Financial Accounting: AGL Australia Sustainability Report Analysis

This financial accounting assignment analyzes the sustainability report of AGL Australia, an Australian energy company. The report examines AGL's sustainability strategies, including its efforts to balance present and future needs, integrate energy-saving techniques, and invest in renewable energy sources. It identifies key stakeholders like shareholders, customers, and the environment, and assesses AGL's environmental performance, highlighting its alignment with government policies, customer experience improvements, and community engagement initiatives. The report also addresses areas where AGL's sustainability efforts could be improved, such as reducing pollution and addressing climate change. Furthermore, the assignment evaluates the clarity and conciseness of the sustainability report, its adherence to GRI standards, and the use of visual aids to aid investors. Overall, the assignment provides a comprehensive overview of AGL's sustainability performance and its implications for financial accounting.

Financial
Accounting
Assignment

By student name
Professor
University
Date: 5th Oct 2018.
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Background
In this assignment the sustainability report of a company has been downloaded to make
an analysis of the steps that have been taken by the company with respect to sustainable
approach and the management of the company and their efforts are also analyzed. It is important
that companies balance their resources in such a manner that they can manage the needs of both
the present and the future needs of the company. In this case the annual report of AGL Australia
has been downloaded and all the important elements that are stated in the annual report of the
company has been discussed.
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Table of Contents
Background................................................................................................................ 2
Introduction................................................................................................................ 3
Question 1.................................................................................................................. 4
Question 2.................................................................................................................. 6
Question 3.................................................................................................................. 6
Question 4.................................................................................................................. 8
Question 5.................................................................................................................. 8
References............................................................................................................... 12
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Introduction
AGL Energy is an Australian Listed company and is involved in generation and retailing
of electricity and gas for both commercial and residential needs of the company. The company
generates energy from various power stations and the company uses various solar energy,
thermal needs, wind power, natural gas etc. The activities of the company have a major effect on
the environment and thus it is important that they should use their resources in such a way that
all the stakeholders get their needs fulfilled for both present and future generation. Sustainability
is a concept that refers to the ways in which the companies can fulfil the social, economic and
corporate governance needs of the company are fulfilled. It aims to fulfil the needs of both the
current and the future shareholders. The companies need to issue a sustainability report that
includes all the steps that they must fulfil their needs and the auditors need to state the same in
their audit report. In this case also the sustainability report of the company has been downloaded
and analyzed and based on that the investors can decide whether they are investing in the
company or not and what are the changes that the management needs to make with respect to
that. It is important that companies balance their resources in such a manner that they can
manage the needs of both the present and the future needs of the company. In this case the
annual report of AGL Australia has been downloaded and all the important elements that are
stated in the annual report of the company has been discussed.
Question 1
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Sustainability is a major part of the activities of AGL, and they have incorporated many such
changes that have made their activities more sustainable for the needs of the future. The
company has integrated the needs of the business with better energy saving techniques and have
taken necessary actions with respect to carbon-constrained world, and made the business more
generic. They aim to use their resources in such a manner that the needs of the customer for their
future is also fulfilled. They have taken following steps to ensure that they have a sustainable
approach for their activities-
 They aim to ensure their customers better empowerment and services by using such
technology that are more specific to the customers.
 The company deals with both large and small generators for their energy needs. In case of
AGL the company previously dealt with large generators but now they are opting for a
mix so that their overall energy consumption is limited and balanced.
 The aim to invest in non-renewable energy sources by aiming for lower emission of
technology methods that will help in making their operations more better and more
generic.
 The company aims to opt for greenhouse energy sources of energy that would help in a
way to reduce the overall pollution that the environment is exposed to and make the
overall system more generic (Kaufmann, 2017).
 It also aims to leverage business in existing and new markets and reviewing the current
market and investing in more offshore energy retail sectors for the companies.
