Case study: How Primax promotes business ethics and integrity
With its global technology headquarters located in Taipei City, Taiwan, Primax Electronics (Primax) designs, develops, manufactures and sells computer accessories, mobile device components, office machines, communication accessories, Smart Home, acoustic products, and automobile electronics. Primax sees integrity as a foundation for sustainability Tweet This! and has long adopted high standards of corporate governance, even higher than what some laws require, as the foundation of its operations.
This case study is based on the 2017 Corporate Social Responsibility Report by Primax published on the Global Reporting Initiative Sustainability Disclosure Database that can be found at this link. Through all case studies we aim to demonstrate what CSR/ ESG/ sustainability reporting done responsibly means. Essentially, it means: a) identifying a company’s most important impacts on the environment, economy and society, and b) measuring, managing and changing.
Abstract
For Primax, operating with integrity ensures the efficiency of board functions, protects shareholders’ interests, and provides the critical foundation to the company’s sustainability. In order to promote business ethics and integrity Primax took action to:
- avoid conflicting interests
- implement a robust internal control system
- apply business integrity procedures and behavioural guidelines
- provide integrity training
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With this case study you will see:
- Which are the most important impacts (material issues) Primax has identified;
- How Primax proceeded with stakeholder engagement, and
- What actions were taken by Primax to promote business ethics and integrity
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What are the material issues the company has identified?
In its 2017 Corporate Social Responsibility Report Primax identified a range of material issues, such as economic performance, labour/management relations, energy, diversity and equal opportunity, customer health and safety. Among these, promoting business ethics and integrity stands out as a key material issue for Primax.
Stakeholder engagement in accordance with the GRI Standards
The Global Reporting Initiative (GRI) defines the Principle of Stakeholder Inclusiveness when identifying material issues (or a company’s most important impacts) as follows:
Stakeholders must be consulted in the process of identifying a company’s most important impacts and their reasonable expectations and interests must be taken into account. This is an important cornerstone for CSR / sustainability reporting done responsibly.
Key stakeholder groups Primax engages with:
| Stakeholder Group | Method of engagement |
| Investors | · Annual general meetings · Quarterly performance seminar and phone conference · Monthly revenue announcements · Domestic interview sessions · Overseas investor forums · Questionnaire survey for CSR topics |
| Employees | · Labour-management meetings · Employee performance interview · Communication meetings between departments · Welfare committee meetings · Opinion surveys · Internal communication channels · Questionnaire survey for CSR topics |
| Customers | · GP, CSR, RBA, QPA/QSA audits · Customers’ GP/environmental protection requirements Customer satisfaction survey · Customers’ supplier conferences · Questionnaire survey for CSR topics · Product RFQ |
| Suppliers | · New AVL assessment/declaration · Primax’s and customers’ environmental protection requirements · Annual audit · Supplier training (GHG/CFP/GP etc) · Supplier conferences · Questionnaire survey for CSR topics |
| Government | · Exchange of correspondence · Market Observation Post System (MOPS) · Company website · Questionnaire survey for CSR topics |
| Non-profit organisations | · Phone interview · Face-to-face interview · CSR mailbox · Questionnaire survey for CSR topics |
How stakeholder engagement was made to identify material issues
To identify and prioritise material topics Primax issued questionnaires to survey stakeholders’ opinions on various topics of concern, recovering a total of 349 questionnaires that included 329 questionnaires on level of concern and 20 questionnaires on level of impact (completed by Primax’s internal management).
What actions were taken by Primax to promote business ethics and integrity?
In its 2017 Corporate Social Responsibility Report Primax reports that it took the following actions for promoting business ethics and integrity:
- Avoiding conflicting interests
- Primax has a set of “Directors Ethical Code of Conduct” in place that strictly enforces avoidance of conflicting interests. According to “Regulations Governing Procedure for Board of Directors Meetings of Public Companies,” directors are required to disassociate from discussion and voting of decisions that pose conflict between their own interests and Primax’s They are also prohibited from exercising voting interest on behalf of other directors on conflicting-interest decisions. All of Primax’s directors are highly disciplined in their conducts, and have managed to disassociate themselves from agendas that present conflicting interest.
