The Corporate Social Responsibility Between Air China and Qantas - Case Study Example

Social Accounting – Air China & Qantas Name Class Unit Executive summary This report compares the social responsibility between Air China and Qantas based on 2015 accounting reports and supporting literature. The report starts by describing Qantas and Air China as Australian and Chinese companies respectively operating in global airline industry. The report then examines the differences which are evident between Qantas and Air China based on the range of issues dealt within the reports and depth of coverage. This shows how Qantas and Air China faces specific issues and how they are covered. Qantas airline shows a depth of coverage in community based issues, diversity while there is less focus on environment as seen in the Air China report. The differences in social accounting are explained based on country and industry differences. It is identified that the apparent quality of social accounting based on Zadek et al.'s (1997) criteria varies with each company performing differently in different areas of criteria. Qantas shows a more detailed reporting than Air China in most aspects. The social reports reflect the values of both Qantas and Air China to a high extent. Lastly, reflections on the social accounting based on group discussions have reaffirmed that it is possible to remain sustainable while doing ethical business. I have realized the importance of having quality social accounting to ensure a sustainable and successful business. Table of Contents Executive summary 2 Table of Contents 3 Introduction 4 Aims and Scope 4 Research Methodology 5 Limitations of the Research Methodology 6 Description Qantas Airlines and Air China 6 Differences between Qantas and Air China in terms of the range of issues dealt with in the Social Accounting Reports 7 Analysis of the differences in each company’s Social Accounting agenda and explanation of differences based on airline industry and the countries of operation 8 Apparent quality of the social accounting approach utilized by each company according to Zadek et al.'s (1997) criteria 10 Extent to which Qantas airlines and Air China Social Reports reflects the values and actions of Qantas and Air China 12 Reflection on my discussions with my group and how the ideas presented by the group confirmed or gave me a new perspective on how to conduct business in a Social responsible manner 13 Bibliography 15 Introduction The intention of this report is to compare the corporate social responsibility between Air China and Qantas. Air China is the flag carrier and one of the largest airlines in the People’s Republic of China. It is also the only flag carrier of the country with its flight activities ranging from passengers to cargo (Air China Annual Report, 2015). Qantas airline is Australia largest domestic carrier and one of the oldest airlines in the country. Corporate social responsibility is a concept which an organisation is able to integrate their social and environmental issues into their business operations and also make interactions with other stakeholders. This is done on a voluntary basis (Owen et al., 2000). Firstly, this social accounting report will identify and describe Qantas and Air China, their countries of operations and the airline industry. Secondly, this social accounting report will examine the differences which are evident between Qantas and Air China based on the range of issues dealt within the reports and depth of coverage. Thirdly, this social accounting report will examine the differences between Qantas and Air China explained by the country or industry differences. Fourthly, this social accounting report will access the apparent quality of social accounting approach that it used by Qantas and Air China applying the Zadek et al.'s (1997) criteria. Fifthly, this social accounting report will discuss the extent to which the social reports reflect the values of both Qantas and Air China. Sixthly, this social accounting report will reflect on the group discussions about these companies. This will help in determining ways in which the ideas presented by the group confirms report conclusions or presents another perspective. Aims and Scope The aim of this report is to compare social responsibility between Air China and Qantas. The scope of this report is to: Identify and describe Qantas airlines and air china; the countries of operation and airline industries in which they operate. Examine the differences evident between Qantas and Air China in terms of the range of issues dealt with in the reports and the depth of coverage on specific issues. Examine the differences between Qantas and Air China explained by the country or industry differences. Assess the apparent quality of the social accounting approach utilized by Qantas and Air China according to Zadek et al.'s (1997) criteria. Discuss the extent to which the social reports reflect the values of Qantas and Air China. Reflect on your groups' discussions of Qantas and Air China and determine in what ways did the ideas presented by your group confirm report conclusions or present another perspective? Research Methodology This research was based on comparative design utilising secondary data. The data gathered from the secondary sources was both qualitative and quantitative. During data collection, the secondary data were collected through documents, publications industry reports, peer reviewed literature, credible websites and organisation records. This included both airlines annual reports where corporate social responsibility information was obtained. The collected information was