Corporate Sustainability Reporting

Question: Describe about the Sustainability reporting. Explainthe impact of non-budgetary execution of an organization and how it impacts the mentality of basic individuals. Answer: Abstract We are presently witnessing a lot of business competition among the global business establishments of the world. Business establishments are leaving no stones unturned in order to stay ahead of their business competitors in the market. The business establishments are trying to incorporate every possible strategy in order to ensure a competitive advantage over their market rivals. In this constant urge to stay ahead of the market competitors, there has been an increasing propensity among the global business enterprises to resort to unfair and unethical business practices which helps the business establishments to maximize their profits and revenues from their business operations in the market. Thus in order to keep a strict check on the business activities of the different organizations and to ensure that they conduct their business operations in a socially responsible manner, sustainability reporting is so essential. It provides us with accurate information regarding the business fun ctionalities of an organisation in the market and how the business establishment is contributing towards the overall growth and development of the society. In this assignment we have taken the example of two of the most reputed and well known banks of Australia (Westpac Bank and Commonwealth Bank) and analysed how both these banking institutions are ensuring sustainability reporting within their business hierarchy. Furthermore, an elaborate comparison of the sustainability reporting which are being practiced in both these banks has been undertaken in order to understand how these two financial institutes are operating their business in a socially responsible and ethical manner. This assignment also discusses the various systems theory such as the Legitimacy theory, Institutional theory and the Stakeholder theory which has played a vital role in helping us to understand the various aspects of sustainability reporting in an effective manner. Introduction The world has undergone globalisation and in light of this change consumers have become highly self conscious about their taste and preferences. The consumers are well aware of the market conditions and other relevant issues which make them quite a hard nut to crack in terms of convincing a consumer to purchase something. Over the years there has been drastic change in the market as well as in the corporate mechanism which has set a benchmark for the corporate world. With the growing conscience of consumers about a few key aspects of the society companies started focusing on emphasising on these aspects. One of the key aspects that stand to be important in the present moment is Environment. The environmental consciousness of common people has rapidly increased in the recent past and it is highly conspicuous. With time passing by rapidly the markets have become highly competitive and it has become tough for the companies to grab substantial market share. In order to construct strong p latform for a sustainable future companies needed design and implement a certain tool that would be conducive for long term sustainability (Bebchuk et al., 2009). Corporate Sustainability Reporting is that certain tool that has become a contemporary corporate weapon for a lot of companies in order to turn the wave towards them. The Corporate Sustainability Reporting is a tool that helps companies to effectively communicate with the consumers since this report provides information about the movement of a particular company towards safeguarding the environment and reporting about the potential steps taken for the economic, social and environmental welfare of the society. The main focus of the framing corporate sustainability report is to be transparent and committed towards the client base. In the contemporary business environment Corporate Sustainability Reporting could be defined as the consolidated collection of information that involves reporting of performance benchmarks from the point of view of the social, economic and environmental sphere for a particular community. In the recent decade or so most of the bigger organisations have got hig hly inclined towards framing effective Corporate Sustainability Reporting that has enabled them to be more transparent and allowed them to face risks and opportunities in a much more effectual manner (Baumgartner Ebner, 2010). The concept of Corporate Sustainability Reporting is multi faceted and hence it becomes extremely important comprehend the purpose of Corporate Sustainability Reporting the role of Global Reporting Initiative Framework in making this kind of report and its impact on companies. Task 1: Corporate Sustainability Reporting In a world of competition where every inch of space is subjected to sheer corporate battle Corporate Sustainability Reporting acts as a deciding factor. Sustainability report is a tool that helps many companies to exhibit their rigorous attempts to be friendly with the environment and contribute to the social and economical welfare of a place and in return they expect to get proper support from the consumers who stand to be the only motivation of these companies. In the recent past the tool of sustainability reporting has been played a significant role in placing different companies in drivers position in a market which is apparently competitive. The sustainability report published by a company exhibits the different attempts and efforts made to positively contribute to the social, economical and environmental domain through their daily activities (Aras Crowther, 2009). This concept of sustainability reporting has grown to be a very convenient and popular device all over the world which has helped a lot of organisations to display their motives to safeguard the environmental, social and economic interest of that organisation through recording of their daily activities. This in return has helped the consumers to distinguish between organisations and get clear and transparent view about their work and activities as well as their corporate social responsibilities towards