IFAC Response to OECD Principles of Corporate Governance Draft for Public Comment
Good governance is fundamental to the effective functioning of the world’s capital markets and to organizations in creating sustainable value for their stakeholders. IFAC strongly believes that the ultimate objective of governance is to ensure the creation of sustainable organizational success and stakeholder value; these are the core elements of every organization that strives to be competitive and sustainable over the long term. Therefore, governance in an organization should be more than a compliance exercise designed with the sole purpose of satisfying regulatory requirements. Instead, good governance involves giving appropriate attention to both conformance and performance, and is the backbone of the entire organizational cycle of strategic planning, resource utilization, value creation, accountability, and assurance. Such a holistic approach ensures that governance is not “bolt on” but “built in”—integrated into all aspects of an organization.
Overall, IFAC welcomes the enhancements to the Organisation for Economic Co-operation and Development (OECD) Principles as they aim to ensure the continuing high quality, relevance, and usefulness of the Principles and take into account recent developments in the corporate sector and capital markets. However, while the draft Principles contain many proposed revisions, a number of these changes may be interpreted as being somewhat cosmetic—shying away from more fundamental modifications that would arguably enhance the quality, relevance, and usefulness of these Principles.
