Ethical and Professional Standards

Do companies that are listed on the JSE uphold corporate governance and maintain ethical and professional standards?

Abstract

In this project we are asked to compare two companies listed on the JSE and look if they uphold corporate governance and, maintain ethical and professional standards. The two companies I have chosen are The Body Shop and Wimpy. In this project I will compare the two companies and come to the conclusion of which company upholds its corporate governance better than the other. For each company I will look at the businesses micro environment, their corporate social responsibility and sustainability, socio-economic issues and strategies, their code of ethics and then a comparison of the two businesses.

Introduction

The aim of this project is to look at two companies listed on the JSE and see if the uphold corporate governance, maintain ethical and professional standards. Then critically analyze the information taken from the two businesses and compare the businesses and give an opinion of which business is more successful in upholding its corporate governance.

Methodology

For this project I looked at internet sources and the websites of each company. First I looked at many different companies and then chose one from Famous Brands Limited and one from New Clicks Holdings Limited. I then researched each industry to find out their codes of ethic, mission and corporate social responsibility that applies to each of the businesses under that industry.

Choice of Companies

New Clicks Group Limited: The Body Shop

The Body Shop is a member of the New Clicks Holdings Group Limited which is a health and beauty focused retail and supply group listed on the JSE limited. The group has over 500 stores across South Africa. Clicks Group is committed to the principles and practice of good corporate governance. The group follows the rulings of the King II report and listings requirements of the JSE limited. All these aspects of Clicks group Limited applies to all businesses that fall under this industry such The Body Shop. The Body Shop itself is very involved in corporate governance and corporate social responsibility. The Body Shop is involved in many socio-economic problems and help to better these problems such as child trafficking, stopping HIV, and stopping violence at home. The Body Shop is truly concerned with having good ethics and corporate governance.

Famous Brands Limited: Wimpy

Wimpy is part of Famous Brands Limited, Africa`s leading quick service and dining restaurant franchisor. Wimpy is very involved in corporate governance and corporate social responsibility. They feel a strong need to give back to South Africa. They are one of South Africa’s leading restaurant franchisor brands and a leading brand in the economy. Wimpy has involved itself in many projects such as creating the Wimpy Charitable Trust and raising R250 000 for the Star Seaside Fund. The trust helps to feed and clothe hundreds of underprivileged children. Wimpy is dedicated to improving South Africa and helping the nation.

Introduction into the Micro Environment of The Body Shop

The micro environment includes internal factors that have a direct impact on the business such as the vision, mission and Board of Directors.

The Body Shop`s Vision/Values with Clicks Group Limited:

Truly passionate about customers

They believe in integrity, honesty and openness.

They cultivate understanding through respect and dialogue

They are disciplined in their approach

They deliver on their goals

Mission/Principles:

Inspired Trading

Stimulating Environment

Being truly South African

The Body Shop Mission:

The Body Shop follows the King II Report which recommends that they work for social, economic and environmental change.

To create a balance between the financial and human needs of their stakeholders

To prevent animal testing

To support community trade

To make sure business is ecologically sustainable

To take on a code of conduct which will ensure that there is honesty, fairness and respect within the micro environment

Activate the self-esteem of the consumer

To defend the human rights of all people

To protect the planet by all means necessary

Vision/Values:

To protest the planet and customers by using natural ingredients in products that are effective while protecting the environment

The soul of beauty, evoking our customers into feeling beautiful, not just looking beautiful and having a positive attitude.

Our incredible planet, protecting and using the planets resources wisely.

Using natural materials and ingredients in our products.

The community of people, The Body Shop to protect their customers and the community they operate in. They wish to respect and value all people. They are passionate about social justice and human rights.

The Body Shop Organizational Structure:

The Body Shop uses the Line and Staff Organizational Structure.

The Body Shop has a board of directors with a CEO who gives orders to the managers who then give orders to the staff.

The Body Shop`s organizational culture is the business`s personality and attitude. The Body Shop is focused on protecting the well being of all people and the planet with respect and integrity.

Corporate Social Responsibility:

Corporate Social Responsibility is the businesses ability to recognize and act on or take responsibility for the impact of their activities on the environment, consumers, employees, communities and stakeholders. They must also ensure they adhere to certain ethical standards, the law and be proactive about promoting public interest.

