There has been increasing and ongoing focus on corporate governance and sustainability of the business. Owing to rapidly changing business environment and conditions it has become important for the organizations to implement effective and efficient corporate governance strategies and frameworks. This in turn will allow the organizations to carefully monitor and regulate the business operations and their impact on different stakeholders and environment. Apart from this corporate governance is also being given additional information because of the increasing pressure on the organizations regarding the ethical behavior and operations on part of the different regulatory bodies and consumers. Also it is important to acknowledge here that researchers have been linking and associating the corporate governance with the overall business ethics and ethical practices (Felo, 2011).
In this report an attempt has been made to understand and comprehend the definition and concept of the corporate governance, along with exploring the relationship between the ethical practices and corporate governance. For this purpose the report will present and highlight some of the key corporate governance principles in AXS and will relate them with the overall concept of ethics and social responsible practices. Lastly, the report will evaluate and explore the operations of Origin Company in the light of the ethical practices and will identify whether the corporate governance principles are being followed by the company or not.
DEFINITION OF CORPORATE GOVERNANCE:
Corporate governance is defined as a process of controlling, administrating, and leading a company in the overall business operations. According to Bonn and Fisher (2005), corporate governance is a broad system of process with the help of which works towards the control, direction, and accountability of the whole organization. The corporate governance system establish the check and balance strategy for ensuring that the organization is operating in the best interests of all stakeholders and is following all legal regulations along with ethical norms and values. According to Bitner and Dasher (2007) the term corporate governance is becoming more common and is expanding from stakeholders to household concept in order to direct and control the overall operations, strategies, and decisions of the organization.
RELATIONSHIP BETWEEN CORPORATE GOVERNANCE AND ETHICS:
Different research studies have established direct relationship between corporate governance and ethics. It is generally asserted by the researchers that an effective and efficient corporate governance system leads to the ethical practices and decision making by the organizations. The corporate governance system acts as a monitor and evaluator of the ethical behavior and practices on the part of the organization (Shah, 1996). According to Bitner and Dasher (2007) the business ethics provides the organization with the overall ethics boundary and principles along with the rules and code of conduct. Corporate governance, on the other hand, takes the overall charge and responsibity to make sure that the behavior of every individual associated with the company is according to the business ethics and regulations. The end motive of both, corporate governance and business ethics is same i.e. improving the enhancing the overall operations of the organization along with the efficiency of the employees in order to facilitate the process of improving the image of the organization in the industry and society (Oza, 2011).
KEY ASX PRINCIPLES AND ETHICS:
Corporate governance and ethics are directly associated and linked as explained above. This is further asserted by some of the corporate governance principles presented by ASX. These principles are as follow (ASX, 2010):
- According to ASX corporate governance principle number 3, the organizations should work for the promotion of the ethical and responsible decision making. This corporate governance principle is directly associated with the ethical practices and behavior. It results in encouraging different organizations to come up with business processes and strategies that not only are according to the legal obligations but also keep in consideration the justified expectations and demands of the important stakeholders of the organization including the customers, employees, shareholders, suppliers, and other important players. This results in overall ethical practices and decision making on part of the organization.
- According to ASX corporate governance principle number 7, the organizations should come up with an effective and efficient risk management system in order to facilitate the process of recognizing and managing the overall risk. This in turn allows the organizations to avoid any possibility of immoral and unethical behavior within the organization. This again links the corporate governance with the overall ethical practices and decision making.
- According to ASX corporate governance principle number 2, organizations should formulate and structure the board in such a way which adds value to the overall operations and business. This in turn allows the organizations to make sure that the board is competent enough to keep a check and balance on the overall operations of the organization and promote ethical strategies and decision making.
- According to ASX corporate governance principle number 4, organizations should have a proper system for protecting the integrity of the overall process of financial reporting. This is again linked with ethics, as it encourages the organizations to enforce ethical practices while formulating the financial reports and statements.
ANALYSIS AND EVALUATION OF ETHICS AND CORPORATE GOVERANCE STRATEGIES OF ORIGIN:
Origin is working to establish a strong and effective corporate governance system in order to operate in ethical and social responsible manner. This is evident from the annual report of the company. The company has a separate section for the corporate governance statement. According to this statement, the company has high commitment to create additional shareholder value and to meet the demands and expectations of other important stakeholders including employees, partners, suppliers, and government. For this the company has implemented the eight principles of corporate governance as presented by AGX. All board members are encouraged to follow these principles in order to make sure that the company operates according to the legal regulations and ethical values (Origin, 2012). Hence, Origin has established an efficient and effective corporate governance system; this is also reflected by the performance of the company.
Hence, it can be concluded that the corporate governance is directly associated and linked with the ethical practices and strategies. The corporate governance formulate a check and balance system for monitoring and directing the organization towards the ethical and social responsible behavior and at the same time makes the organization accountable for working according to the widely accepted corporate governance rules and principles. This makes corporate governance highly important for the organizations in the overall process of growth and development; the same is asserted by the example of Origin. The company is working to incorporate different principles of corporate governance presented by ASX and hence is trying to establish and implement ethical practices and strategies.
List of References
ASX. (2010). Corporate governance principles and recommendations. Sydney: ASX Corporate Governance Council
Bitner, L .N. and Dasher, A. (2007). Examining Corporate governance policies as a routine part of financial analysis. Commercial Lending Review, May-June 2007, pp. 3-9
Bonn, I. and Fisher, J. (2005). Corporate governance and business Ethics: insights from the strategic planning experience. Corporate governance: An International Review, vol. 13, no. 6, pp. 730-738
Felo, A. J. (2011). Corporate Governance and Business Ethics. In Corporate Governance and Business Ethics (pp. 281-296). Netherlands: Springer.
Origin. (2012). Energy for today and tomorrow 2012, Annual report 2012. Sydney: Origin
Oza, H. S. (2011). Corporate Governance and Business Ethics. Editorial Board, vol. 41, no. 2, pp. 1-6.
Shah, A. K. (1996). Corporate Governance and Business Ethics. Business Ethics: A European Review, vol. 5, no. 4, pp. 225-233.