Assessment Description – Research/Case Study
You will undertake a comparative study/assessments of the current or recent published (ASX200 Listed Companies) (https://www.asx200list.com/) Corporate Responsibility Reports of any two companies of your choice. However, the two (2) companies must be from the same industry. In examining these reports, consider the role of corporate reporting on sustainability through, for example, the Global Reporting Initiative’s Sustainability Reporting Guidelines and other Corporate Social Responsibility (CSR) standards as well as the performance of Corporate Governance.
Briefly, consider the national and the sectoral/industry context in which these two firms operate. This should give you some ideas of the institutional and structural pressures on these companies to pursue corporate social responsibility and sustainability accounting. You will need to compare the two reports in terms of the quality and quantity of information provided. Support your analysis and discussion with Literature Review and various accounting theories that explain Corporate Social Responsibility Reporting.
Definition of CSR
Corporate social responsibility is one of the key aspects for all the listed entities as it derives what actually company has performed for the public they serve in. Corporate social responsibility is related with the sustainability accounting as both are related with the accountability of company to its stakeholders. Corporate social responsibility or CSR is the way company manages its business processes in order to have positive result on society. In this report there will discussion on CSR practices followed by AGL Energy and Origin Energy. For this purpose critical analysis of CSR reports have been performed to make comparative analysis of CSR practices followed by both companies. Both of these companies belong to the energy sector in Australia and have responsibility to make compliance with CSR requirements. The main corporate social responsibility of energy companies in Australia is to protect environment, make innovation, and fight against the climate change, workers safety, engagement of community, and safety of personal and working life.
Corporate social responsibility (CSR) and sustainability accounting
There can be multiple definition of CSR as there is no uniformity in its definition. To the best it can be defined as company’s responsibility towards the society and environment for which it operates. The best way to promote the corporate social responsibility is help the society and environment by reducing pollution and waste, to conduct educational and social programs and to earn maximum returns on the capital employed. The best way to account for corporate social responsibility is to have sustainability accounting for all the efforts that have been practiced by the companies for corporate social responsibility (Gottschalk, 2011). Sustainability accounting refers to measurement tool used by the organisations to report various concerns of the corporate social responsibility. The primary purpose of sustainability reporting is that it helps the organization in considering the impact of sustainability issues and also enables organization to be more transparent for the accounting of various financial as well as non financial matters.
Legislative Requirements and Financial Accounting Theories of CSR/sustainability accounting
CSR becomes the most significant phenomenon in Australia as non financial items are also the part of reporting requirement at international level. All the listed companies in Australia are required to prepare the CSR report to report on the non financial matters that are the main issues that have to disclose in front of the stakeholders. CSR is aligned with the sustainability accounting as main purpose of sustainability accounting is to fulfill stakeholder theory of accounting similarly CSR is performed to report the key sustainable matter to stakeholders of the company (Gibassier and Unerman, 2014). So it can be said that both CSR and Sustainability accounting fulfills the criteria of stakeholders theory as well as legitimacy theory. Stakeholder theory clearly provides that company and its managers in action must perform for their stakeholders either in form of increasing the profit or through delivering best course of action that fulfill all the requirement of stakeholders in sustainable manner. As the part of legislative requirement Australian entities especially energy companies have to be more pertinent towards the reporting of social and environment matters to their stakeholders. Energy companies in Australia impacts the environment a lot that make them highly responsible to promote such activities that work for the welfare of people (Rahbek and Pedersen, 2015).
Sustainability Accounting and Reporting
AGL Energy and Origin Energy Limited companies are operating within the energy industry of Australia. As such, there is huge institutional and structural pressure on the companies to adopt the sustainable business practices for ensuring the protection of environment by conserving water, energy and waste. The companies develop and publish their sustainability reports on annual basis for reporting of their sustainability performance to the external stakeholders and ensuring that they have complied with sustainability reporting guidelines. The comparison of the quality of sustainability reporting of both the companies is analyzed as follows:
Analysis of Reports merely Public Relation Exercises
It has been argued by various industrial experts that business corporations are adopting the use of developing and publishing their sustainability information only in order to develop a positive image in the eyes of general public. The businesses are adopting the use of corporate social responsibility merely as a shield to hide their unsustainable business practices that can damage the environment. In this context, the business corporations are directed to adopt the global reporting initiative sustainability guidelines for disclosing their sustainability performances. In this context, the sustainability reports of AGL and Origin Energy have been developed as per the GRI standards for ensuring that they depict all the relevant material issues to the stakeholders. Thus, it can be stated that the reports are not merely developed for improving the public relation but has discussed all the material issues influencing the sustainability performance of the companies. The reports intend to provide all the necessary information to the external stakeholders that will help in assessing whether the companies’ operations are conducted in a sustainable manner or not (Origin Sustainability Report, 2017) & (AGL Sustainability Report 2017, 2017).
