C.   STAKEHOLDERS AND DISCLOSURE

C-1 Principle

The governing body should expressly identify and prioritise its stakeholders (including but not limited to employees, clients, owners, members, suppliers and regulators) and actively engage them in a consultative process to achieve the organization’s strategic goals and objectives. The governing body should, therefore, have a stated strategy of stakeholder engagement to ensure that effective stakeholder relationships are created and sustained and that stakeholder expectations are managed, but considered in organizational decision-making.

C-2 Rationale

As companies move away from adopting the shareholder primacy model of corporate governance of yesteryear, we have been seeing a shift toward a more inclusive stakeholder approach in the way governing bodies operate. New companies’ legislation, for instance, now considers stakeholder interests when providing for the duties of directors. Further, the South African King Report introduced the inclusive stakeholder approach which requires governing bodies to consider the legitimate interests and expectations of key stakeholders on the basis that it is in the best interests of the organization. Taking into consideration the interests of key stakeholders has proven to contribute to the long term success and sustainability of an organization. 

C-3 Key Aspects of Practice

C-3 (a) Stakeholder Policy

The governing body’s stakeholder policy describes the criteria for identifying stakeholders and how they are to be prioritized or classified and the protocols for engagement in order to foster and sustain productive stakeholder relationships. The classifications should allow the organization to determine the relevance of stakeholder expectations to its decision-making.

C-3(b) Stakeholder Strategy and Framework

1. The governing body should, therefore, oversee the implementation of strategies and frameworks for managing the organization’s relationships with its internal and external stakeholders including (but not limited to):-

1. the establishment of a methodology for identifying stakeholders and classifying them based on the materiality of the impact of the organization’s activities on the stakeholder and vice versa. This should be supported by a documented communication strategy for stakeholder engagement.

2. the establishment of a methodology for monitoring, measuring and managing the quality of stakeholder engagement. This should include a documented dispute resolution process; and

3. the incorporation of stakeholder risk in the organization’s enterprise-wide risk management system.

C-3(c) Continuous Stakeholder Engagement

1. The governing body should:-

1. encourage proactive and regular communication between the organization and its stakeholders;

2. implement mechanisms to facilitate meaningful stakeholder engagement, to ensure a comprehensive understanding of stakeholders’ issues and concerns;

3. ensure that the feedback from stakeholder engagement and any communication with stakeholders are directed to the relevant persons within the governing body;

4. approve a policy for the communication of stakeholder feedback within the organization, so that concerns are quickly and effectively addressed;

5. ensure that the relevant persons clearly understand and appreciate stakeholder grievances and to address these before they are made public and adversely impact the organization’s corporate reputation; and

6. disclose that the organization has undertaken effective stakeholder engagement with material stakeholders.

C-3(d) Constructive use of the General Meeting

1. The governing body should ensure:-

1. that general meetings of the owners (or similar meetings) are conducted in such a way that they are an effective method of engagement with owners (as stakeholders) to encourage their participation; and

2. that all governing body members, the heads of governing body committees, executive management, external auditors and other key persons are present and available to answer questions at the general meeting (or similar meeting). 

C-3(e) Intragroup Stakeholder Relations

1. The governing body, in relation to parent and subsidiary organizations, should:-

1. assume responsibility for the group governance framework by setting out the approach to relationship management and the distribution of power within the group;

2. approve policies and set out clear strategies for the establishment of new group entities and provide adequate guidance regarding the group’s structure, evolution and limitations;

3. establish a centralised approval process for the creation of new group entities based on established criteria including the entities’ ability to monitor and fulfil statutory, regulatory, governance and disclosure requirements;

4. maintain a repository of pertinent information relating to each group entity such as: information on the structure, composition, governance framework, ownership and nature of businesses conducted for each group entity;

5. recognise the risks inherent in the complexity of the group structure, including lack of transparency from the management of entities, operational risks associated with the complexity of the structures and intragroup exposure; 

6. evaluate how the risk profile, structure and requirements of the individual entities affect the group’s ability to manage its risk profile and deploy funding and capital in both normal and adverse circumstances; and

7. report matters of concern to the parent governing body as part of regular reporting between the subsidiary and the parent. 

2. The governing body of the parent organization and the governing bodies of the subsidiaries within the group should utilise an agreed governance framework by which the parent determines priorities for achieving group objectives and provide direction on how the relationships and exercise of power within the group should be structured in pursuit of these priorities. This may include:-

1. the alignment of strategy across the group, including the parent organization’s input in the business plans and budgets of its subsidiaries;

2. the alignment of processes and policies for managing key areas; and

3. involvement in the appointment of key staff members of the subsidiaries.

