![Dr Shrinivas V K, School of Business and Management, CHRIST (Deemed to be University)
Fairtrade inspection and certification are carried out by FLO-CERT, an independent, for-profit body created by
Fairtrade International. FLO-CERT certifies that both producers and traders have met with Fairtrade
standards.FLO-CERT inspections and certification follow the international ISO standards for product
certification bodies (ISO 65).[18]
FLO-CERT works with a network of around 100 independent inspectors that regularly visit producer and trade
organizations and report back to FLO-CERT. All certification decisions are then taken by a Certification
Committee, composed of stakeholders from producers, traders, national labelling organisations and external
experts. An Appeals Committee handles all appeals.
In 2006, a Financial Times journalist found that ten out of the ten mills they visited had sold uncertified coffee
to co-operatives as certified. It reported that they were "also handed evidence of at least one coffee
association that received Fairtrade certification despite illegally growing some 20 per cent of its coffee in
protected national forest land.
Sustainability
A sustainable business, or a green business, is an enterprise that has minimal negative impact, or potentially a
positive effect, on the global or local environment, community, society, or economy—a business that strives to
meet the triple bottom line.
Importance:
Corporate companies that focus on SR outperform their peers over the longer run, which in turn
results into a stronger market position and increased profitability.
There is a reliable co-relation between business integrity and above
average financial performance.
SR helps to acquire national and international listings and provide access to otherwise restricted
markets.
SR will provide a sound understanding of the organization's
customer needs, especially foreign international customers.
Other benefits include attracting finance through transparent relationships with credit providers,
improving management systems and improving employee motivation and customer satisfaction.
Stockholm Declaration 1972
The United Nations Conference on the Human Environment, having met at Stockholm from 5 to 16 June
1972,having considered the need for a common outlook and for common principles to inspire and guide
the peoples of the world in the preservation and enhancement of the human environment.
Rio Declaration on Environment and Development ,1992
Summary
The Rio Declaration on environment and development was approved by the United Nations during the
Conference on Environment and Development held in Rio de Janeiro on June 1992. It was aimed at
reaffirming the Declaration of the United Nations Conference on the Human Environment, adopted at
StockholmonJune1972.
The Declaration adopted a set of principles to guide the future development. These principles define the
right of people to development, and their responsibilities to safeguard the common environment.
The Rio Declaration states that the only way to have long term economic progress is to link it with
environmental protection. This will only happen if nations establish a new and equitable global
partnership involving governments, their people and key sectors of societies. They must build
international agreements that protect the integrity of the global environmental and the developmental
system.
The Rio Declaration include following principles:
“Human beings are at the centre of concerns for sustainable development. They are entitled to a healthy
and productive life in harmony with nature. (Principe 1)
The right to development must be fulfilled so as to equitably meet developmental and environmental
needs of present and future generations. (Principle 3)](https://image.slidesharecdn.com/beslmrnotes1-200705064203/85/Bes-lmr-notes-1-3-320.jpg)
Bes lmr notes (1)
- 1. Dr Shrinivas V K, School of Business and Management, CHRIST (Deemed to be University) BUS 4500- BES LMR NOTES Ethics in finance Ethics in finance is mean that bifurcate what is right and wrong in context of financial matter. The assumption of modern financial-economic theory runs counter to the ideas of honesty, devotion, dependability and loyalty.Peoples who involved in finance activity have to serve both their company and their customers at utmost good faith. Ethical conduct is vital to the ongoing viability of capital markets. Regulatory reform may go some way to combatting the misconduct in the industry but that alone is insufficient. Individuals and firms must develop a 'culture of integrity' that permeates all levels of their operations. Code of Ethics in Finance : Act with honesty and integrity avoiding conflicts of interest in personal and professional relationship. To provide information which is full, accurate, fair, objective, timely and understandable. To promote ethical behavior among other associates Respect the confidentiality of info acquired in course of business except authorized Adhere to and promote this Code of Ethics. Financial sector in India REGULATION:RBI, SEBI,FMC, IRDA, MoF, HLCC, PFRDA. MARKETS:Commodities, equities, debts, foreign exchange Players:Brokers, firms, banks, financial institutions, FII, mutual fund manager, investor, exchange, depository, registrar,custodian Present financial system in India: The present situation of Indian financial service sector could be broadly represented as follows; RBI, at the Apex Commercial banks which includes public sector and private sector Banks, Development financial institutions which could be divided into all India institutions and state level institutions, Insurance companies, which can be classified as, Life Insurance Corporation of India, General Insurance Corporation of India, and private sector insurance companies, Other public sector financial institutions like Post Office Savings bank, National housing bank, Export Import bank of India etc. Mutual funds Non Banking Finance Corporations Asset reconstruction companies Capital market intermediaries, Credit information companies. Issue in financial services: Deception, Concealment, Churning, Unsuitable