Lesson 5 - Governance and Leadership for Sustainability Flashcards
(12 cards)
What is corporate governance?
A system of rules, practices, and processes used to manage a company, ensuring all parts work toward a common goal
Who are the Principal and the Agent in corporate governance?
Principal = owner/shareholder, Agent = board of directors/top management
What is the Shareholder-Primacy Model?
A model focused on maximizing shareholder value
What is the main goal of the Shareholder-Primacy Model?
Generating profits for owners
What are the four major groups in corporate governance?
Owners/shareholders, Board of Directors, Management Team, Employees
What is the goal of the stakeholder model?
Serve multiple stakeholders and integrate social responsibility
What are the board’s fiduciary duties?
Duty of care (due diligence), Duty of Loyalty (shareholder interests first), Duty of Candor (transparency)
What ties executive compensation to sustainability?
Perfomance-based metrics aligned with sustainability objectives
What is a benefit corporation?
A legal structure that requires directors to consider all stakeholders in decision-making
What is a B Corp?
A certification by B Lab for companies meeting high standards of social environmental performance
How do you become a B Corp?
Complete the B Impact Assessment, meet legal requirements, be verified by B Lab and recertify every 3 years
What are the 7 pillars of sustainability leadership?
1) Active board engagement on sustainability issues
2) CEO and C-suite leadership on sustainability
3) Integration of sustainability into strategic planning
4) Setting strategic, ambitious, and long-term sustainability goals
5) Tying executive compensation to sustainability performance
6) Incorporating sustainability into the innovation process
7) Embedding sustainability into company reporting an engagement
