Corporate Finance Report: Sustainability, Ethics of Boral & Brickworks

This report provides a comprehensive sustainability analysis of Boral Limited and Brickworks Limited, two building material companies listed on the Australian Securities Exchange. It examines their performance measurement, management compensation, and ethical practices based on their annual reports, sustainability reports, health and safety reports, and governance and remuneration reports from the past three years. The analysis covers environmental impact, social responsibility, and governance structures for both companies, comparing their approaches to sustainability reporting, greenhouse gas emissions, workplace safety, and board composition. The report concludes that Brickworks Company demonstrates better sustainability practices and overall performance compared to Boral Limited, recommending Brickworks as the more sustainable option.

Corporate Finance Assignment 1
Corporate Finance Assignment
Student (name)
Professor (name)
College
Course
Date

Corporate Finance Assignment 2
Executive summary
I was given the task of reporting the analysis of two companies which have been listed on
Australia's securities exchange; the Boral and the Brickworks Limited Companies. I was
supposed to say about their sustainability, performance, management compensation and ethics.
From the annual reports of the previous three consecutive years, I came up with the sustainability
reports, health and safety reports, and the governance and remuneration report. I compared the
statements from both companies and discovered that Brickworks Company had better results
than the Boral Company and it had a better performance than its rival company. I finally
recommended that Brickworks Company was more sustainable than Boral Limited Company.
Introduction
My report will entail the sustainability analysis of two companies, the Boral and the
Brickworks Limited Companies. I will first analyze each company individually, then compare
the results of the investigation in each company, and I will finally draw the conclusion on which
company has the best social, environmental, and governance sustainability.
Body of report
Analysis of Boral Limited Company
The Boral limited company has been fully committed to sustainability reporting because
the company realizes sustainability reporting is significant in determining their success in the
future (Henderson et al. 2015). As a result, the company has diversified their working conditions,
created a conducive working environment for their people, reducing environmental effects, and

Corporate Finance Assignment 3
approaching their operations in a socially ethical manner. We will give an outline of the
company’s sustainability report for the past three years on their workforce on a full-time
equivalence (Rao and Sudhakar 2017)
Financial years
Description 2015 2016 2017
Employees of Boral 8356 8334 11499
Contractors of Boral ~4400 ~4800 ~4800
Employees of JV 3676 3724 4976
Contractors of JV ~3000 ~3400 ~3400
The average length of time that the workers of Boral worked and women’s composition in the
company is outlined in the table below
2015 2016 2017
Australia 9.2 9.1 9.3
Boral’s working
women
14% 14% 18%
Boral’s women
working on board
38% 50% 48%
There has been a gradual increase in the number of workers in the company, and the number of
women working for the company has also increased.
Improvement strategies:

Corporate Finance Assignment 4
Environmental
For the past three years, the company has been committed. To agree to the set
environmental standards, rules, regulations, and laws (Wilson 2015). The company has set
standards to reduce the emissions of gases from greenhouses resulting from their operations. The
Greenhouse Gas (GHG) Emissions have been decreased for the last three years (). The table
below shows the amount of GHG emissions in a million tons of Carbon dioxide with their
respective years.
Financial years 2015 2016 2017
A GHG value in a
million tons
2.17 2.00 2.01
The company has developed new strategies which will focus on reducing the GHG emissions.
Social
One of the company's primary goals is to ensure that its people work in an environment
that is free from harm. The company has developed strategic plans to ensure that it achieves a
healthy and safe environment (HSE). The company's safety performance is marked by its TRFR
(Total Recordable Frequency Rate). The company’s RITR is determined by both its LTIFR and
MTIFR. The table below shows the company’s LTIFR and MTIFR values with their respective
years.
Financial year 2015 2016 2017
LTIFR 1.8 1.3 1.5
MTIFR 10.3 7.5 6.6

Corporate Finance Assignment 5
The company’s LTIFR reduced between 2015 and 2016 but increased slightly in 2017.
The company's MTIFR has been growing gradually over the years and thus has contributed to
the TRFR's decreasing values over the years. The graph below shows the outline of the
company's TRFR costs with their respective years.
Governance
The company's board of committees is divided into three main categories; the Auditing
and Risk Taking Committee, the Compensation and Nominating, and the Health, Safety, and
Environmental Committees. All these members review issues affecting the company for the
board's sake (Webb and Burton 2017). The graph below shows the composition of board
members of both genders.

Corporate Finance Assignment 6
The company had set strategies to involve both genders in its management and
employment opportunity. Below is a graph showing the composition of people employed in the
company of both sexes and their respective years.

