The governance criterion focuses on aspects of corporate leadership and control, including:
- Tax Strategy: How does the company structure its tax policy, ensuring transparency and adherence to tax regulations within its global operations and supply chains?
- Executive Compensation: What framework governs the compensation of executive board members, considering equity and fairness across the organization and its supply chain?
- Donations and Lobbying: What contributions does the company make to charitable causes, and how does it conduct lobbying activities in alignment with ethical standards, including those within its supply chain?
- Corruption and Bribery: To what extent does the company combat corruption and bribery within its operations and supply chain?
- Diversity and Composition of the Board of Directors: How diverse is the company's board of directors, extending diversity considerations to its supply chain governance?
Example: Complying with Supply Chain Laws like the German Supply Chain Law (LkSG) or the Corporate Sustainability Due Diligence Directive (CSDDD) and ensuring governance practices that foster ethical behavior throughout the supply chain.
ESG principles promote transparency, ethical conduct, and effective corporate governance, not only within a company's operations but also throughout its intricate supply chains.