The Body Shop follows the King II Report with triple bottom line reporting. Protecting the economy, environment and social aspects of corporate governance.

The Body Shop has five core values:

Supporting Community Trade

Defending Human Rights

Against Animal Testing

Activate Self-esteem

Protect the Planet

The Body Shop is active in being involved in many projects to help these values as well as sustain these projects

The Body Shop-“The Business of business should not be about money, it should be about responsibility, it should be about public good, not private greed” (Anita Roddick)

The Body Shop Campaigns and Projects:

Stop Sex Trafficking

The Body Shop joined the ECPAT charity which campaigns to stop sex trafficking

The Body Shop has a sustainable project where their product the ‘soft hands kind heart hand cream’, which are sold in all stores, proceedings from the project go the ECPTAT to stop and create awareness for sex trafficking.

The campaign aims to raise awareness of the scale of the issue, raise funds and inspire change

Stop HIV Changing Attitudes

The Body shop has been campaigning in raising awareness of HIV since 1993 showing that the project has been sustained up to 2010

The Body Shop has raised since 2008 1,1 million pounds for the Staying Alive Foundation, a project which educates against the risk of HIV and aids and safe sex.

Violence in the Home

The Body Shop is focused on promoting human rights and protecting people

They have since 1994 up and over 2004 raised funds against domestic violence which shows its sustainability

The funds are donated to partners who fund the prevention and support of the victims of domestic violence.

Protecting the Planet

They feel strongly about being proactive in the battle against climate change

They constantly look for ways to reduce their carbon footprint

They work to improve their energy efficiency

They have introduced energy-awareness training to staff

65% of their stores in the UK are on renewable energy contracts

They have also reduced their air travel

Corporate Governance as under Clicks Group:

Committed to principles and practice of good corporate governance

Acknowledges the relationship between high quality governance and long-term equity performance

They endorse the Code of Corporate Practices and Conduct(King II)

The Governance Committee of the board is responsible for ensuring compliance with King II for the benefit of all stakeholders

Socio-Economic Issues:

Protecting the Planet: Reducing Environmental Impact

The Body Shop is very aware of being of being a green, friendly business. They have many strategies to reduce their impact on the environment. The founder Anita Roddick was very concerned with preserving the environment and protecting the people. The Body Shop is a global business that has always been concerned with battling climate change.

Strategies the Body Shop is taking:

Constantly seek ways to reduce carbon footprints

New lighting reduces their energy use

Introducing energy-awareness training for all the staff

They have reduced their air travel

They are converting their car fleet to lower fuel emission models

65% of UK stores are on renewable energy contracts

For all the prodicts they are introducing plastic bottles made from 100% recycled materials

They are also replacing all carrier bags with 100% recycled and recyclable paper bags.

Code of Ethics

The Body Shop is committed and proactive when it comes to acting in an ethical manner to protect human rights of all people.

The Body Shop ensures that all their outlets actively follow human rights irrespective of their local, cultural or political differences.

The wish their impacts, direct or indirect, to follow human rights legislation and have a positive outcome on their stakeholders and society.

The Body Shop benchmarks their employee policies to make sure that they provide good working conditions which abide by International Human Rights Standards.

The Body Shop continually checks that all franchises abide by this code and create a good business image.

All suppliers must comply with the “Ethical Trading” initiatives Base Code.

They monitor impacts by reporting on their performance to ensure the impact is positive.

Ethical trade improves conditions of workers in the supply chain.

The Body Shop ensures that they are proactive in Human rights by:

Raising money to stop sex trafficking, animal testing, raise HIV awareness and reduce climate change.

Franchise Fast Food Industry

Wimpy

Introduction to Microenvironment

The microenvironment includes interest factors that have a direct impact on the business such as the vision and mission of the enterprise.

Wimpy under Famous Brands

Mission

Famous Brands Limited is focused on the growth and development of the best in class food services franchise brands, supported by a unique backward intergration model which maximizes stakeholder value creation.

Vision

To be by any measure the most admired food services company by 2010.

Things we care about:

People, customers, Innovation, Brands, Quality, Winning.

Wimpy

Mission

Success is achieved with a smile.