mankind. The role of Sustainability reporting rose to prominence as some of the bigger companies in the world used this tool. The sustainability report also presents a clear view of the organisations values and corporate governance which would help the common people to understand asses a company accordingly and demonstrates a clear connection between the strategies and its commitment towards a sustainable economy. With the gradual increase in consumer interest about environment sustain ability reporting of a company helps the company to develop a strong hold over its activities which affects the environment positively (Linnenluecke, M. K., Griffiths, 2010). The corporate supportability report ought to be arranged and planned in a manner that the partners including the clients and the overall population get to be mindful of the undertakings of the organization and that the report lives up to their desires. The substance of the report ought to be adjusted to the general business methodology, mission, vision, points, objectives and targets of the business association. All in all the pith of the report ought to be focused at the requirements and desires of the more extensive gathering of shareholders and partners alike. The procedure of supportability reporting is surely extremely unpredictable and incorporates a wide range of corporate, financial, social and environmental activities that have been embraced by the organization to fulfill the necessities, prerequisites and requests of the shareholders and in addition the different concerned partners. Against the backdrop of the consent to report different parts of corporate business maintain ability discoveries the organization must have the capacity to agree to the different reporting norms, the conventions and the benchmarks of such a report (Garriga and Mel, 2004). Notwithstanding these the report ought to be such that it has the capacity to give all the significant and the appropriate information in regards to the different parts of the organization activities in the supportability area by entirely holding fast to guidelines, principles and controls connected with such sorts of reporting in the business space. The GRI rules give extra system to composing such reports as they are considered fit for this sort of business composing. The GRI rules give a more extensive structure to such reporting that can be utilized by all organizations acting as a part of different areas of Australia. The estimation of an organization's corporate maintainability report lies in its capacity to make an accurate representation of the facts in regards to both its execution and underperfor mance in different parts of the business including ranges of monetary, social and environmental insurance viewpoints (Bosà ¢Ã¢â€š ¬Ã‚ Brouwers, 2010). Care must be taken that the perspective gave in the report is all encompassing and adjusted without inclining to one particular territory of execution like benefits and diverging from ranges in which the organization's execution has not been up to the imprint. The report ought to be as straightforward as would be prudent and should likewise incorporate negative partner feedback where such feedback has been given by the organization. The utility and the pertinence of the corporate maintainability report furthermore its believability relies on upon the way the information and the information is being exhibited to general society. In addition the information ought to be overall target and as unprejudiced as could reasonably be expected so that mistaken suspicions are not made on the premise of a one-sided report (Lee Faff, 2009). Nature of the report is of outright significance if the organization is to persuade its partners that it is submitted and skillful to deal with the social, mo netary and environmental parts of the business in a successful way. Obviously that supportability reporting ought to be adjusted to monetary reporting so that legitimate implicit rules in the accounting norms could be kept up and the organization is free from the possibility of winning unsavoriness from outrages of fumbled assets furthermore corporate cheats. A portion of the specialists are of the perspective that corporate money related reporting principles are of meticulousness in the matters of information gathering and accuracy and much similarly such ought to be the situation of corporate manageability reporting. As the premium level of examiners in the space of interest in the territory of corporate maintainability reporting has expanded the same level of accuracy and meticulousness of money related reporting principles should be connected to some measurements and zones of CSR reporting (Montiel, 2008). Sustainability reporting is also termed as non-financial reporting; Triple Bottom-line Reporting, Corporate Sustainability Reporting et cetera. Building and maintaining trust in business is extremely important and every company needs to do that in order to have proper support from its loyal consumer base and nowadays the best possible way to do that is to develop a proper sustainability report that takes into account the different steps taken by a company to ensure sustainability in the field of social, economic and environmental development. Companies from all across the world have taken up Sustainability Reporting and similarly bigger companies from Australia also have ensured that they take up sustainability reporting in order to make sure that their market position is intact. It is important to mention that the key purpose of Sustainability reporting is to build trust in the minds of the common people which would help a company to effectively interact with them and understand the ir feelings about certain important things. Since a business is built up of different stakeholders and their role becomes extremely essential for the growth and development of a business it is extremely important that the wants and needs of the stakeholders are properly addressed which is highly facilitated by the framing of sustainability report (Hahn et al., 2010). Thousands of companies across all sectors have taken up Sustainability reporting based on certain universal reporting guidelines which are: Global Reporting Initiative framework The Organisation for