Governance and Human Rights
We are committed to strive for the highest standards of corporate governance and ethical business conduct. This commitment is instilled across our business, from the boardroom to the factory floor, and throughout our operations and supply chain.
In keeping with the United Nations Guiding Principles on Business and Human Rights and the Fundamental Principles and Rights at Work developed by the International Labour Organisation, we are committed to the principles of respect, diversity, working fairly, fair pay, compensation and benefits which are also applied to our acquisition practices. They are maintained in every country in which we have a presence and are set out in our Code of Conduct, our Social Citizenship Policy Statement and our Sustainable Development Report.
At Smurfit Kappa we have thousands of suppliers globally, and we consider that our suppliers are an integral part of the value chain of our business. We are committed to working with our suppliers in accordance with our sustainability principles and objectives whereby we distinguish the areas of compliance, performance risk, management, social responsibility and governance.
The Board is primarily responsible for the long-term success of the Group, for setting the Group's strategic aims, for the leadership and control of the Group and for reviewing the Group's system of internal control and risk management. The consideration of sustainability, including climate change, is continuously developing the focus on climate change increases. Given the nature of our business and our strong sustainability credentials, this has been a consideration of the Board for many years. More recently this has evolved further with specific consideration given to climate change. In recognition of the importance of sustainability in general and climate change in particular, the Board formed a dedicated Sustainability Committee, the responsibilities of which are outlined below.
Established in 2019, the Committee has responsibility for the direction and oversight of the sustainability strategy for the Group. The Board Sustainability Committee is responsible for climate change, and updates the Board at each meeting on the matters considered on their agenda, including climate change. The key topics recently included: a comprehensive review of climate change risk and opportunities; increased support for the communities in which we operate, and further enhancement to the lives of our employees. The Sustainability Committee receives regular updates from management on various matters relating to sustainability and climate change. The recently appointed Group Chief Sustainability Officer ('CSO') is also tasked with ensuring relevant sustainability related matters are communicated and discussed at the Board committee level as appropriate.
The Audit Committee and the Board in conjunction with senior management review the key business risks faced by the Group. In reviewing and considering the principal risks of the Group, emerging risk is also considered. For a number of years climate change has been considered an emerging risk of the Group as a result of changes in weather patterns which could result in catastrophic events which could give rise to business interruption and increases in the cost of raw materials. Climate change in the long-term has now been elevated to a principal risk for the Group. In additional, the growing number of environmental and climate change laws and regulations is an existing principal risk of the Group which is also disclosed in the Rick Report. These risks are subject to the Group's formal risk management process.
The Remuneration Committee has responsibility for continually reviewing the ongoing appropriateness and relevance of the Remuneration Policy. A remuneration policy review was conducted by the Committee in 2020. As part of this review, sustainability was considered for inclusion in the short-term and long-term incentives. The long-term incentive plan, the Performance Share Plan, now has a number of climate related performance measures with ESG accounting for 15% of those. These measures include C02 reduction, water reduction and waste reduction targets.
The Nomination Committee is responsible for the succession planning of the Board. Experience and knowledge of sustainability is a consideration in new appointments. This has been clearly evident in the recent appointments of Kaisa Hietala and Lourdes Melgar to the Board.
We announced our support of the recommendations of the Task Force on Climate-related Financial Disclosures (‘TCFD’) in May 2020 and we included our first disclosure in the 2020 Annual Report. In 2021 and 2022 we have significantly developed our disclosure as outlined below which is consistent with all the TCFD recommendations and recommended disclosures. In completing this disclosure we have provided the recommended disclosures relating to:
- Risk Management
- Metrics and Targets
Our TCFD disclosure in full is available in our 2022 Annual Report.