Responsible Business Guide: A Toolkit for Winning Companies

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RBG Responsible Business Guide: A Toolkit for Winning Companies Why Being Financially Viable Comes First When a company’s turnover is sufficient to enable it to meet its operating costs, allow for investments in development and technology, settle outstanding payables, maintain or increase levels of production or service delivery, and on top of all this leave a reasonable margin of profit, it is said to be financially viable. Accountancy norms suggest that this picture of financial viability comes in yearly cycles. In reality, however, companies must remain viable over much longer timelines to be successful. Major SRI Indexes Dow Jones Sustainability Index Ethibel Global Index Ethical Global Index FTSE4GOOD Global 100 Index Humanix 200 Global Natur-Aktien-Index ASPI Eurozone Index Ethinvest Environmental Index Australia Westpac-Monash Eco Index Australia Jantzi Social Index Canada UmweltBank-Aktien Index Germany Morningstar Japan SRI Index JSE / FTSE 4Good Index South Africa Humanix 50 Index Sweden Calvert CALVIN Social Index USA KLD Domini 400 Index USA Prevailing wisdom shows that the break-even point for a business determines its trajectory of success over the long term. In the current environment, this break-even point is determined by more than just the ability to pay bills. Observers, particularly those who measure sustainability indicators, look at a company’s societal footprint to predict success. Assessing a company’s financial viability has become a complex, multifaceted task. This typically involves going beyond traditional evidence (such as audited accounts and financial performance statements, budgets, business strategies, growth projections, etc.) to look at newer indicators such as the environmental footprint, adherence to labor laws and health and safety regulations, employee benefits, credit ratings, and records of litigation. The picture that emerges indicates whether or not a company is financially viable. Inherent in this picture is the assumption that a company that is disciplined and prudent to stay financially viable is a company that can fulfill its obligations to its customers, employees, and governments. In recent years, efforts by regulatory agencies and tax authorities in Pakistan suggest a further tightening of controls for assessing a company’s long-term financial health. Matched with its ability to manage risks through the creation of liquidity mechanisms, assets, and social capital in the form of credit, a company further indicates its sustainability. 48 Responsible Business Initiative
RBG Responsible Business Guide: A Toolkit for Winning Companies WHAT THE PILLAR SAYS A responsible company must be financially viable in order to fulfill its obligations to its stakeholders. HOW TO DEMONSTRATE IT Show that the company makes socially responsible decisions that remain firmly within a framework of prudent financial management Checklist 6: Does the company’s projection of social responsibility stem from financial viability? FINANCIAL VIABILITY and CAPTILIZATION PERCEPTION Importance is understood PREPARATION Specific policies available to all staff PRACTICE Specific procedures operational PERFORMANCE Embedded in day to day decisions A B C Aware of SRI index and criteria and have mechanisms to reach any benchmarks Formally communicate social and environmental responsibilities to financial institutes Systems for cost effective mechanisms for FT4Good RC Index CCI 82 Sustainability reporting UNCTAD/ISAR 83 UNGC COP Env. Reporting Social compliances Env. compliance Ethical marketing Y/N Y/N Y/N Y/N Y/N Y/N Y/N Y/N Y/N Y/N Y/N Y/N Y/N Y/N Y/N Y/N Y/N Y/N Y/N Y/N Y/N Y/N Y/N Y/N Y/N Y/N Y/N Y/N Y/N Y/N Y/N Y/N Y/N Y/N Y/N Y/N Y/N Y/N Y/N Y/N Supply chain verifications Y/N Y/N Y/N Y/N D Have mechanism for evaluating performance / financial benefits of Social investments Environmental investments Y/N Y/N Y/N Y/N Y/N Y/N Y/N Y/N E Systems exists for Avoiding potential "damaging events" Y/N Y/N Y/N Y/N Mitigating the after-effects of a crisis Y/N Y/N Y/N Y/N Responsible Business Initiative 49
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