AM906002 Corporate Governance

Introduction

Corporate governance involves the process by which corporate goals are developed and implemented in terms of the social, market, regulatory environment. This is a set of rules, practices, and policies that govern the way the board of director handles and manage corporate activities (Yermack, 2017). The study will assess the corporate governance practices of the boards of Parininihi ki Wait?tara and Zespri International Limited in regards to legal and social responsibilities.

Legal responsibilities of boards in practice

The legal responsibilities of the board of directors depending on the Companies Act and the regulations of an organization. A director protects the fundamental rights of their shareholders, including employees, consumers, shareholders, government, society, etc., and treats them without any discrimination (Artika, Azheri & Mannas, 2019).

Compliance

Parininihi ki Wait?tara (PKW) is adhering to Section 2 (3) of the Companies Act 1993 whether registered or incorporated. In line with the US rules-based model & State sector governance model, the seven-member management committee is elected by the shareholders in the organization. The company follows the Goods and Services Tax Act 1985. Employees comply with all regional and district plans, standards, regulations, legislation, and by-laws. Under the Resource Management Act 1991 and the Building Act 2004, the company ensures that the building and whenua in the commercial investment portfolio are up to standard (Legislation.govt.nz. 2022).

Furthermore, Zespri is adhering to the Company Act 1993 to operate its business. Zespri kiwifruit industry is regulated under the Kiwifruit Export Regulations 1999. This regulation entails Zespri to reveal the financial statement publicly covering its business activities and make different disclosures regarding the purchase of New Zealand Kiwifruit. Under the Goods and Services Tax Act 1985, Zespri includes the GST rate in the payment for supplies made under the service level agreement. Under the health and safety at work act 2015, the company raised awareness programs of the health crisis during the pandemic about a healthy food and standard life at the workplace and communities (Legislation.govt.nz. 2022).

Ethical behavior

All suppliers and their staff in the PKW workplace (as described in the Health and Safety at Work Act 2015) as a part of a product or service should complete the induction on safety and wellbeing with PKW before starting a provision of service or product. The board of PKW is committed to continuously improving performance and managing the risks arising from their activities and initiatives by building an interdependent culture with the expectation that zero harm is reachable (Jain & Jamali, 2016).

Under the Health and Safety Act 2015, Zespri endeavors for excellence in health and safety management, confirming that employees and visitors are safe and healthy. The company has managed the significant risks posed by COVID-19. The board has emphasized personal connections – performing with humility and empathy and listening to each other with kindness. Abiding by Fair Trading Amendment Act 2013, Zespri has included kaitiakitanga (guardianship) - a record of nutritional value for customers around the world and cultivating good kiwifruit for community, society, and environment (Zespri,2022).

Sustainability

Parininihi ki Wait?tara will make the climate change response plan to adopt relevant metrics to measure the response to climate change. The company uses various initiatives to minimize the amount of waste going to landfills. Novotel Ng?motu is considering an in-room recycling initiative. Also, Port Nicholson Fisheries is part of a fishery company focused on eliminating the use of polystyrene and minimizing single-use plastic (PKW, 2021).

Zespri increases investments in science required to help supply chains, consumers, and growers cope with the effect of climate change, packaging, and water. Zespri launched the first commercial trial of fiber alternatives to its plastic trays. It developed the water strategy for the Kiwifruit Industry in 2019 in partnership with growers, the Kiwifruit Industry, and M?ori Kiwifruit Growers Incorporated (MKGI). It sets some goals for the best way to manage water in the orchards. It adopts virtual and remote work around the world allows to rethink its business approach and move further towards its goal to become carbon-neutral by 2025 (Zespri, 2022). It made the first commitment to sustainability - reporting climate risks and opportunities by August 2021 (Zespri, 2022).

Social responsibility

Under the WelFarm program and the Animal Health Plan of PKW firms, animals are evaluated in three main areas to ensure optimal health and care - body score condition, tails, and locomotion. An active approach to animal health management and planning will continue as Parininihi ki Wait?tara improves animal health planning, identifying areas for development and areas to focus on specific farms. Based on the OECD guidelines, PKW acts daily to respect, meet, and protect the basic cultural, economic, and social rights in post-conflict areas through vocational education and employment creation. PKW develops and maintains the Staff Code of Conduct to keep social responsibility (PKW, 2021).

