Business In society Flashcards
Triple Bottom Line
Methodology
3 P’s:
Organisations measuring:
- Profit
- People
- Planet
CSR
Corporate Social Responsibility
Corporate governance codes and principles
- different in different countries
- not mandated by law
Examples:
OECD
Sarbanes-Oxley
OECD
Organisation for Economic, Co-operation and Development
Principles, to help governments improve the governance framework in their country:
1) ensuring basis for an effective corporate governance framework
- the framework should push an agenda of transparency and efficiency in their markets
- be consistent with the laws of the relevant country
2) the rights of shareholders and key ownership functions
- shareholders rights should be protected and directors must act in the best interest of the shareholders
3) The equitable treatment of shareholders
- every shareholder regardless of how big has the choice to be heard at the AGM for example
4) the role of stakeholders in corporate governance.
- promote and increase cooperation between corporation and stakeholders
5) Disclosure and transparency
6) The responsibilities of the board
- role to monitor the management
- be held accountable to the company and its shareholders
Sarbanes-Oxley (Sarbox or Sox)
Is a rules based and mandatory governance law that applies to all US public registered company boards.
3 of 11 principles:
1) PCAOB (Public Company Accounting Oversight Board)
- audits the auditors
- creates a central oversight board
2) Auditor Independence
- established standards for external auditor independence
- address nee auditor approval requirements
- addresses audit partner rotation
- addresses auditor reporting requirements
- restricts auditing companies from providing non-audit services, such as consulting, for the same clients.
3) Corporate responsibility
- mandates that senior executives take individual responsibility
- specifies the responsibility of corporate officers
- defines the interaction of external auditors and corporate audit committees
CSR
Corporate Social Responsibility =
A company’s responsibility to the society in which it operates
Benefits of CSR
- brand differentiation
- improve reputation
- avoid new regulation - be proactive
Carroll’s CSR Pyramid
Economic: Primary objective
- Return value to shareholders
- stay in business
- deliver quality to customers
Legal: Primary objective
- operate within the law of each country of operation (compliance)
Ethical: (Discretionary responsibilities)
- Going beyond compliance
- doing what’s right and fair
Philanthropic:
- Discretionary acts of corporate citizenship
4 Ethical stances by Johnson, Scholes and Whittington:
determine extend to which an organisation will exceed its minimum obligations to stake holders.
1) Short term shareholder interest
- focussed on returns in the coming year.
2) Longer term shareholder interest.
- recognises that money spent now could bring returns later
3) multiple stakeholder obligation
- involves recognising a purpose beyond merely financial
4) shaper of society
- financial interests are subordinate to societal interests
CSR Initiatives and labour standards
2009: OECD published a range of different guidelines with a focus on CSR:
- large focus: treatment of staff
This led to:
- ILO Conventions
- ILO Tripartite Declaration
- Labour standards
ILO Conventions =
International Labour Organisation Convention:
- businesses have a responsibility to promote human rights throughout the world
- binding for all countries that have ratified the conventions
Core labour standards:
- right to freedom of association (freedom to join or leave an organisation)
- right to organise and to collective bargaining (trade union)
- freedom from forced labour
ILO Tripartite Declaration
Designed to add guidance to government, employer and worker organisations in a number of areas regarding employment.
Non-binding agreement.
Main areas:
-general policies, respecting international standards
- employment
- training
- conditions of work and life
- industrial relations
Labour standards
Written by the UN Global Compact lists a number of principles:
- businesses should uphold freedom of association
- businesses should uphold effective recognition of the right to collective bargaining
- elimination of all forms of forced and compulsory labour
- effective abolition of child labour
- elimination of discrimination in respect of employment and educations
Sustainability
Using resources in a way so that the needs of future generations aren’t compromised.
How to achieve:
- Look at potential short-term profitability = cost savings
Implementing CSR:
Within the organisation:
- mission and objectives
- Benchmarking
- CSR Policies
