Evaluation And Analysis On Sustainability Reporting At Bega Cheese

Background of the Company

Discuss about the Evaluation and Analysis on Sustainability Reporting.

The following report aims to present the explanation and evaluation on the concept of management decision in terms of processes that are associated with the efficient allocation of business resources. The report includes the discussion on sustainability reporting framework along with the evaluation on Global Reporting Initiative considering the given organization Bega Cheese. The following study covers the description of key features of the organization along with an overview on the positive and negative impacts in terms of environmental social factors. The report also contains analysis on the probable alteration of the company’s information in the annual report and other sources including corporate website through the application of gap analysis. Considering the compliance of Global Reporting Initiative guidelines, the study incorporates the evaluation on the benefits to the potential investors, shareholders as well as other stakeholders.  

Bega cheese is a manufacturing company in Australia, one of the largest cheese manufacturing companies in Australia. The company exports its products across the globe while distributes the products in Australia in most of the general stores as well as in supermarkets. As the current financial information, the company incurred revenue amounted to $119.63 million while the amount of profit has been $29.202 million. It has been noted that the company serves the dairy products to around 9.3 billion consumers while the quality management system ensured to design the organizational inputs and business activities through supply chain methods (Begacheese.com.au, 2017).

Considering the present report of the company, Bega Cheese thrives to maintain achievements in business activities and finances for delivering products at low commodity prices and significant competition within the Australian region. During the year, financial performance of the company has been stable over the years while adding more values to the organization’s manufactured dairy products. It has been noted that the company always managed o consider the best business approach to create business values along with the appropriate risk management by applying the experience, knowledge and skill along with the updated and innovative business ideas. During the recent years, company’s revenue reflected increased value by around 131.9% along with the improvement in overall performance margin by 32.6%. The statement of financial position of the organization reflected net debt balance amounted to $53.1 million during the year 2016, which was reduced by $5.6 million in comparison to that of the year 2015 (Begacheese.com.au, 2017). 

Key Features of Bega Cheese

Sustainability reporting is a report that is prepared and disclosed by the management of the organization presenting the accountability towards the internal as well as external stakeholders. The report considers organizational performance overview along with the reporting on economic, social as well as environmental impact that involves positive and negative factors (Ioannou & Serafeim, 2014). Considering the current year’s sustainability report of Bega Cheese, it has been noted that the organization’s total dairy farms consists of more than 400 while 94% of the milk suppliers engaged in the firm’s sustainability assessment. Further, engagement of direct milk suppliers along with the sustainability and growth consists of around 93%. Environmental factor for the organizational operations reflected reduction of 7% in the intensity of production energy over the period of five years. Similarly, social impact reflected 11% reduction in the “Lost Time Injuries” number during the financial year 2015, whereas the company managed to increase the financial support for the local community including benefit fund for the employees (Asx.com.au, 2017).

In view of the company’s reported sustainability report, the management considered the environmental impact reflecting improvement in the dairying community. The company has been able to influence the aspects related to environment in terms of milk supply base with respect to animal welfare and improvement in the production programs. Positive impact of the environmental issues includes several programs based on the “Bega Environmental Management System” to provide long- term benefit on production sustainability (Begacheese.com.au, 2017). The program has been considered to incorporate nutrient management, protection and improvement in the farm safety along with the development in professional service. Considering the positive environment impact, the organizational management emphasizes on reducing the greenhouse gas that affects the environmental hygiene. Apart from that, the organization considered protection with respect to animal health, managing and reducing the waste products in farm as well as savings in energy and water supply.

Considering the positive social impact of the organization, the company adopted emerging pool for the young leaders in terms of capacity, energy and passion for managing business activities. It has been noted that the organization considers its employees and society as an important required to achieve the business targets and aspirations in future years. Positive impact of the social diversity includes development of business structure, greater accountability and improves the management skill with respect to the improvement in business operations and sustainability (Fernandez-Feijoo, Romero & Ruiz, 2014). The organization also considers the regulatory compliance on women employment and management hence, management group of the company involves around 22% women members as per the current report. Social impact of the company involves safe workplace to the employees and workers that adds to the core values of the organizational operations and performance. It has been observed that the organization focused to implement the framework on comprehensive as well as safety management that aims to promote the hygiene and safe environment for the employees (Begacheese.com.au, 2017).

Overview of the Environmental and Social Impact of the Organizational Operations

Other than the positive impacts on environmental and social factors, there are certain negative impacts as well representing several challenges to the business operations of the company. The organization focuses to develop the operational program with respect to prevention of pollution and environmental performance recognizing the sustainability risks for better performance of the business activities. However, the organization experience challenges with respect to the energy and water due to change in climate (Benn, Dunphy & Griffiths, 2014). It has been observed that the probable impact of changes in the climate affect the quality of milk product along with the product volume resulting in affecting the farming cost for the organization. Apart from that, challenges with respect to air emissions has been environmental risk for the organization since several sites of the company operates generating harmful steam from the sawdust and other timber mill wastes. Negative social impact on the organizational operations includes contribution of tax payment, relationship among the organization and its stakeholders along with the human resource management. Moreover, the organization considers certain schemes for the benefit of employees as well for the society, challenges in terms of release of water and solid waste, product storage as well as product transport that affect the environment hygiene (Begacheese.com.au, 2017).

