Introduction
Brambles Limited is a publicly listed company in Australia that offers supply chain logistics solutions. The organization operates in at least 60 countries worldwide (Brambles Limited, 2022b). As a publicly listed company, Brambles is committed to meeting diverse legal, regulatory, and governance requirements.
The business ensures that annual reports containing the relevant disclosures are provided to stakeholders and other interested parties. Part of the Board’s role is to conduct an assessment of the performance of its members. These assessments are carried out either by external entities or through internal processes.
Brambles Limited prefers a combination of the two processes when evaluating the Board’s performance (Brambles Limited, 2022a). The company is exposed to a range of strategic, management, and operational risks. Mitigating these risks is essential for the company to achieve its set objectives. This report will analyze the Board performance assessment, risk governance, and corporate social responsibility of Brambles Limited and then provide recommendations to the Board.
Performance Assessment
Bramble Limited assesses its Board using external evaluations, which are conducted every three years. The alternative to external evaluation is self-assessment, which is carried out internally. The process involves the chair of the Board initiating the evaluation using questionnaires and interviews (Ingram and O’Boyle, 2018). This means that the Board evaluates its performance in-house using mechanisms established by the company.
The company secretary, the legal counsel, the nomination committee, or external partners can also initiate the evaluation process of the Board. Another aspect is that self-assessment uses questionnaires or interviews with each board member to collect data (Gazley and Nicholson-Crotty, 2018). Other individuals, such as the Chief Executive Officer, the Chief Financial Officer, and other important leaders in the organization, are also interviewed.
Organizations that use the self-assessment method can also adopt external entities to collate the data and provide findings (Millesen and Carman, 2019). This helps a company to get important feedback because independent organizations can provide unbiased conclusions. The evaluation aims to ensure that Board members are capable of discharging their duties in a manner that enables the company to remain competitive. External assessments are conducted by independent institutions with the organization’s express permission (Booth and Nordberg, 2021). The autonomous party shares the result and provides concrete feedback and recommendations for improvement.
The external organization can also provide other essential analyses of the Board’s performance that can be helpful to the organization. The aim is to identify areas where the company can improve to enhance its effectiveness. Independent organizations that provide evaluation services must have a good track record (Upadhyaya and Ramsay, 2020). This is because organizations will prefer entities that set and meet high standards. The company conducts in-house appraisals annually, with the assistance of external companies (Brambles Limited, 2022a).
In the 2022 corporate governance report, Brambles conducted a comprehensive evaluation of the Board, utilizing external entities in 2021. In the 2021 assessment, the company provided detailed questionnaires to each of the directors, members of the executive leadership team, and other senior executives. The chosen senior managers had regular interactions with the Board, allowing them to provide essential information regarding their performance.
The surveys that were completed were sent directly to PricewaterhouseCoopers, and the results were then provided to the Board and each committee (Brambles Limited, 2022a). The Board and its committees rigorously reviewed the appraisal results and identified key issues. Brambles also conducted the assessments of non-executive directors who are part of the Board. The evaluation also followed the same process, with the questionnaires being sent directly to PricewaterhouseCoopers.
The results were then shared with the head of the Board, except for the chair’s results. Each of the non-executive directors had a private meeting with the Board chairman to review the results. Brambles has indicated the importance of conducting annual appraisals of its Board. The company benefits from having a team that is well-positioned to lead it to greater heights. Therefore, as indicated, Board evaluations can either be conducted using self-assessment or external evaluations. However, companies can combine both methods to suit their needs.
Risk Governance
SWOT Analysis
Strengths
To understand the risks that Brambles faces, a SWOT analysis is required. Brambles’ strengths include being a global leader in supply chain equipment and solutions. The company has also successfully navigated the economic challenges posed by the COVID-19 pandemic. Brambles gained a significant competitive advantage with the introduction of the CHEP pallet operation. The company is now the leading provider of pallets worldwide. Another aspect is that the organization does not face significant competition from global players (Brambles Limited, 2022b).
Weaknesses
The weaknesses of Brambles include declining markets in Europe, the Middle East, and Africa, resulting in a lower overall growth rate (Brambles Limited, 2021). Another aspect is that the company is heavily dependent on its North American markets.
Opportunities
The opportunities of Brambles lie in the area of sustainability, as the world is changing towards environmental conservation. The company can also focus on big data analytics and digital expansion to ensure it remains competitive. This is because technology can open up new markets for the business. Another aspect is that Brambles can expand into emerging markets, which have higher growth rates.
