Business Studies Notes Grade 12
Matric Business Studies
CSR and Corporate Governance
CSR V CSI
CSR -Corporate Social Responsibility management obligation to promote the welfare of
stakeholders
CSI Corporate Social Investment Actual investment with resources needs a balance
between social investment and financial investment for King Code.
Resources include Time, Money, Equipment and skills.
Stakeholders
Primary, Shareholders, Customers, Suppliers and Employees and competitors.
Secondary, Government and local communities
Sustainability
Ability to maintain action at a certain rate and level.
• Difference over long-term
• Environmentally friendly
• Import seasonal materials
• Self-sufficient
• Teaching skills, marketable skills.
Positives of CSR
• Promotes the image of the business
• Provides competitive advantage because of good publicity
• Attracts staff and investors
• Stops the government from forcing businesses to do CSR
• Tax rebates from SARS
• High rating on JSE SRI
• Fixes local socio-economic issues, which may help businesses in future i.e., future
customers
Negatives of CSR
• The community may not be able to return support from business
• Small businesses can’t afford CSR
• CSR can distract from other primary Stakeholders.
• CSR = higher prices on goods
• It’s time-consuming due to the reports that need to be drawn up
• Makes business less competitive due to the increased spending on CSR
• Primary stakeholders' main priority
• Hard to measure the effectiveness
• Staff need to be trained to manage CSR programs
• Shareholders expect returns on investment
1
,Business Studies Notes Grade 12
Triple bottom-line reporting
3 main factors
People, Social Responsibility, all interactions with people, ie: Employees, customers and community.
Planet, Environmental sustainability Carbon footprints
Profit, Economic prosperity, monitory reporting
Integrated reporting is the cornerstone of good corporate governance; triple-bottom-line
reporting measures performance in those areas. They believe in serving the community, and
they serve the business.
King Code and Corporate Governance
Ethical principles (Guidelines) in which a company is operated, good governance balances
the needs of the Stakeholders, government and the community.
• Assessing how business affects the community positively and negatively in its
business practices and how it intends to influence the community's future.
• Need for Accountability and Transparency
• 3 elements of King Code GCG, Leadership and sustainability
• Key stakeholders decide on business movement for the best need and direction for
the business.
• It is a requirement of all companies on the JSE to comply, ie: H&M is not required.
The emphasis of the king code is to bring financial reporting into perspective by examining a
company's commitment, studying the impact of the business on the community and the
company's commitment to the future benefit of the community and eliminating future adverse
effects.
King codes 1-4
1. Triple bottom line reporting introduced.
Focus of consequences moved from only profits to all stakeholder including on the Planet
and the people
2.
• Describes seven principles of good corporate governance
3. .
• Added to principle regardless of whether private/public/non-profit
• Directors liable for misrepresentation
• Focus on independent directors
• Requires independent audit committee
• Requires companies on JSE to report on sustainability in line with GRI
4. .
•
States that the board of a company is accountable for ensuring these broad outcomes
are achieved
• Ethical Culture
• Good performance
• Effective control • Trust & good reputation
• King Iv now has 17 principles of GCG (Good Corp Gov)
2
,Business Studies Notes Grade 12
Primary Characteristics of GCG (FIATDIP)
Transparency
• Openness, relating to transactions, facts and figures
• Leads to More confidence for Stakeholders, more willing to invest back into business,
less fraud and increased productivity.
Independence
• Avoidance of undue influence
• Free of constraint from correct course of action
Accountability
• Take account for actions done by the business
• Creates confidence with stakeholders
• Done through disclosing information
Fairness
• Customers and stakeholders treated with equality
• A CG rating system can be used with specific criteria that are ranked
Integrity
• Measure to take responsibility for actions to those affected by decision.
Discipline
• Self Discipline, level of integrity and judgement a person has. Especially
management who decide the tone for business functions
• Market Discipline, Investors willing pay premium for businesses that are well
governed and for markets with good governance regime.
• Regulatory discipline, regulations with penalties for lack of transparency, fraud and
malpractice will be put onto the business
Promoting ethical and recposible business decsions
• The Board of directors should ensure that ethical and responsible decisions are
made with legal obligations and expectations from stakeholders.
Sustainability as a part of the king code
Ensuring the needs of the present are met without compromising the future generations
needs.
Criteria for sustainability from business actions
• People are better off than before business actions.
• Planet must not have degraded due to actions
• Economic position has been strengthened
= Triple Bottom line
Environmental sustainability pillar
Business actions that degrade the environment, carbon emissions and footprints,
deforestation, soil degradation. As business operates it will inevitably affect the environment
negatively however they should focus on reducing impact by looking at everyday practices.
3
, Business Studies Notes Grade 12
4ps sustainability design
• Product/service, Less harmful way to make clothing, ie, water recycling, dye’s,
reusing old materials off cuts. Clothing deposit box for recycling use those old cloths
for reuse as materials for new cloths.
• Process, Activities that form part of companies value chain internally and externally.
Production of the clothing and their packaging such as plastic wrapping when
shipping to the store and bags used. Transportation of clothing to the business the
vehicles used impact the environment with C02 emissions.
• Practice, Daily activities, operational activies, waste disposal methods and effective
use of energy. Bathrooms in stores, water usage lights in the store are powered with.
Implement motion senses for lights.
• Premesis, the way the business’ building is designed and how it affects the
surrounding area. Bins arround premisis for recycling. Use of windows for natural
lighting, Nature cooling design so no need for Air conditioning. Garden arround
buisness use of indigenous plants, water wise plants. Not paving the parking lots or
limiting the size of paved parking lots.
Benefits of good Corp GOV
• Investor confidence, gain capital
• Minimizing wasteage, corruption and risk mangement
• Helps in brand formation and devlopment
• Provides incentives to owners and managers to achvie objectives
• Positive impact on shares and SRI rating
• Ensures corp success and economic growth.
Social Responsibility Investment index (FTSE/JSE SRI)
Purpose:
• ID Businesses that subscirbe to TBL reporting
• Asses companies allignment with CSR globally.
• Contribute to the dev of good business practices
• Index founded on principles of TBL
• Gives good CSR businesses a place to show their good business practices to attract investment.
Advantages
• Moral obligation to society
• Complies with company act (Legislation)
• Comply with King Code
• Good Publiticy
• Easier to get contracts, ie tenders and suppliers
• Customers prefer to support businesses that help communities.
• Creates trust
Criteria to form part of JSE all share index
• Core: Are companies' policies comply with minimum requirements, look at
Intergrated reporting.
• Desirable: companies should aspire to, guiding indicators going the extra mile.
4
