Ethical Business Practice - Assignment Example

Topic: How does Slough E s fulfil its obligation to stakeholders in term of ethical business practice and socially responsible corporate behavior? Slough Estates is a property investment and development company. Its property development business is branched out to the UK, Continental Europe, and the US. The primary focus of the company is edge of town flexible business space that it develops for industrial sites and business parks, put to manifold uses, such as manufacturing & light industries, warehousing & distribution, data centres, research & development, and office purpose. It’s a listed company on London Stock Exchange. Since the introduction of REITs in the United Kingdom in January 2007, the company’s status has changed from a plc to Real Estate Investment Trust. It is a big company, as one of its arm, Slough Trading Estate, is the largest trading estate in Europe under single ownership. One of the biggest developments in the history of the company has been at the site of Royal Aircraft Establishment ‘factory’ at Farnborough, Hampshire. The company, Slough Estates, manages its assets itself without contracting to third parties. Slough Estates looks after the interests of its shareholders through excellent customer service and management of its assets – delivering quality, scalable facilities in prime locations at premium value. Development programmes remain in continuity to achieve high growth. The company takes full advantage of higher returns and lower borrowing costs available across Continental Europe. It provides benefits to its stakeholders by operating efficiently the international tax structure and recycling its capital by selling finished projects and reinvesting the accrued capital in new acquisitions and development opportunities. After getting REITs status, it can divide among its shareholders 90 per cent of the profits from the business that is within the REIT circumference. The primary stakeholders in Slough Estates are Slough Estates’ shareholders, central and local governments, customers, company’s staff, lenders and insurers, local communities & NGOs, contractors & suppliers and its competitors. The company pursues ethical business practices and responsible corporate behaviour to the benefit of its stakeholders, which enhances the company’s overall image among its employees and customers. Business relationships are maintained following a code of conduct upholding minimum standards, while dealing with them. Regular meetings with institutional shareholders are conducted by the Chief Executive and Finance Director. Investors can contact Senior Independent Director and the Board is kept abreast of the information given to shareholders and their viewpoints. The Chairman and the senior independent non-executive director also conduct separate meetings with institutional shareholders, which are reported on to the board. Further, in Annual General Meetings, investors are encouraged to discuss issues with the management and build relations with them by actively participating in the AGM meetings. Slough Estates shareholders constitute one of the major stakeholders in the company’s affairs. Besides institutional shareholders, resident shareholders are differentiated on the basis of shares as investment, being total benefit earners of PIDs and their shares in the company. There are other categories of shareholders like dealers in securities or distributors who have acquired shares by reasons of employment or such shareholders as part of hedging or conversion transactions, shareholders of the UK branch, others possessing company’s shares by virtue of their interest in any partnership, collective investment schemes, insurance companies, life insurance companies, and mutual companies. Employees are one of the major stakeholders in the company’s affairs. It has been a policy to retain the best of them by committing to quality employment standards and training them to increase their capabilities and reach their maximum potential. According to Slough CSR statistics 2005, the UK age profile of employees (NEW KPI) indicated 12 employees of 18-25 age group, 185 employees of 26-46 age group, 147 employees of 46-60 age group, and 24 employees belonged to >60 age group. The gender profile 2005 of employees indicated 33% females and 67% males. The new recruitment to the UK business in the year 2005 further outlines the company’s commitment to employ a diverse section of population and benefit from their capabilities and experiences. Statistics reveal that out of total new recruited staff in the UK office, 45% are females, 7% belong to ethnic groups and 2% are disabled. This diverse workforce has enhanced the premium attached to the brand – Slough Estates. Customer satisfaction has been very encouraging overall. It has been Slough Estates objective to work in partnership with the customers and support them to maintain high ethical standards and values. Key findings of the survey conducted to know customers satisfaction in the year 2005 for the previous year reveal that 74% customers having properties under active management are satisfied with the management. They are also satisfied with the communication level of Slough Estates. Further, 94% customers at Slough Trading Estate and 88% at Winnersh Triangle have given a ‘good’ or ‘excellent’ rating to the company. The Slough Estates follows a policy in Corporate Responsibility, which is essential to its long-term development target of economic growth, environmental standards, and community participation. The company follows a CR management strategy that focuses on relevant risks and opportunities, identified via continuous dialogue with stakeholders, internal consultation and opinions of independent experts. The business processes, procedures and reporting provide a glimpse of the best CR practices in economic, social, and environmental fields. In corporate governance, it abides by The Combined Code on Corporate Governance (“the Code”) that became applicable for reporting on or after 1 November 2003. Most of the provisions of the code were applied all along the year ending December 2005, except provisions A.2.2, A. 3.2, and C.3.1. According to Slough CR targets 2006, social targets were set to help identify the needs of all stakeholders. Some of the social objectives in employment are: Select and employ some of the best minds dedicated to quality employment standards and training them to reach to their maximum caliber and full potential. Targets