Evaluation of the Britvic Plc Corporate Responsibility - Assignment Example

Financial reporting 5 Contents (a) Reasons for companies to undertake social and environmental reporting 3 Evaluation of the Britvic Plc. corporate responsibility report 2011 4 (b) Main drawbacks and deficiencies of social and environmental reporting: Assessment of Britvic Plc. corporate responsibility report 2011 6 (c) Recommendations to improve Britvic Plc’s responsibility report 9 References 11 Bibliography 12 (a) Reasons for companies to undertake social and environmental reporting The companies in previous days were only concerned about their commercial activities and profits. With time, they showed increasing concerns for their employees. Now time has come for the companies to contribute to the societies in which they exist. The companies for their commercial activities use the resources available in the society and for this reason they should return the benefits to the same society for long term existence of the business. In order to fulfil this social task, companies undertake corporate social responsibility in order to mitigate the adverse impacts created on the society and environment due to their business operations. Now-a-days, the regulatory authorities and the communities are increasingly aware of the adverse impacts of company operations. This awareness is fuelled by the participation of activists for the environmental protection (Hawkins, 2006, p.11). The stakeholders of the companies who are part of some community are also demanding information on company performance in the social and environmental aspects. The customers and the societies are external stakeholders to the company. Due to such increasing demands from the internal and external stakeholders, the companies have started to include reports on social and environmental performance of the companies apart from the regular financial performance reports. The companies have started to include program descriptions highlighting their activities in the fields of environmental protection, conservation of environment, corporate compliance, duties as a social citizen in order to build brand goodwill and develop trust and confidence among the public. Relatively large sized firms voluntarily disclose information on their social and environmental protection and conservation activities as it reduces the uncertainty of external stakeholders and acts as a stimulant to increase their profitability. Social and environmental reporting helps the companies to maintain a good image of the corporate brand among its stakeholders and attracts the investors by providing assurance of sustainability and profitability in the long run. Evaluation of the Britvic Plc. corporate responsibility report 2011 Considering Britvic Plc.’s corporate social responsibility report of 2011, it has been found that the company has provided disclosure on the commitment of the company towards the society and the environment with an assurance that the company has a long term vision for contributing to the social and environmental causes. The corporate responsibility report 2011 of Britvic Plc. states that the company has always given priority to the communities and stakeholders and that the employee of Britvic Plc. always ensure quality and safety of its business operations with an increasing awareness of environmental and social causes. Britvic Plc. is a soft drinks producer of UK. The soft drinks form a large part of take-home grocery. As found in the corporate responsibility report 2011, Britvic Plc (BRITVIC PLC, 2013, p.1). Operation focuses at the well being and health factors and also takes complete control of the environmental and social impacts of its business operations. The company packages fruit juices in the bottles without the use of preservatives. The company also focussed on delivering no-added sugar and developed diets to their customers thereby contributing to the health of the society. In terms of protecting the environment from the adverse impacts of its operations, Britvic Plc. efficiently uses its water and energy resources, reduces carbon emissions and recycles the disposals or wastes of its operation in order to safeguard environmental aspects. The company also maintains high standards of corporate governance in order to ensure strategic implementation of their policies within the framework and to avoid conflicts of interest (Banerjee, 2007, p.10). Britvic Plc. reduced total packaging wastes by 11000 tons per year since they adopted corporate social responsibility. Britvic Plc. has a Corporate Responsibility Committee as per the following structure. According to the report, Britvic Plc. has reduced waste disposals by 72% since 2002. Britvic Plc. has contributed to educational resources to its communities. A list of its expenditure for social causes in given below: All these social responsibilities undertaken by Britvic Plc. have led to increase in faith of its brand among the public and society for which the profitability of Britvic Plc. has also increased over the years. (b) Main drawbacks and deficiencies of social and environmental reporting: Assessment of Britvic Plc. corporate responsibility report 2011 The major drawbacks and deficiencies of social and environmental reporting for the purpose of disclosure of acts of corporate social responsibility to its stakeholders and investors are as follows. The companies mainly the large ones would incur considerable costs on account of their acts towards protecting the environment and society from the adverse impacts of their own operations. This would tend to bring down the net profits of the company. The shareholders of the company may view this as activities of the company that would reduce their wealth. The shareholders who are only interested in only in short term monetary gains who view acts of corporate