Our bun logo symbolizes our need for quality, cleanliness, service, value and friendliness.

They want their customers to feel comfortable and at home.

They want their customers to have delicious food that is delivered swiftly.

They want their customers to enjoy every moment.

Vision

To appeal to both the younger and older generation

Enjoy every moment, Wimpy hopes to create an environment their customers will enjoy.

Organisational Structure

Wimpy falls under Famous Brands Limited which is run by a board of directors.

This board of directors gives orders to the managers/owners of each business and they then give the orders to the staff making it a Line and Staff Organisational Structure.

The Organisational culture is the corporate personality of the business, the culture supports ethical decisions and actions.

Wimpy’s organization culture is that of good corporate governance, ethical behavior and good corporate social responsibility.

Wimpy campaigns for children in need and for racial equality.

Corporate Social Responsibility

CSR is the businesses ability to recognize and act on or take responsibility for the impact of their activities on the environment, consumers, employees, communities and stakeholders, as well as adhering to certain ethical standards.

Wimpy follows the JSE Ltd Social Responsibility Index which recognizes their contribution to social and economic improvement.

Wimpy follows King II Report on Corporate Governance on triple bottom line reporting which is their contribution to economic, environmental and social aspects of their business environment.

Projects by Wimpy

Wimpy has been involved in many different projects throughout the years

In 1999 Wimpy raised R250,000 for the Star Seaside Fund

They established the Wimpy Charitable Trust, which focuses on childrens needs

This charity raises funds to donate to other charities across South Africa.

They aim to help underprivileged children.

Sustainability of Project

Wimpy through Wimpy Charitable Trusts wants to help uplift organizations and people to sustain themselves

They hope to build on their tradition to help more children.

Wimpy helps fund charitable organizations and assists in their crucial work.

The sustainability of these projects does not seem evident.

Wimpy has not since 1999 raised more money for the Star Seaside Fund.

Wimpy’s assistance of other orgainisations limits their own direct input into the communities.

They also only focus on underprivileged children and no other issues in South Africa.

Socio- Economic Issues

Aiding starving children in South Africa

Wimpy puts emphasis on their efforts to help underprivileged children in South Africa. The business has not listed many strategies to help this issue other than funding other organizations.

Strategies (possible)

Wimpy could create its own charity for underprivileged children that they interact directly with.

Wimpy could create meals that advertise a certain issue and use the proceedings from the meal to donate to a charity.

Wimpy can once a month donate food and clothing to a children’s charity.

Once a month Wimpy could personally go into communities to communicate with children.

Wimpy can organize a buddy system and sponsor school fees to underprivileged children.

Code of Ethics

(Wimpy has no code of Ethics or it is not evident)

A code of Ethics they could apply in their business is :

A code with an aspirational section; the aspirations of the business and what the want to achieve.

A principles section; of which the members of the organization are expected to adhere to.

These aspects should usually be listed in order of importance

Analysis of Information

Comparison and Analysis

The Body Shop vs. Wimpy

It is obvious that The Body Shop has better Corporate Governance and Corporate Social Responsibility.

The Body Shop clearly lays out its mission, vision, values and passionate beliefs so that it is easy for the customer to identify with the business.

Wimpy does not have as many sustainable projects as that of the Body Shop.

The Body Shop addresses many more socio-economic problems and are very involved in reducing these issues.

The Wimpy has weak CSR and have only participated in two projects.

The Body Shop has over 5 sustainable projects that they are openly active with.

The Body Shop has a clear mission and vision of protecting the planet and people.

Wimpy’s mission is vague and concentrates more on the product than giving back to the community.

The Body Shop gives many benefits to their customers such as discount cards and free gifts.

The Wimpy is soley concerned with producing quality food.

Conclusion

This research shows that both the Body Shop and Wimpy participate in corporate governance and corporate social responsibility. The Body Shop however has better corporate governance and CSR. Wimpy has no evident code of conduct which reflects negatively on the business. The research shows that the Body is very passionate about being an eco-friendly business involving itself in nearly 100% recyclable products. Wimpy is very concerned with supporting the community. It is also evident that these businesses need to make this information more accessible to the public. Corporate Governance and CSR are very important for businesses to connect to their consumer and gain their trust and support.