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MIM 511/BA 548 Day 4: Transparency

MIM 511/BA 548 Day 4: Transparency. Scott Marshall Associate Dean, Graduate Programs and Research. Transparency. What is meant by ‘corporate transparency’ ?

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MIM 511/BA 548 Day 4: Transparency

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  1. MIM 511/BA 548Day 4: Transparency Scott Marshall Associate Dean, Graduate Programs and Research

  2. Transparency • What is meant by ‘corporate transparency’? • Actions that reduce ‘information asymmetry’ in one or more components of a company’s value chain by revealing ‘credence attributes’ • ‘Credence Attributes’ – characteristics of processes,products and companiesthat a consumer/citizen is not able to determine • Before purchasing and during use of a product, • When living in proximity, and/or • Considering investment decisions

  3. Transparency • The Transparent Economy – TIGERS • Traceability (Patagonia) • Integrated Reporting • Government Leadership • Environmental Boundaries (Global Footprint Network) • Rating and Ranking • Shadow Economies (Business & Human Rights Resource Centre - adidas)

  4. Transparency • Leadership in the Age of Transparency • “The big idea: The key to becoming a contemporary corporate leader is to take on responsibility for externalities—what economists call the impacts you have on the world (like pollution) for which you are not called to account.” • Ripples of Responsibility • Take Ownership • Take Action • Take Interest

  5. Transparency Pressures – Civil Society and NGOs

  6. Transparency Pressures – Investment Community

  7. Transparency Pressures – Government • Key developments globally • Growing number of Multilateral Environmental Agreements • International corporate accountability / MNC liability regimes • EU Chemicals policy (REACH) • EU Integrated Product Policy - LCA implications • Regulatory pressure for reporting • Environmental tax reform requirements • Personal / class action claims

  8. Transparency Pressures – Competitors and Industry Leaders 2010 Ceres-ACCA Sustainability Reporting Awards

  9. Transparency Trends – Certifications and Labels • Demand for products with ecolabels is growing. • Fragmentation and confusion to institutional buyers as well as individual consumers. • Confusion continues to grow due to competing claims on what makes a product ‘green’, ‘socially responsible’, etc., especially when there are two or more competing schemes for the same sector or product.

  10. Transparency Trends – Certifications and Labels Product Certifications

  11. Transparency Trends – Certifications and Labels Process Certifications

  12. Transparency Trends – Certifications and Labels • Is “Organic” a Product or Process certification?

  13. Transparency Trends – Certifications and Labels For more information, check out: • Ecolabel Index (www.ecolabelindex.com) and • Global Ecolabel Monitor, Towards Transparency 2010 (Source: World Resource Institute and Big Room)

  14. Transparency Trends – Reporting • Sustainability reporting-norm among large companies globally, 1996-300 reports, 2008 - 3,100 reports. • Variable and unreliable measurement and disclosure results. • Synchronization of voluntary reporting frameworks; XBRL taxonomies for non-financial information; new U.S. SEC rule requiring financial statements in a XBRL format as part of SEC filings. • Regulatory and audit oversight of sustainability issues-norm within five years, in both the developed and developing world, across all industries.

  15. Transparency Trends – Corporate Affiliations

  16. Apparel and Footwear • Competitive Dynamics

  17. Apparel and Footwear • Competitive Dynamics BICEP: Business for Innovative Climate and Energy Policy

  18. Apparel and Footwear • Competitive Dynamics Brooks?

  19. Summary of Today • Significantly increasing demands for transparency – process, product, company • Also, significant increasing mechanisms for conveying transparency – some legitimate, some not. Fair amount of confusion. • Leadership matters! A lot! Need to discover what is authentic about what a company says…and what others say about a company. • Apparel and Footwear – competition is primary driver of sustainability-based initiatives. Consumers and governments are important, but secondary.

  20. UPS and CSR: Proactively Managing Risks • In teams of 4 or 5 (not 1,2,3,6, etc.) • Identify and describe the key risks that UPS wanted to ‘proactively manage’. Understand UPS’ strategy by placing these risks into the four quadrants of the Sustainability Value Framework. • Identify and briefly describe UPS’ key stakeholders and how they relate to CSR risks. • Share with each other the key outcomes of your teams’ transparency analyses of UPS’ recent CSR report. • Identify the ways you believe that transparency through its CSR report helps/doesn’t help UPS ‘proactively manage risk’.

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