Expanding Responsibilities of Corporate Governance: The Incorporation of CSR and Sustainability

Abstract

Traditionally, directors’ responsibilities have been to the members (shareholders) of the company. But in the 21st century a view has arisen that they have responsibilities to a wider group of interested parties. Different philosophical approaches support the alternative views about corporate governance. These philosophical underpinnings will be examined. Also, evidence of directors’ responsibilities to the wider community will be illustrated through a national survey of directors in New Zealand. Increasingly, it seems that good corporate governance will involve an expanded view of the responsibilities of company directors. The laissezfaire, free market philosophy has been tempered by a realization that the firm is a part of a wider environment. It is becoming accepted by a large proportion of business firms that the well being of the firm is tied to the well being of the environment, at least in the longer term perspective.