Advanced Financial Accounting Problems In Australia - Case Study Example

Running Head: Sustainability Reporting Name: Course: Institution: Lecturer: Date: According to Burritt, & Schaltegger, (2010), corporate reporting is one of ways through which organizations practice ethical responsibility. It enables an organization to ensure environmental, social and economic responsibility of the area and people surrounding their premises. Sustainability reports are presented as required in the global reporting initiative and help organizations management and shareholders among other stakeholders to be keen on ensuring that their operations are environmental and social friendly. Corporate reporting makes any organization to be careful on ensuring that any operations carried out in the organization do not affect their relationship with the community and ensure environmental protection, thus, facilitating improvement of company’s performance and also build their reputation due to their contribution to the society. Ioannou, & Serafeim, (2011), point out that in sustainability reporting according to GRI 3, companies are expected to report to the stakeholders how the company’s activities are impacting on the environment. They should also the economic benefits that the society is deriving from the company as well as the social impact the company’s activities are creating for the community around them. This essay is focused two mining companies Leighton holdings and AGL Company which are listed in the Australian Securities Exchange. Our aim is to evaluate how they have adopted GRI 3 in presentation of their corporate sustainability report based on the impact of their operations on the environment, cooperation with society and the economic impact they create on the community. The paper also provides analysis of the various items that are reported for the two companies so as to provide information on their corporate social responsibility and if each of the companies follows the requirements set up by the GRI that in sustainability reporting companies should consider environmental, social and economic impact of company’s activities to its surrounding. AGL Company is deals in generation or renewable energy and thermal energy and its distribution to their customers. Thus, the company is involved in large scale production and distribution of gas and electricity as well as their storage and eventually their distribution. These operating activities may result to major risks to the environment, employees, and the society and may eventually affect the economic performance of the community in which the company operates. That is why based on the GRI it is important that AGL provides their sustainability reports for audit so that stakeholders can evaluate the effectiveness of the company’s operations annually. The company is also in charge of maintaining assets used in production of the renewable and thermal energy they produce. The company operates in segments which provide their reports for consolidation so that the information presented to the shareholders in on corporate governance is consolidated. On the other hand, Leighton holding company is a mining company that deals in mining and also deals with a lot of contraction in the mining industry. Thus, the company is responsible for its workforce, the environment and the community surrounding it so that all they activities so impact positively. That is why it is important that the company reports their corporate social responsibility to promote transparency and accountability in their activities and thus ensure they do not result in risks in the society. The company also provides construction and property development services to their customers. This is a parent company with many subsidiaries that deal in the same operating activities. To ensure transparency in enhancing environmental, social and economic responsibility the company consolidates their corporate reports before based on the GRI guidelines before presenting them to the shareholders during presentation of annual reports. Thus, due to the nature of the operating activities of both AGL Company and Leighton holdings sustainability reports as guided by GRI 3 are important in facilitating evaluation of the transparency, accountability and impact of their activities. The reports are provided based on GRI 3 guidelines since they are focused n the impact of the company’s operations on the economic, social and environmental aspects of the companies as depicted on the information disclosed in the reports. In its sustainability report AGL company has disclosed information in three categories, that is, disclosures on environmental impact of the company’s activities, the economic impact of the company and eventually how the company relates with the employees and those living around the company. the economic impact of the business is disclosed through the reporting of the profitability created in the company through their earnings, the report also discloses information on the employment opportunities created in the company that benefit the society directly resulting in improvement in living standards. The report also analyses the level of customer satisfaction derived by the customers from the company’s operating activities. As part of economic impact of the company the report discloses the company’s approach to risk management so as to promote suitable growth in the company and the surrounding community (Dumay, et al 2010). As supported by Manetti, (2011), the social impact of the company is disclosed through information provided about employee’s status in the company. The report provides an analysis of their remuneration, working environment status and how health and safety has been sustained for the benefit of the employees in the company. The percentages of employees involvement in decision making within the company has also been disclosed which reveals the level of social interactions within the company. The company also discloses how in conjunction with NGO’S support various projects that are aimed at promoting community welfare. AGL Company has also disclosed information on their environmental responsibility within the company, the vision of the company is to maintain low profile risks within the