Tag Archives: CSR

How diversify your boardroom?

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`The number one issue in corporate governance is the diversification of boards.

The results confirm this as the Canadian Board Diversity Council found. Only 150 out of 1000 Canadian companies had any diversity on boards.

What is the business case for diversity on boards?

 

There is also evidence that women make better monitors of management and that performance of men increases when women join boards. The other business case for diversity is a simple talent issue.

 

So how do boards diversify themselves? What are leading practices the best boards are doing?

 

 

Step 1: Recruit directors solely on the basis of competency, not on whom you know.

A board is a team. Team members have different abilities. “Competency” can include experience, skills, knowledge and behaviours. A good board draws up a matrix of competencies it needs on one axis and individual directors along the other. It defines the competencies and the scale, and then individual directors assess themselves relative to each other.

 

Step 2: Recruit directors whom you do not know personally and who are first-time directors.

Once you have the desired director competencies, the next step is to recruit directors who fill this gap. Cast your net wide and go beyond personal and professional networks. Have a diligent way of short-listing resumes and ask candidates to address the specific competencies you need.

Don’t be afraid to short-list diverse candidates whom you likely will not know, including first-time directors who have stellar qualifications your board needs.

 

Step 3: Link director time on the board to performance.

Have on boarding, coaching and development for new directors. Then, assess each director on his or her contribution at regular intervals.

 

Step 4: Be prepared to be accountable.

Consistency and follow-through are the only means by which diversity can be achieved. We can expect that some current directors may object to these best practices. Change is difficult and upsetting the status quo is threatening.

 

Finally, you should disclose the basis upon which directors are recruited, developed and assessed so shareholders can vote meaningfully on each director at the time of renewal or removal. This sets the tone that the board holds itself responsible and accountable to shareholders in the same way it expects management to be accountable to itself. Your board and organization will be the better for it.`

 

This article is extract from: Four Steps to a More Diverse Corporate Board

The Board of Directors & Compliance: 4 Ideas for Improving the Effectiveness of & Reducing the Risk to Directors

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By Stuart M. ALTMAN for www.corporatecomplianceinsights.com

“A number of high profile corporate scandals at some large and supposedly sophisticated companies have, if nothing else, driven home the fact that no matter how strong you think your corporate compliance and ethics program is, the risk of failure is still there. This month I want to look at this issue from the standpoint of the board of directors.

Right now, there are a number of very concerned directors asking themselves whether they have done all they could, or should, have to prevent this and what are the ongoing risks, not only to the company, but to them personally. True, directors should always be thinking about the institutional risk to the company, but nothing motivates effectiveness like the risk of personal liability.

Ordinarily directors are protected by the business judgment rule which provides that well informed decisions of directors taken after due consideration and in good faith will not be attacked by a court because the decisions turned out wrong. In cases of compliance failures – whether issues of foreign bribery, cartel activity or environmental hazards, to name a few – the issue for a board is usually one of omission. Rarely has a board approved such activity. Rather, the issue is whether it has done everything possible to avoid such conduct. Here are four ideas that can help strengthen the effectiveness of the board in these situations and thus, limit risk.

Training

Interestingly, in many companies directors do not necessarily receive the same compliance training that employees do. Directors may claim they are too constrained by time, or that they, of course, know this material already. Perhaps they do, but even if the directors are compliance experts shouldn’t they know how the employees are trained? How do you measure the effectiveness of a program you have opted out of? In short, directors should go through, at a minimum, the same training employees receive.

But that is not enough. Directors need specialized training, not just in the nuts and bolts that line employees receive but also in the issues at the center of compliance and ethics. Directors need to be focused on the big picture of why a company has a compliance program. They need to know what questions their compliance professionals should be asking, and if directors don’t see this happening, they need to act quickly.

Moreover, at least some of this training should be external to the company. Even if management is well intentioned, it is vital that directors get an occasional different perspective on compliance from that which prevails in the company.

Structure

A long discourse of the various pros and cons of possible compliance structures would fill several of these columns. There is an active professional debate out there as to whether or not the chief compliance officer should be separate from the general counsel? Should both ethics and compliance roles be rolled into one position? Where does internal audit fit in? I won’t attempt to evaluate these debates here. Indeed, there may be no one right answer. But the way in which your company structures these roles is vital to your governance and your ability to address compliance and ethics.

