The term “corporate governance” can conjure images of closed-door meetings and classified documents. But responsible businesses are finding the value of being a transparent business, meaning employees, shareholders, customers, clients and all stakeholders have access to a business’s inner workings. But why would this be beneficial?
For socially conscientious businesses, corporate governance and financial transparency is often required by discerning customers and employees to prove the company’s responsible claims aren’t just greenwashing. Third-party verifications and certifications, such as the ones listed in this chart of 12 highly regarded ecolabels and ratings, go a long way to assure clients and workers of various conscientious claims’ validity. Many of these certifications, including B Corporation certification, evaluate a company’s corporate governance transparency so stakeholders have a means to review how open a business is about its operations.
Financial transparency can be especially valuable to employees. With rising levels of income disparity between low-wage earners and CEOs, more workers and customers are investigating the ratio of a company’s top-wage earner to its lowest-paid worker’s wages in order to decide where to work and shop. Various states are addressing this disparity by experimenting with raising minimum wages, and other companies have written into the company’s bylaws a set ratio to keep CEOs and other executives from making more than a certain amount of money compared with their entry-level employees. Ben & Jerry’s, for example, has set this ratio at 5 to 1, and has kept it at that ratio for 20-plus years.
Another way to create a more transparent business is to create a more transparent workspace. Rearranging to allow for more open floorplans or replacing solid conference room walls with glass are two examples. An open work strategy’s benefits can be surprising and personal, as was the case for Mary Powell, CEO of Green Mountain Power.
For a conscientious business to set itself apart from other companies with green marketing claims, operating as a transparent business is key. The advantages a business experiences by engaging in corporate social responsibility can be negated without openness about the company’s basic operating, financial and governance procedures. (Learn more about why CSR is important and the benefits such a strategy has incurred at several businesses in our free report.)