There is no substitute for a culture of integrity in organizations. Compliance alone with the law is not enough. History shows that those who make a practice of skating close to the edge always wind up going over the line. A higher bar of ethics performance is necessary. That bar needs to be set and monitored in the boardroom.  ~J. Richard Finlay writing in The Globe and Mail.

Sound governance is not some abstract ideal or utopian pipe dream. Nor does it occur by accident or through sudden outbreaks of altruism. It happens when leaders lead with integrity, when directors actually direct and when stakeholders demand the highest level of ethics and accountability.  ~ J. Richard Finlay in testimony before the Standing Committee on Banking, Commerce and the Economy, Senate of Canada.

The Finlay Centre for Corporate & Public Governance is the longest continuously cited voice on modern governance standards. Our work over the course of four decades helped to build the new paradigm of ethics and accountability by which many corporations and public institutions are judged today.

The Finlay Centre was founded by J. Richard Finlay, one of the world’s most prescient voices for sound boardroom practices, sanity in CEO pay and the ethical responsibilities of trusted leaders. He coined the term stakeholder capitalism in the 1980s.

We pioneered the attributes of environmental responsibility, social purposefulness and successful governance decades before the arrival of ESG. Today we are trying to rebuild the trust that many dubious ESG practices have shattered. 


We were the first to predict seismic boardroom flashpoints and downfalls and played key roles in regulatory milestones and reforms.

We’re working to advance the agenda of the new boardroom and public institution of today: diversity at the table; ethics that shine through a culture of integrity; the next chapter in stakeholder capitalism; and leadership that stands as an unrelenting champion for all stakeholders.

Our landmark work in creating what we called a culture of integrity and the ethical practices of trusted organizations has been praised, recognized and replicated around the world.


Our rich institutional memory, combined with a record of innovative thinking for tomorrow’s challenges, provide umatached resources to corporate and public sector players.

Trust is the asset that is unseen until it is shattered.  When crisis hits, we know a thing or two about how to rebuild trust— especially in turbulent times.

We’re still one of the world’s most recognized voices on CEO pay and the role of boards as compensation credibility gatekeepers. Somebody has to be.

bifocals.jpgGet this man a new pair of glasses! Former Fed chairman Alan Greenspan says he didn’t see a need for most of the 2002 Sarbanes-Oxley legislation and “argued that the business scandals that prompted the law didn’t suggest a massive breakdown in corporate governance,” according to the Wall Street Journal.

The remarks were made at a Treasury-sponsored conference on capital markets regulation in Washington this week, the translation of which is a collection of CEOs and Bush administration officials who are trying to figure out how to roll back laws that are forcing CEOs and directors to do their jobs properly or face serious consequences. We dealt with the first volley in that campaign here.

As chairman of the Fed, Dr. Greenspan made a career of talking in guarded terms and convoluted sentences few really understood. That made him brilliant in the eyes of many. Now, as a much in demand $100,000 a pop speaker to prominent companies and business groups, he has finally found a virtue in plain speaking, and is calling in remarkably unequivocal terms for less regulation. Regulation for which he claims he saw no need.

If we are to take Dr. Greenspan at his word, during the time he headed the Fed he didn’t see the need for changes in governance when huge corporate icons were crashing down about him and taking the stock market with them. He didn’t see the need for codes of ethics that would have protected whistleblowers who tried to prevent Enrons from occurring. He didn’t see anything wrong with the hundreds of millions in loans boards were doling out to CEOs that were never repaid. He didn’t see anything wrong with audit committees that were meeting less frequently than compensation committees while permitting huge liabilities in “off book” arrangements.  He wasn’t bothered by auditors who were making all kinds of fees from non-accounting jobs and were more interested in pleasing management than reporting on the true health of the books. He didn’t see a problem with paying CEOs hundreds of millions in stock options without  expensing them on the company’s balance sheets.

What else can’t this man see? How about the 200 or so companies who have admitted to backdating stock options so that top management could line its pockets even more. Is that a good testimonial to strong internal controls and vigilant boards at those companies, which include Apple, Research In Motion and Home Depot? How about all the boards today that are demanding more pay because they say the boardroom is not the cozy club it used to be? What were they really doing when Dr. Greenspan could not see any need for change. The consensus of many, including influential committees of the House of Representatives and Senate, is not nearly enough.

Seldom have the capital markets been more shaken than they were by the collapsing corporate dominos that prompted the Sarbanes-Oxley Act –legislation Dr. Greenspan doesn’t see as being necessary. Common to all of these disasters, and to so many that preceded them, was the Typhoid Mary of corporate governance that left company after company with an affliction manifested by palpitating CEO pay, apparent unconsciousness on the part of directors as to what was happening about them, a pronounced inability on the part of auditors to count accurately and a detachment from reality among CEOs often characterized by an abundance of personal jets and decadent parties.

Never in the history of modern American business have so many at the top engaged in such egregious displays of criminal wrongdoing and fraud, and others in outright acts of negligence, leading to such a magnitude of losses in stock value, regulatory penalties and shareholder lawsuits as in the period leading up to and immediately following the passage of the Sarbanes-Oxley Act of 2002. Billions were paid out by Citigroup, CIBC, AIG Insurance and Marsh & McLennan alone to settle litigation brought by outraged regulators and aggrieved investors. And the cost of that era grows almost daily. Just this week, the SEC announced that Bank of America will pay $26 million to settle charges that it issued fraudulent research on a number of companies, including Intel. If the great tsunami of fines, payments, trials and prison arrivals by ex CEOs witnessed day after day by Americans and investors around the world during this period was not indicative of a “massive breakdown in corporate governance” –which Dr. Greenspan never saw– I’d like to hear nominations for that category.

Want to make American capital markets more competitive? A race to the bottom of weaker regulation or looser boardroom rules is not the answer. Scandals do not attract investor confidence; laws that set and enforce standards of integrity and openness in the markets and in corporate conduct, when voluntary efforts have failed, do. This was recognized in another era by American lawmakers who passed their equivalent of Sarbanes-Oxley legislation —it was actually much more revolutionary— which was aimed squarely at directors and CEOs. As the report of the House committee on Interstate and Foreign Commerce that accompanied passage of the Federal Securities Act of 1934 stated: “If it be said that the imposition of such responsibilities upon these persons will be to alter corporate organization and corporate practice in this country, such a result is only what your committee expects.” Some CEOs, directors and their spiritual advisors from Wall Street now complain that Sarbanes-Oxley is actually disturbing the status quo in the boardroom. Do you think? Maybe that’s the idea.

No, the answer to Dr. Greenspan & company’s concerns about American competiveness lie in a different direction. A global market that is becoming increasingly volatile and upon which so many depend for their livelihoods, their prosperity and very often their dreams, requires new rules for the road —not a free-for-all. In this complex environment that has too often in recent years experienced the consequences of those who play only by their own rules and tend to forget the trust from others they hold, a premium will flow to where the regulatory structure and corporate governance regime demand and produce transparency, integrity and ethics. Companies and markets that become synonymous with those values will enjoy a competitive edge. Those that do not will suffer. That’s the reality behind Sarbanes-Oxley legislation and other efforts to empower investors and bring common sense to the boardroom.

What’s not to see?