CORPORATE GOVERANCE
SOCIAL RESPONSIBILITY
corporate social responsibility: voluntary steps taken to improve welfare of the community
corporate social investment: the resources a business spends to improve communities’ standard of living
SUSTAINABILITY
the ability to be maintained once the business leaves
CORPORATE SOCIAL RESPONSIBILITY IMPLICATIONS FOR THE BUSINESS
BENEFITS
o
o
o
o
o
helps recruit best employees
favourable image
employee loyalty
customer loyalty
attracts investors
PROBLEMS
o
o
o
o
o
lack of skills
expensive
time consuming
expectations
distracts employees
CORPORATE SOCIAL RESPONSIBILITY IMPLICATIONS FOR THE COMMUNITY
BENEFITS
o
o
o
o
o
improves quality of life
skills development
employment opportunities
bursaries
infrastructure improvement
SOUTH AFRICAN CSR
o
o
o
o
o
o
o
Inequalities of the past
Cycle of poverty
Dualistic economy
Apartheid
Crime
HIV/AIDS epidemic
Global village
PROBLEMS
o
o
o
o
o
lack responsibility
dependant on business
not sustainable
distract public
spending money
INTEGRATED REPORTING
o
o
o
o
Profit
People
Planet
King Reports suggests JSE-listed
not legally binding but favourable
emphasis on empowering community
increased awareness of flaws
POVERTY
o
o
o
poverty is the state of having little or no money as well as few or no material possessions
world bank defines poverty as living under $1,90 per person
comparable cost of buying power
EXTREME POVERTY
o
o
o
struggling to survive
unable to fight disease
little to no access to health, education
SUBSISTENCE POVERTY
o
o
little income
lack basic necessities
KING CODE
o
o
o
currently implemented is King Code IV
requires companies to apply explain
practises
states that the board of directors is
responsible for:
− ethical culture
− good performance
− effective control
− trust and good reputation
GOVERNANCE FRAMEWORK
o
o
o
o
o
o
code of principles and practises
accountable and responsible
JSE makes it compulsory to comply with
King Code through JSE SRI
governance links with compliance of law
directors must act within boundaries of law
checkpoints ensuring stakeholder act
legally
PRIMARY CHARACTERISTICS OF GOOD GOVERNANCE
TRANSPARENCY
o
disclosing all information to stakeholders
INDEPENDENCE
o
avoidance of undue influence
ACCOUNTABILITY
o
answerable for actions
FAIRNESS
o
avoiding bias
INTEGRITY
o
way to measure accountability, honesty
and truth
SOCIAL ISSUES
o
DUTIES AND RESPONSIBILITIES OF DIRECTOR
o
o
o
o
o
o
o
PROMPTING ETHICAL AND RESPONSIBLE DECISIONS
o
o
o
clarify standards of ethical behaviour
comply with legal requirements
have reasonable expectations
stakeholders must focus on needs of future
generations
measures relationship between the
elements of triple bottom line
ENVIRONMENTAL SUSTAINABILITY PILLAR
o
self-discipline: person’s level of integrity
market discipline: investors will pay
premiums with good government regime
regulatory discipline: reinforces selfdiscipline
director must act with good faith, honesty,
skill and integrity
SUSTAINABILITY AS PART OF KING CODE
DISCIPLINE
o
business should be concerned about fair
treatment of society as a whole
business activities concerned with
degradation of environment
measures growth and development
preserve environmental quality
consider 4Ps of marketing:
− products: recycled materials
− processes: assess activities
− practises: waste disposal
− premises: buildings designed
BENEFITS OF GOOD CORPORATE
GOVERNANCE
o
o
o
o
o
o
o
o
maintains investor confidence
minimises wastage, corruption, risks
brand formation and development
provides incentives
positive impact on share prices and SRI
rating
lowers capital acquisition costs
corporate success and economic growth
contributes to political stability and
enhanced international relations
GLOBAL REPORTING INITIATIVE
o
o
o
o
o
GRI is the GLOBAL Reporting Initiative
promotes reporting on sustainability issues
by creating a sustainable reporting
framework
promote transparency on ESG issues
provides guidelines to businesses to
determine their impact on ESG fronts
ensures businesses are compared with one
another
FTSE/JSE RESPONSIBILITY INVESTMENT INDEX
o
o
o
o
o
o
SRI is the Social Responsibility Index
ESG is Economic, Social and Governance
Index founded on triple bottom line and good corporate governance.
FTSE Group are world leaders in creation and management of index solutions.
FTSE/JSE Index Designed to represent the performance of South African companies.
Launched 12 October 2015
PURPOSE
o
o
o
identify companies on JSE that subscribe to Triple Bottom Line (TBL)
provide a tool with criteria to align a company to globally acceptable ESG Standards
promote responsible business practice in South Africa
BENEFITS
o
o
o
o
o
ESG disclosure among JSE-listed companies is promoted
scoring high on the index confirms to stakeholders that the business is accountable and transparent
complying with the index could improve/boost image of business in minds of investors
being listed on the index can be used as a competitive advantage for business
companies can build an organisational culture around this index and make it part of their brand