Contemporary Accounting: GRI Analysis of Woolworths & Wesfarmers

This report provides a comprehensive analysis of the Global Reporting Initiative (GRI) reports of Woolworths and Wesfarmers, two prominent Australian companies. The report begins by comparing and contrasting the GRI outputs and objectives of both companies, highlighting differences in their approaches to sustainability and stakeholder engagement. It then reflects on how each company's sustainability reports align with the GRI principles of stakeholder inclusiveness, materiality, and completeness. Furthermore, the report delves into the ethical actions of Wesfarmers, evaluating them through the lens of utilitarian ethical theory, and discussing both ethical and unethical actions. The report concludes with a judgment on the overall ethical standing of Wesfarmers based on its actions and adherence to ethical principles, referencing accounting scandals within its subsidiaries and its commitment to ethical sourcing and community development. The analysis draws on the companies' sustainability reports and relevant academic literature.

Contemporary Accounting Practice
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Contents
Part 1: Discussion on the use of Global Reporting Initiative by Woolworth and Wesfarmers.......3
Part 1(a): Comparison and contrast on the GRI Output and objectives for both companies...........3
Part 1(a) (i): Comparison.............................................................................................................3
Part 1(a) (ii): Contrast..................................................................................................................3
Part 1(b): Reflecting the Principles of GRI in Woolworths.........................................................4
Part 1 (c): Reflecting the Principles of GRI in Wesfarmers........................................................5
Part 2: Analysis of Ethical Actions of Wesfarmers as per Utilitarian Ethical Theory....................5
Part 2 (a): Utilitarian and Deontological Approach.....................................................................5
Part 2 (b): Ethical Actions............................................................................................................5
Part 2 (c): Unethical Actions........................................................................................................6
Part 2 (d): Judgment whether ethical or not.................................................................................6
References........................................................................................................................................7
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Part 1: Discussion on the use of Global Reporting Initiative by Woolworth and Wesfarmers
Part 1(a): Comparison and contrast on the GRI Output and objectives for both companies
Part 1(a) (i): Comparison
Comparison of GRI Objectives and Output
Basis of GRI Objectives
At Wesfarmers, development of people is the prime objective. Wesfarmers is committed
to provide the safe workforce to their employees and creating the best opportunities to improve
the career of employees (Wesfarmers: Sustainability Report, 2018). Woolworth tends to promote
the diversity at workplace. As per the Woolworth, women should occupy 40% percent of the
executives and senior management. Wage gap has also been reduced between men and women.
Woolworth has the major purpose to include the indigenous people in the workforce to support
the local societies and contribute to the welfare of Australian people (Woolworth: Sustainability
Report, 2018).
Basis of GRI Outcomes
As seen in sustainability report of Wesfarmers, it has been found that company prepares its
report in accordance with GRI. Same has been audited by Auditor Ernst and Young
(Wesfarmers: Sustainability Report, 2018). Wesfarmers has chosen core options to prepare the
report as this option suits their GRI Outputs. Woolworth has prepared its report through using all
the standards mentioned in GRI Index and same has been provided in detail in sustainability
report itself. Woolworth has prepared its report in accordance with GRI and it has been verified
by its auditor Deloitte. It has also used the core option to prepare its report but its report seems to
be properly formatted and arranged according to the requirements if GRI guidelines which were
not seen in the sustainability report of Wesfarmers (GRI 101: Foundation, 2016).
Part 1(a) (ii): Contrast
Contrast of GRI Objectives and Output
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Wesfarmers
Wesfarmers is taking measures for reducing the amount of carbon emission in order to have
very less impact on the climate change. Wesfarmers has also undertaken various steps for
effective water usage through water reduction, recycling and other initiatives. The maintenance
of the healthy relationship with the suppliers is yet another objective of Wesfarmers
(Wesfarmers: Sustainability Report, 2018).
Woolworth
Woolworths also places emphasis on protecting the planet through reducing the emission of
greenhouses gases and other harmful substances (G4 Sustainability Reporting Guidelines, 2015).
