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Voluntary Disclosure in the Australian Corporate Sector - Case Study Example

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The paper 'Voluntary Disclosure in the Australian Corporate Sector" is a perfect example of a finance and accounting case study. In the current business environment, sustainability has come to be a core area of focus for corporate entities, not-for-profit organisations and governments. Companies have had to re-assess their policies and observe ethical standards…
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Extract of sample "Voluntary Disclosure in the Australian Corporate Sector"

Voluntary Disclosure in the Australian Corporate Sector Name Tutor Unit Code Introduction In the current business environment, sustainability has come to be a core area of focus for corporate entities, not-for-profit organisations and governments. Companies have had to re-assess their policies and observe ethical standards all through the value chain given the sensitivity of sustainability to their for profit ventures. The Global Reporting Initiative (GRI) has developed guidelines for sustainability reporting for each one organisation in the globe. The institution’s initiative has been widely accepted. The guidelines include specific standard disclosures that guide organisations to report correctly regarding their economic (profit), social (people), and environmental (planet) (triple bottom line) dimensions of their undertakings. Measuring the degree of an entity’s sustainable operations is rather hard. Even as the GRI guidelines are out to achieve comparability between reports through using common indicators, they also permit flexibility. Organisations are gratuitous to ponder on the content of their reports that is also consistent with their capacity. Therefore, some content may not be covered. This report looks into the sustainability reporting of two leading companies in the Australian energy sector: Origin Energy and Santos. The company’s reports are evaluated against the latest GRI guidelines (G4). Origin Energy Origin is a leading integrated energy company with extensive operations across Australia and New Zealand. Its activities include exploration, generation, production, and delivery of energy solutions both in the local and international markets. The company’s portfolio is concentrated in various basins in Central Australia, Southern Australia, and Western Australia and in the Northern Territory, Taranaki and Canterbury in New Zealand as well as Vietnam. The company provides energy to homes and businesses all through Australia, New Zealand and the Pacific. Origin also has interests in the emerging Asian markets and in the Latin America. Origin desires to produce energy that is affordable, and environmentally friendly. The company’s reporting indicates that it followed the GRI G4 guidelines. Origin reported on the environmental, social and economic impacts of its operations (Origin Energy, 2015a). Under the economic category, Origin reported on three of the four material aspects as guided by G4 principles. Under economic performance aspect, Origin reported on just two indicators; G4-EC1, and G4-EC2. Under indirect economic impacts only indicator G4-EC7 was reported only. The other material aspect covered is procurement practices using the only indicator; G4-EC9. Apart from the indicators not covered in the reported aspects, the only material aspect not totally report on is market presence (Origin Energy, 2015b; GRI, 2014). Under the environment category, Origin reported on six out of the twelve material aspects contained under G4 guidelines. The company reported comprehensively on water regarding all elements contained under G4-EN8, G4-EN9, and G4-EN10 respectively. Origin regards the protection of water resources as a material aspect. The company also reported on biodiversity covering all the four elements outlined under G4-EN11, G4-EN12, G4-EN13, and G4-EN14 respectively. The third aspect Origin reported on is emissions. Origin reported on all the three scopes regarding greenhouse gas (GHG) emissions, that is, scope 1 - G4-EN15, scope 2 - G4‑EN16, and scope 3 - G4‑EN17. Other indicators covered under emissions reporting include G4‑EN18, G4‑EN20, and G4‑EN21. However, the company did not report on the reduction of GHG emissions (G4‑EN19). Under effluents and waste, origin reported on a number of the required elements. That is, G4‑EN22, G4‑EN23, and G4‑EN24. The company also reported on the quantity of formation or produced water (G4‑OG5), and the quantity of drill mud and cuttings generated along with their treatment and disposal (G4‑OG7), though this are not indicated under the G4 guidelines. The effluents and waste reporting did not cover indicators G4‑EN25 and G4‑EN26. Origin reported on G4‑EN29, the only indicator under compliance and G4‑EN34, the only indicator under environmental grievance mechanism. The material aspects under environment not reported on by Origin are materials, energy, products and services, transport, overall, and supplier environmental assessment (Origin Energy, 2015b; GRI, 2014). According to the G4 guidelines, the social category is divided into four sub-categories that are labour practices and decent work, human rights, society, and product responsibility. Origin reported on all the categories. Under labour practices and decent work, Origin reported on four material aspects out of the eight outlined by the GRI G4 guidelines. Regarding employment, the company reported on all indicators G4‑LA1, G4‑LA2, and G4‑LA3. Regarding occupational health and safety indicators G4‑LA5, G4‑LA6, and G4‑LA8 were reported on. G4‑LA7 was not reported on. All indicators G4‑LA9, G4‑LA10 and G4‑LA11 under training and development were reported on. The only indicator under equal remuneration for women and men was reported on; G4‑LA13. Material aspects not reported on are labour relations, diversity and equal opportunity, supplier assessment for labour practices, and labour practices grievance mechanism (Origin Energy, 2015b; GRI, 2014). Three of the ten material aspects on human rights were reported on. Under investment, Origin reported on the second indicator G4-HR2 only. Child labour and indigenous rights have one indicator each; G4-HR5 and G4-HR8 and all were reported on. The material aspects not reported on are non-discrimination, freedom of association and collective