Until a few decades ago, companies, even the largest and most sophisticated ones, were exempt from social control with regard to their governance structures and internal operations. Gradually, however, this reality began to change as societies became increasingly aware of certain problems in which companies had a role to play. Issues such as the treatment of the environment, vulnerabilities to money laundering, the risks of financial intermediaries in managing third-party funds, the impact of pricing and service policies on consumers of goods and users of services, among others, led to a necessary reflection on how to improve corporate governance to mitigate these problems and respond efficiently when they arose.
The concepts of liberal-democratic constitutionalism served as a reference point for devising forms of corporate governance more in tune with social needs. Thus, institutional figures such as checks and balances, transparency, and accountability, among others, were used to design corporate governance models that would allow companies to respond to social demands and concerns that previously remained in the state or public sphere, but not in the private sphere.
The financial sector is the area of the economy that has gone furthest in building new forms of corporate governance based on international agreements and local legislative changes. However, this dynamic has not been limited to the financial sector, but has also begun to reach other areas of business, albeit still rather timidly. Nevertheless, in the business world, especially among large companies, there is a growing awareness that, even in the absence of legal mandates, it is necessary to build corporate governance frameworks that help companies themselves respond to the complexities of today’s world. Hence, even in the absence of specific regulations, many companies are designing corporate governance structures that incorporate some of the elements that have been enshrined in law and regulations for the financial sector in particular.
However, as progress is made in this area of corporate governance, new demands have recently emerged that require companies to respond. They cannot remain indifferent to growing social sensitivity on issues such as gender equality, inclusion, and non-discrimination. In other words, so-called “corporate social responsibility” is no longer sufficient as the basis for the relationship between business and society; a broader and fresher look at this issue is required.
In this context of demands related to human rights, it is not enough to modify corporate governance structures as has been done through regulatory processes emanating from the state and voluntary self-regulation by companies; other dimensions of business activity must also be changed. Codes of conduct and personnel policies are needed that reflect the guiding principles of equality, inclusion, non-discrimination, and respect for the dignity and other rights of individuals. It is also necessary that these new notions do not remain mere formalities on paper, but that the work culture be changed through training and dialogue around these major social concerns.
There are many examples of companies that have found themselves in difficult situations with their consumers and users due to practices and policies that are insensitive to these new people-centered demands and concerns. If companies do not prepare for this new scenario through sincere processes of transforming their policies and values, they will become very vulnerable to potential conflicts that will affect not only their reputation, but also their standing in the community.