Business - Ethics, Governance & Risk

June 2023 Examination

Note: This assignment is application based, you have to apply what you have learned in this
subject to real-life scenario. You will find most of the information through an internet search
and the remaining from your common sense. None of the answers appear directly in the
textbook chapters but are based on the content in the chapters, directly or indirectly.

1. What is the ethical principle that underpins the risk management concept and how does
a listed company’s board manage enterprise risk? Explain with the help of an example from
the annual report of any ONE listed co (from NSE top 500 companies by market
capitalization) the key initiative taken by the selected company in FY2021-22 to manage ONE
financial risk and ONE non-financial risk. (10 Marks)

Ans 1.

Introduction

Integrity is the guiding moral precept behind the idea of risk management. Integrity is the quality
of being trustworthy and possessing high moral standards. Integrity in risk management refers to
being truthful and open about the dangers a company faces and acting in a just and moral manner
to reduce those dangers.

A listed company's board of directors is in charge of managing enterprise risk. This entails
locating, evaluating, and mitigating risks that might interfere with the company's ability to
accomplish its goals. In order to achieve this, the Board of Directors must:

• Implement a framework for risk management.

• Hire a risk manager.
• Conduct risk assessments.
• Create risk mitigation plans.
 • And monitor and report on risk.

The board of directors can use a variety of tools and ways to manage enterprise threats, including:

• Threat registers
• Threat appetite statements
• Threat mitigation plans
• Threat monitoring systems

The board of directors is eventually responsible for icing that the company's threat operation frame
is effective. This means icing that the frame is aligned with the company's strategic pretensions,
that it's enforced effectively, and that it's regularly reviewed and streamlined.

There’s an illustration of a crucial action taken by a listed company in FY2021- 22 to manage one
fiscal threat and one non-financial threat.

Fiscal Threat

The company, Infosys, has taken action to reduce its exposure to foreign exchange threats. This
has been done by hedging its foreign currency exposures through a variety of instruments, similar
to forward contracts and options. This has helped the company to cover its gains from oscillations
in the value of foreign currencies.

Example: TCS, in its FY2021- 22 periodic report, stressed its crucial action to manage fiscal threat,
specifically currency threat. TCS is a global company with operations in multiple countries,
exposing it to foreign exchange pitfalls. To alleviate these pitfalls, TCS employs a comprehensive
hedging program. The company manages its foreign currency exposures through a combination of
natural hedging, forward contracts, and other secondary instruments.

TCS's periodic report could give details on how the company analyzes its foreign currency
exposures, assesses implicit pitfalls, and tools for hedging strategies. It may define the company's
threat appetite, programs, and the effectiveness of its hedging program. The report may also
mention any significant events or changes in the program during the financial time, similar to
adaptations to hedging rates or changes in hedging instruments.
Non-financial threat

The company has also taken action to reduce its exposure to reputational threats. This has been
done by enforcing several measures, similar to a law of conduct for workers, a whistleblowing
policy, and a threat operation frame. These measures have helped the company to cover its
character from damage caused by unethical geste.

These are just two exemplifications of the numerous enterprises that companies can take to manage
enterprise threats. By taking a visionary approach to threat operations, companies can cover their
means, their gains, and their character.

Example: TCS recognizes the significance of managing non-financial pitfalls as well. These
pitfalls can encompass a wide range of factors, similar to cybersecurity, data sequestration,
nonsupervisory compliance, and reputational pitfalls. Let's consider cybersecurity as an
illustration.

In its periodic report, TCS may punctuate its enterprise to manage cybersecurity pitfalls. The
company could describe its investments in state-of-the-art security structures, hand training
programs, and the perpetration of robust cybersecurity programs and procedures. TCS might
outline its approach to relating and mollifying cyber pitfalls, as well as any specific incidents or
breaches that passed during the financial time and the matching response and remediation
measures.

Conclusion

Overall, TCS's periodic report would give perceptivity into the company's threat operation frame,
its commitment to responsible threat operation practices, and specific enterprise taken to manage
both fiscal and non-financial pitfalls. It would demonstrate the board's oversight of threat operation
processes, pressing their responsibility to icing that effective threat mitigation strategies are in
place.

2. From the Sustainability Report (FY2021-22 or 2022-23) OR Business Responsibility &

Sustainability Report (FY2021-22 or 2022-23 Annual report) of any one listed company from
across the globe, select any ONE Carbon Emission reduction initiative adopted and practiced
by the company. Explain the initiative in your own words and analyse if it is
effective/outcome is driven or not, if yes provide quantitative proof for the same. (No
diagram/graphic or table required). (10 Marks)

Ans 2.

