CS Professional · Environmental, Social and Governance (ESG) - Principles and Practice · Governance Influencers
Sundaram Textiles Ltd. discovers that a national daily has published an investigative report alleging unsafe effluent discharge at its Tiruppur unit. Several institutional investors write to the board seeking clarification. Which characterisation best describes the role the media has played here in corporate governance?
The media acted as an external governance influencer. By publishing the investigative report it exposed information and created pressure on the board to explain and correct the issue. Media has no statutory power to penalise, audit internally or direct board decisions.
- AIt acted as an external governance influencer by exposing information and prompting accountabilityCorrect
- BIt acted as a statutory regulator by imposing a penalty on the company
- CIt acted as an internal control by auditing the effluent plant
- DIt acted as the promoter by directing the board's decisions
Explanation
The media is an external governance influencer: it brings information into the public domain and creates pressure for explanation and corrective action. It has no power to penalise, audit internally or direct decisions. Hence the first option is correct.
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