CEGC - Environmental, Social and Governance Practices in Latin America (2021)

No. 21001

WORKING

PAPER

CENTRO DE ESTUDIOS EN GOBIERNO CORPORATIVO (CEGC)

ENVIRONMENTAL,

SOCIAL AND

GOVERNANCE PRACTICES

IN LATIN AMERICA:

INVESTOR AND FIRM

PERSPECTIVES FROM

THE COMPANIES CIRCLE

MEMBERS.

Alexander Guzmán, Magdalena Rego and María-Andrea Trujllo

FEBRUARY

2021 No. 21001

WORKING

PAPER

CENTRO DE ESTUDIOS EN GOBIERNO CORPORATIVO (CEGC)

FEBRUARY

2021WORKING

PAPER

CENTRO DE ESTUDIOS EN GOBIERNO CORPORATIVO (CEGC)

ENVIRONMENTAL, SOCIAL AND

GOVERNANCE PRACTICES IN LATIN

AMERICA: INVESTOR AND FIRM

PERSPECTIVES FROM THE COMPANIES

CIRCLE MEMBERS.

Alexander Guzmán, Magdalena Rego and María-Andrea Trujllo No. 21001

FEBRUARY

2021ENVIRONMENTAL, SOCIAL AND GOVERNANCE PRACTICES IN LATIN AMERICA:

INVESTOR AND FIRM PERSPECTIVES FROM THE COMPANIES CIRCLE MEMBERS.

2 About Us International Finance Corporation (IFC) IFC—a sister organization of the World Bank and member of the World Bank Group—is the largest global development institution focused on the private sector in developing countries. The World Bank Group has set two goals for the world to achieve by 2030: end extreme poverty and promote shared prosperity in every country. We work with the private sector in developing countries to create markets that open up opportunities for all. We leverage our products and services—as well as products and services of other institutions across the World Bank Group—to create markets that address the biggest development challenges of our time. We apply our financial resources, technical expertise, global experience, and innovative thinking to help our clients and

our products and services—as well as products and services of other institutions across the World Bank Group—to create markets that address the biggest development challenges of our time. We apply our financial resources, technical expertise, global experience, and innovative thinking to help our clients and partners overcome financial, operational, and other challenges. IFC is also a leading mobilizer of third-party resources for projects. Our willingness to engage in difficult environments and our leadership in crowding-in private finance enable us to extend our footprint and have a development impact well beyond our direct resources. Our projects and programs are evaluated by the Independent Evaluation Group. Accountability is ensured by the independent Office of the Compliance Advisor Ombudsman.No. 21001

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2021 3 SECO is the Swiss federal government’s centre of excellence for all core issues relating to economic and labour market policy. It is our aim to contribute to sustained economic growth, high employment and fair working conditions, by creating the necessary regulatory, economic and foreign policy framework. On the domestic front, SECO acts as an interface between business, social partners and government. It supports the regionally and structurally balanced development of the economy and ensures the protection of employees. Through its labour market policy, it contributes to the prevention and tackling of unemSwiss State Secretariat for Economic Affairs (SECO) ployment and consequently to upholding social peace. SECO is also involved in efforts to reduce poverty in the form of economic development cooperation. It is SECO aim to contribute to sustained economic growth, high employment and fair working conditions, by creating the necessary regulatory, economic and foreign policy framework.ENVIRONMENTAL, SOCIAL AND GOVERNANCE PRACTICES IN LATIN AMERICA:

INVESTOR AND FIRM PERSPECTIVES FROM THE COMPANIES CIRCLE MEMBERS.

4 CESA Business School is a specialized private higher education institution

the necessary regulatory, economic and foreign policy framework.ENVIRONMENTAL, SOCIAL AND GOVERNANCE PRACTICES IN LATIN AMERICA:

INVESTOR AND FIRM PERSPECTIVES FROM THE COMPANIES CIRCLE MEMBERS.

