21874 Corporate Governance and Sustainability

Subject level: Postgraduate

Handbook description

This subject examines corporate governance systems by which business corporations are directed and controlled, and how these may contribute to sustainable enterprise. Issues considered include the implications of the separation of ownership and control, contrasting institutional systems of governance, competing theoretical explanations, the mechanisms of governance, the increasing significance of capital markets and the internationalisation of finance and regulation. The subject employs a stakeholder management perspective to analyse organisational strategies, values and operations that facilitate the development of sustainable, high-performing organisations, as well as enabling a balance between enterprise, society and the ecosphere. The subject focuses on how organisations develop a 'licence to operate and grow' through their relations with employees, wider society and the natural environment, developing skills in critical analysis, risk evaluation and management, scenario planning and stakeholder dialogue.

Subject objectives/outcomes

On successful completion of this subject students should be able to:

1. appreciate the distinctive influences of different internal governance mechanisms, and external institutional structures, upon business strategy and performance
2. understand the significance of market-based and relationship-based governance systems, and the strategic impact of the globalization of corporate finance and governance
3. evaluate, develop and implement strategies to develop ethical engagement and build cooperation with corporate stakeholders, and recognise the demand for accountability and transparency
4. analyse the key elements of social and environmental sustainability, and contribute to the debate on the relationship between environmental and social risk and corporate performance
5. apply key concepts and techniques of voluntary reporting, management and certification systems that could progress organisations towards social and environmental sustainability
6. design management strategies which enable organisations to integrate business opportunity with sustainability values.

Contribution to graduate profile

The subject provides a deeper understanding of the contrasting ways companies are owned and controlled, of the role of competing systems of corporate governance which exist in different institutional environments, and how sustainable these different business approaches are. The subject will contribute to the objectives of the course by integrating the governance, investment, strategic and control elements of business decision making. The subject examines how distinct corporate values and objectives, aligned to competing systems of corporate governance, can produce diverse strategies and results in various product markets. The subject contributes to a better understanding of the complexity of internal business behaviour and control, and the impact of the capital market environment, and how this may contribute to sustainable enterprise. The subject examines how an understanding of stakeholder relationships for sustainability is fundamental to the development of lasting, high-performance organisations in the rapidly changing business, ecological and social environment. The subject develops students' ability to critically assess their existing frames of reference when it comes to analysing organisational sustainability. It aims to develop the necessary skills in stakeholder dialogue and management for participants to work in an innovative fashion towards making organisations more sustainable, while sustaining the natural environment and society.

Teaching and learning strategies

The subject will normally be delivered with lectures and group discussions, with frequent use of cases of companies confronted by corporate governance crises, sustainability issues or other moral dilemmas. Classes will involve a combination of lectures, video analysis, role-plays, case studies, scenario modelling, stakeholder dialogue and simulation exercises. Use will be made of guest speakers including regulators, lawyers, investors, company executives and consultants. Resources will be employed to give more direct insights into business practice including film and video, company materials, and web resources including the governance web sites of corporations, and sustainability agency web sites. Students will be encouraged to develop forensic skills in the analysis of cases of corporate failure, the investigation of sustainability issues, and the analysis of corporate moral dilemmas, and will be encouraged to acquire knowledge and skills of how to develop higher standards of corporate disclosure, stakeholder engagement, and sustainability strategies. The UTS web-based communication tool (UTSOnline) will be used to share information and encourage interaction between staff and students.

Content

• Strengths and weaknesses of market-based and relationship-based governance systems, and how they are related to different business objectives, strategies and performance outcomes
• The mechanisms of governance including the role of the board, executive compensation, and the influence of stock options
• The increasing significance of capital markets, including stock exchanges, institutional investors and private equity, in merger and takeover activity
• The internationalisation of finance, governance and regulation
• Instrumental and normative perspectives on corporate social responsibility and sustainability
• The simultaneous and often competing drives to enhance corporate performance, accountability and sustainability
• Evaluating and managing risk, and the relationships between human and ecological organisational sustainability
• Efficiency and sustainability: the triple and quadruple bottom line
• Strategic sustainability, organisational identity and image
• Stakeholder relations, reflexivity and adaptive management
• Organisational change and leadership for sustainability

Assessment

Assessment item 1: Seminar Paper (Individual)

Assessment item 2: Case Analysis (Group)

Assessment item 3: Individual Research Report

Required text(s)

Clarke, T, 2007, International Corporate Governance: A Comparative Approach, London and New York: Routledge

Dunphy, D, Griffiths, A and Benn, S, 2007, Organisational Change for Corporate Sustainability, New York and London

Recommended text(s)

Benn, S and Dunphy, D, 2007, Corporate Governance and Sustainability, London and New York: Routledge

Indicative references

A book of course readings will be provided for each student.

