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Governance Resource Centre

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On this page we present special articles on governance, a selection of relevant articles from Accountancy Ireland, as well as recent news from across Chartered Accountants Ireland in relation to governance.

Governance news and articles

Financial Reporting
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Corporate human rights reporting

Gemma Donnelly-Cox, Mary-Lee Rhodes, Benn Hogan and Mary Lawlor make the business case for corporate human rights reporting and outline critical issues for businesses to consider. Businesses can impact human rights in every context in which they operate. These impacts can be positive: delivering employment, infrastructure and furthering development. They can also be negative, bringing risks, including forced and child labour, pollution and corruption. Since 1 January 2017, all companies in Ireland to which the Non-Financial Reporting Directive (NFRD) applies have been required to disclose information relating to respect for human rights, including human rights risks and due diligence processes. Over the same period, there has been an increased interest among investment managers, most notably in Europe, in the human rights performance of companies. Furthermore, mandatory human rights due diligence is coming down the tracks. On 29 April, the European Commissioner for Justice, Didier Reynders, announced his intention to bring forward a legislative proposal in 2021 on mandatory human rights and environmental due diligence. It would seem to be in the clear interest of companies to have a human rights policy and to undertake human rights reporting. Richard Karmel, Global Business and Human Rights Partner at Mazars UK, makes this case in saying (in correspondence with the authors): “Reporting on human rights isn’t a compliance area; it is about being authentic and meaningful in disclosing not only the actions that you have taken to address your greatest risk areas (salient risks) but also reporting on how you know this information. Companies shouldn’t view addressing human rights as an internal cost for external benefit; there is huge internal benefit – greater productivity, improved quality of supplies, less staff turnover and absenteeism, and the attraction of new recruits, for example. This is not a cost area, but one of investment and companies are very good at monitoring their return on investment.” However, when we looked at human rights reporting by Irish companies, we found a significant information gap. Very few of the companies we studied in Ireland include human rights performance in the policy statements or company reports they publish, including those prepared under the NFRD. This may be due in part to the limited guidance within the Directive on how companies should report on human rights, including due diligence. We consider here some of the factors driving human rights reporting, what is required in such reporting, and what it looks like when companies do it well.   The UN Guiding Principles and the Irish national plan In December 2011, the United Nations Human Rights Council unanimously adopted the Guiding Principles on Business and Human Rights (UNGPs). These principles were the first agreed statement by UN member states following 40 years of attempts to clarify the relationship between business and human rights. Embedded in the UNGPs is the three-pillar ‘Protect, Respect and Remedy Framework’, which sets out the duties of states to protect human rights, and the responsibilities of businesses to respect human rights and remedy failures. At a national level, a range of laws and ‘national action plans’ (NAPs) were created by member states seeking to embed these principles in company law and practice. Ireland’s NAP, published in 2017, recognises the need to, among other things, “encourage” companies to “develop human rights-focused policies and reporting initiatives”, “conduct appropriate human rights due diligence” and to consider a range of matters regarding access to remedy. An implementation group involving a wide range of stakeholders was established by the Department of Foreign Affairs and Trade to progress the NAP and a baseline assessment of the Irish legislative and regulatory framework was produced.   The Corporate Human Rights Benchmark and Irish company performance In 2019, the Trinity Centre for Social Innovation published Irish Business and Human Rights: Benchmarking Compliance with the UN Guiding Principles. Mark Kennedy, Managing Partner at Mazars Ireland, has described the report as “a first and important assessment of how companies are dealing with what is a vitally important business issue”. We reported on the results of our pilot study in which we applied the benchmarking methodology developed by the UK-based Corporate Human Rights Benchmark (CHRB). The CHRB conducts an annual assessment of 200 of the world’s largest publicly traded companies on a set of human rights indicators. The indicators consider:   Commitments: what commitments does a company make to respect human rights, engage with stakeholders and remedy shortcomings? Responsibility, resources, and due diligence: what steps does a company take to embed responsibility and resources for day-to-day human rights, and to establish a due diligence process that encompasses: identifying human rights risks; assessing them; taking appropriate action on the assessed risks; and tracking what happens after action by monitoring and evaluating their effectiveness? Grievance mechanisms, remedy and learning: what grievance mechanisms are established for staff and external stakeholders? How are adverse impacts remedied, and how are the lessons learned incorporated? Our report applied these indicators to analyse human rights policies and reporting in 22 Irish companies that have international operations. Our source materials for the study were the companies’ publicly available information, as listed in Figure 1. We found that, by and large, the Irish companies in our study are not reporting fully or systematically, and therefore are failing to make their human rights performance visible. No company disclosed a human rights due diligence process, and no company had a publicly reported formal commitment to remedy adverse impacts caused by it to individuals, workers or communities. Where companies are reporting, what does an ‘exemplar’ look like? Adidas AG was ranked first in the 2019 global CHRB (see corporatebenchmark.org). Bill Anderson, Vice President, Global Social and Environmental Affairs at Adidas notes (in correspondence with the authors) that excellence requires transparency about human rights failures as well as successes: “John Ruggie, the author of the UNGP, offered a simple but powerful message to business: in order to meet societal expectations, businesses must both know, and show, that they are respecting human rights. Building policies and due diligence systems on human rights is only half the journey. If a company is to be accountable for its actions and decisions, it must strive for transparency. This can start with small steps, the publication of a statement and a commitment to uphold rights and in time, lead to more dedicated reporting measures on issues and remedies. It is always easy to present the good one is doing, but much harder to account for the negative impacts a company’s operations may have on people’s lives.” Human rights reporting is here to stay While few companies in our sample of 20 Irish companies reported systematically on human rights, and despite an apparent lack of awareness among them of the UNGP, and a lack of explicit compliance, our view is that awareness of the requirement to report is slowly gaining strength in Ireland. It makes business sense to know how to report and how to address areas that indicate less than ideal human rights performance. Companies reporting under the NFRD are likely to face a shifting environment in the coming years. The European Commission is currently conducting a review of the NFRD, with a proposal expected in Q4 of this year. As mentioned above, the EU is committed to bringing forward legislation on mandatory human rights and environmental due diligence in 2021. Companies that get the basics right now by implementing policies and due diligence to prevent human rights abuses, instigating appropriate systems to remedy harms caused, and communicating their actions through non-financial reporting mechanisms will be well-placed to respond to this evolving regulatory landscape. We continue to benchmark Irish companies and in autumn 2020, will report on an expanded sample. We hope that benchmarking in Ireland will contribute to the impetus for improved corporate human rights reporting. Richard Karmel shares this view, noting that benchmarking “has an important role to play in the world of human rights reporting; after all, few companies want to be seen in the bottom quartile. Naturally, human rights benchmarks should stimulate a race to the top and ultimately encourage better treatment by business of those who are most vulnerable in our supply chains.”   Gemma Donnelly-Cox, Mary-Lee Rhodes, Benn Hogan and Mary Lawlor represent the Centre for Social Innovation at Trinity Business School.

