MBA402 Corporate Governance, Sustainability and Ethics Case Study Sample

MBA402 Corporate Governance, Sustainability and Ethics

Your Task

You are required to write a report to a corporate board summarising your views on corporate governance, sustainability and risk management practices.

Assessment Description

From Monday of Week 9 at 9 am, you will have access to a case study on MyKBS under the assessments tab. This document will have all the necessary case facts and the specific questions which you are required to answer for this assessment.

This assessment examines two learning objectives:

• LO4: Analyse the role of the board in the assessment of strategy and risk and the way in which this expertise can be better utilised.

• LO5: Analyse the sustainability initiatives practised within organisations and determine their effectiveness in meeting corporate and ethical objectives.
Assessment Instructions

• You are required to prepare a report and submit it via Turnitin via MyKBS.

• You should adhere to KBS’s referencing and Academic integrity requirements.

• Please refer to the assessment marking guide to assist you in completing all the assessment criteria.

Solution

1. Evaluating our corporate governance practices for Focus Logistics Company

Corporate governance practise is the heart of successful execution of a company. This practise not only help to develop the workflow but also promote trust among the shareholders. The four effective corporate governance practices are-

(1) Policies Following Law and Regulations Applicable 

According to the investors, the company has been running the business with a lack of operational insight and proper management. There has been no appropriate performance and necessary planning for proper logistic management. According to the MBA Assignment Expert For this reason, the company must adopt some important policies which are following the law and the government regulations must be implemented as it is the only way to figure out the pertinent problems (Govindan et al. 2021). It can help the company to assess its compliance with laws and regulations, bring a positive reflection on the company ethics, give suggestions for making proper decisions, and manage the risks well in the company which has been one of the most important concerns of the Focus logistics. The company must follow the Charities Act of 2006 and the Financial Services and Markets Authority of 2011 (Burdon and Sorour, 2020).For example- Degree limited company, from capital goods industry, their employees working within the company aswell-trainedfunction on how to be efficient with the governance policies. Laying solid foundation on the management system, the board must be structured effectively, the culture must be implemented within the sector to act lawfully must be followed to mitigate the needs of the company growth. 

(2) Framework for Governance 

According to Jacob Gardner, the COO of the company, the decision-making process of the company has slowed down which has resulted in complications, and a lack of proper innovation and creativity. The company might focus more on the operation of the business. Oftentimes in organizations, the frameworks for the business have been overlooked, given that it is the most important thing or the base of a company to achieve positive growth and in the case of logistics in this company too (Luo, 2018). The company must focus on some of the corporate governance frameworks namely – ISO 38500 – The International IT Governance Standard, ITIL-IT Service Management, and most importantly COBIT which will be needed to mitigate with the challenges of business and the risks which emerge in the company (Al-Fatlawiet al. 2021).The company must focus on the operation of the boars which must be effective, the roles and the responsibilities which are set must be kept transparent and maintained accordingly, the business practice must be driven sustainably, and the engagement with the stakeholders must be given the focus on. 

(3) Governance Documentation and Process 

According to the CFO of the company David Rose, it would be great if the company's peers determine them as the pioneers of the corporate governance and practices which provide sustainability to the business. The company must initiate that the documents related to the governmental law must be accurate and always kept up to date. The documents state properly and ensure that the business is operated properly and the engagement with the stakeholders is made right, providing proper evidence for the regulators of the governmental authority. The governmental and the legal documents must be also kept properly to manage any kind of risk which might create miscreants that might provide legal allegations to the company. For example- ZIP CO LIMITED is the company always careful while providing any throwaway comments having the capital of 574.42 million Euros (Khan et al. 2019). The processes must include incorporationcertificate, bylaws and often agreement of the shareholders (Mocket al. 2018). 

(4) Director Training and Board Evaluation 

Mrs. White stresses the transparency of the business operations. She expects the customers who must be loyal and faithful and must have empathy. The company must focus on the training of the directors too to keep them updated with the rules and regulations of the company. It must be incorporated within the board of the company and must be kept updated for the proper management of the company and the responsibilities must be mitigated (Cichoszet al. 2020). The board must have a proper hold of knowledge, education, skills, and diversity in their aspects. The board members must have enough time to commit to the companies and they must discharge the responsibilities properly. The board of directors must be independent and most importantly the director must not be appointed as the CEO of the company according to the CGC principles. 