social responsibility of the companies against their vested interests. The expenditure reported for environmental and social causes may be viewed as costs incurred that are not directly related to business and hence would appear redundant in short term. The deficiency of social and environmental reporting is that it may be viewed as disclosure of company activities that have shifted from its main course of business. Deficiency of social and environmental reporting arises from the perspective that the objective of the companies should be profit driven whereas corporate social responsibility would include cost of recruiting, training, operations looking at the long run (Schwartz, 2011, p.8). Considering the corporate social responsibility report of Britvic Plc. for 2011, the company is focussed at reducing the wastes and disposals to reduce the adverse effects on the society resulting out of its own operations. A breakup of the expenditure on account of corporate social responsibility is given below. Contributions to the societies in kind form the highest share of costs incurred with an additional management cost forming 17% of the total cost. As a balancing act and looking at the growth prospects of the company, the environmental and social activities have resulted in reduction of 11064 tonnes of waste per year. A break up of the waste reduction categories is given below. Due to such disclosures in the report, the deficiencies of Britvic Plc. as marked by some sections of the stakeholders would be logically justified with the gains in terms of growth of company goodwill in other sections of the society. Britvic Plc. aimed at reduced the waste content by increasing recycled product proportions with its green glass containers containing 75% of the recycled content, clear glass containing 30% of the recycled content and its steel cans containing 54% of the recycled content. Britvic Plc. aimed at reclaiming the water used in its processes and using the recycled water in its production process. Thus cost of corporate social responsibility has been offset with increasing focus on quality, safety, risk, control, labour policies with an aim to contribute to the social and environmental causes, thereby creating a good-will for long term growth. The major shareholders of Britvic Plc. include Barclays Plc., PepsiCo, Aviva Plc and its subsidiaries, Deutsche Bank AG, etc. In order to manage the apparent deficiencies and drawbacks of corporate social responsibility disclosures, a general meeting with the shareholders is organised by the company which is addressed by the finance director. According to the corporate social responsibility report, an open dialogue with the shareholders is held. The stakeholders who have vested interests in the performance and policies of the company have varying attitude, interests , concerns and opinions with respect to the corporate social responsibility acts of Britvic Plc (Mallin, 2009, p.6). The management and the governing body of Britvic Plc. takes into the consideration all the critical issues and opinions of the shareholders and then decide of the future policies by giving due priority to their core values and responsibility towards the society and environment. (c) Recommendations to improve Britvic Plc’s responsibility report The corporate social responsibility report talks about the processes adopted as a responsible corporate citizen to add value to its products and offerings to the society and also provide future plans of social contribution and its positive effects. For example, the company plans to investigate the right alternative of bio-plastics to maintain the quality and sustainability of its products. Firstly, it is recommended that apart from the planned investigation and volumes of waste reductions, Britvic Plc. may also provide a trend analysis of the waste reduced as a result of recycling of its disposals. The trend analysis in the corporate responsibility report would provide a quantitative measure of the value added as a result of social and environmental responsibility acts and thus would help in reducing the deficiency of such disclosures. The investor would feel that he is also a part of benefit received by the society which would deserve a cost. Secondly, it is also recommended that Britvic Plc. should include an analysis showing the increase in profitability of its business over the years since it started the corporate responsibility disclosures. Also a section in the report needs to be added showing the profitability growth solely due to the acts of corporate social responsibility which is over the normal profitability growth rates. Thus the stakeholders would come to realize that their returns are indeed maximized although the company had to bear some cost for it (Innes and Norris, 2005, p.4). References Banerjee, S. B. 2007. Corporate Social Responsibility: The Good, the Bad and the Ugly. Edward Elgar Publishing; Great Britain. BRITVIC PLC. 2013. CORPORATE GOVERNANCE. [Online]. Available at: http://www.britvic.com/corporate-governance.aspx. [Accessed on 11 April, 2013]. Hawkins, D. E. 2006. Corporate Social Responsibility: Balancing Tomorrows Sustainability and Todays Profitability. Palgrave Macmillan; China. Innes, J. and Norris, G. 2005. Corporate Social Responsibility: a case study guide for Management Accountants. Butterworth-Heinemann; Great Britain. Mallin, C. A. 2009. Corporate Social Responsibility: A Case Study Approach. Edward Elgar Publishing; UK. Schwartz, M. S. 2011. Corporate Social Responsibility: An Ethical Approach. Broadview Press; Canada. Bibliography Baxi, C. V. and Prasad, A. 2005. Corporate Social Responsibility: Concepts and Cases: The Indian Experience. Excel Books India; New Delhi. Beesley, M. E. and Evans, T. 1978. Corporate Social Responsibility: A Reassessment. Taylor & Francis; Great Britain. Read More