organised and interpreted in a manner that made it possible to obtain the key findings (Harwell, 2011). The research started with a large body of knowledge and utilised inductive reasoning to sort and categorise the information. This made it possible to determine the key themes from the research. In the research, it was possible to utilise Creswell spiral data analysis method (Schilling, 2006). This started with the data being organisation based on the forms. The data was then perused various times to gain an overview on what it contained. During this process, notes were written and summarisations made. Themes were identified and classifications made accordingly (Burns & Bush, 2000). Finally, the data was summarised for use in the report. Secondary data was highly utilised due to fact that most of the information required for this research was available from published sources. Limitations of the Research Methodology The main weakness of the research method was fact that there was limited participation of the firms under research. This may have led to lack of some vital insights which could have been captured through use of primary data collection methods. Description Qantas Airlines and Air China This paragraph describes Qantas and Air China based on airline industry and countries of operation. Qantas and air china are companies in the airline industry. Qantas airline is the largest carrier in Australia and one of the leading long distance airlines. The airline is also one of the strongest brands in Australia. Qantas (2015), Annual report describes the company business objectives for the next 5 years as building a modern, customer focused and competitive aviation business. The five year plan is to ensure that the airline international flights are profitable in the short run. This is a strategy that will ensure that Qantas is competitive globally and has high potential in all markets. In contrast, Air China (2015) Annual report describes the company business objectives for the next five years as becoming a competitive in the global aviation industry. This is through meeting the customer needs and innovation. The airline delivers high quality credible services to the customers in convenient and comfortable manner. Air China (2015) Annual Report highlights that it operate from its hub in Beijing china and employs about 50, 000 employees. This includes highly qualified staffs which has helped the airline maintain global success. Air China (2015) Annual Report highlights that Air China is a mature global firm with a diversified portfolio. The airline has been able to expand its operations since its inception in 1988. In conclusion, both airlines have global operations with a diversified service portfolio. The airlines short term objectives are all focused on excellent service to their customers. Despite this, Air China has a higher number of employees compared to Qantas (Air China Annual Report, 2015). Differences between Qantas and Air China in terms of the range of issues dealt with in the Social Accounting Reports The intention of this paragraph to examine the differences between Qantas and Air China in terms of the range of issues dealt with in the Social Accounting Reports. In the Qantas (2015) annual report the key Social Accounting issues confronting Qantas in 2015 were emerging global environmental issues, social trends, community empowerment, diversity, governance, ethical supply chain, corruption, risk management and support for Australian suppliers and associated challenges. This is because the firm was in a position that their current decisions have a long impact on the stakeholders. There are emerging issues such as global warming and change in consumption patterns. The firm had been faced by the environmental and social governance issues calling for more efforts to be sustainable. There have been challenges in ensuring that the airline is innovative enough to ensure sustainability in future. In contrast, Air China Social Accounting Report (2015) the key Social Accounting issues confronting air China in (2016) were environmental, economic, employee, safety, customer and social responsibility. This is especially with the rising pollution levels in china. The airline has been forced to come up with measures that can ensure that they reduce their emissions while at the same time ensuring that they are responsible. This led to Air China coming up with a comprehensive economic, environmental and social value which was aimed at measuring the firm corporate sustainability. The airline utilised public responsibility as their integral part in their operations. This is through participating in disaster reliefs and social practices. For example, the airline participated in the Haiti earthquake and Japanese tsunami disaster of 2011. In conclusion both airlines are involves in social issues but with varying coverage. Air china seems to have taken an in-depth approach in dealing with environmental and social issues. This is through setting up goals and investing in these issues. Qantas airlines seem to have taken an in-depth approach in diversity, community partnerships and governance. There is low coverage on the environmental issues in 2015 annual review. Analysis of the differences in each company’s Social Accounting agenda and explanation of differences based on airline industry and the countries of operation The intention of this paragraph is to analyze the differences in each company’s Social Accounting agenda and explain the differences based on airline industry and the countries of operation. In china, air pollution has been a major problem which might have led to Air china