Analysis of Its Effectiveness for The Company 

Benefits of Maintaining Law-oriented Policies 

As Mrs. White says the application of unnecessary products and resources can complicate the situation of the business while operating it. The company must follow the policies which are oriented to the authoritarian or the governmental laws and Focus Logistics must implement it in their work culture as it may benefit the company in several ways. It can help to figure out the prevalent issues faced in the company and help in managing the roles and the responsibilities of the company. One of the recent news in DC Velocity has discussed the best corporate governance practices to achieve sustainable logistics. It discusses that recognition and feedback are very critical along with engaging retention environment, coaching the officials are also important and reward or recognition is very critical too (DC Velocity, 2022). A disclosure of the Whistle blower policy must be implemented by the company that it can help to combat the acts by frauds, and avoid the reputational destruction (Eulaiwiet al. 2021). 

Advantages of Following Governmental Frameworks 

David Rose says that the company must be careful while passing throwaway comments. If the governmental frameworks are overlooked or not implemented in the company logistics then it will face deterioration in the business operation. The company must follow every individual framework set by the government, which will assist in setting up an effective board having directors with sustainable decisions. The roles and responsibilities must be sustainable while operating the company. The engagement with the stakeholders must be effective and connected for efficient collaboration and connection (Durst and Evangelista, 2018). The ISO governmental framework can be incorporated to provide safety for the employee, the workplace hazards will be reduced, and will provide a positive work environment. 

Proper Documentation-

This will help the company to keep up-to-date documents and will also help to avoid any types of miscreants. It will help the directors to set rules and obligations for the owners and the stakeholders associated with the company. The team will also be successful while providing evidence in a place where it is found to be necessary. It will also be successful in managing the risks in the company and will keep information and the activities compact. Document360 will help the company to align with the official workflows, and User Guiding will be very helpful to share and document innovative ideas. 

Efficient Operation by The Directors

The directors will contribute more time to providing innovative strategies and provide plans which are of longer time for the company. The directors will have a stronger knowledge of management and have diversity in their knowledge. They will have sufficient time for the company for discharging its responsibilities. They will pass through proper education and training more become more efficient and will also help the company officials to make proper governmental documentation and follow them according to the government guidelines and frameworks which is a matter of priority to the company. The directors must use a GPS system to track the real time delivery, and use Enterprise Resource Planning for smooth flow of information in the logistics department (Aremuet al. 2021). 

2. Benefits and Challenges of Producing Sustainability Report for Focus Logistics

According to Traxler, Schrack, and Greiling (2020), the sustainability report basically reveals the declaration and communication of ESG (environmental, social, and governance) goals and also an organization’s progress towards the goals. According to Mrs. White, there is no need for preparing a sustainability report for Focus Logistics, and preparing these reports can be a waste of money. According to her grandson Jacob Gardner, the COO of Focus and investors, there is a need for sustainability reports. The benefits and challenges of preparing a sustainability report for Focus Logistic are briefly described here:

Benefits

(1) Signifying credibility - sustainability report helps to be clear about every economic, environmental, and social effect of the business activities which is the key to comforting others that this company is serious about sustainability.

(2) Indicating opportunities for saving money - sustainability reporting helps to recognize cost savings brought about by the sustainability strategy and the possibility of making more savings. These reporting will be an opportunity for saving money for Focus as well as the investors.

(3) Developing worker morale - sustainability reporting helps businesses to apply solid data and information to report back internally on development and progress. Additionally, this reporting helps to build worker pride, action, and morale.

(4) Developing investor and stakeholder confidence - as per Karaman, Kilic, and Uyar (2020), sustainability reporting is a trustable reporting that increases stakeholders' and investors’ trust. Reporting sustainability data is very essential in gaining sustainability authentications and authorizations as well as gaining the confidence and trust of investors. According to Satish (2021), Microsoft CSR makes its environmental sustainability report and because of this, it is able to gain stakeholders’ and investors’ trust. The investors of Focus Logistics are concerned about sustainability reports. So, producing sustainability reports can increase their trust.

