Comparison Of Business Values And Social Performance: An Essay On Two Companies.

Part A – Business Values Assessment Comparison

Part A – Business Values Assessment Comparison

This activity is based on the exercise on page 226 of ‘Business Ethics’ (Crane & Matten, 2010) – a copy of the relevant pages are available on the course Moodle page.

For this component, you need to work in a group of three to four (3-4) students to consider the values and social performance of two companies. You are required to consider and discuss the companies as a group, but must submit your responses to the questions as individuals.

As a group, select two companies that produce social reports and whose values are identified on their websites or in other company documents (that are publicly available). The two companies selected by your group must be either:

From different industries but in the same country; or

From the same industry but different countries.

By Week 5, your group must provide the names of the companies you have selected to research, and the industry and country within which they operate.

1.As a group, research each of your companies to determine their company values, their approaches to social responsibility and their reporting of their social performances.

2.As an individual, you are required to submit responses to the following questions:

3.Identify and describe the two companies you have researched; their core business activities and the countries and/or industries in which they operate. (15 marks)

4.What differences are evident between the two companies in terms of the range of issues dealt with in their social reports and the depth of coverage on specific issues? Please note – this question does not ask for a description or summary of the content of each company’s reports. Instead, you need to analyse the types of information, the major themes, the presentation, formatting and tone of each report – and explain the ways in which the reports are similar to each other and the ways in which they are different.  (15 marks)

5.Discuss which of the Sustainable Development Goals you believe are most relevant to these companies, their industries and the countries in which they operate. Discuss the extent to which these SDGs were addressed, explicitly or implicitly, in the CSR/Sustainability reports of your companies? (15 marks)

6.Assess the apparent quality of the social accounting approach utilized by each company according to Zadek et al.’s (1997) criteria. (15 marks)

7.Discuss the extent to which the social reports provided by these companies reflect their stated values. (15 marks)

8.Briefly reflect on your groups’ discussions of these companies. In what ways did the ideas presented by your group confirm your own conclusions, influence your thinking and/or present another perspective to you? (15 marks)

9.A score (10 marks) will be allocated for presentation, written expression, spelling, grammar, punctuation and referencing.

Part B – Application of GVV Framework

In this group task you will work with the same group members as for Assessment 2 - Part A. This task requires your group to consider an ethical dilemma that emerges at a workplace of your choosing. This workplace may be based on one of the companies analysed in Assessment 2 – Part A, another workplace or company with which you are familiar or a fictional workplace developed by your group. As a group, you are required to:

1. Write a fictional scenariothat describes the emergence an ethical/moral dilemma for stakeholders in a workplace of your choosing;
2. Develop a scriptin which the central character in this scenario applies the Giving Voice to Values framework to the give voice to his/her values;
3. Present your scriptto the class as a role play.
    

Part A – Business Values Assessment Comparison

Wesfarmers and BHP are the two leading Australian companies. The former company is a core Australian conglomerate, the head office of which is located at Perth, Australia. The latter one is an Anglo-Australian multinational, formed through the merger of BHP and Billiton, the global head office of which is located at Melbourne, Australia. Wesfarmers is mainly engaged in providing a range of consumer centric businesses such as supermarkets, hotels and convenience stores, home improvement products, as well as the industrial business such as chemicals, liquor, coal, fertilisers, industrial goods and many more. The company BHP is engaged in mineral and metal mining industry, the major commodities being the copper, iron ore, coal, nickel, potash, zinc and petroleum. The company Wesfarmers operates across the globe through various brands, majorly in the areas of Australia, New Zealand, UK and Ireland. The areas of operation of BHP are Australia, North America and South America, Chile, Brazil and more.

Both the companies are large multi nationals belonging to Australia and contribute significantly towards the gross domestic product of the region through their respective businesses. The turnover of the Wesfarmers in the year 2017 was $ 68444 million and that of the group BHP was US $ 38285 million. The comparison might seem to be unfair in terms of the different industries of both the companies; however, both the companies are a major contributors towards the Australian sustainability business practices.

