Structure and Management
This section focuses on the critical role that Structure and Management play in corporate governance. The structure refers to the distribution of rights and responsibilities among different stakeholders, and the management refers to the individuals who are responsible for making decisions and managing the company on a day-to-day basis. The questions in this section establish the existence of board diversity and board oversight as key aspects of the structure of corporate governance. Effective corporate governance requires a well-designed structure, strong management, and a commitment to ESG performance. By focusing on these elements, companies can build trust with stakeholders, and increase their long-term success and resilience.
Important disclaimer:
Please note that there are no applicabilities in the questionnaire, this means that even if a user answers “no” to a question, the follow up questions will still apply to the user and result in a point loss. In particular, if you answered “no/none” to the questions in this section asking if targets have been formally set and approved for a specific impact and/or topic area, the N/A answer option is not available for the related questions asking whether annual milestone targets have been met and whether those have been publicly reported, and you must answer “no”.
About this question
A diverse board of directors or senior leaders will include a variety of perspectives, skills, ages, genders, cultures, and ethnicities in order to perform its obligations effectively. Evidence shows that having a diverse board/senior management is essential for effective decision-making, guidance and governance. Targets and indicators are critical elements of driving effective practice within a company. This question asks to see if your company has a structured approach to increasing and maintaining board/management diversity across a range of characteristics.
- Answer yes if you can provide evidence that your company has set targets to increase board diversity for two or more characteristics (e.g., gender and national origin). ‘Yes’ can be scored if you can provide evidence of a diverse board and a stated commitment to maintain or improve these levels
- Answer no if you have no formal targets related to board/senior management diversity
Applicability: Brand, Retailer, Brand and Retailer
Reference ID: gsm.MQ
About this question
Having a diverse board/senior management is essential for effective decision-making, guidance and governance. Some regulatory authorities have introduced mandatory gender balance requirements and reporting. This question assumes your company is already compliant with the law and asks whether your company has gender equality targets at board level that exceed regulatory requirements in your region.
- Answer yes if you can provide evidence that your company has formal gender equality targets that exceed regulatory requirements. If there are no such requirements in your company’s region, you can answer yes if your company has a board level gender equality target in place
- Answer no if there is no board/senior management gender equality target in place that goes beyond the regulatory requirements in your company’s region
Applicability: Brand, Retailer, Brand and Retailer
Reference ID: gsm.Mg
About this question
Diverse management is essential for a company’s success in today’s globalized and interconnected world. A diverse management team promotes an inclusive workplace culture, improving employee morale, satisfaction, and retention. It also helps in understanding and connecting with a diverse customer base, leading to increased revenue.
This question looks for evidence of a structured approach and activities aimed at achieving its board/senior management diversity targets (e.g., examples could include mentorship programs for under-represented groups, targeted recruitment campaigns, changes in recruitment practice).
- Answer yes if you can provide evidence of your company’s strategy to increase diversity at board/senior management level. Examples could include HR strategy, board minutes, annual reports
- Answer no if there is no program or strategy in place to achieve your senior level diversity targets
Applicability: Brand, Retailer, Brand and Retailer
Reference ID: gsm.Mw
About this question
This question is asking whether your company is tracking and making progress against its own targets for increasing board/senior management diversity. Please note that the term ‘most recent’ has been considered as ‘annual’ but may not be appropriate in all cases.
- Answer yes if you can provide evidence demonstrating progress against your company’s targets, or achievement of milestone targets as part of a bigger program or strategy
- Answer no if you cannot provide evidence of achieving project milestones or targets, or if your company is not tracking progress in this area
Applicability: Brand, Retailer, Brand and Retailer
Reference ID: gsm.NA
About this question
ESG objectives need to be integrated into the overall strategy of a company to ensure conflicts with other strategic targets – such as financial goals – are identified and resolved. In order to embed ESG into a company’s strategy, it is important that senior managers develop their knowledge and understanding of environment, social and governance issues.
This question asks for evidence of capacity building of ESG at senior level. If your company has a board of directors, the answer should refer to this group. If there is no board of directors, the answer should refer to the most senior group of decision-making executives, referred to in the BRM as ‘senior management’ or ‘leadership’.
This includes the appointment of individuals with ESG expertise onto the board/senior management team, the creation of ESG specific roles on the board/ senior management team, and regular training and development activity on key ESG topics for board/leadership team members.
- Answer yes if you can provide evidence of board/leadership team capacity building in all three areas of ESG, individually and as a group
- Answer partial yes if you can provide evidence of either individual or group capacity building in one or more areas of ESG
- Answer no if there is no evidence that the board /senior management team is building its knowledge and capacity in ESG issues
Applicability: Brand, Retailer, Brand and Retailer
Reference ID: gsm.NQ
About this question
The board/senior leadership team of a company are ultimately accountable for the long-term sustainability of the business. As ESG factors can have a significant impact on a company’s long-term sustainability, financial performance, and reputation, the board has a fiduciary duty to ensure that the company is managing these risks and opportunities effectively. This includes setting ESG targets, monitoring progress, and ensuring that the company is complying with applicable laws and regulations.
This question asks if your company’s ESG strategies and targets are subject to oversight at the highest level of the company, either by a Board of directors, or senior management, whichever is the most senior decision making body applicable.