- Implementing a robust internal control system
- Primax has enforced external regulations in all of its business activities to ensure honest, transparent and responsible management. To enforce corporate governance and self-monitoring, Primax has developed an internal check system based on operating activities of the company and subsidiaries and Regulations Governing Establishment of Internal Control Systems by Public Companies, that incorporates five main elements: “Environment control,” “Risk assessment,” “Activity control,” “Information and communication,” and “Supervision.” Primax also has an operation audit unit and personnel available to ensure the effectiveness of the internal control system in accomplishing the company’s operational goals, and the effectiveness of self-inspection practices across all units. Primax’s General Manager serves as the convener of this unit and is fully authorised to inspect and evaluate the internal control system for defects and efficiency. In doing so, Primax makes sure that design and implementation of the system continue to remain effective in helping the board of directors and the management fulfill their duties and supporting sound corporate governance practice. Departments are being required to make improvements to the various defects highlighted during inspection, whereas the chief auditor engages independent directors in meetings at least once per quarter to report the current progress of internal audit and control, and reply to whatever queries independent directors may have. Each independent director is constantly updated on internal audit issues, and may call meetings or contact the chief auditor by phone at any time under exceptional circumstances.
- Applying business integrity procedures and behavioural guidelines
- Primax implements a set of “Business Integrity Procedures and Behavioural Guidelines” that emphasises integrity in business dealings. Employees are prohibited from accepting inappropriate gains or engaging in improper competition, and are required to enforce information transparency, respect intellectual property rights, protect the privacy of every business partner, and act responsibly when procuring supplies. Primax protects informants and has many different communication channels in place that allow employees to voice out freely, without fear of retaliation. Additionally, Primax’s “Work Rules” and “Employee Code of Conduct” require all employees to comply with laws and ethical guidelines when performing business activities, whereas suppliers and business partners are bound to sign a “Supplier Statement” in order create a fair, honest, trustworthy and transparent trade environment.
- Providing integrity training
- Each year Primax organises communication meetings, promotional videos and fun activities to convey integrity values in a comprehensive yet easily understandable manner, and also arranges for employees to undergo anticorruption training. Currently, all new recruits are required to undergo 8 hours of orientation within the first month onboard, which includes a 1-hour introduction to business integrity and ethics. In 2017, Primax received a total of 10,767 new recruits and delivered 10,767 hours of integrity/ethics training, which covered 100% of new recruits.
Which GRI Standards and corresponding Sustainable Development Goals (SDGs) have been addressed?
The GRI Standards addressed in this case are:
1) Disclosure 205-2 Communication and training about anti-corruption policies and procedures
2) Disclosure 205-3 Confirmed incidents of corruption and actions taken
Disclosure 205-2 Communication and training about anti-corruption policies and procedures corresponds to:
- Sustainable Development Goal (SDG) 16: Promote peaceful and inclusive societies for sustainable development, provide access to justice for all and build effective, accountable and inclusive institutions at all levels
- Business theme: Anti-corruption
Disclosure 205-3 Confirmed incidents of corruption and actions taken corresponds to:
- Sustainable Development Goal (SDG) 16: Promote peaceful and inclusive societies for sustainable development, provide access to justice for all and build effective, accountable and inclusive institutions at all levels
- Business theme: Anti-corruption
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References:
1) This case study is based on published information by Primax, located at the link below. For the sake of readability, we did not use brackets or ellipses. However, we made sure that the extra or missing words did not change the report’s meaning. If you would like to quote these written sources from the original, please revert to the original on the Global Reporting Initiative’s Sustainability Disclosure Database at the link:
http://database.globalreporting.org/
2) https://www.globalreporting.org/standards/gri-standards-download-center/
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