Good corporate governance is very useful in the sustainability of an organization. Corporate governance is described as the system used by organizations to direct and control their processes and operations (Hussain et al., 2018). The board of directors is responsible for their companies’ governance in any organization. It is the role of the shareholders in the governance to make the appointment of the directors. Corporate governance facilitates effective, entrepreneurial, and prudent management that can ensure the organization’s long-term success. On the other side, sustainability is understood as enhancing the quality of people’s lives, protecting the ecosystem, and preserving natural resources for future generations. Good corporate governance is good for the corporations, but it is also important for society since growth in recognition results in a close relationship between corporate governance and social responsibility (Hussain et al., 2018). In this case, we will focus on the Tesla company.
Firstly, good corporate governance ensures increased attention to sustainability as the corporations have their ability to thrive and prosper improved (Hussain et al., 2018). This is because of the increased focus on environmental issues. Good governance takes upon itself as their responsibility and as they are accountable for the environment’s future. Through its governance, Tesla has policies guiding the company to increase its energy sufficiency as it reduces environmental footprints resulting from engines (Vladimirovna et al., 2018). This is similar to saying that the policies require that the company focus on creating something that causes less pollution and utilizes a smaller amount of energy resources. Tesla’s mission has been accelerating the global transition to sustainable energy as it focuses on renewable energy. Having good governance ensures that the policies are well implemented and adhered to.
Secondly, when the board is well disciplined, this leads to better sustainability performance (Wahyuni, 2020). Also, boards that contain a higher portion of independent directors have greater scores of disclosure and are more likely to implement climate change policies and environmental supply chain management. Such boards highly comply with Global Reporting Initiative (Wahyuni, 2020).
Good governance ensures that the organization gains interest in sustainability. Recognizing that the organization’s business affects the environment develops an innate sense of accountability to society. This results in the company encouraging all the workers and other stakeholders to reserve energy, reduce waste, and enhance other environmental factors. Through good governance, stakeholders appreciate the effort that the firm takes in placing bins throughout corporate facilities. They enjoy reading the way firms lower their emissions and engage in other conservation efforts. For instance, through the good relationship that good governance establishes with society, consumers increasingly prioritize provenance and sustainable supply chains, as they put pressure on the corporate to adopt socially responsible attitudes to sourcing (Mahmood et al., 2018). In terms of sourcing, Tesla company applies its Supplier Code of Conduct and Human Rights and Responsible Materials policies as a foundation to ensure social, environmental responsibility, and ethical conduct throughout its supply chain, from raw materials to the doors of the facilities (Dibble, 2018). Tesla governance ensures block-chain application for sustainable sourcing of both cobalt and nickel. The company employs two block-chain solutions in tracing the raw materials used in electric vehicles batteries. Thus, ensuri8nbgb they have been sustainably sourced.
Corporate governance fosters sustainability, creates sustainable values, and assists an organization in achieving these values (Mahmood et al., 2018). This creates a very good establishment for achieving sustainability. While the quest for corporate sustainability continues to improve and enhance the principles of good corporate governance, organizations sometimes feel pressured to offer support to their efforts with transparency and public disclosure. Corporate governance ensures transparency, which provides information to the general public on the association between corporate governance and enhanced sustainability. When stakeholders are well-informed about the association between corporate governance and enhanced sustainability, the relationship becomes more apparent over time.
In its mission to help the world to have a faster transition to sustainable energy, Tesla company governance hires bright people to help make this future a reality. While the daily use of Tesla’s products by the consumers has been causing a lot of impact on the environment, the governance cares very much about operating the company’s businesses and manufacturing products sustainably. The company has been keeping track of its operational effects, which has enabled them to implement efficiency improvements that have decreased the impact on the environment and lowered operational costs (Vladimirovna et al., 2018). The level of CO2 in the atmosphere has been higher than ever. This has driven Tesla’s mission to accelerate the global transition to sustainable energy. For example, in 2017, the company implemented a baseline global carbon effect footprint across various manufacturing, retail, and energy facilities (Vladimirovna et al., 2018). The company was trying to tract consumption of electricity and natural gas.
About Tesla’s Corporate Governance
Through governance, the board of directors develops high standards for the organization’s workers, officers, and directors. Most implicit in such a philosophy is the significance of having sound governance (Dibble, 2018). The board of directors must work as a wise fiduciary for shareholders to inspect the management of the corporation’s business. To ensure that they fulfill their role, the board of directors works according to the procedures and standards outlined in the guidelines. The guidelines can be modified as deemed appropriate by the board of directors in the organization’s best interest.
Tesla’s Contribution Towards Sustainability
Tesla company has been at the forefront championing for transition to sustainability. The company has achieved this through battery life and recycling (Vladimirovna et al., 2018). The battery pack is designed in a way that it can outlast the vehicle itself. In preparation for the future, the battery factories implement in-house loop recycling systems to ensure that a hundred percent of Tesla company batteries received are recycled and around 90 percent of the raw metals reused. The company is using technology to recycle batteries. It is not because all the batteries are in the condition of being recycled yet. About 90% of Tesla batteries are left after two hundred thousand miles of driving. The company has tried to reduce the incidences of batteries catching fire. According to the company’s report, the incidences of vehicle fires have gone down eleven timeless than for conventional vehicles. The company has promised to continue improving its battery chemistry and battery pack to decrease fire risk to almost zero as much as possible. This will greatly ensure sustainability as less of the battery and cars can catch fire.
In conclusion, governance is very important for achieving sustainability not only in Tesla but also in other organizations. The global transition to sustainability has been one of the core missions of Tesla company. The company has achieved a lot in this due to corporate governance. It is worth understanding that an organization gains interest in sustainability. Corp[orate governance creates sustainable values and assists organizations in achieving such values. With good governance, there is increased attention to sustainability since the corporation will have the ability to thrive and prosper improved.
References
Dibble, C. (2018). Exploring the Potential of Environmental Impact Investing for Sustainable Development: The Cases of Dominion Energy and Tesla Motors.
Hussain, N., Rigoni, U., & Orij, R. P. (2018). Corporate governance and sustainability performance: Analysis of triple bottom line performance. Journal of business ethics, 149(2), 411-432.
Mahmood, Z., Kouser, R., Ali, W., Ahmad, Z., & Salman, T. (2018). Does corporate governance affect sustainability disclosure? A mixed-methods study. Sustainability, 10(1), 207.
Vladimirovna, S. T., Marina, G., Maria, H. D., & Martina, G. (2018). Analysis of financial market trends in the company Ericsson Nikola Tesla plc. In terms of breaking out of the economic crisis regarding the code of corporate governance. Вестник НГИЭИ, (2 (81)).
Wahyuni, P. D. (2020). Corporate Governance and Sustainability Reporting Practices: Market Dimension of Financial Performance. Int. J. Business, Econ. Law, 22(1), 1.
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