Scorecards

Introduction

This volume provides boards with governance frameworks that can be used for self-assessment purposes. Two exemplar scorecards are shown:

  1. The first scorecard focuses upon DISCLOSURE EVIDENCE mainly through the Annual Report and on the website. It is therefore to be most relevant to public interest entities with transparency and disclosure obligations.
  2. The second scorecard focuses upon amore internally focused assessment that might be conducted by a closely held unlisted family business.

It is intended that these exemplar scorecards will be placed upon a website maintained by the National Committee of Corporate Governance and updated on a regular basis.

About Scorecards

Definition

A scorecard is a quantitative tool to measure the level of observance of a corporate governance code.

The purpose of Scorecards

Scorecards are NOT used principally to measure regulatory compliance. Rather, scorecards measure the observance of a voluntary code of best practice. They are used to:

  • Assess a company’s governance practices,
  • Show progress over time, and
  • Compare different companies and even groups of companies within or across countries.

The benefits of Scorecards

The main beneficiaries of scorecards are companies and their stakeholders (Table 1). Most companies want quantifiable and comparable information on the quality of their governance practices. Scorecards generate important information on the quality of governance practices. They can tell whether companies ignore codes or follow code recommendations. They provide information on the impact of governance codes. They can be used to compare practices between companies and between countries.

Scorecards encourage companies to improve their governance. Companies want to know when and where they fall short so that they can act.

Comparisons to other companies provide an important indicator on how the company stacks up against a peer group and can motivate companies to improve their governance.

Scorecards are particularly useful when a new or revised code of corporate governance is introduced in a country.

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