An extract of the strategies of AGL Energy Australia has been stated below-
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Question 2
The major stakeholders of the company include- the shareholders and the investors are
the people who invest in the company and aim for interest from the company. The other
stakeholders include the customers, the company delays in both retail business and organization
specific business, government is also an important stakeholder of the company as government
forms the rules and regulations and the companies need to stick to that and function accordingly
(Henriksen, 2018). The other stakeholders include the environment, as the company is involved
in such a business that might cause a lot of pollution and affect the environment and thus they
need to regulate their actions in such a manner so that the environment is safeguarded for the
needs of the future. Thus, we see that there are large number of stakeholders that are dependent
on the company and they need to take care of that.
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Question 3
With respect to the environment in which the operations of the AGL are conducted, the
company is said to adopt a very sustainable approach. The same can be said with respect to the
customers of AGL. The annual reports of the company can be highlighted in the following
manner:
1. The company aimed to sync their efforts with the policies of the government so that it can
work sustainably with the government.
2. The aim of the company was to develop an electrical market design and regulatory
framework from the centralised sources. These designs aim to provide affordable, reliable
and safe electrical supplies.
3. The company tried to adopt those practices of corporate governance that are best for the
companies.
4. To develop mutually beneficial energy products for the companies the company aimed to
work with the community.
5. On comparing the Net Promoter Score with that of FY 2016 it was to have increased in the
current year. This showed us that the aim of the company was to make the overall customer
experience better. With the help of better channels and decentralised sources the company
aimed to better the overall distribution of energy (Norberg, 2018).
6. The company has made investment in offshore energy sectors where there are better
opportunities as there are new market needs available.
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7. The company has distributed the energy requirements and energy services needs by opting
for electrical vehicles and opting for more smart connections in which the emission of energy
is low and there is not much pollution caused (Charles H, et al., 2015).
8. The company is also opting for arranging community events, and aim to develop mutually
beneficial energy development products for the companies. They have arranged four such
community events in 2017 and have opted for better growth by opting for more employee
participation, in 2017 the rate of employee participation was 16%.
9. The company also aims for compliance with the greenhouse gas policy, and aims to annually
offset the greenhouse gas emission from the electricity that was consumed at AGL’s
corporate workplace with respect to that. Thus, they are complying with the needs of
government and other officials who are putting their efforts for the company (Kang, et al.,
2016).
10. The company has also taken steps to manage the water and air pollution that might have
occurred due to the harmful emission through energy plants and sync their efforts with the
guidelines of the government of the company.
11. The have worked with suppliers on various ends to ensure sustainability practices are
implemented to meet the expectations of AGL and the community. They have also signed the
contract to include the supplier code of conduct for the company.
So, through this analysis we can say that the company has been able to achieve the targets of
sustainability that they have set for themselves through their strong approach towards
sustainability. This has also been stated in the annual reports of the company. So, it can be
concluded that the performance of the company was excellent in terms of sustainability
during the current year (Johan, 2018).
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Question 4
In certain areas the company has failed to achieve the targets they have set for themselves
although they have been working to adopt a sustainable approach. In this way we can
comprehend the weak performance of the company towards sustainability. The company also
needed to reduce the amount of pollution that was being produced through the activities of the
company and work for the best results although they were working for the better energy related
activities. Given that the energy is of non-renewable sources the main business of the company
was to deal with the distribution of the energy related to the non-renewable source (Cundill, et
al., 2017). Change in climate, energy policies and profitability, material issues, customer
experience, community engagement, renewable energy, health and safety, etc. are some of the
areas in which the management on the company is needed to work more. Overall, to attain a
level of sustainability, the company is required to put much more efforts as the efforts put in by
the company till now is not satisfactory. So, to get best results certain areas must be consider
again and much more effort is needed to be put into those areas (Cayon, et al., 2017). They have
identified the challenges that the shareholders have faced but have failed on aspects to state the
relevant efforts that they need to take to overcome those challenges of the government. The
challenges have been ranked based in internal and external shareholders and thus there are
chances of biasness also.