Jul 29, 2020
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Governance, Risk and Legal
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Institute involvement in Good Governance Awards 2020

Entries open until 11 September 2020 The Good Governance Awards recognises and encourages adherence to good governance by charities and other non-profit organisations in Ireland. The 2020 Awards are now open for entries for both the Annual Report Award and the Governance Initiative Award on www.goodgovernanceawards.ie Institute involvement The Institute are proudly supporting the awards for the third year. It is important to recognise good governance and more importantly to recognise the people that are responsible for putting it into practice. Members of our profession are held in high regard by charity and non-profit organisations and many are involved in the sector by direct employment, volunteering, accepting trustee appointments, acting as advisors, accountants, or auditors. Two Award Types Annual Reports: This award recognises annual reports that effectively tell the story of the non-profits its activities, impact, finances and demonstrates adherence to good governance practice.   Governance Improvement Initiative: This award recognises initiatives that have been taken in the last 12 months to improve the quality of the non-profit’s governance. Four great reasons to enter Open for non-profits of all sizes: There are six entry categories ranging from small (annual turnover of less than €50,000) to the very large (turnover of over €15 million).The push this year is for getting smaller non-profits involved Entries reviewed by a first class assessment and judging panel: There is a panel of over 60 assessors and judges and seven accountancy firms who bring great expertise and experience who will review each entry and provide valuable feedback and insight to assist in enhancing each submitting organisation’s governance Organisation reputation is enhanced with stakeholders: Entering the Good Governance Awards demonstrates commitment to adhering to good governance practice and transparency. It also shows willingness to be assessed and receive feedback on how governance can be enhanced Boost team morale and gain valuable PR opportunities: Being shortlisted for a Good Governance Award recognises hard work to adhere to good governance practice. Winning an award boosts credibility and increases awareness of the organisation which can help convince even more people that it is a cause worth supporting. New award category for 2020: very small non profits In this year's Good Governance Awards, there is a new entry category for very small non-profits (annual turnover less than €50,000). As an added incentive to encourage smaller non-profits to enter for the Annual Report award, thanks to the Community Foundation of Ireland, those shortlisted in this category will receive €1,000 with the overall winner receiving an additional €1,000. For more details, see www.goodgovernance.ie Institute supports and services for those involved in the Charity/Non-profit sector (‘the Sector’) The following are examples of key supports and services the Institute have in place for members: Dedicated Charities and Non-profit members group (ROI), co-chaired by Paula Nyland FCA and Tony Ward FCA – See page 50 of 2019 Annual Report) Dedicated Charities and Non-profit members group (NI), chaired by Dr Rosemary Peters Gallagher OBE – See page 23 of 2019 Ulster Society Annual Report) Concise Guide of Ethics and Governance for the charity and not-for-profit sector Northern Ireland: Notification facility for Charities/Non-profit boards seeking expressions of interest from Chartered Accountants to join their board. Click for list of contacts Procedures for Quality Audit for Charities – ROI Procedures for Quality Audit for Charities – NI Online courses relevant to Charity and non-profit sector (click and search) e.g. Auditing and Accounting for Charities – ROI Also, events run by District Societies (Western, Cork, Ulster, Mid West, North West, Leinster, London, Australia, United States) Northern Ireland:  Organise webinars on relevant topics for sector (click and search) Technical representations to standard setters, government and regulators on matters also affecting the Sector, based on inhouse technical research and expert input from members technical committees Technical Releases and Technical Alerts providing additional information on technical matters also affecting the Sector Dedicated Governance Resource Centre an Ethics Resource Centre containing updates and other resources on matters also relevant to the Sector Níall Fitzgerald - Head of Ethics and Governance      