Corporate Finance Assignment 7
The Company’s Transparency of policies
Boral company limited has made its rules and procedures very clear. Any breach of a
system will attract punishment. Boral limited company reports cases of violations of their
policies and punish them accordingly. Reports from the year 2015 had shown that about 20% of
employees are fired by the company due to a breach of systems. The company gives reports on
executive management who do not follow the company's rules and regulation. They publish their
names when they are submitting the annual reports as a punishment.
The sort of business the company takes
The company manufactures and supplies the materials for building and constructions.
The industry has a high environmental impact because it needs to access most raw materials
from the underground. The company mines these natural resources to acquire their raw materials,
and this leaves holes in the ground which could cause many waterborne diseases. The companies'
manufacturing activities' causes air pollution due to the gases emitted (Keen 2015). One of the
most challenging issues the company faces is how to minimize the emission of these gaseous
wastes to reduce pollution and hence create a sustainable clean environment.
The Executive Remuneration
I will give the remuneration report regarding Fixed annual Remuneration, Short-term
Incentive, Long-term Incentive, and TRI (Targeted Retention Incentive) for the past three years.
The target remuneration for both the CEO and other senior executive committee was the same
year 2015, and 2016 was the same.

Corporate Finance Assignment 8
This was different from the 2017 remuneration report whose CEO's target was 100% amount,
and the senior executive's target was between 35% and 50%.
The reaction of share price on the publicized breaches
The share price has been reacting to the company’s publicized breaches of the company's
policies over time. If the company's assets fail to meet its plans, the company declares that the
assets do not meet the company's laws. The share price has been taking advantage of buying the
company's assets at throwaway prices. In my view, I think this price reaction is unethical. I
would recommend the share price to give the company some time before it shares the company's
assets.

Corporate Finance Assignment 9
Analysis of Brickworks Limited Company
Environmental
There are many ecological aspects of Brickworks limited company. Some are by proper
waste disposal, less energy consumption, less water consumption, adequate utilization of
materials, and less emission of carbon dioxide. The emissions of carbon IV oxide in Australia by
the Brickworks Company could benefit from either direct or indirect consumption of fuel. The
graph below shows the comparison between the direct and indirect fuel consumptions over the
past three years.
The results show that the amount of carbon dioxide emitted from the manufacture of
bricks has been increasing for the past few years (Saltary and Thorpe 2016). Despite the
company’s efforts to minimize these emissions, their efforts have been fruitless, but the
companies have to strategize their plans.

Corporate Finance Assignment 10
The company has implemented several practices to minimize some environmental impact
of the company's operations. Some of them are; substitution of fuel, making energy more
efficient, recycling of water, recycling of raw materials, product development, and substituting
materials (Kumarasiri and Jobb 2017). The company submits its emissions every year, and it
complies with the NGERS (National Greenhouse and Energy Reporting Scheme). The table
below shows the emissions of the gases and the amount of energy used.
Amount of energy used
(*106)
The first emissions
(*106)
The second
emissions (*106)
The total
emissions (*106)
5.757576 0.256863 0.107365 0.364228
Social
One of the Brickworks Company's commitments is to minimize the health risk of their
workers and ensure their safety. The health improvement and safety maintenance strategy are
crucial in creating a sustainable working condition. The models for calculating the safety and
determining the health risks are the TRFR (Total Risks Recordable Frequency Rate), LTIFR, and
the MTIFR. The table below shows the composition of the LTIFR, MTIFR, and the TRFR value
within the three years.
Year 2015 2016 2017
LTIFR 2.0 1.6 1.3
MTIFR 20.2 17.6 15.8
TRFR 22.2 19.2 17.1

Corporate Finance Assignment 11
It is clear from the table that the health and the safety conditions at the company is
improving since the TRFR value has been decreasing over the past three years. A graph would
show a better correlation. Below is a chart of the above table (Ukwatta et.al 2018). The figure
shows a partial decline in the TRFR value every year, and this marks the company's ability to
sustain a clean and safe environment. The company has managed to create a clean, safe, and
healthy environment by encouraging its workers to consult the health workers regularly.
Governance
The company's board of committees is divided into four main categories; the Auditing
and Risk analysis, the Compensation and Nomination, the Independent Board and the Health,
Safety, and Environmental Committees (Backhouse and Wickham 2017). All committee
members review issues affecting the company for the board's sake. The graph below shows the
composition of board members of both genders.

Corporate Finance Assignment 12
An excellent executive composition would mean better sustainability of the company.
Transparency of the company
The company elaborates its policies. They also outline that any breach of their systems is
punishable, but they do not give a detailed explanation of how much action they take on any
breach of contract. Even then, we assume that the company would take a severe legal step on
anyone or any organization that breaks their policies.
The kind of business
The company designs, develops, manufactures, markets, distributes, and sells building
and construction materials (Henderson et.al 2015). Brickworks Company has a very medium
impact on the environment as compared to the Boral Company because it emits a secondary
volume of GHG emissions. The company also extracts raw materials through mining thus
leaving open holes on the ground which would be filled with water when it rains. These holes
could lead to the spread of waterborne diseases as well as the spread of malaria when it floods

