Chapter 2 - Business Sustainability Flashcards
What is corporate social responsibility?
An entity’s obligations to society in general and to the environment
What is business sustainability?
The development that meets the needs of the present without compromising the ability of future generations to meet their own needs
What is a stakeholder?
An individual or group with an interest in an entity
What is the agency theory?
The theory which describes the relationship where one party (the principal) employs another (agent) to perform some activity on their behalf
What is shareholder value?
The views that holds that the purpose of the corporation is to maximise shareholder wealth
What is the stakeholder theory?
Holds the purpose of the entity is to work for the good of all stakeholders, not just to maximise shareholder wealth
What is the stewardship theory?
Director act in the interest of a group(s) of stakeholders and not shareholder value
Managers will indeed act as responsible stewards of the assets they control
What is the legitimacy theory?
Theory that entitles must conduct operations in accordance with societal expectations
-behaving in a way society accepts
What is triple bottom line?
Considers the economic, social and environmental performance of an entity
What is the GRI reporting framework?
A sustainability framework that provides guidance on how organisations can disclose their sustainability performance
Explain the concept of corporate governance
Refers to the direction, control and management of an entity. This includes the rules, procedures and structure upon which the organisation seeks to meet its objectives.
The board of directors is given the authority through a company constitution to act on behalf of shareholders
What are the key drivers of business sustainability?
- Competition for resources
- Climate change
- Economic globalisation
- Connectivity and communication
What are the four key responsibilities of businesses?
- Economic
- Legal
- Ethical
- Discretionary
What are the principles of business sustainability?
- Ethics
- Governance
- Transparency
- Business relationships
- Financial return
- Community involvement
- Value of products and services
- Employment practices
- Protection of the environment
Outline corporate governance guidelines and practices
The guidelines foster awareness if a director’s responsibility, and help communicate society’s expectations to the wider business community.
Such guidelines includes board structure, financial reporting, ethics, stakeholders, remuneration and disclosure
