cg lecture3
TRANSCRIPT
7/29/2019 CG Lecture3
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Corporate GovernanceEthics
andThe Role of CG Officer
Corporate Governance
Ethics
andThe Role of CG Officer
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Areas Covered
Corporate Social Responsibility
Reputation & Reputational Risk
Role of Officer designated to look afterCorporate Governance
Whistleblowing
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Concepts of CG
Openness, honesty and transparency
Independence (of the Board)
Accountability (of all persons holdingpower)
Responsibility
Fairness
Reputation and reputational risk
Social Responsibility
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Reputation
Good reputation takes years to build.
Shades of reputation:
Products Management
Profits
Social posture
It takes just one incidence to destroy thereputation of a company.
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Reputational Risk
What can bring a company into disrepute?
What is the price of disrepute?
Is it worth losing/keeping reputation?
What if there is no direct potential of losing reputation?
Defending and Sustaining Reputation: Sustaining reputation is painstaking
Defending reputation may often be self-defeating.
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Code of Ethics
Avoiding conflict of interest
Use / abuse of position, power or property
Confidentiality Fair dealing with all
Protection of company property
Compliance with laws, rules Encouraging reporting of illegal or
unethical behavior.
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CSR and Reputation Risk
Financial Implications:
Impact on market performance
Failure to get good employees
Cost of deflecting negative publicity
Lower earnings / share price
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Shades of CSR
Official posture and reality
Spending more on publicizing CSR thanactually doing it.
Lip service / Strings attached Welfare
IPPR Report says most CSR is lip service /
ulterior motive based.
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Formulating CSR Policy
Set a Code of Ethics outlining CSR Valuesto be upheld
Establish current position on CSR values
Discuss with relevant stakeholders
Employees
Pressure groups
Clients
Set up a system
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CSR Policy
Devise CSR Policy
Prescribe systems
Establish responsibility for each party Set realistic strategies and targets
Keep all concerned informed
Monitor achievements
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Bench Marking in CSR
You do as much as others are doing.
Can any one set “minimums”?
Who ensures compliance? How to monitor compliance?
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Sustainability Report
Report on social, ethical, health andenvironmental policies.
More focused on environment (i.e.sustainability of the society) than any thing else.
Not a report on company’s sustainability (financial or otherwise).
Not yet mandatory in Pakistan.
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The Triple Bottom Line
Prescribed by Global Reporting Initiative:
Financial Performance
Impact on environment and naturalresources
Social benefits and costs
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Economic Indicators
Revenue
Earning
Dividend per share Sales Volume
Market Share
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Environmental Indicators
Global energy use
Global carbon dioxide emissions
Global non-recycled waste Global waste consumption
Company sites certified to ISO 14001
standards
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Public Sector
Commonwealth Association for CorporateGovernance (CACG) Guidelines:
Major or significant companies aregovernment owned.
Directors are political nominees, notindependent.
Severe shortage of able directors.
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Whistleblowers
Who is a whistleblower?
Connection of WB with CG
Honest and Malicious whistleblowers Area of concern:
Employees (can) have access to all data
Whistleblowers are punished, not rewarded Disregard as gripe
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WB – Best Practice
Recognize the importance.
Set a procedure / prescribe channels
Involve non-executives
Confidentiality
Legal Protection to whistleblowers
UK’s Public Interest Disclosure Act 1998
Gagging clause in employment agreement
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Disclosure
Internal and External Disclosures
Good faith
No personal gain
Reasonableness
Violation of law, rules of the company, injustice,financial malpractice, risk to public
Internal before external Laws have so far not been effective
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Recommended Guide on WB
Documented procedure
Named office to handle WB
Examples of what is or is not misconduct Consequences of false or malicious
allegations spelt out
External route also indicated Investigation procedure
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CG Officer
Who:
CEO
Chairman, Board
CFO
COO
CS
Specially assigned officer
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Thank youDr Safdar A Butt