Boards of directors should be intimately involved in planning for these issues. Directors should regularly review the existing structure and make sure they are comfortable with it and it is serving the company’s interests. Whatever the specific structure chosen, those primarily responsible for compliance must have direct access to the board or a compliance committee. Given this dictate, you can decide what works for your company. Is your organization hierarchical in nature? Are managers expected to closely follow superiors with little questioning? If so, asking a GC who reports directly to the CEO to also serve as CCO and report to the board may place him or her in an unworkable position. If the CFO uses internal audit as a personal resource how comfortable can the board be that the head of IA would bypass that CFO if the situation called for it? On the other hand, where a company operates in a matrix environment with multiple reporting lines standard, such dual roles and reporting may come naturally.

Seek Advice

Most boards of directors do not have separate counsel from the entity they serve. Directors typically rely on the general counsel and regular outside counsel to do their job except in the rare situation such as the need for a special committee and counsel thereto. In general, most boards do not need regular and continuing counsel involved in every decision they make. But that does not mean such outside advice may not be useful some of the time…”

To read the complete article : www.corporatecomplianceinsights.com

Corporate Governance, Risk Management and Corporate Social Responsibility in Emerging Markets: A Symbiotic Relationship

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By Robert Adamson
Executive Director, CIBC Centre for Corporate Governance and Risk Management

“As corporate governance continues to be an area of focus for most companies, regardless of whether they are involved in global operations, there are many questions and issues that firms still struggle with:  What is good corporate governance and why is it so important? Why are so many firms and governments promoting improved techniques in corporate governance? What are those techniques and best practices and is there evidence that these reforms and policies are useful for firms in promoting transparency, sustainability and the confidence of global markets and investors?

In general, corporate governance is about how companies make decisions, how they organize themselves and how they communicate with shareholders and the rest of the world. Typically, corporate governance deals with issues such as how boards and executives are chosen, what mandate and responsibilities boards and executives have,  whether shareholders have any right to participate in certain types of corporate decisions through voting and, if so, what form these shareholder rights take.

These issues are important because they promote good business practices, good decision-making and opportunities for investors to ensure the integrity of their investment. Because these issues are so important to developing good businesses and a good business environment, both companies and policy-makers are very interested in ensuring that good corporate governance is adopted widely and is effectively institutionalized throughout the firm.

So why are companies themselves so concerned and preoccupied with corporate governance, risk management and CSR? Many companies recognize that good corporate governance, risk management and CSR is good business practice, good business strategy and what many companies are focusing on to improve their business, particularly in the emerging global marketplace where companies are constantly trying to outdo each other to make their business more effective and to attract new investors. Companies, particularly those that are well-managed, want to develop good business practices, improve their decision-making and provide reasons for investors to invest in the company. While these firms are highly motivated and successful at adopting and implementing good corporate governance practices,  other companies may not acknowledge the importance and value of adopting and investing in corporate governance, risk management and CSR…”

This is an extract from business.sfu.ca, to read more: http://business.sfu.ca


Corporate Governance and Corporate Social Responsibility (CSR)

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From corporate governance… 

The corporate governance concept was born just after the economic crash of 1929.  However corporate governance as we know today only appeared at the mid-1990.
The corporate governance is a set of processes, regulations, laws, and institutions that have an important influence on the way that the company is managed, administered and controlled. It involves a set of links between the different stakeholders of the organization. Furthermore the whole decision-making process (shareholders, board members and the CEO) is influenced by governance.
To summarize, corporate governance is about how companies make decisions, how they organize themselves and how they communicate with shareholders and the rest of the world.

…To corporate governance and CSR

The corporate governance has changed. Now, it is not enough to control how companies make decisions, how they organize themselves and how they communicate with shareholders and the rest of the world. For many companies the corporate social responsibility is a way to better engage with many of their stakeholders, including investors and consumers. Corporate governance and CSR are resulting into formalization and definition of ethical policy, a better oversight of safety principles, setting up risk management program, and many other policies.
The Corporate Social Responsibility is a way for organizations to improve clearly corporate governance processes.