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1
Corporate Governance
Corporate Social Responsibility
CSR
as
Value
Creation
CSR
as
Risk Management
CSR
as
Corporate Philanthropy
Three Stages of CSR
Compliance Medium to High
Strategic and
Operational
Impact
Fundamental Strategic
and Operational Impact
Innovation
Sustainable Business Models
Provide
funding
and skills
Little Strategic or
Operational
Impact
Strategic Philanthropy
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Raise employee morale and productivity
Renew the corporate license to operate
Improved risk profile
Build and strengthen corporate reputation.
Improve operational efficiency. Reduce costs.
Discover corporate social opportunity.
Benefits of Engagement
Building Markets
Good Governance
& Security
Climate Change
Water
Profit
&
Growth
Social Inclusion
Business
Global Health
United Nations
Peace
&
Poverty
Reduction
The United Nations and Business
Deepening Interdependencies
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The Global Compact Overview
Launched on 26 July 2000 in New York with roughly 40 businesses Launched on 26 July 2000 in New York with roughly 40 businesses
UN Convention Against Corruption UN Convention Against Corruption
Rooted in universally accepted conventions: Rooted in universally accepted conventions:
Universal Declaration of Human Rights Universal Declaration of Human Rights
ILO Declaration ILO Declaration
Rio Declaration Rio Declaration
Multi-stakeholder platform Multi-stakeholder platform
A more sustainable and inclusive global economy A more sustainable and inclusive global economy
The 10 Global Compact Principles
Human Rights
Principle 1: Businesses should support and respect the protection of internationally proclaimed
human rights; and
Principle 2: make sure that they are not complicit in human rights abuses.
Labour Standards
Principle 3: Businesses should uphold the freedom of association and the effective recognition of
the right to collective bargaining;
Principle 4: the elimination of all forms of forced and compulsory labour;
Principle 5: the effective abolition of child labour; and
Principle 6: the elimination of discrimination in respect of employment and occupation.
Environment
Principle 7: Businesses should support a precautionary approach to environmental challenges;
Principle 8: undertake initiatives to promote greater environmental responsibility; and
Principle 9: encourage the development and diffusion of environmentally friendly technologies
Anti-Corruption
Principle 10: Businesses should work against all forms of corruption, including extortion and
bribery.
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Facilitate partnerships in support
of broader UN goals.
Facilitate partnerships in support
of broader UN goals.
Make the ten principles part of
business strategy, operations and
culture everywhere.
Make the ten principles part of
business strategy, operations and
culture everywhere.
Internalization Internalization
Contribution to
Development
Contribution to
Development
Two Complementary Objectives
The Global Compact Clarified
The Global Compact is The Global Compact is
a voluntary initiative to promote and advance responsible business. a voluntary initiative to promote and advance responsible business.
a universal value framework to help business get organized. a universal value framework to help business get organized.
a global network of like-minded businesses and other stakeholders. a global network of like-minded businesses and other stakeholders.
a platform for innovation. a platform for innovation.
The Global Compact is not The Global Compact is not
a regulatory body. a regulatory body.
a substitute for regulation at the national or international level . a substitute for regulation at the national or international level .
a PR exercise. a PR exercise.
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What is sustainability
A strategy by which communities seek
economic development approaches that also
benefit the local environment and quality of
life
Is a process of achieving human development
through effective management of social,
economic and environment benefits
Global Drivers of Sustainability
Increasing Industrialization
Proliferation & Interconnection of Civil
Stakeholders
Emerging Technology
Effects of Globalization- poverty, inequity,
population explosion
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Triple Bottom Line (TBL)
An expanded spectrum of values and criteria
for measuring organizational and societal
success economic, environmental, social.
In the private sector, a commitment to CSR
implies a commitment to some form of TBL
reporting.
Triple Bottom Line (TBL)
The Triple Bottom Line is made up of "Social,
Economic and Environmental"
"People, Planet, Profit "
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Triple Bottom Line Accounting
Expanding the traditional reporting framework
Take into account environmental and social performance in
addition to financial performance.
Company's responsibility to 'stakeholders' rather than
shareholders.
What is triple bottom line reporting?
At its narrowest TBL reporting is a framework
for measuring and reporting corporate
(organizational) performance against economic,
social and environmental parameters
www.sustainability.com
A move from one dimensional economic
reporting to three dimensional economic, social
and environmental reporting
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How is TBL reporting accomplished?
Economic
Generally Accepted Accounting Principles
Customers
Suppliers
Employees
Social
Bribery and corruption
Political contributions
Child labor
Security practices
Indigenous rights
Training and diversity
Environmental
Energy
Water
Biodiversity
Emissions, effluents, and waste
Global
Reporting Initiative (GRI)
GRI and is defined as a common framework for sustainability
reporting
Started in 1997 by the Coalition for Environmentally Responsible
Economies and the United Nations
GRI became independent in 2002, and is an official collaborating
centre of the United Nations Environment Programme (UNEP)
and works in cooperation with UN Global Compact.
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GLOBAL REPORTING INITIATIVE
GRI
Global Reporting Initiative attempts to make the
Triple Bottom Line operational
GRI vision is that reporting on economic, environmental, and
social performance by all organizations becomes as routine
and comparable as financial reporting. GRI accomplishes this
vision by developing, continually improving, and building
capacity around the use of its Sustainability Reporting
Framework.
How organizations strategically manage
CSR through triple bottom line reporting
TBL reporting enables organizations to:
Measure and manage their financial and non-
financial
performance and impacts, or lack thereof
Have their performance and impacts verified
independently
Communicate effectively with consumers,
governments, investors, employees, other
stakeholders and watchdog groups
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Internal Governance Mechanism-Top
Management
Top Management Compensation
Insider Trading
Related Party Transactions
Remuneration to the top management
Salary should be proportional to their performance
But what about the top managements particularly the CEOs salary?
Mercator Lines Ltd (shipping company)
Two promoters together own 40 % (43 % in 2006)
H.K.Mittal CMD, A.J.Agarwal- JMD
Their total Compensation is Rs 5.5 cr in 2003-04, Rs 19 cr in 2004-05
Rs 20 Cr in 2005-06
Combined salary of all other regular employees for the 2004-05 Rs 1 cr
(including all benefits)
Turnover Rs 564 cr in 2004-05 (843 cr in 2005-06)
profit Rs175 cr in 2004-05 (194 cr in 2005-06)
Compare with the Compensation of Mukesh Ambani 24.5 cr in 2005-06 on a
profit of Rs 9000 cr and a turnover of Rs 89,000 cr
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Mercator lines situation is better
Moser Baer
MD Deepak Puri Annual compensation is Rs
2.08 cr in FY 2006-07
ED Raturl Puri 1.25 cr
Duo took 71% of the companys net profit
UK Modi- CMD of SBEC Sugars
Compensation is Rs 1.65 Crore while
companys net profit is 11 lakhs in 2006-07
Insider Trading
What is insider trading
What is the ethical issues?
The SEBI (Prohibition of Insider Trading)
Regulations -1992 and substantially amended
in 2002
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Insider Trading A concept
Insider trading is the trading of a corporation's stock or
other securities by individuals with potential access to non-
public information about the company.
Insider trading can be illegal or legal depending on when
the insider makes the trade
It is illegal to trade when the material information is non-
public as it is unfair to other investors who are not privy to
such information. Illegal insider trading therefore includes
tipping others when you have any sort of nonpublic
information.
Insider trading is legal once the material information has
been made public, at which time the insider has no direct
advantage over other investors