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Corporate Governance Issues - Essay Example

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This is a critical discussion of the following statement attributed to Sir Adrian Cadbury in the context of socially responsible investment (SRI): “The continued existence of companies is based on an implied agreement between business and society”…
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Corporate Governance Issues

Download file to see previous pages... Thus, society and business co-exist in the same place, benefiting from each other through wealth transfer or the satisfaction of a need, and as long as business meets this need and serves its purposes for both society and the owner of the business, then it continues to be an ongoing and sustainable concern as the income generated allows the business to stay in existence. However, once any of these purposes is not met, either the business ceases to exist or a new business with a different set of purposes is created. In recent years, society and business have come into escalating conflict, as businesses focus on the generation of profit at all cost to the detriment of society. Thus, business has destroyed environments, abused its workers, and even sold products that killed or injured its customers. Other businesses have abused their economic power to subdue nations, twisted the arms of their governments, and caused severe harm to other sovereign nations, their people, and their environments. As the phenomenon of globalisation spread in the last decade, the extent of the conflict between business and society escalated. Now, not only are businesses supposed to earn profits and meet the needs of its consuming society. It also has to stand by the quality of its products, ensure that its working conditions are human, and that all of its activities are sustainable, i.e., do not cause permanent damage to the welfare of future generations. Negligence on any of these points would open the company to damaging lawsuits, as shown by recent experiences with costly litigation on the effects of asbestos, tobacco, and faulty pharmaceuticals. ...Download file to see next pagesRead More
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