Since coming back from the most awesome adventure to Cederberg mountains (which requires its own post soon), I’ve been studying corporate governance, business ethics and managing sustainability. I’m so fascinated by this that I’ve found a new passion towards large businesses. After all, besides governments, they are the most impactful institutions we have on earth. Change how things are done there and you know you’ll make a positive impact on the world. As long as my work involves human resources development & talent management, aligning operations to be highly ethical and sustainable, I can totally see myself working for a corporation. Excited for what the future brings…
Integrated reporting = holistic and integrated presentation of the company’s performance in terms of both its finance and its sustainability
Components and focus areas of corporate governance:
- Ethical leadership
– Responsible corporate citizenship
– Ethics management
- Boards and directors
– Integrated view of strategy, risk, performance and sustainability
– Chairperson must be independent and non executive
– Appoint CEO
– Majority of non-execs on board and to be independent
– Competent secretary
-Annual evaluation of board, committees and individuals
– Compensation fairly
- Audit committees
– Skilled and independent non-execs, chaired by independent non-exec
– Oversees integrated reporting, internal and external audit
– Reports to the board and shareholders
- Governance of risk
– Determine levels of risk tolerance
– Delegate risk management to management
– Continual risk assessments and monitoring
– Risk disclosure to stakeholders
- Governance of IT
– Monitor and evaluate IT investment and expenditure
– IT to be integrated with risk management
– IT to be aligned with performance and sustainability objectives
– Compliance with all applicable laws
– Compliance risk to be integrated with risk management
– To be delegated to management
- Internal audit
– Effective risk-based internal audit
– Assessment of effectiveness of internal controls and risk management
– Perceptions affect on reputation
– Stakeholder management to be delegated to management
– Equitable treatment of stakeholders: protection of minority stakeholders
– Transparent and effective communication
- Integrated reporting
– Financial and sustainability reporting to be integrated
Levels of business ethics
Systemic – What is the most ethical economic system? Capitalism vs socialism
At a macro level, ethics are influenced by the wider operating environment in which the company exists. Factors such as political pressures, economic conditions, societal attitudes to certain businesses, and even business regulation can influence a company’s operating standards and policies.
Industry – How does the industry behave?
Different industries have their own set of ethical standards.
Company – How does my company behave?
At a company or corporate level, ethical standards are embedded in the policies and procedures of the organization, and form an important foundation on which business strategy is built. These policies derive from the influences felt at macro level and therefore help a business to respond to changing pressures in the most effective way.
Individual – How do I behave?
Since businesses are run by people, the ethical standards of individuals in the business are an important consideration. Management needs to be able to align individual ethics with corporate ethics.