Question 5
a) The overall report of sustainability has been written in a very clear and concise manner
and has made the reporting of the company with respect to the relevant rules and
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regulations of the authorities. The company has presented various charts and diagrams
that would help the investors in better analysis of the present status of the company. It
also has stated the various steps that the companies have stated for management of the
resources of the company in a sustainable manner and has also stated the goals of the
company and their achievements with respect to that (Boghossian, 2017). The company
has also stated the steps that they have taken which includes identification of the
challenges and stakeholders, confirmation of the issues of the materiality, identification
of the strong and the weak stakeholders of the company, the way the review has been
conducted and the shareholders who are part of the same. All the important points are
highlighted in different sections and that has made the entire report very clear and concise
and the investors can analyse the same and decide whether they want to invest in the
company or not. They can analyse whether the company is sustainable in its approach or
not and the steps that they have taken are correct or not. The materiality chart from the
sustainability report of the company has been stated below:
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b) The Global Reporting Initiative (GRI) is an organization that has set guidelines and
procedures that companies need to follow when they are stating their sustainability
approaches in their report (Abdullah & Said, 2017). The companies need to follow the
GRI guidelines when making relevant disclosures in their annual reports and the auditors
need to check whether the steps of the management are correct and as per the principles
of the company or not. In case of AGL the company has followed the GRI standards and
stated the same in their annual report. An extract from the same is attached below:
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The GRI standards highlights the materiality level of the steps taken by the management of the
company and how is it affecting the shareholders of the company is also stated. The steps of the
company are aligned with the principles of GRI and they have selected different activities and
stated the materiality level along with relevant boundaries that the companies need to maintain.
The auditors have also stated the clear report on the sustainable approach of the management of
the company, and has given them a clear report.
Conclusion
Based on the overall analysis and the above report we can finally conclude that all the
basic elements of sustainability have been adopted by the company along with all the activities
relating to sustainability. The report prepared by the company was excellent as the report gives a
good knowledge to the investors and the company has worked brilliantly to prepare this user-
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friendly report which shows us the areas in which the management is lacking. Thus, we can say
that the company has been able to achieve the sustainability needs of the stakeholders and the
society and the overall stand of the company is correct. They have taken large number of steps to
fulfil the sustainable needs of the society that they operate in and there are high chances that in
case the management of the company fails it would affect their operations and thus for that they
have put in the requisite efforts.
The sustainability report of AGL can be accessed through the following URL.
http://agl2017.reportonline.com.au/sites/agl2017.reportonline.com.au/files/
sustainability_report_full_report_0.pdf\
References
Abdullah, W. & Said, R., 2017. Religious, Educational Background and Corporate
Crime Tolerance by Accounting Professionals. State-of-the-Art Theories and
Empirical Evidence, pp. 129-149.
Boghossian, P., 2017. The Socratic method, defeasibility, and doxastic
responsibility. Educational Philosophy and Theory, 50(3), pp. 244-253.
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Cayon, E., Thorp, S. & Wu, E., 2017. Immunity and infection: Emerging and
developed market sovereign spreads over the Global Financial Crisis. Emerging
Markets Review.
Charles H, C., Giovanna, M., Dennis M, P. & Robin W, R., 2015. CSR disclosure: the
more things change…?. Accounting, Auditing & Accountability Journal, 28(1), pp. 14-
35.
Cundill, G., Smart, P. & Wilson, H., 2017. Non‐financial Shareholder Activism: A
Process Model for Influencing Corporate Environmental and Social Performance.
International Journal of Management Reviews, 20(2), pp. 606-626.
Henriksen, L., 2018. Public orchestration, social networks, and transnational
environmental governance: Lessons from the aviation industry. Regulation and
Governance, 12(1), pp. 23-45.
Johan, S., 2018. The Relationship Between Economic Value Added, Market Value
Added And Return On Cost Of Capital In Measuring Corporate Performance. Jurnal
Manajemen Bisnis dan Kewirausahaan, 3(1).
Kang, D., Yu, G. & Lee, S., 2016. Disentangling the effect of the employee benefits
on the employee productivity. The Journal of Applied Business Research, 32(5), pp.
1447-1458.
Kaufmann, W., 2017. The Problem of Regulatory Unreasonableness. First ed. New
York: Routledge.
Norberg, P., 2018. Bankers Bashing Back: Amoral CSR Justifications. Journal of
Business Ethics, 147(2), pp. 401-418.
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