Threats
The threats Bramble faces arise from the possibility of a recession, which can disrupt the company’s business. The organization can also be affected by fluctuations in the currency due to inflation. Another issue is that the company may face challenges in retaining and attracting new talent. This is because a labor crisis may hinder the business’s ability to retain and employ new talent.
Risks
Strategic
The risks can be grouped into strategic, management, and operational risks. For the strategic risks, one of the major concerns is the development of a better and more cost-effective solution by a competitor. Brambles relies on being a global leader in providing solutions to logistics and supply chain management. The development of cost-effective options by other firms can significantly disrupt the business.
Another strategic risk is the shift in customer expectations due to new competitors. New entrants can alter customer expectations by introducing products and services that are both effective and efficient, resulting in clients with diverse needs and expectations. Unmet customer expectations can significantly impact companies operating in a highly competitive environment (Klinke and Renn, 2021). A change in client outlook can have a serious impact on the company.
Management
Management risks arise from the activities of leadership that may jeopardize the organization’s performance. One of the risks identified for Bramble is the issue of management fraud. The impact of deception is significant because it can affect the perception of the organization (Schweizer, 2021). Another management risk is the illness of board members, which may have a reduced impact on the company’s performance.
Operational
In terms of operational risks, the company faces the risk of being unable to attract and retain talent. This is due to the existing labor shortage that has affected major sectors of the economy (Brambles Limited, 2021). Another operational risk is cyberattacks, which can disrupt the company’s ability to serve its customers. There is also the risk that such attacks can lead to the compromise of customer or employee data.
Managing Risks
One of the significant operational risks identified is malware attacks or cyber-attacks. The company holds important customer and employee data, which, if accessed by malicious people, can prove disastrous for the organization. The effects of cyber-attacks are reputation loss, financial loss, and operational consequences (DuHadway, Carnovale, and Hazen, 2019).
One way to mitigate malware attacks is to conduct regular risk-based assessments focused on critical IT infrastructure (DuHadway, Carnovale, and Hazen, 2019). The reports should be shared with management for follow-up and decision-making purposes. Brambles can also continue applying the existing security program, which focuses on protecting systems, detecting, and promptly responding to unauthorized activities.
The development of cost-effective solutions that provide better results to potential customers is a significant strategic risk. The company relies on providing effective solutions for supply chain management, which is based on being the world leader in supply chain expertise. Technology can be a disruptor, as new companies can develop more efficient methods that are less costly for customers (Giambona et al., 2018). Bramble should continue investing heavily in research and development to ensure it remains competitive. The organization should also employ individuals who are capable of creating innovative solutions toward achieving the company’s main goal.
Management fraud refers to the involvement of top executives in a company’s fraudulent activities. The consequences are that the organization may face fines and damage its reputation. The organization operates under specific laws and regulations that all employees must follow. The likelihood of the situation occurring is low due to the organization’s strict policies. However, the company needs to conduct regular seminars to remind employees of the code of conduct. Brambles can adopt group-wide online compliance training programs, which can supplement the seminars.
Corporate Social Responsibility (CSR)
Bramble’s CSR policy is divided into sections that cover business practices, the environment, people, community, and human rights. The organization is involved in corporate social responsibility activities, which are founded on its CSR policy. The first part covers business practices and focuses on professional conduct for the employee. Based on its policy, Brambles expects that workers will act in accordance with the laws and regulations of the country in which the business is located.
A significant aspect of CSR policies is to provide guidelines on the organization’s responsibilities to various entities (Liang and Renneboog, 2017). The company has established a speak-up policy, which encourages the workers to raise genuine concerns about the workplace (Brambles Limited, 2020). The employees can use the Speak Up hotline or contact the legal or human resources team.
The second section of Brambles’ CSR policy addresses the environment. In particular, it explains how to protect and conserve the surroundings by adopting sound environmental policies. The company has initiated the Zero Harm Charter, which ensures that employees commit to and contribute towards effective environmental practices in all daily operations (Brambles Limited, 2020). The company has also set targets to reduce waste and emissions in all its businesses.
