Inclusive Corporate Governance

Governance

How well are we doing?

Editor's note: We have recently refreshed and updated our data for all countries on the platform, as we revised the 21 policies we cover.

Building a green economy means more than just putting up solar panels. Profound changes will need inclusive corporate governance, including employee involvement in decision-making, gender representation on boards, and effective environmental, social and governance (ESG) policies that align with the UN Sustainable Development Goals (SDGs).

National policies here are distinctly average or low across the board, with only 6 of 41 countries showcasing clear leadership or significant progress towards inclusive corporate governance strategies. Germany, Sweden and France stand out amongst the most progressive countries reaching our highest level of ambition. France combines mandatory board-level employee representation with robust gender-balance rules and mandatory sustainability reporting, while Germany has long-standing mandatory worker participation in corporate governance and well-established gender-balance requirements applicable via their Act on Equal Participation of Women and Men in Leadership Positions. Trailing just behind is South Africa, where, although its approach to inclusive corporate governance is still voluntary, it comes with clear guidance on ESG, gender diversity, and stakeholder engagement.

Scoring low are countries such as Argentina, Brazil, China, India, and Trinidad and Tobago that do not mandate gender-balanced or worker-inclusive corporate boards and keep their ESG/SDG framework largely voluntary with no binding governance obligations.

Countries with higher levels of gender equality have higher economic growth. Companies with more women on their boards have higher returns.

Ban Ki-Moon
Former UN Secretary General; speaking on International Women's Day

Join the debate

About this policy

Building a green economy means more than just investing in solar panels or recycling of plastic. The systemic changes that are needed in how people live and work mean inclusive processes for involving people in the design of policy are essential - if sometimes difficult. This just as true for governance in the private sector as it is for public actors and national or local government.

The weakest approaches to inclusive corporate governance do not provide guidance for private sector actors at all, giving little thought to inclusive processes or the benefits of high environmental, social and governance (ESG) standards. Ignoring the potential of processes for inclusive governance can be a recipe for low engagement and wellbeing within organisations - as well as policy failure where private and public sector objectives are too far apart; for example in consideration of how to contribute to the Sustainable Development Goals (SDGs)

More progressive governance explicitly addresses the participation of women and marginalised groups in senior leadership, though will vary country-to-country. The most inclusive approaches mandate comprehensive employee consultation that has a real impact on policies, overseen by strong and independent governance structures. Less ambitious corporate standards may start with providing minimal guidance for employee consultation, and ultimately build up towards workers committees and mandatory representation on company boards.

Policy Description

A national strategy that champions inclusive corporate governance, such as employee involvement in decision-making, gender representation on boards, and effective environmental, social and governance (ESG) policies that align with the UN Sustainable Development Goals (SDGs).

Scoring Criteria

A comprehensive national strategy for inclusive corporate governance, with mandatory employee representative and gender-balance standards for boards, and clear incentive structures for high ESG standards and SDG alignment/impact.
Clear inclusive corporate governance strategy with targets and reporting on gender balanced governance and employee consultation, and effective ESG guidance for supporting private sector contributions to delivering the SDGs.
National corporate governance strategy or regulations, with voluntary standards on employee consultation, gender representation, and ESG standards/SDGs.
Limited corporate governance and ESG standards/guidance, with weak alignment with SDGs.
No guidance or regulations in support of inclusive corporate governance.

More ambitious?

Social impact commission review of green policy and governance instruments, and employee share ownership options.

Policy methodology

Case Study: Sweden

Inclusive corporate governance is a priority for Sweden, and this is well reflected in its sustainable development and green economy policies. The Swedish approach to sustainable business has updated existing corporate social responsibility policies to align with the SDGs. Large companies (250+) employees are required to report on their environmental performance, strengthening requirements at European Union level. With the launch of the SDGs, Sweden also developed guidance on a clearer ‘industrial policy for sustainable business’ covering eighty different measures, impacting all sectors, and integrating additional metrics such as the UN Guiding Principles on Business and Human Rights. Private sector governance also reflects strong norms of worker involvement, with a single-tier board including employees for all but the smallest companies (less than 25 workers). Gender inclusion has been mainstreamed across Swedish public life, reducing the percieved need for statutory requirements for including women in corporate governance and consultation; though this attitude is beginning to see Sweden superceded by peers.

Sweden Country Profile