4 CESA Business School is a specialized private higher education institution in Colombia, which offers Bachelor’s degrees in Business Administration, Master’s degrees in Finance, Marketing, Entrepreneurship and Innovation, MBA programs, postgraduate diplomas and executive programs for professionals and top-level management. CESA was established in 1975 by a group of prominent business leaders backed by Colombia’s National Entrepreneurs’ Association (ANDI). Its primary objective is to offer a well-rounded education and formation in business administration with a strong international focus and highly practical content, linking theory with business practice. In its more than 40 years of existence, CESA has contributed to the formation of professionals who have gone on to become prominent entrepreneurs and occupy key management positions in different sectors. This has allowed the institution to stand out as one of the country’s most prestigious business schools and ensured it has very strong ties to Colombia’s corporate sector. Based on the information gathered by the observatory group from the Ministry of Education in Colombia, CESA’s alumni top the list of the highest paid professionals in the Colombian job market, surpassing the salaries of graduates in the same field from the country’s other universities. Colegio de Estudios Superiores de Administración

(CESA)No. 21001

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2021 5 CESA’s Corporate Governance Studies Center (CEGC, according to its Spanish acronym) develops rigorous and applied research to improve organizational practices at both country and regional level. CEGC also develops and runs CESA’s corporate governance training programs, and provides advisory services to different types of organizations,

Spanish acronym) develops rigorous and applied research to improve organizational practices at both country and regional level. CEGC also develops and runs CESA’s corporate governance training programs, and provides advisory services to different types of organizations, public or private, for profit or nonprofit. It represents a collaborative environment for business leaders, practitioners, researchers, regulators and policy makers working on corporate governance in Colombia and across the region. CEGC has been actively involved in collaboration agreements, projects and activities with the World Bank Group - IFC, OECD, SECO, GRI (Global Reporting Initiative), IGCLA (Network of Institutions of Corporate Governance Latin America), the Colombian Presidency’s Administrative Department, the Colombian Stock Exchange, the Financial Superintendence of Colombia, the Superintendence of Closely-held Companies, the Colombian Private Competitiveness Council, the Colombian Corporate Governance Institute, the Colombian Taskforce of Responsible Investment, Aequales, ANDI, Deloitte, and Page Group, among others. Centro de Estudios en Gobierno Corporativo

(CEGC)ENVIRONMENTAL, SOCIAL AND GOVERNANCE PRACTICES IN LATIN AMERICA:

INVESTOR AND FIRM PERSPECTIVES FROM THE COMPANIES CIRCLE MEMBERS.

6 The Latin American Companies Circle is a unique initiative launched in May 2005 in Sao Paulo, Brazil at the recommendation of the Latin American Corporate Governance Roundtable, a network of public officials, investors, non-governmental institutes, stock exchanges and associations as well as others interested in corporate governance improvements throughout the region. The Companies Circle brings together a group of leading Latin American companies who have adopted good corporate governance practices. Companies Circle members provide private sector input into the critical work of corporate governance development in the region and, importantly, share their experiences with each

The Companies Circle brings together a group of leading Latin American companies who have adopted good corporate governance practices. Companies Circle members provide private sector input into the critical work of corporate governance development in the region and, importantly, share their experiences with each other and other companies in the region and beyond. Through the Companies Circle, members showcase how leading Latin The Latin American Companies Circle American companies can implement good corporate governance and the benefits their companies experienced from undertaking these improvements. Most members of the Companies Circle are firms listed on local and international exchanges with significant presence in their capital markets. Their experience in boards of directors, shareholder and stakeholder relations, the control environment, transparency and sustainability / ESG also provide important lessons for closely-held private corporations, including family firms. As at June 2020, the Latin American Companies Circle members are: Grupo Algar, Embraer, Natura &Co and Ultrapar (Brazil), Grupo Argos and ISA (Colombia), Florida Ice & Farm Co. (Costa Rica), Buenaventura and Ferreycorp (Peru). The Companies Circle is sponsored by

IFC.No. 21001

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2021 7 I am pleased to share with you this new publication from the Latin American Companies Circle, in collaboration with CESA Business School, in a very poignant moment in our history, in the midst of a pandemic that is reshaping the way of doing business. The Companies Circle was launched in May 2005 and different members have come in and out during its 15 years of existence, for various reasons, mainly due to changes in control or delisting. We are grateful to all those companies that have been part of Companies Circle initiatives, because they have contributed to its success today. Companies Circle firms have grown from being local companies to regional and global players. Among

