OBSERVARE
Universidade Autónoma de Lisboa
e-ISSN: 1647-7251
Vol. 13, Nº. 2 (November 2022-April 2023)
301
PLANET GOVERNANCE A NEW CONCEPT
SANDRA CRISTINA ANTUNES RIBEIRO
sribeiro@autonoma.pt
She holds a Ph.D. in Economics from Universidade Autónoma de Lisboa (UAL), a Master Degree
in Monetary and Financial Economics from Instituto Superior de Economia e Gestão and a degree
in Economics from UAL. Lecturer at UAL (Portugal) and full researcher at OBSERVARE
Observatory of Foreign Relations. She coordinates the research strand “Economic Spaces and
Resource Management”. She is the author and co-author of several books and chapters. She has
several scientific papers published in indexed international scientific journals, namely SCOPUS
and WEB of Science. She has several presentations and publications at congresses, conferences
and seminars. She is a reviewer for international scientific publications. Her research areas are
Economics and International Trade, Economics and Macroeconomics
ANA MARIA QUARESMA
aquaresma@autonoma.pt
She holds a Ph.D. in Economics and a Master Degree in Management from Universidade
Autónoma de Lisboa (UAL) and a degree in Banking Management from Instituto Superior de
Gestão Bancária. She is a lecturer in, and Scientific Coordinator, of the Degree in Economics and
President of the Pedagogical Council of UAL (Portugal). She is a researcher at the Observatory of
Foreign Relations and in the Economic and Business Sciences Research Centre. She is interested
in the scientific area of Corporate Governance, and has several international publications on the
topic. She has a consolidated career in International Banking, particularly regarding matters
related to Financial Markets.
Abstract
Although there are many concepts related to sustainable development, this paper analyses
the concept of “Planet Governance”, which comes from, and is related to, Corporate
Governance. It aims to present all the literature that relates the application of business
strategy to the global economy, associating the instruments of Corporate Governance with
Global Governance.
The current valuation of companies in the market, attracting investments, funding resources,
in particular from listed companies, are related to compliance with Corporate Governance
good practices. Based on this premise, then the economic and social development of states
can also be related to good environmental practices carried out by a given economy. From
this comparison, this new concept of “Planet Governance” was evidenced by the authors.
Based on the pillars and main variables of corporate governance, we defined a new concept:
the concept of Planet Governance. “Planet Governance identifies the way in which
governments manage, based on the principles of equity, transparency, alignment of interests
and accountability, their economic resources for the sustainability of the planet with a positive
impact on the country's economic performance".
Planet Governance will be understood as a concept that will allow, in the first place, to evaluate
the governments of countries in terms of the management of the planet (resources). It will
also enable evaluating the economic and social impact resulting from these good practices,
thus going further and more specifically than the Sustainable Development Goals (SDGs)
themselves.
Keywords
Corporate Governance; Pillars of Corporate Governance; Sustainability; Economic
Development, Resources
JANUS.NET, e-journal of International Relations
e-ISSN: 1647-7251
Vol. 13, Nº. 2 (November 2022-April 2023), pp. 301-315
Planet Governance a new concept
Sandra Cristina Antunes Ribeiro, Ana Maria Quaresma
302
Resumo
Apesar de existirem muitos conceitos relacionados com o desenvolvimento sustentável,
apresentamos, neste trabalho, o conceito de Planet Governance”, que advém, e se relaciona,
com o de Corporate Governance.
O presente estudo visa a apresentação de toda a literatura que relaciona a aplicação da
estratégia empresarial à economia global, associando os instrumentos de Corporate
Governance à “Governance Global”.
A atual valorização das empresas no mercado, a captação de investimentos, os recursos a
financiamentos, em particular das empresas cotadas, estão relacionados com o cumprimento
das boas práticas em matéria de Corporate Governance. Partindo desta permissa então
também o desenvolvimento económico e social dos Estados podeser relacionado com as
boas práticas ambientais levada a cabo por uma determinada economia. Desta comparação
foi evidenciado pelas autoras este novo conceito de “Planet Governance”.
