Ethics and Governance Practices of Gold Road Resources Ltd

This report analyzes the ethics and governance practices of Gold Road Resources Ltd and suggests improvements for their corporate code of conduct.

Running Head: Report
Executive Summary
Gold Road Resources has set up the corporate code of conduct to be followed by every
member of the organization including the board members, the management and all the
employees of the company. This code of conduct is designed to maintain high standards of
behaviour within the organization to be observed by all members and make the employees
aware of their responsibilities as per the employment contract with the company. This report
is compiled to analyze the ethics and governance practices of Gold Road Resources Ltd. The
organization Gold Road Resources Ltd was established in the year 2004. It can be inferred
from the analysis that although Gold Road has included detailed disclosure about their
policies and initiatives for environmental and social well being of the internal and external
stakeholders of the company the report lacks substance. It is recommended that the
organization should work towards gathering information about the actual consequences of
their operations on the environment and the society and include the same in the report along
with the corrective initiatives.
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Contents
Executive Summary...................................................................................................................1
Introduction................................................................................................................................3
Organizational background........................................................................................................3
Corporate governance practices.................................................................................................4
Corporate governance: stakeholder orientation.........................................................................9
Interpretation of company communication using legitimacy theory.......................................13
Conclusion................................................................................................................................15
References................................................................................................................................16
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Introduction
Gold Road Resources Ltd is an organization that primarily deals with the exploration of gold
deposits and is currently focused on developing the Yamarna Belt in Western Australia
stretched across an area of 6,000 square kilometers. This report presents the ethical outlook of
the organization and begins with providing the organizational background. This is followed
by presenting a brief summary of the corporate governance practices and the approach that
the organization has taken in terms of their orientation for reporting about the environmental
and social impact. The interpretation of the communication by the organization for this
purpose is included in the report to highlight the outcomes of the reporting practices and how
the organization can take measures for improving them (Guthrie & Parker, 2009).
Organizational background
The organization Gold Road Resources Ltd was established in the year 2004 as a private
organization with the name Faulkner Resources Pty Ltd. Russel Davis made use of his
experience of working in the Yamarna Greenstone Belt as a geologist to establish Faulkner.
After the acquisition of the Yamarna North and Yamarna South Projects in the year 2005,
Faulkner decided to go public and the organization was renamed Eleckra Mines. Eleckra
Mines became a public company in the year 2006 and also got listed on the Australian
securities exchange. The organization further explored the Golden Highway Resources and in
the year 2010, Eleckra decided to rename itself Gold Road Resources to represent the focus
of the company on gold mining operations. Currently, Gold Road Resources has complete
ownership of the Yamarna Greenstone Belt (Wilmshurst & Frost, 2010).
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The Yamarna Greenstone Belt is located 200 km to the east of Laverton in Western Australia
covering area of more than 6,000 square kilometers. This belt is considered to be under
explode and very prospective in terms of Gold mining. In the year 2016, Gold Road
Resources also entered into a joint venture with the organization Gold Fields Ltd having a
50:50 partnership. This covered an area of 144 square kilometers of the Gruyere Joint
Venture. It is estimated that this joint venture will produce between 85,000 and 120,000
ounces of gold for the financial year 2019 and once the operations attained a steady state, the
annual production can go anywhere up to 300,000 ounces from it. The total leases in the
Yamarna Belt contain gold resources that are expected to amount up to 6.5 million ounces.
The completely owned tenements of the Yamarna Belt currently being explored by the
organization and in addition to this, the company is also exploring the Gruyere JV. Gold
Road Resources is more focused on the exploration of the Yamarna Belt since it is expected
to have various New World discoveries in this region. The organization entered another joint
venture with Cygnus Gold Ltd in the year 2017 for exploration in the Greenfields region of
Western Australia.
Corporate governance practices
Gold Road Resources carries out the exploration and development of mineral properties
throughout Australia and is primarily known for the exploration of gold deposits.
Headquartered in West Perth, Australia, Gold Road Resources is headed by Duncan Gibbs as
the Managing Director and CEO of the company. The members of the board of Gold Road
are presented in the image below.
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The board comprises of four executives and three non-executive members. The details of the
remuneration of the non-executive members are presented below.
The remuneration structure followed for the executives of the company is presented below.
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The letter by the chairman of Gold Road Resources, Tim Netscher, for the Annual Report
2018 is included below.