Twisting, Flipping Frauds in relation to financial market. The over-arching obligation of every investment institution is to promote and safeguard the interests of beneficiaries or clients. This is often expressed as a fiduciary duty, requiring prudence, care and loyalty on the part of all agents which are subject to such obligations. Frauds: Third Party: Fraud related to third party of the organization i.e. suppliers, customers, and agents, Fraudulent round-trip transaction , Cartel Activities ,Commission Payback , Counterfeiting ,Piracy Financial Statement Reporting: ,Improper revenue recognition ,Manipulated asset valuations, Inappropriate judgments regarding the capitalization of development costs ,Concealment of liabilities , Related party transactions ,Misstatement of acquisition accounting Misappropriation of Assets: ,False expense claims ,Cash / materials theft ,Theft of trade secrets / I.P. , Procurement fraud ,Theft of customer data Corruption & Abuse of Position: , Management override of controls , Conflicts of interest ,Inappropriate use of company assets ,Contrivance against fair competition Disclosure Fraud: ,Omission or misstatement financial / non-financial information ,Misrepresentation regarding undertakings to regulators / and third parties such as banks Hostile takeover Hostile takeover is the acquisition of one company by another that is accomplished by going directly to the companies shareholders or fighting to replace management to get the acquisition approved. Primary methods of hostile takeover:
- 2. Dr Shrinivas V K, School of Business and Management, CHRIST (Deemed to be University) Proxy fight : The purchaser doesn't make any attempt to buy the stock. The interested buyers will try to convince the shareholder to vote out the current board of directors or management. Tender offer : Is a public bid for a huge amount of the target's stock that is set at a fixed price. Reasons for hostile takeover: Capable of generating more profit in the future, To gain control over the shares. Advantages : 1. Increase shareholder value. 2. Increase companies worth. 3. Shareholders to recognise the real value of their investment. 4. Increase wealth and productivity. Disadvantages : 1. Employees are laid off from work. 2. Burden companies with debt loads. Bankruptcy: Bankruptcy is a legal process through which people or other entities who cannot repay debts to creditors may seek relief from some or all of their debts. In most jurisdictions, bankruptcy is imposed by a court order, often initiated by the debtor. The ethical issues involved in bankruptcy affect the debtor, the creditor and the society in which they operate. Facing the debtor is his responsibility to pay back the loans and credit extended to him while the creditor has to decide whether or not to press his legal rights, irrespective of the consequences to the debtor. Society will have to determine to what extent, if any, it is prepared or obligated to fund the rehabilitation of the debtor and those employees, whose employment is terminated as a result of the bankruptcy. These issues will be determined according to the value structure of the particular solely in which debtor and creditor operate. bankruptcy laws protect entrepreneurs when they take risks and fail, allowing them a fresh start on a new idea. Certainly the immediate benefit filing for bankruptcy offers the claimant is the cessation of hostile calls from collection agencies demanding payment on credit card debt, or creditors threatening to repossess a car. Court- ordered reduced payments on secured debts, such as taxes, a mortgage, or a student loan, also provide tremendous relief. Unsecured debts, such as medical bills, could be discharged completely by the court and may be well worth the price of waiting out a shaky credit rating for up to 10 years. Even so, bankruptcy remains the last option many financially distressed consumers will choose, and personal ethics may well be the reason. While some individuals see little or no stigma attached to bankruptcy and are unwilling to scale down either their lifestyle or their spending to pay off a debt, others will struggle financially for a lifetime before reneging on an obligation. Measure to control conflict in finance or unethical activities in finance: Incentive compensation better aligned with customers‟ interests, rather than agents‟ More industry trade associations supporting ethics initiatives The Center for Ethics in Financial Services growing in influence and impact Internal and external audit and a compliance department/compliance officer are needed to avoid fraud and other unwanted unethical behavior. Conflict of interest should if possible be avoided Market manipulation should be curbed. Microfinance: Microfinance, also called micro credit, is a type of banking service provided to unemployed or low-income individuals or groups who otherwise would have no other access to financial services. Because micro credit is aimed at the poorest, micro-finance lending technology needs to mimic It is not just a financing system, but a tool for social change, specially for women. It is essentially for promoting self- employment, Concept and Features of Micro- finance: generally used for: Delivery is normally through Self Help Groups (SHGs). It is a tool for empowerment of the poorest. It is essentially for promoting self- employment, generally used for: Delivery is normally through Self Help Groups (SHGs). It is a tool for empowerment of the poorest. Fairtrade Program Fair trade is an arrangement designed to help producers in developing countries achieve sustainable and equitable trade relationships. It promotes sustainable development by offering better trading conditions to, and securing the rights of, marginalized producers and workers in developing countries. Fairtrade Standards are designed to aid the sustainable development of some smaller producers and agricultural workers in third world countries. In order to become certified Fairtrade producers, the cooperatives and their fellow farmers have to strictly comply with the standards laid down by Fairtrade International.
