10) ESG Flashcards
what is stakeholder mgmt?
the foundation for ESG – org must manage its relations with stakeholders in an action-oriented way
what is Freeman’s theory on stakeholder mgmt?
it would be impossible to satisfy all stakeholders and it would take over their core processes/aim as a company
what are the key primary stakeholders?
those who are directly affected by the actions of the company
what is stakeholder inclusivity?
- an org considering the needs, interests and expectations of all material stakeholders in the execution of its duties
- focus on value creation not profit creation
how can an org include stakeholder inclusivity into their value creation journey?
- balance their goals w stakeholder expectations
- establish accountability
- develop relationships based on trust and integrity
what is the resource-based theory?
companies are dependent on resources for them to be sustainable and operate in the world to ensure they have a comp adv
what do competitive adv and resources assist with?
creating entry barriers to the industry
what are the attributes of resources which create a comp adv?
- valuable, not substitutable
- rare and specific
- difficult to replicate
what is the overall goal of ESG?
sustainability
what are the ESG focuses for society?
- standard of living
- education
- jobs
what are the ESG focuses for economy?
- growth
- profit
- cost saving
what are the ESG focuses for environment?
- nat resource use
- pollution prevention
- biodiversity
what are the ESG focuses for socio-economics?
- business ethics
- fair trade
- worker benefits
what are the ESG focuses for socio-env?
- env justice
- conservation
what are the ESG focuses for env-economic?
- energy efficiency
- renewable fuels
- green tech
how can ESG help during a financial crisis?
can mitigate financial risk
what are some of the issues with ESG?
1) transparency and measurement issues
2) issues with ranking
3) unsatisfactory balances
what is greenwashing?
when a company claims to be environmentally conscious for marketing purposes but actually isn’t making any notable sustainability efforts
what about ESG can be advantageous to a company?
- cost saving
- energy saving
- reducing pollution
what is circular economy?
where a company minimizes wastage by putting its outputs back into the company or reusing its output
what is social decay?
when a company acts like they have the SHs best interests in mind, but ultimately only focus on making a profit
between whom can agency conflicts occur?
- maj and min SH
- managers and SH
- entity vs other stakeholders
what occurs in an agency relationship?
fiduciary relationship where the agent has dec-mak authority to perform services on behalf of the principal
what can be used to achieve goal congruence between principals and agents?
governance mechanisms
what does King define corp gov as?
exercise of ethical and effective leadership through:
- strategic direction
- disclosure and oversight
- ethical culture
- accountability
what are some of the governance outcomes that King hopes to achieve?
- ethical culture
- effective control
- good performance
what are King’s requirements for board composition?
- diversity
- CEO not chair
- NED, iNED, executive
how does business stage impact board diversity?
company will need a different set of skills, etc at different stages of growth to assist with achieving their objectives
