Why are Reputations Important?

Reputation is Linked to Market Value - A Stronger Reputation Eases Recovery from a Crisis

The Board is responsible to protect a company’s reputation which, according to King III, is a company’s most significant asset.

King III; Code on Governance Principles for South Africa (p. 52) Corporate citizenship: leadership, integrity and responsibility – Principle 2.1: The board should ensure that the company acts as and is seen to be a responsible corporate citizen

  1. The board is not only responsible for the company’s financial bottom line, but for the company’s performance in respect of its triple bottom line. This means that the board should report to its shareholders and other stakeholders on the company’s economic, social and environmental performance.
  2. Although a company is an economic institution, it remains a corporate citizen and therefore has to balance economic, social and environmental value. The triple bottom line approach enhances the potential of a company to create economic value. It ensures that the economic, social and environmental resources the company requires to remain in business are treated responsibly.

By looking beyond immediate financial gain, the company ensures that its reputation, its most significant asset, is protected.

There is growing understanding in business that social and environmental issues have financial consequences.

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