Com base nos pilares e principais variáveis de governação empresarial, definimos um novo
conceito: O conceito de Governação do Planeta. "Planet Governance identifica a forma como
os governos gerem, sobre os princípios da equidade, transparência, alinhamento de interesses
e responsabilidade, os seus recursos económicos de sustentabilidade do planeta com um
impacto positivo no desempenho económico do país".
O Planet Governance será entendido como um conceito que permitirá em primeiro lugar
avaliar os governos de cada país em termos da gestão do planeta (recursos) e também
permitirá avaliar o impacto económico e social resultante dessas boas práticas, indo, desta
forma, mais além e mais especificamente do que as metas que os Objetivos do
Desenvolvimento Sustentável (ODS) abordam.
Palavras-chave;
Corporate Governance; Pilares da Corporate Governance; Sustentabilidade; Desenvolvimento
Económico, Recursos
How to cite this article
Ribeiro, Sandra Cristina Antunes; Ana Maria Quaresma (2022). Planet Governance - a new concept.
Janus.net, e-journal of international relations, Vol13 N2, November 2022-April 2023. Consulted
[online] in date of last visit, https://doi.org/10.26619/1647-7251.13.2.12
Article received on 12 August 2022, accepted for publication on 26 August 2022
JANUS.NET, e-journal of International Relations
e-ISSN: 1647-7251
Vol. 13, Nº. 2 (November 2022-April 2023), pp. 301-315
Planet Governance a new concept
Sandra Cristina Antunes Ribeiro, Ana Maria Quaresma
303
PLANET GOVERNANCE A NEW CONCEPT
SANDRA CRISTINA ANTUNES RIBEIRO
ANA MARIA QUARESMA
1. Introduction
The effects caused by industrialization and globalization are undeniable. Although these
phenomena have had a positive impact on the livelihoods of societies, their social
dependence and impact on natural resources have considerably increased global
concerns about this transition.
All the changes resulting mainly from globalization take the economic and financial
problems of companies to another level. The problem moves to a global level where,
according to Dragomir and Constantinescu (2018), the concern focuses on harmonizing
economic, social and environmental problems, in order to guarantee prosperity for future
generations. Consequently, in the same way that companies have instruments to achieve
their objectives, governments and, in a more general way, the whole world, must have
instruments and measures that allow at any time measuring the reach of the main
objectives in terms of sustainable development, never forgetting the need for interaction
between the public and private spheres.
In the context of globalization, sustainable development is an issue that is often taken
into account by policy makers, both locally and globally, who are constantly struggling
with the challenge of making economies grow efficiently and sustainably.
Dragomir and Constantinescu (2018) argue that, given that regions are different and
have different needs and characteristics, the process inherent to development involves
several and different actors, from citizens to companies as well as local or governmental
organizations themselves. In the same way that the authors point out several
characteristics inherent to sustainable development at a local level, we also consider
most of them at a global level, including: ecological integrity, economic security,
accountability and authorization, and social well-being. They also argue that “According
to these components, the main problem is the creation of a strategy capable of positively
affecting each domain and each moment of the life of a community”. This is our future
objective: to define strategies capable of achieving sustainable development at world
level by developing a composite indicator capable of measuring it. For now, and in this
work, we intend to arrive at a new concept of “Planet Governance”, which is the starting
point for the definition of a model and the instruments inherent to it.
JANUS.NET, e-journal of International Relations
e-ISSN: 1647-7251
Vol. 13, Nº. 2 (November 2022-April 2023), pp. 301-315
Planet Governance a new concept
Sandra Cristina Antunes Ribeiro, Ana Maria Quaresma
304
Thus, this article’s main objective is to expose the new “Planet Governance” concept.
This concept is based on two aspects: (i) Corporate Governance, concept and basis for
the definition of Planet Governance and (ii) the role of governments in adopting good
Planet Governance practices to achieve environmental sustainability, as well as the
economic impact of good practices in terms of Planet Governance.
