Discuss about the Sustainability Reporting for Generating Transparency.
A sustainability reporting is a report of an organization, which provides various data and information regarding the social, environmental, economic and governance performance. Therefore, it can be said that it is important for every firm to prepare sustainability report as it helps to improve the green initiatives of a firm and also assists to determine the relationship of the particular organization with its customers and investors (DesJardins and McCall, 2014). Moreover, this report detects whether the demand of the stakeholders of the firm aligns with the firm’s objectives or not and transparency as well as accountability is also maintained. In this report, sustainability reporting of two Australian firms i.e. BHP Billiton and Wesfarmers Limited have been analyzed and compared in detail in order to identify the current state of sustainability reporting. Moreover, case study analysis has been performed and finally based on the findings and outcomes, conclusion has been drawn and recommendations have been suggested.
BHP Billiton
It is a public company listed in ASX (Australian Securities Exchange) as BHP and is headquartered in Melbourne. It is considered as the largest mining, petroleum and metals firm across the world as per the market value of 2015 and is regarded as the 4th largest firm by revenue in Australia (Bhpbilliton.com, 2017).
Wesfarmers Limited
It is also a public company listed in ASX as WES, which was established in 1914 and is headquartered in Perth, Australia (Wesfarmers.com.au, 2017). It is a conglomerate industry that deals with chemicals, coal mining, fertilizers, retail, safety and industrial products. This is regarded as the largest company by revenue in 2015 in Australia and it employs around 230000 employees across the world (Wesfarmers.com.au, 2017).
Project Aim
The intention of this report is to explore the sustainability reporting of both the firms BHP Billiton and Wesfarmers Limited and to measure it with the objectives of the strategic integration of sustainability. Therefore, this report will help to make the engagement platform between the firms and its stakeholders better and thus the reporting can also be improved. Based on the sustainability governance, the operations of the firms are assessed to understand the process by which both the organizations manage their sustainability (Horngren et al., 2013). The present sustainability of both the corporations will be studied and analyzed based on four aspects of governance of sustainability. These include – communication, commitment, leadership and implementation. Moreover, the score of these four aspects i.e. the rating like below average, average and above average will help to analyze the present situation of the firms regarding its sustainability reporting. Additionally, it can be said that these ratings will also help to conclude the present state of sustainability reporting of the organizations and will also assist to recommend the firms regarding this.
BHP Billiton
According to the sustainability reporting of the firm for the year 2016, it has been found that the value of the business involves integrity, accountability, performance, respect, simplicity and sustainability. BHP Billiton develops and bears social, environmental and economic value. From detailed analysis, it has been found that these values serve the firm with various competitive advantages. Moreover, the sustainability framework of the organization includes risk management as well as sustainable development and these way out the process by which the investment policy is implemented within the local communities and host country. As per Deegan (2013), the sustainability report of the particular firm is directly associated with the operated assets. The specified organization’s shares stewardship regarding the environment, monetary development and local cultures. The sustainability governance is greatly operated by the firm’s rules, which are linked to environmental, safety, community and health impacts. BHP Billiton founds to comply with the rules, regulations and policies of the country, where the business is operated. In the particular organization, the OMC (Operations Management Committee) are responsible for taking main decision about the sustainability governance (Edwards, 2013). The sustainability governance and its maintenance is considered as an important factor as for daily operations and management of the corporation. It has been found that BHP Billiton is inhabited by the formal governance structure and technological exchanges. BHP Billiton’s sustainability framework gets priority to the determination and management of the material risks, which are incorporated in various business processes, functions and actions. Internal auditing appraises the design as well as operational effectiveness of the firm’s sustainability procedure yearly and these procedures are HSEC data and HSEC data (Henderson et al., 2015). These assess the firm’s sustainability reporting. However, BHP Billiton, has different objectives of sustainable development and from the following screenshot this can be better understood:
According to the sustainability report of the firm for the year 2016, the particular organization continues to develop values for future actions. On the other hand, the firm assigns the management of the community and the environmental influence proactively. This can be differentiated into – people, sourcing, community, environment and governance. The firm creates value for its investors, staffs and communities. Wesfarmers believe in value creation (especially, the long-term) and provides it to the communities in an accurate way. Moreover, the firm commits to minimize its carbon footprint and intends to deliver possible solutions through the process of helping the clients as well as the entire community (Bebbington and Larrinaga, 2014). Therefore, this aids in developing the performance of the firm to a large extent. Moreover, the firm has developed transparency in its operations, particularly in the field of supply chain management. It has been found that the particular corporation mainly focuses on the ethical sources, such as transparency in the supply chain. Additionally, this strengthens the association with the suppliers of the firm by making sure the operational actions of the firm. Furthermore, the corporation intends to reduce the emission of greenhouse gases by about 2 % in future (Hribar, Kravet and Wilson, 2014).
