Corporate governance is a priority for businesses in both the public and private sectors. On a recent edition of LMDtv, the CEO of the Sri Lanka Institute of Directors (SLID) Anitra Perera explained that this is about policies, practices and processes.

She explained: “It ensures accountability, fairness and transparency of a company’s operations and relationships with its stakeholders.” Perera added that “it also defines the roles and responsibilities of the board, management, shareholders and other stakeholders, and provides a structure through which companies are directed and controlled in today’s context.”

Perera continued: “Corporate governance extends beyond compliance; it involves integrating ethical leadership, long-term value creation and sustainability. It also emphasises the need for critical elements such as digital transformation, diversity and proactive stakeholder engagement to address challenges in a rapidly evolving business landscape.”

By fostering robust decision making and balancing the interests of all stakeholders, corporate governance lays the foundation for responsible and sustainable business practices.

In Sri Lanka, corporate governance is supported by a strong regulatory framework that includes the Companies Act, regulations set by the Securities and Exchange Commission of Sri Lanka (SEC), and the Corporate Governance Code issued by the Colombo Stock Exchange (CSE).

She noted that while leading organisations demonstrate progress in areas such as transparency and stakeholder engagement, small and medium-size enterprises along with family owned businesses face challenges, such as resource constraints and limited awareness.

“Emerging themes such as environmental, social and governance (ESG) criteria, ethical leadership and digital transformation are gaining traction. Technologies that include digital board portals and compliance tools, which help companies enhance decision making and transparency, are needed across sectors,” Perera asserted.

It is also crucial that business leaders ensure there’s corporate governance “since it fosters trust and credibility while mitigating risks.”

She emphasised that “a strong governance framework ensures regulatory compliance, ethical leadership and accountability, and creates a foundation for sustainable growth and resilience. By embedding governance into their strategies, leaders can enhance investor confidence and align organisational goals with stakeholder interests.”

Perera explained that “in an era of fighting for scrutiny and with a global focus on ESG criteria, governance has become a strategic enabler. Leaders who prioritise governance are better equipped to navigate uncertainties, address social and environmental challenges, and drive long-term value creation.”

“Governance also fosters a culture of accountability, and that enables businesses to attract talent, retain customers and build strong relationships with partners and communities,” she added.

Today, corporate directors are pushed to balance compliance, performance and profitability. SLID’s CEO believes that it’s necessary for organisations to adopt a strategic approach, which integrates these elements into its vision: “Compliance with laws and regulations is a fundamental requirement – as well as ensuring integrity, and reducing legal and reputational risk.”

She continued: “At the same time, directors must also drive innovation, operational efficiency and growth, to enhance performance and profitability. Embedding governance into business strategies allows them to align short-term objectives with long-term sustainability. This involves addressing factors such as ESG and considering diverse stakeholder interests to create shared value.”

Perera summed up: “Ethical leadership and informed decision making are essential for maintaining this balance, and enabling directors to foster trust and accountability while driving innovation.”