ACCT2005 - Module 5: Commonwealth Bank ESG Analysis Report

This report presents a comprehensive analysis of the Commonwealth Bank of Australia's (CBA) social, environmental, and governance (ESG) practices. The analysis is based on the CBA's annual reports and sustainability reports. The report begins with an executive summary, followed by an introduction that emphasizes the importance of ESG analysis for evaluating an organization's operational efficiency. The discussion section covers CBA's social and environmental performance, including its strategies, policies, and guidelines. It examines the reasons for adopting these practices, measurement indicators, and performance criteria, and the bank's compliance with the Global Reporting Initiative (GRI). The report also delves into CBA's corporate governance framework, policies, guidelines, and measurement indicators, highlighting how these align with ESG practices. The report concludes by summarizing CBA's commitment to building sustainable relationships with its stakeholders, as revealed through its sustainability report and adherence to various environmental and governance regulations. References are included to support the analysis.

Running head: SOCIAL ENVIRONMENTAL AND GOVERNANCE ANALYSIS
SOCIAL ENVIRONMENTAL AND GOVERNANCE ANALYSIS
Name of the student
Name of the University
Author note

1SOCIAL ENVIRONMENTAL AND GOVERNANCE ANALYSIS
Executive Summary
The Australian Commonwealth Bank, being a leading multinational bank, has certain
responsibilities towards the global community. Several environmental, social and corporate
governance practices have been adopted by the organization to ensure an adherence to global
environmental and governance oriented laws. The significant objective of this report is to
analyze the sustainability report presented by the organization and infer its policies and
measurement indicators. Moreover, the report also analyzes the organization’s compliance
with the Global Reporting Initiative. An evaluation of the sustainability report also presents
how the ESG practices align with the strategies of the organization. In conclusion, it has been
mentioned how the Commonwealth Bank of Australia aims at building sustainable
relationship with its stakeholders.

2SOCIAL ENVIRONMENTAL AND GOVERNANCE ANALYSIS
Table of Contents
Introduction................................................................................................................................3
Discussion..................................................................................................................................3
Social and Environmental performance.................................................................................3
Strategies, policies and guidelines.....................................................................................3
Reasons for adopting social and environmental practices.................................................4
Measurement indicators and Performance criteria.............................................................4
Global Reporting Initiative....................................................................................................5
Corporate Governance Framework........................................................................................5
Aspects of Corporate Governance in Commonwealth Bank Australia..................................7
Policies and guidelines.......................................................................................................7
Reasons for adoption of Corporate Governance................................................................8
Measurement indicators and Disclosure Information........................................................8
Strategies compliance with ESG practices.............................................................................8
Conclusion..................................................................................................................................9
References................................................................................................................................10

3SOCIAL ENVIRONMENTAL AND GOVERNANCE ANALYSIS
Introduction
An analysis of the social, environmental and corporate governance strategies adopted
by an organization is essential to the evaluation of their efficient operation. These criteria,
collectively called the Environmental, Social and Governance (ESG) forms the standard
according to which socially conscious investors may choose to identify potential investments
in the organization (Lokuwaduge & Heenetigala, 2017). The social aspect determines how
the organization tackles its relationships with employees, customers, suppliers and the
community at large. The environmental aspect determines the steps taken by the organization
towards environmental sustainability. The corporate governance aspect deals with
organizational leadership, shareholder rights and others (Tricker & Tricker, 2015). This
report will provide an analysis of the social, environmental and corporate governance report
of the selected organization, Commonwealth Bank of Australia.
Discussion
The Commonwealth Bank of Australia, being a multinational bank, provides various
services like retail business, funds management, superannuation, institutional banking,
insurance and broking services across Asia, United Kingdom, New Zealand and United States
(Commbank.com.au, 2019).
Social and Environmental performance
Strategies, policies and guidelines
The Commonwealth Bank of Australia has incorporated in various policies like
Carbon Disclosure Project and Climate-related Financial Disclosure. The strategies used by
the Commonwealth Bank include reduction of emissions through investments in advanced
and sustainable technology, respecting the human rights of the customers and employees,
complying with laws relating to the environment and encouraging compliance with

4SOCIAL ENVIRONMENTAL AND GOVERNANCE ANALYSIS
sustainability standards in the industry among agricultural producers (Herbohn, Gao &
Clarkson, 2017). The guidelines of adopting such policies are to ensure an efficient
governance and adherence to social and environmental commitments set by the Paris
Agreement, UN Global Compact and UN Sustainable Development goals.
Reasons for adopting social and environmental practices
Social and Environmental practices adopted by the Commonwealth Bank of Australia
is a part of their code of conduct that is strictly abided by to ensure sustainability in their
outcomes. Firstly, their policies are aimed at integrating social and environmental risk
management to business procedures. Secondly, the activities of the organization concern the
prevention of environmental risks through dedicated services. Thirdly, the organization also
encourages its customers to mitigate social and environmental impacts by adopting
sustainable practices.
Measurement indicators and Performance criteria
The social and environmental performance of the Commonwealth Bank of Australia are
measured using the various reports provided by them:
 Sustainability report – It provides information on the organization relating to social,
environmental and governance performance
 CDP report – It provides information on Carbon Disclosure, that is, steps taken to
reduce indirect and direct emissions.
 Assessed emissions report – It provides information on opportunities and risks
regarding business lending.
 Equator principles report – It provides information on the compliance with
environmental and social standards in project-related financing and progress.

