Foundation in Accounting: Sustainable Innovation and Practices of Rio Tinto

This article discusses sustainable innovation and practices in accounting, with a focus on Rio Tinto's sustainability reports for 2015 and 2018. It covers environmental and social disclosures, as well as the relationship between ESG and financial performance.

Running head: FOUNDATION IN ACCOUNTING
Foundation in Accounting
Name of the Student
Name of the University
Author Note

1FOUNDATION IN ACCOUNTING
Table of Contents
STUDENT 1....................................................................................................................................2
Introduction..................................................................................................................................2
Innovation and Performance........................................................................................................2
Pushing the frontier......................................................................................................................3
Student 2..........................................................................................................................................3
Sustainability report for 2015......................................................................................................3
Environmental disclosures-.........................................................................................................3
Social disclosures.........................................................................................................................4
Student 3......................................................................................................................................5
The student will discuss about the sustainability practices for the year 2018.................................5
Sustainability report for 2018......................................................................................................5
Environmental disclosure............................................................................................................5
Social disclosure..........................................................................................................................5
Conclusion...................................................................................................................................6

2FOUNDATION IN ACCOUNTING
STUDENT 1
Introduction
The introduction covers the following points on sustainable innovation:
 Sustainable innovation is an all encompassing innovative practice that leads to greater
profits, better social results and less environmental consequences.
 It includes practices like changing consumer behaviors, using more renewable
technologies etc.
 It facilitates change in business practices that leads to cost reduction and helping
companies to grow and evolve.
Innovation and Performance
 Most multimillion companies disregard environmental implications over financial
perspective. These implications are borne by the society which in turn benefits the
shareholders.
 The relationship between financial performance and ESG performance can be shown
with the help of a curve called the performance frontier curve
 The steeper the downward curve, the greater will be the negative impact that the ESG
performance will have on the financial performance
 The steeper the upward curve, the greater will be the positive impact that the ESG
performance will have on the financial performance.

3FOUNDATION IN ACCOUNTING
Pushing the frontier
The major innovations require a business strategy that can help develop sustainable strategies:
 Identify material ESG issues- Material ESG issues include emissions, water and energy
use ,employee safety procedures.
 Quantify relationship between financial and ESG performance- It is difficult to quantify
ESG performance. Financial performance is however represented by net profit, gross
revenue and other financial estimates which can be estimated fully.
 Innovate products, process and business models- The performance standards need to be
met according to the benchmarks set. Innovations include reducing manufacturing waste,
increasing efficiency that involves minor or moderate innovations
 Communicating the company’s innovation to shareholders- Shareholders need to be
communicated effectively about the sustainable innovations practices. This will enable
the firm to get long term investment.
Student 2
A discussion of the company Rio Tinto and its sustainable practices for the year 2015 will be
delivered as follows:
Sustainability report for 2015
The company Rio Tinto faced lots of challenges in the years 2015 , because of reduced demand
for its products. However it came out of those tough situations with a positive attitude.
Environmental disclosures-
The disclosures include:

4FOUNDATION IN ACCOUNTING
 Energy usage- It introduced a program called Energy Leadership programme that is
aimed to reduce environmental emissions.
 Water- the company has employed a Water management plan which monitors water
usage .it is also aimed in improving water recycling ..
 Other emissions- the company has made significant advancement in removing the effect
of ozone .
 Biodiversity- the company wants to make a positive contribution in terms of making sure
that the region gets benefitted by its presence.
Social disclosures
The disclosures include:
 Occupational health and safety- this year they had achieved their best ever health and
safety standards by achieving one million hours injury free
 Health- The company clinic provides exceptional clinic facilities to its employees. It also
has active wellness educators that promote health education.

5FOUNDATION IN ACCOUNTING
Student 3
The student will discuss about the sustainability practices for the year 2018
Sustainability report for 2018
The company advocated the need for operating their business in a sustainable manner and
maintain safety and health standards of employees in a sustainable manner.
Environmental disclosure
The environmental disclosures include:
 Low carbon emissions- the company is aiming to reduce significant amount of energy
emiisons.it further plans to decarbonize their business by 2050.
 Water-the water resource management program focuses on site related risks and
managing water quality/
 Biodiversity-the company plans to minimize biodiversity loss and manage biodiversity
management practices.it is aimed at rehabilitation and restoration practices that is aimed
to compensate negative dangers to biodiversity.
Social disclosure
The social disclosures include:
 Occupational health and safety- as a result of an employee accident in Utah, the company
redoubled their efforts in maintain safety of employees. They even physically inspected
two sites, one in Australia and the other one in Canada.
 Mental health in the workplace- The company provides a facility of mental health and
well being that aims to balance work life and personal life.

6FOUNDATION IN ACCOUNTING
Conclusion
 ESG and financial performance are inversely related.-If one increases, the other one will
decrease and vice versa.
 Sustainable innovation in products and processes can improve both financial and ESG
performance at the same time.
 The company Rio Tinto has great CSR policies, with its primary focus on employee
health and safety.