portfolio writing based on my project report in accounting course

Introduction:

The purpose of this research paper is to analyze the facts regarding the disclosure requirements of sustainability reporting and environmental reports. Environmental protection and sustainable business are two of the primary success factors for the companies operating in 21st century as these two are the largest problems which our planet is facing and these factors are having severe impacts on human life and ultimately on Business life along with the culmination of leaving nothing for the off springs of mankind and this is going to be the worst heritage which was ever left by any of our ancestors for us. This report encompasses the legal requirements for the preparation of such environmental reports and the content of such reports. It will also include the international financial reporting standards intended for this purpose along with the efforts of international bodies for regulating and overseeing the disclosure requirements and presentation of such reports.

The basic purpose of the sustainability reporting is to change ad widen the view of the business, it states that businesses and corporations should not only operate in order to generate values for the shareholders but there should be some other perspectives too for the survival of the company and as a company uses the resources from the community and environment, so it should be liable to the community and the environment and it should disclose its environmental foot prints and the issues other than profits and financials e.g. the social, environmental and economic impacts of the companies caused by their operations. (Sustainability Reporting Guidelines On Economic Environmental, And Social Performance)

Another purpose of the sustainability reporting is that some of the investors base their decision on how green a company’s operations are and as the environmental concern in general public is increasing day by day, most of the company in the 21st century are facing many opportunities and threats based on their environmental exposure and these sustainability and environmental issues should be brought into the public’s consideration in the form of annual reports inclusion or separate discrete reports, so that shareholders and other stakeholders of the company could be able to make informed and timely decision regarding the future of their relationship with the company. These reports are based on a tipple bottom line, in which there are three perspectives that must be satisfied by the annual reports of a company and those three perspectives are Social, Environmental and Financial. This concept of triple bottom line was brought forward by Elkington who argued that Finance should not be the only focus of the companies reporting initiatives and there must be some other information (discussed above) included too in the reports of the companies.

GRI has established a number of guidelines and principals that govern the presentation and disclosure criteria for the sustainability reports. The GRI guidelines offer two methods for the preparation and presentation of the sustainability reports with every organization having the authority to apply any of the option without any consideration to their size, location or sector and those two methods are:

· The Core Option

· The Comprehensive Option

Both of the options are intended to satisfy the process and method for the identification of the material aspects of the company. The core option is related to providing a background to the company against which the company communicates its impacts of environmental, social and economic aspects which are material in nature. Corporate Governance Performance is also one of the major parts of a sustainability reports as these are the practices that ensures that the company is being run in a way which is most suited for the public interest.

In core option, only the basic material aspects of the described measures are to be reported by the comprehensive option is the next step of core option as it involves some additional disclosure standards regarding the company’s strategy, its integrity and ethical environment and the governance and analysis of the company. Moreover, in comprehensive option, extensive reporting on the performance of the company is required regarding all of the indicators related to material aspects identified.

There are two types of standards that govern the sustainability report’s preparation, presentation and disclosure. Compliance levels of both options with respect to these standards are provided in below tables.

Table 1: General Standard Disclosures.

*See Appendix A.

Table 2: Specific Standard Disclosures.

According to the GRI, paper reports, web-based reporting and electronic based reports are appropriate methods for sustainability reporting. It is on the discretion of the organization to choose more than one reporting methods, a combination of the above or a single method for reporting but there should be at least one medium through which the users should be able to access the complete information regarding the sustainable reporting for the reporting period stated.

There are certain principals developed by GRI for the achievement of the transparency in the sustainability reporting and therefore these principals are to be followed by all of the organization while preparing sustainability reports (The GRI Sustainability Reporting Guidelines). These principals are further divided into two categories which are as follows.

· Principals for defining report Content

· Principals for defining report Quality

The principals for defining the content of the report defines the process that should be applied for the identification of the context of the report and tends to answer the questions such as “WHAT SHOULD BE INCLUDED IN A SUSTAINABILITY REPORT?” These principles consider the activities of the organization, impacts of those activities and the substantive interests and expectations of the stakeholders.

The principals for defining the quality of a sustainability reports guide the choices on making sure the quality of a sustainability report, along with managing the proper presentation of the report. The quality of the sustainability report is very important because users access the performance of the organization relating to its activities and make decision accordingly on the basis of the information provided in the report so its quality needs to be at highest possible level.

Stakeholder Inclusiveness:

All of the stakeholders of an organization should be identified by the organization and it should explain that how the reasonable interests and expectations of those stakeholders were responded by the organization’s management team. (The GRI Sustainability Reporting Guidelines)

Stakeholders of an organization could be the investors, suppliers, customers or any other people or group of people who have any relationship with the organization weather existing or prospective.

Sustainability Context:

The organization’s performance presented in the report should be in a wider context of sustainability.

This principle is intended for making sure that it should not be only financial impacts of the organization on the environment, social and financial perspective but a detailed analysis of the impacts of the organization on these three bottom lines should be presented. Some of the questions such as how the organization is attempting to contribute to the current and future of the environment and community and at which level (local, regional, national or global) is the organization taking steps or accepting its responsibility for sustainability reporting.

Materiality:

The report should cover all of the aspects that are related to the significant environmental, social and economic impacts of the organization’s activities or the aspects that the organization consider, could impact the decision making ability of the stakeholders and public regarding the organization in a substantive way.

