PC10: Corporate Governance

Question 1

What is Corporate reporting - common aspects/trends across countries

Answer 1

Mandatory information to the disclosure will depend on the country, but there are common aspects (and common trends):

• how a company communicates in its annual report reflects how committed it is to transparency and accountability to its stakeholders, regulatory compliance
• quality of a company´s corporate reporting is a real indicator of a broad´s commitment to transparency and its fundamental sense of accountability to all its stakeholders

Question 2

What is Corporate reporting (def.)

Answer 2

Corporate reporting provides companies with the opportunity to tell stakeholders their story.

• should provide information around company´s strategy and its performance

Question 3

Risk reporting

Answer 3

Common illustrations included risk owners, the potential velocity of the risk, and information about the actual mitigating activities performed in the year.

Examples of risks: cyber security, Brexit, climate change

Question 4

Corporate reporting themes

Answer 4

Breaking down the boundaries (encouraging reporting with a strategic mindest, being clear and concise)

Reporting time horizons: building new levels of forward-looking information, including the consideration of climate change risks and opportunities

Striking the right balance: report balance between the interest of different stakeholders, how this is consistent with their underlying purpose.

Focusing on purposes, culture and values: board´s involvement in culture and strategy, and the transparency around viability statements.

Question 5

Corporate reporting trends: Stakeholder agenda

Answer 5

A company´s purpose and values are important issues for many of its stakeholders. The business model is often where companies show how they aim to create value for all their stakeholders.

Question 6

The reporting dilemma

Answer 6

Dilemma: balancing the needs of shareholders and other stakeholders.

• One side: pressure from the government, regulators
• other side: investors wanting to know the company´s strategic plans, future ambitions

–>significantly, the content in the AR tends to be quite backward-looking and fails to discuss plans and a direction of travel for the future.

–>A strategic report is meant to be strategic and hence forward-looking in nature.

Question 7

What is CSR?

Answer 7

is a management concept whereby companies integrate social and environmental concerns in their business operations and interactions with their stakeholders.

Question 8

Key CSR issues

Answer 8

• environmental management
• eco-efficiency
• responsible sourcing,
• stakeholder engagement
• labour standards and working conditions
• human rights
• good governance
• gender balance

Question 9

Different meanings in different societies

Answer 9

most salient approaches to CSR may be regarded as Anglo-saxon:

1. they impose certain assumptions about what CSR means based on theoretically developed measurement scales;
2. they often share the instrumental perspective on CSR as a business case; and
3. they do not consider that a particular understanding of CSR can come through a “local adaption”, rooted in factors significant to a certain society.

–>Interpretations of the CSR concept reflect the importance of country-specific political, cultural and social elements.

Question 10

What is the difference between CSR

Answer 10

CSR is not Charity, Sponsorships, Philanthropy

Question 11

CSR impact on business

Answer 11

• positively influence the quantity of innovation
• reduce financing costs
• create highly loyal and more price-inelastic customer base
• increase trust between employees and managers

Question 12

ESG investing

Answer 12

Environmental, social and governance (ESG) Investing is a strategy to invest money in the companies that strive to make the world a better place.