5SOCIAL ENVIRONMENTAL AND GOVERNANCE ANALYSIS
 Modern Human Trafficking and Slavery Statement – It provides means to mitigate
slavery in operations and supply chains.
 Reconciliation Action Plan – It provides guidelines to comply with the national
reconciliation program.
Global Reporting Initiative
As a non-profit organization, the Global Reporting Initiative provides guidelines to
organizations regarding sustainability issues in the world like climate change, governance,
human rights and well-being in the society. The GRI standards set the global sustainability
standards for organizations over the world (Vigneau, Humphreys & Moon, 2015). According
to these standards, the sustainability reports presented by organizations should have an
interrelated and modular structure, including reports on environmental, economic and social
impacts. The sustainability report of the Commonwealth Bank of Australia maintains the GRI
standards, as it is presented in a systematic manner covering major social and environmental
issues like climate change, biodiversity protection and human rights. The strategic direction
of the Company is to become a better and simpler bank with an excellence in customer
services. Since the social and environmental practices pertain to their code of conduct, it
provides a framework for their strategic direction.
Corporate Governance Framework
Corporate Governance entails principles that outline the business processes and
procedures of organizations. This includes external and internal factors affecting the interests
of the organizational stakeholders. The Corporate Governance Framework in Australia
mandates that the organizations must comply with the rules and regulations pertaining to
business operations such as directorial duties and rights of the shareholders. For this, the
principles set by the Organization for Economic Co-operation and Development are adhered
(Chatterjee & Finger, 2014).

6SOCIAL ENVIRONMENTAL AND GOVERNANCE ANALYSIS
The Corporate Governance framework in the Australian Commonwealth Bank aims at
improvements in stakeholder outcomes. The principles set by the Australian Prudential
Regulation Authority are catered to by the organization through their Remedial Action Plan.
The organization also aims at meeting the expectations of the management and perform their
business procedures with adherence to stakeholder expectations and new laws. The corporate
governance framework operative in the Australian Commonwealth Bank is displayed below:
Figure 1: Corporate Governance Framework in Australian Commonwealth Bank
(Source: Commbank.com.au, 2019)
As indicated in the diagram, the organizational structure is divided into several
categories that oversee the business operations and its adherence to the laws and regulations
pertaining to its governance framework. Delegation of powers to the different committees
ensures the efficiency of operations including the management of stakeholder expectations
and compliance with institutional framework. Thus, it can be said that the Australian
Commonwealth Bank voluntarily follows the principles of standard corporate governance

7SOCIAL ENVIRONMENTAL AND GOVERNANCE ANALYSIS
designated in Australia. The firm’s corporate governance reports and disclosures comply with
the Australian Securities Exchange disclosure obligations and listing rules as means to ensure
optimization in governance (Commbank.com.au, 2019).
Aspects of Corporate Governance in Commonwealth Bank Australia
Policies and guidelines
The guidelines for corporate governance in the organization are to improve the
wellbeing of the communities and customers financially (Chan, Watson & Woodliff, 2014).
The policies of corporate governance strategized by the Australian Commonwealth Bank is as
follows:
 Code of Conduct - This aspect sets the behavioral standards of the employees of the
organization with the stakeholders. Such expectations determines the decisions to be
taken in case of challenges.
 Whistleblower Protection – This aspect promotes the culture of the organizational
staff to express their opinions regarding the business procedures. Protection is
provided to these people in cases of victimization or retaliation, discrimination and
harassment (Dixon, 2016). The Misconduct Committee overviews the effectiveness of
the whistleblower program.
 Corruption and Anti-Bribery – This aspect entails that any act of corruption or bribery
will not be tolerated by the organization. It also aims at identifying potential risks in
this area.
 Diversity and Inclusion – This policy ensures the inclusion of employees in business
procedures of the organization without discrimination from the leaders or managers.
 Conflicts Management – This policy ensures that potential conflicts pertaining to the
interest of the organization and its stakeholders is identified promptly and managed
efficiently.

