Member Spotlight: PotashCorp takes balanced and integrated approach to CSR governance

Member Spotlight: PotashCorp takes a balanced and integrated approach to CSR governance

 

As Canadian companies increasingly respond to global sustainability issues like climate change, corporate boards are starting to actively manage their CSR performance. The leading CSR governance practices of CBSR member PotashCorp reflect this trend, highlighting their sustainability priorities and the joint commitment of the board and management to advance CSR.

 

“The [PotashCorp] board actively desires to be a leader in governance. In that regard the board has not hesitated to pursue sensible governance innovations,” says Mary Mogford, Director and member of the Corporate Governance and Nominating Committee, and the Compensation Committee.

 

“We are committed to do the right thing for our company, our shareholders, our employees, our communities, our customers and all of our stakeholders. But we consciously avoid making governance changes whose sole impact is just to gain ratings points from good governance rating organizations,” relates Mogford.

 

Saskatchewan-based PotashCorp is the world’s largest fertilizer company by capacity, producing three primary crop nutrients (potash, phosphate and nitrogen). PotashCorp operates in seven countries and has over 5,000 employees.

 

 

A Balanced Approach

 

According to CBSR’s CSR Governance Guidelines, there are five major elements that encompass CSR governance:

• Strategy and vision
• Oversight and accountability
• Risk identification and management
• Board compensation and expertise; and
• External disclosure.

 At the strategy and vision level, PotashCorp has integrated CSR into its operational vision, which is to "Play a key role in the global food solution while building long-term value for all our stakeholders". CSR elements are included in the company’s organizational goals, core values and business code of conduct. The board also uses the Dow Jones Sustainability Index (DJSI) as an indicator of CSR performance and as a primary reference for industry trends.

 

Board oversight and accountability for the PotashCorp sustainability program happens at the Corporate Governance and Nominating Committee, while the Compensation Committee reviews CEO sustainability performance. The Safety, Health and Environment committee (SHE) oversees all SHE related issues.

 

The PotashCorp Board of Directors also supports the company’s risk management process, considering a number of CSR issues in recent years, including labour relations, climate change, and an evaluation of the company’s executive compensation system.

 

Recently, the board considered the risks and opportunities in changing demographics in Saskatchewan, where the company’s operations and head office are located. In light of a projected need for additional employees, the board has mandated management to develop an aboriginal outreach strategy.

 

Stakeholder engagement is also a key element in the board’s risk management and CSR activity, with the group conducting a review of stakeholder relations each year.  In this session, the board reviews the results of customer, community, investor and employee surveys.  In addition, the board monitors engagement with NGOs, socially responsible investors and other priority stakeholders, and will meet with them directly upon request.

 

In the area of external disclosure, the board sets the tone with an emphasis on accountability, transparency and integrity. Responding to stakeholder feedback, PotashCorp produced a “Report to the Community” in 2009, directed specifically to Saskatchewan residents to provide information on activities and plans while encouraging dialogue with the communities in which they work.

 

 

Leading on “Say on Pay”

 

Executive compensation has been a hot topic recently and PotashCorp has been at the leading edge due to the leadership of its board. “The thing we think is unique about our performance option plan is that we ask our investors every single year for their approval at our Annual Meeting. We think this goes further than the say on pay approach the Canadian Coalition for Good Governance is endorsing. But we have also committed to voluntarily adopting say on pay and in fact our shareholders approved this on our recommendation at our recent AGM in May,” relates Mogford.

 

PotashCorp also utilizes the company website to invite shareholders to comment on the compensation program and met directly with significant numbers of shareholders on the say on pay issue. The board’s Compensation Committee will use the feedback to help develop future plans.

 

 

A Long Term Flourishing Enterprise

 

“Corporate sustainability initiatives are designed to ensure the long term flourishing of the enterprise—and that long term focus in our prime responsibility. That’s why the board formally adopted and embraced oversight responsibility for all areas of sustainability several years ago,” say Mogford. That commitment continues to inform board oversight now and into the future.

 

 

To learn more about PotashCorp and Governance, visit the website

 

Download CBSR's CSR Governance Guidelines