Economic and Co-operation and Development (OECD) The United Nations Global Compact The International Organisation for Standardisation (ISO 26000, International Standard for Social Responsibility) Out of these guidelines the most followed framework is Global Reporting Initiative or GRI Framework. In the late 90s when a lot of multinational companies were thinking about fixing the key problem of their commitments towards the stakeholders in terms of social, economic and environmental duties it was very tough come up with solutions as there were no such guidelines or processes similar to displaying the financial performance of a company. In this situation a coalition of CERES (Coalition for the Environmentally Responsible Economies) and UNEP (United Nation Environment Program) came up with an idea of launching newly formed frameworks which would help these companies to measure their non-financial performance and also exhibit the same to the consumers and Global Reporting Initiative came into existence. This framework made sustainability reporting mandatory and common for companies like financial reporting. The GRI framework helps the companies to approach their non financial sus tainability reporting in a very systematic way (Bosà ¢Ã¢â€š ¬Ã‚ Brouwers, 2010). The GRI is focused on making it easier but much more conventional for the companies to approach their sustainability reporting which would help them to be more clear and transparent towards its target audience. The GRI focuses on helping a company to: Understand the economic, social and environmental impacts of their activities Helps the companies to enter into conversation with its stakeholders about their possible impacts Define indicators to reflect on its social, economic and environmental contributions And finally monitor the steps taken to fulfill the objectives The GRI framework has been effective for many companies all across the world due to its simple process and clear focus. The major steps taken to fulfill the reporting under GRI guidelines involve: Prepare: In this phase the upper level management is approached in order to identify the most obvious positive and negative social, economic and environmental impact from the organisational activities. Connect: This is an essential part as it involves approaching stakeholders and seeking their inputs about what are the key aspects that should be added in the final report. It depends on the assessment of the different aspects by the company and how they felt about them (Schaltegger et al., 2012). Define: The inputs provided by the stakeholders will ensure that the identified aspects in the first step are the key aspect or not. This helps in clearing the sole focus of the report. Monitor: This is the stage where all the different information is gathered. The various GRI indicators are available to help companies to monitor the information gathered. The induction of GRI indicators helps in gathering highly refined information that helps in effectual reporting. Reporting: Finally the data gathered from the above steps are very prudently put into the report and then published for the common people to see it. It also takes into account the best possible way to communicate the result of the report to the stakeholders. Overall it could be said that the main purpose of sustainability reporting is to build up trust with the stakeholders through clear and distinct communication with the help of GRI guidelines that helps companies to report key social, economic and environmental aspects to good effect (Milne Gray, 2013). Task 2: Comparison of Sustainability Reporting Comparison of sustainability reporting could be done when two companies are assessed effectively. For the present study tow companies taken are Commonwealth Bank Australia and Westpac Banking Corporation Australia. Commonwealth Bank Australia The Commonwealth Bank Australia is one of the leading financial institutions that have its operations in many countries like New Zealand, Europe, USA, Asia-Pacific regions. The company has huge goodwill in the market and provides different banking services like retail banking, premium banking, business banking, institutional banking, asset management et cetera. The company has focused on framing and maintaining corporate social responsibility objectives which helps the company to keep its interaction with the consumers significantly effective. The company focuses on addressing certain issues related to economic, social and environmental domain and wants to maintain and its non financial performance consistently as well (Aras Crowther, 2008). The company focuses on effective corporate governance which helps the company to address all the needs and demands of its stakeholders. The company strives to provide effective responsible financial service by addressing issues like bribery, cor ruption, speaking up against financial frauds et cetera. Setting targets for its employees to visibly assess their performance helps the company to provide increments and other rewards, the company focuses on hiring talented personnel, ethical business practice like providing equality at the workplace, paying taxes to the government, fulfilling their duties of environmental stewardship, empowering backward classes, investing in literacy programs, supporting arts sports and health in Australia have been their core focus which is given in the annual report of 2014 (Lee Faff, 2009). In late 2009, the Group declared a pledge to enhance the money related literacy of one million youngsters by 2015. We achieved this objective in August 2014, 5 months sooner than arranged. In the course of the most recent 12 months we've lessened our joined residential Scope 1 and 2 carbon emanations by 12,385 tCo2-e. Our yearly People and Culture study measures the levels of engagement amongst our kin. The bits of knowledge we accumulate from the study reactions illuminate choices and actions that assemble individual, group and business achievement. Republic Bank is currently the most noteworthy positioning Australian bank recorded on CDP's worldwide list and achieved a general divulgence score of 94/100. In the course of the most recent five years our introduction to the renewable vitality division has expanded altogether, and