Gap analysis is a procedure that the organization considers to determine the steps for comparing the actual performance of the company with that of potential performance. It is conducted by the organization to identify the gap between the allocation of operational resources and its integration in accordance with the present level of allocation (Hahn & Kühnen, 2013). Further, development of sustainability reporting framework by the Global Reporting Initiative, which is a non- profit organization provided mandatory practice to present sustainability reporting for all the organizations. The primary reason for such initiative was to make the companies of Australia more active and to maintain the sustainable growth parallel to the business activities of international companies. Currently, the annual report of Bega Cheese presents its responsibility of the employers and partners for the business operations while the reporting guidelines by GRI provides presentation of principles for comparability, accuracy and balance.

Second part of the sustainability reporting guidelines include standard disclosures required to present by the company in the suitability reporting with respect to the strategy and business profile, approach of management and indicators of performance. Considering the current sustainability reporting, annual report and corporate website of Bega Cheese it can be said that the company presented the business operation process, supply chain procedure along with the operational performance covering the financial aspects, environmental aspects and social aspects (Begacheese.com.au, 2017). However, if the proposed sustainability guideline is followed then the company is required to include performance strategy for business operation along with the steps taken by the company to develop the particular business activity (Sacks & Pikas, 2013). In terms of economic, environmental or social factors, the organization presented positive impact as well as certain challenges that affects the safety and hygiene to the workplace and consequently affects the business performance. Application of GRI guidelines for reporting different aspects of business operations would alter the present sources of reporting in terms of inputs of business operations, strategies implemented to develop the business activities and performance and presentation of self-evaluation.

Analysis of Application of GRI Guidelines Along with the Application of Gap Analysis

Global Reporting Initiative provided certain guidelines to present the sustainability reporting for the purpose of stating the business performance in balanced way including positive impacts and negative impacts. It includes the guidelines for the organizations to report the business operation strategy, approach of management and other factors for assessing the performance benchmark for the benefit of stakeholders, shareholders and other potential investors (Globalreporting.org, 2017). The purpose of GRI guidelines include demonstration of organizational operations involved in sustainable development of the company along with the presentation of performance comparability with other organizations of the same industry. Presentation of the information on business performance, strategies along with the comparative details would assist the investors and stakeholders to analyze the company’s performance other than the financial information (Ramos et al., 2013).

Sustainability reporting is prepared and presented by the organizations to provide the performance information other than the financial activities, which is reported in the financial report during the accounting year. On the contrary, sustainability reporting relates to the performance evaluation with respect to production activities, economic activities, environmental activities and social aspects including human resource management (Bhaduri & Selarka, 2016). Therefore, if Bega Cheese follows the guidelines to represent its sustainability reporting, it would benefit the potential investors to analyze the overall performance of the company. In addition, compliance of GRI guidelines requires the company to present sustainability practices by reporting on supply chain analysis, environmental protection along with the presentation of risk management. Accordingly, such information would provide the potential investors, shareholders and other stakeholders.

Compliance of sustainability reporting guidelines provided by GRI assists the company, Bega Cheese in building trust with the potential investors and other users of the company’s report. Presentation of non- financial factors in a transparent manner assists the company to eliminate the potential risk on business reputation while demonstrating the leadership quality for business accountability (Bellantuono, Pontrandolfo & Scozzi, 2016). Compliance of GRI guidelines for presenting sustainability reporting would improve the business systems and internal management processes required for making appropriate business decisions. Bega Cheese would present the comparable reduced cost factors along with the sources of measuring and monitoring the energy consumption issues, use of materials for producing dairy products along with the consideration of waste materials (Begacheese.com.au, 2017).

Compliance of GRI guidelines for sustainability reporting by Bega Cheese would provide benefit to the users in terms of business progressing strategy by analyzing the comprehensive information on the company’s strength and weakness. Presentation of internal control analysis and organizational visions including the information on protection program for farms and milk suppliers would present detailed information to the potential investors that are essential to evaluate the company’s business strategy (Shannon, Chao & Ramos, 2015). For providing benefit to the shareholders and other stakeholders, analysis on compliance costs for using the resources to produce dairy products would assist in measuring performance along with the analysis on regulatory requirements. The benefit to the investors would include the analysis on competitive advantage along with the analysis on Bega Cheese’s bargaining power for the purpose of providing investment opportunities and other economic benefits (Begacheese.com.au, 2017).

Conclusion

Financial reporting of the company is important to evaluate the financial performance during the reporting year, which does not provide the overall performance analysis to the shareholders, stakeholders and potential investors. Accordingly, companies prepare and present sustainability reporting to provide evaluation on non- financial factors with respect to the economy, environmental and social factors incorporating positive and negative impacts on the business operations. Therefore, the study demonstrates the essential features of the selected organization Bega Cheese along with the overview on environmental and social impact with respect to sustainable milk supply by the farm services, supply chain and product growth for the business services. It has been observed that the organization provides “code of practice” for animal welfare and several programs for improvement environment protection and social values. The report also demonstrates the analysis on application of Global Reporting Initiative guidelines for presenting sustainability reporting that would alter several non- financial information of Bega Cheese in terms of management approach and business strategy.

The report presents the difference in standard disclosures for monitoring the internal control and management activities of the organization that provides benefit to the shareholders and other stakeholders. It can be concluded that the compliance of sustainability reporting guidelines as developed by GRI would benefit potential investors, shareholders and other stakeholders. Compliance of sustainability reporting framework would assist Bega Cheese in building trust with the consumers as well as with other stakeholders because of the presentation of non- financial information by maintaining transparency and accountability. Apart from that compliance of GRI guidelines for preparation of sustainability reporting provides benefit with respect to improved business processes and business strategy along with the information on reduction of compliance cost to provide competitive advantage.

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