to changes in control or delisting. We are grateful to all those companies that have been part of Companies Circle initiatives, because they have contributed to its success today. Companies Circle firms have grown from being local companies to regional and global players. Among these leading regional companies, we have the commitment of chairpersons A Word from the Companies Circle Executive Director and board members as well as the generous work and contributions of their C-level executives. We have also been able to engage the chairpersons of Latin America’s main stock exchanges, as well as the region’s main institutional investors, in this endeavor, ensuring that the conversations relating to the Companies Circle’s discussions and work towards environmental, social and governance (ESG) practices are high-level, as well as being both practical and inspiring. It is worth emphasizing that Companies Circle members are not only committed to each other, but to their markets. Hence, this publication and its dissemination are part of this initiative’s commitment to the development of regional markets. The first goal of the Companies Circle was to focus on good corporateENVIRONMENTAL, SOCIAL AND GOVERNANCE PRACTICES IN LATIN AMERICA: INVESTOR AND FIRM PERSPECTIVES FROM THE COMPANIES CIRCLE MEMBERS. 8 governance practices and learn from leading institutions, such as IFC, as well as each other. We have since come a long way, moving onto ESG and furthermore, attempting to address the constant question of how to govern environmental and social issues and make sure they are embedded in companies’ governance systems. Today, the Companies Circle works to be recognized as a knowledgeable, experienced and active think-tank on ESG practices in Latin America. This publication is one of the results of this endeavor. We started the discussion about ESG demands, trends and practices in 2017 and engaged in this research to discover the actual requirements from investors’ perspectives. We

on ESG practices in Latin America. This publication is one of the results of this endeavor. We started the discussion about ESG demands, trends and practices in 2017 and engaged in this research to discover the actual requirements from investors’ perspectives. We uncovered different realities between local and international investors, as well as other interesting insights, using a survey methodology. We later asked ourselves how international development investors, such as IFC and SECO, play a role in the region and the nature of their vision on ESG practices and requirements. We were able to understand the evolution, and increasing importance, of ESG practices related to investment by conducting in-depth interviews with these organizations. We also wanted to understand how Companies Circle members respond to ESG demands. Initially we assumed that the motivation behind the implementation of good practices comes from investors’ demands. However, we discovered that Companies Circle members have a robust corporate development and have gone the extra mile in practices, policies and disclosure. ESG practices are embedded in the core of these companies and shape their way of doing business. This has led them to gain new markets, develop new products, and find new ways to finance operations, such as the issuance of green bonds. These practices have also made the process of the acquisition of companies in new markets easier. Commitment to ESG shapes the culture of Companies Circle members, something that has been very attractive for the employees of the companies acquired. Finally, while working on this publication, we encountered the COVID-19No. 21001

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2021 9 pandemic. We then included an analysis as to how companies are responding to such distressing times. You will find their responses not only inspiring but proof of what it means to ‘walk the talk’ in the most difficult moments. None of this would have been possible

2021 9 pandemic. We then included an analysis as to how companies are responding to such distressing times. You will find their responses not only inspiring but proof of what it means to ‘walk the talk’ in the most difficult moments. None of this would have been possible without the generous and continuous support of the former IFC LAC Corporate Governance Manager, Oliver Orton, who has been an inspiration to the program, its fiercest sponsor and a wise guiding voice, thanks to both his experience in the market and his knowledge of corporate governance. We especially thank Oliver for his consistent willingness to go the extra mile to make things happen. I hope you enjoy reading this as much as we have enjoyed the process of producing this publication. Magdalena Rego, Companies Circle Executive DirectorENVIRONMENTAL, SOCIAL AND GOVERNANCE PRACTICES IN LATIN AMERICA:

INVESTOR AND FIRM PERSPECTIVES FROM THE COMPANIES CIRCLE MEMBERS.

10 The preparation and publication of this paper entitled ENVIRONMENTAL,

SOCIAL AND GOVERNANCE

PRACTICES IN LATIN AMERICA: INVESTOR AND FIRM PERSPECTIVES FROM THE COMPANIES CIRCLE MEMBERS. , has involved the participation and efforts of a large number of dedicated people and has been a productive, collaborative effort.

On behalf of International Finance Corporation we would like to express our sincere gratitude to Magdalena Rego, the Executive Director of the Companies Circle, for all her efforts in this publication. Ms. Rego was instrumental in conceiving and envisioning the new high-profile participation from company chairpersons, as well as the main stock exchanges, in the region, which took the conversation from the Companies Circle to a higher and more regional level. The fact we have been able to address key issues regarding ESG practices in this publication is thanks to Ms. Rego’s extraordinary effort, in conjunction with

exchanges, in the region, which took the conversation from the Companies Circle to a higher and more regional level. The fact we have been able to address key issues regarding ESG practices in this publication is thanks to Ms. Rego’s extraordinary effort, in conjunction with the invaluable and generous work of professors Maria Andrea Trujillo, Ph.D and Alexander Guzman, Ph.D from CESA Business School, who patiently solicited, collected, coordinated and analyzed the input from every institution involved. CESA Business School, through professors Trujillo and Guzman, and their Dean Henry Bradford, has been an outstanding partner of both the Companies Circle initiative and IFC in general. Without their immense generosity we wouldn’t have been able to pull this publication together. AcknowledgmentsNo. 21001

