Irrespective of the manner in which corporate governance practices define the responsibility and scope of the company’s activities, the notion has a different ethical character. This is reflected in the fact that corporate governance calls for companies to bear the responsibility for the impact of their actions on the societies and the stakeholders. Thus, the importance of corporate governance is consistent with the importance of business ethics. Management’s task is not restricted to dealing with various stakeholder groups in an ethical manner, but it also calls for resolution of conflicts of interest which occur between the company and its various stakeholder groups. As said by Elkington (1997), sustainability is regarded as following the “Triple Bottom Line” (environmental, economic, and social). This represents the idea that businesses do not have to focus on one single goal pertaining to adding economic value, but it is expected to meet the extended goal set of adding social and environmental value too.
According to Davis (1973), social responsibility refers to the obligation on decision makers to implement actions that protect and improve the society’s welfare as a whole, along with their own interests. Thus, this rationale suggests two active aspects of protection and improvement of social responsibility. Protection of the welfare of society calls for avoidance of negative impacts