The designation of Planet Governance derives from the analogy with the term Corporate
Governance. Currently, Corporate Governance has been highlighted for its importance in
economic performance, market assessment and the sustainability of organizations. Good
Corporate Governance has a positive impact on these dimensions.
Guimarães (1997), when presenting the different dimensions and operational
sustainability criteria, referred to “planetary sustainability” as one of the dimensions.
The author also considered the following dimensions: ecological, environmental,
demographic, cultural, social, political, and institutional sustainability. He considers that
the main objective of planetary sustainability is “to reverse the global processes of
ecological and environmental degradation”. Here, our objective goes a little further, as
we do not want to associate the concept of Planet Governance only with the ecological-
environmental aspect.
As for governments, they too must take into account the economic performance and
development of countries associated with the sustainability of the planet. Thus, Planet
Governance emerges as a concept associated with the good management of governments
in order to maintain a “healthy” planet, that is, Global Governance.
On the study and interest in these matters, Kahn (2015) argues that “if we could
communicate to the public that “we know that there is a lot we don’t know about,” and,
at the same time, teach the public about the methodology of how we create new scientific
knowledge, then we could allow more leeway for experimentation and study, and we
discover the right strategies to promote sustainable global development”.
2. Literature review
This topic will address the theoretical developments on the matters that led to the Planet
Governance concept.
2.1 Planet Governance and Corporate Governance
The Planet Governance concept is based on matters related to Corporate Governance,
extracting from this last concept basic ideas for the development of the Planet
Governance concept referred to in this article.
In its most limited sense, corporate governance refers to how to manage a company. In
recent years, it has been a topic in the life of organizations that arouses the most intense
debates because it is directly related to important events that reflect the current scenario
of high volatility surrounding the business environment. (Quaresma, 2014).
In recent years, the concept of corporate governance has developed and gained
popularity due to developments in management science. Corporate governance, which is
used in the management of companies in order to obtain the greatest benefits for their
JANUS.NET, e-journal of International Relations
e-ISSN: 1647-7251
Vol. 13, Nº. 2 (November 2022-April 2023), pp. 301-315
Planet Governance a new concept
Sandra Cristina Antunes Ribeiro, Ana Maria Quaresma
305
shareholders and other stakeholders, is one of the topics frequently discussed in the
literature (Çemberci, Basar and Yurtsever, 2022).
In its most diverse aspects, corporate governance options will determine the efficiency
and effectiveness of the management of companies regarding the challenges of
competitiveness, internationalization and globalization, access to capital markets and
their sustainability as organizations integrated in a specific community. At the same time,
they have increasingly attentive and demanding stakeholders determined to defend their
interests (Quaresma, Pereira and Dias, 2014).
It should be noted that corporate governance is something completely different from the
daily activities of operational management, as it goes further in its perception and
operation. It is, therefore, considered to be a management and control system that
dictates how a board of directors manages and supervises a company.
The literature provides several definitions of corporate governance. In 1776, Adam
Smith, in his work entitled “The Wealth of Nations” raised the hypothesis that with the
separation between ownership and control within organizations, they would be managed
by people who would not have the same type of interest and attention as the owners
(Quaresma, Pereira and Dias, 2014). Over a century later, Berle and Means (1932)
analysed the separation between ownership and control that gives administrators the
possibility to pursue their interests in favour of the interests of owners. Jensen and
Meckling (1976) detailed the concept of Agency Theory, which refers to the separation
between ownership (principal) and agent (management), considering that the manager
may act in the sense of not maximizing profit for the shareholder, leading to conflict of
interests and agency costs associated with monitoring management. Donaldson and
Preston (1995) presented the stakeholder theory, showing that all stakeholders of
organizations, in their relationships with organizations, seek to obtain benefits.
Accordingly, there is no reason to choose a set of interests over others, expanding
management's interaction with all those who have a relationship with it and not just with
shareholders. Since then, many studies have focused on this concept. However it is
believed that this separation, ownership and management, becomes inevitable as
markets become more developed.
