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CONTEMPORARY ACCOUNTING THEORY
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Executive Summary The organisations engage in wide range of the corporate social responsibility practices, through the partner agencies or on their own in light of the regulatory compliance or to improve the image. It is imperative to note that as per the industry and region of operation of an enterprise, various guidelines have been issued for the amount and manner of the corporate social responsibility activities. The ethical theories also support the sustainable reporting principles. The report engages in the theoretical research of the various facets of corporate social responsibility and sustainable reporting in the modern businesses. The report further engages in the application of the theoretical knowledge to the practical scenario in terms of the evaluation of the CSR activities and reporting of the Spark New Zealand Limited, in light of the GRI principles.
Contents Introduction................................................................................................................................3 Significance of corporate social responsibility..........................................................................3 Sustainable Reporting representing the holistic view of the corporate social responsibility.....4 Theories representing the essence of sustainable reporting.......................................................5 Overview of the company..........................................................................................................6 Sustainability reporting (disclosure) scoring index according to the Global Reporting Initiative (GRI) guidelines.........................................................................................................7 Extent and Quality of Sustainable Reporting of the company Spark New Zealand Limited....8 Conclusion................................................................................................................................12 References................................................................................................................................13
Introduction With the increased complexities in the business environment and the corporate scandals and collapses coming into light, there has been placed an enhanced responsibility on the entities to be considerate of the welfares of the stakeholder groups and not just concentrate on the revenue earning objectives. The term corporate social responsibility denotes the accountability of the company towards the society and various associated members in the light of the environmental, economic and social responsibilities (Schwartz, 2011). The following assignment is aimed at examining the various aspect of the corporate social responsibility in light of the case study of the company Spark New Zealand Limited (SPK, formerly Telecom Corporation of New Zealand Limited). The concept of the sustainability reporting and corporate social responsibility would be studied in detail with the aid of the literature and the theories. Further, the report would involve the application of the insights gained from the literature to the financial statements of the said company to conclude on the extent and quality of the social responsibility fulfilment by the company. Significance of Corporate Social Responsibility(CSR) Bowen (1953), had stated the meaning of the corporate social responsibility in the book “Social Responsibilities of the Businessman”, as the framework of the obligations required to be adhered to by the enterprises, which included the designing of the policies and undertaking decisions that extend the goals and values of the society of the wellbeing of various members of society (Moon, 2014). As per the work of Chaffee (2017), the evolution of the social responsibility principles can be traced back to the earlier Roman laws and English laws as well that regarded the corporations as an tool for societal development. Gradually over the years, the concept of the corporate social responsibility has been widened considerably to include aligning the aspirations of the stakeholders with the corporate objectives (Tricker, 2015). Some of the societal concerns that have formed the part of the corporate social responsibility principles are that of rapid population growth, pollution, and issue of the resource depletion, which are a matter of concern for almost every nation. The growing significance of the corporate social responsibility can be traced in the fact that numerous international and national organisations have been formed to address the various societal concerns (Zientara, 2017). Some of the organisations are the “UN Global Compact,”
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the “Global Reporting Initiative”, and the “World Business Council for Sustainable Development”, the “Organization for Economic cooperation and development”, the “International Organization for Standardization” and others. The principles and guidelines of these organisations facilitate and guide the entities towards the best approaches for the entities in being transparent, fair and accountable while carrying out the revenue earning objectives. Hence, it can be stated that the principles of the CSR have evolved extensively. Sustainable Reporting representing the holistic view of the corporate social responsibility Over the years, the reporting of the activities of the enterprises have also enhanced significantly to include the non-financial information as well for the advancement of the decision makers interests. In order to provide a broader perspective in context of the performance of the business activities, various organizations have indulged in reporting of their performance on the scale of the environmental issues, sustainable development, and social responsibility as well other than the financial issues (Katamba, Zipfel, Haag & Kazooba, 2012). Sustainability reporting refers to a systematic framework which involves gathering and presenting the sustainability information for the management process and strategies, and for the employees, customers, local communities, investors and the shareholders. The following picture highlights the development process of the current sustainable reporting over the years that is comprised of the principles of various other relevant principles to form an overall comprehensive framework. (INTOSAI WGEA, 2013)