Both the organisations have undertaken the responsibility of Corporate Social Practices in their respective industries and the same is depicted through their respective reports on the corporate social responsibilities and the code of ethics in the business conduct.

The organisation Wesfarmers mainly dealt with the following issues in the year 2017, namely safety, ethical sourcing and human rights, diversity, and the climate change resilience. The main areas of sustainability as carried on by BHP were occupational exposures, greenhouse gas emissions, social investments and contribution, and health and safety at workplace.

However, both the organisations are contributing actively towards the safety, security and the overall wellbeing of their respective workforce through various programs and policies in terms of recruitment, training, development, indigenous employment and more. 

Wesfarmers reports it sustainability practices brand wise, i.e. the practices adopted at Coles, Bunnings in Australia and New Zealand, Bunnings in UK and Ireland, Target, Kmart and in terms of the office works. In addition to this, product wise evaluation is done, in terms of cocoa, timber, paper and other agricultural products. This enables the internal comparisons possible.  A separate segment of industrial products evaluation is provided along with the values in the supply chain, which is the chief component of the business of the Wesfarmers. Thus, it can be said that the report of Wesfarmers more comprehensive and detailed. Though not much of internal comparison is made in terms of, regional performance in the sustainability reports of BHP, which makes it report less detailed.

Part B – Application of GVV Framework

Both the organisations have actively reported on the contribution towards the environmental practices, bio diversity, human rights, climatic changes, culture, and development of the regions of operations. Overall, the sustainability report of Wesfarmers has provided more insight of its activities as compared to that of the BHP, in terms of the content of the report.

As stated by the company Wesfarmers, the CEO of the company Mr Richard Goyder had signed the CEO Statement of Support for the Sustainable Development Goals (SDGs). Thus, the company Wesfarmers has identified and supported the eight SDGs, as per the nature of their business and the industries. The segment of the sustainability report, which addresses the respective SDG, are listed as follows along with the SDG concerned.

 (Source: Wesfarmers, 2018)

As stated by the company in its annual report, 2017, the company is governed by the SDG number 1, 2, 3, 4, 5, 6, 8, 10, 13, 15, and 16. These are on the lines of no poverty, zero hunger, good health, quality education, gender equality, clean water and sanitation, decent work and economic growth, reduced inequalities, climate action, life on land and peace, justice and strong institutions. The company follows these goals explicitly in the form of the direct business activities and the products rendered, through payment of the various taxes for the resources used of the country and generation of the employment opportunities, and through range of varied social investment programmes.

According to the Zadek et al, (1997), there have been prescribed eight key standards of the quality, which aid in the evaluation of the level of the social accounting procedures of the organisations. The standards are prescribed on the lines of the necessity of auditing and reporting the social activities, the identification of the risks and the stakeholder’s interest and the suitability of the accounting and transparency of the activities.

Both the companies report on their social responsibilities and activities by themselves. The companies include and identify the following groups for their continuing business activities, namely the employees, customers, suppliers, regulators, shareholders and other stakeholders. In addition, both the companies have their code of ethics prescribed which acts as guide for all the members of the organisations. The company Wesfarmers was ranked 78 on the Dow Jones Sustainability Index (Report, 2017). 

As Wesfarmers has been continuously engages in the business reconstruction activities, the company has been reporting comprehensively about the social activities brand wise. Thus, the report of Wesfarmers is more detailed in terms of social reporting.

Researching Companies' Values and Social Responsibility

Both the companies have identified targets and have made commitments on the lines of the delicate areas such as timber and palm oil in case of Wesfarmers, occupational hazards and greenhouse emissions in case of BHP.

The companies have made full disclosure of the mandatory data, i.e. Annual Reports and the Financial Reports for the year 2017. In addition to this, the companies have prepared their respective sustainability reports for the disclosure on the ethical issues. While the Wesfarmers statements is being audited by Ernst & Young, that of BHP is audited by KPMG, in terms of the external independent verification.

Both the companies have recognised the value of the future targets and initiatives for the safety of the employees, community contributions, climate change resilience and robust governance in terms of the social reporting.