bargaining, forced on compulsory labour, security practices, assessment, supplier human rights assessment, and human rights grievances mechanisms (Origin Energy, 2015b; GRI, 2014). Under society, Origin reported on four of the seven material aspects. Regarding local communities the company reported on the two indicators G4-SO1 and G4-SO2. Under anti-corruption two indicators G4-SO3 and G4-SO4 were reported on. G4-SO5 was not covered. The only indicator under public policy, G4-SO6, was reported on. Reporting also covered G4-DMA. Also, the only indicator under grievance mechanisms for impact on society, G4-SO11, was reported on. The aspects not reported on are anti-competitive behaviour, compliance and supplier assessment for impacts on society (Origin Energy, 2015b; GRI, 2014). Finally, under product responsibility, Origin reported on several material aspects. It reported on one indicator, G4-PR5, under product labelling. G4-PR3 and G4-PR4 were not covered. Also one indicator, G4-PR7, was reported on under marketing communications. G4-PR6 was not covered. Access and provision of information were supplementary aspects covered through indicators G4-DMA. Origin did not report on customer privacy and compliance aspects (Origin Energy, 2015b). Santos Santos pioneered the business into the Australian energy sector in 1954. Today Santos is a top independent gas producer and supplier to homes, businesses and industries in Australian local market and the Asia-Pacific region. Santos also runs top oil and liquids ventures around Australia. The company’s strategy is based on liquefied natural gas (LNG), with a wider portfolio that includes pipeline gas and oil resources. With a desire to deliver long-term value for the shareholders, Santos has divested its LNG business into four attractive projects: Darwin LNG, Bonaparte LNG, PNG LNG and GLNG. These projects are projected to provide good cash flow into the future as demand for natural gas continues to grow. Besides, the company has an established business in Indonesia and continues to develop other projects and exploration ventures in Asia. For Santos it is not all about energy. The company is conscious about clean energy through sustainable operations. The company’s report indicates that it followed the GRI G4 guidelines regarding the environmental, social and economic impacts of its operations (Santos, 2015a). Under the economic category, Santos reported on three of the four material aspects as guided by G4 principles. Santos reported on all indicators under the economic performance, market presence, and indirect economic impacts aspects. Santos did not report on procurement practices. Under the environment category, Santos reported on four out of the twelve material aspects contained under G4 guidelines. The company reported fully on water, biodiversity, emissions, and effluents and waste aspects. However, the company did not report on materials, energy, products and services, compliance, transport, overall, supplier environmental assessment, and environmental grievance mechanisms (Santos, 2015b; GRI, 2014). Under the social category, Santos reported on three sub-categories that are labour practices and decent work, human rights, and society. It did not report on product responsibility. Under labour practices and decent work, Santos reported on five material aspects out of the eight outlined by the GRI G4 guidelines. Regarding employment, the company reported on one indicator G4‑LA1. It did not report on G4‑LA2, and G4‑LA3. Regarding occupational health and safety indicators G4‑LA5, G4‑LA6, and G4‑LA8 were reported on. G4‑LA7 was not reported on. One indicator G4‑LA9 under training and development were reported on. It did not report on G4‑LA10 and G4‑LA11. Under diversity and equal opportunity, Santos reported on the G4-LA12 indicator. Material aspects not reported on are labour relations, equal remuneration for women and men, supplier assessment for labour practices, and labour practices grievance mechanism. One of the ten material aspects on human rights were reported on. Santos reported on one indicator under investment, G4-HR1. The company also reported on indigenous communities, OG9. The material aspects not reported on are non-discrimination, Child labour, freedom of association and collective bargaining, forced on compulsory labour, security practices, indigenous rights, assessment, supplier human rights assessment, and human rights grievances mechanisms. Under society, Origin reported on just two of the seven material aspects. Regarding local communities the company reported on one indicator G4-SO1. G4-SO2 was not reported on. Under compliance, Santos reported on G4-SO8. The aspects not reported on are anti-corruption, public policy, anti-competitive behaviour, supplier assessment for impacts on society, and grievance mechanisms for impact on society (Santos, 2015b; GRI, 2014). Comparison: Origin versus Santos Both Origin and Santos reported on three aspects under the economic category. Whereas both reported on economic performance and indirect impacts, Origin reported on procurement practices and Santos on market presence. Under the environment category whereas Origin reported on six out of the twelve material aspects contained under G4 guidelines, Santos reported on just three. Under the social category, Origin reported on all the four sub-categories while Santos reported on three. For both companies reporting on human rights was poor. Conclusion Even though Origin and Santos are reputable companies with wide operations in the Australian energy sector, there is a divergence on their sustainability reporting. Origin offers a more wide-ranging GRI G4 reporting than Santos. Santos reporting is not sufficient from a stakeholder point of view. It would be better if GRI could be more specific and recommend reporting guidelines for specific industries. This will enhance comparability since it will be easy to spot companies that do not report as required within the industry. References Global Reporting Initiative, (2014). G4 Guiding Principles, Accessed 6 May, 2015, . Origin Energy, (2015a). About Us, Accessed 6 May, 2015, . Origin Energy, (2015b). Sustainability Report 2014, Accessed 6 May, 2015, . Santos, (2015a). About us, Accessed 6 May, 2015, < http://www.santos.com/company-profile.aspx>. Santos, (2015b). 2013 Sustainability Report, Accessed 6 May, 2015, . Read More
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