Corporate Finance Assignment 13
because mosquitos survive well in flooded areas. Some of the most significant sustainability
issues the company faces are the challenge to eradicate the emission of gases to maintain the
environmental sustainability. Another problem that the company faces is the challenge to
minimize the amount of energy they use in production and recycling of water and raw materials
to maintain the economic sustainability of the company.
Remuneration of the executive management
The board members are divided into the Auditing and Risk Committee, the nomination
committee, the Compensation Committee, and the Independent Board Committee. Over the past
two years, the STI and the LTI of the Managing Director and the CFO have changed
considerably. The table below shows that composition of the managing director's percentage
change in STI and LTI.
YEAR 2016 2017
STI (Percentage change) 50% 60%
LTI (Percentage change) 50% 40%
The TSR value is measured alongside the TSR. The executive interests which are in line
with the shareholders are enhanced. The company's alignment of the outcome with the financial
performance has encouraged the culture of the organization to be developed and maintained
(Datta, Gopalakrishna-Remani and Bozan 2015). The culture of the organization is featured in
the endeavor of the cooperative and mutual respect which has impacted some of the company’s
performance.
The total payment of the executive members and the MD consist of both the STI and the
LTI. The graph below shows the comparison of the percentages of the fixed remuneration, the

Corporate Finance Assignment 14
STI, and the LTI between the executive members and the managing director.
The share price action of breaches if policies
The company does not make their violations of policies public, and so the share price has
not reacted to any violations of systems. When the company makes some of the breaches of their
laws and regulations public, they do not give a clear indication as to what happened, and so the
share price cannot react (Henderson et.al 2015). There has been no evidence of share price
responding to the company's publicized breaches of the law.
Comparison of Boral limited Company and Brickworks limited Company
Environmental
The differences between the two companies on their environmental sustainability was
determined by the difference between their emissions of carbon IV oxide. It is clear from our
analysis that the Boral limited company emitted more carbon dioxide into the air than the

Corporate Finance Assignment 15
Brickworks limited company. The GHG values in 2017 for the Boral company was 2.01 million
tons of carbon dioxide while the GHG value for the Brickworks Company for the same year was
0.364228 million tons of carbon dioxide (Damert, Paul and Baumgartner 2017). The contrast
between the GHG values of the two companies shows that the Brickworks limited Company has
higher environmental sustainability than the Boral limited company.
Social
The social sustainability of the two companies will be determined by the different rate of
health and safety records. It is evident from the report that the Brickworks limited Company has
a lower history of health and safety measures (Ukwatta et.al 2018). This is determined by the
companies' LTIFR, MRIFR, and TRFR (PLN 2015). It is clear that the health risks of the
Brickworks limited Company are higher than that of the Boral limited Company.
The Medically Treated Injured Frequency Rates were also prominent figures in
determining the health and safety of the workers of the two companies (Webb and Burton 2017).

Corporate Finance Assignment 16
It was evident that the MTIFR of the Brickworks limited Company was higher than that of the
Boral Limited Company indicating that Boral’s health and safety sustainability is higher than
that of Brickworks Limited Company (Kiron et.al 2017). The graph below shows the
comparison of Boral limited company and the Brickworks Company in the values of their
MTIFR, LTIFR, and TRFR during the year 2016
Governance
We have discovered that both companies have almost the same board representations.
Each year, the average board members are about eight, four from each gender, but executive
managers and board members are higher in the Brickworks Company than in Boral Company
(Ukwatta et.al2018).
The remuneration of the executive management

Corporate Finance Assignment 17
The executive's salary was determined by the companies' payment to the executive using
the FAR (Fixed annual Remuneration), STI (Long-Term Incentives), and LTI (Long-term
Incentives).
Brickworks’ remuneration
The managing director FAR 50%
STI 35%
LTI 15%
Other members of the
executive committee
FAR 50%
STI 35%
LTI 15%
Boral’s remuneration
The director in charge of
management
F 0.34
STI 0.33
LTI 0.33
Other members of the
executive committee
FAR 50-60%
STI 20-25%
LTI 20-25%
The tables above compares the Boral’s remuneration and the Brickworks’ target remuneration
for the year 2017. Brickwork’s remuneration shows that the company paid a higher Fixed
Annual Remuneration than the LTI’s and the STI’s to its executive members and the managing
directors (Wilson 2015). The Boral Company, on the other hand, paid its managing directors a

Corporate Finance Assignment 18
relatively equal FAR, STI, and LTI amount. The company spent the other executive members a
higher FAR which was about 50% of their total remuneration and a relatively equal STI and LTI
amount.
We have discovered that the Boral Company is more transparent on its breach of policies than
the Brickworks Company. We have also realized that the Brickworks Company is involved in
more business activities than Boral Company (Rao and Sudhakar 2017).
Conclusion
From the result of my analysis, I would recommend that the Brickworks Company has
higher sustainability than the Boral's for various reasons. First, the GHG emissions in the former
are lower signifying higher environmental sustainability as compared to the later. I have also
realized that the company has more durability on its governance than the Boral's management.
Though the company has lower social sustainability than that of the Boral's, this is still
negligible, and the company has opportunities for improving.

Corporate Finance Assignment 19
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Corporate Finance Assignment 20
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