02 Nov RESTATED CSR RESULTS UNDER THE MICROSCOPE; INCREASED ONUS ON DIRECTORS TO ACT ON NATURE-RELATED RISKS
RESTATED CSR RESULTS UNDER THE MICROSCOPE
ASX boards this AGM season might encounter a few additional shareholder questions on how they have been reporting their CSR performance, thanks to a recent paper by two Sydney-based academics.
The Guardian has reported that a paper by UTS’s Helen Spiropoulos and Macquarie University’s Rebecca Bachmann has found some companies are reporting better CSR metrics by revising past outcomes, “particularly when a chief executive’s own remuneration is tied to the results”.
“Our results show that CSR contracting is associated with a greater number of CSR restatements, particularly when social performance measures are contained within CEO compensation contracts,” the paper found.
The paper added: “Using a sample of ASX 500 firms over the 2004-2020 period, we find that there is bias in the direction of restatements of CSR performance. Specifically, we find that the majority of restatements are unfavorable, meaning prior year’s performance is restated to be worse than originally reported, and lead to improved comparative performance between the current and prior year.”
INCREASED ONUS ON DIRECTORS TO ACT ON NATURE-RELATED RISKS
Boards have also been given the loudest warning yet that they are obliged under their directors’ duties to consider nature-related risks to their companies.
The AFR has reported on the release of a groundbreaking legal opinion commissioned by the advisory firm Pollination and Commonwealth Climate and Law Initiative (CCLI), which has concluded: “Directors who fail to consider nature-related risks could be found liable for breaching their duty of care and diligence.”
“Failure on the part of a director to identify, manage and disclose material nature-related risks may lead to increased shareholder pressure and even litigation against personal assets of directors,” it added.
THE REBIRTH OF DARRELL LEA
After being purchased by a private equity firm after collapsing in 2012, iconic Aussie confectionery brand Darrell Lea is now a big hit in the United States.
Annual revenue for Darrell Lea has doubled in the last few years to $500 million, with the US market contributing $80 million.
The brand’s chief executive, James Ajaka said that despite consumers tightening their budgets, affordable snacks, such as the brand’s famous liquorice and Rocky Road, are still loved by households.
To meet surging demand, Darrell Lea recently spent $45 million to upgrade its factory to be the world’s biggest soft-eating liquorice and Rocky Road production facility.
Feel free to share these updates with colleagues or friends. They can sign up here to receive our daily newsletter.