Best overall corporate governance- international.
Governance has always been a global concern, but as the worldwide financial crisis has intensified, regulators have stepped up their scrutiny of international business relationships in an effort to curb bribery and fraud. This is why Royal Bank of Canada’s (RBC) leadership in global subsidiary management is worthy of recognition as winner of Corporate Secretary’s first ever award for best overall corporate governance – international.
All multinational companies are faced with toughening governance standards in the area of subsidiary management, but financial institutions such as RBC are under even greater pressure to keep their operations running above board. To tackle this challenge, RBC relies on its Subsidiary Governance Office, which uses several global teams to oversee different regions of the world by using local governance expertise layered with global oversight. This approach allows the company to implement a consistent approach to governance without alienating stakeholders with different cultural values.
The company has also been a leader in governance because of its willingness to be an early adopter of new technologies and management strategies. RBC’s innovative use of web-based legal entity management software allows employees in its many subsidiaries to access key data in order to solve problems or report information quickly and accurately, giving the company an undeniable edge in maintaining the highest governance standards around the globe.
RBC maintains a commitment to continuously improving its governance practices. Over the last year, it has switched to a risk-based approach to identifying those subsidiaries in need of the highest levels of oversight and enhanced governance controls. The company also insists on active involvement in oversight by its many local subsidiary boards, with assistance from senior management from throughout the global organization. And if that’s not enough to keep subsidiaries on their toes, the company openly says that it ‘promotes the dissolution of any subsidiaries which no longer serve a business purpose.’
Of course, RBC has more going for it than its leadership in subsidiary governance. The company has voluntarily adopted many governance best practices over the years, including the selection of a non-executive chair to lead a board that is composed of independent, experienced directors. In addition, although RBC is not required to comply with most of the corporate governance listing standards of NYSE Euronext, the board has chosen to make sure the company meets or exceeds all NYSE rules.
RBC says its board ‘fosters a strong governance culture that influences the entire organization and each segment of business activity.’ Considering the stellar job the company has done while operating in one of the worst economic environments in history, it’s difficult to argue with the success of this approach.
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