Accounting, Society and Environment - Taylor Wimpey Plc - Case Study Example

Accounting, Society and Environment Companies are required to publish annual reports and business reviews to relay performance, development and positioning of the business; although the requirements encompassing the review are size and complexity of the business (KPMG, 2006). In 2006 the Financial Reporting Review Panel extended the requirement of the annual reports to constitute of the review from the director’s of the companies (FRC, 2008). Companies which qualify as small companies are not required to publish annual reviews (PLC, 2013; KPMG, 2006) and medium sized companies are not required to publish their environmental and social policies in their annual reviews as an obligation (KPMG, 2013). For quoted companies it is required that the review in addition with a fair review of the business and major risk faced by the company; the company should also publish its environmental policy, the social policy; employee issues and also to what extent these policies were effective (PLC, 2013; KPMG, 2006; CR, 2012). Taylor Wimpey Plc is a quoted company and is registered with the London Stock Exchange; thus it is required to publish an annual report encompassing a business review, the performance and development of its business mentioning the Key Performance Indicators and also the environmental and social policies and the effect they generate on the society and environment. Ethical Policy of Taylor Wimpey Plc The company’s ethical policy is addressed as either corporate culture, corporate responsibility or under peoples and culture. The company highlights the high ethical standards it has set for its business and employees in the form of an ethical corporate culture (TWCSR, 2009; TWCSR, 2010; TWCSR, 2011). Although the company has a clear ethical policy which is implemented in all of its organizations (TWPLC, 2007), yet the policy does not get a clear and open mention in the reviews of the company. The ethical structure of the company is only described in term of qualitative data, no disclosure policy is followed. Neglect can be seen in terms of describing the clear ethical policy of the company and the implications it has had. The corporate responsibility of the company is clearly explained in the review as well as the annual reports; as the corporate responsibility of the company is in part comprised of the ethical policy of Taylor Wimpey plc (TWP, 2007). Corporate responsibility management also finds the ethical policy of the company addressed in the form of the primary stakeholder’s interests and stakeholder engagement (TWP, 2009). Chairman Kevin Beeston in his review is also found focusing of the ethics in the form corporate responsibility (TWP, 2011). The Value Cycle focuses on the ethical policy in the form of care for customers (TWCSR, 2009; TWCSR, 2010; TWCSR, 2011). Non-Financial disclosures like the ethical policy of the company can help a company reflect upon its culture and enable investors making decisions based on the information that the company voluntarily discloses (Binh, 2012; Singhvi & Desai, 1971). Diversity and Anti-Corruption policy is mentioned as part of the corporate governance structure of the company (TWP, 2011). More focus and clarity is required on the ethical responsibility; as it helps in building the trust of the company and provide the company with a competitive edge over other companies (KMPG ‘Beyond the numbers’, 2000). Social Policy of Taylor Wimpey Plc Like a balanced sheet fails to relay the complete value that a company has; the Key performance indicators for financial performance alone do not suffice for the risks and opportunities that lay ahead f any company; companies by joining their benefit with that of the society at large have come to change the way business success is perceived (KMPG ‘Beyond the numbers’, 2000). The annual reports and the business reviews of the Taylor Wimpey Plc use two Key performance indicators to determine their impact on society (TWCSR, 2009; TWCSR, 2010; TWCSR, 2011). The two key performance indicators for Social policy are; the measure of Customer Satisfaction; and the Health and Safety of customers, as well as employees (TWCSR, 2009; TWCSR, 2010; TWCSR, 2011). Both the indicators are measured and presented in the form of qualitative & quantitative descriptions; percentage measure of both KPI’s is given, with a bar graph representation and a three year comparison. Under Corporate Governance the Chairman’s report also lays emphasis on the significance of the People and Share holders of the company (TWCSR, 2009; TWCSR, 2010; TWCSR, 2011). The Chief Executive’s Review also focuses on the social strategic objectives of the company, laying focus on the needs of the customers and by addressing the managing the planning and community engagement process (TWCSR, 2011). People and Culture are explained and maintained as a serious point of focus in the reports (TWCSR, 2009; TWCSR, 2010; TWCSR, 2011). A company might be operating within the legal limits of the country but if the society, people and culture