Corporate Governance: An Analysis of Marks and Spencer’s 2022 Annual Report

This essay aims to study several facets of corporate governance by analyzing Marks and Spencer’s 2022 annual report (M&S), a publicly traded UK corporation. We will learn more about M&S’s recent changes, future strategy, commitments, risk mitigation strategies, and governance framework by examining the strategic report, non-financial statement, principal risks, and audit committee. The strategic direction, non-financial obligations, risk management procedures, and audit processes of an organization are all greatly influenced by its corporate governance.

Marks and Spencer’s 2022 Annual Report: Three adjustments were made (Page 4)

Changes made to the Clothing & Home business: Marks & Spencer (M&S) executed a thorough transformation strategy for its Clothing & Home company, focused on cost savings, expanding product lines, and improving the customer experience. Improving the store estate, improving the supply chain, and putting money into digital capabilities were all part of this.

Accelerating the digital transition was a priority for M&S, emphasizing improving its digital skills and growing its online presence. To adjust to shifting consumer preferences and purchasing patterns, they created a new website and mobile app, added services like virtual styling, and increased their online selection.

Strengthening sustainability commitments: By establishing challenging goals and activities, M&S supported its sustainability agenda. They found a “Plan A” framework to address climate change and waste reduction, set a goal to reach net-zero carbon emissions by 2035, and emphasize sustainable sourcing and ethical supply chain procedures.

Marks and Spencer’s 2022 Annual Report: Intangible Statement

Commitments: On page 31 of its non-financial statement, M&S expresses its commitment to several significant problems. First, the business reduces trash production, water use, and carbon emissions to lessen its environmental impact. Second, through programs like Plan A, which emphasizes ethical sourcing and sustainable production, M&S is dedicated to promoting ethical sourcing and assisting local communities. Lastly, the business stresses establishing an inclusive and diverse workplace to ensure every employee has an equal chance of success.

Alignment with the Stakeholder Theory of Corporate Governance: M&S’s pledges closely follow this theory’s recommendations. According to this philosophy, businesses should consider all parties’ interests, including shareholders, workers, clients, suppliers, and the general public. This notion is supported by M&S’s dedication to reducing environmental impact, promoting ethical sourcing, and encouraging workplace diversity. M&S understands the need to consider the needs of various stakeholders to achieve long-term success.

Marks and Spencer’s 2022 Annual Report: Future business plans for M&S: (Page 6)

Creating a smooth omnichannel experience is a goal of M&S, which also wants to combine its physical and digital platforms to give customers a seamless shopping experience. They want to provide a consistent brand experience across all touchpoints. Therefore they will improve their web platform, use customer data to tailor products and optimize their store network.

Driving the food industry’s growth is M&S’s intention to build on its track record for excellence and innovation by expanding its business. They want to increase their market share in food takeaway and delivery by increasing their investment in product development, new meal formats, growing their store network, and introducing new products.

The Clothing & Home business will continue to change as M&S works to restructure and energize it. To reclaim market share and profitability in this market, they want to increase their product offerings, boost their digital capabilities, optimize their store portfolio, and look into new alliances.

Marks and Spencer’s 2022 Annual Report; Three main threats M&S faces, along with appropriate mitigations:

Market rivalry and shifting consumer trends: The threat to M&S comes from escalating competition from offline stores and online marketplaces and shifting consumer preferences and purchasing patterns. M&S focuses on enhancing its brand promise, investing in product innovation, growing its online presence, and performing market research to keep up with shifting trends to counteract this.

Operational risks and supply chain disruptions: M&S is subject to operational inefficiencies, product recalls, and supply chain disruptions. The organization focuses on quality control, supplier management, and risk assessment procedures to mitigate these risks. They also make technology investments to streamline supply chain operations and maintain backup plans in case of disruptions.

Economic and macroenvironmental factors: M&S is vulnerable to economic downturns, inflation, currency fluctuations, and regulatory changes. They manage these risks by carefully monitoring market conditions, implementing hedging strategies, diversifying their sourcing regions, and upholding solid relationships with regulators and industry associations. Additionally, M&S actively engages in sustainability initiatives to mitigate environmental risks and comply with regulations.

The audit committee’s members and the governance principles in Marks and Spencer’s 2022 annual report :

The Marks and Spencer’s 2022 annual report (Page 78) lists the following individuals as members of the Marks and Spencer audit committee:

Chair Steve Rowe

Eoin Tonge

Melissa Bethell

Martin Machin

Regarding its composition, the audit committee adheres to the governance standards by including independent non-executive directors with the necessary financial knowledge. The committee’s membership complies with the guidelines for good corporate governance, which state that audit committees should be made up of impartial individuals with backgrounds in finance.

The M&S audit committee has three primary responsibilities: (pages 78–79).

Financial reporting oversight: The audit committee examines and keeps track of financial statements’ truth and accuracy, ensuring they adhere to regulatory and accounting standards. They interact with the company’s outside auditors to evaluate their effectiveness and independence.

Internal control and risk management: The committee assesses the efficiency of M&S’s internal control frameworks and risk management procedures and identifies and controls operational and financial risks. They monitor the company’s risk management system and assess the effectiveness of internal controls.

External audit and assurance: The audit committee regulates external auditors’ hiring, performance, and compensation. To ensure the success of the external audit process and to deliver impartial and top-notch audit services, they maintain an open and productive connection with the auditors.

Analyzing in conclusion, Marks and Spencer’s 2022 Annual Report offers insightful information on the company’s strategic adjustments, plan, non-financial commitments, risk management, and audit procedures. The organization’s focus on change, digitization, sustainability, and stakeholder interests underlines its dedication to good corporate governance. M&S exhibits its proactive approach to handling difficulties by recognizing risks and implementing mitigation measures. In conclusion, M&S’s annual report is an excellent example of the significance of solid corporate governance for attaining long-term success in a fast-paced business climate.

References for Marks and Spencer’s 2022 Annual Report.