Good corporate governance is the foundation of great companies that last. It builds trust among stakeholders and ensures that capital is used for the most productive purposes. Not surprisingly, good governance improves company performance and economic returns.
Placing corporate governance at the centre of a company’s corporate culture creates long-term value for customers, employees, and shareholders. In countries with the worst corporate governance records, public companies are worth 65% less than they would be if they were governed well. Well-governed companies in the same markets, however, can command good-governance premiums of up to 109% by exhibiting integrity, transparency, and accountability.
We have developed and applied the principles of corporate governance for more than three decades. Environmental, social, and governance considerations remain a core part of our investment decisions. We invest responsibly, focusing on sectors which we believe create social value, and on companies that create products and services which meet the needs of society.
Investors have an important role in ensuring company management remains accountable for their financial and ethical performance. We work together with the companies in which we invest to improve their governance practices and build value. As a farmer must spend time tending their fields for a better harvest, investors must take responsibility for the markets in which they invest. This is known as the Law of the Farm, based on the ancient principle that we reap what we sow.