Sustainability Performance Interpretation - Research Paper Example

SUSTAINABILITY PERFORMANCE INTERPRETATION Overview In the management of modern firms, one important variable that is used to assess overall performance and commitment to growth is sustainability (Pogue, 2010). As noted by quote (year), sustainability is a multivariate concept spanning across several variables of the management of an organization. In most literature, there are three broad categories given to the variables under which sustainability fall. These categories also referred to as the pillars of sustainability include social, economic, and environmental (quote). As global firms strive to manage their organizations to fulfil these pillars of sustainability, once major challenge they face has to do with how to ensure that the outcome of their sustainability efforts fit into acceptable and prescribed standards. To respond to this challenge, the Global Reporting Initiative (GRI) has been introduced to most global firms in assessing their sustainability efforts (Willis, 2013). Through the GRI principles, firms are able to engage in sustainability performance assessment (SPA), an exercise which has been performed for three major companies namely Caesars Entertainment, Carnival Cruises, and Royal Caribbean Cruises. In this case study, the outcomes of the SPA are interpreted at both intra-company and inter-company level to know how well the companies adhere to sustainability categories both within their own means and among themselves. The GRI contains a total of six categories and sub-categories including economic, environment, human rights, labor practices, product responsibility, and society performance. GRI Practices at Caesars Entertainment As indicated earlier, there are 6 major categories and sub-categories for assessing sustainability for any single company. As far as Caesars Entertainment is concerned, its internal performance for for all the 6 areas of sustainability performance has been summarized in the table below. Table 1: Sustainability scores for Caesar Entertainment Indicator Total points available Score earned Percentage score Economic 45 6 13.3 Environment 170 40 23.5 Human rights 60 0 0 Labor practices 80 27 33.8 Product responsibility 45 17 37.8 Society 55 7 12.7 From the table give above, it would be seen that Caesar Entertainment’s greatest commitment in terms of sustainability in the past few years has been on product responsibility and labor practices, where it scored 37.8% and 33.8% out of total percentage of 100, given across different total points available. The company has however performed very poorly in the area of human rights as its score was 0%. On the whole, Caesar Entertainment can be said to have been very sluggish towards sustainability as the area of its highest score could not even reach 50% of total available marks. For both economic and society performance, the company score below 10% with a meager 23.5% in environment performance. The score of 0% for human rights is an alarming situation for the protection of the rights of both internal and external stakeholders (quote). Some of these stakeholders whose rights are commonly infringed in sustainability reports include customers and employees (quote). GRI Practices at Carnival Carnival Cruises’ sustainability performance among the 6 major categories and sub-categories have been summarized in the table below. Table 2: Sustainability scores for Carnival Cruises Indicator Total points available Score earned Percentage score Economic 45 12 26.7 Environment 170 83 48.8 Human rights 60 18 30 Labor practices 80 30 37.5 Product responsibility 45 14 31.1 Society 55 13 23.6 Within its own field of practice, it can be said that Carnival Cruises has showed a relatively same strength of commitment towards the sustainability categories and sub-categories. This is because the scores for most of the areas are in the same range of score. With this said, the company showed a clear distinction for environmental performance where it had the highest score of 48.8%. With growing global concern for environmental preservation, this can be said to be a step in the right direction. Labor practices had the second highest score with product responsibility coming third with 37.5% and 31.3% respectively. Of the 6 areas, the company’s worse performance was in society performance where it scored 23.6%. This is an indication of low commitment towards the welfare of the larger society the company finds itself such as in issues like corporate social responsibility (quote). Human rights had 30% with economic also having a low score of 26.7%. GRI Practices at Royal Cruises As far as sustainability performance is concerned, Royal Cruises have showed different levels of commitment, which have been translated into the scores earned in the table below. Table 3: Sustainability scores for Royal Cruises Indicator Total points available Score earned Percentage score Economic 45 14 31.1 Environment 170 43 25.3 Human rights 60 5 8.3 Labor practices 80 13 16.3 Product responsibility 45 11 24.4 Society 55 6 10.9 From the table give above, it is revealing that Royal Cruises has a differential level of commitment attached to the different categories and sub-categories. This is clearly seen in the score between the highest scoring indicator and lowest scoring indicator, which is 13.1% and 8.3% for economic and human rights respectively. Apart from these two, there were two other indicators that were scored in the range of 20, which are environment and product responsibility which were scored 25.3% and 24.4% respectively. Labor practices and society performance were both scored in the range of 10s with 16.3% and 10.9% respectively. On the whole, the trend of score shows a poor commitment to sustainability at Royal since its highest score was not even up to 40%. With human rights scoring the lowest, it means that company has largely failed to protect the right of its stakeholders, particularly employees (Karl-Henrik, 2010). Economic Performance among companies Quote (year) stated that companies are expected to have a positive impact on their stakeholders as far as financial flows are concerned. Among the three companies therefore, it should be possible to have a comparative analysis to know which of them is most committed and least committed to ensuring that at the local, national and global levels, it is able to generate the best capital yield for stakeholders. For want to space, the total score earned by each company in the category of economic performance will be compared. From figure 1, it will be seen that there was a total of 45 points available. Out of this, the companies had different score earned, which was subsequently translated into percentage. Figure 1: Economic performance of companies From figure 1, it would be seen that none of the three companies could score more than 50% in terms of economic performance which was measured with a total point of 45. This is a major score of worry, showing that the companies generally