Ultimately, when it comes to corporations, incentives seem to matter a whole lot, with one key incentive being the profitability (or avoidance of loss) of any action to shareholders. In his column in the New York Times, Paul Krugman notes: Action on climate, if it happens, will take the form of “cap and trade”: businesses won’t be told what to produce or how, but they will have to buy permits to...
Some Literature on Governance and Social Responsibility
Professor Balasubramanian of IIM Bangalore has posted two interesting papers. In the first paper, Addressing Some Inherent Challenges to Good Corporate Governance, he examines certain specific issues arising due to the concentrated ownership in Indian listed companies. Specifically, he notes: While the objectives of good governance, namely creation, protection and equitable distribution of...
UN Corporate Law Tools project: Corporate Structures and Governance and Human Rights
The United Nations has been developing a project on Reports on Corporate Law Tools, which involves leading law firms from across the globe working with UN Special Representative John Ruggie to analyse how corporate structures in different legal systems foster respect for human rights. The idea behind the project is found in this note prepared by the Special Representative. Reports from several...
CSR in India: Some Theory and Practice
Experts in the area of corporate social responsibility (CSR) have argued that CSR is not just philanthropy by companies. It should involve the right combination of enhancing long-term shareholder value and protecting the interests of various other stakeholders (such as employees, creditors, consumers and the society in general). In a recent article in the Wall Street Journal, R. Venugopal and...
Environmental, Social and Corporate Governance (ESG) Factors
While examining issues pertaining to corporate governance, a myopic approach is to look at the interest of the shareholders, whose interests are to be protected. On the other hand, there is a school of thought, known as the “stakeholder” approach, which calls for governance of companies with a view to protecting the interest of stakeholders in a company, which include not only shareholders, but...
Promoting ‘Inclusive Capitalism’ in India
The latest issue of IndiaKnowledge@Wharton carries an article on the concept of ‘inclusive capitalism’ and its effect on India. It also considers prospects for the future. The article discusses some examples where inclusive capitalism has been implemented. It begins with a study of Fabindia Overseas, and then moves on to discuss the concept in detail: “The venture is one of several recent...
The Proper Purpose of a Corporation
One of the themes that we often explore on this Blog relates to the determination of the proper purpose of a corporation – i.e. whether a corporation exists solely to carry on business for the benefit of its owners (i.e. shareholders), or whether it has a larger responsibility towards other stakeholders and generally the society. The Harvard Corporate Governance Blog has a post referring to...
Measuring the Success of Capitalism
Being back on blawgosphere after a brief hiatus, I noticed this interesting column by Arun Maira in today’s Times of India. By way of background, the recent events in the US and UK have cast a serious doubt on the efficacy of capitalism as a viable economic model. It has been subject to challenge in particular on the ground that it promotes greed, leading businesses to go overboard and that it...
More on Social Business
After I wrote an earlier post on Social Business over a month ago, I came across some interesting examples of efforts being made to integrate companies and society. These are not just voluntary efforts by companies to act in societal interest, but matters of policy pronounced by legislatures to be complied with by the corporate sector. These policies make it mandatory on companies to act in the...
Industry can play an important role in reservation policyLast weekend, as part of a panel discussion at the Annual Day of the Pune Chapter of the Confederation of Indian Industry, I was pleasantly surprised to hear about CII Pune having run finishing school sessions in collaboration with a local educational institute for members of the “scheduled castes” and “scheduled tribes”. The “reservation...
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