Essay: Sustainability Reporting Analysis Of Caltex Australia.

Purpose: This assessment is designed to allow students to research and analyse current social issues in accounting and evaluate their impact on various stakeholders. As a group assessment, it further develops students’ team working skills.

Company to be done this on is Caltex Australia

Groups are to research the current state of Sustainability Reporting. As a result of their research groups need to develop a video presentation detailing the current state of sustainability reporting including the issues, practices, etc using higher order analysis and explaining the implications for various stakeholders in relation to financial decision making. The video presentation should conclude with supported specific recommendations as to how organisations and their accounting advisors should proceed in light of the analysis.

Research Students need to support their analysis with reference from the text and requirements: minimum of ten (10) suitable, reliable, current and academically acceptable sources – check with your tutor if unsure of the validity of sources.

Groups seeking Credit or above grades should support their analysis with increased number of reference sources comparable to the grade they are seeking.

A primary feature of a sustainability report is that it should represent a reasonable and balanced presentation of the sustainability performance of the organization that essentially involves both the positive and the negative contributions. In order to understand the primary features and guidelines in which a sustainability report must be prepared, the concept of sustainability reporting must be understood. Sustainability reporting can be referred to as a broad term that defines the entire process of recording and the preparation of the financial statements in regards to the economic, environmental and the social aspects of business.

This particular study aims to evaluate the annual report of Caltex Australia in order to find out whether the management of the company has followed the sustainability reporting guidelines and the issues and implications that have to be faced by the stakeholders in case of omission of the reporting guidelines. The annual report of the company that has been chosen for the purpose of evaluation belongs to the financial year of 2016 (Ioannou and Serafeim 2017).

The detailed guideline that has been used for the purpose of evaluating whether the annual report of Caltex Australia has been prepared by following the sustainability regulations, is the ASX Corporate Governance Principles and the governance guidelines established by the Australian Council of Superannuation Investors (ACSI) and the Financial Services Council (FSC). The format of a sustainable report depends on the management of the company preparing the financial report of the company. However, the company should focus on providing accurate, quality, consistent and relevant information on their business operations in the financial reports, prepared (Fassin 2015).

The standards that will be utilized for evaluating the annual report of Caltex Australia are as follows:

• Definition of the business conducted and the operations related  to it
• Identification of the key stakeholders
• Determination of what is material
• Identification of the methods of measurement and reporting of the material risks
• Reporting of the framework and the particular standards for the measurement of the environmental, social and governance issues

Caltex Australia has been an Australian listed company. The information that has been provided by the management of the company in its annual report in regards to the business that is conducted by the company is that Caltex delivers lubricants, high quality fuels, and other related services to its diversified range of customers. Much information has been provided about the business conducted by Caltex Australia in its financial report (Rayner and Patel 2015).

The management of Caltex Australia has disclosed in the financial report much information about the different subsidiaries owned by the company in different parts of the world. Thus, it can be evidently stated that the financial report prepared by the management of the company has successfully adhered to the first guideline of the sustainability guidelines established by the regulatory committees (del Mar Alonso-Almeida, Casani and Rodriguez-Pomeda 2015).

Research

The identification of the key stakeholders is an important consideration in ensuring that the sustainability of the financial report of the company has been properly achieved. The stakeholders of business may be identified as employees, customers, suppliers, distributors, community, governments and shareholders. The primary purpose of a sustainable report is ensuring that the interests of the stakeholders of business are met properly (Alonso?Almeida, Llach and Marimon 2014).

In case of Caltex, the management of the company has efficiently established a Code of Conduct that provides the exact guidance as to how the employees and other stakeholders of business must be treated. The code works hand in hand with the other policies and programs like the Fraud and Corruption Control Policy, the Ethical Business Practices Policy, the Harassment and Bullying Prevention Policy and the Competition and Consumer Act Compliance Policy. The management of the company also holds regular meetings with the government and the industry stakeholders for the purpose of sharing information in regards to the company performance and other industrial developments. The company also adheres to the Australian laws in order to safeguard the interests of the company and its stakeholders. It also sets key performance indicators for the purpose of measurement of environmental, health and safety performance and the corresponding improvement in respect to the set targets.

The determination and the identification of the material risks involved in the financial statements of the company is a crucial consideration in ensuring the sustainability of the financial reporting of the company. A quality review of the sustainability risks that may be involved in the business operations is very important to be disclosed so that the different stakeholders of business can refer to the financial report and undertake proper corresponding financial or business decision (Junior, Best and Cotter 2014).

