Corporate Social Responsibility and Integrated Reporting: A Case Study of AGL Energy

This presentation discusses the corporate social responsibility framework and integrated reporting in the context of AGL Energy, an Australian company. It explores the company's background, a newspaper story about its pollution, the CSR framework, integrated reporting, and the choice and relevancy of management accounting theory. The presentation also covers the literature related to the news story, the reasons behind addressing the identified problems, and comments on the existing financial framework. Overall, it highlights the importance of CSR and accounting theories in dealing with challenges and improving company performance.

Report

Table of content
 Introduction
 Company background
 Newspaper story
 Discussion of CSR framework
 Integrated reporting
 Choice of theory
 Relevancy of theory
 Description of theory and its predictions
 Literature which covers predictions that are directly related to news story
 Reason behind addressing social, technical, accounting problems identified in the
news
 Comments to existing financial framework
 Conclusion

Introduction
Corporate social responsibility can be defined as an approach which contributes in
sustainable development by delivering social, environmental and economic benefits
for all the stakeholders such as customers, employees, investors etc. Under this
approach business entities promise to spend a fixed percentage for welfare of
society (Butler, 2014). The organisation which is selected for this report is AGL
Energy which is an Australian Listed Public company. This report is based upon a
newspaper article in which it is being mentioned that AGL Energy is one of the
largest polluters in Australia. Various topics are covered under this assignment such
as newspaper story, CSR framework, integrated reporting etc.

Company background
AGL Energy is an Australian company which is involved in the
activities of generating and retailing electricity and gas for commercial
as well as residential uses. In October 2006 two companies were
merged and created two new company which are AGL Energy Ltd. and
restructured Alinta Ltd. Those organisations were Australian Gas Light
Company and Alinta Ltd. AGL is listed upon Australian Stock
Exchange. In year 2012 AGL acquired two business entities, Loy Yang
coal mine and Loy Yang A Power station.

Newspaper story
According to a newspaper article as all the business entities are becoming green and
at the same time AGL took step to become Green to Black as its CEO Brett Redman
bought a coal mine company which is Loy Yang. Most of companies are trying to
reduce use of carbon but AGL purchased a coal mining organisation which created
various issues for it which are related to its Corporate Social Responsibility. It has
resulted in huge pollution and AGL became the part of top ten companies in
Australia which are known as polluters. According to Australian Conservation
Foundation it is one of the biggest polluters in the nation which is using outdated
and polluting techniques in order to generate huge profits.

Discussion of CSR framework
For all the business entities it is very important to spend a fixed percentage of their
profit for welfare of society in order to establish a positive market image. It covers
different areas such as social, environment and economy. The framework of AGL
Energy have two different areas which are covered by it. These are Internal and
external environment. Both of them are described below:
Internal environment: Under this type of environment AGL focuses on
internal corporate structures and policies which are formulated by executives in
order to sustain in the market.

Continued…
External environment: Under this type of environment AGL try to fulfil all
the requirements of CSR against society and customers by following all the
rules, regulations and laws. It provides its services and products at affordable
prices in order to be on the top of the industry. In order to be environmental
friendly, the company is taking strict actions to reduce its greenhouse gas
emission by offering secure and affordable energy to the clients. It is committed
to achieve excellence in environmental management and performance.

Integrated reporting
From sustainability report of AGL Energy it has been analysed that organisation has
promised and committed various things but it is not able to reduce its pollution
which is affecting the environment. It is required to find ways in which it can
minimise impureness which is created by it. Making promises is not a solution for
the issues which are taking place and affecting the environment. It is vital for AGL
to focus on environment protection and reduce use of carbon which is resulting in
pollution. As analysed from new story According to Australian Conservation
Foundation it is being rated as third, worst polluter in Australia. In order to remove
name from this list it is vital to identify the causes which are resulting in this
problem (Courtice, 2014).

Choice of theory
As AGL Energy is dealing with the issue of higher carbon uses and pollution
which has taken place due to bad decisions which were made by CEO Brett
Redman, of buying coal mining and power companies. The best suitable
method of dealing with this situation is using accounting theory such as
management accounting which helps top executives to formulate strategic
decisions for betterment of company. It is the theory which is being selected for
AGL Energy in order to respond the issue identified from news story (Dimitriou
and Kassomenos, 2014).