According to the Wesfarmers, the company’s core objective is to deliver satisfactory returns to the shareholders through financial discipline and the strong management of the ethics and values in the diverse business portfolio of the organisation. The company BHP believes in creating long-term shareholder value through the discovery, development and marketing of the natural resources. The BHP states its values to be sustainability, integrity, respect, performance, simplicity, and accountability in the business practices. On the lines of the stated values, some of the major initiatives taken by the companies in the last year and the performance evaluation of the same are presented in the following part.

While the total recordable injury frequency rate decreased for Wesfarmers from 33.6 to 28.3 percent, i.e. approximately around 16 percent improvement, the BHP improved only 2 percent on the same lines as compared to the financial year 2016. The organisation BHP sets an annual target of zero work related fatalities, which remain unmet like in the year 2016.

The company Wesfarmers measures the total recordable injury frequency in terms of the percentage, while in case of BHP the same is measured in terms of the per million hours worked. While the graph of Wesfarmers shows a continuous decline, the BHP’s graph is more or less consistent and the no major improvement can be seen in last five financial years.

In terms of the gender diversity, the BHP employees about 20.5 percent of women as claimed by the organisation on 30 June 2017. The corresponding number for the Wesfarmers is 54 percent. 

We conducted the group discussions to evaluate the activities of the chosen companies on the lines of the social reporting and the business values of the each. At the first meeting, business of the Wesfarmers was discussed, and the other members raised the issue of ethics in agricultural products procurement and the supply chain, as these from the chief part of the business of the Wesfarmers. In addition to this, as the company also is engaged in the business of industrial products and involves timber procurement, the same was discussed. As we went through the CSR report of the company we found that in spite of the global business operations at such a larger level, the company has been engaging effectively in the varieties of the social activities, from development of the region, to employment opportunities, to assisting to the suppliers in terms of the finance and many more.

The second group meeting was organised to discuss the business values of the company BHP. As the company is engaged in the extraction and mining of the minerals and the metals, the key concern that was identified by the group members were the employee safety and security at the mining places and the compliance of the legal obligations in terms of the extraction of the minerals by the company.

On comparing both the reports, the members of the group found that Wesfarmers presented its activities in a more systematic and comprehensive way as compared to the BHP. I also observed the same. In addition to this, we like the segment wise and the brand wise reporting, which made it easy for us to read the report and understand it. The report of the BHP was a bit in generic terms, but the striking feature was that with each segment of the report, the future targets were laid down. 

Through the group discussions conducted, I realised the significance of the sustainability reporting and the necessity of the development of the social and ethical activity charter on the lines of the sustainability development goals as laid down by the United Nations.

Conclusion

As per the comparison and the discussions conducted in the previous parts, it can be concluded that the organisations have a great responsibility of the corporate social reporting, apart from the conduct of the business activities and the maximisation of the shareholders return. Prima facie the reports present a range of the social responsibility activities undertaken by the companies during the year. However, the data presented is by the companies itself and therefore the same must be viewed in light of the news and other pieces of external information on the lines of the unethical business practices undertaken by the big business organisations. It can also be concluded that the CSR reporting is a prime need of the businesses of the 21 century, as it aids the companies build and overall image for the stakeholders and thus companies are actively involved in the same. 

References

Wesfarmers. (2018a). Our businesses. Retrieved from: https://www.wesfarmers.com.au/our-businesses/our-businesses

Wesfarmers. (2018b). Sustainability Report 2017. Retrieved from: https://sustainability.wesfarmers.com.au/media/2222/2017-wesfarmers-sustainability-full-report.pdf

BHP. (2018). Sustainability Report 2017. Retrieved from: https://www.bhp.com/-/media/documents/investors/annual-reports/2017/bhpsustainabilityreport2017.pdf?

Report, M. (2017). Australia : Wesfarmers Ranks Highly in the 2017 Dow Jones Sustainability Index.  Retrieved from: https://www.highbeam.com/doc/1G1-504884821.html