Corporate Governance & Ethics and Corporate Social Assignment 2022

Running head: CORPORATE GOVERNANCE & ETHICS AND CORPORATE SOCIAL
RESPONSIBILITY
Corporate Governance & Ethics and Corporate Social Responsibility
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Table of Contents
Introduction......................................................................................................................................3
Discussion........................................................................................................................................4
Financial Advices........................................................................................................................4
Financial Advice on Culture Point of View............................................................................4
Financial Advice on Governance.............................................................................................5
Financial Advice on Remuneration.........................................................................................5
Identification of the Effects on the Stakeholders through Carroll and Buchholtz’s....................6
Analysis of the Financial Institutions Investigated Reported in ASX Principles and
Recommendations during the Years before the Royal Commission.......................................7
Assessment of Diversity and Inclusion of the Boards Investigated............................................9
Ethical Analysis Using Normative Theories of Ethics, and Sustainability Approaches...........10
Conclusion.....................................................................................................................................12
References......................................................................................................................................13
Bibliography..................................................................................................................................16
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Introduction
Corporate Social Responsibility (CSR) can be defined as a process through which companies
manages its business for producing a positive effect on society. However, CSR mainly focuses
on the relationship of a corporation with the local society, wherein it operates. It also includes the
relationship amid the business world with its stakeholders (American Society for Quality 2019).
In the present scenario, every corporate sector is concerned regarding the policies of CSR and
further prepares annual report, which illustrates the CSR-related activities that are undertaken by
the entity (Crowther & Aras 2018). In addition, there are several benefits of CSR, as it is
considered be an important part at the time of making decisions. It will help an organisation to
prosper in the respective market in an effective manner focusing upon integrity of social
responsibility. It is important for the organisations to increase the use of CSR, as it is highly
demanded by the customers and society (American Society for Quality 2019).
Social responsibility is regarded as a moral theory in which some of the individuals are regarded
to be responsible for accomplishing the civic duty along with the actions under civic duties must
be beneficial for society. In addition, this will help in creating a balance between the economic
growth of the organisations, as well as, the benefits for the society and the surroundings.
Additionally, if an organisation is able to maintain equilibrium between these two factors, and
then they will easily accomplish the goal of the CSR (Pachamama Alliance, 2019).
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Discussion
Financial Advices
Financial Advice on Culture Point of View
Culture is regarded as the main aspect, which has to be undertaken during the process of
financial advice. In addition, culture has become an essential regulatory part of an organisation’s
process relating to financial services. In addition, the culture of an organisation is regarded as a
strong competitor for the governance of the same. It has been argued other regulatory initiative
must be given importance instead of giving priority to the cultural factors of the regulatory part.
Although culture is perceived as an important aspect of an organisation, as it is has a positive
impact on the poor cultured organisation, as well as, its customers and society. Additionally, it
has been stated that the”Culture is often thought of as a system of values, beliefs and behaviors
that influences how work gets done” (Deloitte LLP 2018, p. 3).
Culture is considered to be an important factor, which helps in enhancing leadership condition in
an organisation. It also focuses on fostering poor behaviour along with decision-making process
of the organisations (McKenzie, Dring, Nixon, & Pallisco 2019). In addition, this can lead to
decreasing the quality of governance structure of the entity. It has been found that in earlier time,
the services of financial sector highly relied on the rules, regulations, and the systems in order to
influence the customers. However, in recent times, organisations are found to invest more in
enhancing a powerful ethical culture that will help to achieve the target of the set by the board
and senior management of an organisation. Furthermore, It is important for every leader of an
organisation to be accountable for their behaviours, as it has a great impact on the other
subordinates of an organisation (McKenzie, Dring, Nixon, & Pallisco 2019).
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Financial Advice on Governance
Royal Commission developed some regulatory frameworks in order to regulate adverse actions
in the organisations such as wrongdoing in the banking along with financial services industry, as
well as, superannuation (Commonwealth of Australia 2019). In addition, the regulatory
framework was created to govern the financial advice of the company. It also aims to bring up a
desirable change in the organisations for increasing sales. Additionally, the company was found
to be selecting various types of designs for the organisation to shape a better design of the
financial industry (Commonwealth of Australia 2019).
In addition, it has been found that there is a wide range of factors in an organisation, which
mainly focuses on its governance. On the other hand culture, post-global financial crisis (GFC)
mainly focuses on financial accuracy and stability of an organisation. In accordance with the
release of the financial report of the Royal Commission. It has been illustrated that the decision
design of an organisation must include non-financial risks, culture, governance, and
remuneration. The governance factor is a tangible process, which can be changed as per the
changes in internal, as well as, external environment of the organisations (KPMG 2019).