The management of Caltex has essentially disclosed the material risks as the risks that are associated with the delivery of the business strategy by the company. The material risks are reported to the Board at regular intervals. The Board of Directors of the company, the Environmental Risk Committee, the Audit Committee and Human Resources Committee of the company receive reports in regards to the material risks. The management of the company also discloses the detailed analysis of the material risks in the books of accounts and provides an overview into the areas of the financial report that may be subjected to material misstatement or other material risks. The administration of Caltex discloses that information in regards to the assumptions that are made while computing the impairments of the fixed and intangible assets. The explanation of the risks in regards to the foreign exchange, commodity price exposures of the group, and other interest rates provide enough insight into the materiality risks of the company. This will essentially help the investors or other external stakeholders of business to analyze the future performance of the company in regards to the revenue that has been extracted and take important business decisions (Ehnert 2016).

Standards Utilized

The proper reporting of the material risks is a crucial component of sustainable reporting. This is because the clear understanding of the material risks is very important for the third party investors to make financial decisions. A proper and clear disclosure in terms of the areas that may be exposed to materiality is very important for ensuring that the prepared financial statements reflect a true and fair view of company (Pérez?López, Moreno?Romero and Barkemeyer 2015).

As in the case of Caltex, the materiality risks have been clearly reported. The particular areas in the annual report that may be subjected to materiality has been stated in the notes to financial statements. The issue also has been properly reported under the corresponding heads like the impairment of fixed and intangible assets. An unusual event that may affect the materiality of business has also been reported in the notes to the financial statement of the annual report of the company. For instance, the proposed acquisition of the Milemaker Petroleum and Gull New Zealand and fuel supply arrangement with Woolsworth might have an Impact on the materiality of business in the future financial years to come, which have been clearly represented in the annual report of the company. This indicates that the financial report of the company has maintained the sustainability standards (Buhr, Gray and Milne 2014).

The availability of a framework is very important in the measurement of the business operations in order to ensure that the sustainability standards have been maintained (Barkemeyer, Preuss and Lee 2015).

As in the case of Caltex, the regulatory policies that have been established by the management of the company are the Fraud and Corruption Control Policy, the Ethical Business Practices Policy, the Harassment and Bullying Prevention Policy and the Competition and Consumer Act Compliance Policy.

Conclusion

The management of the sustainability issues that have been a major concern in the corporate governance structure of an organization has been an essential ingredient for the establishment of the long-term sustainable returns. The particular sustainability principles that mandate the management of a company to disclose the sustainability risks that the particular company is or may be exposed to, in the future make the financial report of the company easy to understand and decipher by its users.

In case of the Company, Caltex Australia as it can be concluded from the above discussion the financial report of the company has been prepared in compliance with the sustainability standards laid down by the regulatory bodies.

References

Ioannou, I. and Serafeim, G., 2017. The consequences of mandatory corporate sustainability reporting.

Rayner, S. and Patel, T., 2015. A Transactional Culture Analysis of Corporate Sustainability Reporting Practices.

del Mar Alonso-Almeida, M., Marimon, F., Casani, F. and Rodriguez-Pomeda, J., 2015. Diffusion of sustainability reporting in universities: current situation and future perspectives. Journal of Cleaner Production, 106, pp.144-154.

Alonso?Almeida, M., Llach, J. and Marimon, F., 2014. A closer look at the ‘Global Reporting Initiative’sustainability reporting as a tool to implement environmental and social policies: A worldwide sector analysis. Corporate Social Responsibility and Environmental Management, 21(6), pp.318-335.

Junior, R.M., Best, P.J. and Cotter, J., 2014. Sustainability reporting and assurance: A historical analysis on a world-wide phenomenon. Journal of Business Ethics, 120(1), pp.1-11.

Ehnert, I., Parsa, S., Roper, I., Wagner, M. and Muller-Camen, M., 2016. Reporting on sustainability and HRM: A comparative study of sustainability reporting practices by the world's largest companies. The International Journal of Human Resource Management, 27(1), pp.88-108.

Pérez?López, D., Moreno?Romero, A. and Barkemeyer, R., 2015. Exploring the relationship between sustainability reporting and sustainability management practices. Business Strategy and the Environment, 24(8), pp.720-734.

Barkemeyer, R., Preuss, L. and Lee, L., 2015. On the effectiveness of private transnational governance regimes—Evaluating corporate sustainability reporting according to the Global Reporting Initiative. Journal of World Business, 50(2), pp.312-325.

Buhr, N., Gray, R. and Milne, M.J., 2014. Histories, rationales, voluntary standards and future prospects for sustainability reporting. J. Bebbington, J. Unerman and B. O’Dwyer, eds, pp.51-71.

Fassin, Y., 2015, July. The Status of CSR and Sustainability Reporting at Universities in Europe: a Survey. In Proceedings of the International Association for Business and Society (Vol. 26, pp. 179-191).