Standalone Sustainability Report for the Betterment of the Welfare of the Different Shareholders - Essay Example

Sustainability Reporting Name: Institution: Date: Sustainability Reporting Introduction Sustainability reporting is becoming very important in this era of increased customer awareness and community participation. Standalone sustainability report provides vital information that would not have otherwise been released to the public by the company. Legitimacy, transparency, and accountability are enhanced through sustainability reporting. Prospective investors would like to know how affairs in the company are being run while shareholders want to understand the performance of the company. This paper discusses pertinent issues revolving standalone sustainability reporting. These include rationale, intended stakeholders, content of sustainability report, guidelines for reporting, and recommendations on how to go about sustainability reporting. Rationales for standalone sustainability report Motivation for sustainability reporting for private and public sectors differ. In private sector sustainability is generally done to fulfill industry standards and legal requirement. However, sustainability reporting in public sector by the national government is as a result of domestic political pressure, trading relationships, international agreements, targets and the desire to cut costs. Conceptualization of sustainability in the public sector adopts a holistic approach capturing prevailing reporting in actions, identification of gaps and how it can be focused towards the central purpose of the organization (Bryson, 2004). Reporting on sustainability using an annual report is an important element in comprehending the commitment of the company towards sustainability reporting, especially as a statement in the annual report of the company falls under the regulatory regime of the Corporation Act. The information included has to be linked to financial outcomes and corporate strategy then a simple commentary on the sustainability commitments and policy which provide indication as to performance. In Australia the Corporations Act 2001 provides guidelines towards sustainability reporting. The Act requires that companies have to provide details of breaches of environmental licenses and laws in their annual reports (Kaatz, Root & Bowen, 2005). The Act requires that providers of financial products with an investment component to disclose the degree to which labor standards or social, environmental, or ethical considerations are taken into account during investment decision-making. The stakeholders have a right of knowing what is happening in the organization and should be treated equally. Different groups have an interest in the running of the organization for one reason or another. Sustainability report will give everyone an opportunity to evaluate the future prospects of the organization and know whether there will be growth and profitability. The expectations of different groups of stakeholders have to be met by the management while dispensing the activities of the company. It is moral and normative for the company to provide standalone sustainability to all stakeholders who are interested in the running of the company. Sustainability reporting is disclosing, measuring, and being accountable to both external and internal stakeholders for organizational performance directed towards the objective of sustainability development. Sustainability reports based has to provide a reasonable and balanced representation of the sustainability of the organization reporting that includes both negative and positive contributions (Kassinis & Vafeas, 2006). Sustainable report has to disclose results and outcomes that happening within the period of reporting in the context of the organization’s strategy, commitment, and management approach. The company has to be managed for the benefit of its stakeholders. Stakeholders have to take part in decisions that significantly affect their welfare. Intended stakeholders for this report There are different groups of stakeholders who have stakes in the organization and the needs of these groups are addressed by the organization. The organization has functions that work towards the various organizations. The objective of the stakeholder theory is to enable management to strategically engage in the stakeholders’ management. Customers will want know how various goods are manufactured to be sure about the quality of what they are using. Employees are interested in the profile of the company and the conditions under which workers are handled. If there is any breach of any labor laws, it can be of great concern for the employees. Local communities have to understand how company is doing with regard to environmental conservation and how much waste is being discharged in rivers. Employment opportunities in the company have to be available to all (Bryson, 2004). Suppliers and distributors have to be certain about the economic condition of the company and the liquidity is required to settle short term debts of the company. Suppliers have to understand the history of the company and whether it is promising to continue working with it. Shareholders have to informed how the company performance in every period and whether there have been any challenges faced in the running of the company. The management has to provide information which is also important to government. Content of sustainability report All stakeholders have to be treated fairly by the company since it is their right. Management maintains a fiduciary relationship to all stakeholders. The information that is reported has to be sufficiently accurate and detailed for all stakeholders to assess the reporting of the performance of the organization. The sustainability report has to contain information that is relevant to what the shareholders want. The local community will be interested to know the level of pollution that the company is causing in the area and what measures have been taken to mitigate the effects. If there has been any breach in licensing and other environmental considerations, the company has to indicate the information in its sustainability report (Friedman & Miles, 2006). The sustainability report will include environmental, economic and social issues and indicators have options of being presented in many different ways; starting from qualitative responses to quantitative measurements. The report should contain strategy and profile: disclosures have to set the overall setting for understanding organization performance such as profile, governance, and strategy. The information is important to employees, local communities, suppliers and also shareholders. The government is interested in knowing how different businesses are carried out in the organization. The sustainability report also contains the management approach. These are disclosures which cover how the company handles a given set of topics in order to offer context for comprehending performance in a particular area. The shareholders really want to know how the organization performed and how it is being managed. Also investors will be interested in the management of the company before they invest their money. Sustainability report also has performance indicators. These