(5) Helping the company to learn by doing - sustainability reporting can help the company to find what is working or not working within the company. So, the management board of Focus can adjust plans and strategies accordingly.

Challenges

(1) Lack of clearance - a major challenge for sustainability reporting is clearance or transparency. A company can report high local community involvement by having representation programs in its every execution, even if these are not fruitful. Multiple organizations have attempted to address this by hiring external adjudicators. However, adjudicators can only verify the number, not the potency of these functions. According to Wulff et al. (2019), Samsung is facing sustainability challenges due to a lack of clearance in its sustainability report.

(2) Lack of general correspondence - According to Tsalis et al. (2020), the guidelines of sustainability reporting are maintained by 70% of large companies worldwide, but they also allow for substitutes. An organization can claim that a needed declaration does not apply to it or that the data and information needed are private, confidential, and legally forbidden or unavailable. These anomalies make it difficult to compare sustainability performance between organizations, or overtime for the organization. Moreover, since sustainability reporting is the main source of sustainability guides, these anomalies also limit the actual value of these guides or indicators.

(3) Disarranged with internal priorities and needs - one of the biggest issues with sustainability reporting is that sometimes these reports are disarranged with the priorities and needs of the company. As per Nguyen (2020), Starbucks faced this type of challenge and failed to prepare a proper sustainability report. Gaining success for the Focus needs a healthy and proper balance between environmental, social, and economic performance. If reports are misaligned with internal priories and needs then it will be difficult to measure these performances.

The key elements that should be included in such a report in this industry are briefly described here:

(1) Transparency or clearance - As per Torelli, Balluchi, and Furlotti (2020), transparency is one of the key elements in sustainability reporting. It needs putting new organization information and data into the public domain.

(2) Authenticity - sustainability reports must clearly show the organization’s dedication to authenticity.

(3) Instinctive structure - sustainability reports have a broad formation of audiences. Sustainability reports must create a structure that conducts readers via the organization’s story of sustainability.

(4) Carbon footprint report - Focus must include its carbon footprint report in the sustainability report because its carbon footprint is enormous. The sustainability report must show Focus’s dedication and actions to reducing carbon footprint.

(5) Fuel consumption report - as Focus consumes a large amount of fuel every year, the sustainability report of this organization must include a fuel consumption report and the organization’s action toward reducing the consumption.

The most likely sustainability risk for Focus is a financial risk because all national banks do not support a business or organization that does not have a sustainability target or plan.

3. Key Risks for Focus Logistics and Benefits in Minimizing Risk

Key risks

(1) Financial risk - Focus has recently taken on a lot of debt and this is why the board must continuously operate its exposure to financial risk. Also, it is very clear that national banks do not support an organization or business that does not have a sustainability target or plan.

(2) Failure to combine logistics - 3PL or third-party logistics has matured to allow and support the logistics industry. That does not mean that logistics governance should not be built into the company. Even outstanding logistics companies cannot set the priorities for the company from the outside.

(3) Operated by technology - software helps to operate businesses in a stronger and faster way. Sometimes software creates a departmental mindset that can only work and think the way the software permits. Logistics operatives spend a huge amount of time putting data and information into the system.

(4) Holding investors and stakeholders - As Focus started refusing investors’ suggestions about preparing a sustainability report, it will be difficult for the company to hold the investors and sustain the business.

(5) Maintaining security - maintaining a secure and safe logistics system can be a critical challenge. Within a logistic company, countless people, staff, employees, and third-party providers are engaged, which can conduct serious security problems in logistics.

Benefits

Risk management is considered the key in reducing waste and energizing other appropriate and best practices within the logistics. Risk management assures deliveries and production is performing properly. It helps to avoid losses by figuring out risks early. Additionally, it helps to hold the satisfaction of customers as well as investors.

To mitigate risks the company should take some actions:

(1) The company should recognize and evaluate the current risks. By taking a critical look at the business and recognizing risk areas the company can evaluate possible logistics risks and issues.

