Recently, The Confederation of Indian Industry (CII) has come up with 15 action points that can induce regulators to reduce compliance burdens and move towards a trust-based corporate governance.
What is corporate governance?
Definition – It refers to the system of rules, practices, and processes by which a company is directed and controlled.
Principles
Significance
What are the importance of trust in corporate governance?
Serves as a valuable asset – Building trust is a powerful asset for Indian industry, enabling companies to thrive in a competitive and globalised environment.
Builds collective goals – In the current geo-economics and geopolitical environment, the responsibility of building trust needs to be ideally shared between businesses, the government and various stakeholders.
This enables them to work in coordination and shared values.
Enable stakeholders engagement – On the governance side, this will enhance stakeholder engagement, build brand value, deepen customer loyalty, inspire employees and strengthen resilience during crises.
As stakeholders increasingly seek transparency and accountability, businesses that invest in trust can meet these expectations more effectively.
Leads to efficient policy making – Building trust can encourage regulators to adopt more supportive and streamlined policies, reducing compliance burdens and fostering a more business-friendly environment.
Promotes business – Companies known for integrity and good governance gain a competitive edge by attracting talent, investors and global partnerships—fuelling innovation and long-term success.
This involves taking actionable steps towards conservation and sustainability, digital transformation and responsible use of AI.
Equity, inclusivity and welfare, community engagement, education and upskilling, R&D and innovation, leadership commitment and financial integrity among others.
What are the 15 action points to improve corporate governance?
Establish a clearly defined purpose – A clear corporate purpose grounded in ethics, sustainability and long-term value creation should be established.
This must reflect both the organisation’s vision and stakeholder aspirations.
It should act as a reference point for strategic decisions, fostering alignment, accountability, and transparency across the enterprise.
Develop a robust risk and crisis management framework - Trust is tested during uncertainty.
Identify areas of vulnerability— Indian businesses must identify challenges of geopolitical, financial, operational, or technological and implement comprehensive risk mitigation plans.
Companies can reinforce stakeholders’ confidence by demonstrating preparedness and responsiveness during crises
Ensure regulatory compliance and financial integrity – Clear policies, internal controls, and early corrective mechanisms should be institutionalised.
Transparent financial reporting and timely statutory disclosures affirm the company’s integrity and commitment to ethical governance, which in turn fosters regulatory trust and investor confidence.
Embrace technology and innovation responsibly – Adopting AI, block chain and automation tools can enhance transparency, efficiency and data protection.
Companies must be explicit about technological integration, train employees accordingly, prevent misuse and ensure that innovation aligns with ethical standards.
Optimise supply chain management – A reliable and ethical supply chain enhances both operational efficiency and stakeholder trust.
Businesses should use technology for transparency, predictive analytics to foresee disruptions and ensure fair and timely payments to suppliers.
Strong relationships across the value chain promote resilience and shared accountability.
Assign clear roles for trust stewardship – Titular designation or appointing an existing senior executive to lead trust-building initiatives highlights the strategic priority.
This executive shall coordinate efforts across compliance, risk, stakeholder engagement, and data security, working collaboratively with other all executives.
Companies should foster two-way communication to resolve disagreements swiftly.
Institutionalising mechanisms for redressed minimises escalation and promotes a culture of openness and fairness.
Maintain transparent stakeholder communication – Consistent, honest communication reinforces credibility.
Creating feedback loops and listening actively to stakeholders’ concerns builds deeper engagement and reduces misinformation.
Deliver consistently on promises – Companies should meet or exceed the set expectations on Reliability.
By setting realistic goals and consistently delivering, businesses establish trustworthiness.
Uphold ethical practices and integrity – A clear code of conduct, regular ethics training and strict enforcement of behavioural standards are crucial for maintaining trust.
Ethical leadership must be demonstrated across all levels of the organisation.
Empower and engage with employees – Investing in professional development, recognise achievements and encourage collaboration.
Open communication, psychological security and inclusive policies enhance internal trust and employee loyalty.
Adopt a customer-oriented approach – Providing seamless service, quick issue resolution, and multiple communication channels.
It includes respecting data privacy which strengthens customer relationships and enhances brand credibility over time.
Commit to the environmental, social and governance responsibility – Businesses should prioritise environmental stewardship and community development demonstrate a broader commitment to the common good.
Investment in sustainability initiatives help earn public goodwill and societal trust.
Nurture collaborative and transparent partnerships – Regular communication, fair negotiations and mutual goal-setting help establish dependable, long-term partnerships built on trust and mutual respect.
Champion the trust agenda – Transparent decision-making, openness to accountability and ethical role modelling by senior executives shape organisational culture.
When trust is channelled from the top, it embeds throughout the company.
What lies ahead?
By working on these 15 points, Indian industry could meet the rising expectations of stakeholders and also be future-resilient.
A trust-centred approach and global competitiveness could lead to collective progress, policy vitality and enhanced trade and investment.
