Organizations are separate entities that owe their existence to the group of stakeholders. As such, they are responsible to act in a manner that adds value to the society at large and maximizes the value of the collective group of stakeholders, rather than merely focusing on shareholders. Corporate Governance is another important constituent of the group of Corporate Social Responsibility activities that is built on the three pillars of transparency, accountability and responsibility. These aim to ensure that an accurate financial picture of the company is presented to the public that can help them to take informed decisions. There is a direct link between ethicality and profitability and ethical and socially responsible businesses gain on account of loyal customer base and strong brand image.
According to Rossouw (2005), there are two prominent issues pertaining to this responsibility. Firstly, this responsibility can be borne voluntarily by the boards of directors of the companies, or it may be imposed on them through regulating bodies. Secondly, the scope of the group of stakeholders, towards which the company should be responsible, has been a contested issue in the field of corporate governance, since some regimes restrict the stakeholders group to comprise of shareholders only, while other regimes adopt an inclusive approach and include other stakeholders like employees, customers, and the Environment at large, within the ambit of corporate responsibility.