Financial Advice on Remuneration
Remuneration plays an important role in order to sustain human resource in an organisation, as
they work in order to get paid. Hence, remuneration should be considered to be an essential
factor by the financial advisor of the company. In addition, a financial adviser should keep in
mind the need and wants of the employees as along with the other members of an organisation
before fixing up the remuneration (Financial Planning Standards Board Ltd, 2014). The financial
adviser is also required to consider the cost of services, as well as, the cost of the job that is been
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provided by the employees for setting up the remuneration. Thus, there should be a mutual
understanding of this process between management and employees. The method is required to be
completely disclosed and translucent and must be in accordance with the local regulatory
necessities (Financial Planning Standards Board Ltd, 2014). It has been derived that there is
number of ways, which can be used by the financial adviser in order to provide remuneration to
the employees of an organisation. The method includes commission-based payments and fee-for-
service, which are used by the financial advisers to provide the remuneration to the employees
(Parliament of Australia 2007).
Identification of the Effects on the Stakeholders through Carroll and Buchholtz’s
Stakeholders are the part of organisation, which are directly affected by the overall procedures,
policies, strategies, and actions. In addition, based on the definition developed by Carroll and
Buchholtz, the word stake entails that an individual is interested or have a share in an
organisation. In addition, some of the stakeholders have definite legal rights along with the
expectations such as the employees and the owners of the organisations to undertake the
operational activities. On the other hand, some of the other stakeholders pose rights, which have
been granted by law. However, they may even recognise that they pose some moral rights that
are related to the operations of an organisation. Additionally, it can be illustrated through an
example that the group of employees, which may not have any legal right for sing any of the
natural resources of the company, although they may consider that owe a moral right to inquire
about the organisation’s environmental policies. They can encourage organisations to build up
the policies, which are environmental friendly. However, there are many groups, which have
been affected by the issue using Carroll and Buchholtz’s model, but the stakeholders were the
ones that were adversely affected (Advameg, Inc., 2019).
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According to Carroll, it has been stated that CSR has found to be playing an important role in
formulating an organisation since 1950 and is still developing. The organisations are found to
undertake certain activities that will help to improve society and the nearby community to a large
extent. It also focuses on developing certain groups of stakeholders for the well-being of self and
the organisations. In addition, the economic responsibilities are regarded as an important factor
in affecting the stakeholders along with the employees of the organisations. This is because if the
business is not able to earn desirable profit or it is not financially strong, they may have an
adverse effect on the shareholders, as well as, the employees. Additionally, the legal
responsibilities even have certain importance with respect to the owners of the organisations.
However, it has been found that in current controversial society, the legal responsibilities are
often regarded as threat of litigation against businesses. This is mostly concerned with both
employees and consumer stakeholders. The stakeholders were also affected by the ethical
responsibilities of the organisations (Carroll, 2016).
Analysis of the Financial Institutions Investigated Reported in ASX Principles and
Recommendations during the Years before the Royal Commission
An ASX principle was mainly established to attain a high level of governance in the company
and even to meet the economic expectation of the investors along with the customers in every
situation (ASX Corporate Governance Council 2019). In addition, the ASX principle was
applicable for every part of an organisation, whether it is the legal or economic aspect of the
organisation. In addition, the ASX principle the Royal Commission includes eight key principles,
which includes structure the board to be efficient, and add importance, maintain the reliability of
business reports. It further includes e of the rights of shareholders, remunerates reasonably, &
sensibly, builds strong fundamentals for management & supervision process (ASX Corporate
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Governance Council 2019). This further comprises creating a culture that supports lawful actions
and supporting ethical & responsible actions, make appropriate & fair disclosure, and even
should focus on identifying, as well as, managing the risk of an organisation. Furthermore, it has
been established in order to create effective corporate governance in the organisations to
effectively undertake its overall function and activities (ASX Corporate Governance Council
2019).
The main aim to establish ASX principles in the organisation was to create a framework for the
Royal Commission in order to determine an important level of accountability for the company.
In addition, the application of ASX principles has resulted in implementing brings up minimum
changes in an organisation such as the features of the board of directors. Hence, a company was
still running and operated in accordance with the ASX principles. One of the principles of ASX
deals with the arrangement of the board in order to add up the value to the organisation's
structure (Dakhelalla 2014).