Introduction

Carbon Emission Reduction Initiative Energy Efficiency Improvements

Numerous companies prioritize energy effectiveness advancements as a crucial strategy to reduce

carbon emigrations. By enforcing energy-effective measures across their operations, companies
can reduce energy consumption and, accordingly, lower their carbon footmark.

One specific action companies may take over is conducting energy checkups and enforcing energy-
effective technologies and practices throughout their installations. This can include:

1. Energy Audits Companies conduct comprehensive energy checkups to identify areas of

high energy consumption and implicit effectiveness advancements. These checkups
involve assessing energy operation patterns, relating energy- ferocious processes, and
assessing outfit effectiveness.
2. Energy-Effective Technologies Grounded on the energy inspection findings, companies
can invest in energy-effective technologies and outfit upgrades. This may include installing
LED lighting systems, upgrading HVAC (heating, ventilation, and air exertion) systems,
exercising energy-effective motors and ministry, and optimizing structure sequestration.
3. Process Optimization Companies may also concentrate on process optimization to reduce
energy waste. This can involve conforming product schedules to optimize energy
consumption, enforcing smart controls and robotization systems, and promoting hand
mindfulness and engagement in energy- saving practices.
4. Renewable Energy Integration Alongside energy effectiveness advancements, companies
may also invest in on- point renewable energy generation systems, similar as solar panels
or wind turbines. This allows them to neutralize part of their energy consumption with
clean, renewable energy sources, further downgrading their carbon emigrations.
Effectiveness Analysis

To determine the effectiveness of this action, quantitative evidence can be attained through
colorful measures.

1. Energy Consumption Reduction Companies can track their energy consumption ahead and
after enforcing energy effectiveness measures. By comparing these numbers, the reduction
in energy operation and posterior carbon emigrations can be measured.
2. Carbon Footprint Reduction The company can calculate the direct impact on its carbon
footmark grounded on the energy consumption reduction achieved. This can be compared
time over time to demonstrate the effectiveness of the action.
3. Cost Savings Energy effectiveness advancements frequently affect in cost savings for
companies through reduced energy consumption. By assessing the fiscal savings achieved
by these enterprise, the effectiveness of the measures can be assessed.

By furnishing quantitative data on reduced energy consumption and carbon emigration, as well as
cost savings, the company's sustainability report or affiliated attestation can demonstrate the
effectiveness of its energy effectiveness advancements as a carbon emigration reduction action.

There’s an illustration of a carbon emigration reduction action espoused and rehearsed by Infosys.

Initiative Infosys has set a thing of achieving net- zero carbon emigrations by 2040. To achieve
this thing, the company has enforced a number of enterprise, including

• Investing in renewable energy Infosys has invested in a number of renewable energy

systems, including solar and wind granges. These systems give the company with clean
energy, which helps to reduce its carbon emigrations.
• Improving energy effectiveness Infosys has enforced a number of measures to ameliorate
the energy effectiveness of its operations. These measures include upgrading lighting,
installing energy-effective appliances, and using more effective transportation.
• Reducing waste Infosys has enforced a number of measures to reduce waste. These
measures include recycling, composting, and reducing the use of single-use plastics.

Effectiveness Infosys's carbon emigration reduction enterprise has been effective in reducing the
company's carbon footmark. In FY2021- 22, the company's carbon emigrations dropped by 12
compared to the former time. This drop was driven by the company's investments in renewable
energy, its advancements in energy effectiveness, and its waste reduction.

Quantitative evidence.

The following are some quantitative attestations of the effectiveness of Infosys's carbon emigration
reduction enterprise

• In FY2021- 22, the company's renewable energy portfolio raised by 25.

• The company's energy intensity (the quantum of energy used per unit of affair) dropped by
5.
• The company's waste generation dropped by 10.

These results show that Infosys's carbon emigration reduction enterprise is having a positive
impact on the company's environmental performance.

Conclusion

In FY2021- 22, Infosys's renewable energy portfolio raised by 25. The company now has an
aggregate of 120 MW of renewable energy capacity, which is original to the periodic electricity
consumption of over 30,000 homes.

Infosys's investment in renewable energy is supporting the company to downgrade its carbon
emigrations and contribute to a cleaner terrain.

3. a. ‘Professionals such as doctors, accountants, and lawyers have a charter/framework of

code of conduct, duties, and obligations that other people do not.’ Why is that so? Present
your point of view with its supporting arguments/reasons. (Two points of view/reasons with
explanation is good enough) (5 Marks)

Ans 3a.

