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base did not reveal many instances – only three out of 62 committees – where external representatives are listed amongst the membership of board-level CSR committees. Where data was found, it was revealed that the majority of CSR committees – 22 out of 62 – include as part of their governance the requirement to meet at least quarterly (a minimum of four times) per year.
Vulnerabilities: Extrapolating out from these research findings there could be the potential for board-level governance vulnerability in a number of areas: • • • • • •
Limited board-level CSR oversight either through a nominated committee or designated board agenda items. Lack of published terms of reference for CSR board committees. Insufficient links to stakeholder input and external advice to such a committee. Clear connections with the business strategy, impacts and responsibility (CSR). Links with the other board committees – risk, audit, remuneration. Board-level ‘training’ to support directors in making informed decisions about issues as they arise.
Echoing the Combined Code guidance for Audit Committees (2003), Article 13 believes and recommends that best practice therefore is “beyond meeting the essential requirements and that every board needs to consider in detail what arrangements are best suited for its particular circumstances”. Equally, Article 13 repeats from the Code that “all directors remain equally responsible for the company’s affairs as a matter of law”. The findings of the research and best practice governance, as laid out in the Combined Code, lead Article 13 to advocate that good practice for CSR committees should include: 1. A board-level designated committee led by the senior non-executive director (linking with his/her role as key liaison with stakeholders). 2. A majority membership of non-executives but with the inclusion of at least one executive director (e.g. Finance, Human Resources). 3. One member who is also a member of the risk committee. 4. The requirement to meet at least four times per annum. 5. Written terms of reference for the CSR committee that are provided by the board and include the committee’s remit clearly stated with the definition of CSR for that company and links to the business strategy and to stakeholders. 6. The roles and responsibilities should include: • To monitor the integrity of the CSR statements of the company; • To review the company’s internal CSR risk register, company impacts and stakeholder engagement programme; • To make recommendations to the board in relation to the appointment of external advisors; • To monitor and review such advisors’ (to include auditors if required) objectivity and effectiveness; 5