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Designing Corporate Governance to Enhance Respect for UN Global Compact Principles

The UN Global Compact: Fair Competition and Environmental and Labour Justice in International Markets

ISBN: 978-1-78441-295-1, eISBN: 978-1-78441-294-4

ISSN: 2051-5030

Publication date: 28 January 2015

Abstract

Purpose

The chapter aims to clarify the relationship between corporate governance structure and corporate subscription to Global Compact standards. Part one of the chapter looks at the relationship between different models of board governance and active Global Compact participation by publicly listed companies. Part two of the chapter examines a number of external mechanisms aimed at bringing corporate behavior in line with Global Compact principles, and argues that there is a mutually reinforcing relationship between internal governance structures and external provisions aimed at influencing corporate behavior.

Design/methodology/approach

Part one of the chapter uses an independent T-test to compare the average (mean) proportion of publicly listed companies from unitary board countries with an active Global Compact Communication on Progress status with the average proportion of publicly listed companies from two-tier/hybrid corporate governance systems listed as active Global Compact participants. Part two of the chapter uses primary and secondary sources to examine external mechanisms operating across national borders aimed at influencing corporate behavior.

Findings

The chapter finds that a higher proportion of public companies from countries with two-tier/hybrid corporate governance structures have become active Global Compact participants compared to public companies from legal systems with unitary board corporate governance structures. Part two of the chapter examines the potentially mutually reinforcing relationship between internal governance structures and external mechanisms for modifying corporate behavior.

Research limitations/implications

While external codes and standards such as the UN Guiding Principles on Business and Human Rights and the OECD Guidelines for Multinational Enterprises appear to be influencing corporate behavior worldwide, quantitative data confirming and recording the extent and nature of this influence (if any) remains limited.

Practical implications

The chapter provides useful insights for policy makers and corporate leaders into the relationship between internal corporate governance structures and external codes, standards and guidelines aimed at influencing corporate behavior.

Originality/value of the chapter

This chapter provides original insights into whether and how internal governance structures can complement and reinforce social standards regarding global corporate citizenship, and the legal guidelines reflecting those standards.

Keywords

Citation

de Jonge, A. (2015), "Designing Corporate Governance to Enhance Respect for UN Global Compact Principles", The UN Global Compact: Fair Competition and Environmental and Labour Justice in International Markets (Advances in Sustainability and Environmental Justice, Vol. 16), Emerald Group Publishing Limited, Bingley, pp. 61-82. https://doi.org/10.1108/S2051-503020140000016018

Publisher

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Emerald Group Publishing Limited

Copyright © 2015 Emerald Group Publishing Limited