From the picture depicted above, it is evident that what started with the concentration on the environmental reporting only, gradually involved the need and the principles of the triple bottom line where three pillars were the people, planet and profit (INTOSAI WGEA, 2013). The 1990s further witnesses the development of a voluntary sustainability reporting framework under Global Reporting Initiative (GRI). Further, the individual countries also developed their respective principles for the improvement of the annual reports and accounts. Eventually, the sustainable reporting principles also included the disclosure of the issues related to organizational governance, fair employment practices, consideration of the human rights and the labor practices, consumer issues, community involvement apart from the environmental concerns such as the climate change, carbon contribution and others. Today, various organizations are not only providing the said information in an attempt to improve their reputations in light of the consideration of the societal issues, while others report as part of the mandatory frameworks. Some of the aspects that form the content of the sustainable reporting are listed as follows. The sustainable reporting principles demand the reporting of the financial as well as the non-financial information of the energy use, water usage, waste generation and various aspects of the procurements. Hence, it can be stated that the sustainable reporting has become a significant tool in the presentation of the holistic view of corporate social responsibility, which now includes a number of aspects and responsibilities to be disclosed. Theories representing the essence of sustainable reporting The following segment of the report sheds light on the principles of two of the many available theories that lead to the explanation of the gist or the rationale of the sustainable reporting. Numerousphilosophers have developed various ethical theories to provide the guiding principles that facilitate an efficient conduct from the individuals as well as the business organisations. These theories are aimed atoverall social wellbeing in the decision making (Scalet, 2018). While some theories stress on the performance of the duties, some are focussed towards the outcomes of the decisions, to regard an act as ethical or unethical. One of the most popular and chief ethical theories is of the ethical theory of utilitarianism.The said theory of ethics is based on the belief that the mass interests must be considered at the time of decision-making and the same should lead to the general happiness or utility and not be concentrated only to the fulfilment of the individual interests only (Hollander, 2016). On application of the above principles to the nature of the sustainable
reporting, it can be stated that principles of sustainable reporting are aimed at providing information to the interests of the every stakeholder group of the entity and not just the shareholders (Barry, 2016). The information presented therein aids the investors and regulators as well for the various decisions. Yet another popular ethical theory whose father is regarded asImmanuel Kantis that of Deontology also known as the Kantian analysis.The principles of the theory state that legitimacy of the actions must be judged in the light of the moral principles, and the consequences are not of much importance under said scenario. The theory is based on the belief that if the ethical and moral guidelines are sufficiently considered at the time of making decisions and the performance of the acts, there will be an spontaneous refinement in the consequences as well (Vadastreanu, Maier & Maier, 2015). Thus, the theory calls for the management of the companies to not be deviated from individual emotions, conflicts of the interests and personal inclinations at the time of making business decisions for the stakeholders group as a whole. In business scenario, the moral duties of the businesses calls for the provision of the safe products to consumers, provision of the transparent information to shareholders and investors, safeguarding the environment by engaging into sustainable business practices, and providing safe working conditions to the employees (Chandler, 2019). In context of the duties, various corporate frameworks have further prescribed mandatory duties to act and present information in best interests of the stakeholders. Hence, as the management of the organisations engage into various sustainable reporting practices and also report the same in the financial reports, they are complying with their legally prescribed duties and best practice guidelines. Consequently, the said compliances would lead to the overall social well-being. Hence, the above discussions elaborate the gist of the sustainable reporting to be the conduct of the business in a way to be considerate of the interests of the various stakeholders and providing information in a transparent and accountable manner. Overview of the company The company chosen for the analysis of the various aspects of the sustainability reporting is the Spark New Zealand Limited. The stated organisation is based out of New Zealand and is the supplier of telecommunications and digital services. The three chief segments of operation for the entity are Spark Home, Mobile & Business; Spark Connect and the Spark Digital. The segment named Spark Home, Mobile & Business is engaged in the