indicators provide comparable information on the social, environmental, and economic performance of the organization. Reporting organizations have to give information that is relevant to the various stakeholders (Roberts & Mahoney, 2004). The report has to include strategy and profile, management approach, and performance indicators. Even the government has a duty of protecting the environment and therefore, aspects on the environment such as pollution has to be reported fully. The profile of the company is very important for the part the strategy and analysis subsection. The section provides a strategic view of the organization relationship to sustainability. The economic parameter of sustainability concerns the impacts of the organization on the economic conditions on its stakeholders and on economic systems at global, national, and local levels. This information includes the main economic effects of the organization in the society and the flow of capital among various stakeholders. The environmental parameter of sustainability regards the impact of an organization on the non-living and living natural systems, that includes ecosystems, air, land, and water. Environmental indicators cover performance related to inputs and outputs. It also includes environmental compliance, biodiversity, and other information like environmental expenditure and the effects or impacts of services and products. Other information includes decent work and labor practices (Ostroff, 2006). The particular aspects under the category of labor practices are founded on internationally recognized universal standards. Guidelines for reporting format There are some areas that are very important and have to be included in sustainability reporting which include: Cost-effective The framework has to be cost-effective and consistent, especially in reference to small to medium enterprises, that may possess a lesser environmental and social impact as compared to their larger counterparts, but moreover, a lesser capacity in order to meet sustainability reporting additional costs. Flexibility The ‘if not, why not’ approach has been selected as the most appropriate for mandatory sustainability reporting in which case an organization reports non-financial information which is important to the stakeholders and the company, but supports the manner in which it reports and why other information is excluded. Therefore, it remains accountable. Comparability Non-financial information has to be comparable. If sustainable reporting is not imposed, there is still chance for a standard reporting framework to make the information which is voluntary supplied comparable. The sustainability report has to reflect the organization’s relevant environmental, economic, and social impacts that would significantly influence the assessment and decision making of the stakeholders. Recommendations It is important for any organization to have a sustainability report. Sustainability report has to possess reasonable balance ethical, moral, environmental, financial, humanitarian among other issues that will address the needs of various stakeholders. The relationship between the firm and stakeholders are founded on moral commitments. The relations between the stakeholders and the firm can be valuable for the organization as a reflection of its values and principles. A company has to define its fundamental moral principles, and apply these principles as a guidance of making decisions (Kassinis & Vafeas, 2006). The company should not ignore the concerns of stakeholders for the simple reason that honoring them will not add to the strategic interests of the company. Decisions which are carried out without considering their impact are usually regarded as being unethical. The firm has to outline the principles to apply when it comes to operating building contracts with stakeholders. The revelations made in the sustainability report assist investors in making the best decisions with regard to the organization. In order for the activities of the company to be allowed in other parts of the country or region, it has to demonstrate ethical or moral concern in its operations. The license of the company can be taken away if it engages in activities that are contrary to the code of conducted of businesses in the country. There are reasons as to why some industry associations and corporations do not support mandatory reporting. In the first place, additional compliance costs will have to be incurred if mandatory was implemented. Secondly, there would the tendency of the company establishing “a compliance mentality” whereby organizations change their operations in accordance to the regulations as opposed to the interest of the company (Doelle & Sinclair, 2006). However, there are a number of reasons that deem it fit to support mandatory reporting. Mandatory reporting establishes structures and systems for understanding risks and impacts, which had hitherto not been addressed by many organizations. Significantly, it offers institutional investors with access to information on non-financial risks; permitting them to develop a better overall picture of the organization. It is important also to note that mandatory sustainability reporting ensures transparency and accountability by the organization to all its stakeholders. Conclusions The ethical or normative requirement and managerial approach in stakeholders requires that full information has to be provided to the stakeholders. Standalone sustainability report has to be provided by the company for the betterment of the welfare of the different shareholders. Sustainability report has both advantages and disadvantages but the organization has to present some disclosures that will help investors in making decisions concerning the firm. This report provides the rationale of sustainability research and what is the content of this report. The company has to be sincere in its undertakings and present the needs of the customers without discrimination. Every part of the standalone sustainability report is important to a particular group of stakeholders. Despite the negative effect of standalone sustainability reports, each organization has a responsibility of divulging the right information to various stakeholders. References Bryson, J.M. (2004). What to do when stakeholders matter: Stakeholder identification and analysis techniques, Public Management Review 6 (1): 21-53. Doelle, M. & Sinclair, A.J. (2006). Time for a new approach to public participation in EA: promoting cooperation and consensus for sustainability, Environmental Impact Assessment Review, 26, 185-205. Friedman, A.L. & Miles, S. (2006). Stakeholders: Theory and Practice, Oxford: Oxford University Press. Kaatz, E., Root, D. & Bowen, P. (2005). Broadening project participation through a modified building sustainability assessment, Building Research and Information, 33 (5): 441-454. Kassinis, G. & Vafeas. N. (2006). Stakeholder Pressures and Environmental Performance," Academy of Management Journal, 49(1), 145-159. Roberts, R.W., & Mahoney, L. (2004). Stakeholder concept of the corporation: Their meaning and influence in accounting research, Business Ethics Quarterly, 14 (3): 399-431. Ostroff, F. (2006). Change Management in Government, Harvard Business Review, 84(5), 141-147. Read More