Sustainability and Segmental Reporting: A Case of Sembcorp Industries Limited

Student ID: UP916241
Module Code: P22997
Module Title: Advanced Financial Accounting (AFA)
Lecturer: Ms Yeo Ai Ling
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Sustainability and Segmental Reporting: A Case of
Sembcorp Industries Limited
Introduction
There are various rules and regulations applicable to business organizations operating all
across the globe. These rules and regulations are applied by the governing authorities in order
to make sure that financial statements are prepared in such a manner that true and fair value
of the business can be represented. The main objective of the financial reporting standards is
to make sure that investors are able to understand the financial data provided in financial
reports so that they can make their investment decisions. This report will be focused on
evaluating the financial reporting requirements in relation to a business organization listed on
the Singapore Stock Exchange (Wahlen, Baginski & Bradshaw, 2014). Organization under
consideration is Sembcorp Industries Limited. Sembcorp Industries Limited is a business
organization operating in the energy and water supply industry of Singapore. The primary
business of this organization is to provide electricity and water resources to industries
operating in Singapore. This organization is also providing wastewater treatment plant for
large scale organizations operating in the chemical industry. This organization is also
operating in Vietnam China United Kingdom and different countries in the Middle East.
Reporting requirement in relation to this organization will be focused on sustainability
reporting and segmentation reporting. As it is already discussed that management of the
organization is providing a different kind of services to industries and manufacturing units,
therefore it is important that profitability is evaluated by the organization from each and
every service. Segmentation reporting will help in evaluating profitability from different
business activities of the organization (Frias‐Aceituno, Rodríguez‐Ariza & Garcia‐Sánchez,
2014). Both of these reporting requirements will be evaluated from the financial statements
prepared at the end of the year 2018.
Sustainability reporting
Sustainability reporting is concerned with the organization report on a different kind of
information such as economic, environmental, and social and governance. On an overall
evaluation, it can be said that the sustainability report helps in identifying the external
environment in which the organization is operating. This also helps in evaluating the
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governance policies and procedures used by the organization in order to execute their
functions. First of all, it is very important to understand as reporting requirements provided in
the Global reporting initiative.
Environmental reporting
Global reporting initiative is an independent standard making an organization that helps
business organizations to communicate the impact that their business operations have on
society and business environment. According to this organization, every business
organization has to issue a sustainability report or corporate social responsibility report for
communicating the impact that business organization has on environment and society
(Ehnert, Parsa, Roper, Wagner & Muller-Camen, 2016). This report will include the actions
taken by management in order to reduce the carbon footprint of the organization on the
environment. In addition to that this report will also include all the activities undertaken by
the organization for the development of society.
Following are the highlights of sustainability report made by Sembcorp Industries Limited for
the year ending 2018-
Management of Sembcorp Industries Limited has provided detailed information in relation to
sustainability reporting in the year 2018. Key drivers of energy transition and reasons for
Climate Change identified on the official website of the company. According to the official
website, Sembcorp Industries Limited is the first Organization in Singapore that has
established a climate change strategy. The main objective of this climate change strategies to
reduce the carbon footprint on the environment and society (Ioannou & Serafeim, 2017).
Management of the company has also disclosed that the sustainability report is prepared by
the organization following the standards of GRI i.e. global reporting initiative. Factors in
relation to environment social and governance are described separately by the management as
per the requirement of GRI.
Stakeholder management
Management of the organization has included sustainability report for the year ending 2018
in the annual report prepared by the organization. All the activities in relation to sustainability
management in the organization have been divided into three major categories i.e. enabling
the low carbon and circular economy, embedding responsible business practices and
empowering people and community. Enabling a low carbon and circular economy activities
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