Measuring of the Corporate Responsibility Performance against the Benchmark
The reports have provided a measure of the corporate responsibility performance of both the companies against the Global Reporting Initiative (GRI) guidelines for sustainability reporting. GRI are the international standards that are developed for businesses, government and other organizations to be adopted as a benchmark to report their sustainability issues. The benchmarks of public policy engagement, community engagement, health and safety, customer experience, ethical conduct, renewable energy and energy market evaluation are used by AGL for reporting of its sustainability performance. On the other hand, Origin Energy has adopted the use of materiality analysis for examining each of its sustainability aspect on the basis of their level of risk to the company and the interest of the stakeholders (Origin Sustainability Report, 2017) & (AGL Sustainability Report 2017, 2017).
CSR and Sustainability Accounting in Australia
Extent of Critical Information Provided by the Sustainability Reports
The sustainability reports of both the companies are providing useful and pertinent information about the measures adopted by them to promote the development of environment, society and community in which they operate. AGL Energy Limited sustainability report is depicting important information in relation to the strategic imperative undertaken by it to drive transparency and attaining the determined sustainability targets (Schaltegger and Bennett, 2006). The performance of the company in various sections of the sustainability issues are depicted in detail in the report. The process undertaken by the company in reviewing the sustainability performance is also provided in detail in the report for promoting transparency in financial reporting (AGL Sustainability Report 2017, 2017). On the other hand, the sustainability report of Origin has also provided all the relevant quality information in context of the sustainability issues. The major sustainability aspects discussed in the report includes climate change, people and culture safety, process safety, waste, land access, communities, supply chain, customers and the relevant laws and regulations (Origin Sustainability Report, 2017).
Extent of Sustainability Reports laying out tangible objectives and planning for the future
The sustainability report of AGL Energy Limited has determined the tangible objective of attaining the high standards of accountability and conducts the business activities in an ethical manner. The company is aiming to transform the electricity industry by fostering the ongoing development in the costs, availability and capabilities through efficient deployment of technologies that creates energy in a sustainable manner. The report has also determined the company planning for the future by redesigning a 20th century regulatory framework for delivering 21st century energy technology (AGL Sustainability Report 2017, 2017).
On the other hand, Origin Energy sustainability report has stated the target objective of overcoming the imbalance between energy security and cost affordability by adapting to the best in class sustainability practices. The company is planning to develop abundance of gas reserves within Australia for meeting the demand of both domestic and international markets through fostering the adoption of carbon constrained business practices as depicted below (Origin Sustainability Report, 2017):
The company also aims to promote its growth in the renewable capacity and its tangible objective in this directed can be depicted as follows:
Extent to which the two corporations can be trusted to serve the common good
The tow corporations develop and publish their sustainability reports on an annual basis for improving the transparency in their business practices. The reports have disclosed in detail the responsible practices adopted for promoting the development of social and economic environment (Origin Sustainability Report, 2017) & (AGL Sustainability Report 2017, 2017).. The policies adopted for protection of climate and community development are undertaken by both corporations actively as depicted by their sustainability reports and thus they are directed towards maximizing the general public welfare (Wales and Hope, 2016).
Extent to which the reports impacts the various stakeholders or shareholders
The sustainability reports developed by both the corporations mainly intends to provide increased information related to non-financial performance of the companies to the external stakeholders, such as investors, creditors and lenders (Origin Sustainability Report, 2017) & (AGL Sustainability Report 2017, 2017). As such, they mainly aim to maximize the value for the stakeholders and are not developed for the purpose of shareholders (Lamboi, 2018).
It can be stated from the overall discussion held in the report that both the companies have provided quality and detailed disclosure relating to sustainability matters in their sustainability reports. Both the reports have provided quality information in relation to sustainability issues as they have effectively complied with the GRI guidelines
AGL Sustainability Report 2017. 2017. Sustainable Business Strategy. [Online]. Available at: https://agl2017.reportonline.com.au/sites/agl2017.reportonline.com.au/files/sustainability_report_full_report_0.pdf [Accessed on: 2 September 2018].
Gibassier, D. and Unerman, J. 2014. Sustainability Accounting and Accountability. Routledge.
Gottschalk, P. 2011. Corporate Social Responsibility, Governance and Corporate Reputation. World Scientific.
Lamboi, C. 2018. Determinants of Level of Sustainability Report. Xlibris Corporation.
Origin Sustainability Report. 2017. [Online]. Available at: https://www.originenergy.com.au/content/dam/origin/about/investors-media/annual%20review%202017/FY2017%20Sustainability%20Report.pdf [Accessed on: 2 September 2018].
Rahbek, E. and Pedersen, G. 2015. Corporate Social Responsibility. SAGE.
Schaltegger, S. and Bennett, M. 2006. Sustainability Accounting and Reporting. Springer Science & Business Media.
Wales, A. and Hope, M. 2016. Big Business, Big Responsibilities: from Villains to Visionaries: How Companies are Tackling the World's Greatest Challenges. Springer.
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