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2021 11 A fundamental participation came from Companies Circle members too, who are the core and soul of both the program and this publication. We wish all of them a sincere thank you for their hard work, good will and commitment to the Companies Circle, as well as their good practices on ESG and their willingness to share them with the wider market community. It is because of their incredible work and commitment that the Companies Circle has thrived these past 15 years, allowing us to accomplish so many goals including this publication, our latest endeavor. To all of you, thank you for having supplied qualitative and quantitative data. Thank you for having dedicated your valuable time, especially in the midst of the pandemic crisis, to explore the reasoning and motivations in implementing better corporate governance, environmental and social practices. Our deepest appreciation goes to the dedicated individuals of Companies Circle member firms, who made this work possible and who secured the contributions of key participants:

• Alain Bühlmann, Head of Economic

Cooperation and Development, SECO Peru

environmental and social practices. Our deepest appreciation goes to the dedicated individuals of Companies Circle member firms, who made this work possible and who secured the contributions of key participants:

• Alain Bühlmann, Head of Economic

Cooperation and Development, SECO Peru

• Alejandro Hermoza, Vice President of Sustainability, Compañía de

Minas – Buenaventura

• Adriana Bravo, Corporate Legal Affairs Manager, Grupo Argos • Camilo Zea Gómez, Independent Board Member, ISAENVIRONMENTAL, SOCIAL AND GOVERNANCE PRACTICES IN LATIN AMERICA:

INVESTOR AND FIRM PERSPECTIVES FROM THE COMPANIES CIRCLE MEMBERS.

12

• Carlos Claux, Director of Social

Responsibility and Development, Compañía de Minas – Buenaventura • Christian Brändli, Head of Economic Cooperation and Development, SECO Colombia

• Cristina Arias Echavarría, Sustainability Senior Director, Grupo Argos
• Cristina Heluy, Sustainability Manager, Algar Telecom
• Eduardo Pavanelli Galvão, Investor

Relations manager, Grupo Ultra

• Elizabeth Tamayo, Investor Relations, Ferreycorp
• Ernesto Ladrón de Guevara, Compliance Manager, Compañía de Minas – Buenaventura • Fabrizio Alfonso Papaianni Martinez, Coporate Auditor and Compliance Director, FIFCO
• Guillermo Gonzalez Rodriguez,

Vice President of Institutional Relations, ISA

• Gulnara La Rosa, Legal Manager,

Compañía de Minas - Buenaventura

• Investors Relations Department, Natura &Co • Javier Posas, Senior Investment Officer and Hub Leader Andean Region,

International Finance Corporation, Worl Bank Group • Leandro García, Vice President of Finance and Administration, Compañía de Minas – BuenaventuraNo. 21001

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2021

• Javier Posas, Senior Investment Officer and Hub Leader Andean Region,

International Finance Corporation, Worl Bank Group • Leandro García, Vice President of Finance and Administration, Compañía de Minas – BuenaventuraNo. 21001

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2021 13

• Luiz Alexandre Garcia, CEO, Algar

Telecom

• Luiz Alberto Garcia, Chairman,

Algar Telecom

• Marcello de Simone, Investor Relations Director, Grupo Ultra
• María Pía Seminario, Investor Relations Assistant, Compañía de Minas

– Buenaventura

• María Uriza, Former Vice President

of Corporate Affairs, Grupo Argos

• Mariela Garcia de Fabbri, CEO,

Ferreycorp

• Massiel Canales, Compliance Coordinator, Compañía de Minas – Buenaventura
• Moacir Salzstein , Corporate Governance Officer, Natura &Co
• Natalia Gomez -Senior Legal Counsel, ISA
• Oliver Orton, Regional Advisory Manager Environmental, Social and Governance Latin America and the

Caribbean, International Finance Corporation, World Bank Group • Oscar Guillermo Espinosa Bedoya, Chairman, Ferreycorp (With the finishing of this publication we have learned that Mr. Espinosa is getting retired, so we would like to thank his special generosity through all his Chairmanship at Ferreycorp, supporting the Companies Circle initiative, always going the extra mile to ensure the success of the Companies Circle and inspiring all who have had the pleasure to cross his path).ENVIRONMENTAL, SOCIAL AND GOVERNANCE PRACTICES IN LATIN AMERICA:

INVESTOR AND FIRM PERSPECTIVES FROM THE COMPANIES CIRCLE MEMBERS. 14 • Patricia Gastelumendi Lukis, Corporate Financial Director: Investor Relations and Sustainability, Ferreycorp

• Percy Montoya, Environmental Management Manager, Compañía de Minas – Buenaventura • Rafael Olivella Vice President of Human Talent and Corporate Affairs,

Grupo Argos

• Ramón Mendiola Sánchez, CEO,

FIFCO

• Renato Paschoareli, Executive Director: Strategy & Regulatory, Algar

Telecom

• Roberto de Oliveira Marques, Chairman, Natura &Co
• Roberto Truque Harrington, Independent Board Member, FIFCO
• Rodrigo Echecopar, Head of Investor Relations, Compañía de Minas

– Buenaventura

• Rodrigo Vargas, Lawyer, Compañía de Minas – Buenaventura
• Roque Benavides, Chairman, Compañía de Minas – Buenaventura
• Rosario Cordoba, Chairwoman,

Grupo Argos

• Santiago Montenegro Trujillo,

Chairman, ISA

• Sonia Margarita Abuchar Alemán,

Legal Vicepresident, ISA

• Teruo Murakoshi , Corporate Governance Director, Algar Telecom
• Tulio Abi-Saber, Chief Financial

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2021 15

• Victor Esteban Gobitz Colchado,

CEO, • Wilhelm Steinvorth Herrera, Chairman, FIFCO The determination of the sponsoring organization and its leaders—Davit Karapetyan, Corporate Governance Lead for Latin America, and Oliver Orton, Corporate Governance Program Manager for Latin America, helped ensure that this publication became a reality.ENVIRONMENTAL, SOCIAL AND GOVERNANCE PRACTICES IN LATIN AMERICA:

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Latin America, and Oliver Orton, Corporate Governance Program Manager for Latin America, helped ensure that this publication became a reality.ENVIRONMENTAL, SOCIAL AND GOVERNANCE PRACTICES IN LATIN AMERICA:

INVESTOR AND FIRM PERSPECTIVES FROM THE COMPANIES CIRCLE MEMBERS.

16 Environmental, social and governance practices in Latin America: investor and firm perspectives from the companies circle members 2 2 Note: A first draft of this paper wa.s prepared as background for discussion at the 2018 Latin American Companies Circle annual meeting in Bogotá, Colombia. Magdalena Rego, IFC’s Corporate Governance Officer for Latin America and the Caribbean, served as Coordinator. This final version of the paper includes not only investors’ perceptions about ESG practices, but also considers the motivations and initiatives of Companies Circle’s members to support and develop business models within a framework of sustainability. Special thanks to the companies and respondents that supported the survey, and to Margarita Ortiz, Nicolás Prieto, Jennifer Romero and Alejandro Escallón at the CESA Corporate Governance Studies Center (CEGC). Centro de Estudios en Gobierno Corporativo (CEGC) Colegio de Estudios Superiores de Administración – CESA Cite this publication: Guzmán, A.; Rego, M., & Trujillo, M. A. (2020). Environmental, social and governance practices in Latin America: investor and firm perspectives from the companies circle members. Working Paper No. 20002. Centro de Estudios en Gobierno Corporativo (CEGC). CESA: BogotáNo. 21001

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2021 17 Alexander Guzmán, Magdalena Rego and María-Andrea Trujllo 2 2 Alexander Guzmán, Ph. D. Alexander Guzmán is chair and professor of the Finance Department at the CESA School of Business in Bogotá, Colombia. Prof. Guzmán is founder member of the Colombian Corporate Governance Institute (ICGC, to use its