Relevancy of the theory
Management accounting theory is relevant to the news story and the issues
which are affecting AGL Energy. With the help of it social and ethical issues can
be dealt effectively. Main function of this theory is to render appropriate
information of the company to the internal stakeholders which can help them to
take effective decisions for betterment of company. T plays a vital role within the
company as it helps to respond social and ethical issues properly. Its relevancy
level with the issue of carbon uses and pollution made by AGL Energy is very
high which affects its market image (Dupont and et.al., 2016).

Description of theory and its predictions
Management accounting is a technique which is used by internal
stakeholders to form decisions for betterment of organisation. It
guides managers and top executives to formulate such strategies
which could be implemented to deal with challenges which are
affecting performance of the company. They can get detailed
information regarding business operations and activities which are
conducted by organisation. It is an accounting theory which could be
used by CEO of AGL Energy to deal with the issue which is being

Continued…
 Management accounting is used by business entities to predict future outcome of
a step which is taken by top executives of the company. With the help of this
technique they can analyze that their step will result positively or negatively. As
CEO of AGL Energy had taken a decision of buying coal mining companies and
management accounting can help to measure success of this decision as it
provides detailed information regarding company and its operations (Martin and
Rice, 2015).

Continued…
 Management accounting helps to predict future performance of the company by
forecasting future consequences which may take place and affect organizational
performance. With the help of it, managers can formulate effective strategies to
deal with negative events which may take place in future (Leary, 2016).
 Cash flow forecasting can also be done with the help of management accounting
as it helps to predict future situations in which such type of negative events can
be dealt which can result in huge losses. In such types of consequences
management accounting helps to formulate strategic decisions which helps to
respond all the issues appropriately (Hinman, 2016).

Literature which covers predictions that
are directly related to news story
According to Ege, (2014), management accounting is a theory of accounting which
helps business entities to make different types of predictions. It can help AGL
Energy to deal with issues such as decreasing market image due to higher
involvement in the pollution and coal mining activities. Some of its predictions
include analysing result of the action which are taken by business entities in order to
achieve predetermined objectives. Business entities such as AGL Energy can use
predictions of it to deal with the challenges identified in the news story.
Management accounting can help to predict situations which may take place in
future due to decisions which are made by management and other top executives.

Reason behind addressing social, technical,
accounting problems identified in the news
Integrated reporting framework is mainly used by business entities for the purpose of
accelerating adoption of integrated reporting all around the world. Main purpose of it
is to establish guiding principles and content elements which governs the overall of an
integrated report and to explain the fundamental concepts that underpin them. Mandate
disclosure under this framework are showing detailed information of all the internal
activities which are conducted by the company. Another mandatory disclosure under
IR framework is that organisations are required to disclose their actual profit and
losses to the stakeholders (Green and Newman, 2017).

Comments to existing financial framework
 Existing financial framework of AGL Energy is not good because
the CEO have spent $1.5 billion for a coal mining company
which was not a good decision for the company.
 Organisation is leading towards becoming the biggest polluter in
the world which is because of its subsidiaries which are involved
in power and coal mining activities.

Conclusion
From the above project report it has been concluded that all the business entities are
required to make contribution in corporate social responsibility in order to establish a
good market image, attain long term sustainability and be the employer of choice.
Sometimes organisations fail to fulfil requirements of CSR which results in various
issues such as bad market image, reduced sales etc. At this time accounting theories
could be implemented by companies in order to deal with the challenges which are
affecting operational activities. For example, if cause of problem is bad decisions
making then management accounting could be imposed within enterprise in order to
form best suitable decisions. It can result positively and help to deal with issues
appropriately.

References
Butler, E., 2014. The bottom line: Why Australia's energy companies are after our
RET. Habitat Australia. 42(4). p.19.
Chapman, A. J., McLellan, B. C. and Tezuka, T., 2018. Prioritizing mitigation efforts
considering co-benefits, equity and energy justice: Fossil fuel to renewable energy transition
pathways. Applied energy. 219. pp.187-198.
Courtice, B., 2014. The lies about renewable energy's cost. Green Left Weekly. (998). p.9.
Dimitriou, K. and Kassomenos, P., 2014. Decomposing the profile of PM in two low polluted
German cities–mapping of air mass residence time, focusing on potential long range transport
impacts. Environmental pollution. 190. pp.91-100.

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