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Reasons for adoption of Corporate Governance
Corporate Governance is an essential in any organization as it helps in developing a
culture that protects the needs and interests of the stakeholders. These stakeholders in turn
ensure the efficient productivity and optimum profitability for the organization. In the
Commonwealth Bank of Australia, Corporate Governance has been adopted as a means to
ensure the success of their motto of becoming a better and simpler bank, improving global
communities’ financial wellbeing. The policies of Corporate Governance adopted by the
organization also ensures the protection of the stakeholders’ interests thereby creating a
dynamic environment. The Bank also aims at creating inclusive environments for their people
and supporting flexible practices of work through their Corporate Governance framework.
Measurement indicators and Disclosure Information
The measurement indicators of the Corporate Governance operative in
Commonwealth Bank of Australia include reviews from employees and other stakeholders
displayed in their annual sustainability report. Annual report presented by the organization
also provides information on their application of Corporate Governance policies in regular
business procedures. Disclosure information of the organization relating to market
information is presented to the ASX following the Bank’s disclosure obligations listed under
the ASX’s Corporations Act (Commbank.com.au, 2019).
Strategies compliance with ESG practices
The strategies of the Australian Commonwealth Bank shows a sense of sustainability,
as they aim at supporting the stakeholders and various groups associated with the
organization and developing a healthy network with investors and customers (Klettner,
Clarke & Boersma, 2014). The policies underlined in their social and environmental practices
shows the organization’s adherence to environmental and social regulations thereby ensuring
a sustainable relationship with not only the stakeholders but also the global community as a

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whole. Moreover, the Corporate Governance policies adopted by the organization aims at
supporting and protecting the interests of the stakeholders thereby ensuring the building of
sustainable relationships with investors and customers.
Another strategy of the organization is to obtain a competitive advantage through
operational excellence. The social and environmental practices of the organization aims at
building a sustainable community and providing the company with competitive advantages.
Similarly, the corporate governance strategies are aimed at ensuring the satisfaction of the
stakeholders. Therefore. It can be said that the environmental, social and governance
practices of the Australian Commonwealth Bank completely align with their strategies.
Conclusion
An evaluation of the sustainability report provided by the Commonwealth Bank of
Australia shows that the policies and strategies adopted by the organization are inclined
towards making the bank simpler and better, thereby ensuring a financial wellbeing for global
communities. From the analysis, it can be deduced that the organization, being a leading
multinational bank, ensures a sustainable relationship with its stakeholders through a strict
observance of the environmental regulations mandated by the UN. Moreover, the records of
the practices are reported by the organization through maintenance of the ASX listings of
disclosure. Therefore, the Australian Commonwealth Bank ensures the satisfaction of its
employees, customers, investors and the global community as a whole.
References
Chan, M. C., Watson, J., & Woodliff, D. (2014). Corporate governance quality and CSR
disclosures. Journal of Business Ethics, 125(1), 59-73.
Chatterjee, P., & Finger, M. (2014). The earth brokers: power, politics and world
development. Routledge.

10SOCIAL ENVIRONMENTAL AND GOVERNANCE ANALYSIS
Commbank.com.au. (2019). About us - CommBank. Retrieved 11 August 2019, from
https://www.commbank.com.au/about-us.html
Commbank.com.au. (2019). Retrieved 10 August 2019, from
https://www.commbank.com.au/content/dam/commbank/about-us/shareholders/pdfs/
annual-reports/CBA-2019-Annual-Report.pdf
Commbank.com.au. (2019). Retrieved 10 August 2019, from
https://www.commbank.com.au/content/dam/commbank/about-us/shareholders/pdfs/
2017-asx/Appendix_4G_14-Aug_2017.pdf
Commbank.com.au. (2019). Retrieved 11 August 2019, from
https://www.commbank.com.au/content/dam/commbank/about-us/shareholders/
corporate-profile/corporate-governance/corporate-governance-statement.pdf
Dixon, O. (2016). Honesty without Fear-Whistleblower Anti-Retaliation Protections in
Corporate Codes of Conduct. Melb. UL Rev., 40, 168.
Herbohn, K., Gao, R., & Clarkson, P. (2017). Evidence on whether banks consider carbon
risk in their lending decisions. Journal of Business Ethics, 1-21.
Klettner, A., Clarke, T., & Boersma, M. (2014). The governance of corporate sustainability:
Empirical insights into the development, leadership and implementation of
responsible business strategy. Journal of Business Ethics, 122(1), 145-165.
Lokuwaduge, C. S. D. S., & Heenetigala, K. (2017). Integrating environmental, social and
governance (ESG) disclosure for a sustainable development: An Australian
study. Business Strategy and the Environment, 26(4), 438-450.
Tricker, R. B., & Tricker, R. I. (2015). Corporate governance: Principles, policies, and
practices. Oxford University Press, USA.

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Vigneau, L., Humphreys, M., & Moon, J. (2015). How do firms comply with international
sustainability standards? Processes and consequences of adopting the global reporting
initiative. Journal of Business Ethics, 131(2), 469-486.