Principles of Governance Metrics
Principles of Governance MetricsThe company’s stated purpose, as the expression of the means by which a business proposes solutions to economic, environmental, and social issues. Corporate purpose should create value for all stakeholders, including shareholders.
Oversight of a company’s chosen priorities in terms of economic, environmental, and social issues requires a clear understanding and articulation of the firm’s purpose. The more that firms can link their purpose and core business, the better they can deliver long‑term value for all stakeholders, including shareholders.
Source:
The British Academy and Colin Mayer, GRI (102-26), EPIC, and others
Composition of the highest governance body and its committees by: competencies relating to economic, environmental, and social topics; executive or non-executive; independence; tenure on the governance body; number of each individual's other significant positions and commitments, and the nature of the commitments; gender; membership of under-represented social groups; stakeholder representation.
The capabilities and perspectives of board members are important for making robust decisions on an ongoing basis. This disclosure captures a variety of important dimensions to composition, going beyond a single metric, and emphasizing competencies relating to economic, environmental, and social topics.
Source:
GRI (102-22), GRI (405-1a), IR (4B)
A list of the topics that are material to key stakeholders and the company, how the topics were identified, and how the stakeholders were engaged.
This disclosure highlights the importance of the relationship between what is material to a firm and to its stakeholders; it captures the output of a process to understand the impact of the company on its stakeholders, and the implications for the company.
Source:
GRI (102-21), GRI (102-43), GRI (102-47)
A description of internal and external mechanisms for:
1.Seeking advice about ethical and lawful behaviour and organizational integrity;
2.Reporting concerns about unethical or lawful behaviour and organizational integrity
This disclosure focuses on the ongoing ability of a company to both prevent and remedy ethical issues.
Source:
GRI (102-17)
Company risk factor and opportunity disclosures that clearly identify the principal material risks and opportunities facing the company specifically (as opposed to generic sector risks), the company appetite in respect of these risks, how these risks and opportunities have moved over time and the response to those changes. These opportunities and risks should integrate material economic, environmental, and social issues, including climate change and data stewardship.
This disclosure focuses on company-specific risks and opportunities, the onus on the board to oversee management of those risks and opportunities, and the corporate response over time as they change; it provides broad, management and board-centred insight.
Source:
EPIC, GRI (102-15), WEF Integrated Corporate Governance, IR (4D)
How the company’s stated purpose is embedded in company strategies, policies, and goals.
Embedding purpose within the company’s strategy and policies is necessary to realizing its stated benefits for all stakeholders, including shareholders.
Source:
GRI (102-26)
Disclosure of the material strategic economic, environmental, and social milestones expected to be achieved in the following year, such milestones achieved from the previous year, and how those milestones are expected to or have contributed to long-term value.
An outcome-oriented measure of board and management quality, this disclosure focuses on the company’s achievement of its stated objectives. This disclosure combines both leading and lagging indicators of the board oversight and management’s ability to set, guide and execute on the company’s strategy.
Source:
EPIC
1. How performance criteria in the remuneration policies relate to the highest governance body's and senior executives' objectives for economic, environmental and social topics, as connected to the company’s stated purpose, strategy, and long-term value
2. Remuneration policies for the highest governance body and senior executives for the following types of remuneration:
-Fixed pay and variable pay, including performance-based pay, equity-based pay, bonuses, and deferred or vested shares
-Sign-on bonuses or recruitment incentive payments
-Termination payments
-Clawbacks
-Retirement benefits, including the difference between benefit schemes and contribution rates for the highest governance body, senior executives, and all other employees.
The incentives provided to board members and senior executives, and the way they are structured, can significantly reinforce or impede long-term value creation. Importantly, this disclosure requires the reporting organization to explicitly address how its approach to remuneration relates to the organization’s economic, environmental, and social objectives.
Source:
GRI (102-35)
The significant issues that are the focus of the company’s participation in public policy development and lobbying; the company’s strategy relevant to these areas of focus; and any differences between its lobbying positions, purpose, and any stated policies, goals, or other public positions.
Consistency between corporate activity related to lobbying and the firm’s publicly stated purpose and strategy is a core component of alignment on long‑term objectives, which in turn is essential for long‑term value creation. Monitoring this consistency is an important element of overall transparency and the authentic pursuit of the company’s objectives.
Source:
GRI 415: Public Policy 2016
Total amount of monetary losses as a result of legal proceedings associated with: fraud, insider trading, anti-trust, anti-competitive behaviour, market manipulation, malpractice, or violations of other related industry laws or regulations.
This metric is a critical advanced indicator of ethical behaviour, focusing on the company’s observed behaviour and relying on outside parties (regulators) and a robust formal process (enforcement and the courts) to assess that behaviour. Additionally, measurement in monetary terms facilitates comparison across firms.
SASB (510a.1)
How the highest governance body considers economic, environmental, and social issues when overseeing major capital allocation decisions, such as expenditures, acquisitions and divestitures.
This disclosure is an important way to gauge the quality of risk and opportunity oversight and the extent to which it incorporates economic, environmental, and social considerations. Capital allocation is at the core of any business model and illustrates the company’s longer-term priorities, and as such it is a leading indicator of long‑term value creation.
Source:
CDSB (REQ-02)