Corporate Sustainability Governance (English Edition) [Kindle version]
This booklet discusses a key question about the objective of corporate governance in the 21st century: Between ROE (Return on Equity) or Corporate Sustainability, which should be selected as the supreme goal of corporate governance? It also addresses whether investors’ property or social entity should be selected as the definition of a corporation.
For the discussion, financial data from 460 manufacturing corporations in Japan from 1993-2012 are reviewed. The author analyzes the extent to which their R&D (Research & Development) and Quality Control competencies have declined since 2004, when a shift of corporation definition from the traditional social entity to investors’ property emerged in Japan. Also analyzed is the contribution share of US manufacturing industries to the US GDP for the period of 1997-2013, in order to estimate the extent the value added creativity of the US manufacturing corporations - having been assumed historically as investors’ property– has declined during the past 17 years.
As a conclusion from these analyses, in order to overcome the recent self-consuming cycle of manufacturing corporations in Japan and the USA, this booklet proposes the shift of the objective of corporate governance from maximizing ROE towards corporate sustainability. It is also a proposal for all industrial corporations in mature societies to recognize that the time has come that corporations liberate themselves from the yoke of monetarism philosophy and mission. Also proposed are necessary tools and organizational change models for realizing the shift: Balanced Scorecard and advanced corporate sustainability models of Unilever, GE, P&G (Procter & Gamble), and 12 manufacturing corporations in Japan.