company and in the surrounding environment. The company facilitates environmental responsibility through proper use of resources in the environment as disclosed in the report. The company discloses of the environment management systems available in the company used in enhancing proper environment management. Since most of the operations of the company emit carbon the company has also disclosed on how the emissions which are harmful to people and the environment are managed. The company’s activities may also lead to water wastage and pollution, the company has disclosed on their commitment to water management. In Leighton holding has disclosed their commitment in ensuring environmental protection such that in 2013 there are no environmental risks reported. The Company has also enhanced their resource management so as to ensure that their activities do not affect the environment. In promoting social responsibility the company has on board the community by involving themselves in projects that will promote community development. The company has also disclosed on its commitment in promoting the welfare of both the employees and their customers by ensuring health and safety standards are upheld in the company (Roca, & Searcy, 2012). The company also promotes diversity in their service provision as well as in employment so that discrimination is not allowed. For efficiency among the employees the company also supports programs that will facilitate development of employee’s skills so as to boost their performance. In reporting their economic impact the company has disclosed the employee’s remuneration which reflects on the economic level of the employees. The report also discloses information on employees such as their gender and origin which may reflect the economic impact of the company on the community. The report also discloses the role of the company in infrastructure development which is important in boosting economic performance of the community (Dingwerth, & Eichinger, 2010). Global reporting initiative guidelines have been followed in disclosing of information contained in the sustainability reports for the two companies. The guidelines are provided to promote same standards to be used as the basis for disclosing the information so that comparison of sustainability reports for two companies in the same industries is possible (Fonseca, 2010). As required by the guidelines the companies have disclosed impact of their activities on the environment, how resources are managed in the society so that there is no pollution or wastage. The companies have also disclosed information relating to the employees, their remuneration, how they participate in the company and how their welfare is catered for in the company. Company’s participation in development of the community has also been disclosed as part of the information provided. To facilitate disclosure of the economic impact of the company on the business information on profitability, impact on employee and consumer welfare as well as sustainability of growth within the company have been disclosed as required by GRI guidelines (Lozano, & Huisingh, 2011). According to Gnansounou, (2011), the strength with sustainability reporting is that transparency of a company in corporate responsibility enhanced and eventually better relationships, working environment and performance within the company is improved. The reporting also puts the shareholders in the light with regard to social responsibility within the company. However, the reports are not quantifiable so that at times they can be biased to meet the needs of the management and thus may fail to be a fair representation of the status within the management (Chvatalová, et al 2011). Comparison of social responsibility for companies may be difficult since companies are operating in different environments. Leighton holding company has complied with GRI 3 guidelines. To bridge the gap in following the guidelines as set by the GRI standards it is important that the management of each company faithfully adopts the provided guidelines in their disclosures (Kolk, 2010). References Burritt, R, L, & Schaltegger, S, (2010), sustainability accounting and reporting: fad or trend, Accounting, Auditing & Accountability Journal, 23(7), 829-846. Chvatalová, Z, Kocmanová, A, & Dočekalová, M, (2011), corporate sustainability reporting and measuring corporate performance, in Environmental Software Systems, Frameworks of eEnvironment (pp. 245-254), Springer Berlin Heidelberg. Dingwerth, K, & Eichinger, M, (2010), Tamed transparency: how information disclosure under the Global Reporting Initiative fails to empower, Global Environmental Politics, 10(3), 74-96. Dumay, J, Guthrie, J, & Farneti, F, (2010),GRI sustainability reporting guidelines for public and third sector organizations: a critical review, Public Management Review, 12(4), 531-548. Fonseca, A, (2010), how credible are mining corporations' sustainability reports? A critical analysis of external assurance under the requirements of the international council on mining and metal, Corporate Social Responsibility and Environmental Management, 17(6), 355-370. Gnansounou, E, (2011), assessing the sustainability of biofuels: a logic-based model. Energy, 36(4), 2089-2096. http://www.agl.com.au/~/media/AGL/About%20AGL/Documents/Media%20Center/What%20We%20Stand%20For/2013/AGL051_Sustainability%20Report_2013_LR2a.pdf https://www.leighton.com.au/__data/assets/pdf_file/0006/28878/280314b_asx.pdf Ioannou, I, & Serafeim, G, (2011), the consequences of mandatory corporate sustainability reporting, Harvard Business School Research Working Paper, (11-100). Kolk, A, (2010), Trajectories of sustainability reporting by MNCs, Journal of World Business, 45(4), 367-374. Lozano, R, & Huisingh, D, (2011), Inter-linking issues and dimensions in sustainability reporting, Journal of Cleaner Production, 19(2), 99-107. Manetti, G, (2011). the quality of stakeholder engagement in sustainability reporting: empirical evidence and critical points, Corporate Social Responsibility and Environmental Management, 18(2), 110-122. Roca, L, C, & Searcy, C, (2012), an analysis of indicators disclosed in corporate sustainability reports, Journal of Cleaner Production, 20(1), 103-118. Read More