Various Development Finance Institutions (DFIs) and the EIB sign an Approach Statement on Corporate Governance in Emerging Markets
On Friday 19 October in Washington, Philippe de Fontaine Vive Curtaz, Vice-President of the European Investment Bank (EIB) signed an approach statement on corporate governance in emerging markets.
The leaders of 31 Development Finance Institutions (DFIs) issued a joint statement, positioning corporate governance at the forefront of their sustainable development agenda in emerging markets. This initiative highlights the increased role of good corporate governance as a facilitator of international capital flows to emerging market companies.
By signing the statement the EIB recognises not only the importance of good corporate governance practices for sustainable economic development, but also the critical role that DFIs can play in their promotion in emerging markets at both the private and public sector level. This will be done by developing and adopting guidelines, policies and procedures at an individual DFI level and then by collaborating with other DFIs to support the cause of good corporate governance.
At the signature EIB Vice President, Philippe de Fontaine Vive, welcomed the initiative, stating that, “signature of the Approach Statement on Corporate Governance represents the Bank’s strong commitment to supporting a new generation of entrepreneurs that want to be part of a transparent global business community.”
Corporate governance involves a set of relationships between a company’s management, board, shareholders and other stakeholders and is a key element in improving economic efficiency and growth as well as enhancing investor confidence. In addition, corporate governance provides the structure through which company objectives are set, and the means of attaining those objectives and monitoring performance are determined. The presence of an effective corporate governance system, within an individual company and across an economy as a whole, helps to provide a degree of confidence that is necessary for the proper functioning of a market economy. As a result, the cost of capital is lower and firms are encouraged to use resources more efficiently, thereby underpinning growth.
The statement is based on the OECD Principles of Corporate Governance, which provides a framework identifying its key practical aspects; the rights and equitable treatment of shareholders, the role of stakeholders, disclosure and transparency, and the responsibilities in the Board of Directors. The Statement presents a common approach to corporate governance issues by DFIs and applies to equity investments in private sector companies operations in emerging markets.