Completeness:

The report should include all material aspects along with their boundaries in such a way that those material aspects reflects all of the company’s environmental social and economical impacts in a sufficient way and which enables the stakeholders of the organization and users of the reports to analyze the performance of the company in the given period. This completeness principal includes dimensions of time, boundary and scope.

These principles deal with ensuring the quality of the report and the presentation requirement of the reports. The decisions for the process of preparing the reports must be in line with these principles as these are necessary for the achievement of transparency. Quality of a report is essential to enable the users of the report to make informed and timely decisions.

Balance:

THE report must reflects all of the aspects and impacts of an organization including both the negative and the positive impacts in order to facilitate the stakeholders for a reasonable and appropriate assessment of the overall performance. This principle has a theme that the report contents and quality should be unbiased.

Comparability:

The information and the contents of the report should be selected, complied and reported in a consistent way that allows the comparability to be done by the users. This should be done in order to allow the stakeholders to compare and do analysis o the changes in the organization’s performance, and this is also required to analyze and compare the reports of one organization with reports of another organization. (The GRI Sustainability Reporting Guidelines)

Comparability is essential for the evaluation of the performance. Stake holders must be able to compare the information over all and in parts like economical, social and environmental aspects of the report over a period of time.

Accuracy:

The information presented in the sustainability reports must be sufficiently accurate in such a way that stakeholders could base their decision on the information presented in the reports by analyzing the performance of the organization(The GRI Sustainability Reporting Guidelines). There should be no fake or unauthorized information included in the report nor any information should be there without authentic references.

Timeliness:

The reports containing the information should be published after regular intervals of time or on specified dates so that information is accessible by stakeholders on timely basis in order to make decision by evaluating performance. Moreover this principle is also intended to make the information’s comparability easy.

Clarity:

The availability of the information in reports should follow a manner that facilitates the easy understandability of the information for the stakeholders and users. Professional Jargons must be used at minimum level and the language and context of the report should be easily understandable and comprehensive enough to help a person analyze the performance of the company who has reasonable information about the company.

Reliability:

The information presented in the reports should be reliable and the gathering, recording, compiling, analyzing and disclosing of the information to be presented in the reports should be done in a manner that they could be subjected to analysis and examination and that maintains the materiality and quality of information.

As discussed in the first part of this paper there are two types of the standard disclosures which are as follows:

· General Standard Disclosures:

· Strategy and Analysis

· Organizational Profile

· Identified Material Aspects and Boundaries

· Stakeholder Engagement

· Report Profile

· Governance

· Ethics and Integrity

· Specific Standard Disclosures:

· Disclosures on management approach

· Indicators

Harvey Norman is a multi-national retailer based in Australia and dealing in communications, consumer electrical products, bedding computers and furniture etc. Founded in 1982 by Gerry Harvey, the company is mainly being led by franchising system. Up to the date, there are 280 franchised and company owned stores in Australia.

Harvey Norman also publish its information regarding the environmental and sustainability impacts of the company’s activities but as discussed later in the survey, like most of the other major Australian companies, Harvey Norman do not follow the global reporting initiative guidelines and there is not much information revealed in the annual reports of the company. However electronic media like website and discrete reports are issues by the company to address the issues. According to the CSR hub, the company is given a score of 45 against the other companies regarding the sustainability reporting. This is a below the average ranking inclined towards low and most of the factors in the sustainability reporting just shows the positive side and impacts of the company. Breakdown of the 45 rating is that community information in the reports are given 40 rating, Employees are rated 42, Governance at 44 and most of the rate is associated with the environment which is 52, and thesis the only rate that falls in average threshold.

According to a survey conducted by the backing and patronage of CPA Australia on 25 Australian companies, most of the companies were biased in their sustainability reports and they didn’t followed the guidelines of GRI(Frost et al. 89-96). The survey concluded that there were major visible inconsistencies in the sustainability reporting of the major 25 Australian companies noticed in the spate discrete reports issued by those companies and that most of the companies contained incomplete information that didn’t complied with the initiatives of GRI and the benchmarking of those reports against GRI initiatives is very limited. As the companies in the sample were some of the major companies working actively and supporting the sustainability reporting, the findings cast huge doubts on the overall sustainability reporting of t Australian companies. (Frost et al. 89-96)

Sustainability is one of the issues which is being actively pursued by the environmental groups and general public as it is jeopardizing the future of the business world and our planet earth. Companies must realize their role in the community and must just focus on the financials but also on the environmental and social impacts of their activities and should disclose these impacts and the steps taken to minimize these impacts in the sustainability report, but actually it is not being done at all or if it is being done by some companies, it is not being done in the right way so in order to control this issue there should be some legal requirements on the listing and stock exchange level or national or international legislation level by developing binding requirements for the companies to issue such reports and according to the guidelines of GRI.

Reference:

Frost, Geoff et al. "A Survey of Sustainability Reporting Practices of Australian Reporting Entities". Australian Accounting Review 15.35 (2005): 89-96. Web.

The GRI Sustainability Reporting Guidelines. Amsterdam, Netherlands: Global Reporting Initiative, 2007. Print.

Schaltegger, S, Martin Bennett, and Roger Burritt. Sustainability Accounting And Reporting. Dordrecht: Springer, 2006. Print.

Sustainability Reporting Guidelines On Economic Environmental, And Social Performance. [Boston, Mass.]: [GRI], 2000. Print.

Zachary, Daniel S. "On The Sustainability Of An Activity". Sci. Rep. 4 (2014): n. pag. Web.

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Md shafiqul islam s232319 ACT306 Assessment 2