Topic 20 Corporate Social Responsibility & Ethics

I am really glad to read your post. I cant start my RAP for topic -20 as i dont have any sample report. i want to submit in period -37. A sample report will really be helpful for me.

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I am done with my research part and have gathered all the facts I need to for the project. I’m on to start my analysis part, I just need some idea as to what exactly am I supposed to do although my mentor has guided me through this still I’m a bit lost ! Like, one of the key weaknesses of Sports Direct (the org I selected) is that it effectively paid less than the minimum wage to workers for which they were heavily fined, faced reputational damage and had to pay back wages to the employees. Now these are just facts, my mentor said that I need to analyze this.
This may sound silly but this is my first ever project ? if you could give me an example or a suggestion how to tackle my analysis part would be really great .

So, do I have to talk about all the weaknesses one by one or just a general analysis of their practices ? Weaknesses primarily pertain to the employees of the org, so I’ll talk about the weak corporate culture and its impact i.e increased staff turnover, fines and penalties, drop in EPS and PBT, decline in share price and loss of customers as well as reputation.
Am I on the right track ? Plus, using TBL shall i use headings and talk about their practices ? Like their responsibility towards People, Planet & Profit.

@imaann – yes you need to discuss/analyse the problems individually from different angles (which you seem to be doing with the employment issue). Another aspect of Sports Direct activities is that the CEO is quite controversial in the way he runs the company (favouring family members and upsetting institutional shareholders) which possibly you are bringing in when discussing the culture, and his attitude towards his rival JD Sport. You might also look at where the products are made (sweat shops in the Far East?).

However there may be some positives (you are supposed to do a balanced report not just slag the company off) and where there is something good you should mention it briefly. So perhaps on Sports Direct side they do pay their fair share of tax in the UK? (Unlike the Amazons and Facebooks of this world).

Generally use plenty of headings and sub-headings and a good structure as it makes it easier for the marker to read

So with the TBL it may be appropriate to apply this under the three headings – People, planet, profit. However first in your report cover all the issues in detail so with say ‘People’ having covered this thoroughly first you could then just summarise the key points when doing the TBL and refer the reader back to the main section for most of the detail.

You could approach the profit issue you have uncovered in one of 2 ways. You could highlight the dubious practices early on in detail and then mention in the TBL that although the company is following the principle of profit maximisation the methods used should be ethical however your research in section x.1 tends to indicate that deceitful practices have usurped good CSR principles in the attempt to increase profits. Alternatively you could do it all under TBL

A good way of illustrating philanthropy (is this what you mean by contributions to society? )and charitable initiatives is to compare these and all donations to charity as a ratio to profits and also dividends over the last few years (and compare these possibly with JD Sport). You might also show the ratio of these charitable efforts to the total amount paid to the Board as the total remuneration

Take a look at their tax payments too over the last 5 years – admittedly sometimes these can fluctuate wildly from year to year – and see if there is a significantly declining trend when set against EBITDA as this might indicate tax avoidance mechanisms (an area you might then be able to research further)

There is information for charities if you do a full search. For example these are extracts from the 2016 and 2018 annual reports:

CHARITABLE AND POLITICAL DONATIONS
“During the year, the Group made charitable cash donations of £5,000 (2015: £117,000) in the UK. No political donations were made (2015: nil). There have been a number of further donations of sporting equipment made to worthy causes, and these are set out on page 33” (2016)

“During the year, the Group made charitable donations of £66k (2017: £117k) in the UK. No political donations were made (2017: nil). There have been a number of further donations of sporting equipment made to worthy causes.” (2018)

The equipment mentioned would of course have been at cost and therefore unlikely to have run into hundreds of thousands (otherwise the company would be bragging about it) and more than likely it would have been able to have set such costs against revenue for tax purposes. This is not to do SD down, but to point out the facts.

For any comparisons when looking at pay it might be significant to look at the detail behind the Remuneration report (remember directors get ‘packages’ – salaries, bonuses and often advantageous share options so it is the total of the full package that should be compared).

With stakeholder groups it depends on the group. You have discussed the working practices at SD so for employees try to find out the impact of those practices on the workforce e.g. motivation, staff turnover etc. You may have to research this using key words in a search engine and annual report. For example on page 56 onwards in the AR 2018 there is quite a bit of useful information and to be be fair to SD and to comply with the T20 title, there have been improvements in some areas, so for a balanced report you may need to show what the position was and how the company may have changed things.

For shareholders most of the impact would be how the share price and dividend have been affected. Additionally you should also look for information (in search engines) about the AGMs as sometimes there have been quite lively arguments at these between shareholders and the board (and this in fact has been the case for SD).

However this is your report (and it should therefore be you, guided by your own mentor), who should be doing this type of research – it is there if you use the right key words when you search – just don’t expect all the information to be conveniently available in one place – it just doesn’t work like that!

