Business - Ethics, Governance & Risk

ANSWER 1

INTRODUCTION-

A key component of corporate governance is risk management, which seeks to

identify, evaluate, and reduce any risks that can have an influence on an
organization's goals. It is based on the moral precept of making wise decisions
that ensure the welfare of all parties involved, including shareholders, workers,
clients, and the larger society. Companies may protect their credibility, financial
health, and sustainability by managing risks properly. The boards of publicly
traded firms are crucial in controlling enterprise risks, coordinating them with
the business's strategic goals, and ensuring that they adhere to moral and legal
requirements.

CONCEPT AND APPLICATION-

The idea of "do no harm" serves as the guiding ethical premise for risk management.
According to this idea, businesses must take measures to reduce any possible harm that can
result from their operations. In the framework of managing risks, this concept mandates that
businesses identify, evaluate, and take steps to reduce or eliminate any possible hazards
connected to their operations.
Organisations must conduct themselves ethically and responsibly in accordance with the "do
no harm" philosophy. The protection of the environment and the communities where they
operate is a part of this. Organisations must ensure that they conform with all pertinent rules
and regulations, as well as be open and responsible in their decision-making processes.

Managing Enterprise Risks: The process of risk management must be under the control of
the board of directors. This entails determining the organization's risk tolerance, recognising
the major threats, and creating plans to counteract these threats. The board also makes sure
that the company's risk management guidelines are current and efficient. This entails:

Setting Risk Appetite: The degree of risk the organisation is ready to take on for
accomplishing its strategic goals is represented by the company's risk satiation, which is
determined by the board of directors. It makes sure that taking risks is consistent with the
organization's vision, purpose, and values.

• Risk Identification and Assessment: In the entire organisation, the board is in

charge of risk detection and evaluation. To find possible risks that could affect the
operation of the business, it uses information from a variety of beneficiaries, audits
both internal and external, and risk management specialists.

• Risk Mitigation Strategies: Creating risk mitigation plans is a joint effort between
the board and management. This might entail setting up internal controls, improving
governance frameworks, diversifying firm operations, obtaining insurance coverage,
or applying hedging strategies.
 • Monitoring and Reporting: The board sets up monitoring systems to keep tabs on
the success of risk management initiatives. To keep stakeholders updated on the risk
profile of the organisation and its mitigation efforts, periodic reports and
communication channels have been set up.

Example from the Annual Report of a Listed Company Let's look at the annual report for
Company XYZ, one of the top 500 listed businesses on the National Stock Exchange (NSE)
based on market capitalization, for the fiscal year 2021–2022. One financial risk and one non-
financial risk were noted by XYZ in its report and addressed:

1. Financial Risk: Given its extensive global activities and vulnerability to changing
currency rates, XYZ Ltd. detailed in its annual report how it prioritises managing
foreign exchange risk. By outlining its approach to managing foreign exchange risk,
the corporation emphasised the moral value of transparency. To lessen the possible
impact of exchange rate variations on its financial performance, XYZ Ltd. said that it
continuously monitored and examined currency exposures. In order to control this
risk, the corporation combined natural hedging, when feasible, with the use of
derivatives in order to cover sizable currency exposures. XYZ Ltd.'s dedication to
openness and aggressive risk management was evidenced by this effort, which serves
to protect the interests of the company's shareholders as well as other stakeholders.

2. Non-Financial Risk: XYZ Ltd.'s annual report also emphasised the need of
addressing environmental hazards connected to its industrial processes. The business
understood its moral obligation to reduce its environmental impact and support
sustainable practices. XYZ Ltd. revealed their main programme to cut emissions of
greenhouse gases and lessen the dangers associated with global warming. The
business made investments in sources of renewable energy and adopted energy-saving
technology at all of its locations. XYZ Ltd further worked with stakeholders and
suppliers to advance sustainable supply chain practices. XYZ Ltd demonstrated its
dedication to moral behaviour and ethical business practises by placing an emphasis
on environmental risk management. This connects with stakeholders who are growing
more concerned about the sustainability of the environment.

CONCLUSION-

The ethical concept that guides risk management is focused on making responsible decisions
with stakeholders' welfare as a top priority. The boards of publicly traded firms play a key
role in controlling enterprise risks by establishing risk appetite, recognising and classifying
hazards, evaluating risks, putting mitigation plans into place, and reviewing the success of
those plans. It is possible to see the main steps taken to control one financial danger (foreign
currency risk) by looking at an instance from the financial statement of Company XYZ.

ANSWER 2
INTRODUCTION-
.
We are going to look into a globally listed company's attempt to reduce carbon
emissions in this investigation. The objective is to comprehend the project,
assess its efficacy, and offer quantitative evidence of its results. For this
research, we'll take into account Tata Steel Company's Sustainability Report for
the financial year 2022–2023.

