What is the relationship between corporate governance and social responsibility?
Answer:
corporations are also citizens of the place where they are created. like other citizens, they have social responsibilities. in good corporate governance, the management should be able to meet their social responsibilities. these include making sure that their products are not hazardous to people and to the environment, sharing their profits for the good of the community as a natural person or human being would do, donating to social causes, organizing activities to benefit the community. other good corporate governance practices that overlapped with social responsibility is complying with applicable laws, setting good labor conditions for employees, providing good products to the community, helping the economy through fair trade practices, paying taxes and other obligations due the government, making sure that it is meeting commitments to othe persons, natural and juridical alike. good corporate governance will also ensure that the entity will continue on a going concern existence so that it will be able to pay its employees, pay taxes and give a return for stockholders.
in sum, corporate governance aims to make the corporation a good citizen by being socially responsible.
It doesn't relate to how we normally talk about social responsibility - the environment, diversity, etc. - but good corporate governance leads to more transparent, less corrupt companies, which is good for shareholders.
If a company takes this to heart, it is showing a responsibility to shareholders and, it could be argued, to society in general as large corporate collapses - such as Enron - had wide ranging effects beyond investors in the corporation.
Hope this helps!
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