Exam 3 Review: Sustainability and Corporate Governance

Flashcards covering key concepts from sustainability and corporate governance as discussed in the lecture notes.

What is the Brundtland Commission's definition of sustainability from 1987?

Meeting the needs of the present without compromising the ability of future generations to meet their own needs.

What cognitive bias is described as positive or negative feelings influencing perceptions of different areas?

Halo Effect.

What does ESG stand for in sustainability practices?

Environmental, Social, and Governance.

What are the 17 Sustainable Development Goals intended to achieve?

A universal call to action to end poverty, protect the planet, and improve the lives and prospects of everyone everywhere.

What is Corporate Social Responsibility (CSR)?

A term indicating a company's commitment to conducting business ethically and sustainably, though it has faced controversy regarding its economic alignment.

What is the Circular Economy focused on?

Actionable behaviors like reducing, reusing, recycling, and remanufacturing to create a sustainable model.

Define Normative Ethics in the context of sustainability.

A branch of philosophy exploring how people ought to act morally in relation to resource use and sustainability.

What does 'Normative Ethics Creep' refer to?

Slowly evolving accepted ethical concepts to incorporate new ideas without notice.

What is the primary focus of Corporate Governance?

The mechanisms to manage relationships among stakeholders and control the strategic direction and performance of organizations.

What is the main issue explained by agency theory?

Conflicts that arise when a company's owners (shareholders) are different from the managers, leading to potential misalignment of interests.

What is the difference between corporate-level strategy and business-level strategy?

Corporate-level strategy focuses on which businesses to operate and their management collectively, while business-level strategy is about competing effectively in a specific market.

What are the four main pillars of Circular Economy?

Reduce, Reuse, Recycle, and Remanufacture.

What is the definition of Executive Compensation as a corporate governance mechanism?

Compensation provided to top-level managers, aimed at aligning their interests with those of the firm's owners.

What are agency costs?

Costs that arise from conflicts between principals (owners) and agents (managers) due to divergent interests.

Why was the Sarbanes-Oxley legislation significant?

Passed to enhance trust in corporations post-scandals by enforcing accurate financial reporting and accountability.

What does the term 'naef' in corporate governance refer to?

The idea that the board should monitor closely ('nose in') but not interfere with daily operations ('hands out').

What is a Large Block Shareholder?

An owner of 5% or more of a company's stock, which allows them to influence corporate decisions.