Importance of Good Governance in Businesses - Dace Helmane
Dace Helmane, Head of the Institute for Corporate Sustainability and Responsibility
Importance of Good Governance will only continue to increase further, therefore not only compliance with the legislative requirements but also adhering to ethical principles and reduction of negative impacts become of essence.
Already now, we are seeing that not only globally but also in Latvia investors, clients and customers are focusing on the ESG or Environmental, Social and Governance factors. There are several countries where certain groups of companies, for example, state owned companies, financial companies and others have to provide reports not only about their financial performance but also non-financial results of their actions, including, impact on the environment, gender equality etc. Connection of sustainability with creation of values, as well as balancing of risks and potentialities, will definitely be not only the global tendency of coming years but also priority for investors. Focus is both on the measuring, evaluating of ESG aspects and disclosure of information and on the fact how these issues are integrated in the business strategy.
The Sustainability Index is a time-tested and improved tool recognised by Latvian companies for assessing of the operations of companies accordingly to several criteria related to strategic planning, environmental protection, work environment and other important aspects. In 2019, I am especially happy for the companies that have been participating in this index for several years already and demonstrate positive dynamics of growth, serving as an inspiring example also to others. Baltic International Bank has been participating in the Sustainability Index for the sixth year already, always showing progressive growth, therefore finding Baltic International Bank in the highest Platinum Category this year is natural.
The role of the corporate culture continues to increase alongside strategic planning, environmental, work environment and other aspects. Human capital and intangible assets, including the organisational culture and reputation, are important as they directly influence the ability to attract and retain talents. In addition, investors need to know whether values the company is willing to embody, conform to its actual behaviour; and what is the understanding of the Board as to this regard.
Although representation of women on the top management positions are comparatively high in the European Union due to legislation factors and historical circumstances, still we need to take into consideration that topicality of this issue will only increase. Companies that will not be able to provide equal opportunities will have to justify the causes and offer solutions; also in regards to the differences in remuneration.