The Forum supports client countries in drafting, implementing, and monitoring corporate governance codes of best practice and scorecards.
The codes can be found in more than 70 countries, and almost half of them have been developed with the Forum's assistance.
As a rule, compliance with these codes is not mandated by law, but they are important tools for encouraging private sector commitment to good corporate governance. They provide clearer guidance for financial and nonfinancial disclosure, foster better engagement of minority shareholders, and clarify the respective roles of managers and directors. In contrast to mandatory approaches, codes help disseminate knowledge, and are more flexible and transparent.
To be effective, codes must reflect the level of best practices that can be handled and implemented by a country’s companies, along with a certain level of measured aspirations toward higher standards.
To promote the use of its knowledge-management products, the Forum has organized regional workshops based on Toolkit 2 ( more info below), focusing on the implementation, monitoring, and review of corporate governance codes. The Forum has also supported and guided the work of corporate governance task forces in different countries and provided international peer reviews of draft codes through the Private Sector Advisory Group's members and other corporate governance experts.
The corporate governance scorecards assess a company’s governance practices and provide opportunities for systematic improvement. The scorecard is closely related to the corporate governance code and represents all of its relevant criteria. Different scores related to these criteria are assigned upon completion. Thus, the scorecard determines a total value of corporate governance. This approach is designed to depict for companies the quality of their own corporate governance and to facilitate comparisons between companies, which also makes it a source of useful information for investors. The general method of the scorecard used in Germany is also used—after suitable local adaptations, with the Forum’s support—in Croatia, Bulgaria, Macedonia, Bosnia and Herzegovina, Montenegro, Serbia, Indonesia, and the Philippines.
What should a scorecard achieve? It should:
Facilitate the work of analysts and investors through a systematic and easy overview of all relevant issues of good governance
Enable companies to easily assess the reach and the quality of their own governance
Enable comparisons across industries and countries
Be readily available to all interested parties via the Internet
Be available at very little cost for implementation
Allow investors to set minimum scores for governance as part of general investment decision making
"The Forum's expertise and experiences provided Bulgaria with practical, relevant, insightful counsel in developing a corporate governance code in Bulgaria." Bistra Boeva, Member of the Bulgarian National Corporate Governance Commission.
For more information about this program, please contact Ralitza Germanova at RGermanova@ifc.org.
The Forum’s Toolkit 2, Developing Corporate Governance Codes of Best Practice, sets out a step-by-step approach that stakeholders can follow to develop, implement, and review a corporate governance code. Other publications provide additional guidance. The supplement to this publication,Corporate Governance Scorecards, provides practical guidance and a step-by step approach on how to develop a corporate governance scorecard.