The principles and recommendations that have been established to ensure corporate governance
practices for the corporate sector have been included under the principles of the ASX. In
accordance with the perspective of the by using ASX principle, a company is expected to
maintain high level of governance and even achieve the economic expectation of the investors
along with the shareholders. In addition, with respect to the principles along with
recommendations, the board members believe that the recommendation is provided by the
Council is not suitable for some of the sections of the company. Hence, it cannot be implemented
by a company. However, if the organisations do not adapt recommendation, then they are
required to provide a valid clarification for not adopting the same. In addition, it is important for
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all the entities to apply the principles, as well as, recommendations of the ASX principle
irrespective of the legal form, which has been implemented by the company. It is not important
that the entity is developed in Australia or any elsewhere and even the company is managed
internally or externally (ASX Corporate Governance Council 2019).
The statement of corporate governance must reveal the degree to which an organisation is
implemented the recommendations that have been established by the Council while reporting. In
addition, it has also been stated that “If the entity has not followed a recommendation for any
part of the reporting period, its corporate governance statement must separately identify that
recommendation and the period during which it was not followed and state its reasons for not
following the recommendation and what (if any) alternative governance practices it adopted in
lieu of the recommendation during that period” (ASX Corporate Governance Council 2019, p.
3).
Assessment of Diversity and Inclusion of the Boards Investigated
According to Vafaei, Ahmed, and Mather (2015), it has been argued by the advocates for
increasing board diversity, which comes under two broad categories. The first category includes
‘fairness and equity’, while the other includes ‘shareholder value and firm performance’. In
addition, the research which has been undertaken to investigate the engagement of women on
boards in accordance with procedural justice viewpoint, it has been suggested that public mostly
focuses on the equality of decision-making regardless the outcomes. Furthermore, it has been
argued that the diversity in the board advances the organisational importance along with the
performance of the employees by presenting the board with innovative vision and standpoints
(Vafaei, Ahmed, & Mather 2015).
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In addition, the inclusion of the risks with respect to sustainability comes under the ASX
Corporate Governance Council Principles. This includes CFOs, Boards, and Audit Committees,
which must consider sustainability along with the risks issues as the main factors for evaluating
their corporate governance obligations on a regular basis (Deloitte 2015). The multiplicity of
recommendations include various types of disclosure such as quantifiable achievement for
gender mixture, as well as, attainment of some of the other objectives, the policy of diversity, to
count the quantity of females employees, which are present within the organisation. It includes
disclosure at superior administrative & board level and to disclose a statement that mixes up the
skills and diversity of the company. This can help in order to achieve the recommendation of
board (Williams 2019)
Ethical Analysis Using Normative Theories of Ethics, and Sustainability Approaches
The normative theories of ethics can be defined as the analysis of ethical actions. However, it
generally focuses on some questions such as ‘what is the right thing to do?’ on a general basis. In
addition, it mainly comprises questions regarding what an individual should do or how to make
decision, which action is correct or vice versa. It also concentrates on the moral actions that are
to be considered by the people (Ethics for Environment and Development 2013). Additionally, it
has been found that the proper normative ethics must include the following five elements such as
normative individualism. This indicates that the observation of the incidence regarding norms
along with moral values, which can only be accepted with a valid point of view provided by the
concerned individual. The second element deals with the considering about an individuals’
anxiety and desires, interests aims, requirements, important, and unimportant factors that are
required for the function of justification (Pfordten 2012). The next element is concerned with
pluralism of situations. Therefore, this helps in integrating the moral values and norms in all the
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actions of the element. The fourth element deals with the importance of a standard of aggregation
and further focuses on the evaluation of it with that of the concern. In addition, the final element
can be considered to be an essential principle of aggregation and evaluation, it even focuses on
the principle of relative allusion for oneself and others. It mainly operates based on generalizing
Meta principle, which helps in regulating the application of existing principles and decisions of
an organisation (Pfordten 2012).
Sustainability approach is regarded as one of the CSR strategies, which can help in integrating
sustainability in a business organisation. It even assists to take on the daily activities of the
organisation in an effective manner. The main principle of sustainability approach is that it aims
to restore, advance, preserve, look after the process, and the goods to be supplied. It also focuses
on the features of natural resources along with ecological media for long-term. In order to
achieve positive results with respect to economy, environment, and social systems, sustainability
can aligned and combined with programs, indicators, tools, and incentives among others. It
further aims to focus on the entire life cycle of various natural resources, its processes, and
different pollution types that comes out of it in order to prevent pollution, reduce the level of
waste, and create a sustainable future (Epa.gov 2016). Becker stated sustainability can be defined
as “the ability to establish continuance as a means for orienting human actions and life toward
the threefold relatedness of human existence to contemporaries, future generations, and nature”
(Bushby 2017, p. 27).