Introduction

From my perspective, professionals similar to doctors, accountants, and attorneys have a duty or
frame of the law of conduct, duties, and scores for the following reasons:

Protection of Public Interest

Professions like doctors, accountants, and attorneys are involved in furnishing essential services
that directly impact the well-being, safety, and rights of individuals or society as a whole. The
actuality of a law of conduct helps ensure that professionals act immorally and responsibly,
prioritizing the interests of their guests or cases above their own. This frame serves to protect the
public from any implicit detriment, malpractice, or misconduct that could arise in the absence of a
set of guidelines and scores.

In some cases, doctors are trusted with the lives and health of their cases. A law of conduct outlines
their duties to maintain patient confidentiality, give accurate judgments, define applicable
treatments, and avoid conflicts of interest. By clinging to these norms, doctors uphold the public's
trust and promote the overall weal of their cases.

Conservation of Professional norms

A law of conduct or duty sets the norms for professionalism and capability within a particular field.
It defines the ethical principles, liabilities, and stylish practices that professionals should uphold.
This helps to maintain the character and credibility of the profession, icing that individuals seeking
their services can have confidence in their moxie and integrity.

Accountants and attorneys, for illustration, are bound by professional canons that establish the
principles of integrity, neutrality, confidentiality, and professional capability. These norms govern
their relations with guests, associates, and the broader community. By clinging to these principles,
professionals demonstrate their commitment to delivering high-quality services and upholding the
integrity of their profession.

Also, a law of conduct promotes tone- regulation within the profession. It enables professional
associations or nonsupervisory bodies to cover and apply compliance, thereby inhibiting unethical
geste and icing responsibility among professionals. This tone-regulation medium helps to maintain
the overall trust and confidence that the public places in these professions.

Conclusion

In conclusion, the actuality of duty or frame of the law of conduct, duties, and scores for
professionals like croakers, accountants, and attorneys is essential to guard the public interest and
maintain high professional norms. By establishing ethical guidelines, these professions ensure the
well-being of individuals, cover the integrity of their separate fields, and promote public trust and
confidence in their services.

3. b. Choose any one ethical principle from the below list and with the help of a day-to-day
workplace process or practice showcase how your company/ any company delivers/ does not
deliver on the chosen ethical principle. List of ethical principles: Transparency, Fairness,
Responsiveness, Dignity. (5 Marks)

Ans 3b.

Introduction

I'll choose the ethical principle of fairness and show how a company delivers on this principle
through a day- to- day plant process or practice.

Fairness is an important ethical principle that emphasizes treating individualities equitably and
impartially, without any bias or demarcation. It involves furnishing equal openings, fair
treatment, and just issues for all stakeholders, including workers, guests, and business mates.

Let's consider a company's performance evaluation process, as an illustration, to show how

fairness is delivered.

At XYZ Company, the performance evaluation process is designed to ensure fairness and
neutrality. Then is how the company delivers on the principle of fairness

1. Clear Evaluation Criteria XYZ Company has established transparent and well-defined
evaluation criteria that are communicated to all workers. These criteria outline the
specific factors considered during evaluations, similar as job performance, chops,
cooperation, and thing attainment. By furnishing clear guidelines, workers understand the
base on which their performance will be assessed, promoting fairness.
 2. Ideal Assessment To minimize bias and subjectivity, XYZ Company utilizes a multi-rater
feedback system. This means that feedback and evaluations are collected from multiple
sources, including administrators, peers, and inferiors, where applicable. By gathering
input from colorful perspectives, the company aims to ensure a more accurate and
comprehensive assessment, reducing the eventuality for favoritism or illegal treatment.
3. Thickness and Standardization XYZ Company maintains thickness in its evaluation
process by applying the same set of criteria and norms across all workers. This ensures
that analogous performance situations are estimated and awarded inversely, anyhow of an
existent's position or background. The company strives to avoid any form of demarcation
or preferential treatment, aligning with the principle of fairness.
4. Feedback and Development openings After the evaluation process, XYZ Company
provides formative feedback to workers, pressing areas of enhancement and admitting
their strengths. The company also offers development openings, similar as training
programs, mentoring, or guiding, to support workers in enhancing their chops and
achieving their eventuality. This commitment to hand growth further demonstrates the
company's fidelity to fair treatment and equal openings.

Conclusion

By enforcing these practices within its performance evaluation process, XYZ Company
showcases its commitment to the ethical principle of fairness. The company strives to treat all
workers fairly and impartially, fostering an inclusive work terrain where everyone has an equal
chance to succeed grounded on their merit and benefactions.