Corporate

Governance
for
Sustainable
Banking :
Conceptual
Framework

ASHRAF AL
MAMUN
Associate Professor,
BIBM

CORE SUSTAINABILITY CONCEPTS

Intergeneratio
nal
responsibility
Systems
thinking
Socioeconomic
justice

CORPORATE SUSTAINABILITY

ple
Peo it
Equ/
y

Pro
Eco fts /
nom
y

TRIPLE BOTTOM LINE

Planet Environm
/
ent

CORPORATE SUSTAINABILITY

ial
Soc

Gov
ern
anc
e

ESG

Environmenta
l

CORPORATE SUSTAINABILITY

ial
Soc

Eco
nom
ic

GREEN +CSR

Environment
al

SUSTAINABILITY JOURNEY
5. PURPOSE & PASSION
4. INTEGRATED STRATEGY

3. Beyond
Compliance
2. Compliance
1. PreCompliance

CEO MINDSET IS SHIFTING

Sustainability should be

fully embedded in

strategies and operations

acted upon by boards

embedded in supply chains

96%
72%

93%
69%

88%
50%

2007 2010
UN Global Compact and Accenture study, survey of 766 worldwide CEOs, June

STAKEHOLDERS INFLUENCE CEOs

58%

Consumers

50%

45%

Employees

39%

39%

Governments

32%

Commmunities

29%

28%

Regulators

26%

25%
2007

2010

UN Global Compact and Accenture study, survey of 766 worldwide CEOs, June
2010

CEOs SUSTAINABILITY DRIVERS

UN Global Compact and Accenture study, survey of 766 worldwide CEOs, June

IN SUMMARY
SUSTAINABILITY IS
SMART BUSINESS
The possibility
that
sustainable
enterprises
will flourish
forever.

Strategic Inputs

12
The External
Environment
Strategic Intent
Strategic Mission

The Strategic
Management
Process and CG

The Internal
Environment

Strategy Implementation

Strategic Outcomes

Strategic Actions

Strategy Formulation
Competitive Rivalry
Business-Level
and Competitive
Strategy
Dynamics
Acquisition and
Restructuring
Strategies

International
Strategy

Corporate
Governance

Cooperative
Strategy

Strategic
Competitiveness
Above-Average
Returns

Feedback

Strategic
Leadership

Organizational
Structure,
Controls and
Culture

Corporate Governance (CG)

Corporate

governance is

relationship among stakeholders that

is used to determine and control the
strategic direction and performance of
organizations

concerned

with identifying ways to

ensure that strategic decisions are made
effectively

used

in corporations to establish order

between the firms owners and its top-

Agency Relationship: Owners

and Managers
Shareholders
(Principals)
Owners

Decision makers

Managers
(Agents)

Risk bearing specialist (principal)

pays compensation to
A managerial decision-making
specialist (agent)

An Agency
Relationships

15

Keys to Corporate
Governance

Transparency

Accountability

Information Disclosure

Ethics

Governance
Mechanisms
Ownership
Concentration

Boards of
Directors

Executive
Compensation

Market for
Corporate Control

BIS CG Principles for

Banks
Board members should be qualified for their positions, have a
clear understanding of their role in corporate governance and
be able to exercise sound judgment about the affairs of the
bank.
The board of directors should approve and oversee the
banks strategic objectives and corporate values and ensure
that they are communicated throughout the banking
organization.
The board of directors should set and enforce clear lines of
responsibility and accountability throughout the organization.

18

BIS CG Principles for

Banks
The board and senior management should effectively utilize the

work conducted by the internal audit function, external auditors, and

internal control functions.
The board should ensure that compensation policies and practices
are consistent with the banks corporate culture, long-term objectives
and strategy, and control environment.
The bank should be governed in a transparent manner.
The board and senior management should understand the banks
operational structure, including where the bank operates in
jurisdictions or through structures that impede transparency.

19

Bangladesh Bank Guidelines

for CG in Bank Management
1. Responsibilities and authorities of
the board of directors:
(a)
(b)
(c)
(d)
(e)
(f)
(g)

Work-planning and strategic management

Lending and risk management
Internal control management
Human resources management and development
Financial management
Formation of supporting committees
Appointment of CEO

20

Bangladesh Bank Guidelines for CG in Bank Management (Cont..)

2. Responsibilities of the chairman of the

board of directors
3. Responsibilities of the adviser
4. Responsibilities and authorities of the
CEO
5. Meeting of Board of Directors etc.
6. Number of members in Executive
Committee
7. Training for Directors

21

Bangladesh Bank Guidelines for

CG in Bank Management (Cont..)
CONSTITUTION OF THE AUDIT COMMITTEE
OF BOARD OF DIRECTORS

The audit committee will comprise of 05

(five) members

Members of the committee will be nominated

by the board of directors from the directors

Members may be appointed for a 03 (three)year term of office

Company secretary of the bank will be the

secretary of the audit committee

22

Corporate Governance and

Ethical Behavior

The Firm
Capital Market
Stakeholders
Financial Product
Market
Stakeholders
Organizational
Stakeholders

It is important to serve the

interests of the Banks
multiple stakeholder groups!

Many Thanks.