It seeks to develop trusted relations with the stakeholders and for this purpose aims to provide
best and most sustainable products to their customer (Woolworth: Sustainability Report, 2018).
Basis of GRI Outcomes
Wesfarmers
As analyzed from the sustainability report of Wesfarmers, the application of selected GRI
standard seems to be incomplete as there are no recommendations and guidelines provided.
Woolworths
On the other hand, the analysis of sustainability report of Woolworth has inferred that it
followed proper format and provided detailed reference to GRI Standards with recommendations
and other information (GRI 101: Foundation, 2016).
Part 1(b): Reflecting the Principles of GRI in Woolworths
The GRI has stated the following principles that guide the content and nature of disclosures
of sustainability report of business entities. These include stakeholder inclusiveness, materiality
and completeness. As per the principle of stakeholder inclusiveness, the company has provided
adequate disclosures regarding the different stakeholders and the measures adopted for meeting
their various reasonable expectations and users. The Company as per the principle of
sustainability context has adequately reported its performance in wider context of social and
environmental areas. The key materiality issues discussed within the sustainability report as per
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the materiality principle includes employee engagement, diversity, sustainable supply chain,
waste and packaging, climate risk, corporate conduct, and trust in Woolworth’s group,
community engagement, and third-party relationships. Lastly, on the basis of completeness it has
included sufficient disclosures regarding all the materiality topics and enabling stakeholders for
assessing its performance in the key materiality areas (Woolworth: Sustainability Report, 2018).
Part 1 (c): Reflecting the Principles of GRI in Wesfarmers
On the other hand, Wesfarmers as per the principle of stakeholder inclusiveness has also
included disclosures regarding the measures adopted by it for promoting the welfare of each of
its stakeholder group. In the sustainability context principle, it also includes broader information
regarding the approaches adopted for promoting the social and environmental performance. The
key materiality issues are also discussed as per the materiality principle of GRI. The key issues
discussed as per the principle includes information regarding its people, sourcing, community,
environment, governance and progress made in all the above stated materiality areas. Also, on
the basis of completeness it includes adequate disclosures in relation to the key materiality areas
to provide guidance for stakeholders regarding decision-making (Wesfarmers: Sustainability
Report, 2018).
Part 2: Analysis of Ethical Actions of Wesfarmers as per Utilitarian Ethical Theory
Part 2 (a): Utilitarian and Deontological Approach
Utilitarian approach is an ethical philosophy that emphasizes on promoting happiness for
greatest number of people in the society. On the other hand, deontological approach has regarded
that morality of an action is based on the fact that whether it is right or wrong under a series of
rules (Shapiro & Stefkovich, 2016).
Part 2 (b): Ethical Actions
Wesfarmers Limited is recognized as a leading Australian company involved in diverse
businesses such as retails, coal mining, production of industrial safety products and production of
chemicals and fertilizers and home improvement products. It places high importance on ethical
sourcing, community development, safety of employees, protecting environment and maintaining
a strong governance system. The ethical actions of the company can be explained adequately on
the basis of utilitarian theory as it emphasizes on promoting greatest good for all its stakeholders
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(Wesfarmers Limited, 2018). The company also emphasized on promoting greatest good for all
its stakeholders such as its customers, suppliers, employees and other community members. The
code of conduct adopted by the company is developed for the purpose of protecting its all
stakeholders from any negative impact due to its operations. Thus, it can be said that ethical
actions of Wesfarmers such as protecting the indigenous communities, ethical sourcing,
contribution in community development or environment protection seeks to maximize the
welfare of all its stakeholders (Nieh & McLean, 2011).
Part 2 (c): Unethical Actions
Wesfarmers has however received criticism on account of its unethical actions of being
involved in accounting scandal in its one of subsidiary Target. Target, apparel and general
merchandise subsidiary of Wesfarmers which has been reported to be involved in manipulation
of its financial statements and reporting higher earnings in the financial period of 2015-2016.
