Students will be required to choose a specific enterprise and develop a sustainability indicators monitoring system for that enterprise.
To provide a realistic account of the enterprise you might need to access a web site or undertake a site visit.
Importance of Sustainability in Business
Development Of Sustainability Indicators Monitor System For Commonwealth Bank
Sustainable business structures are developed to construct economic value, while benefiting society standards and not distressing the environmental factors (Prause, 2015). This particular business structure aims to maximize its profit by exploiting limited amount of resources and also aims to earn profit in a sustainable procedure that would help for the motive of environmental reinvestment. Sustainable business structures ensure growth of employment and equality within a production system, as well as ensure the limited use of natural capital (Bocken, Short, Rana & Evans, 2014). Conducting the production process in a particular way, which is not massively harmful for the environment and also emphasizes on the sustenance of the business, is understood as sustainability initiatives. The business structure, of particular entrepreneurships, also contributes to the standard of living of the people at every level, who are confined within the perimeters of the society (Costanza et al., 2017). Not only have the sustainable models achieved maximization of profit, the sustainable strategies of business structures also reduced the cost of production.
Business monitoring system is a useful way to measure the sustainability of a business, periodically from the people, planet and profit perspectives. Proper monitoring systems can help to reduce the risk of non-sustainable factors which affect the business in a negative way (Alles, Brennan, Kogan & Vasarhelyi 2018). The periodical monitoring of the three main components of a sustainable business structure, that is social, environmental and economic, would give an image accountable of mannerism of sustainability. It is not enough to enforce sustainable business models but requires further and constant monitoring, in order to keep a track of changes and how they affect the internal as well as the external functioning of the business corporation (Epstein, 2018).
The essential characteristics of a good monitoring system can be briefly described as follows:
- The responsibility of a good monitoring system is to investigate the business processes in a detailed way and reflect back with the particular practices that are helping as well as the ones that are deteriorating the efforts to sustainable development (Bailey, Bode, Christiansen, Klaff & Alva 2015). By reviewing the business strategies of the organization, a good monitoring system would analyze the particular sustainable elements and develop them for future activities.
- Another essential characteristic of a good monitoring system is to clarify doubts in decision-making processes by analyzing the business strategies against the existing external environment, with a sustainability approach (Woods, 2017). It identifies in advance the probable threats to the organization and prepares it in an appropriate way.
- An essential characteristic of a good monitoring system is the one which regulates and updates itself regularly in accordance with the changing external conditions of the environment. A monitoring system that is static and far from amendments is of no use as it becomes mostly irrelevant with the dynamic nature of time and space(Hart et al., 2018).
- A good monitoring system not only introduces changes in the existing structure of business but also makes sure that these particular changes are directed towards improving the sustainability of the organization and not just monetary growth.
- A good monitoring system is essentially the one that works in harmony with the changing legal, political and social conditions of the external environment. Updating the business organization with current social and environmental laws and policies is an essential criterion for achieving genuine sustainability (Evans et al., 2017).
The three main components of a sustainable business structure takes into account the dimensions of social, environmental and economic factors that deal with the question of sustainability of a business structure. It is also called the ‘triple bottom lines’ dimensions of a business venture as these three specific dimensions go hand-in-hand to ensure the success of the sustainability module or vice-versa. Indicators are the particular elements in a business process, who signify the developing parameters of a business structure, in relation to these three components, which are utmost essential for the creation of a sustainable business structure. The different performances of these three components, not only in respect to the internal dynamics of the Company but also its external market and environmental forces, signify the condition of development in these areas, with the relation to sustainability.
Indicators of a sustainability monitoring systems need to be effective enough to reflect development from all three dimensions of the business and the society. Growth in specific areas like multiplying annual revenues or improvement in business turnover has to be considered in comparison with the economic growth of the external factors, like increasing environmental capital or improving human capital and their sustenance. Similarly, growth has to be analyzed and compared with respect to the social inequalities and environmental exploitation, which would indicate the most sustainable approach in the given context and help with decision-making procedures.
