Focus Logistics Pty Ltd (Focus) has engaged you as an independent consultant, and they are seeking your advice on several corporate governance, sustainability and risk management issues. You have just returned from a board meeting with Jennifer White (company’s founder and the current Chair), Geena Rose (CEO), Jacob Rose (COO) and David Rose (CFO). You have gathered the following information about this company:
Now, Focus needs additional capital to fund its expansion plans, and Mrs Rose has metwith several potential investors and private equity groups over the last six months. The senior management team has prepared a very impressive prospectus highlighting all of Focus’s recent achievements and a business forecast for the next ten years. However, these investors are concerned that Focus doesn’t have the proper operation and governance structure to justify the additional funding and expansion plans.
The board unanimously agrees that since they own most of the company, there is no need to spend any money on non-value adding reporting like a sustainability report. The board acknowledges that the company might benefit from some regular reporting and performance reviews. Still, it is concerned about its impact on the family members – after all, trust and patience are the most important traits of a family-run business. Plus, it is the boards view that there is a reason why such reporting is optional and not mandatory at all. Mrs Rose has already notified these investors that Mrs White will soon retire from the board, and Mrs Rose will nominate herself as the next Chair.
You are required to write a report to Focus’s board summarising your views on corporate governance, sustainability and risk management practices.
In your report, you must address the following three areas:
1. Discuss at least four good corporate governance practices and the importance of good governance for a large private company such as Focus Logistics that wants to transition into an ASX listed entity.
2. Summarise the significance, benefits and challenges of producing a sustainability report for Focus Logistics, especially for a business within the logistics industry.
3. Summarise the benefits and challenges of sound risk management practices for Focus Logistics.
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