Publication Date: 02-05-2023
Setting up a corporate governance structure should sit on the top of the mountain of priorities for today’s business leaders. From an oversight perspective, the Board of Directors holds the highest power, but the structure itself also lays at the base – and ultimately serves as a solid foundation for growing your enterprise and mitigating risks. The concept refers to the system, or the set of principles, practices, and norms that are applied to direct and control a company. The Board of Directors carries this responsibility, which highlights the importance of choosing the correct architecture. When it comes to the energy industry, we have learned from history that applying the best practices to corporate governance is of utmost importance; looking at future tendencies, we also know that ESG has taken a leading role in the way investors, customers, employees, and clients view an organization.
The “E” for “environmental” in ESG has been the priority in most industries, particularly in energy, because of its relation to climate. According to Deloitte, 62% of CXOs are worried about climate change most or all of the time. It is easier to detect impact, opportunities, and risk regarding emissions for oil and gas or electricity generation assets and their operational activity. The ”S” stands for “social,” which is also covered by most companies in their day-to-day programs with communities and other stakeholder groups, which usually requires alignment and disclosure guidance. However, the ”G” for “governance” frequently is disregarded; yet, it is critical for long-term business success.
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