Examples of board oversight include, setting/approval of targets and strategy, regular monitoring of progress against targets, embedding ESG into across other business strategy and functions (e.g., investment strategy, performance management).
- Answer yes if you can provide evidence that ESG is subject to oversight at the highest level within the company
- Answer no if ESG is not subject to oversight at the highest level within the company
Applicability: Brand, Retailer, Brand and Retailer
Reference ID: gsm.Ng
About this question
ESG due diligence policies help a company identify and manage potential risks and opportunities related to ESG. It can ensure that a company complies with applicable laws and regulations, and promotes transparency and accountability. Aside from looking at all the relevant risk factors for a company, the policy would establish metrics and reporting mechanisms to track progress and communicate ESG performance to stakeholders.
- Answer yes if you can provide evidence that your company’s board/senior management have implemented appropriate mechanisms to track environmental, social and governance targets
- Answer partial yes if your company’s evidence relates to just one or two pillars and not the full remit of ESG, or if metrics and targets are not set in all areas
- Answer no if there is no evidence of a top-down approach to allocating resource and appropriate mechanisms to implement ESG in your company
About this question
ESG objectives need to be integrated into the overall strategy of a company to ensure conflicts with other strategic targets – such as financial goals – are identified and resolved. Linking executive compensation to environmental, social, and governance (ESG) performance has been shown as one way to help drive accountability and progress on the ESG agenda.
This question is about executive incentives. It asks whether your company has established a mechanism by which company or individual achievement of ESG targets and goals is linked to salary, bonus, share options or other reward and compensation schemes for Board and/or senior management.
- Answer yes if you can provide evidence that your company’s board/senior management incentives and reward mechanisms include the requirement for individual and/or company achievement of ESG targets. We are looking for the whole of the senior management team to have ESG performance metrics in place
- Answer partial yes if your company’s evidence relates to just one or two of the three pillars of ESG, or if a proportion of the senior team have ESG performance metrics in place related to reward
- Answer no if there is no direct link between ESG targets and executive reward in your company
Applicability: Brand, Retailer, Brand and Retailer
Reference ID: gsm.OA
About this question
Successfully delivering a robust ESG strategy means utilizing expertise and engaging the commitment of employees throughout the entire company. It is important to motivate and empower employees to contribute effectively to the achievement of ESG targets and goals in a way that is relevant to their role.
Incorporating ESG goals within company-wide performance management systems, and potentially linking with compensation and development plans, is a way of driving greater accountability and progress across the business.
- Answer yes if you can provide evidence that the performance management system of all your company’s relevant employees is linked with the achievement of ESG goals
- Answer partial yes if you can provide evidence that some relevant employees have personal performance objectives linked to the achievement of ESG goals (excluding ESG specific roles where their job is specifically focused 50% or more on this topic)
- Answer no if there is no direct link between ESG targets and your company’s performance management system for employees
Applicability: Brand, Retailer, Brand and Retailer
Reference ID: gsm.OQ
Question: Retailer path
Did your company implement commercial incentives, standards or sanctions for business partners that are linked to environmental, social and governance practices?
Question: Brand and Retailer path
Did your company implement commercial incentives, standards or sanctions for suppliers and/or business partners that are linked to environmental, social and governance practices?
About this question
This question asks about whether your company has implemented any commercial incentives, sanctions or standards for suppliers and/or business partners in order to support your company’s ESG goals and targets. This could include a scoring system for tender processes that gives preference to suppliers and/or business partners achieving certain ESG goals; offering beneficial terms to enable supplier investment in low carbon technology; sanctions for safety breaches, etc.
- Answer yes if you can provide evidence that your company has embedded ESG in its commercial relationships with all suppliers and/or business partners
- Answer partial yes if you can provide evidence that your company has some examples of ESG-linked incentives and sanctions but no overall strategic approach
- Answer no if there is no linking of commercial terms with ESG targets
Applicability: Brand, Retailer, Brand and Retailer
Reference ID: gsm.MTA.b (For: Brand, Brand and Retailer)
Reference ID: gsm.MTA.r (For: Retailer)
About this question
Public transparency on key issues is widely recognized as a core principle of good governance. This question asks you to confirm if you have reported your progress in corporate governance topics publicly, for example via an annual report, sustainability report, on your website, or through newsletters about your ESG targets, initiatives and progress.
- Answer yes if you can provide evidence that your company has reported publicly on its corporate governance targets and progress
- Answer no if there has been no public communication of your corporate governance targets and progress, or if there are no targets and/or progress to report on
Applicability: Brand, Retailer, Brand and Retailer
Reference ID: gsm.MTE
About this question
This question provides an opportunity to demonstrate that your company takes a collaborative approach to addressing corporate governance risks and opportunities – by working with other businesses, civil society and stakeholders.
While there may be fewer collaborative initiatives focussed on governance topics than other ESG pillars, examples could include participating in roundtables, cross-sector working groups or global collaborations to make progress on challenging corporate governance issues within ESG such as bribery and anti-corruption.
- Answer yes if you can provide evidence that your company has taken part in a joint or collaborative approach to address any corporate governance issue
- Answer no if your company has not participated in collaborative work relating to governance
Applicability: Brand, Retailer, Brand and Retailer
Reference ID: gsm.MTI