Corporate governance

Books (a selection only):

Aglietta, M. and A. Rebérioux (2005) Corporate Governance Adrift: A Critique of Shareholder Value, Edward Elgar

Aguilera, R. & Jackson, G. (2003) The cross-national diversity of corporate governance: dimensions and determinants, Academy of Management Review, 28 (3): 447-465

Aguirre, G.J. (2003) The Enron Decision: Closing the Fraud-Free Zone On Errant Gatekeepers? Delaware Journal of Corporate Law, 28: 447–511

AMP Capital Investors (2006) Corporate Governance: Why Bother? Corporate Governance Report, Sydney: AMP

Bebchuk,L.A. and Fried, J.M. (2005) Pay Without Performance: Overview of the Issues, Harvard Law School Discussion Paper No 528, Harvard University

Blair, M.M. (1995) Ownership and Control: Rethinking Corporate Governance for the 21st Century, Washington DC: Brookings Institute

Cadbury, A. (2002) Corporate Governance and Chairmanship, Oxford University Press

Carter, C.C. and Lorsch, J.W. (2004) Back to the Drawing Board: Designing Corporate Boards for a Complex World, Harvard Business School Press

Cernat, L.(2004) The Emerging European Corporate Governance Model: Anglo-Saxon, Continental or Still the Century of Diversity?, Journal of European Public Policy, 11,1, 147–66

Clarke,T. (2004) Theories of Corporate Governance, London and New York: Routledge

Clarke, T. (2000) Haemorrhaging tigers: the power of international financial markets and the weaknesses of Asian modes of corporate governance, Corporate Governance An International Review, 8 (2): 101–116

Claessens, S. (2004) Corporate Governance and Development, Global Corporate Governance Forum, Washington DC: World Bank

Daily, C.M., Dalton, D.R.,& Cannella, A.C.( 2003) Corporate Governance: Decades of Dialogue and Data, Academy of Management Review, 28 (3): 371–382

Department of the Environment and Heritage (2003) Triple Bottom Line Reporting in Australia — A Guide to Reporting Against Environmental Indicators, Canberra: Commonwealth of Australia www.deh.gov.au/industry/finance/publications

European Commission (2005) Company Law & Corporate Governance http://www.europa.eu.int/comm/internal_market/company/index_en.htm

Finkelstein, S. and Mooney, A. (2002) Not the Usual Suspects: An Exploration and Conceptualisation of Board Process, Strategic Management Society Annual Conference, Paris, France

Jacoby, S.M. (2004) The Embedded Corporation: Corporate Governance and Employment Relations in Japan and the US, Princeton: Princeton University Press

Kiel, G & Nicholson, G. (2003) Boards that work: a new guide for directors, Sydney: McGraw-Hill

Leblanc, R. and Gillies, J. (2005) Inside the Boardroom, New York: Wiley

MacAvoy, P. W. and I. M. Millstein (2004) The Recurrent Crisis In Corporate Governance, Stanford Business Books

Monks, R.A. and Minow, N. (2007) Corporate Governance, Oxford: Blackwell

Useem,M. and Zelleke, Z. (2006) Oversight and Delegation in Corporate Governance: Deciding What the Board Should Decide, Corporate Governance- An International Review, 14, 1, 2–22

Websites

Academic Centre for Corporate Governance, UTS www.ccg.uts.edu.au

Center for Corporate Governance, Dartmouth http://mba.tuck.dartmouth.edu/ccg

Centre for Corporate Law and Securities Regulation, Melbourne http://cclsr.law.unimelb.edu.au

International Institute for Corporate Governance, Yale http://iicg.som.yale.edu

Social Science Research Network http://papers.ssrn.com

Commercial Australian Institute of Company Directors www.companydirectors.com.auBusiness Council of Australia www.bca.com.au

Business Roundtable: Corporate Governance www.businessroundtable.org/taskForces/index.aspx#CorporateGovernance

