Date: __________________________

Names of the 2 or 3 members of the group:

_____________________________________________________________________________

_____________________________________________________________________________

Activity 4.

Corporate Governance

Objective:
Understand different practices of corporate governance from some companies like Argos, Nutresa,
Corona and Iberdrola.

Please review the following information to answer the questions below.

 Corporate Governance definition: https://www.icsa.org.uk/about-us/policy/what-is-

corporate-governance
 Artículo Gobierno Corporativo: http://www.dinero.com/edicion-
impresa/caratula/articulo/definicion-de-gobierno-corporativo-y-su-importancia-en-empresas-
colombianas/225898
 Argos: http://reporteintegrado.argos.co/nuestros-pilares/gobierno-corporativo/
 Nutresa: https://www.gruponutresa.com/sostenibilidad/gobierno-corporativo/
 Corona: https://www.corona.co/nuestra-empresa/quienes-somos/gobierno-corporativo
 Iberdrola:https://www.iberdrola.com/gobierno-corporativo/sistema-gobierno-corporativo
 KPMG’s True Value Methodology:
https://assets.kpmg.com/content/dam/kpmg/pdf/2014/09/a-new-vision-of-value-2014.pdf

Questions:

1. How does the four companies define Corporate Governance?

2. What is the purpose of Corporate Governance in the four companies?
3. Why is corporate governance important today?
4. Who is responsible for the Corporate Governance in the company?
5. What is the role of stakeholders in Corporate Governance?
6. How is the Corporate Governance applied in the four companies? Please, write about practices,
structures, normative, etc.
7. In general, how is Corporate Governance related to the company’s strategy?

The corporate governance is directly related with the company’s strategy because the one of
the most important roles of corporate governance is to ensure that strategic decisions are
made in the interest of those with a stake in successful outcomes.

Corporate governance, in strategic management, refers to the set of internal rules and policies
that determine how a company is directed. Corporate governance decides, for example, which
strategic decisions can be decided by managers and which decisions must be decided by the
board of directors or shareholders; in the same way corporate Governance is highly essential
from the point of view of the shareholders, customers, employees and company and society
at large for the survival and sustainable growth of the company. Strategy integrates internal
environment including corporate governance and external environment.

8. What is the True Value Methodology by KPMG and which are its steps? How and
why is applied it in Argos?

KPMG True Value is a tool to understand how the value of business creates and reduces for
society is likely to affect the value it creates for shareholders. This knowledge provides a new
lens for decision-making to improve performance, inform strategy and increase influence.
KPMG True Value is a 3-step process that can be applied across sectors and geographies. It
is scalable and can be applied to a whole company, a division or a specific project.

 STEP 1: Identify the value of company creates and reduces for society through its
externalities and express this in financial terms

 STEP 2: Assess how the internalization of externalities is likely to affect future earnings
(through regulation, stakeholder action and market dynamics).

 STEP 3: Develop business cases that build and protect future value for shareholders by
increasing the value created for society

Through the True Value Methodology of KPMG, they develop a Value Added State
(VAS), which is a tool that provides a comprehensive overview of how they retain, add or
reduce value for society as a whole.

This approach allows a wide range of applications within their company, which we will
explore in the future to achieve three main objectives:
1. Make better informed and more responsible decisions.

2. Manage our risks more accurately.

3. Improve transparency by presenting our stakeholders with more comprehensive and fact-
based information.

Argos implement this, to create value for our stakeholders through responsible operations
and effective management strategies. so that it is reflected in its financial statements, in the
same way, to create an intangible value through the economic, environmental and social
impacts of our operations. These effects represent costs and benefits that society assumes
involuntarily, which are known as externalities.

METHODOLOGY

1. Definition of the scope:

corporate-level identification of positive and negative externalities in operations.

2. Construction of the model:

data collection and monetization based on the most accurate multipliers available to date.

3. Collection of ideas:
analysis and public disclosure of key findings and planning of the steps to follow.

9. What is a Good Governance Code?

The Corporate Governance Code sets out standards of good practice in relation to issues such
as board composition and development, remuneration, accountability and audit, and relations
with shareholders.

The main principles of the Code

 Leadership
Every company should be headed by an effective board which is collectively responsible for
the long term success of the company.
As part of their role as members of a unitary board, non-executive directors should
constructively challenge and help develop proposals on strategy.
 Effectiveness
The board and its committees should have the appropriate balance of skills, experience,
independence and knowledge of the company to enable them to discharge their respective
duties and responsibilities effectively.

 Accountability
The board should present a fair, balanced and understandable assessment of the company's
position and prospects.

 Remuneration
Executive director remuneration should be designed to promote long term success of the
company. Performance-related elements should be transparent, stretching and rigorously
applied.

 Relations with shareholders

There should be a dialogue with shareholders based on the mutual understanding of
objectives. The board as a whole has responsibility for ensuring that a satisfactory dialogue
with shareholders takes place.