Rx to be a global corporate citizen

The Adani controversy will serve as a marker for India Inc's global aspirations that could run afoul of imperfectly harmonised regulations and variance in law enforcement. Businesses operating within acceptable tolerance levels in individual jurisdictions will have to craft corporate governance standards that clear the highest available threshold. Having a global footprint involves best-in-class innovation, entrepreneurship and governance to gain access to markets and capital. The margin of error on all three counts decreases with the diversity of values a corporate entity is exposed to. And the scope for regulatory capture diminishes with scale. It is not just about being a good corporate citizen at home. Companies must get better at abiding with whatever law confronts them.

This could be challenging for businesses that have grown in an environment that does not share the sensitivities of a new market. The array of views on sustainability, for instance, is a minefield for corporate lawyers. But governance is a less contested domain and yields itself to easier harmony. Evolving a common set of rules that bind a company to its environment is, however, a slow process. Countries make laws through a complex interplay of political and economic factors. Businesses cannot pace themselves to these timelines. They need to be ahead in the game of regulatory catch-up. Companies that are culturally open to new values are more resilient in an international setting. They also contribute to synchronising regulation among countries.

The process of globalisation that allows companies to grow beyond local markets is strengthened by information-sharing, which raises the bar for corporate disclosure. Corporate citizenship is ensured not only by doing what is right, but also by communicating it effectively to stakeholders. Indian companies seeking a global mindset must work on their messaging, to consumers and investors alike. This is key to gaining the trust needed by foreign entities in any market.