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BA4 - CIMA > Chapters 7&8 > Flashcards

Chapters 7&8 Flashcards

1
Q

CSR

A

Corporate Social Responsibility is an organisation’s obligation to maximise positive stakeholder benefits while minimising the negative effects of its actions.

(World Business Council for Sustainable Development = businesses behaving ethically, contributing to economic development, improving workforce QOL and their families, and society and local community)

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2
Q

Sustainability

A

Developing strategies so that the company only uses resources at a rate that allows them to be replenished. So the needs of the current generation is met without compromising the needs of future generations.

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3
Q

CSR and Ethics?

A
  • CSR require an organisation to go beyond simply adhering to minimum ethical standards.
  • CSR is closely linked to contemporary business issues, giving back to society and being good citizens
  • CSR is socially mediated unlike ethics and likely to be specific to the time and culture in which it’s considered
  • voluntary but associated with legal obligations see brackets below

EG

  • equal opportunity policies (employment legislation)
  • environmental emission and recycling (co2 targets, green taxes and carbon levies)
  • fair trade (low pay = min wage)
  • charitable donations (attract tax reliefs)
  • standards in the supply chain (min wage and health and safety policies)
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4
Q

CIMA and American Institute of Certified Public Accountants report titled ‘Evolution of corporate sustainability practices’

A
  • Business sustainability = long term success
  • sustainability strategies and reporting
  • sustainability plans for complying with laws and improving efficiency

how to embed sustainability into an organisation:

  • strategy and oversight (board commitment, sustainability drivers)
  • execution and alignment ( everyone’s responsibility, breaking down targets to smaller ones, processes to make it part of day to day decision making and training)
  • performance and reporting (targets, champions to promote, monitoring and reporting)
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5
Q

Finance professionals and sustainability

A

Proactive approach rather than reactive

Helping promote sustainability practices throughout the organisation in relation to:

  • products / services
  • customers
  • supply chain
  • workplace
  • employees
  • other business functions and processes
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6
Q

What are the OECD Principles for?

A

guidance to multi national companies on how to take into account the countries in which they operate and the views of other stakeholders.

principles and standards for responsible business conduct and therefore CSR policies

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7
Q

OECD general policies

A

Sustainable development (econ/social/environmental progress)

Respecting human rights (those affected by activities)

encourage local capacity building

encourage human capital formation (employment)

refrain from seeking or accepting exemptions not in framework

good corporate governance principles / practices

Self regulatory practices / management systems

promote employee awareness / compliance w policies

refrain from discriminatory / disciplinary action

business partners, suppliers etc to follow same guidelines

Abstain from improper involvement in local political activities or adverse impacts through business activities

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8
Q

Arguments FOR CSR

Encapsulated in the Enlightened Self Interest Theory

A

Ethical companies are

  • rewarded with extra customers
  • avoid boycotts
  • likely to retain/attract high quality staff
  • likely to attract investors who seek ethical ones
  • likely to avoid punitive legislation
  • contributing to a positive society (stable environment to trade)
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9
Q

Arguments AGAINST CSR (Advanced by Friedman)

A
  • Businesses should maximise profits, not shoulder responsibilities which they shouldn’t have
  • aim is to maximise shareholders wealth (if they want to spend on charity then fine)
  • governments should be tackling social issues and regulating society instead
  • profits = more taxes therefore is responsible alone
  • practical reasons eg higher costs, losing customers and wasting time.
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10
Q

Carrol’s 4 part model to CSR (responsibilities)

A

ECONOMIC

  • stakeholder returns to stay in business
  • employees safe well paid jobs
  • customers good qual produce @ fair price

LEGAL

  • follow relevant laws and regulations.
  • avoid anti competitive behaviour and price fixing

ETHICAL
- seen doing what’s right eg voluntary reduction in carbon emissions / closing polluting operations

PHILANTHROPIC
- undertaking desired actions instead of required ones eg charitable donations, sponsoring and providing facilities etc

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11
Q

Carrol’s 4 ways for SOCIAL RESPONSIVENESS

A

responding to social pressures by:

  • reaction
    denying responsibility
  • defence
    initially fighting then doing bare minimum
  • accommodation
    accepting responsibility and doing whats required
  • proaction
    volunteering to go beyond industry norms
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12
Q

stakeholder conflicts will be inevitable so the examples are:

A

employees - salary, security, bonuses
shareholders - dividends, growth, success
customers - value for money
suppliers - continued business and payments
banks - repayment
local community - not to be negatively affected so responsible businesses
gov - taxes, jobs, compliance w laws

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13
Q

Strategic Approach to CSR

A

Identify relevant stakeholders

classify them
I - internal (work in)
C - connected (have dealing with eg shareholders, customers)
E - External (lack direct interest eg trade unions who want an active part)

establish their claims

assess the importance of stakeholder groups

decide on a response eg one of carrols four

Aiming to be sustainable with available resources to maximise competitive advantage WHILST pursuing profit

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14
Q

CSR and supply chain and operations?