enhanced focus on environment. Also, China has context which is mostly based on socialism. This may have led to the firm use of a corporate culture which assimilates core values of socialism. The main focus is ensuring there is happiness and harmonious development with the society. The airline has had its focus based on the airline industry in the region where there have been a lot of problems with environment, economy and society (Air China Annual Report, 2015). In contrast, Qantas whose main focus on the emerging global issues and social trends can be associated with their country as well as the current environment in the airline industry (Qantas Annual Review, 2015b). The Australian airline industry has been under a lot of pressure to cut their emissions and become more sustainable. This may have led to Qantas setting their targets for 2020 in emission reduction and energy saving. Global warming is an emerging issue that has led to Australian government being stricter on carbon emissions (Qantas Annual Review, 2016). Owen et al., (2000), highlights that Social Accounting Reports can be significantly different based on the company’s values and the business phase of the organisation such as set up, growth, maturity, decline and regrowth phase of the business cycle. This is due to the challenges and opportunities that are faced by the company in different stages of their lifecycle. Both firms are at the different stages of their lifecycle. For Qantas, the airline is in its renewal stage of post maturity while air china is on its growth phase nearing maturity. This may explain the level of disclosure that is shown by both Qantas and air china. Pennington & More (2010) argues that a company in a set up phase of the business cycle is likely to include the following Zadek’s Social Accounting criteria in its Social Accounting Report, they are inclusivity, evolution, management policies and systems, disclosure and continuous improvement because of quality (Zadek, 1997). During the set up phase, the company is made up of opportunities and profit ability of its resources. The social accounting number at this stage provides a lot of information on the future growth. As the firm progress to maturity, the growth opportunities are fewer and the operating expenses are mostly on convenience. At the set up phase, the social accounting report is not comprehensive and some areas of Zadek criteria are left out. In contrast, Owen, Swift & Hunt (2001) argues that a company in a maturity phase of the business cycle is likely to include the following Zadek’s Social Accounting criteria in its Social Accounting Report, they are inclusivity, comparability, completeness, evolution, management policies and systems, disclosure, external verification, and 'continuous improvement because at this stage, the firm is mature and tries hard to increase their market share (Zadek, 1997). The growth is slow and hence the need to appear more sustainable. At this stage, the firm puts a lot of effort in making sure that their social accounting reporting is of high quality. Their efforts in social accounting are high as seen in the case of Qantas and Air China. Air China which is in growth stage nearing maturity gives almost all criteria but Qantas which is in renewal post maturity tries to offer a detailed accounting. In conclusion, both firms are based on varying countries and are also at different phases of growth. This explains the differences in social accounting where Qantas which is on mature phase of its lifecycle give a more comprehensive reporting in some aspects than Air China which is on the growth phase. Apparent quality of the social accounting approach utilized by each company according to Zadek et al.'s (1997) criteria Zadek et al.'s (1997) social criteria Qantas Airchina Inclusivity Qantas airlines have an inclusive report where social and ethical accounting is able to reflect the views of all stakeholders. For air china, there is low inclusivity. This is due to fact that the airline is a government entity and most of the decisions are made by government without adequate consultation. Comparability The social accounting report enables Qantas to be compared as a basis for assessment. The social accounting report enables Air China to be compared as a basis for assessment. Completeness The report is not complete and some areas have been systematically excluded such as on environment. The report is complete and no areas have been systematically excluded. Evolution The report covers the entire company social footprint and shows that it will vary over time. It shows an evolutionary path over time.   The report covers the entire company social footprint and shows that it will vary over time. It shows an evolutionary path over time.   Management policies & systems Have clear policies. Have clear policies. Disclosure There is full disclosure There is full disclosure External verification Externally verified. Not externally verified. Continuous improvement There is continuous improvement. There is continuous improvement. Table 1, apparent quality of the social accounting approach (Zadek, 1997). Based on the criteria, the apparent quality of the social accounting approach varies. It seems Qantas has a quality reporting with its report being verified and inclusive. Despite this, Qantas report lacks completeness which is evidenced by Air China report. Extent to which Qantas airlines and Air China Social Reports reflects the values and actions of Qantas and Air China This paragraph will discuss the extent to which Qantas airlines and Air China Social Reports reflects the values and actions of Qantas and Air