in the year 2006 are to follow the successful application of the ‘Performance Development Review (PDR) processes in the UK and rolling out the processes to be adapted in Paris office of the company. PDR is associated with new reward system, combining it with the success of the company, the performance of the business area and employees own performance in particular objectives and behaviours. Around 200 employees of the Head Office including Executive Directors and members of the Executive Committees were provided training around the new PDR system. It plans to review policies and employment standards of Continental European employees. According to Slough CR report 2004, a formal code of conduct for all employees was initiated to maintain their integrity and technical capability. A good number of employment policies have been reviewed including the ‘whistle-blowing’ procedure for their grievances. Customers have been other important stakeholders in the list. The company provides to its customers property solutions according to their needs, focusing on relationship building. Customers get quality service and their feedback is given proper attention and response. Surveys are conducted with the purpose of identifying the standard of current relationship and satisfaction. Customer feedback system was initiated in the year 2004 to bring improvement in service standards in the field of key events like moving in, insurance claims, service charges, and licensing alterations. Some other features of the feedback system are Customer visit programme, Complaints procedure, Independent benchmarking of customer satisfaction. It has been Slough Estates’ CR objective to participate in community development actively. The company operates and functions through its employee time and financial welfare projects. The relationship with the communities is very important to the company, as it involves continuous contact with local government and business organisations. Some of the organisations, the company is closely associated, are Thames Valley Economic Partnership, Slough Business Community Partnership, Backwater Valley Enterprise, and London First. Prince Trust and Outward Bound Trust. Students of the Westgate – a local school, achieved specialist status in receiving funded places on one of the Outward Bound Trust residential courses in Mid Wales in 2005. It had positive impact on young minds. Communities’ help is utilized in building toddlers’ play area, street furniture, and tree planting. Employees are also encouraged to participate in volunteer opportunities and are given one day paid leave. Some of the major community investment activities include Slough Business Community Partnership (SBCP), Slough Social Fund to promote educational, social and health initiatives. In the year 2004, Macmillan Cancer Relief was nominated Charity of the year. Environment protection and wise use of natural resources has been the policy at Slough Estates. The environment policy and objectives are specifically implemented through an environment management system (EMS). Recently, it provided facilities by overhauling power stations and water wells on the Slough Trading Estate by providing electricity, steam and water to 400 businesses and other consumers. Such activities have significant environmental implications for customers, shareholders, employees, and the local communities, where investment is made. Innovations like grey water, photovoltaics, wind turbine, roof lighting and rainwater harvesting are considered during the development process. There is a system in place, providing procedures for dealing with activities impacting the environment in acquisitions, design, construction, asset management and office management. The regional Environment Committee forms annual environmental objectives, reviews current environmental legislation. Compliance with best practices and experiences is enforced by Environmental Strategic Committee. In the year 2005, reviews of significant environment impacts were taken, related with core business activities. As a result, it has disposed off many multi-let shopping centres. The company has reduced the number of properties, where it has management control over common services to reduce the impact on resource efficiency and waste management. Environment impacts related to design and construction activity provide scope for improvement. Environment impacts of company’s own occupation, like resource use, waste management, and business travel are identified. The company has achieved carbon dioxide emission reduction through renewable energy by Slough Heat & Power. Slough’s US environment objectives are targeted to achieve minimum rating of LEED-CS “silver” on at least one development. Slough’s power station is providing steam and hot water for space heating and would be used in industrial processes. Fuel was derived from waste products, saving the labour of land filling. Suppliers of Slough Estates, being one of the stakeholders, were also engaged in site waste management plans and participated in workshops on waste management. During 2006, the company plans to engage all aspects of supply chain by recruiting a Group procurement manager to bring consistency in buying practices – to formulate sustainable and responsible procurement policies. Health & safety is also one of the top priorities. The company’s online H&S training tool equips the staff on the importance of achieving highest standards in H&S. To prevent crime and provide security, CCTV cameras have been installed at Slough Trading Estate. Overall, Slough Estates has been a leading development company, taking corporate responsibility initiatives for the welfare and benefit of all its stakeholders. References: Community Partnership 2006, Slough Estates Plc, viewed 19 March 2007, . Corporate Governance 2006, Slough Estates Plc|, viewed 19 March 2007, . Corporate Responsibility Targets 2006, Slough Estates International, viewed 19 March 2007. Environment 2006, Slough Estates Plc, viewed 19 March 2007, . Overarching CR Policy, Slough Estates Plc, viewed 19 March 2007. Relations with Shareholders, Slough Estates International, viewed 19 March 2007, . Slough Estates Plc, Corporate Responsibility Report 2004, viewed 19 March 2007. Slough Estates Plc, Corporate Responsibility Report 2005, viewed 19 March 2007. Slough Estates plc Summary Corporate Responsibility Report 2005, Slough Estates International, viewed 19 March 2007. The Business, Slough Estates International, viewed 19 March 2007, . Read More