Corporate governance for a sustainable economy

Alfaisal University’s Corporate Governance Center is leading the way on corporate governance research, benchmarking and partnerships in Saudi Arabia

The international business world is often rocked by stories of poor practice or corporate scandals, so it’s no surprise that corporate governance continues to be a focus for many investors, employees and business leaders.

Across economies such as the UK and the US there is corporate scrutiny through regulators and legislation, but this is a nascent focus in Saudi Arabia. With a view to accelerating this focus, the Corporate Governance Center (CGC) is one of the core programmes that sits within the Alfaisal Center for Research and Consultancy Studies at Alfaisal University in Saudi Arabia.

As the country undergoes significant change and works towards Saudi Vision 2030 – a bid to diversify its economy and build more sustainable sources of income – solid corporate governance will be crucial in attracting foreign investment and ensuring corporations can withstand scrutiny.

The CGC launched in 2016 when Alfaisal University partnered with the Saudi Ministry of Investment and a team of experienced consultants to develop a project that would increase societal awareness of corporate governance and help citizens understand why it is important.

The university recognised that corporate governance would become an important factor in ensuring sustainability and security for investors, as well as fostering corporate social responsibility.

“The CGC is a research and education centre that focuses on the study and promotion of good governance practices in the business and public sectors,” explains Diana Korayim, director of the Alfaisal Center for Research and Consultancy Services.

“The CGC aims to contribute to the development of a strong and sustainable corporate governance system in Saudi Arabia and the wider Middle East region.”

There are five core pillars to the work of the centre: a corporate governance index that measures the governance practices of Saudi Arabian companies and beyond; research on governance-related topics; education and training; conferences and workshops; and advisory services.

The corporate governance index sits at the heart of the centre’s work. It is based on a set of governance principles and standards and assesses the governance practices of companies across a range of aspects, including board structure, shareholder rights and transparency.

The index aims to raise awareness of the importance of good governance practices and to encourage companies to adopt best practices, while also informing policymaking at a local and national level through data. Companies can use the index for benchmarking purposes, allowing them to compare their governance practices with those of their peers and identify areas for improvement.

Building knowledge

Crucially, the data collected in building the index informs the research activities of the CGC. “The CGC conducts and publishes research on a range of governance-related topics, including board composition, director duties, ownership structures and stakeholder engagement,” Korayim says. “The research helps to inform policy decisions and advance understanding of best practices in corporate governance.”

Building skills and knowledge around corporate governance is a key focus for the centre, and the CGC provides a range of training programmes for business professionals, board directors and other corporate stakeholders. Events bring together experts on corporate governance as well as business professionals so they can share best practice and discuss the latest developments in this area.

In addition to the index, the CGC runs annual conferences on corporate governance as well as webinars sharing new developments and knowledge in areas such as financial reporting and disclosure.

Korayim argues that building good corporate governance is “essential for the long-term success of organisations and for maintaining public trust in business and government”. “Good governance helps organisations operate effectively, make informed decisions and manage risks, which ultimately supports their financial performance and sustainability,” she says.

The CGC is supported by Alfaisal University through funding, and the provision of facilities and high-calibre faculty members who are experts in governance-related fields. “We work with a range of partners, including government agencies, NGOs and other universities to maximise the impact of its governance work,” Korayim explains.

These partnerships are important because they allow the university to leverage the knowledge of other experts and build relationships with key researchers in this field. Working with government organisations means the centre has firsthand knowledge of governance-related policies and regulations, ensuring faculty are informed by the latest research.

“Working with industry organisations and businesses helps the CGC engage with stakeholders who are affected by governance practices and understand the challenges and opportunities facing organisations in the region,” Korayim says.

“Collaborating with a range of partners allows the CGC to reach a wider audience and have a greater impact on the development of governance practices in Saudi Arabia and the wider region. By collaborating with a range of partners, the CGC is better equipped to provide relevant and informed advice and to make a meaningful impact on the development of governance practices.”

Looking forward, the CGC plans to expand its research activities, potentially exploring new areas of governance-related topics while increasing its output of peer-reviewed publications. There are also plans to enhance existing education and training programmes, develop new courses and offer these to a wider audience – both students and professionals.

To support this, it will build further partnerships with government agencies, industry organisations and other universities nationally and across the globe. Growing student numbers will be supported by technological innovation, with the centre providing additional online training and governance assessments that can reach many more people and organisations thanks to reduced physical barriers.

Finally, the CGC wants to build on its existing engagement with policymakers, offering advice and guidance on all aspects of governance, and supporting them to develop new policies and regulations.

Find out more about the Corporate Governance Center.