China. Air china Social Report (2015) highlights that the key elements of the company’s social values in driving its operations are people orientation, assumption of responsibility, resolve to go ahead and loving to fly resulting in a safe airline, steady growth, and responsibility. This has led to an airline which is professional and highly trusted. The airline has been able to offer world class standards and act to showcase the Chinese culture. For example, the airline has been able to offer quality services and experienced a steady growth. In addition, the airline has also experienced an ethical performance (Air China Annual Report, 2015). In contrast, Qantas Social Report (2015) highlights that the key elements of the company’s social values in driving its operations are playing a responsible and progressive role in the community, Australia, globally and the supply chain resulting in an iconic Australia brand which caters for all stakeholders globally. For example, Qantas has formed strategic partnerships with the community leading to positive change and embracement of diversity. The airline has been able to support the indigenous Australians, honour the military through veteran affairs and maintain a sustainable supply chain. This has supported a robust growth and an ethical company. In conclusion, the social reports reflect the values of Air China and Qantas airlines. This is through ensuring that the organisations are able to uphold their values through corporate governance. Reflection on my discussions with my group and how the ideas presented by the group confirmed or gave me a new perspective on how to conduct business in a Social responsible manner This paragraph requires me to reflect on my discussions with my group and reflect on how the ideas presented by the group confirmed or gave me a new perspective on how to conduct business in a Social responsible manner. In my initial discussion with my group members my business social accountable values with regards to conservation of environment was reaffirmed because it appears that both firms have put a lot of efforts in environmental conservation. This is evidenced by the push for low carbon flights, energy efficiency, energy conservation and reduction in emissions with the Air China social accounting plan 2015 and Qantas 2016 report. In addition, a second business social accountable value of diversity was reaffirmed because there seems to be a lot of efforts by both companies to diversify their workforce. For Qantas, the airline has given a priority to the diverse workforce and has engaged in partnerships and efforts that promote diversity. This is also seen in Air China where diversity is supported. I feel that business must encourage and support diversity to enable sustainability and innovation. This also ensures that the indigenous and venerable members of a society are included. In addition, as a result of my discussions with my group I acquired a new perspective on how to do business applying the Zadek’s Social Accounting values that there is need to have quality initiatives in social and ethical accounting. This is through applying the principles of quality to ensure that there is good practice in social accounting report. I learnt that through application of Zadek’s social accounting values, it is possible to come up with a worthy report. This makes it possible to conduct a responsible business and utilising the quality principle. In future, I will always apply the eight principles since they represent the basic assumption in which social accounting reports should be judged on. In conducting a responsible business, I learnt to go beyond the norm and demonstrate social and environmental responsibility. In conclusion, it is possible to carry out a socially responsible business while at the same time being financially viable. Bibliography Air China Annual Report. (2015). 2014 Corporate Social Responsibility Report. Available at: http://www.airchina.com.cn/en/images/en/investor_relations/csr/2015/08/27/B2B27B 4F4034CA5FF7C6899C32FC1240.pdf (Accessed: 2 January 2017). Burns, A. C., & Bush, R. F. (2000). Marketing research. Globalization, 1(7). Harwell, M. R. (2011). Research design in qualitative/quantitative/mixed methods. Conrad, Clifton F.; Serlin, Ronald C. The SAGE Handbook for Research in Education: Pursuing ideas as the keystone of exemplary inquiry. 2ª Edition. Thousand Oaks, CA: SAGE Publications, 147-163. Owen, D. L., Swift, T. A., Humphrey, C., & Bowerman, M. (2000). The new social audits: accountability, managerial capture or the agenda of social champions? European Accounting Review, 9(1), 81-98. Owen, D. L., Swift, T., & Hunt, K. (2001, September). Questioning the role of stakeholder engagement in social and ethical accounting, auditing and reporting. In Accounting forum (Vol. 25, No. 3, pp. 264-282). Blackwell Publishers Ltd. Pennington, L. K. & More, E. (2010). Sustainability Reporting: Rhetoric Versus Reality? Employment Relations Record, 10(1), 24. Qantas Annual Review. (2015b). Social Responsibility & Governance. Available at: http://qantas2015.reportonline.com.au/system/files_force/downloads/2015-annual- review-social-responsibility_0.pdf?download=2 (Accessed: 2 January 2017). Qantas Annual Review. (2016). Corporate Governance. Available at: https://www.qantas.com/infodetail/about/corporateGovernance/2016AnnualReview (Accessed: 2 January 2017). Schilling, J. (2006). On the pragmatics of qualitative assessment. European Journal of Psychological Assessment, 22(1), 28-37. Zadek, S. (1997). Balancing performance, ethics, and accountability. Journal of Business ethics, 17(13), 1421-1442. Read More