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Ethic And Development

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Ethic And Development

  1. 1. ETHICS AND DEVELOPMENT E ntrenching the principles of good governance in public and private sectors for sustainable development Pavan Kumar Vijay Past President The Institute of Company Secretaries of India 02/22/12
  2. 2. “ Corporate governance is… … the application of best management practices , compliance of law in letter and spirit and adherence to ethical standards for effective management and distribution of wealth and discharge of social responsibility for sustainable development of all stakeholders” Institute of Company Secretaries of India
  3. 3. <ul><li>Corporate Governance rests with the Vision and Perception of the Leadership </li></ul>
  4. 4. <ul><li>and </li></ul><ul><li>A Leader need to adopt a </li></ul><ul><li>Vision for Corporate Governance </li></ul>
  5. 5. Corporate Governance Framework Output – Input = Wealth Created ? Sustainability Happiness and Prosperity of all Stakeholders Reinvestment Distribu- tion <ul><li>Research and </li></ul><ul><li>Development </li></ul><ul><li>HR Development </li></ul><ul><li>Infrastructure </li></ul><ul><li>Risk Management </li></ul><ul><li>SUPPLIERS </li></ul><ul><li>Adequate Returns </li></ul><ul><li>HUMAN ASSETS </li></ul><ul><li>Adequate </li></ul><ul><li>Remuneration </li></ul><ul><li>CUSTOMERS </li></ul><ul><li>Affordable Prices </li></ul><ul><li>PUBLIC </li></ul><ul><li>Payment of Taxes and Partnership in National Development Projects </li></ul>Wealth Creation Wealth Management Wealth Sharing Enhanced Capabilities Best Management Practices are Vital Here Law and Ethics are Vital Here
  6. 7. The stakeholder value chain SUPPLIERS CUSTOMERS HUMAN RESOURCE Supply Funds, Materials and Services Value Addition and Management of Resources Give Opportunity to Co. to Satisfy their Needs Adequate Returns for Funds, Material and Services Supplied Adequate Salary and Security for leading a Happy Life Best Quality Products and Customer Care at Minimum Prices ROLE OF STAKEHOLDERS EXPECTATIONS OF STAKEHOLDERS Potential Suppliers, Human Resources and Customers Biological, Economic and Cultural Environment PUBLIC PUBLIC EXPECTS PARTNERHIP FOR SUSTAINABLE DEVELOPMENT
  7. 8. The OECD Principles of Good Governance
  8. 9. <ul><li>The age old mantra of us Indians is </li></ul><ul><li>that </li></ul><ul><li>Commitment to well-being and progress of all stakeholders </li></ul>
  9. 10. Satyam Vada Dharmam Chara - Taittariya Upanishad Mantra for Good Governance Cont… Speak the Truth and Practice Righteously
  10. 11. Mantra for Good Governance - Karna Parva of the Mahabharata. Verse-58 in Chapter 69
  11. 12. Mahatma Gandhi’s Philosophy- The Father of Indian Nation “ The Customer is King” - Mahatma Gandhi
  12. 13. <ul><li>This is the soul behind modern </li></ul><ul><li>Marketing Management </li></ul>
  13. 14. <ul><li>Worshipping 33 Crore Godheads </li></ul><ul><li>signifying various species, plants, </li></ul><ul><li>cosmic elements, … </li></ul>
  14. 15. <ul><li>Care for Panchtatvas (The Basic Elements) </li></ul><ul><li>Earth, (Prithvi) </li></ul><ul><li>Water, ( Jal), </li></ul><ul><li>Sky , ( Akaash) </li></ul><ul><li>Wind, ( Vaayu) & </li></ul><ul><li>Fire (Agni) </li></ul><ul><li> that make a human being </li></ul>
  15. 16. <ul><li>This is our approach to </li></ul><ul><li>Environment Protection </li></ul>
  16. 17. The essential principle of Mahatma Gandhi's Governance philosophy “ Trusteeship”
  17. 18. Capacity, Knowledge and Resources Maximization of stakeholders’ value and well-being and progress of humankind TOWARDS THROUGH Transparency, accountability and truthful disclosure of state of affairs Ethics Truth Corporate are also expected to use their
  18. 19. <ul><li>This is our own age old mantra of </li></ul><ul><li>Good Governance </li></ul>
  19. 20. <ul><li>Companies that have followed these </li></ul><ul><li>principles of </li></ul><ul><li>Corporate Governance </li></ul><ul><li>have </li></ul>
  20. 21. <ul><li>Consistently earned high returns, </li></ul><ul><li>increased their net worth, </li></ul><ul><li>enhanced their shareholders wealth </li></ul>
  21. 22. <ul><li>Invested significantly in proactive research and development </li></ul>
  22. 23. <ul><li>Developed people into ‘ achievers ’ than just ‘ performers’ </li></ul>
  23. 24. <ul><li>Dealt ethically with customers, government and business partners </li></ul>
  24. 25. <ul><li>Maintained and updated their professional management culture, system and processes </li></ul>
  25. 26. <ul><li>..and accomplished </li></ul>
  26. 27. WINNING EMPLOYEES XCELLENCE GROWING INVESTORS DELIGHTED CUSTOMERS TRUSTED SUPPLIERS SATISFIED GOVERNMENT AND REGULATORS HAPPY SOCIETY
  27. 28. <ul><li>Advantages of applying </li></ul><ul><li>Best Corporate Governance Practices </li></ul>
  28. 29. <ul><li>Widespread Goodwill and Brand Reputation </li></ul>Access to Global Markets Better Access to Human Capital Ready Market for New Products Widening Customer Base
  29. 30. <ul><li>Enhanced Trust and Confidence of all Stakeholders </li></ul>EMPLOYEES INVESTORS CUSTOMERS SUPPLIERS GOVERNMENT AND REGULATORS SOCIETY
