Internal Governance Instruments: Codes and Policies

Abstract

Corporate governance involves a set of relationships between a company’s management, its board, its shareholders and other stakeholders and effective governance requires a structure through which the objectives of the company are set, the means of attaining those objectives and monitoring performance are determined, and the company and its people are held accountable. Since the elements of corporate governance include ethics, risk management, compliance and administration, companies must establish and maintain the appropriate “control environment” in order for their corporate governance procedures to be effective. One of the first steps in establishing the appropriate control environment is the adoption and dissemination of corporate governance instruments and this chapter covers of the content of key governance-related codes, policies and procedures including principles of corporate governance, codes of conduct and ethics for the entire enterprise, board of directors’ code of conduct, CEO/CFO code of ethics, “independent director” requirements and guidelines that the nominating or corporate governance committee can follow in evaluating prospective candidates for the board of directors and sustainability-related instruments.