3. In negotiating the governance framework for the group, each subsidiary’s governing body should have an effective input into group matters that affect the subsidiary. This input should be based on the principle of proportionality, adopting and scaling practices based on suitability, appropriateness and impact.

4. The parent governing body should:-

1. ensure that each subsidiary has sufficient resources to meet the group and national governance standards;

2. ensure that all subsidiaries understand the roles and relationships between and among subsidiaries and between subsidiaries and the parent;

3. always recognise the fiduciary duties of its subsidiaries’ governing body and its members and their duty to act in the subsidiary’s best interest;

4. ensure that its subsidiaries’ governing bodies are included in the development of the group’s governance framework in order to facilitate the seamless adoption and implementation of the group’s policies, structures and procedures;

5. ensure that the group’s governance framework is relevant to each subsidiary, contemplating, among other factors:-

1. a delineation of the rights and roles of the parent;

2. the delegation of certain responsibilities of the governing body of the subsidiary, subject to reporting and information-sharing requirements, to a parent governing body;

3. the extent to which policies of the parent governing body are to be adopted by subsidiaries;

4. engagement of the governing body of a subsidiary organization before the parent governing body exercises its right to elect members to the governing body of the subsidiary; and

5. the implementation of systems and controls to mitigate the risk of exposure to litigation or sanction for breaching legal duty in relation to the use of information obtained while acting as a governing body member of one organization within the group for the purposes of another organization within the group.

C-3(f) Employee Relations

1. The governing body should:

1. recognise employees as key stakeholders and ensure meaningful engagement to consider employee’s views and wellbeing in the organization’s governance and operations. This requires regular and meaningful discussion between the organization’s executive management, employees and employee representatives (including majority recognised trade unions);

2. be aware of the legislation governing industrial relations, trade disputes and conciliations and may seek external professional advice to manage the process;

3. adopt a robust policy framework for key human resources matters including grievance procedures, health and safety violations, whistleblowing, disciplinary procedures, sexual harassment and workplace violence to be acknowledged and addressed so that written policies can be prepared (or improved) and implemented; 

4. outline policies for voluntary and involuntary terminations, including exit interviews, transition plans and communication guidelines in line with relevant laws and regulations to reduce the probability of employer liability for unfair or wrongful dismissal; and

5.  disclose the organization’s objectives, programs, achievements and shortfalls in the area of diversity, equity and inclusion and the extent to which it is fulfilling (or not) its mandate in this area.

C-3(g) Health, Safety and Data Protection

1. The governing body has a non-delegable statutory and common law duty to ensure the health and safety of employees as well as approved visitors in the workplace and in so doing:

1. should develop policies and protocols (which become terms and conditions of employment) relating to inter alia anti-discriminatory practices, gender and sexual orientation bias, social media intrusiveness, privacy controls, workplace bullying and sexual harassment; and

2. establish, in relation to employees, policies for the retention and protection of personal and sensitive employee data, which are aligned to relevant legislation (if any).

C-3(h) Timely and Balanced Disclosures

1. The governing body should:

1. so far as is practicable, make all disclosures publicly available on the organization’s website;

2. promote timely and balanced disclosure of all material matters concerning the organization; 

3. implement mechanisms to ensure, at a minimum, compliance with all statutory disclosure requirements;

4. ensure that its financial disclosures include sufficient explanatory notes to permit ease of understanding by stakeholders;

5. (in relation to publicly listed companies), establish and disclose written policies designed to ensure compliance with all disclosure requirements, including but not limited to the Trinidad and Tobago Stock Exchange rules  and to ensure accountability at the executive management level for such compliance; and

6. where applicable, adhere to a review and approval process designed to ensure that public announcements by the organization are accurate and timely and are expressed clearly and objectively to allow investors and other stakeholders to make informed decisions;

2. Organizations’ disclosures should:

1. be purpose driven and have regard to sustainability and stakeholder interests; 

2. be jargon-free, accurate, balanced, transparent and easily understood;

3. be made in relation to all oversight committees and should include each committee’s approved charter or terms of reference, responsibilities, functions and composition and each member’s qualifications and experience; and

4. be ethical and transparent and enable stakeholders to make informed assessments of the organization’s alignment of its performance with its stated goals and objectives. 

3. Oversight committees should also make periodic disclosures which include:-

1. the number of meetings held during the disclosure period and attendance at those meetings; and

2. key matters considered by the committee during the reporting period and the committee’s undertaking that it is satisfied that it has fulfilled its obligations in accordance with its terms of reference for the reporting period.

C-4 Expected Outcomes

Having applied the recommendations stated here, in accordance with the size, sector and complexity of the organizations, it is expected that organizations will achieve the following key outcomes:

1. Improved sustainability;

2. Improved employee engagement; 

3. Increased stakeholder buy-in to organizational initiatives; and

4. A more harmonious business environment