at a much speedier rate than our presentation to coal-based vitality (Milne Gray, 2013). Westpac Banking Corporation Westpac is a renowned name in the Australian financial service market. The company has substantial market share in Australian and New Zealand market which makes it another big name in the banking industry. Westpac has consistently contributed to the economic, social and environmental sphere in Australia. Providing more placements to women, investing 100 educational scholarships in 2014, reduction in the usage of paper and building the business in a clean-tech environmental friendly business have been some of the biggest feats for the company. The company has been able to communicate with its stakeholders both internal and external and has contributed largely to the reduction of carbon emission in the environment and has also emphasised on green banking. Overall it could be said that Westpacs sustainability agenda have been effective (Simnett et al., 2009). The primary manageability standards took after by the bank as a component of its supportability drive includes the cooperation of every one of its partners in the part of the key basic leadership plan furthermore taking care of the requirements and requests of the dedicated clients in a manner that base danger is included similarly as the prosperity of the general public and the assurance of environment is concerned. To get supportability going in the material world the bank embraces different activities like digitisation of the keeping money administrations which are done in a manner that the clients are the genuine recipient and the saving money items and capacities can react to a colossal scope of demographic changes that impact the way the managing an account operations are completed to meet the destinations of the shareholders (Aras Crowther, 2008). Comparison Both the companies Westpac and Commonwealth Bank have been very effective with their corporate social responsibility. Both these companies have performed well even non-financially towards the communities in Australia and the other countries they work in. It has to be mentioned that Commonwealth Bank sustainability reporting is done in a much more systematic manner. The approach is classical and conforms to the GRI frameworks. The Australian Stock Exchange has officially nodded to the material issues of the corporate governance principles which are not found in the reporting of Westpac. IT can also be said that Westpacs sustainability reporting could be made more synchronised. Though Westpac follows the GRI framework but information provided in the report is not up to the mark as compared to Commonwealths Sustainable reporting. It is also important to mention that the Commonwealth Bank focuses on sustainable business practice but Westpac doesnt mention anything like that in its report . Overall it could be said that both the companies are top level companies and hence need to work on their sustainable reporting paradigm (Bebbington et al., 2014). Task-3 Overseeing legitimacy through reporting is absolutely imperative for any business as it helps the business entities to direct their business operations in a socially accountable and moral manner. CSR information divulgences assume an imperative part in helping the stakeholders of an organisation to see how much effectively the business associations are participating in social exercises and how has it helped in changing the society as a whole. During the last ten years business establishments have increased the measure of information which is being disclosed to their shareholders in their yearly financial statements. This late pattern is basically ascribed to the increasing governmental pressures in order to guarantee that business associations are undertaking their business in an ethical and morally responsible way and are and are contributing pro-actively towards the development and advancement of the wider society. There are additionally different speculations which have been broug ht forth by specialists in this field which grasps the expanded social and natural liabilities of the business foundations (Baumgartner Ebner, 2010). The fundamental hypothesis connected with legitimacy is the general thought that for guaranteeing and ensuring the smooth coherence of their business operations in the market, business establishments must act in such a way so that they can always remain inside the boundary of what is considered to be a socially accepted behaviour by the general population. The business associations need to assume a dynamic role in the general development and improvement of the region in which they are operating their business as this would eventually help them to realise their business goals and objectives in the market. By undertaking effective measures to contribute towards the growth and development of the society the business establishments would really project a positive vibe to their customers in the market and this would help them in earning the trust and faith of their customers in the market. This would also help them in enhancing their brand image and reputation in the market (Farber, 2005) . In case it is found that an organisation is continuing their business in a socially unacceptable manner solely for the purpose of increasing their revenues and profits from their business operations then its mere existence in the market would be threatened in the first place. Business establishments which are operating in an unethical and socially irresponsible manner would be forced to shut down their business operations in the market sooner or later. Believers of this hypothesis generally have the same perception that the business establishments are attempting to gather the trust and confidence of their clients in the business sector by voluntarily providing them with all the necessary information with respect to their social activities in their yearly business reports (Simnett et al. 2009). They are attempting to legitimize their business operations in the business sector and stay in the safe side of the public administration and the law enforcement authorities. It has also bee n discovered that the penchant to uncover information in regards to social and environmental activities are expanded