The Board of Zespri is devoted to working with the industry to defend the rights of employees in the industry using the GRASP module of the Global GAP Standard, focusing on social responsibility. Under Charitable Trusts Amendment Act 2010, the company has three pillars in the community investment program that connect its partnership to a healthy community, a skilled and innovative industry, and a sustainable environment. Zespri offers the M?ori Kiwiberry Scholarship for raising awareness of the kiwifruit industry as a stimulating career alternative, promote capacity building, and boost further research in the development of kiwifruit cultivar. The initial scholarship is around $40,000 and 1 year of study or work experience (Zespri, 2021).

The Treaty of Waitangi

Parininihi ki Waitotara is abiding by the Treaty of Waitangi Act 1975. In accordance with this law, the company takes a charge of the administration of the Mäori reserved land in its rohe. The incorporation is needed by law to employ, operate and manage the land and the interests of the company for all owners Although PKW's core business is to protect and enhance its assets, its focus is on bringing wh?nau together, and connecting and their whenua (Legislation.govt.nz. 2022).

Zespri helps the primary objective of the modern and effective Plant Variety Rights Act 1987, which promotes economic growth and innovation by encouraging the progress of new varieties. For offshore farmers, Zespri handles kiwifruit export, market development, supply, marketing, and distribution of proprietary kiwifruit assortments (Zespri Organic SunGold, Zespri SunGold, Zespri Sweet Green and Zespri Gold Kiwifruit) and non-proprietary kiwifruit assortments (Zespri Organic Green and Zespri Green Kiwifruit). Under Treaty of Waitangi Act 1975, Zespri also supports the goal of ensuring compliance with the Treaty of Waitangi of the contemporary PVR regime to present more ambiguity into the governance following other goals of the regime (Mbie.govt.nz. 2022).

Social Responsibilities of Boards in Practice

Social responsibility of the company refers to the responsibility to manage the business to protect the interest of society. The director takes business decisions not only for maximizing shareholder’s value and profits but also to protect and serve the interests of other members of society, like employees, society, and customers (Fernández-Gago, Cabeza-García & Nieto, 2016).

Compliance

PKW has endorsed the code of ethics to set its standards and people's expectations across the company. It empowers its personnel to make environmentally responsible choices, including efficient use of natural resources, collecting, recycling, and reusing materials at the end of life, and minimizing its environmental footprints. Under companies amendment act 2013, the organization focusses on the people who are responsible for caring their whenua for collective benefits and continuing the legacy of giving opportunities for the people; enhancing and protecting its assets for present and future generations; increasing the active management over the ancestral land, and excelling culturally, commercially, and environmentally (Eberhardt-Toth, 2017). 

Zespri shows its commitment to legal compliance with the policies about anti-corruption, gifts, privacy, anti-competitive behavior, and bribery under the privacy act 1993. Zespri has an anonymous and dedicated Speak Up line for reporting illegal or unethical conduct, which allows for identification and hands-on examination of supposed misbehavior. The company is adhering to the European Two-Tier Model & Co-operatives model. The board is accountable for managing daily operation in the company and separate supervisory boards supervise the management. The board works hard to monitor this compliance and monitor on a risk basis through due diligence, and audits of compliance in target areas, like customs and duty declarations (Gennari, 2019).

Ethical behavior

The Code of Ethics is a statement of compliance principles and expectations that PKW workers perform with the highest standards of ethical behavior and integrity. PKW builds a relationship with suppliers based on fair and legitimate practice. Suppliers may comply with laws that require them to treat their employees honestly, give a healthy and safe work environment, and maintain environmental standards. Suppliers are required to adhere to all relevant laws and regulations relating to human trafficking and slavery (Jain & Jamali, 2016).

Zespri is devoted to offering a secure and sustainable business setting and abiding by the legislative and regulatory framework applicable to its business. Under the anti-corruption and anti-bribery laws and regulations, Zespri may be responsible for some of the supplier's illegal activities. Such actions may involve illicit interactions with government employees, employees of state-owned companies, or government officials. Each supplier may comply with all anti-corruption and anti-bribery laws and regulations, regardless of local business practices or social customs. Zespri is devoted to run its businesses with uncompromising integrity under its supplier gift, benefit and hospitality policy (Zespri, 2022).