2 Alexander Guzmán, Ph. D. Alexander Guzmán is chair and professor of the Finance Department at the CESA School of Business in Bogotá, Colombia. Prof. Guzmán is founder member of the Colombian Corporate Governance Institute (ICGC, to use its Spanish acronym), founder and co-director of the Corporate Governance Studies Center at CESA (CEGC, to use its Spanish acronym), and member of the Latin American Academic Network for Corporate Governance Research under the leadership and coordination of the World Bank Group. Prof. Guzmán holds a Bachelor’s degree in Business from the Externado University, Bogota, Colombia, a Ph.D. in Business Administration from the University of the Andes School of Management, Bogota, Colombia, and has a Master of Business Administration with a major in Finance from the same school. Prof. Guzmán has been working on their research agenda in Colombia with support from the World Bank through IFC, SECO (Switzerland), the Colombian Ministry of Education, the Colombian Securities Exchange, among others. Magdalena Rego, M.B.A. Mrs. Rego Rodriguez is a Environmental, Social & Corporate Governance Officer for Latin America and the Caribbean (LAC) at IFC. She joined IFC in 2010 and since then has been developing regional work with private and public companies across sectors and across the region working directly with the leadership of the pyramidal structure of firms, involving clevels, directors and shareholders, along with key market players such as the Stock Exchanges. She has also represented LAC in the various Global Practice Groups and co-delivered IFC’s unique workshop for independent board members of listed companies. She has been the Executive Director of the Companies Circle and IGCLA Network since 2014 and member of their Steering Committees since 2010. Before joining IFC Mrs. Rego Rodriguez gained broad experience in the private sector working for the German global company Siemens also in a regional position. Mrs. Rego Rodriguez holds an MBA from PUC and holds executive programs from Wharton Business School, Columbia Business School and IE Business School. María-Andrea Trujillo, Ph. D .

Rodriguez gained broad experience in the private sector working for the German global company Siemens also in a regional position. Mrs. Rego Rodriguez holds an MBA from PUC and holds executive programs from Wharton Business School, Columbia Business School and IE Business School. María-Andrea Trujillo, Ph. D . María-Andrea Trujillo is professor of Finance at CESA School of Business in Bogota, Colombia. Prof. Trujillo is founder member of the Colombian Corporate Governance Institute (ICGC, to use its Spanish acronym), is founder and codirector of the Corporate Governance Studies Center at CESA (CEGC, to use its Spanish acronym), and member of the Latin American Academic Network for Corporate Governance Research under the leadership and coordination of the the World Bank Group. Prof. Trujillo holds a Bachelor’s degree in Engineering from the University of Antioquia, Medellín, Colombia, a Ph.D. in Business Administration from the University of the Andes School of Management, Bogota, Colombia, and has a Master of Business Administration with a major in Finance from the same school. Prof. Trujillo has been working on her research agenda in Colombia with support from the World Bank through IFC, SECO (Switzerland), the Colombian Ministry of Education, the Colombian Securities Exchange, among others.ENVIRONMENTAL, SOCIAL AND GOVERNANCE PRACTICES IN LATIN AMERICA:

INVESTOR AND FIRM PERSPECTIVES FROM THE COMPANIES CIRCLE MEMBERS.

18 Milton Friedman, who received the 1976 Nobel Memorial Prize in Economic Sciences, wrote a famous opinion column in September 1970 entitled “The Social Responsibility of Business Is to Increase its Profits.” 3 He asserted that in a free enterprise, private-property system, a corporate executive is the employee of 3 Friedman, M. (1970, September 13). The social responsibility of business is to increase its profits. The New York Times Magazine. the business owners, and owes primary responsibility to them. From this point of view, the only social responsibility of business is to use its resources to engage

3 Friedman, M. (1970, September 13). The social responsibility of business is to increase its profits. The New York Times Magazine. the business owners, and owes primary responsibility to them. From this point of view, the only social responsibility of business is to use its resources to engage in activities designed to increase its profits and the owners’ wealth. There has been a lot of water under the bridge since this piece was published. The reasoning of Friedman is closely related to the discussion about the ends of corporate governance; that is, whose “When a company compromises its license to operate, there is a risk to our investment.” Survey respondent Introduction Ends of corporate governanceNo. 21001

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2021 19 interests should prevail in the decisionmaking process? While some models suggest that corporations should be run so as to maximize shareholders’ wealth, others argue that managers and directors should consider the interests of all stakeholders when making corporate decisions. 4 On one hand, and according to Bainbridge, 5 boards should be the leading internal corporate governance mechanism, pursuing shareholders’ wealth maximization and hence favoring shareholders’ interests. Under this viewpoint, a firm is organized and primarily geared toward the accumulation of wealth for shareholders, and directors should employ their efforts for that end. On the other hand, Tan 6 argues that the ends of governance must be expanded 4 Bainbridge, S. (2003). Director primacy: The means and ends of corporate governance, Northwestern University Law Review, 97(2):547-606. 5 Ibid. 6 Tan, Z. X. (2014). Stewardship in the interests of systemic stakeholders: Re-conceptualizing the means and ends of Anglo-American Corporate Governance in the Wake of the Global Financial Crisis. Journal of Business & Technology Law, 9(2):169212. past maximizing shareholder value to

systemic stakeholders: Re-conceptualizing the means and ends of Anglo-American Corporate G