BHP Billiton
Based on the detailed study of the sustainability report of BHP Billiton for the year 2016, it has been found that there are various issues regarding material sustainability in the firm. In addition to these, the intention of the corporation is to detect and retort all problems of material sustainability in order to deliver the strategies of the organization efficiently. BHP Billiton is currently striving for managing its accountability towards the employees’ safety. In addition to these, the firm targeted to develop its overall recordable grievance incidence on an annual basis (Christensen et al., 2015). However, from detailed study, it can be said that the improvement rate is minor for the firm. BHP Billiton targeted to donate 1 % of the total pre-tax profits to the local as well as national economies and community programs (Morales, 2017). However, from the report, it can be said that the percentage of profit of the corporation started to decline constantly. Moreover, the firm aimed to deduce and control the emission of greenhouse gases from the operations and regulations of the corporation, but the firm failed to maintain it in the earlier year. Furthermore, the organization has not performed any kind of important events regarding saving of society, environment and ecosystem on an annual basis. Additionally, BHP Billiton has not performed any significant events about community, therefore, the particular corporation should put much emphasis on the wellbeing of society, community and environment for the betterment of the business operation with the aim to run it successfully.
Wesfarmers Limited
The sustainability report of the firm for the year 2016 reveals that despite of enormous effort regarding development of this report and constant work on decrease in waste removal and water usage, Wesfarmers finds it hard to control, obtain and maintain business growth. It has been found that the management department of the organization Wesfarmers Limited is entrusted to proactively control and manage the overall society for influencing the environment. The operations of the firm are mainly concerned and adhered to ten various principles, which can be linked to the issues of company sustainability. Moreover, these can be distinguished as material aspects for the overall group. Nonetheless, it has been found that the management department of Wesfarmers persistently flourish to provide a safer work environment for its employees by enhancing the magnitude of safety presentation and to consider proposals for decreasing the numbers of damages within the corporation (Hoyle, Schaefer and Doupnik, 2015). However, the assessment of Wesfarmers’ sustainability reporting is concerned with the divulgement of the fact that it might improve the safety program and safety performance.
Conclusion
Based on the above study, it can be can be said that this study assists to gain an overall view about various theories and concepts of governance of sustainability with particular direction to the pronouncement of BHP Billiton and Wesfarmers Limited. The study gives an overall outlook of several theories of sustainability reporting and the significance of the observance with the commands that are led down as per the standards of accounting. Moreover, the significance of sustainability reporting has been explained in detail through the help of case study analysis of both the corporations. In addition to this, it can be said that this particular analysis illustrates the need and importance of preparing sustainability reporting in detail for both the organizations and have also been compared accurately for better understanding. Lastly, it can be said that this report helps in addressing various problems in the company operation depending on all the findings and outcomes of the case study.
References
Bebbington, J. and Larrinaga, C., 2014. Accounting and sustainable development: An exploration. Accounting, Organizations and Society, 39(6), pp.395-413.
BHP Billiton | A leading global resources company. 2017. BHP Billiton. Retrieved 3 January 2017, from https://www.bhpbilliton.com
Christensen, H.B., Lee, E., Walker, M. and Zeng, C., 2015. Incentives or standards: What determines accounting quality changes around IFRS adoption?. European Accounting Review, 24(1), pp.31-61.
Deegan, C., 2013. Financial accounting theory. McGraw-Hill Education Australia.
DesJardins, J.R. and McCall, J.J., 2014. Contemporary issues in business ethics. Cengage Learning.
Edwards, J.R., 2013. A History of Financial Accounting (RLE Accounting) (Vol. 29). Routledge.
Henderson, S., Peirson, G., Herbohn, K. and Howieson, B., 2015. Issues in financial accounting. Pearson Higher Education AU.
Horngren, C.T., Sundem, G.L., Schatzberg, J.O. and Burgstahler, D., 2013. Introduction to management accounting. Pearson Higher Ed.
Hoyle, J.B., Schaefer, T. and Doupnik, T., 2015. Advanced accounting. McGraw Hill.
Hribar, P., Kravet, T. and Wilson, R., 2014. A new measure of accounting quality. Review of Accounting Studies, 19(1), pp.506-538.
Morales, M.P.E., 2017. Important Announcement. EURASIA Journal of Mathematics, Science and Technology Education, 13(5), pp.1377-1409.
Sustainability.wesfarmers.com.au. 2017. 2015.sustainability.wesfarmers.com.au. Retrieved 3 January 2017, from https://2015.sustainability.wesfarmers.com.au
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