Sustainability

PKW remains to use the OverseerFM online software tool to regulate the application of all urea and fertilizers on managed whenua. The management has been improved by introducing satellite imagery to monitor the grass growth rate. PKW Farms has begun exploring the future of fertilizer use and what alternatives are available. The ongoing application of modern effluent management systems (that use green water) consistently reduces freshwater use (Pkw.co.nz. 2022).

According to Zespri Environmental Sustainability Policy 2021, the company is dedicated to confirming that its economic achievement is unified with proactive management of the social and environment aspects of the business to develop a sustainable future for post-harvest partners, growers, and shareholders. Zespri supports communities, the environment, and people through the goodness of kiwifruit. All North American consumers packaging is made from 100% recycled materials and is 100% recyclable. It will remain to strive for more sustainable ways to deliver the highest quality fruits to consumers (Zespri, 2021).

Social Responsibility

PKW provides Taranaki wh?nui with their cultural and educational aspirations. The amount of investment allows developing the professional and personal capabilities of internal employees and external stakeholders, e.g., whanau and young M?ori. The PKW Trust is an important platform for capacity building outside of its operating business, providing 159 educational grants and 23 scholarships to help Taranaki uri grow new skills and acquire knowledge. It has made the incorporation to relaunch Whakatipu (development conversations) program, whereas PNF has been able to secure funds to assist kaimahi development (Gennari, 2019).

According to Zespri Social Responsibility Policy 2021, Zespri is devoted to doing business that is environmentally and socially responsible and protects the rights of communities and employees. It means that Zespri sources services and product from suppliers that perceive and realize ethical trading practices. While respecting and recognizing various international laws, the company will adopt and implement the highest protection for each employee. Suppliers must show their commitment to the ethical trading norms and comply with the legal employment requirements and respect dignity and core labor rights at work (Zespri, 2021).

The Treaty of Waitangi

PKW is often regarded as a modern representation of Mäori economic growth. This is a model of incorporation through developing and fledgling Mäori incorporations and trusts. Its vision, "He Tangata, He Whenua, He Oranga" (to sustain and grow our people through prosperity), is associated with cultural and spiritual richness because this is about a sustainable profit. Under Charitable Trusts Act 1957, the PKW Trust has approved limited grants to the Taranaki-based kaupapa, which has benefited the Taranaki Maori community. This contributes significantly to this metric by supporting groups that promote the use of Te Reo through the community grant (PKW, 2021).

Zespri has numerous Maori-owned organizations and developments in the New Zealand Kiwifruit supply chain. The success of Zespri SunGold Kiwifruit in underdeveloped or regional areas in New Zealand shows a broad societal advantage that could be accomplished through a conservation and development of new plant varieties. Under Charitable Trusts Act 1957, the board supported the Young Fruit Grower of the Year award at Bay of Plenty, an event where the contestant competes in various practical and theoretical activities followed by a speech. A cash prize of $1,500 has been received by the winners of the BoP Young Fruit Grower competition (Zespri, 2021).

Conclusion

Parininihi ki Wait?tara and Zespri have followed strict social and legal responsibilities, while every company manages corporate governance in a different way. PKW is devoted to business excellence and environmental sustainability. Then again, Zespri brings cooperative and innovative attitudes with the industry-leading farmers and is consistently focused on offering healthy, top-quality, and delicious kiwifruit to customers.

References

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Eberhardt-Toth, E. (2017). Who should be on a board corporate social responsibility committee?. Journal of Cleaner Production, 140, 1926-1935. https://doi.org/10.1016/j.jclepro.2016.08.127

Fernández-Gago, R., Cabeza-García, L., & Nieto, M. (2016). Corporate social responsibility, board of directors, and firm performance: an analysis of their relationships. Review of Managerial Science, 10(1), 85-104. https://doi.org/10.1007/s11846-014-0141-9

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Mbie.govt.nz. (2022). Plant Variety Rights Act 1987 review: Issues Paper. Retrieved 21 February 2022, from https://www.mbie.govt.nz/dmsdocument/4984-zespri-group-submission-pvr-act-review-issues-paper.

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Yermack, D. (2017). Corporate governance and blockchains. Review of finance, 21(1), 7-31. https://doi.org/10.1093/rof/rfw074

Zespri. (2022). Zespri US - Make your healthy irresistible. Retrieved 21 February 2022, from https://www.zespri.com/en-NZ.

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