Institutional Shareholder Services www.issproxy.com

Value Alliance www.thevaluealliance.com

Government Australian Securities and Investments Commission www.asic.gov.au

H.K. Securities and Futures Commission www.sfc.hk/sfc/html/EN/

Japan Financial Services Agency www.fsa.go.jp/indexe.html

Singapore Monetary Authority www.mas.gov.sg

UK Financial Services Authority www.fsa.gov.uk

US Securities and Exchange Commission www.sec.gov/index.htm

Institutions Asian Corporate Governance Association www.acga-asia.org/index.cfmAustralian Stock Exchange www.asx.com.au

Brookings Institution: Corporate Governance www.brook.edu/gs/research/areas/corporate/corporate_hp.htm

Corporate Governance, Japan www.rieti.go.jp/cgj/en/index.htm

Corporate Library www.thecorporatelibrary.com

European Corporate Governance Institute www.ecgi.org

Global Reporting Initiative www.globalreporting.org

International Business Ethics Institute www.business-ethics.org

International Corporate Governance Network www.icgn.org

International Organization of Securities Commissions www.iosco.org

Organisation for Economic Co-operation and Development www.oecd.org

World Bank – Private Sector Development (Corporate Governance) http://rru.worldbank.org/Themes/CorporateGovernance/

World Bank Institute – Private Sector Development (Corporate Governance and Corporate Social Responsibility) www.worldbank.org/wbi/corpgov

Other Stakeholders: Business for Social Responsibility www.bsr.org

Centre for Social and Environmental Accounting Research www.ceres.org

CorpWatch www.corpwatch.org

Executive Paywatch www.aflcio.org/corporateamerica/paywatch

Investor Responsibility Research Center www.irrc.org

United for a Fair Economy www.faireconomy.org

Corporate sustainability and CSR

Books (a selection only):

Bendell, J, 2006. Tipping Frames: Lifeworth Review of 2006. (Available: www.lifeworth.net accessed 7 December 2007.)

Benn, S. and Dunphy, D (eds.) 2007, Corporate Governance and Sustainability: Challenges for Theory and Practice, Routledge, London and New York.

Buchholz, R.A. 2004, 'The natural environment: Does it count?' Academy of Management Executive, vol. 18 Issue 2, pp. 130–133

Carbon Disclosure Project. Available at http://cdproject.net accessed 7 December 2007.

Carroll, A.B. 2004, 'Managing ethically with global stakeholders: A present and future challenge'. Academy of Management Executive, vol. 18, No 2, pp 114–120

Christmann, P. and Taylor, G. 2002, ' Globalization and the environment: Strategies for international voluntary environmental initiatives'. Academy of Management Executive, vol. 16, no 3, pp 121–135

Clarke, T. and Clegg, S. 2000, Changing Paradigms, HarperCollinsBusiness: London

Crane, C. and Matten, D. 2007, Business Ethics : Managing Corporate Citizenship and Sustainability in the Age of Globalization, Oxford University Press, Oxford; New York

Doppelt, Bob, 2003. Leading Change Toward Sustainability: A Change-Management Guide for Business, Government and Civil Society, Greenleaf Publishing, Sheffield UK

Ehrenfeld, J. 2000. Industrial Ecology. Paradigm Shift or Normal Science?, American Behavioral Scientist, Vol 44 Issue 2, pp 229–245

Figge, F., Hahn, T., Schaltegger, S. and Wagner, M. 2002. The Sustainability Scorecard – Linking Sustainability Management to Business Strategy. Business Strategy and the Environment, vol 11, Issue 5 pp 269–284

Grayson, D. and Hodges, A. 2004, Corporate Social Opportunity: Seven Steps to Make Corporate Social Responsibility Work for Business, Greenleaf Publications, London.

Hart, S.L. and Milstein, M.B. 2003, 'Creating sustainable value', Academy of Management Executive, vol. 17 Issue 2, pp 56–67

Hawken, P. Lovins,A and Lovins, H. 1999, Natural Capitalism: Creating the Next Industrial Revolution. Earthscan, London

Kolk, A. 2000, 'Green Reporting.' Harvard Business Review, vol. 78, no 1, p 15

Porter, Michael E. and Kramer, Mark R. 2006, 'Strategy & Society: The Link Between Competitive Advantage and Corporate Social Responsibility'. Harvard Business Review. Vol. 84, no. 12, pp 78–92.

