The Group CR Governance Framework
Prudential's Group Finance Director, Prudential plc, Philip Broadley, has Board-level responsibility for social, environmental and ethical risk management. The Board discusses Prudential's performance on this at least once a year. The Board also annually reviews and approves our CR report and strategy.
The Corporate Responsibility Committee (CRC) is a specialist Group-wide committee, chaired by the Group Finance Director, and is responsible for reviewing business conduct and social and environmental policy.
The Group's Corporate Responsibility Team develops strategy, provides training across the Group, and works closely with individual business units to provide advice, ensuring that our core values are consistently maintained and assisting with the adaptation of Group-wide initiatives so that they meet local needs. The Corporate Responsibility Team is also Secretariat to the CRC.
Accountability and Governance
In 2007, our main focus was to ensure that corporate responsibility (CR) activities were properly embedded across the company. The Corporate Responsibility Committee (CRC) is chaired by Philip Broadley, Group Finance Director and Board sponsor for CR. The membership of the committee incorporates all areas of the business.
The CRC is a forum for senior managers across the Group and is responsible for agreeing and ensuring the implementation of CR related policy and strategy. During 2007 and the early part of 2008, three CR Committee meetings were held, with a particular focus on CR risk management, climate change and CR strategy.
Policy and Procedures
Prudential operates a Group Governance Framework which is underpinned by a Group Governance Manual and associated processes. This encompasses all key policies and procedures that govern Prudential Group. Responsibility for ensuring that these are maintained is allocated to appropriate senior managers within Group Head Office. These include the Group Code of Business Conduct; Health and Safety policy; Environment policy and Employment policies. Responsibility for compliance with all Group policies rests with each business unit's management. We set our own codes and policies that often go further than local/domestic legislative requirements.
The Group Governance Manual is reviewed annually in order to ensure that it remains both current and relevant. It also sets criteria for regular reporting to Group Head Office by business units and provides for an annual certification of compliance by each business unit.
Group Code of Business Conduct
Prudential's Group Code of Business Conduct (the Code), sets out the ethical standards the Board requires of itself, its employees, agents and others working on behalf of the Group, in their dealings with employees, customers, shareholders, suppliers, competitors, the wider community and the environment. This policy is in force across the Group and compliance by all business units is mandatory. The Code is published both internally on the Group Head Office intranet and externally on the Prudential website. It is also integrated within the Group Governance Manual and is covered by the annual compliance certification process. In 2007, the Code was revised to incorporate anti-money laundering and financial crime.
We have also translated the Code into Chinese, Korean and Thai, for publication on the website. The Code is printed in full at the back of this report and can be downloaded at www.prudential.co.uk/prudential-plc/cr/managementpolicies
Risk Management
The Group Governance Manual is itself supported by the Group Risk Framework, which provides an overview of the Groupwide philosophy and approach to risk management. The Group's risk categorisation encompasses all of the principles in the Group Code of Business Conduct. Risks are assessed against non-financial impacts such as the customer experience, statutory and regulatory requirements and, not least, reputation and brand.
Each business unit Chief Executive is accountable for the implementation and operation of appropriate business unit risk frameworks, and for ensuring compliance with the policies and minimum standards set by the Group. Business units must establish suitable processes to identify, assess, control and monitor the risks to which they are exposed.
We are also required to report on environmental and social issues affecting our businesses in line with the EU Accounts Modernisation Directive (Directive 2003/51/ EC) and the UK Companies Act 2006. Risk management is also a central feature of the Sarbanes-Oxley Act of 2002. We continue to identify, evaluate and manage significant risks faced by the Group. It is essential that this exercise is periodically repeated in order to position us to meet requirements of changing legislation and identify CR risks that might adversely affect our business, financial condition and reputation.
Money Laundering Prevention
Prudential seeks to comply with high standards of anti-money laundering and counter-terrorist financing practice in all countries/territories in which we operate. Failure to comply with international standards and Group policies to prevent money laundering and combat terrorist financing could lead to criminal prosecution, fines or reprimands by regulators. Prudential takes this extremely seriously and has established strong policies and procedures to manage these issues, including awareness raising and training, record keeping and compliance monitoring.
The issue of money laundering is managed through a Group-wide governance structure. Each business unit has appointed a Money Laundering Prevention Officer, who reports directly to the Regional Money Laundering Prevention Officers who, in turn, report to the Head of Group Money Laundering Prevention.
Stakeholder Dialogue
Our stakeholders are those individuals or groups who have a relationship with us. These include consumers; business associates and suppliers; our employees; shareholders and the investor community; academia; the media; governments; regulatory authorities; non-governmental organisations, and consumer associations.
It is part of our stakeholder engagement strategy to ensure that we continue to work with our employees, customers and external parties to shape what we do and to translate their reasonable expectations into business value. To obtain feedback from our stakeholders, we conduct periodic surveys on a range of topics such as how the company is perceived; what we do well, and where we could improve.
USEFUL LINKS
Key Challenges and Global Issues
As an international retail financial services group, we are faced with a range of global challenges and issues. We have identified four key areas which we consider to be material to the way we run our business, and where our achievements will make a difference to the wider socio-economic environment.
Changing Demographics
Around the world people are living longer and birth rates are in decline, leading to ageing populations. With fewer workers and more people in retirement, people will be increasingly called on to provide for their own financial well-being. We can play a key role in developing products and services that respond to our customers' needs, including educating individuals about their financial needs.
Consumer Confidence
Consumer confidence in the financial services industry is linked to a range of issues including the complexity of financial products and their financial knowledge and confidence in their own financial capability. A key step in restoring confidence is to provide our customers with a range of products that meet their needs and generate good returns. This, together with clear communication, high quality customer service and easy-tounderstand products, can help those who need to do so to grasp the essentials of money management.
Globalisation
We recognise the complexity of issues and challenges resulting from the rapid and huge increase in the amount of economic activity taking place across international boundaries. As a result, we strive to apply consistently high standards of opportunity and welfare for employees throughout our operations, wherever they are located, achieved through clear policies and effective governance.
Sustainable Development
A widely-used and accepted international definition of sustainable development is: ‘development which meets the needs of the present without compromising the ability of future generations to meet their own needs’ (The Brundtland Report).
It is essential that, as a business, we not only manage our environmental impact efficiently, but also ensure we act responsibly towards our employees, customers, suppliers and the communities in which we operate.