Best practice governance and corporate citizenship 

Boards are required to demonstrate that they have integrity, a mix of skills and experience and are able to manage risk.

Businesses are expected to conduct themselves in a morally and ethically acceptable way.

All these things add up to a company’s ‘license to operate’.

Today’s lobbyists, activist groups, shareholders, non-governmental organizations and other stakeholders are too sophisticated to let businesses get away with deliberate lack of clarity around these key issues. The impact of the negative publicity that can arise when stories of wrong-doing hit the media, has prompted corporates to change their behavior.

Many companies have good initiatives that they do not communicate fully to the outside world. Companies must consider what is meant by corporate citizenship and seek to ensure that the widest possible audience gets to hear of their works.

It is important that companies appreciate that corporate citizenship is about more than a few ‘green’, sustainable initiatives ― external parties will likely want to scrutinize them over an ever growing range of issues.

What are the common problems I may face when tackling this issue?
Corporate citizenship:

• Activities should not come across as a ‘tick in the box’.
• Anything that looks limited in scope and as if it has been undertaken purely for the purposes of good PR will likely be self-defeating.
• Activities should not be limited to the ‘green’ corporate social responsibility (CSR) arena. Corporate citizenship seems to be increasingly about acknowledging the way society views business and acting to protect or enhance a company’s standing.

Communication:

• However keen to communicate with external stakeholders, some companies do not give information effectively. Too much badly signposted information can be as irritating to stakeholders as no information at all.

Governance:

• Governance best practice is constantly evolving. It covers issues such as board integrity, long-term strategy, corporate culture, executive remuneration, sustainability, investor relations and corporate communications. The problem companies face is trying to stay on top of these.

So what should I do?
Consider what external stakeholders ― from regulators and investors to lobbyists and employees ― want to see from the company. Do they want to know about key risks and how they are being managed, about board members and their long-term plans for the business or are they more focused on community initiatives in new and emerging markets? Companies need to communicate properly all their good works in the areas of governance and citizenship. At the same time, they need to be fully aware of what it is the public expects of them.

In summary
Major corporates should not be secretive. They are accountable to a broad range of stakeholder groups and have to be seen to be acting responsibly ― both in the way they run their business and the way they manage their impact on society.

How can KPMG firms' professionals help?
KPMG professionals can advise you on the following:

• How to manage key stakeholder relations, integrity and accuracy in communications.
• How to implement appropriate board and sub-committee structure and policy, such as its composition and mandate, in order to help ensure the integrity of key officials and appointments.
• How to develop an appropriate focus for corporate citizenship, such as policies on sustainability. How to identify what corporate citizenship information should be reported, how to gather such information and procedures to help ensure the accuracy of information.