have very low commitment levels for benefit plan obligations, monetary values, standard enty level wages, and other economic indicators given in the SPA. Among the three companies however, Royal was the highest scoring with 31.1%, which was followed by 26.7% from Carnival and only 13.3% from Caesar. Environmental Performance among companies In terms of environment, some of the most important variables and indicators that were considered for creating the SPA were water discharge, weight of hazardous and non-hazardous waste, volume of spill, water bodies and habitats, among others. It is based on this that quote (year) referred to environmental sustainability as one of the most important areas that ensure general continuity for businesses and the people that run it. To know how the companies have each approached environmental sustainability, figure 2 is used. Figure 2: Environmental comparison among the companies The individual performance of the companies towards environmental performance seems to be a bit higher. This is because for once, a company came very close to scoring 50% of the points at stake, which was Carnival, which had 48.8%. The difference between this company and the next in line was however too vast, as Royal had 25.3% and Caesar, 23.5%. This shows a very strong commitment of Carnival towards the environment, which is enviably not competed closely by its competitors. It also shows a strong focus on environmental preservation by Carnival. Human Rights Performance among companies Under human rights, such issues as employee training, incidents of discrimination, freedom of association, and child labor were all factored in the SPA. This shows that the level of human rights performance could be an indicator of how well the companies relate with not only employees but the outside well also (quote). Among the companies, figure 3 shows that there were different levels of commitment attached to human rights issues. Figure 3 Human right issues among companies Based on the figure above, it can be seen that human right performance is one of the least performing among the companies. This is because the highest earning company could not even earn 40% out of the total of 60 points. There was also a company scoring 0% with the second highest scoring only 8.3%. With Carnival which scored 30%, it can be indicated that the company showed a lot of difference between itself and Royal which had 8.3% and Caesar which scored 0%. This is a score that should be of concern to managers within Royal and Caesar, especially their legal team. Labor Practices Performance among companies As companies rely on employees and human resource to get their orgnanisations ran, it is only important that the labor practices among the companies will be healthy ones (quote). The labor practices indicator therefore focused on such issues as skills management, employees reviews, breakdown of employee diversity, salary and remuneration, among others. Once this was done, there were different outcomes that were produced at the company level for the three companies. These performances have been displayed in figure 4 below. Figure 4: Labor practices among the companies As far as labor practices are concerned, it is possible to state that there was a close range of performance among the companies with Carnival and Caesar coming neck-to-neck in terms of their points earned out of the total of 80. Whiles Carnival scored 37.5%, Caesar scored 33.8%. Royal on the other hand was somewhat far behind the two companies with only 16.3%. On the whole, it can be said that the companies have been more concerned about ways in which they can build their human capital to ensure that their human resource is well positioned to give the companies what they expect to gain in terms of work output (quote). This level of commitment is however expected to be translated into the larger world in which the company operates such as human rights issues and society. Product responsibility Performance among companies In the processing of their day-to-day activities, the companies in the case rely strongly on products outsourcing. Whiles doing this, there are responsibilities that they are expected to bear, some of which include health and safety impacts, as well as product and service information accuracy. In figure 5, the extent to which the companies have been performing among themselves in product responsibility is given. Figure 5: Inter-company product responsibility From figure 5, there is a very clear indication that the companies have been showing closely marked performance in terms of production responsibility. This point is made due to the differences in percentage scores they had. For example the highest scoring was Caesar with 37.8%, followed by Carnival with 31.1% and Royal with 24.4%. Even though the inter-company competition is competitive, it is regrettable to note that the highest scoring company could not cross the 40% mark. This is a sign of low commitment towards sourcing and using high quality products and services among the companies (quote). Society Performance among companies Because the companies do not operate in isolation but in the midst of a larger society, their society performance as manifested in areas such as local community engagement, negative impacts on local communities, risk related to corruption, and political contributions can be said to be very important. On the whole, the figure below shows how the companies performed among themselves. Figure 6: Society performance of companies Figure 6 shows a very regrettable situation where the companies displayed very low levels of commitment towards the society in which they operate. This is said because the highest scoring company which was Carnival had only 23.6% with Caesar coming second with 12.7% and Royal in the last position with 10.9%. Certainly, this score should be a source of worry if the companies should prove to their external stakeholders that they are present not only for their personal gains but for the gains of the large society also. Conclusion and recommendation In the management of modern firms, one important variable that is used to assess overall performance and commitment to growth is sustainability (quote). As noted by quote (year), sustainability is a multivariate concept spanning across several variables of the management of an organization. Regrettably, the case study has showed that the companies are more committed to indicators that guarantee and bring direct internal growth such as labor and and economic performance, whiles leaving out those that benefit external stakeholders as seen with human rights and society. However, it is impressive that the commitment towards the environment was high. Going forward, it will b recommended that the companies need more work in all the indicators and sub-indicators as there was no area that a single company could cross the 50% mark of total points available. Whiles doing this, the companies ought to balance internal gains with external gains. Read More