The Three Main Components of a Sustainable Business Structure
The major performance indicators of a business organization can be broadly described as follows:
- Human resources: One of the most important indicators of sustainability is the retention and complete satisfaction of the human resources utilized by an organization for the completion of its particular set of aims and objectives. Ensuring employee rights includes equal and fair pay structure, sufficient leaves, multicultural coexistence, job security and more. On one hand the organization might expect increased productivity or efficiency from its human resources, but in order to sustain the increased efficiency, the organization must take up initiatives to look after the job satisfaction of their employees, allowing them flexibility and space for further growth.
- Environmental resources: The next most important criterion for achieving sustainability is to ensure complete restoration of environmental health, in terms of its capital and resources. As the increasing business transactions take a heavy toll on the health of the external natural environment, for example: rampant deforestation, depleting minerals and other non-renewable resources, it is becoming increasingly necessary to restore the lost environmental health.
The Commonwealth Bank of Australia, also known as the CommBank, is a multinational bank with extensive business transactions over a large part of the world market, including New Zealand, Asia, United Kingdom and the USA. The large established multinational company engages in a variety of financial services, such as retail banking, business or corporate banking, providing insurances to individuals and Companies and more. The bank is not only the country’s largest corporate institution; it is the largest bank in the entire Southern Hemisphere of the world. With its headquarters located in darling harbor, Sydney, the CommBank has more than 1,100 branches worldwide. The organization offers a wide range of banking services, for example: Consumer Banking, corporate Banking, Finance and Insurance, mortgages, global wealth and much more.
The Commonwealth bank has a strong international presence with extensive operations in almost all the leading countries, including the leading economies of UK and USA. The bank has variety of interactions with countries like China, India, New Zealand and Indonesia, and has respective branches in all these individual locations. One of the chief objectives of the bank is to provide the best services and support that would not only encourage the Company’s revenues but would also make a positive impact on the society it is performing. Functioning on a multi-national level, it is absolutely necessary for the organization to remain up to date regarding sustainability approaches. At a global market level, the certification for sustainability and awareness is one of the chief indicators of loyalty and trust (Schlagwein, Thorogood & Willcocks, 2014).
Navigating through the sustainability requirements of the current context, it is important for the enterprise to keep up appropriate monitoring systems that would keep a regular check on the particular sustainability drives. One of the chief aims of the enterprise is claimed to be the financial well-being of the people, businesses and communities that they serve. In order to ensure the maximum development of the same, the Company expends the best professional skills and support system through their services. The bank puts in considerable efforts to make people aware of financial crimes, corporate laws and environmental issues that pose a serious threat to their current external environment.
The Corporate Governance Statement issued by the CommBank clearly outlines all the essential elements of the framework that has been built to monitor the corporate interactions with the bank. This framework is inclusive of CSR initiatives, which are mandatory for all corporations, who want to initiate a transaction with the bank. The concept of Corporate Social Responsibility refers to the duties of corporate institutions to put considerable efforts that contribute to the progress of the society and natural environment (Schwartz, 2017). The bank also offers a framework for risk management that guides a user through the potential threats and obstacles in the process of business transaction.
In order to maintain transparency in the various working processes, the organization has drafted the guidelines for their shareholders communication processes. This effort was taken to make sure none of the stakeholders are ignorant of blind towards the Company’s objectives, strategies and expectations in performance (Klettner, Clarke & Boersma, 2014). It makes sure that all members related to the business stay informed about all the decisions, actions and disclosures that are documented in the decision-making processes. Apart from the, the Annual report of the CommBank encapsulates the details of all their economic transactions throughout the year, which helps to identify the amount of investment made towards the improvement of sustainability and calculate the specific returns earned out of the investments.
Indicators of a Sustainability Monitoring System
The Statement of Professional practice declared by the enterprise contains all their corporate ethics, behavior and responsibilities that they deem to be necessary in order to have working business interactions, applicable for all employees and directors of the enterprise. Their Anti-Bribery Corruption Policy and Network drafted by the Company is an important step towards restoring the lost balance in the performance of business processes. The enterprise has claimed to follow zero-tolerance towards corruptive behaviors, such as—bribery, corruption, facilitation and bias on the basis of anything (Lord & Levi, 2017). Both the Professional Practice as well as the Anti-Corruption Policy is extended for all stakeholders of the Company. A separate unit in the system, called the Speak up Program, has been created to keep an eye on the everyday production processes and reports the identified unethical behaviors or practices. Therefore, it can be said that the enterprise has a good monitoring system for their sustainability drives and efforts.
