What is the underlying principle of the corporate governance code in most markets?

TheGovernance Factorschapter of the OTM outlines that:

“Corporate governance codes in most jurisdictions are based on the principle of‘comply or explain’, where companies must either follow recommended governance practices or publicly explain deviations.”

This approach promotes flexibility while maintaining transparency and accountability. It contrasts with rules-based systems, emphasizing market discipline and investor judgment. The manual further references theUK Corporate Governance Code, the archetype of the “comply or explain” framework, influencing global standards in the EU, Australia, and Asia.

Therefore,option Caccurately reflects the widely accepted governance principle underpinning ESG frameworks.

????Reference:2021-Final-Book.pdf, Chapter 5 — Governance Factors (Corporate Governance Codes section).