Jul 01, 2020
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Careers
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Diversity & Inclusion during COVID-19

Building a culture of inclusion and belonging is now more important than ever. Rachel Power shares her insights from PwC’s experience thus far. Not that long ago, we were all clear on our plans. Our strategies were set, with events and meetings scheduled in the diversity and inclusion calendar for the year ahead. All the behaviours and operating norms we took for granted changed in what seemed like the flick of a switch. COVID-19 has led to new terms in the diversity and inclusion (D&I) world, which we would not have understood just a few months ago. The main one at the heart of PwC’s strategy is ‘inclusive distancing’ – how can we all be more inclusive while maintaining a distance that is outside the norm. Another element that is core to our current D&I work is just how little has changed. While our medium may differ, the core elements of our strategy remain the same around inclusion, wellness and flexibility and focusing on tools and training for the future. Our long-standing D&I values have helped us navigate through this crisis, and this was supported in no small part by our investment in technology.  More important than ever Several items already high on our strategic agenda have helped us navigate and transition relatively seamlessly into this new remote working world, in which building on our culture of inclusion and belonging is more important than ever. Our D&I focus was on three areas before the arrival of COVID-19, and all three ring true during this time: Nurturing an environment of inclusion and belonging; Living our values, putting wellness and flexibility at the core; and Leveraging tools and training for the future. We set these objectives before the pandemic, but they are still as relevant now as ever. Transforming our workforce and the way we work requires us to have diverse, talented people from different backgrounds; people who have different experiences and who bring innovation, creativity, and fresh perspectives. No one size fits all This new era of working remotely – or smart working, as we call it – brings challenges that can present in different ways for our diverse team. We are all different, with distinct personal circumstances, and deal with problems in unique ways. Some people are balancing work and caring for their family; others may be away from their family and friends. Some have family on the front line, relatives who have been sick, or family members who may not be well. A one-size approach certainly does not fit all. While many of us worked flexibly before the crisis, our approach to flexibility has been taken to a new level. Arrangements that worked in the past are in many cases no longer viable, as many of our people now balance many things including work. The new world of flexible working may, therefore, involve doing some work very early and then taking a couple of hours during the day for caring responsibilities or exercise, before returning to work later. It is all about balance and finding ways to make it work. Again, this comes back to having inclusive and values-based leaders and ensuring that the right conversations happen so that the solutions work for everyone. Focus on wellbeing Focusing on the wellbeing of our people, particularly to support those struggling with a diverse range of circumstances, has been at the top of our priority list at PwC. Through our Be Well, Work Well programme, we provide a variety of supports including one-to-one psychologist sessions, parenting, nutrition and fitness classes, and we continue to host regular wellbeing seminars. Communicating regularly with our people, and in different ways, has been vital. From transforming our intranet into a ‘smart hub for smart working’ to regular emails, leadership briefings and FAQs, we continue to foster a culture of inclusion. There is undoubtedly more to do as the end to this pandemic is far from sight. However, our values, strategic direction, and technology will help steer us through this and ultimately strengthen D&I throughout our firm and beyond. Rachel Power is Diversity & Inclusion Senior Manager at PwC Ireland.

Jun 02, 2020
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