if an organization has been included in any sort of negative environmental activities which has been brought to light by the digital or print media. This helps the business foundations in shielding or advocating the business activities which have been undertaken by them over the span of their business operations in the market (Klapper Love, 2004). The Legitimacy of the business reporting is essentially carried out by utilising three different system oriented theories, which are - Legitimacy theory, Stakeholder theory and Institutional theory. These theories enable the business enterprises to ensure an effective reporting on their part which plays a vital role in improving the overall reputation of the business enterprises in the market. The Legitimacy theory has already been discussed previously. Now we need to understand the Stakeholder Theory and the Institutional Theory (Montiel, 2008). The Stakeholder theory is essentially a theory of organisational management that deals with the organisational morals and values which are been incorporated into practice while managing the daily business activities of an organisation in the market. Stakeholders are the people who are directly or indirectly getting affected by the business activities of an organisation in the market. Stakeholder of an organisation generally includes theiremployees, suppliers, trade unions, investors, governmental bodies,political groups and charitable trusts. The stakeholders play a vital role in determining the overall success and growth of a business in the market and thus it is absolutely essential for the business establishments to satisfy the interests of their stakeholders in the market. The stakeholder theory plays a vital role in helping the business establishments in identifying the needs and expectations of their stakeholders in the market and thus it helps the business establishments to co nsider the interests of their stakeholders at the time of business decision making (Baumgartner Ebner, 2010). On the other hand, the Institutional Theory is a widely accepted school of thought which essentially deals with the legitimacy, isomorphism and rational myths which are widely prevalent in the business structure of an organisation. It plays a vital role in helping the business establishments to analyse the deeper and more resilient aspects of the social structure under which an organisation is operating their business in the market. Thus, it helps and organisation to understand their wider role in the society and how they can contribute effectively towards the overall growth and development of the society (Farber, 2005). Both the Westpac Bank and the Commonwealth Bank have strived to develop an effective reporting on their part which has helped them to create a strong viewpoint of their business operations in the market. If we consider the application of the Legitimacy theory in case of Westpac Bank and Commonwealth Bank then we can clearly say that both the organizations have been utilising the theory in an effective manner and operating within the socially acceptable norms of business. The legitimacy theory has played a vital role in defining the roles and responsibilities of both Westpac Bank and Commonwealth Bank during the course of their business operations in the market. This has enabled both the organizations to ensure an accurate and transparent information disclosure regarding their social responsibilities towards the general population which has helped them to identify and realise their liability towards the society (Bebchuk et al. 2009). It is important to mention over here that both the banks have continuously strived to disclose their business information in a detailed manner to the general population. Both the companies are functioning in the market in such a manner which satisfies and goes with the expectations of the Australian public. Whenever an organisations activity reflects that it does not complies with the social and moral values of the society, it becomes quite evident that sooner or later the society will oppose the functioning of that organisation in the market. Both the Commonwealth Bank and Westpac Bank must ensure that they participate in those activities which help them to engage with their customers in an effective manner. This will help them in creating a strong bond with the general public and they will be able to earn the trust and faith of their customers in the market. Both the organisations have adopted Green Banking which has helped them to reduce their dependence on paper and helped them to ensure paperless transaction with their customer s. Thus, both the banks have been able to contribute significantly towards environmental conservation and environmental awareness by decreasing the paper consumption among their customers. This has helped Commonwealth Bank and Westpac Bank to create a positive impression on their stakeholders in the market. Again, the stakeholder hypothesis has enabled the both the banks to analyse the relationship which exists with their stakeholders in the market. The stakeholder theory has helped both the Commonwealth Bank and the Westpac Bank to ensure a powerful association with their internal and external stakeholders. From the points of view of the partners they will be satisfied if their requirements and needs are satisfied. The partner hypothesis for the most part demonstrates that each organization needs to deal with their partner's advantage (Simnett et al. 2009). In this situation both these organizations deal with their legitimacy by revealing distinctive corporate information. Both Westpac and Commonwealth bank needs to apply diverse developments that have a decent develop with the partners. At long last the Institutional hypothesis says that the institutional environment impacts the formal structure of a business. This aides in creating inventive thoughts of both the organizations Commonwealth and Westpac Bank and it could be said that early embracing associations are legitimized in such situation. It is likewise said that appropriation of such advancements reach a level of legitimisation where neglecting to accomplish these levels would appear to be nonsensical (Montiel, 2008). 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