A

SupplyChain

  • meet standards
  • verify them through audit
  • failures will be bad for company reputation
  • higher prices to uphold these

Operations

  • process design eg min resources
  • product design eg recycled packaging and use
  • quality management eg high qual to reduce wastage
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15
Q

The Global Reporting Initiative (GRI) produced the G4 Sustainability Reporting Guidelines

A

G4 Sustainability Reporting Guidelines sets out 3 categories to report about

ECONOMIC
performances

ENVIRONMENTAL
materials, waste, emissions, compliance

SOCIAL
labour (remuneration, pay, training),
human rights (investments etc),
society/community (behaviour),
product responsibility (health and safety)

should have balance, comparability, accuracy, timeliness, clarity, reliability

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16
Q

ILO Tripartite Declaration

A

Principles that establish norms covering all aspects of working conditions so;

General Policies
Employment
Training
Conditions of Work and Life
Industrial Relations
17
Q

UN Global Impact

A 
Another recognised CSR approach
Ten principles under;
Human rights
Labour Standards
Environment
Anti Corruption
18
Q

Integrated Reporting (what it is, what capital means to value creation and the types of capital)

A

Concerned with conveying a wider message on an entity’s performance not just financials but how its activities interact to create value over time.

resources = capitals -> assess value creation through increases/decreases

6 TYPES OF CAPITAL
Financial (investment funds)
Manufactured (infrastructure)
Intellectual (licenses etc)
Human (experience of staff)
Social and Relationship (networks)
Natural (environmental resources)
19
Q

IIRC 7 principles to prepare an integrated report

A 
Strategic focus and future orientation
Connectivity of Information
Stakeholder Relationships
Materiality (disclosure of matters)
Conciseness
Reliability / Completeness
Consistency / Comparability (KPI's every year)
20
Q

John Elkington’s Triple Bottom Line

A

TBL = Profit, Planet, People

Economic Prosperity (lasting economic benefit)

Environmental Quality (benefit natural order and do no harm)

Social Justice (fair and beneficial business practice)

21
Q

CSR and Branding

A

Positive CSR Strategy = branding benefits eg more consumers, sales, investment therefore poor CSR = risk to cause tremendous brand damage

3 approaches to this!

Integrated Approach: brand and CSR operate in synchrony

Selective Approach: certain and specific ways of CSR eg subrands/partnerships

Invisible Approach: important role in guiding a company but is understated in external communications and initiatives (not flaunted)

22
Q

What is a contract?

A

A contract is an agreement which legally binds the parties. The underlying theory is that a contract is the outcome of ‘consenting minds’.

23
Q

What does subject to contract mean?

A

Parties who have formed a contract are not yet legally bound. Still negotiating and may leave without penalty as its not been executed yet.

24
Q

Standard Form Contracts

A

commonly where a business presents a customer with a written contract - no negotiation the party presenting often has more power.

But the law will intervene when this is an issue as there should be freedom to contract (consumer protection agencies or legislation)

25
Q

Three essential elements of a contract

A

Agreement by offer and acceptance

Intention to Create legal relations

Consideration to be provided by both parties (bringing something of value)

26
Q

Effect of failure to satisfy the validity tests of a contract

A

Void Contract
(no contract)

Voidable Contract 
(can be avoided by one party)

Unenforceable Contract
(valid but performance of one party cant be forced)

27
Q

Factors affecting the validity of a contract

can render a contract void

A

Form (must follow a particular form eg land = written)

Terms (must be properly incorporated through express and implied terms. Warranties and Conditions)

Consent (misrepresentation to induce a party to consent)

Legality (courts wont enforce illegal activity)

Capacity (boundaries of authority eg age)

28
Q

Form of a contract

A

A contract can be made in any form eg written, oral or inferred from conduct.

MUST BE IN WRITING
- shares, cheques, consumer credit contracts, interest in land, debts
(commercial contracts generally)

MAY BE MADE ORALLY but not enforceable in a court of law unless evidenced in writing eg contracts of guarantee

MUST BE EXECUTED BY DEED
in writing, signed, sealed, delivered. Speciality contracts.
- leases of 3 years+
- transfer/conveyance of legal estate in land eg mortgage
- promise not supported by consideration eg covenant

29
Q

Offer

A

Definite promise to be bound on specific terms, it must be certain and cannot be vague. Moves from Offeror to Offeree.

  • doesnt have to be to a definite person, can be made to world at large (carlill case)
  • supply of info doesnt mean offer
  • if lowest price is stated then may be an offer
  • may lapse if not accepted within a reasonable or fixed time
  • if its too precise, has consideration and has intention then its an offer
30
Q

Invitation To Treat

A

Indication that a person is ready to accept offers with a view to a contract

when accepted isnt an offer so cant make a valid contract

Auction sales (bid is the offer)
Invitation for tenders
Advertisements
Exhibition of goods for sale eg shop window or shelf

31
Q

Termination of an offer

A

Express Rejection -saying no

Counter Offer - not mere request of info but changing contractual terms

Lapse of time - express (specific time gone) or implied (reasonable time if not stated)

Revocation - must be communicated before acceptance, must be received by the offeree, may be communicated by a reliable third party, promise to keep it open is only okay if promise is bought

Death of one of the parties - The offeror or the offeree generally terminates contract

Failure of a condition that hasn’t been met

32
Q

Acceptance

A

The unconditional assent to all of the terms of the offer. Once accepted the parties are in agreement and so in a binding contract. Must be made while offer is open and made clear when counter offer back and forth which is accepted.

33
Q

Communication of Acceptance

A

Must be communicated to the offeror or not effective and only by the person authorised to accept.

Form of express words either oral or written or deeds or action, silence is not enough

Can only accept offer if they knew about it in the first place

34
Q

Exceptions to the communications rules of acception

A
  • Unilateral acceptance is possible eg carlill, public advertisement too specific
  • if it says one form of communication, other equally speedy methods will suffice
  • instant methods of communication = when communication is accepted and recieved

POSTAL RULES apply via letters (maybe telegrams too) so acceptance is completed as soon as the letter has been posted (as long as its been addressed, stamped, both parties agreed to this [contemplation] and the postal rule has not been excluded)

35
Q

The 1992 Rio Declaration

A

corporate social responsibility initiative that sets out 27 principles defining the rights and responsibilities of states in relation human development and well-being

36
Q

kyoto protocol

A

the international agreement linked to the UN’s framework convention on climate change. it commits its parties to set up an internationally binding emission reduction target.

BA4 - CIMA (7 decks)

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