Governance

Information about how a company operates ethically and in line with laws on issues like bribery and corruption.

Tools and services to use: Risk assessment (identify and analyse), Self-Assessment Questionnaire (record), SMETA audit (verify), data platform (analyse and report), Consulting (all steps)

9. Governance body

What this is

The people ultimately responsible for how a business operates and is governed – usually a Board of Directors or Executive Team.

Why capture this

ESG ratings providers and analysts want to know who governs a business and its strategic decisions. They’ll use this information to assess how diverse a governing board is and how the people on it might influence business direction.

Many companies need to provide data on their governing bodies to comply with business law. It’s likely you will have this information for your own organisation already – focus on capturing it for your suppliers to demonstrate a stronger commitment to transparency.

Benefits of capturing governance body data

  • Meet business legislation
  • Demonstrate and show progress regarding gender and ethnic diversity in your business’s governing body
  • Track and report on gender pay gaps at Board level
  • Demonstrate Board-level responsibility for and commitment to ESG

How to capture this

  • Record data on the individuals and structures that make up your Board of Directors and/or Executive Team (your most senior governance body).

  • Ask suppliers to record this information – include it as an additional request when asking suppliers to complete SAQs for their work sites.

Boardroom diversity improves financial performance.

The UK Financial Reporting Council found that FTSE 350 boards with well-managed gender diversity contribute to higher stock returns, and are less likely to experience shareholder dissent.

UK Financial Reporting Council

10. Corruption

What this is

Dishonest or illegal behaviour, or abuses of power, by people in positions of power for personal or corporate advantage.

Why capture this

Corruption is illegal, creates an environment that encourages other illegal behaviour, and can be costly.

Your business will need to demonstrate that it works to prevent corruption and deals with it appropriately when it happens. Most countries have specific laws on corruption and bribery, so it’s likely your business already collects the right data on their own operations.

Benefits of capturing corruption data

  • Identify priority areas to take action against corrupt behaviour and risks of corruption
  • Meet corruption and bribery legislation
  • Protect your business from losing money through bribery or penalties for corruption

How to capture this

  • Record the number and nature of instances of corruption from across your company. You can capture this in an SAQ, or through a separate report.

  • Ask suppliers to record this data in the SAQs for their work sites, or in a separate report for their business, and ask them how they manage risks of corruption.

Use a SMETA audit to verify this information – consider prioritising sites in high-risk areas for corruption and bribery.

The estimated annual cost of corruption (in bribes and stolen money) to the global economy, according to the World Economic Forum9

SMETA audits detected over 5,700 issues relating to business ethics in 2021.

Sedex analysis of SMETA audit findings

9Source: World Economic Forum, 2018

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