hold objections against it, the company development will be stagnated (KMPG ‘Beyond the numbers’, 2000). Employee turnover rates are also taken into account with focus on factors affecting it (TWCSR, 2011). By addressing these major relationships in the business review the company relays the significance of impact the customers, employees and the society have on the company (CR, 2012). Social concerns do not hinder in business development rather when taken into account and worked on, they can actually add to the window of possibilities and result in maximizing profitability (KMPG ‘Beyond the numbers’, 2000). Although having the choice to disclose which ever social indicators they want, by choosing the ones most appropriate and adequate to the business; the company should look to promote trust and accountability in and out of the company (Topazio, 2010). Environmental Policy of Taylor Wimpey Plc The annual reports as well as the business review lay significant focus on the environmental policy of the Taylor Wimpey Plc. The company utilizes a single Key Performance Indicator to assess and explain the impact of the business on environment. The key performance indicator is the Waste Generated per Home (TWCSR, 2009; TWCSR, 2010; TWCSR, 2011). The performance indicator is compare on three year basis with a bar graph and percentages (TWCSR, 2009; TWCSR, 2010; TWCSR, 2011). The Chairmen’s reviews with their emphasis on the corporate responsibility also lay determined focus on the incorporation of the environmental policy and going green in terms of the consumption of resources, and cutting down costs by promoting electronic communication (TWCSR, 2009; TWCSR, 2010; TWCSR, 2011). The reviews focus especially on sustainable homes and environment in their construction policy and the efficiency of utilization of resources, in the environment section in the business reviews (TWCSR, 2011). Focus on sustainable environment is continually paid in the UK, America and Spain Business reviews separately, not only in the corporate responsibility but also as a Key Performance indicator and Progress Evaluation (TWCSR, 2009; TWCSR, 2010; TWCSR, 2011). Environmental disclosures as key performance indicators provide a necessary understanding and comprehension of the way a company does business (Topazio, 2010). The Environment management system finds its way into the annual reports as a part of Risk Management (TWCSR, 2009; TWCSR, 2010; TWCSR, 2011). By focusing on the Environmental policy disclosure as risk and uncertainties posed to the company as sustainability indicators, allows investors to place better value on the company combined with the financial indicators (Topazio, 2010). Environmental indicators undergo progress evaluation as well, with qualitative and quantitative aid. Suggestions 1. The business review can substantially better its focus on ethical policy by disclosing ethical practices and legal practices 2. Examples and percentages (qualitative data) of diversity; reward and penalties resulting from compliance or non-compliance of ethical and diversity policies could be included to reflect better on the emphasis the company lays on ethics. 3. The IIRC (International Integrated Reporting Committee) framework could be included to account for sustainability; it will comprise of all the necessary financial and non-financial (ethical, social, environmental) performance indicators and all necessary information on them (Topiazo, 2010). 4. Relevance of social and ethical key performance indicators should be increased. 5. Key Performance Indicators for ethical policy should be included. 6. Focus should be laid on increasing the reliability and comparability of these non-financial and intangible asset disclosures and their associated key performance indicators(Topiaz, 2010; Arvidsson, 2011). 7. Non-financial items should be disclosed based on the significance that stake holders lay on them and what is convenient to be reported, this will improve the significance of the reports in the eyes of the stakeholders (Binh, 2012). 8. The report should highlight the workings of the company within the ethical, lawful and social advancement framework, according to a survey 89% consumers felt that the quoted companies have more responsibility towards society and law while moving towards profitability (KMPG ‘Beyond the numbers’, 2000). More and more companies are figuring out that in a dynamic business environment, non-financial assets are as significant as financial ones, as these are the ones which help in gaining the trust and confidence of the society and without its approval no business can develop and sustain that development (KMPG ‘Beyond the numbers’, 2000). References Arvidsson, S. (2011) "Disclosure of non-financial information in the annual report: A management-team perspective", Journal of Intellectual Capital, 12 /2, pp.277-300. Bing, Q. T. 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TWSpain. (2010), “Our Commitments”, Taylor Wimpey Spain. Available at: http://www.taylorwimpeyspain.com/ourCommitments.php (last accessed March 16, 2013). Read More