It has been widely and strongly acclaimed that sustainability is not one thing—that can be achieved by a set of rules, or just economic growth. Sustainability requires the appropriate balance between nature and human activities that would help each other grow and sustain longer. Therefore, sustainability has varied range of dimensions, which encapsulate the entire socio-economic-environmental context of particular enterprises. In this case, monitoring the sustainability model of Commonwealth Bank of Australia requires us to analyze the particular dimensions of sustainability as in relevance with the existing conditions. Sustainability is not a static position or an end of destination, rather it enforces the need for change in order to adapt in a way that is best for the bank, in respect to its existing external conditions (Schader et al., 2016).
In order to understand the various dimensions of sustainability, it is fundamental to understand the three most important aspects of a society, which go hand-in-hand—the social dimension, the economic dimension and the environmental dimension. In order to monitor the sustainability of a multinational enterprise like the Commonwealth Bank, it is important to ensure that the effectiveness of their development processes sustain over time and generate significant growth of capital in all three dimensions—economic, social and environmental.
Economic dimension: Ensuring economic sustainability is one of the most important dimensions of development. Without economic stability and balance, no enterprise can function in the best efficient way. Establishing economic sustainability is one of the prime indicators of monitoring sustainability models. Economic sustainability refers to the capability to sufficiently run or function without external financial help, as well as generate further revenue and income sources by creating employment and other activities (Geissdoerfer et al., 2016). The main aim of economic sustainability is to achieve the highest added value from the capital and other investments and sustain it over time.
Commonwealth Bank’s economic sustainability depends on its capability to generate more employment opportunities, more loyal customers, more business interactions internally as well as externally—with other business organizations or entrepreneurs. Banks hold the maximum percentage of a country’s wealth; therefore, a sustainable economic development for the bank must also comply for the economic growth of the external environment, such as the natural capital and the human capital. As the Companies and establishments grow, it creates short-term developments that produce huge economic returns; however, the extortion of natural hand human capital also has adverse effects on the development process in the long run—as the natural and the human capital start depleting.
The Commonwealth Bank: An Overview
Environmental dimension: The sustainability of the environment is the key factor in maintaining growth in any sector because most of our resources are derived from the environment, which are further used for human business and transaction. For example, with the growth of multinational Companies and industries, thousands of trees are been cut down every day, farmlands being changed to factory houses, consuming large amounts of non-renewable sources like minerals and oil. In order to maintain environmental sustainability it is important to restore the lost environmental capital by contributing in an effective way. The concept of Corporate Social Responsibility enforces the duties of all multinational establishments to make an effort to restore the lost environmental balance and hence, it is now considered one of the chief features that mark the ingenuity of an aware global market force.
In order to monitor the Commonwealth bank’s environmental sustainability, it is important to ensure that the bank offers an environment-friendly approach in all their business functions including money lending, investments on environmental initiatives, carrying out environmental awareness drives or committing to specific projects or initiatives with external agencies that cater to the standing environmental issues. An environmentally-oriented thinking needs to be brought into regular practice, which would help in longer sustenance of available resources.
Social dimension: Social sustainability refers to the general well-being of the people of the society—ensuring adequate food, shelter, employment, security for all as well as improve the living conditions of the below poverty line people. One of the exceptionally standing social issues of Australia is the sharp inequality in its distribution of wealth. The huge economic divide creates unjust social imbalances that encourage the elite class to consume more while exploiting the cheap labor of the working class. Social sustainability can be achieved by appropriate redistribution of wealth and services, in a particular way that aids the working class to avail more social privileges like—better education, better employment opportunities, funding opportunities and more.
