CH AP TER 1 I S S U ES I N COR POR ATE G OVER N AN CE

ADVANCED FINANCIAL MANAGEMENT

Investment decisions

Financing decisions

Dividend decisions

Financial objectives

Primary objective maximise shareholder wealth

Secondary objectives meeting other predetermined targets

Stakeholders

Shareholders

Management and employees

Customers

Suppliers

Lenders

Government

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Stakeholders Measures

Suppliers Price
Payment

Lenders Security
Liquidity

Government Taxable profit

Inflation
Employment
Investment

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Corporate Governance

Are the board effective?

Are they making good decisions?

Can we obtain assurance that they are?

Are the board effective?

Combined Code

Board of Directors

Chair CEO Execs Non-execs

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Are they making good decisions?

Higgs Report

Cadbury Report Greenbury Code

Key guidance

Smith Turnbull

Can we obtain assurance that they are?

Disclosure

FSA Listing Rules Combined Code

FSA Disclosure and
Transparency rules

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Independent audit
committee
More formalised Quarterly
reporting

USA

Sarbanes Oxley

Independent PCOAB
directors Critical accounting policies

Germany

EU company law Two-tier board

of directors

Board of directors

Supervisory board Management board

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Japan

Consensual management

Policy boards Monocratic

Functional boards boards

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SUSTAINABILITY AND ENVIRONMENTAL RISK

Sustainability balancing growth with environmental and social concerns

At BP, we are working hard to restore trust in our ability to operate safely and responsibly
wherever we do business.

Our approach to sustainability covers issues relating to governance and risk management, safety, the
environment, the energy future and our local and global socio-economic impact. We aim to report
on these issues in a way that answers key questions raised by our stakeholders.

Carbon Trading

1. Governments hand out free tradable rights to emit carbon dioxide to big industrial polluters

2. Companies buy additional pollution credits from projects that claim to emit less greenhouse
gas than they would have without the investment

Environment Agency

1. Protects air, land and water used by society in England and Wales

2. Offers guidance to businesses on environmental issues

Environmental Permitting

Flood

Pollution and emissions

Waste

Water

Environmental Audits

Energy saving

Waste reduction

Business processes

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