In 2021, Brambles maintained 100% sustainable sourcing and increased the chain of custody to 68.6% (Brambles Limited, 2021). As a company that relies on trees as raw materials, the firm has initiated plans to plant two trees for every one it uses (Brambles Limited, 2021). Effective CSR initiatives foster a shared understanding and strengthen the relationships between organizations and stakeholders (Bhardwaj et al., 2018). The company also intends to work with suppliers who have a proactive approach to environmental risk management.
Regarding the focus on people, the company views its employees as a vital asset. Workers must be treated justly and fairly, and rewarded for their achievements. The company’s CSR policies commit to providing employees with a safe working environment that is based on health and safety management standards. The policy also shows that Brambles is an equal opportunity employer and is committed to developing a diverse workforce. Diversity is an essential aspect because companies need to project equality (Wang and Sarkis, 2017). The use of the Speak Up policy ensures that employees can raise any work-related challenges. Employees’ right to freedom of association is also respected at the company.
The next section focuses on the community, highlighting the company’s commitment to making positive contributions to the communities in which it operates. The CSR policy also shows that the organization aims to be a responsible neighbor. Businesses determine the community investment priorities that suit the needs of their local communities (Bhardwaj et al., 2018). Brambles has a CommunityReach program that encourages employees to become active in the community (Brambles Limited, 2022a). The scheme enables employees to request volunteering time and receive financial support for community projects.
In the section on human rights, the company does not tolerate child labor or any other form of forced labor, which also includes prison labor, bonded labor, slave labor, and military labor. This is essential as it outlines the issues that the firm deems inappropriate. In the aspect of suppliers, Brambles seeks to work with suppliers that comply with relevant laws and regulations. The company relies on its suppliers to meet the ever-changing demands of the customers.
Impacts of Brambles’ CSR Practices
Short-Term Goals
One of the first impacts of CSR practices on the company’s short-term goals is improved customer relations. Policies that focus on sustainability can lead organizations to be viewed as socially responsible (Bhardwaj et al., 2018). This can have a positive impact on the way customers perceive the organization. Better relations with customers can enhance a company’s performance. Research indicates that customers are more likely to purchase products from organizations they perceive as socially responsible (Wang and Sarkis, 2017).
Another impact on the short-term goals is that the business can reach a higher market capitalization. As a publicly listed company, Bramble’s market capitalization is affected by market movements.
Involvement in CSR practices can lead to positive news, which can positively impact the share price. A higher market capitalization represents shareholder confidence in the organization (Kim, Kim, and Qian, 2018). The increase in stock value also represents opportunities for the company and its shareholders to gain from the positive movements. Brambles utilizes trees as a raw material and requires CSR initiatives focused on environmental sustainability to enhance its reputation.
In recent years, the focus has shifted to companies that utilize raw materials such as trees. This is due to the environmental impact of cutting down trees. Brambles’ short-term goals are to enhance shareholder value and customer relations. Engaging in CSR initiatives ensures that the organization can meet its short-term goals.
Long-Term Goals
Participating in certain CSR practices can be costly for the organization. However, as a major company, Bramble can handle various activities due to its healthy financial status. The impact of the cost of CSR practices may not be a significant issue for Brambles. One of Brambles’ long-term goals is to reduce carbon emissions and adopt renewable energy sources across all its operations (Brambles Limited, 2021). This is a significant objective that can enhance the organization’s performance when achieved (Bhardwaj et al., 2018).
Changes in the company’s operations can also impact its ability to achieve its long-term goals (Wang and Sarkis, 2017). The need to adopt sustainable processes can hinder an organization’s performance because significant resources are required to implement the plans. Failure to achieve the set targets can also harm the company’s reputation. This can impact customer relations, potentially resulting in lower productivity. Therefore, Brambles engages in CSR initiatives that, if not successfully implemented, may impact its market position.
Recommendations
Brambles can enhance its risk oversight mechanisms to ensure all risks are addressed. The company faces significant disruptions to its operations due to the competitive nature of the sector. The need to address risks before they become serious issues is crucial for an organization like Brambles.
The company can introduce big data analytics to the risk assessment process. As a company operating in various locations, applications that assess risks using new technologies can help the company stay ahead of its competitors. Businesses that leverage big data have a significant advantage because of the untapped potential of analytics.
Another recommendation is that the company should increase women’s representation in management to 30% within 3 years. The data indicate that women currently comprise 24% of the company’s employees (Brambles Limited, 2022b). This is an essential CSR initiative that focuses on diversity.