The Commonwealth Bank involves a variety of stakeholders that are a part of the society at large. Apart from contemporary banks and enterprises at a national as well as international level, the bank involves the general people of Australia, the government of Australia, its employees, market-share holders and many more, who are directly responsible for the sustainability of the social equity. Social sustainability is considered one of the chief responsibilities in the banking sector and adopting various activities that are relevant and useful for all sections of society equally, would be one of the chief indicators of social sustainability.
A sustainable development does not necessarily need to incorporate major changes in the functioning of the corporation, rather encourages making development more sustainable through the help of changes in analyzed dimensional perspectives. Small initiatives that incorporate transitory practices, towards the development of the organization as well as preservation of the environment, can be indicated as signifiers of sustainable changes.
List and Assessment of Indicators for Monitoring
Social sustainability indicators are one of the most influential markers of an establishment’s development process. The various parameters by which a society’s development can be measured are directly related to the kind of lifestyle the general people are living in the present context (Lozano, Carpenter & Huisingh, 2015). One of the most important responsibilities of banks is towards their customers, the general public of the country; therefore the well being and development of the common people, especially the ones who are direct customers of the Commonwealth bank would be a major signifying indicator of social sustainability. Apart from making one’s own profit, the organization also needs to be responsible for the profit of its stakeholders, including employees and customers (Waas et al., 2014).
Sustainability and the Commonwealth Bank
The various indicators of social sustainability dimension, in respect to the Commonwealth Bank are briefly discussed below:
Employee satisfaction: One of the chief indicators of social sustainability would be the satisfaction of the employees, who work for the bank. Looking after the well-being, security and healthcare of their employees would be a strong element denoting social sustainability practices under the Corporate Social Responsibility Guidelines (Avanzi, Schuh, Fraccaroli & van Dick, 2015). Employee satisfaction doesn’t only make an organization socially more sustainable, but also generates better employee engagement in their regular activities. With sharp issues regarding unemployment and job insecurity, providing fair-paying employment with social security and related privileges add up to a strong influence of sustainability. With better employee satisfaction, better employee productivity and efficiency can be expected, leading to a profitable turnover.
However, with sufficient job satisfaction, employees seem to lose their ambition and dedication for better positions. Thus, employee satisfaction can also backfire with reduced levels of productivity and lethargy amongst the task force. Increased employee engagement also opens up space for a multi-culturally diverse workforce. Even though multicultural workforces are considered as vital strength to an organization, it also brings forth various challenges like intercultural issues, differences in beliefs and opinions, disagreements and more. Maintaining a multi-cultural workforce requires huge monetary investments as well as investment of time and energy.
Community: One of the leading responsibilities of large-scale private organizations like the Commonwealth Bank is to look out for the well-being of the society at large. A bank requires an affluent well-to-do society to function properly, just as much as the society needs the bank to perform. In order to sustain the development in respective spheres, the bank needs to take up active efforts that would help in building the structures of society, encouraging startups, allowing loans and grants for education, allowing easy housing plans and more. The more people get into the habit of saving up money in a bank, the better the business is for the banks, annually.
Overconsumption is the inevitable challenge that comes along with the improvement of living standards of people. With more available liquid cash on hand, people tend to spend more and more of unnecessary consumption that plays a huge part in fuelling the already existing inequalities. With increasing power in the hands of general people there is a increasing rise in demand for all products, commodities and services, leading to several undesirable results like over-pricing, inflation, overconsumption and artificial shortage of goods and commodities in demand (Alshuwaikhat, Abubakar, Aina, Adenle & Umair 2017).
Charity: Amongst others, charity is an important social sustainability indicator that is extremely important in case of large-scale private enterprises like the Commonwealth Bank of Australia. As the banks invests a good amount in exploiting the natural and human capital to generate economic profits, it is the due responsibility of the enterprise to contribute the same amount back to the society, in a way that would help reduce the existing inequality and encourage progressive actions. Providing better schemes for education loans, housing loans, medical claims, etc. help the common people of a country to inculcate the habit of saving up for future. With economic aids like these the less privileged population also gets back on their feet in a more settled environment, thus making the business for banks more sustainable and vice-versa.