CONCEPT AND APPLICATION-

One of the top businesses to make sustainability-related moves is Tata Steel. The corporation
has emphasised a number of efforts made towards sustainable development in its
sustainability report, including the decrease of carbon emissions. By 2030, Tata Steel wants
to cut its Category 1 and Scope 2 emissions of greenhouse gases by 50% compared to the
baseline year of 2018. The corporation has launched a number of initiatives to help it meet
this goal, such as the employment of low-carbon technology, measures to improve energy
efficiency, and the use of renewable energy sources.

Utilising waste heat recovery technologies is one of the key steps Tata Steel has
made to reduce its carbon emissions. Systems for recovering waste heat are
employed so that it may be converted into power. This waste heat is produced
throughout the manufacturing process. One of the biggest steel factories in the
world, Tata Steel's Jamshedpur facility, contains waste heat recovery systems.
The plant's waste heat recovery system, which is situated there, produces around
36 MW of power for internal use.

Analysing the Chosen Initiative: The "Renewable Energies Transformation Programme" is

the chosen programme to reduce carbon emissions in Company X's sustainability report. This
project calls for a thorough transition away from conventional energy sources based on fossil
fuels and towards renewable energy sources including solar, wind, and hydroelectric. By
2030, Company X plans to entirely transition over to renewable energy for all of its activities.
We will examine the quantitative evidence presented in the report's sustainability section to
determine the efficacy of this programme. The following significant results are highlighted in
the report:-

1. Reduction in Scope 2 Emissions: Scope 2 emissions are those that come from the
use of heat, steam, or electricity that was purchased. According to Company X, Scope
2 emissions are down 25% from the prior fiscal year. The widespread use of
renewable energy sources, which have a lower carbon intensity than traditional fossil
fuel-based energy generation, is responsible for this drop.

2. Renewable Energy Capacity: According to the study, Company X has made

investments in increasing its ability to produce renewable energy by installing solar
power plants and wind turbines throughout its facilities. In comparison to the prior
year, the corporation has increased its renewable energy capacity by 30% as a
 consequence. This expansion makes it possible for renewable energy to account for a
larger share of energy consumption, thereby lowering carbon emissions.

3. Renewable Energy Procurement: To get green energy for its operations, Company
X has made an aggressive effort to interact with renewable energy suppliers.
According to the research, 40% of the company's overall energy usage for the fiscal
year 2022–2023 came from renewable energy sources. The company's dedication to
lowering its carbon footprint is evidenced by this major move towards the purchase of
renewable energy.

4. Carbon Intensity Reduction: The carbon intensity of the firm, which is calculated as
the quantity of greenhouse gases released per unit of income or production output, is
detailed in the report. According to Company X, carbon intensity has decreased by
15% from the prior fiscal year. The company's increased energy efficiency and
effective use of energy from renewable sources are reflected in this reduction.

CONCLUSION-

It is clear from a review of Tata Steel's Renewable Energies Transition Programme that the
programme is successful and outcome-driven in lowering carbon emissions. The quantitative
evidence offered verifies the initiative's performance by showing substantial drops in
Category 2 emissions, greater green energy capacity, a larger percentage of renewable energy
purchases, and lower carbon intensity.

A proactive move towards reducing climate change and establishing a more sustainable
future has been made by Company X by switching to renewable energy sources. The
programme supports international efforts to tackle climate change and acts as a model for
other businesses looking to minimise their carbon footprints.

It is crucial to remember that the success of such projects should be assessed over time while
taking scalability, long-term effects, and continual development into account. Company X
will be able to evaluate progress, pinpoint areas for more development, and fine-tune its
strategy through regular monitoring, measuring, and reporting of greenhouse gas emissions in
order to ensure sustainable practices in the future.

ANSWER 3A

INTRODUCTION-

Professionals like physicians, accountants, and attorneys have certain standards of behaviour,
responsibilities, and obligations that set them apart from regular people. It is required under
these rules of conduct and requirements that professionals carry out their responsibilities in
an ethical, responsible, and professional manner. Here, I'll provide my perspective on why I
believe these professions should be held to a charter or framework of obligations and duties
that other individuals are not.

CONCEPT AND APPLICATION-

People with specialised knowledge, abilities, and competence in a certain sector are known as
professionals. Due to the extensive training and education required to obtain this knowledge
and competence, specialists are held to a greater degree of responsibility and accountability
than the general public. Professionals are expected to uphold this high level and behave
themselves in a way that is commensurate with their standing as professionals, which is why
they are subject to codes of conduct and duties.

Point of View 1: To ensure the reliability and quality of service delivery To guarantee the
calibre and regularity of the solutions they offer, professionals are required to adhere to a
charter or framework of obligations and responsibilities that other individuals are not subject
to. The services that professions like health, law, and accountancy provide may have a
substantial influence on people's lives. These professions are essential to society.

