Back to basics in corporate governance

The global financial crisis has highlighted the need for good corporate governance, according to Bob Garratt, a London-based business consultant with wide experience in corporate governance.

Speaking to The Times Business, Prof. Barratt said that until 2007 many businesses used to pay lip service to corporate governance, but today many organisations are integrating this important sector into their business model.

Prof. Bob Garratt is a company director, consultant and academic working on corporate governance, board and director evaluation and performance, organisational change and strategic thinking issues. He was in Malta to address a Directors Forum 2010 conference on international corporate governance organised by the Institute of Directors (Malta Branch) and the Chamber of Commerce and Industry.

He said he was pleased to note that in countries such as the UK and South Africa, corporate governance was being extended to shareholders, directors, management and the wider community. He said companies, for example, had to be conscious of the physical environment in which they operated and the sustainable use of resources.

"Shell oil company is an excellent example of a business organisation which has done very good work in corporate governance especially with regard to its environmental consciousness," he said.

Prof. Garratt emphasised that corporate governance was applicable not only to the private sector but also to government agencies.

He pointed out that while some countries has progressed a lot in corporate governance, especially since the legal framework encouraged this, the US had very little federal law in corporate governance and this was decided at state level.

Prof. Garratt said many companies were returning to basics over corporate governance with clear lines being drawn over the distinct roles being played by CEOs, management and directors. He said that in the UK there was no such thing as an "executive director" or a "non-executive director", but simply a "director". The principal role of the board of directors, he said, was "to look to the future".

Prof. Garratt said that without good corporate governance businesses had no future.