I think you have misunderstood the reason for showing charitable initiatives to profit

“And the charitable initiatives as a ratio to profits was really insignificant like 0.003% etc, so I decided not to add those in the report”

That is precisely why you should be showing them – this company iappears not to doing much.with regard to the philanthropical element of Carroll’s pyramid. I would also compare those miserly charitable efforts against dividends for the last three years.

Obviously your mentor is a Topic 8 devotee !

Yes you can do that – it will be interesting to see if the weak CSR has had a significant impact on revenue and profit

As financial statements are a minor detail for Topic 20 this does not sound credible. It is more likely that a SPREADSHEET showing formulae was not included as that would lead to a fail

“Facebook intentionally and knowingly violated both data privacy and anti-competition laws”

“Mark Zuckerberg continually fails to show the levels of leadership and personal responsibility that should be expected from someone who sits at the top of one of the world’s biggest companies”

“MPs note that Facebook, in particular, is unwilling to be accountable to regulators around the world: “By choosing not to appear before the Committee and by choosing not to respond personally to any of our invitations, Mark Zuckerberg has shown contempt towards both our Committee and the ‘International Grand Committee’ involving members from nine legislators from around the world.”

These are not my words – they are direct citations from The Digital Culture, Media and Sport Committee of the UK Parliament Report released today.

The malpractice demonstrated by the company are now sufficient to fill a book…… and certainly the above together with the Molly Russell case and its lack of ethics overall and avoidance of tax and lack of contrition would make it a great subject organisation for Topic 20

My initial reaction is that you need to plan and work extremely hard at this stage if you are going to get all of the work done in 7 weeks.

With Topic 20 you are not analysing all of the financial statements in depth (as you would Topic 8) -the emphasis would normally be on showing a relationship between the bad CSR and profitability, share price and possibly looking at dividends ( possibly with the latter comparing it as a percentage of profits with amounts spent on charitable donations and initiatives). As such I would expect to see trends for the last 3 or last 5 years.

I don’t see why you can’t therefore use the annual report for year end 2018 as it is available (and am actually surprised you only want to go up to Dec 2017). In fact the best RAPs on CSR and corporate governance show up to the minute articles on the companies. I currently have two P38 students submitting on a UK company whose weak corporate governance only came to light in October 2018 (but involves a huge fraud). If you restrict yourself to old data and information you are very unlikely to get a good grade.

Note the rule on latest financial statements does not preclude using the most recent -merely that for Topic 8. It was felt by the marking team with that topic and topic 15 it was unreasonable to expect a student with so many ratios to calculate for two companies and research the reasons for those trends not to have the statements publicly available for at least 3 months. However you are not doing Topic 8 and you are not going to be calculating so many ratios nor analysing those trends in the same manner and therefore I would not only expect you to use 2018 but if you don?t use them find it very odd that you ignored 2018 (it would look like ‘old work’ -some one else’s that you had .borrowed’)

Although some specific CSR incidents may happen in specific years (the refusal to unlock a known terrorist’s phone in 2016 ), most of them will be policies and trends over several years (the battery issue). Therefore there is no hard and fast rule about when to start your review of the delinquent CSR practices but roughly from 2013 onwards to the present day should be considered.

Remember that you need to go with balance and there are sometimes two sides such as with the terrorist phone https://www.theguardian.com/technology/2016/feb/22/tim-cook-apple-refusal-unlock-iphone-fbi-civil-liberties

Although my iPad is more recent than the one referred to this article which is from 2012 I have the same issue and in the last month have lost the use of 2 apps

https://www.theguardian.com/technology/2012/jul/04/apple-ipad-software-update

So in summary when it comes to years for Topic 17 & 20 there is no real ‘cut-off’ and although you mention something about September 2018 I would expect a student for example with Apple to have touched upon the following (though they might use a different source) https://m.slashdot.org/story/347559

Please do not submit your work until you have consulted Appendix 1 the Assessment Criteria. You will note if you scroll down that your spreadsheet is supposed to clearly demonstrate use of varied formulas.

Sometimes with some topics you have to be innovative when trying to think how to use these. Possibilities with Topic 20 might be calculating percentage changes in share price over a set period , calculating the ratio of total amount of charitable donations to dividends paid or the relationship of average worker’s pay to CEO’s salary and the like. To a point it depends what info is in the financial statements-but you may have to think outside of the box. Try to go for 3 different formulas (percentage, average, sum for example)

If you have already submitted (sorry only just read your query) contact acca@brookes.ac.uk and send your updated spreadsheet because on the basis of it not having used varied formulas it will be a technical fail and you will have wasted GBP 380. You will need to send your new sheet before the submission window closes.

I just checked that I have used 2 formulas, one is related to percentage and the other one is net profit ratio calculation. Do you still suggest to update it?