  30. 31. <ul><li>Leading to… </li></ul>
  31. 32. Environment Civil Society Business Society SUSTAINABLE DEVELOPMENT OF NATION
  32. 33. Thus benefits for the nation <ul><li>Happier Nation </li></ul><ul><li>World wide recognisation </li></ul><ul><li>Overall Growth </li></ul><ul><li>Enhanced confidence amongst foreign investors through Primary/Secondary Market </li></ul><ul><li>Overall stakeholders benefit </li></ul><ul><li>Enhanced repute and significance of Citizens at the global platform. </li></ul>
  33. 34. <ul><li>The Indian Growth Story & </li></ul><ul><li>Governance Model </li></ul>
  34. 35. The Indian scenario – The Initial Hurdles <ul><li>High population </li></ul><ul><li>High poverty </li></ul><ul><li>Disparity of income </li></ul><ul><li>Lack of education </li></ul><ul><li>Lack of employment opportunities </li></ul><ul><li>Low infrastructural development </li></ul>
  35. 36. Slow Industrial Growth due to <ul><li>Lack of liberalization </li></ul><ul><li>Underdevelopment of Industrial Structure </li></ul><ul><li>Insufficient entrepreneurial initiatives </li></ul><ul><li>Poor Governance </li></ul><ul><li>Corruption </li></ul>
  36. 37. India Today <ul><li>2 nd most populous nation 1.2 billion – Largest Pool of young & Skilled Manpower </li></ul><ul><li>The 2 nd fastest growing economy of the world after China. </li></ul><ul><li>GDP USD 1 trillion and growth in last 4 years is 9%, 9.6%, 9.4% and 6.7% </li></ul><ul><li>GDP - Agriculture : 20%, Industry 23%, Services: 57% </li></ul><ul><li>Never defaulted on international commitments </li></ul><ul><li>Preferred destination of Foreign Direct Investment </li></ul><ul><li>Believed to be one of the top five Economies by 2050 </li></ul>
  37. 38. The Story of Change over <ul><li>The initiatives by the government </li></ul><ul><li>Liberalization of Industrial Development </li></ul><ul><li>Improved Infrastructural development </li></ul><ul><li>Development through Public Private Partnership (PPP) Model </li></ul><ul><li>Transparency in Disclosures through RTI act </li></ul><ul><li>Strengthened Governance Model </li></ul>
  38. 39. The desired result <ul><li>Optimum utilization to high population </li></ul><ul><li>Increased per capita Income </li></ul><ul><li>More Infrastructural Development </li></ul><ul><li>More FDI due to Increased accountability </li></ul><ul><li>Investors trust within and outside nation </li></ul>
  39. 40. Corruption The real enemy of good governance -The root cause <ul><li>Restriction in grant of permission </li></ul><ul><li>Non Transparency </li></ul><ul><li>Non Accountability </li></ul><ul><li>No fear of wrong doing </li></ul>
  40. 41. The way out to deal with Corruption <ul><ul><li>The Simplified legal System </li></ul></ul><ul><ul><li>Fuller disclosure & dissemination of Information </li></ul></ul><ul><ul><li>Strict actions against wrong doers </li></ul></ul><ul><ul><li>Stronger Judiciary </li></ul></ul>
  41. 42. The Anti Corruption Implementation Model <ul><ul><li>The e-governance Initiative (MCA21, UID, other e-Governance Models) </li></ul></ul><ul><ul><li>Better Transparency & Accountability through the Right to Information (RTI) Act </li></ul></ul>
  42. 43. <ul><li>Initiatives towards Corporate Governance by The Institute of Company Secretaries of India </li></ul>
  43. 44. Initiatives of ICSI towards good governance <ul><li>The Corporate Governance Award function </li></ul><ul><li>The Post Membership Qualification on Corporate Governance </li></ul><ul><li>The Corporate Governance Module for best practices </li></ul><ul><li>The laying of secretarial standards for best practices </li></ul>
  44. 45. The Secretarial Standards of ICSI one of its own type <ul><li>Secretarial Standard on Meetings of the Board of Directors </li></ul><ul><li>Secretarial Standard on General Meetings </li></ul><ul><li>Secretarial Standard on Dividend </li></ul><ul><li>Secretarial Standard on Registers and Records </li></ul><ul><li>Secretarial Standard on Minutes </li></ul><ul><li>Secretarial Standard on Transmission of Shares and Debentures </li></ul><ul><li>(All ten SS) </li></ul>
  45. 46. Recommendation for ICPSK <ul><li>Advocacy of Good Governance Practices </li></ul><ul><li>Recognition to Good Governed Companies </li></ul><ul><li>Specifying structures and role models </li></ul><ul><li>Inculcate the better Governance Practices in Members & Students </li></ul><ul><li>The Secretarial Standards </li></ul>
  46. 47. Outstanding Performance, Higher Profits, Expanded Market Reach and the like FAILS to protect a company which has put good governance & ethics at the back burner…. History is Witness D I S A S T E R
  47. 48. Secret behind building foundations ..…Only the culture of strict adherence to good compliance can keep a company ahead on sustainable basis , bring in larger profits!!! Tcs & others S U C E S S
  48. 49. <ul><li>CORPORATES SHOULD ACT LIKE HONEYBEE WHICH SUCK THE NECTAR OF THE FLOWERS </li></ul><ul><li>WITHOUT EFFECTING ITS FRAGRANCE AND PRODUCE HONEY FOR THE WELL –BEING OF SOCIETY . </li></ul>
  49. 50. Thank you

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