A well-functioning board of directors can contribute to ensuring that a company operates in a responsible manner and is able to pave the way for sustained success. This is because effective corporate governance helps build confidence and trust with stakeholders, which include shareholders, customers, employees and society at large.
A responsible company that complies with the basic principles of corporate governance is also more inclined to satisfy regulatory requirements and stay clear of legal issues. Besides, a company operating in line with corporate governance can more easily attract investors and lenders as it gives them confidence that the company is capable of delivering strong performance in the long term.
That is why it is important for any company to have effective corporate governance practices in place to maintain responsible and sustainable operations. Companies should ensure that their boards are composed of talented and independent members, that internal control systems are in place to minimise risks and that their management adheres to high ethical standards.
Ultimately, a company adopting a corporate governance approach can benefit from gaining increased confidence and trust from stakeholders, which can facilitate greater success and sustainability in the long term.