Post, J. Preston, L. and Sachs, S. 2002, 'Managing the extended enterprise: the new stakeholder view'. California Management Review, vol 45, pp 6–29

Rondinelli, D.A. and London, T. 2003, 'How corporations and environmental groups cooperate: Assessing cross-sector alliances and collaborations' Academy of Management Executive, vol. 17, no 1, pp 61–76

Russo, M., Delmas, M. and Montes-Sancho, M. 2007, 'Deregulation and environmental differentiation in the electric utility industry'. Strategic Management Journal, vol. 28, pp 189–209

Russo, M. and Harrison, N. 2005, 'Internal organization and environmental performance: clues from the electronics industry', Academy of Management Journal, vol. 48, pp 582–593

Russo, M. 2003, 'The emergence of sustainable industries: building on natural capital', Strategic Management Journal, vol. 24, pp 317–331

Schendler, A. 2002, 'Where's the green in green business?' Harvard Business Review, vol. 80, no. 6, p 28

Sharma, S., Starik, M. and Husted, B. (eds) 2007, Organizations and the sustainability mosaic: crafting long-term ecological and societal solutions, Edward Elgar, Cheltenham, UK ; Northampton, MA

Sroufe, R and Sarkis, J. (eds) 2007, Strategic sustainability: the state of the art in corporate environmental management systems, Greenleaf, Sheffield

Waddock, S. and Bodwell, C. 2007, Total Responsibility Management. Greenleaf Publishing, Sheffield

Waddock, S., Bodwell, C. and Graves, S. 2002, 'Responsibility: the new business imperative'. Academy of Management Executive, vol. 16, no 2, pp 132–148

Wilkinson, A., Hill, M. and Gollan, P. 2001, 'The sustainability debate'. International Journal of Operations and Production Management, vol 21, no12, pp 1492–1502

Websites

UN Global Compact www.unglobalcompact.org

ISO standards www.iso.ch/iso/en/aboutiso/introduction

ILO standards www.ilo.org

SA8000 standards www.sa-intl.org

GRI guidelines www.globalreporting.org/ReportingFramework/G3Online

CERES www.ceres.org

Business for Social Responsibility http://bsr.org

World Business Council for Sustainable Development www.wbcsd.org

Further resources

ACF's Natural Advantage: Blueprint for A Sustainable Australia www.acfonline.org.au/uploads/natural_advantage.pdf

ACF's Corporate Reputation Index 2002 www.acfonline.org.au/uploads/res_tela012.pdf

Australian Government Department of Environment and Water Resources Sustainable Reports Index www.environment.gov.au

Publications on corporate sustainability

Corporate Sustainability Project Resources www.csp.uts.edu.au/resources/#resources

Green Innovations Ltd www.green-innovations.asn.au
www.greenbiz.com/reference

Rocky Mountain Institute (RMI) www.rmi.org

RMI's groundbreaking work on 'Tunnelling through the Cost Barrier'

Chapter 6, of Natural Capitalism: The Next Industrial Revolution (www.natcap.org/images/other/NCchapter6.pdf)

Watch some of the RMI videos at: www.rmi.org/sitepages/pid41.php

The Natural Edge Project www.naturaledgeproject.net

Samples of Leadership from the Australian Industry Groups, and Business Networks (alphabetical order) Business Council of Australia's stated commitments to corporate community investment www.bca.com.au/Content.aspx?ContentID=100839

and Setting Achievable Emissions Targets for Australia www.bca.com.au/Content.aspx?ContentID=101071

Buy Recycled Business Alliance has over $30 Billion worth of purchasing power www.brba.com.au

EnviroBusiness Australia www.environmentbusiness.com.auThe Australian Environment Industry Development Network Directory www.environmentdirectory.com.au

The Australian EIDN hosts an immense database of Energy Resource and Development Corporation Reports at www.eidn.com.au

Environment Australia Department's Sustainable Industry resources www.ea.gov.au/industry

State and federal dovernment also have numerous programs. Sample of Leadership from state governments:

WA State Sustainability Strategy www.sustainability.dpc.wa.gov.au

Australian Government samples: Australian Government Cooperative Research Centres Programme www.crc.gov.au/Information/default.aspx

CSIRO's Climate Page www.csiro.au/csiro/ghsolutions

CSIRO's Sustainability network www.bml.csiro.au/sustnet.htm