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Gold Road has 11 distinct policies that ensure that the organization and all its operations are
in compliance with corporate governance principles stated by the ASX Corporate
Governance Council. The various policies of the company allowing them to practice
excellent corporate governance are:
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 Anti-corruption and compliance policy
 Continuous disclosure policy
 Corporate code of conduct
 The report on director related entities
 Environmental policy
 Health, safety and wellbeing policy
 Remuneration policy
 Risk management policy
 Securities trading policy
 Shareholder Communications policy
 Whistleblower policy
The organization has demonstrated that commitment towards maintaining the highest
standards of corporate governance and constantly works towards creating an excellent
corporate culture. Gold Road believes in values of ethical working and integrity and also
understands that these practices help in reducing the risk faced by the organization. The
system for complete control and improve accountability has been introduced by the
organization as a part of the corporate governance practices (Gibassier & Unerman, 2019).
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Corporate governance: stakeholder orientation
It is the responsibility of the organization to ensure that its members are acting ethically and
professionally at all times and all the actions and decisions are consistent with the values of
Gold Road. All the internal and external stakeholders of the organization get the assurance
from the corporate code of conduct of the company that their actions will be consistent with
the stated practices of the company. In addition to the employees of Gold Road, the do's and
don'ts included in the corporate code of conduct of the company are also applicable to all the
contract partners of the organization and their consultants. All the senior leaders of the
organization including the board members and the decision makers endorse the values of the
company and the code of conduct and it is their responsibility to constantly strive to achieve
it. It is also the responsibility of the organizational leaders to make use of the principles and
values stated in the when taking decisions, acting and responding on behalf of the company
(Bebbington & Larrinaga‐González, 2008).
The corporate governance system and principles of gold Road oriented towards ensuring that
the rights of all the stakeholders of the company are protected and the organization is able to
maximize the returns of the shareholders. The organization does not just focus on the
shareholders of the company but also has policies in place for working ethically and
protecting the other internal and external stakeholders of the company. The third section of
the corporate code of conduct of the company highlights the responsibilities that Gold Road
holds towards the shareholders of the organization and the entire financial community. This
states that the organization is working towards increasing shareholder value while
safeguarding their rights and interests and acting ethically. The organization strives to
maintain a system of strong accountability and control throughout their processes for this
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purpose. However, the focus of the corporate governance system of Gold Road is not just to
maximize the shareholder value but also adopts a stakeholder orientation taking care of the
protection of the rights of various stakeholders of the company and not just the people having
a stake in the organizational capital (Chu, Chatterjee, & Brown, 2012). The five core values
of Gold Road as stated in the 2018 annual report of the company are:
 Caring for the well-being of all
 Acting with integrity
 Delivering the promises
 Innovating for improvement
 Working as a team
(Netscher, 2018)
Since the organization is focusing on abiding by the legislation and the common law
requirements having an impact on their business operations, they ensure that they do not
cause any damage to the environment of the cultural heritage of the area. The organization
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also provides measures to ensure the health and safety of all its members and had a dedicated
whistleblower policy for the protected disclosure of any unethical practices noticed by the
internal employees. The employees of the organization considered to be significant
stakeholders of the company and therefore, Gold Road only employees the best available
staff. The organization ensure that the people hired by the company have the necessary skills
to carry out where job requirements and they do not practice any discrimination on the basis
of religion, cast, colour, nationality, race, family status, marital status, sexual orientation,
gender, pregnancy, ancestry, age, medical condition, mental or physical disability or any
other characteristic. The organization also focuses on encouraging affirmative action by
providing opportunities for employment to women and indigenous people and ensures equal
opportunity for all (Gold Road Resources Board, 2019).
In order to fulfil their responsibility towards the community in which they operate, Gold
Road regularly raises issues related to environment and complies with all the legal
regulations and requirements for their operations. The stakeholder orientation of the
organization is also visible in their policy to respect the beliefs, culture and values of the
indigenous people by developing transparent practices and honest relationships with the
communities with which they operate. This provides mutual benefits to the community as
well as the organization (Campbell, Craven, & Shrives, 2013). Gold Road also monitors the
environmental performance identifying the opportunities and ensuring that there efficiently
making use of resources like water and energy. They take conscious efforts to minimize the
waste production and also run initiatives that contribute to the conservation of the
biodiversity. Another initiative started by Gold Road to fulfill their obligations and
responsibility towards their community is the land use planning and Rehabilitation practice.