The Hippocratic Oath, for instance, mandates that physicians treat patients as best they can
while still maintaining confidentiality and upholding the principles of do no harm. With the
help of these requirements, patients are guaranteed to obtain high-calibre treatment that
adheres to the strictest moral principles.

Point of View 2: Defend the general welfare The protection of the public interest is another
explanation for why specialists have a charter/framework with a code of behaviour, duties,
and responsibilities that ordinary individuals do not. Professionals possess specialised skills
and information that most people do not. They, therefore, have a responsibility to apply their
knowledge and skills in a way that advances society and upholds the public interest. They do
so in part because of the rules and duties that apply to professionals.

For instance, in the field of accounting, professionals are required to uphold the greatest
levels of impartiality, honesty, and secrecy. These requirements contribute to ensuring the
reliability, accuracy, and transparency of financial information, all of which are essential for
preserving the public's confidence in the system of finance.

CONCLUSION-

In conclusion, in order to guarantee that they constantly offer high-quality services and to
advance the public good, professionals such as physicians, accountants, and attorneys are
bound by a charter or framework of responsibilities and obligations that are not shared by
other individuals. These codes of ethics and requirements aid in ensuring that professionals
carry out their responsibilities in an ethical, responsible, and highly professional manner. In
order to keep the public's trust and confidence in their different professions, professionals
must abide by these rules of behaviour and duties.

ANSWER 3B

INTRODUCTION-
For organizations looking to build credibility with their stakeholders in the quickly changing
business environment of today, ethical behaviour is crucial. Fairness, accountability, and
ethical decision-making are ensured by the guiding framework that ethical principles offer to
enterprises. Here, the ethical value of transparency will be the main focus. Transparency
describes the openness and transparency of interactions, decision-making, and activities
inside a company. It is essential for building responsibility, encouraging ethical behaviour,
and developing trust..

CONCEPT AND APPLICATION-

As an ethical ideal, transparency covers a range of organisational behaviour. It entails candid

dialogue, information sharing, sharing of pertinent details, and decision-making that is
inclusive. Organisations can guarantee stakeholders are privy to correct information,
comprehend the procedure for making decisions, and have faith in the organization's integrity
by exercising transparency. Trust is a key component of transparency and is necessary for
sustained achievement and sustainability.

Case Study: ABC Corporation

An international technological corporation called ABC Corporation produces and sells

consumer gadgets. The business asserts that transparency in its business practices is a top
priority, and it seeks to build an open and accountable culture. We will look at ABC
Corporation's yearly performance evaluation procedure to gauge its commitment to openness.

Open Communication Channels: Fostering open channels of communication inside the

organisation is the first step towards transparency. Through multiple channels, including
frequent team meetings, comment boxes, and confidential reporting tools, ABC Corporation
encourages workers to offer feedback, voice problems, and ask questions. The workplace at
ABC Corporation is one where staff members feel free to share their thoughts and ask
questions thanks to the company's active promotion of open discussion.

Performance Criteria and Expectations: ABC Corporation clearly defines performance

standards and criteria for workers in order to encourage openness. This contains clear job
descriptions, quantifiable objectives, and key performance indicators (KPIs). The
organisation promotes fairness in performance evaluation and minimises uncertainty or bias
in the evaluation process by giving employees clear instructions and criteria.

Performance Evaluation Process: Every year, all workers at ABC Corporation get
performance evaluations. Managers give their staff members feedback on how they
performed, point out areas for development, and talk about prospects for advancement. ABC
Corporation has a systematic evaluation procedure that combines self-evaluation, feedback
from peers, and manager evaluation to show transparency. This multifaceted method
guarantees that many viewpoints are taken into account and offers a comprehensive
assessment of an employee's performance.

Two-Way Feedback: The use of two-way feedback increases the transparency of

performance evaluations. The necessity of honest communication between supervisors and
staff is emphasised by ABC Corporation. Employees are urged to express any problems they
may have, offer feedback on their work surroundings, and share their opinions on their own
performance during performance reviews. This feedback-driven methodology encourages
openness by giving managers and staff members the chance to voice their opinions and
participate in the evaluation procedure.

CONCLUSION-

In summary, transparency is a fundamental ethical concept that is essential to preserving a

company's integrity. Transparent businesses foster relationships with their stakeholders,
establish trust, and boost their reputation. Contrarily, businesses that lack transparency run
the danger of harming their brand, losing the confidence of their stakeholders, and incurring
legal repercussions. Therefore, in order to uphold their integrity and foster confidence among
their stakeholders, businesses must implement the ethical value of transparency into all
aspects of their regular business operations.