What Is Corporate Governance?

Corporate Governance is the system of rules, practices and processes by which a company is directed and controlled. Corporate governance essentially involves balancing the interests of the many stakeholders in a company - these include its shareholders, management, customers, suppliers, financiers, government and the community. Since corporate governance also provides the framework for attaining a company's objectives, it encompasses practically every sphere of management, from action plans and internal controls to performance measurement and corporate disclosure.

Corporate governance became a pressing issue following the 1992 introduction of the Sarbanes-Oxley Act in the U.S., which was ushered in to restore public confidence in companies and markets after accounting fraud bankrupted high-profile companies such as Enron and WorldCom.

(http://www.investopedia.com/terms/c/corporategovernance.asp#axzz2LjXgGBoR)

Most companies strive to have a high level of corporate governance. These days, it is not enough for a company to merely be profitable and it also needs to demonstrate good corporate citizenship through environmental awareness, ethical behavior and sound corporate governance practices.

For example in 2010 Nestle has won the award for Distinction Award for Corporate Governance, after successfully achieving an A+ rating equivalent to a score of more than 80%. The recognition is one of several Nestlé Malaysia has received for excellence in corporate social responsibility and corporate governance in the past 12 months.

One of Nestle Corporate Governance project is "Making Banana Chips". The ‘Empowering Women in Setiu Wetlands’ project was set up in one of the poorest districts in the state of Terengganu, to raise awareness among local women of their natural environment while supporting them to work together to increase their income.

Others example, in August the Company was honoured with an Asia Responsible Entrepreneurship Award (AREA) for a sustainable community development programme it created in partnership with the World Wildlife Fund (WWF) in Malaysia.