The management has adopted the use of supplier rebate agreement for inflating its earnings in
the income statement. Wesfarmers after coming across such an ethical breach of conduct in its
subsidiary has taken strict actions for preventing the occurrence of such unethical activities in
any of its subsidiaries in future (Mitchell, 2016). The actions are being taken by Wesfarmers for
ensuring that the illegal practice found in one of its subsidiary is an individual incident and does
not indicate any signs of unethical behavior within the largest retailer of Australia. The external
auditors at Wesfarmers, Ernst & Young, has undertaken the investigation and concluded that
rebates were used to inflate the earnings. Wesfarmers has appointed new management team at
Target and also reinforced the importance of complying with the standard accounting policies,
governance framework and its code of conduct to ensure that such illegal and unethical practices
does not take place in any context (Parker, 2016).
Part 2 (d): Judgment whether ethical or not
It can be stated from analysis of overall ethical policies and unethical actions that have
occurred within Wesfarmers that its actions can be regarded as mainly ethical on the basis of
utilitarian theory of ethics. This is because though one of its subsidiaries has been involved in
unethical practices of inflating the earnings but yet it has been reassured by Wesfarmers that it
places high importance on conducting its different activities as per the ethical code of conduct. It
has also been featured as the only company within Australia that has made to the list of World’s
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Most Ethical Companies. It is largely on account of its strong governance policies related to
ethical sourcing, safety of employees and environment and contributing to community
development (Staff Reporter, 2009). The continuous improvement made by the company in its
social and environmental perspective has enabled it to achieve a distinctive position in the
retailing sector of Australia. Its supply chain is developed in a manner to ensure that all the
different operational activities are conducted as per the code of conduct and thus improving the
transparency in the different operational activities. It has also developed strict compliance rules
and governance policies after the occurrence of corporate scandal in its Target subsidiary and
thereafter there has been no reporting of any type of unethical issues across the subsidiaries of
Wesfarmers.
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References
G4 Sustainability Reporting Guidelines. (2015). GRI. Retrieved June 4, 2019,
fromhttps://www.globalreporting.org/resourcelibrary/GRIG4-Part1-Reporting-Principles-
and-Standard-Disclosures.pdf
Wesfarmers: Sustainability Report. (2018). Wesfarmers. Retrieved June 4, 2019, from
https://sustainability.wesfarmers.com.au/
Woolworth: Sustainability Report. (2018). Woolworth. Retrieved June 4, 2019, from
https://www.woolworthsgroup.com.au/icms_docs/195398_2018-sustainability-report.pdf
Wesfarmers Limited. (2018). Ethical and Responsible Behavior. Retrieved 3 June, 2019, from
https://sustainability.wesfarmers.com.au/our-principles/governance/robust-governance/
ethical-and-responsible-behaviour/
Staff Reporter. (2009). Australia's Wesfarmers in List of World's Most Ethical Companies.
Retrieved 3 June, 2019, from https://probonoaustralia.com.au/news/2007/05/australias-
wesfarmers-in-list-of-worlds-most-ethical-companies/
Parker, J. (2016). Target accounting scandal: Wesfarmers taking action against staff. Retrieved 3
June, 2019, from https://www.abc.net.au/news/2016-04-11/wesfarmers-taking-action-
over-target-accounting-scandal/7317178
Mitchell, S. 2016. Wesfarmers takes action against staff over Target rebates. Retrieved 3 June,
2019, from https://www.smh.com.au/business/companies/wesfarmers-takes-action-
against-staff-over-target-rebates-20160411-go3il5.html
Nieh, L. C., & McLean, G. N. (2011). Succession planning and managerial ethics in the retail
industry. Organization Development Journal, 29(2), pp.35-45.
Shapiro, J. P., & Stefkovich, J. A. (2016). Ethical leadership and decision making in education:
Applying theoretical perspectives to complex dilemmas. US: Routledge.
GRI 101: Foundation. (2016). GSSB. Retrieved June 4, 2019, from
https://www.globalreporting.org/standards/media/1036/gri-101-foundation-2016.pdf
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