The annually released sustainability report of the organization provides the details about their
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performance in this sector and they strive to maintain complete transparency in the
environmental impact reporting (Subramaniam, McManus, & Zhang, 2009).
The objectives of the code of conduct of Gold Road are to safeguard the interest of the entire
financial community along with the shareholders of the company and to ensure that the
financial statements and reports of the organization are prepared with integrity and openness.
The corporate code of conduct of the company presents the responsibilities of the
organization and its members towards the financial community and the shareholders. Gold
Road as a public organization is expected to abide by the requirements of the legislation and
the common law that impact their business operations. Going by the industry in which the
organization operates, it is very important to take care of the occupational health and safety of
the employees, safeguard the environment and the cultural heritage of the place where they
conduct their mining operations (Rahaman, Lawrence, & Roper, 2014). The code of conduct
of gold Road states that any transgression from the legal rules that are applicable to the
organization should be avoided by the company and any employee noticing it should
immediately report the same to a member the executive leadership team of Gold Road. The
corporate governance statement of the organization is released for 12-month period at the end
of a calendar year. For the year 2018, the corporate governance statement of Gold Road
included the 8 principles to keep the integrity and ethical behaviour of the organization intact
and maintain high standards of governance. This was in line with the principles set out by the
ASX Corporate Governance Council. The organization especially values the human resource
and believes that the people are the key to the ongoing success and operations of the
company. The company values of Gold Road are reflected in their reporting and corporate
governance practices that adopt the stakeholder perspective (Ricceri & Yongvanich, 2004).
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Interpretation of company communication using legitimacy theory
The legitimacy theory is defined as a mechanism that allows the organizations throughout the
world to practice good corporate governance by making voluntary disclosure about the social
and environmental performance (Burlea-Schiopoiu & Popa, 2013). According to this theory,
the organizations need to corporate in congruence with the norms and values of the society if
they wish to continue with their operations for a long time (Donovan, 2013). The voluntary
disclosure by the company about their social information and the environmental impact
communicate legitimacy and therefore a number of organizations throughout the world have
started adopting this practice. Gold Road is one such organization that provides the details
about the environmental, social and corporate governance practices in the annual report.
However, it is to be noted that there is no significant disclosure about the impact of the
mining and exploration operations of the company on the society and on the environment.
The organization has only disclosed information about their values and organizational
culture. Although Gold Road has included detailed disclosure about their policies and
initiatives for environmental and social well-being of the internal and external stakeholders of
the company the report lacks substance. This indicates that the organization does not have
effective internal controls in place for monitoring the degrading impact of their practices on
the environment and the indigenous societies (Tilling & Tilt, 2010).
There is limited research conducted to identify the impact of corporate governance and CSR
reporting on the quality of the governance practices but it is believed that transparent clear
disclosures about the corporate social responsibility of the company and their social and
environmental impact enhance the quality of governance demonstrated by them. Legitimacy
theory is the conceptual framework used by the organizations for these disclosures but this
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theory is dependent on the assumption the decision makers of the organization will also adopt
strategies for improving their social and environmental performance if they are encouraged to
share these reports. In the case of Gold Road, the organization tries to communicate
legitimacy and good governance practices by including the sections of environmental, social
and governance reporting in the annual report but these disclosures do not prompt the Desire
of the company to increase their legitimacy and only limited to communicating the good
news and the remarkable initiatives started by them missing out on the details of strategic
importance (Mayne, 2017).
Therefore, it is recommended that the organization should work towards gathering
information about the actual consequences of their operations on the environment and the
society and include the same in the report along with the corrective initiatives. It is
understood that the organization is working on the social contract getting permission to draw
on the resources of the community. However, they do not have the inherent right to the
environmental and social resources and therefore, it is expected that the benefits that the
society receives from the resources extracted by the organization should exceed the cost that
they have to bear in the process. Gold Road should address these issues and improve the
quality of reporting instead of simply including these sections in the annual report as a part of
the social and corporate obligation (Christensen, Kent, & Stewart, 2010).
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Conclusion
This report is compiled to analyze the ethics and governance practices of Gold Road
Resources Ltd. The organization Gold Road Resources Ltd was established in the year 2004.
It can be inferred from the analysis that although Gold Road has included detailed disclosure
about their policies and initiatives for environmental and social well-being of the internal and
external stakeholders of the company the report lacks substance. It is recommended that the
organization should work towards gathering information about the actual consequences of
their operations on the environment and the society and include the same in the report along
with the corrective initiatives.
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References
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