- 3. Dr Shrinivas V K, School of Business and Management, CHRIST (Deemed to be University) Fairtrade inspection and certification are carried out by FLO-CERT, an independent, for-profit body created by Fairtrade International. FLO-CERT certifies that both producers and traders have met with Fairtrade standards.FLO-CERT inspections and certification follow the international ISO standards for product certification bodies (ISO 65).[18] FLO-CERT works with a network of around 100 independent inspectors that regularly visit producer and trade organizations and report back to FLO-CERT. All certification decisions are then taken by a Certification Committee, composed of stakeholders from producers, traders, national labelling organisations and external experts. An Appeals Committee handles all appeals. In 2006, a Financial Times journalist found that ten out of the ten mills they visited had sold uncertified coffee to co-operatives as certified. It reported that they were "also handed evidence of at least one coffee association that received Fairtrade certification despite illegally growing some 20 per cent of its coffee in protected national forest land. Sustainability A sustainable business, or a green business, is an enterprise that has minimal negative impact, or potentially a positive effect, on the global or local environment, community, society, or economy—a business that strives to meet the triple bottom line. Importance: Corporate companies that focus on SR outperform their peers over the longer run, which in turn results into a stronger market position and increased profitability. There is a reliable co-relation between business integrity and above average financial performance. SR helps to acquire national and international listings and provide access to otherwise restricted markets. SR will provide a sound understanding of the organization's customer needs, especially foreign international customers. Other benefits include attracting finance through transparent relationships with credit providers, improving management systems and improving employee motivation and customer satisfaction. Stockholm Declaration 1972 The United Nations Conference on the Human Environment, having met at Stockholm from 5 to 16 June 1972,having considered the need for a common outlook and for common principles to inspire and guide the peoples of the world in the preservation and enhancement of the human environment. Rio Declaration on Environment and Development ,1992 Summary The Rio Declaration on environment and development was approved by the United Nations during the Conference on Environment and Development held in Rio de Janeiro on June 1992. It was aimed at reaffirming the Declaration of the United Nations Conference on the Human Environment, adopted at StockholmonJune1972. The Declaration adopted a set of principles to guide the future development. These principles define the right of people to development, and their responsibilities to safeguard the common environment. The Rio Declaration states that the only way to have long term economic progress is to link it with environmental protection. This will only happen if nations establish a new and equitable global partnership involving governments, their people and key sectors of societies. They must build international agreements that protect the integrity of the global environmental and the developmental system. The Rio Declaration include following principles: “Human beings are at the centre of concerns for sustainable development. They are entitled to a healthy and productive life in harmony with nature. (Principe 1) The right to development must be fulfilled so as to equitably meet developmental and environmental needs of present and future generations. (Principle 3)
- 4. Dr Shrinivas V K, School of Business and Management, CHRIST (Deemed to be University) All States and all people shall cooperate in the essential task of eradicating poverty as an indispensable requirement for sustainable development, in order to decrease the disparities in standards of living and better meet the needs of the majority of the people of the world. (Principle 5) States shall enact effective environmental legislation. Environmental standards, management objectives and priorities should reflect the environmental and development context to which they apply. Standards applied by some countries may be inappropriate and of unwarranted economic and social cost to other countries, in particular developing countries. (Principle 11) Warfare is inherently destructive of sustainable development. States shall therefore respect international law providing protection for the environment in times of armed conflict and cooperate in its further development, as necessary. (Principle 24)” Kyto protocol The Kyoto Protocol is an international agreement that aimed to reduce carbon dioxide (CO2) emissions and the presence of greenhouse gases (GHG) in the atmosphere. The essential tenet of the Kyoto Protocol was that industrialized nations needed to lessen the amount of their CO2 emissions.The Protocol was adopted in Kyoto, Japan in 1997, when greenhouse gases were rapidly threatening our climate, life on the earth, and the planet, itself. Today, the Kyoto Protocol lives on in other forms and its issues are still being discussed. Key Points: The Kyoto Protocol is an international agreement that called for industrialized nations to reduce their greenhouse gas emissions significantly. Other accords, like the Doha Amendment and the Paris Climate Agreement, have also tried to curb the global-warming crisis. Today, talks begun by the Kyoto Protocol continue and are extremely complicated, involving politics, money, and lack of consensus. *****