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ESG > Social Factors > Flashcards

Social Factors Flashcards

1
Q

Social Megatrends

A

long-term social changes that affect governments, societies and economies permanently over a long period of time.

globalization
automation and artificial intelligence AI
Inequality and wealth creation
digital disruption, social media and access to electronic devices
changes to work, leisure time and education
changes to individual rights and responsibilities and family structures
changing demographics, including health and longevity
urbanization
religion

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2
Q

Environmental megatrends have several social impact:

A

climate change and transition risks
water scarcity
mass migration

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3
Q

Globalization

A

growth in global interactions has increased international trade and the exchange of ideas and culture.

caused by rapid increase in cross-border movement of goods, services, tech, people and capital.

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4
Q

implication of globailization:

A
  • offshoring
    cheap clothes made in asian countries, disappearance of textile industry in western countries
  • dependency
    US-based and Asian companies dominate the industry for mobile phones, computers and other IT products, European countries are more dependent on these suppliers.
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5
Q

Automation and artificial intelligence AI

A

biggest advantages of automation in industry:

a. associated with faster production and lower labour cost
b. replaces hard, physical or monotonous work

disasdv: displaces workers due to job replacement

AI significant effect on sectors such as:
health
automotive
financial services and auditing
security 
creative ads and video games
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6
Q

Inequality and wealth creation

A

limits total economic growth as
educational opp. and social mobility maybe reduced resulting in a less skilled and less healthy society with lower ppp among the lower and middle classes.

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7
Q

digital disruption

A

change that occurs when new digital technologies and business models affect the value proposition of existing goods and services

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8
Q

Urbanization increase implication for societies

A

economic: increase in costs, often pricing the local working class out of the market
environmental: existence of urban heat islands, where urban areas produce and retain heat, becomes a growing concern
social: increased mortality from non-communicable diseases associated with lifestyle

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9
Q

starting point when implementing social factors in investment decision:

A
  1. to determine which social factors are most controversial or financially material in each industry
  2. can assess how exposed certain companies are to these sector-specific social factors and if and how the company manages these risks
  3. investors should assess critical social factors in the supply chain
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10
Q

social factos impact internal stakeholders

A

human capital development

working conditions, health and safety

human rights

employment standards and labor rights

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11
Q

social factors that impact external stakeholders

A

stakeholder opposition and controversial sourcing

product liability and consumer protection

social opportunities

animal welfare and antimicrobial resisitance

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12
Q

human capital development

internal social factors

A

ensures that workforce:

  1. well equipped for performing its tasks and responsibilities
  2. operates under the latest standards and regulations
  3. remains motivated
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13
Q

human rights

A 
apply to all 
race
sex
nationality
ethnicity
language
religion or any other status
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14
Q

Human rights include include

A
  1. the right to life and liberty
  2. freedom from slavery and torture
  3. freedom of opinion and expression
  4. the right to work and education
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15
Q

Universal Declaration of human rights UDHRR

A

Most important foundation for international human rights

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16
Q

UN Guiding Principles and OECD Guidelines for Multinational Enterprises

A

direct effect on companies and investors:

  • the United Nations Guiding Principles on Business and Human Rights (UNGPs)
  • the OECD Guidelines for Multinational Enterprises (MNEs)
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17
Q

UNGPs

the United Nations Guiding Principles on Business and Human Rights

A

are a set of guidelines implementing the United Nations’ Protect, Respect and Remedy framework on the issue of human rights and transnational corporations and other business enterprises.

these guiding principles provided the first global standard for preventing and addressing the risk of adverse impacts on human rights linked to business activity.

18
Q

UNGPs encompass three pillars outlining how states and businesses should implement the framework:

the United Nations Guiding Principles on Business and Human Rights

A
  1. the state duty to protect human rights
  2. the corporate responsibility to respect human rights
  3. access to remedy for victims of business-related abuses
19
Q

OECD Guidelines for Multinational Enterprises

A

are a comprehensive set of government-backed recommendations on responsible business conduct.

gov’t adhering to the Guidelines aim to encourage and maximise the positive impact MNEs can make to sustainable development and enduring social progress.

voluntary principles and standards:

employment and industrial relations
human rights
environment
information disclosure
combating bribery
consumer interests
 science and technology
competition
taxation
20
Q

Responsible Business Conduct for Institutional Investors

A

helps institutional investors implement the due diligence recommendation of the OECD Guidelines for MNEs in order to prevent or address adverse impacts related to human and labor rights, the environment and corruption in their investment portfolios.

21
Q

Responsible investment agreement Netherlands

A

investors agree to adopt this double materiality approach, follow the OECD guidelines and take responsibility to try to mitigate the negative impact of their investments.

22
Q

Corporate Human Right Benchmark CHRB

A

is a collaboration led by investors and civil society organization dedicated to creating the 1st open and public benchmark of corporate human rights performance.

provides a comparative snapshot year-on-year of the largest companies on the planet, looking at the policies, processes and practices they have in place to systematize their human rights approach and how they respond the serious allegations.