(2) Suppliers and providers can influence the reputation of the company. To assuring the quality of suppliers’ products, the company should be aware of how they behave with workers, source elements, and communicate with other partners.

(3) The company must prepare a sustainability report to get financial support from the national banks which will decrease the financial risk of this company.

(4) The company must be aware of risks that the suppliers, investors, and providers may face including country risk, rules and regulations compliance, political and economic situations, or any critical issue.

(5) The company must listen to its stakeholders and investors because they are an important part of this business. Investors are concerned about the carbon footprint as the company’s carbon footprint is huge; this is why the company should take some actions to reduce the use of carbon. 

(6) According to Stefanova (2022), the company should include its partners, stakeholders, investors, suppliers, and data management centres in risk management planning. The involvement can increase their loyalty and responsibility.

References

Cichosz, M., Wallenburg, C.M. and Knemeyer, A.M., 2020. Digital transformation at logistics service providers: barriers, success factors and leading practices. The International Journal of Logistics Management. https://www.emerald.com/insight/content/doi/10.1108/IJLM-08-2019-0229/full/html

DC Velocity, 2022. Best Practices to Build Labor-friendly and Sustainable Logistics Operations, Part 1. https://www.dcvelocity.com/blogs/2-one-off-sound-off/post/54681-best-practices-to-build-labor-friendly-and-sustainable-logistics-operations-part-1

Durst, S. and Evangelista, P., 2018. Exploring knowledge management practices in third-party logistics service providers. VINE Journal of Information and Knowledge Management Systems. https://www.emerald.com/insight/content/doi/10.1108/VJIKMS-05-2016-0030/full/html?skipTracking=true&utm_source=TrendMD&utm_medium=cpc&utm_campaign=VINE_TrendMD_0&WT.mc_id=Emerald_TrendMD_0

Govindan, K., Kilic, M., Uyar, A. and Karaman, A.S., 2021. Drivers and value-relevance of CSR performance in the logistics sector: A cross-country firm-level investigation. International Journal of Production Economics, 231, p.107835.https://www.sciencedirect.com/science/article/pii/S0925527320302048

Karaman, A.S., Kilic, M. and Uyar, A., 2020. Green logistics performance and sustainability reporting practices of the logistics sector: The moderating effect of corporate governance. Journal of Cleaner Production, 258, p.120718.

Khan, M., Lee, H.Y. and Bae, J.H., 2019. The role of transparency in humanitarian logistics. Sustainability, 11(7), p.2078. https://www.mdpi.com/2071-1050/11/7/2078/pdf

Luo, C., 2018. Relationship dynamics in logistics.http://researcharchive.wintec.ac.nz/6295/1/K%20%26%20Q%20conference%202018%20proceedings.pdf
Nguyen, C., 2020. Sustainability marketing concept: Case Starbucks.    
Satish, K., 2021. Embracing Environmental Sustainability: The Case of Microsoft Corporation. Available at SSRN 3882786.

Stefanova, M., 2022. Changes in Quality and Risk Management in Logistics. Integrating Quality and Risk Management in Logistics, p.1.

Torelli, R., Balluchi, F. and Furlotti, K., 2020. The materiality assessment and stakeholder engagement: A content analysis of sustainability reports. Corporate Social Responsibility and Environmental Management, 27(2), pp.470-484.

Traxler, A.A., Schrack, D. and Greiling, D., 2020. Sustainability reporting and management control–A systematic exploratory literature review. Journal of Cleaner Production, 276, p.122725.

Tsalis, T.A., Malamateniou, K.E., Koulouriotis, D. and Nikolaou, I.E., 2020. New challenges for corporate sustainability reporting: United Nations' 2030 Agenda for sustainable development and the sustainable development goals. Corporate Social Responsibility and Environmental Management, 27(4), pp.1617-1629.

Wulff, E., Kee, D.M.H., Halttunen, E., Kara, H. and Pakarinen, N., 2019. An analysis on how Samsung can improve their environmental work by adding new ecological transportation method of goods. Asia Pacific Journal of Management and Education (APJME), 2(3), pp.55-66.