The leadership roles within the company are predominantly held by males, which may suggest that the company is not an equal-opportunity employer (Brambles Limited, 2022b). This can be addressed by developing a policy that prioritizes women to bring balance. However, the employees should be qualified to handle the positions for which they are selected. This is because the workers need to assist the company in meeting its objectives.
The company should leverage technology to enhance its Board performance evaluation process. Technology applications can be developed to conduct the process in-house, eliminating the need for external entities. The application must adhere to the relevant regulatory policies specific to the industry. The model can be designed to provide solutions to the issues raised after the review. Research indicates that technology can provide a competitive edge to companies when applied effectively (Bhardwaj et al., 2018). Therefore, using technology can enhance the annual reviews of Board members.
Conclusion
In summary, Brambles Limited is an Australian publicly listed company that offers supply chain solutions to its customers. The company has a Board, which is evaluated annually and every three years. The annual review is conducted in-house, but an independent entity also reviews it.
An external company contracted by Brambles carries out the three-year review. The process involves providing individuals with questionnaires and conducting interviews to gather additional information. The Board’s assessment provides organizations with a clear view of the company’s direction.
Brambles faces significant strategic, operational, and management-level risks. The company needs to enhance its risk oversight mechanisms to ensure it can identify potential risks before they cause serious harm to the company. Brambles engages in corporate social responsibility initiatives due to the benefits they provide. The company needs to enhance diversity in the workplace and utilize technology more effectively when conducting board performance appraisals.
Reference List
Bhardwaj, P., Chatterjee, P., Demir, K.D. and Turut, O. (2018) ‘When and how is corporate social responsibility profitable?’, Journal of Business Research, 84, pp. 206-219.
Booth, R. and Nordberg, D. (2021). ‘Self or other: directors’ attitudes towards policy initiatives for external board evaluation’, International Journal of Disclosure and Governance, 18(2), pp. 120-135.
Brambles Limited. (2020) Corporate social responsibility policy.
Brambles Limited. (2021) Annual report.
Brambles Limited. (2022a) Corporate governance statement.
Brambles Limited. (2022b) About brambles.
DuHadway, S., Carnovale, S. and Hazen, B. (2019) ‘Understanding risk management for intentional supply chain disruptions: risk detection, risk mitigation, and risk recovery’, Annals of Operations Research, 283(1), pp. 179-198.
Gazley, B. and Nicholson-Crotty, J. (2018) ‘What drives good governance? A structural equation model of non-profit board performance’, Non-profit and Voluntary Sector Quarterly, 47(2), pp. 262-285.
Giambona, E., Graham, J.R., Harvey, C.R. and Bodnar, G.M. (2018) ‘The theory and practice of corporate risk management: evidence from the field’, Financial Management, 47(4), pp. 783-832.
Ingram, K. and O’Boyle, I. (2018) ‘Sports governance in Australia: questions of board structure and performance’, World Leisure Journal, 60(2), pp. 156-172.
Kim, K.H., Kim, M. and Qian, C. (2018) ‘Effects of corporate social responsibility on corporate financial performance: A competitive-action perspective’, Journal of Management, 44(3), pp.1097-1118.
Klinke, A. and Renn, O. (2021) ‘The coming of age of risk governance’, Risk analysis, 41(3), pp. 544-557.
Kroupa, S., Keehn, J., Ament, H., Pate, C. and Hanks Jr, J.J. (2018) ‘Annual board self-evaluations: a valuable aid to board effectiveness’, Journal of Corporate and Commercial Law and Practice, 4(2), pp. 31-36.
Liang, H. and Renneboog, L. (2017) ‘On the foundations of corporate social responsibility’, The Journal of Finance, 72(2), pp. 853-910.
Millesen, J.L. and Carman, J.G. (2019) ‘Building capacity in non-profit boards: learning from board self-assessments’, Journal of Public and Non-profit Affairs, 5(1), pp. 74-94.
Schweizer, P.J. (2021) ‘Systemic risks–concepts and challenges for risk governance’, Journal of Risk Research, 24(1), pp. 78-93.
Upadhyaya, M. and Ramsay, I. (2020) ‘An Analysis of Board of Director Appraisal Disclosures in Australia and the United States’, Business Law Review, 41(5).
Wang, Z. and Sarkis, J. (2017) ‘Corporate social responsibility governance, outcomes, and financial performance’, Journal of Cleaner Production, 162, pp. 1607-1616.