The various financial scandals that occurred in the 20th and 21st century, which at their
base involved acts of mismanagement by companies, led to a growing concern of states
and market regulators for the issuance of laws (Anglo Saxon markets) and principles
(European market), whose purpose is to guide the activities of organizations in terms of
corporate governance. Common sense suggests that companies with a corporate
governance structure aligned with Best Practices Codes should have better management
(Fama and Jesen, 2003). Corporate governance is thus under the scrutiny of the market.
Cadbury (1992) defined corporate governance as “the system by which companies are
managed and controlled”, the OECD developing this concept a little further by indicating
that it “involves a set of relationships between the management of the company, its
management body, its shareholders and other subjects with relevant interests. Corporate
governance also establishes the structure through which the company's objectives are
set and the means to achieve those objectives are established and controlled. Good
corporate governance must provide adequate incentives for the board of directors and
JANUS.NET, e-journal of International Relations
e-ISSN: 1647-7251
Vol. 13, Nº. 2 (November 2022-April 2023), pp. 301-315
Planet Governance a new concept
Sandra Cristina Antunes Ribeiro, Ana Maria Quaresma
306
managers to pursue objectives that are in the interest of the company and its
shareholders, and must facilitate effective supervision” (OECD, 2004).
Just as corporate governance is based on the laws and principles that govern the actions
of companies, Planet Governance is conceived as a concept that should guide the good
practices and economic policies of states in terms of governing the planet.
2.2. Sustainable Development and Corporate Governance
The concept of Sustainable Development is as old as economics itself. Since the beginning
of the existence of economics, with Adam Smith, there have been concerns related to
the development of a nation. And, further on, other classics such as Thomas Malthus,
David Ricardo and Stuart Mill followed up this concern, referring to some aspects of
sustainable development. Neoclassical theory emphasized concerns about the existence
of clean air and water and renewable resources (fossil fuels, ores), expressing the need
for government intervention in the case of externalities and public goods.
In 1968, economists and humanists from ten countries met in Rome with the aim of
improving the socio-economic situation of developing countries. Their main concern was
the scarcity of resources, economic development, ecological problems and economic
development. This group of individuals became known as the Club of Rome.
Klarin (2018) states that it was forestry that gave rise to the greatest use of the term
sustainable development, ending up being mentioned for the first time in the Strategy
for the Conservation of Nature and Natural Resources of the International Union for
Conservation of Nature, published in 1980.
Although initially sustainable development aimed mainly at an ecological perspective, it
quickly spread to the socio-economic domain.
The existence of the concept of sustainable development, as we approach it today, dates
back to the 1970s and 1980s. All the studies and analysis inherent to this concept have
become more pronounced in recent years, associated with natural disasters and climate
change. However, it has existed for many decades, related not only to those areas, but
also to the instability then felt in the socioeconomic and political levels.
However, it was between the 1980s and 1990s that, given the reduction of the ozone
layer and climate change, environmental problems began to be seriously addressed,
leading to greater concern and focus on the concept of “sustainable growth”.
According to Hove (2004), sustainable development is a process that contributes to
achieving sustainability, that is, the final long-term goal. As a result, we conclude that
sustainability ends up following the results obtained using sustainable development
strategies. Accordingly, Dempsey et al. (2011) argue that the sustainable development
process consists of actions linked to managerial, financial, strategic and technical skills
that help to achieve sustainability.
More recently, the term sustainability has been associated with many areas other than
the environment and/or development, also including the economy, technology, business,
and agriculture, among others.
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e-ISSN: 1647-7251
Vol. 13, Nº. 2 (November 2022-April 2023), pp. 301-315
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In general, sustainability refers to the creation of a condition that enables people and
nature to coexist in a productive harmony that allows the socio-economic development
of current and future generations (Nodehi and Taghvaee, 2021).
Vatamanescu et al. (2017) argue that “sustainability is changing the way life is framed
and lived in the 21st century. It integrates concepts and theoretical models barely
anticipated and discussed in the previous century, which, nowadays, have known an
exponential dynamics”.
