Cover: Business Sustainability, Corporate Governance, and Organizational Ethics by Zabihollah Rezaee with Timothy Fogarty

Business Sustainability, Corporate Governance, and Organizational Ethics




This book is dedicated to Dr. Rezaee's parents Fazlollah and Fatemeh, sister Monireh,
wife Soheila, and children Nick and Rose

and to Dr. Fogarty's wife Susan, son Joe, and daughter Kate.


Business sustainability, corporate governance, and organizational ethics are taking center stage in the global business and academic communities. With its accreditation, the Association to Advance Collegiate Schools of Business (AACSB) has noted that these topics are gaining the global acceptance and attention of business schools worldwide. Adequate coverage of these important topics will enable business schools and accounting programs to sufficiently and effectively train competent and ethical students to become future business leaders. Business sustainability focuses on economic, governance, social, ethical, and environmental (EGSEE) performance in creating shared value for all stakeholders. Business sustainability information is now demanded by investors, required by regulators, and reported by business organizations. Organizations worldwide report their integrated financial and nonfinancial sustainability performance in creating shared values for all stakeholders from shareholders to customers, suppliers, creditors, employees, environmental agencies, government, and society. Several professional organizations, including the Global Reporting Initiative (GRI), the Sustainability Accounting Standards Board (SASB), the International Integrated Reporting Council (IIRC), and the Corporate Reporting Dialogue (CRD), have issued numerous sustainability reporting and assurance guidelines to assist business organizations in disclosing their financial and nonfinancial sustainability performance information to all stakeholders. As the book was going through production, the Business Roundtable, On August 19, 2019, announced the adoption of a new Statement on the Purpose of a Corporation, signed by 181 well-known, high-powered CEOs. The Statement indicates “moves away from shareholder primacy” as a guiding principle and outlines in its place a “modern standard for corporate responsibility” that makes a commitment to all stakeholders under stakeholder primacy, and advocates the concept of profit-with-purpose mission for public companies.

Corporate governance is also considered one of the themes of the twenty-first century in determining the roles, responsibilities, and accountability of all corporate gatekeepers from the board of directors to management, regulators, standard-setters, internal auditors, external auditors, legal counsel, and financial advisors and fund managers in contributing and adding value to corporate success and sustainable performance. Organizational ethics encompass the principles and standards of behavior and best practices that guide organizational decision making and provide the framework for individuals within the organization to do the right thing. Increasing expectations around business sustainability, corporate governance, organizational ethics, and accountability for all types and sizes of entities appears to be an international trend. Business schools can serve as a conduit to produce and transfer knowledge about business sustainability, corporate governance, and organizational ethics to ensure a more sustainable future education that contributes to the well-being of society. Business schools worldwide play an important role in preparing the most competent future business leaders who understand corporate governance and business sustainability, and conduct their businesses ethically. Furthermore, these three emerging educational areas of business sustainability, corporate governance, and organizational ethics are aligned with the AACSB’s core values, guiding principles, and the desired dimensions of engagement, innovation, and impact. Thus, these special topics deserve proper attention and coverage in the business and accounting curricula.

This book is the first to present a comprehensive framework of the theory and practice of business sustainability, corporate governance, and organizational ethics education. Currently, more than 450 courses and programs in business sustainability, corporate governance, and organizational ethics are being offered by colleges and universities worldwide and there are more than 200 business sustainability, ethics, and corporate governance research centers at high-profile universities worldwide. More universities are expected to offer stand-alone courses and programs and research centers on business sustainability, corporate governance, and organizational ethics. This book provides students with the knowledge and organizational and personal skills to become successful business leaders, and is intended to be used at both undergraduate and graduate levels. It takes a holistic teaching approach, focusing on the value-adding roles of all participants in the corporate governance process who share the collective responsibility of creating shareholder value; protecting interests of other stakeholders; complying with all applicable laws, rules, regulations, ethics standards, and best practices; and producing reliable, transparent, and high-quality financial information. This book can be used in a three-credit-hour course at the undergraduate, graduate, and/or both levels, as it is designed to develop an awareness and understanding of the main themes, perspectives, frameworks, and issues pertaining to corporate governance, organizational ethics, and business sustainability. Alternatively, different modules of the book can be used individually in a variety of undergraduate and/or graduate accounting and business courses.

This book is a highly pertinent reference for all business schools and other college programs that offer business sustainability, corporate governance, and organizational ethics education, as well as for professionals who need an up-to-date understanding of emerging areas in business. There is currently no other comprehensive book that covers all these emerging and important contemporary issues of corporate governance, organizational ethics, and business sustainability. Straightforward language illustrates theoretical and practical concepts and procedures to aid comprehension of complex corporate governance and business sustainability processes and exposure to a variety of organizational ethics issues that shape corporate culture. The focus is on corporate culture in creating links between business sustainability, corporate governance, and organizational ethics. The next generations of business leaders must understand the importance of ethical conduct, business sustainability, and corporate governance to society and the environment. Organizations of all types (for-profit, not-for-profit), sizes, and complexities (simple operation, multinational) can benefit from comprehensive business sustainability, effective corporate governance, and a robust ethical culture.

Business schools play an important role in preparing the next generation of business leaders, who will experience lifelong training in acting with integrity, upholding the highest level of ethical conduct, and carrying the heavy burden of public trust, as well as being socially and environmentally responsible. The time has come for business schools and accounting programs to renew and revitalize their commitment and education programs in providing business sustainability, corporate governance, and organizational ethics education and in training the most ethical, competent, and socially and environmentally responsible future business leaders. We hope you find this book relevant in educating future business leaders.


Zabi Rezaee
Tim Fogarty
August 19, 2019


We acknowledge rules, regulations, and authoritative reports and guidelines that are cited throughout the book, including the rules, standards, publications, and reports of entities such as the Securities and Exchange Commission (SEC), the Public Company Accounting Oversight Board (PCAOB), the American Institute of Certified Public Accountants (AICPA), the International Federation of Accountants (IFAC), as well as the Global Reporting Initiative, the International Integrated Reporting Council, the Sustainability Accounting Standards Board, the Big 4 and other international accounting firms, the Association to Advance Collegiate Schools of Business (AACSB), and the United Nations Sustainability Development Programs (UNSDP), among other organizations.

We also acknowledge the encouragement and support of our colleagues at The University of Memphis, and Case Western Reserve University. We truly appreciate professors Damon Fleming, Tim Coville, and Brigitte Muehlmann for their invaluable review of business sustainability chapters and seasoned internal audit practitioners, Richard A. Mueller and Alan N. Siegfried, for their insightful reviews of the chapters on corporate governance. Special thanks are due to Professor Sridhar (Sri) Ramamoorti for his generous support and advice throughout the preparation of the book and particularly his review of 13 chapters of Module III on corporate governance. The assistance of our graduate students, Charles Bell, Naomi Riley, Jing Wang, Coumba Khoule, and Sonia Nauhria, is also appreciated. We thank the members of the John Wiley & Sons team for their hard work and dedication, including Susan Cerra for managing the book through the production process, Jean-Karl Martin for marketing efforts, and Sheck Cho for his editorial guidance.

Our sincere thanks are due to our families – the Rezaee family (Soheila, Rose, and Nick) and the Fogarty family (Susan, Joe, and Kate). Without their love and support, this book would not have come to fruition when it did.