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provision of the fixed line, Internet and Mobile services. The said provision is done to the home consumers as well as the small medium business market. The second segment namely the Spark Digital segment is engaged in the integration of the information technology (IT) and telecommunications services and thus provides various information and communications technology (ICT) solutions to the clients. The third and last segment Spark Connect provides services of the network and IT operations. Sustainability reporting (disclosure) scoring index according to the Global Reporting Initiative (GRI) guidelines It is imperative to note that the numerous companies around the world take the aid of the GRI guidelines for the development of their sustainability reports (Davys and Searcy, 2010). A sustainability reporting (disclosure) scoring index can be prepared according to the Global Reporting Initiative (GRI) guidelines. The said benchmark would include the various principles of the sustainable reporting and the content of the financial reports would be examined against the same to judge the vitality of the same. There are numerous reporting standards prescribed below under various categories to adjudge the performance of the entities (GRI, 2019). Serial NumberGRI StandardParticularsScoring 1GRI 102General Disclosures0/1/2/3 2GRI 103Management Approach 0/1/2/3 3GRI 201Economic Performance 0/1/2/3 4GRI 202Market Presence0/1/2/3 5GRI 203Indirect Economic Impacts 0/1/2/3 6GRI 204Procurement Practices0/1/2/3 7GRI 205Anti-Corruption0/1/2/3 8GRI 301Materials0/1/2/3 9GRI 302Energy0/1/2/3 10GRI 303Water0/1/2/3 11GRI 304Biodiversity0/1/2/3 12GRI 305Emissions0/1/2/3
13GRI 306Effluents and Waste0/1/2/3 14GRI 308Supplier Environmental Assessment 0/1/2/3 15GRI 403Occupational health and safety 0/1/2/3 16GRI 404Training and Education 0/1/2/3 17GRI 405Diversity0/1/2/3 18GRI 406Non discrimination0/1/2/3 19GRI 411Rights of Indigenous People 0/1/2/3 20GRI 413Local Communities0/1/2/3 Scoring: The scores would be given on the lines of 0, 1, 2 and 3, for attributes as described below. ď‚·0 points: Absence of information for a specific indicator. ď‚·1 point: Presence of qualitative information for a specific indicator and insufficient quantitative indicators. ď‚·2 points: Quantitative information is presented comprehensively as per the GRI guidelines. ď‚·3 points: When the reports present the information with comparison to the previous year figures to indicate the benchmarks and the targets set and the levels of achievement. Extent and Quality of Sustainable Reporting of the company Spark New Zealand Limited Serial NumberGRI Standard ParticularsScoring
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The analysis of scoring as presented above is as follows. The general information have been presented well in the financial statement of the entity Spark, with respect to the applicable accounting framework, operating results, leaders and others. Hence, score of 3 is awarded. The management approach has been presented clearly as well that is focussed on the business organisational model “Agile” which involves replacement of the traditional hierarchical control with small, cross-functional and self-managing teams. Both qualitative and quantitative impacts are presented. The economic impacts are presented in both the yearly reports as highlighted by the picture below, however, the market share is generally described. (Source: Spark New Zealand, 2018)
The indirect economic impact has been presented qualitatively in the form of growth in cloud, security and service management, launching of nationwide low-power Internet of Things (IoT) network and others. In terms of material and energy information, comprehensive information have been provided. For the suppliers, code of conduct has been envisaged. As described in the score sheet above, the company has additionally provided a range of information for the various aspects of the employment in the company. The aspects like the diversity, inclusion, director’s remuneration, the extent of the target achieved and upcoming targets are stated in the financial reports of both the years. Some of the aspects that have been completely missed in the reports in the environment sections is that of the biodiversity and in the employees section is that of the rights of the indigenous people. Other than this, on evaluation it has been found that the reports of the company have been comprehensively prepared highlighting the various aspects of the business functioning as required by the sustainable reporting standards.
Conclusion The discussions conducted in the previous parts aid to conclude that the business cannot limit their objectives to merely profit earning in today’s times. The stakeholders of the businesses have varied interests and the businesses must fulfil the same with the aid of the transparent and accountable business practices and reporting. The work was an attempt to review the growth of the corporate social responsibility practices over the years, the theories forming base for the sustainable reporting and the expansion of the ambit of the sustainable reporting principles. In addition, the sustainable reporting practices of the company Spark New Zealand Limited was examined to conclude that the overall reporting is quite comprehensive of the said company.
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