Conclusion
Based on the overall understanding, it can be concluded that the CSR models mainly involve
four different social responsibilities, which helps in fulfilling the needs of CSR in an
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organisation. It includes models such as ethical, philanthropic, economic, and legal aspects of the
company. It considers financial advice from cultural, governance, and remuneration point of
view. It also focuses on deriving the effects on the stakeholders by the issues of Carroll and
Buchholtz. It can be inferred that the principle of ASX and the assessment of diversity and
inclusion of the boards can be investigated with the analysis of normative theories of ethics and
sustainability approaches. Through the research, it has been developed that CSR plays an
important role in sustainable development of an organisation, as well as, on the society and the
stakeholders. In addition, it can be concluded that using different models of CSR, an organisation
can achieve different targets along with the responsibilities. This includes attaining desirable
profit through economic responsibility and legal concern through legal responsibility among
others.
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References
Advameg, Inc 2019, Corporate social responsibility, Reference for Business, viewed 26
September 2019, < https://www.referenceforbusiness.com/management/Comp-De/Corporate-
Social-Responsibility.html>.
American Society for Quality 2019, What is social responsibility? ASQ, viewed 26 September
2019, <https://asq.org/quality-resources/social-responsibility>.
ASX Corporate Governance Council 2019, ‘The 8 principles’, Corporate Governance Principles
and Recommendations, pp. 1-40.
Bushby, E 2017, ‘Towards a coherent sustainability ethics’, Master's Thesis in Human Rights
Department of Theology, pp. 1-68.
Carroll, A B 2016, ‘Carroll’s pyramid of CSR: Taking another look’, Carroll International
Journal of Corporate Social Responsibility, pp. 1-8.
Commonwealth of Australia 2019, ‘Royal Commission into misconduct in the banking,
superannuation and financial services industry’, Final Report, pp. 1-496.
Crowther, D & Aras, G 2018, ‘Definitions of CSR’, Corporate Social Responsibility, pp. 1-44.
Dakhelalla, F R 2014, ‘The impact of corporate governance principles on board characteristics:
an Australian study’, University of Wollongong Thesis Collection, pp. 1-157.
Deloitte LLP 2018, ‘Culture of financial services’, Centre for Regulatory Strategy, pp. 1- 20.
Deloitte 2015, ‘Better practice guide 3rd edition’, ASX Corporate Governance Council Principle
7 Recognise And Manage Risk, pp. 1-40.
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Epa.gov 2016, A strategic approach to sustainability, Sustainability, viewed 26 September 2019,
< https://www.epa.gov/sustainability/strategic-approach-sustainability>.
Ethics for Environment and Development 2013, ‘Areas of ethical study’, Unit One: Introduction
to Ethics, pp. 1-41.
Financial Planning Standards Board Ltd 2014, ‘Financial planner remuneration’, Global
Perspectives, pp. 1-6.
KPMG 2019, Culture and governance in financial services following the Royal Commission,
Culture and Governance in Financial Services, viewed 26 September 2019,
<https://home.kpmg/au/en/home/insights/2019/02/financial-services-royal-commission-culture-
and-governance.html>.
McKenzie, G, Dring, T, Nixon, D & Pallisco, M 2019, Culture, governance and remuneration,
EY, viewed 26 September 2019, < https://www.ey.com/en_au/financial-services/how-the-royal-
commission-impacts-the-financial-services-industry>.
Pachamama Alliance 2019, social responsibility and ethics, About, viewed 26 September 2019,
<https://www.pachamama.org/social-justice/social-responsibility-and-ethics>.
Parliament of Australia 2007, Remuneration models, Chapter 7 - Remuneration Models for
Financial Advice, viewed 26 September 2019,
<https://www.aph.gov.au/Parliamentary_Business/Committees/Joint/Corporations_and_Financia
l_Services/Completed_inquiries/2004-07/superannuation/report/c07>.
Pfordten, D 2012, Five elements of normative ethics - a general theory of normative
individualism. Ethic Theory Moral Prac, pp. 449–471.
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Vafaei, A, Ahmed K. & Mather, P 2015, ‘Board diversity and financial performance in the top
500 Australian firms’, Australian Accounting Review, vol. 25, no. 75, pp. 413- 427.
Williams, R B 2019, ‘Diversity ASX corporate governance recommendations: A step towards
change?,’ Sustainability Accounting, Management and Policy Journal, vol. 8, no.3, pp. 335-357.
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