Klarin (2018) argues that the concept of complete sustainable development depends on
the balanced existence of three pillars, characterized as the pillars of sustainability:
environmental sustainability, with the objective of maintaining a healthy environment,
managing to combine the existence of economic activities involved in production, with
the well-being of the existing population with environmental quality;
social sustainability, with the objective of guaranteeing the application of human rights
and equality, preservation of cultural identity, respect for cultural diversity, race and
religion;
economic sustainability necessary to maintain the natural, social and human capital
required to obtain wealth.
Gazolla and Pellicelli (2019), assuming the need for a model that seeks to promote the
well-being of individuals, argue that “there is a misunderstanding between the central
role of the public sector regarding sustainable development and its effective participation
in the enterprise. The reason behind it is the difficulty of integrating the myriad needs of
citizens and the requirements of different cultures”.
Global goals such as the SDGs are believed to create a common vision and an incentive
for greater cooperation between international organizations and institutions and
therefore improve policy coherence (Haas and Stevens, 2017).
Although companies are profit-oriented, increasing political pressure, market
competition, customers with different characteristics from the past, and the general
public, among others, are leading the most diverse business sectors to get involved within
the framework of the Sustainable Development Goals.
Good corporate governance should provide adequate incentives for the board of directors
and managers to pursue objectives that are in the interest of society and its shareholders,
and should facilitate effective supervision (OECD, 2004). Also according to the OECD
(2004), good corporate governance should contribute to the organizations' sustainable
growth, identifying, among others, factors that can contribute to the companies' long-
term success: professional ethics and concern for environmental and social issues of the
external environment in which the company operates.
Thus, it is possible to identify a relationship between corporate governance, ethics and
environmental and social issues, also involving sustainability and the social responsibility
of organizations, concepts used to build the concept of Planet Governance.
JANUS.NET, e-journal of International Relations
e-ISSN: 1647-7251
Vol. 13, Nº. 2 (November 2022-April 2023), pp. 301-315
Planet Governance a new concept
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Planet Governance is thus identified as a concept that relates the performance of
countries and governments to competitiveness and sustainability based on respect for all
citizens and natural resources on the planet.
Corporate sustainability implies the incorporation of sustainable development objectives,
that is, objectives that are directed towards the pursuit of social equity, economic
efficiency and environmental performance, in a company's operational practices
(Labuschagne, Brent and Van Erck, 2005).
The concept of Corporate Social Responsibility has been the subject of debate and
scientific studies. It is linked to some theories, such as the Stakeholder Theory and its
business implications, aiming to demonstrate the impact of corporate governance on all
those who have an interest in the company's activity. In this sense, companies define
their strategic stakeholders in business management planning, outlining a specific
strategy based on their expectations. Thus, in the current changing world, Social
Responsibility has become a field of study that increasingly integrates new perspectives
for companies to promote sustainable development.
For now, the contribution of companies to sustainable development is represented by
their integration of Social Responsibility strategies considering various activities that
report results and are linked to sustainable development.
Gerhards and Greenwood (2021) state that “the last two decades have seen an increase
in the use and evolution of forms of governance instruments that seek to promote
sustainability in increasingly complex and varied contexts. These instruments, mostly
voluntary, combine guidance on sustainability strategy and/or monitoring with
marketable public information, such as certifications, ratings and reports, to encourage
their use”.
Song et al. (2022) report that their “understanding of the status and progress of SDG
adoption in business sectors is limited. Although many companies have mentioned the
SDGs in their reports, they lack assessment and monitoring tools to assess the current
status and actions in implementing the SDGs in business sectors”.
As we have also seen, other literature is concerned about the subject, but not with the
objective of quantifying the scope of the objectives that represent the sustainability that
each country will have at any given moment. For that, it will be necessary to start with
the definition of a new concept and capacity, to enable, in the future, measuring this
reach (or greater, or lesser, distance from the outlined objectives).
3. New Planet Governance Concept
3.1. Pillars of Corporate Governance and Planet Governance
An adequate model of Corporate Governance is essential for the success of organizations.
The separation of powers structure and the organization's control and balance system
must meet four fundamental criteria, as follows: