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Corporate Governance > Lesson 7 - CSR, Stakeholder Reporting On Non finacial Issues > Flashcards

Lesson 7 - CSR, Stakeholder Reporting On Non finacial Issues Flashcards

1
Q

CSR definition

A

The commitment by business to behave ethically

and contribute to economic development

While improving quality of life of the workforce as well as the community and society

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2
Q

Reporting on non financial issues

A
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3
Q

Corporate citizenship

A

Belief that companies should act in the same way as citizens

Meeting the countries legal, social, ethical and economic responsibilities expected of its citizens

But companies are not citizens and have a wider role to play

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4
Q

Sustainability

A

How a company carries out its operations

Develops its strategy

And manages risk

To have a positive impact or to lessen the negative impact on the environment

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5
Q

ESG and investors

A

Integrating ESG issues / concerns into capital markets

Fund managers and institutional investors have bought these 3 areas together and their benchmarking /scoring companies on these factors

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6
Q

CSR benefits - business case

A

1-sustainability of company
2-reduce reputation risk
3-attract capital
4-necessary for innovation (ideas treatment of workforce WFH)
5-obtain competitive advantage
6-stay relevant and competitive

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7
Q

How CSR measured

A

Considerations when developing measures or targets

1- focus on outcomes

2- measure the outcome from a qualitative and quantitative perspective

3- engage and listen to stakeholders

4- do not undervalue stories - very powerful (changing lives through donations)

5- learn from others

6-identify and measure risks

7-measure, refine, modify and measure again (continually re examine measures)

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8
Q

Drivers for CSR

A

laws and regulations

OECD guidelines

World bank guidance

Investors are using ESG to evaluate companies and their values (record on human rights, impact on environment)

Also referred to as socially responsible investment

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9
Q

Greenwashing

A

making unsubstantiated or misleading claim about the environmental benefits of a product or service

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10
Q

Types of CSR activity

A

Philanthropy
high benefit to society
low benefit to organization
e.g. Patagonia donate profits

Pet projects
benefit to society low and
low benefit to organization
e.g. sponsor opera

Partnerships
High benefit to society
High benefit to organization
Eg football youth partnership

Propaganda
sponsoring an event
High benefit to org
Low benefit to society
E.g. virgin media sponsoring London marathon

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11
Q

Approaches to CSR
(area of impact)

A

ENVIRONMENTAL APPROACH - using paper straws as opposed to plastic

COMMUNITY APPROACH - companies sponsoring volunteer days or events to give back to the community

EMPLOYEE APPROACH - employee wellbeing focus - yoga, meditation

ETHICS APPROACH - ensure ethics of suppliers aligned to your own

SUPPLIER APPROACH

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12
Q

Creating CSR partnerships- benefits

A
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13
Q

CSR initiatives

A

UN Sustainability goals 17 goals - eliminate poverty, hunger, focus quality education, clean water, etc

UN Global compact - 10 principles cover human rights, Labour, environment.

Sigma project guidelines - sustainability reporting framework

Equator Principles- risk management framework to determine,assess and manage environmental and social risks

OECD guidelines - encourage positive contributions to environment, social progress

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14
Q

Benchmarking CSR

A

Dow Jones Sustainability Index

*FTSE 4 GOOD indexes**

Business in Community responsible Business Tracker - BITC

But there is no requirement or legislation for companies to report on CSR

But companies only talk about what they are doing well

This is on the horizon though

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15
Q

CoSec Role in CSR

A

Develop KPIs

Annual review at board

Advise of directors duties section 172 promote long term success of company

Communicate views of stakeholder and what are other companies doing

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16
Q

Engagement with stakeholders

A

Board should understand views of key stakeholders and

Describe in Annual report how their interests are considered

17
Q

Ways to engage stakeholders

A

Reactively - defensive approach

Proactively - understand concerns

Interactively - ongoing relationship management - permanent discussions

18
Q

Ways to engage with workforce

A

Director appointed from workforce

workforce advisory panel

Designated NED to take on workforce issues

19
Q

Wates principles - same stakeholder engagement

A
20
Q

Companies Act 2006 amendment

Miscellaneous Reporting Regulation 2018

A

Large companies

Must include a statement in Strategic report

how directors handled matters set out in section 172

21
Q

CA 2006 - Section 172 promote the success of the company

A

Factors to consider

Consequence of decision in long term

Interests of employees

Foster relationships with suppliers, customers

Impact of ops on community and environment

Reputation - desirability to maintain high standards of conduct

Act fairly

22
Q

CoSec Role in stakeholder engagement

A

Develop - ID stakeholders, develop KPIs, develop and approve ESG policy, discuss risks and impact. Integrate stakeholder issues in AGM, Covent stakeholder forum

Advise board on reporting

23
Q

Non financial reporting - integrated reporting

A

Traditional corporate reporting only covers the financial position

Intangibles such as brand recognition, good reputation, environmental reports are excluded

Financial reports are yesterdays story

Non financial costs-such as environmental costs (use of natural resources) are excluded

Too much info not understood by average reader

24
Q

Section 172 Companies Act 2006

Companies Regulation (Misc Reporting) 2018

Narrative reporting

A

As part of strategic report

Large companies required to report

Companies >250 staff

Summarize how directors engage with employees, how the foster business relationships with suppliers, customers, others

25
Q

Strategic report is forward looking

A

Strategy

Objectives

Business model

Trends and factors affecting the company

Risks and uncertainties

Companies only report what they want

Required to report on gender balance

26
Q

Integrated reporting

A

Different to narrative reporting

Integrating reporting pulls all different aspects of reporting into a single metric

27
Q

How to bring all reports together into single integrated report

A

Integrated thinking - u6 types of capital

1-finance capital
2-human capital
3-manufacturing capital
4-intellectual capital
5-natural capital
6-social capital

28
Q

Benefits of integrated reporting

A

Provides greater clarity

Better decisions

Become aware of interests of different stakeholders

Reduce reputational risk

29
Q

Triple bottom reporting

John Elkington 1994

A

Effort to align integrated reporting

Link profit, people and planet

problem it is very difficult to quantify social and environmental elements

No widely accepted set of standards for reporting

No requirement to independently audit social and environmental measures - no audit process - therefore open to interpretation

This type of reporting can’t be trusted

30
Q

IIRC developed integrated reporting framework

A

Goal to improve quality of info

Promote cohesive and efficient approach to reporting

Support integrated thinking

31
Q

Global reporting initiative

A

Trying to standardize sustainable reporting

32
Q

Sustainability reporting - non financial reporting

A
33
Q

CSR companies act 2006 requirement to report on greenhouse gas initiatives

A
34
Q

Environmental P&L accounts

A

Created by puma in 2011

Linked environment impact across the supply chain

Allows companies to measure costs and benefits if t generates for environment and therefore make more sustainable decision making

Stella McCartney 2015 began using EP&L

Problem how do you aufdit this and where do you draw the line

Eg use of mobile phone - and calculating the cost / use of that mobile phone

35
Q

Companies Act Section 172

A

Directors Duty

172 PROMOTE THe SUCCESS OF THE COMPANY

Factors to consider

long term consequences of any decision

interests of employees

stakeholders relationships

impact on the community

reputation / high standards

act fairly

36
Q

Role of CoSec in Stakeholder Engagement

A

Identify stakeholders
Develop strategy for engagement
Discuss /approve KPIs
Discuss risks + impact
Convene stakeholder forum
Document concerns

Corporate Governance (10 decks)

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