23
Q

CHRB measurement themes and indicators, themes consist of multiple questions:

A
  1. governance and policy commitment
  2. embedding respect and human rights due diligence
  3. remedies and grievance mechanisms
  4. performance - company human rights practices
  5. performance - responses to serious allegations
  6. transparency
24
Q

the most important labor rights have been summarized in

A

International Labour Standards

aimed at promoting opportunities for women and men to obtain decent and productive work, in terms of freedom, equity, security and dignity, and are included in the fundamental conventions of the International Labour Ogranization ILO, include:

  1. freedom of association and protection of the right to organize
  2. right to organize and collective bargaining
  3. forced labour and abolition of forced labour
  4. minimum age
  5. worst forms of child labour
  6. equal remuneration
  7. discrimination (employment and occupation)
25
Q

forced balour is defined by the ILO

International Labour Ogranization

A

All work or service which is exacted from any person under the menace 威胁 of any penalty and for which the said person has not offered himself voluntarily.

26
Q

Platform living wage financials PLWF

A

coalition of financial institutions that encourage and monitor investee companies to address the non-payment of a living wage in their global supply chains

  • measure their performance on living wage
  • discuss the assessment result
  • support innovative pilots
27
Q

A way to establish bottom-up participation is to

A

Free Prior Informed Consent FPIC
developments on ancestral land or the use of resources of a territory owned by indigenous people.

Free -
no manipulation or coercion 强迫 of the indigenous people原住民 and that the process is self-directed by those affected by the project

Prior -
Implies that consent is sought sufficiently in advance of any activities being either commenced or authorized, and time for the consultation process to occur must be guaranteed by the relative agents

Informed-
suggests that the relevant indigenous people receive satisfactory information on the key points of the project
such as:

its nature, size, pace, reversibility, the scope of the project, the reason for it, and its duration.

Consent- a process in which participation and consultation are the central pillars

28
Q

Consumer protection

A

refers to laws and other forms of government regulation designed to protect the rights of consumers.

safeguarded by:

  • enforcing product safety
  • distributing consumer-related information
  • preventing deceptive marketing
29
Q

product liability

A

legal responsibility imposed on a business for the manufacturing or selling of defective goods

3 main types:

  1. businesses being found liable to consumers when a court finds design flaws
  2. manufacturing defects
  3. a failure to warn consumers of a possible danger
30
Q

Sustainable Development Goals SDGs

A

focus on lack of social opportunities, especially in developing countries, is an important social issue,

31
Q

Access to Medicine Index

A

analyze how 20 of the world’s largest pharmaceutical companies are addressing access to medicine in 106 low-to-middle-income countries for 82 diseases.

32
Q

Farm Animal Investment Risk and Return FAIRR

A

focus on the increased prevalence of antimicrobial resistance due to intensive farming practices and poor antibiotic stewardship.

33
Q

EU taxonomy for sustainable activities

complying with minimum safeguards

A

it sets performance thresholds for economic activities that make a substantive contribution to one of six environmental objective:

  1. climate change mitigation
  2. climate change adaptation
  3. sustainable and protection of water and marine resources
  4. transition to a circular economy
  5. pollution prevention and control
  6. protection and restoration of biodiversity and ecosystems
34
Q

different elements of the EU taxonomy screening

A

sustaintially contribute
( to at least 1/6 environmental objectives as defined in the Regulation)
+
Do no significant harm
(to any of the other five environmental objective as defined in the proposed Regulation)
+ Comply with minimum safeguards

35
Q

The International Organization of Securities Commissions IOSCO

A

connects regulators over the world and provides global frameworks to support worldwide standardsation, which regulators in each country can use as a basis for their own regulations.

36
Q

Most social issues on a company level:

A
  1. impact a company’s bottom line
  2. increase workforce issues
  3. decrease the corporate responsibility and its consumer expectations
37
Q

materiality or risk assessment

A

1 step:

determine the impact of social factors and trends could be on the investee companies in the diff. sectors,

38
Q

Qualify potential social factor impact using ratio analysis and financial modelling:

A

scenarios:
1. occupational health and safety issues, which can result in huge fines and liabilities

  1. human capital management issues, which can lead to greater operating costs if new employees need to be trained due to high employee turnover
  2. supply chain issues, which can impact brand reputation and revenues if consumers choose to boycott certain products
  3. local protests that lead to business disruptions at plants of factories
  4. poor working conditions, which can result in issues with product safety.
39
Q

sex equality clause has the following effect:

A
  • if a term of A’s is less favorable to A than a corresponding term of B’s is to B, A’s term is modified so as not to be less favorable.
  • if A does not have a term that corresponds to a term of B’s that benefits B, A’s terms are modified so as to included such a term.
40
Q

social factors for a particular company compare to its peers for:

A
  1. corp. strategy
  2. policies in place
  3. process and measures implemented
  4. performance indicators
  5. public disclosure

process involves looking at

  1. current performance
  2. progress over time
  3. how that progress compares to industry averages and key competitors
41
Q

income inequality over the last few decades

A

has been growing, negative effect on the economy

ESG (10 decks)

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