Corporate Governance at Commonwealth Bank
Amongst the various challenges of charity, one of the most important is that many people seem to lose dedication, ambition and hard work, when aided with free economic or other support. The easy availability of power to consume encourages them to consume more without putting in equal amount of effort for the goods and/or services. Reduced competitiveness amongst the people, lead to reduced productivity of the industries, which ultimately lead to reduced business interactions.
Equity: Australia has been facing stiff issues regarding the increasing inequality between its two large economic classes. On one hand the privileged class consumes the most, whereas on the other hand, the lower economic classes face the adverse effects like unemployment, deficit in capital, exploitation and lack of security. In order to emphasize on a more sustainable model, it is important look for the indicator of equity, which signifies the efforts of the enterprise that have taken to reduce the sharp divide. Efforts like providing special economic aids to unprivileged people, allowing free bank accounts, reducing interest rates in case of loans, can be considered as constructive efforts for the equity of the society.
Equity has its own challenges. Equity brings along with it the redistribution of wealth. With redistribution of wealth, the entire economic structure might collapse, resulting in heavy disruption in business interactions. The large-scale organizations might not be content with such redistribution of wealth as it would mean lesser profits to them. In that case, the Commonwealth bank might lose some meaningful stakeholders in the process of it.
Stakeholders: key stakeholders of the firm help the firm in increasing their efficiency as whole retaining key stakeholders is very important for a company. It can be said that through retainment of stakeholders the company will be able to get further investments and support in there activities which increase the operational efficiency of Commonwealth Bank. This will result in better operational implementation which will help the company to regain sustainable development and increase the pace of progress towards a goal sustainable development.
Capability to sustain employees through various employee benefits and privileges
? Adequate employee satisfaction might lead to reduced motivation, dedication and productivity.
? Workforce diversity.
Ability to contribute to the community at large in any effective way/s, like taking active part in educational and awareness events, investing in community startups and more.
? With active community participation and development comes unsustainable practices like overconsumption.
Capability to sustain and introduce better scopes of improving community-life, education, shelter and health security
? Reduced competitiveness amongst the people receiving economic aids
Ability to reduce the unequal distribution of wealth through providing special privileges to the underprivileged.
? Redistribution of wealth would work as a backfire for the privileged classes, therefore losing support of the powerful business organizations.
Dumphy phases model will be used in order to ensure effective monitoring of the project. It is a process under which the organization will determine ways in which the sustainable development could be achieved by the company. It can be said that Dunphy sustainability phase model will used to analyze different stage of the project and how they have been completed to ensure sustainable development within the firm.
The above images shows 6 phases which can occur in an developmental stage which start from rejection and end with sustaining organization. The characteristics of each phases has been defined based on which the company will be able to identify in which stage is there company in helping the following in monitoring the progress of the firm in the project.
To conclude, it has been strongly recognized that the need to introduce sustainability approaches in human and business interactions is extremely necessary in order to save the world and the businesses from facing a major breakdown or lapse. The increased human exploitation of the natural resources is taking a heavy toll of the health of the natural elements like air, water and soil. Rampant deforestation, carried out in order to meet the rising demands of the people, is resulting in massive soil erosion, depletion of farmlands and scarcity of crops.
A clear understanding of the various dimensions of sustainability is important for the development of sustainability models. With the help of the context of the Commonwealth Bank, we analyzed how the various dimensions of society, environment and economy need to be organized and analyzed in order to develop a good monitoring system. Recognizing good indicators from the monitoring systems and sustainability efforts is a huge help towards strategizing, decision-making and policy-making processes.
The Commonwealth Bank enforces a substantial amount of effort to restore balance in the business interactive systems by encouraging environment-friendly attitudes and approaches. The sustainability approaches of the enterprise have been analyzed in light of the characteristics that define a complete sustainability model, including good monitoring systems.
Finally, the social dimension of sustainability is explored in detail to list the particular areas, which need to be focused on while considering social development. It included factors like employment satisfaction, community support, charity and restoring equity. These particular factors have been analyzed against the context of the Commonwealth Bank for a better understanding of the processes of indicators and monitoring systems of a sustainable development model.
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