Foundation in Accounting Report: Rio Tinto Sustainability Analysis

This report analyzes the significance of sustainability strategies for organizational performance, focusing on environmental, social, and governance (ESG) factors. It examines the challenges organizations face in balancing sustainability with financial goals. The report evaluates Rio Tinto's sustainability reports from 2015 and 2018 to assess changes in their approach and the impact of innovation on financial and ESG performance. The analysis considers the need for sustainable strategies, the importance of identifying material ESG issues, quantifying the relationship between ESG and financial performance, and the role of innovation in products, processes, and business models. The report also discusses the importance of communicating company innovations to stakeholders and concludes that organizations must adopt sustainability strategies to improve financial outcomes while adhering to ESG regulations.

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Foundation in Accounting
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Table of Contents
Introduction:...............................................................................................................................2
Indicating about the need for sustainable strategy by business:................................................2
Evaluating the sustainability report of Rio Tinto for understanding the significance of
Sustainable strategy:...................................................................................................................5
Conclusion:................................................................................................................................8
Reference and Bibliography:......................................................................................................9

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Introduction:
The overall assessment aims in identifying the significance of sustainability strategy,
which would allow organisations to obtain adequate performance, while maintaining
environmental, social and governance factors. The main hurdle that is presented to
organisation now days is to follow the sustainability measures that are imposed by regulators
while maintaining steady flow income from operations. The assessment directly evaluates the
theoretical knowledge and imperial resources that has been conducted on the sustainability
approach, which needs to be maintained by organisation. Further evaluation on annual report
of Rio Tinto for the fiscal year of 2015 and 2018 is satisfactorily conducted for identifying
the changes in sustainability report that is being be depicted by the organisation. The
significance of sustainability innovation is adequately depicted in the assessment, which
needs to be implemented by organisation to support the regulatory requirements and improve
revenue generation capability. Therefore, with the implementation of adequate strategy
organisations can improve their current operations.
Indicating about the need for sustainable strategy by business:
In light of the current trend, using sustainability programs within the organisation is
directly reducing the level of carbon emission and waste, which is beneficial to the
environment and Society. However, complying with the regulations of sustainability
programs is directly hampering the organisational capability to continue its productivity and
profitability. In mere business terms, it can be detected that organisations that are not for
leaving the sustainability approach is directly getting hampered by regulators, governments
and society. Therefore, it is necessary for the organisations to develop an adequate strategy
that supports sustainability programs, while improving their current productivity. The
adoption of these measures is directly allowing the organisations to innovate new ideas for

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production, which is improving the competitiveness in the market and generating higher
market capitalisation (Pearce, Lonnroth & Raviglione, 2016).
Figure 1: Depicting the performance frontier for firms with ESG
(Source: Hbr.org, 2013)
The above figure directly depicts the level of performance Frontier for organisations,
which is in accordance with the ESG. This evaluation directly helps in detecting whether the
organisation needs to improve their financial performance or the ESG performance. The craft
directly represents the level of activity that need to be conducted by the organisation for
improving the financial performance and ESG performance, which would lead to an adequate
output. Therefore, it could be understood that organisations having high performance would
eventually need to do innovation, as the ESG performance has been relatively low. However,
organisations, which are increasing the ESG performance is seeing the decline in their
financial performance. On the other hand, if organisations need to increase their financial
performance and ECG performance they need to conduct major innovations for reducing the
damages that are conducted to the environment and Society. This would eventually allow the

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organisation to accommodate the components of ESG and increase their current financial
performance to support the interest of their investors (Rowledge et al., 2017).
Four broad initiatives need to be taken into consideration for developing the
innovative programs for sustainable strategy. The broad initiatives are depicted as follows.
Identifying the material ESG issues:
The major concern for the organization is to identify the material ESG issue that is
being highlighted by the organization. The organization to identify the impact that will be on
the financial performance of the company when ESG standards are implemented within its
operations. The organization also needs to evaluate the strategy on the basis of its current
financial problem and whether the implementation of adequate sustainability measures would
affect their current financial performance. Therefore, it is essential for organization to
identify the materials that is hindering the organization to obtain ESG.
Quantifying the relationship between ESG and Financial performance:
The organization will need to evaluate their current material for understanding the
issues that can hinder the performance of ESG. This evaluation would eventually help in
detecting the relationship between financial and ESG performance. The organization need to
conduct adequate calculation identifying the level of expenses that we will be needed for
improving ESG performance. The use of financial calculations would eventually help in
detecting the level of expenses that need to be conducted by the organization to generate
adequate return from investment in future. Organizations related to return on investment
calculation for identifying viability of that is propose for improving there ESG performance.
This eventually helps in maintaining an adequate investment streak to generate higher returns
from investment (Baumgartner, 2014).

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Innovating products, processes and business models:
Analysis conducted on the relationship between ESG and financial performance
would eventually allow the organisation to draft an adequate innovative strategy, which could
generate higher returns while complying with the environmental regulations. The innovative
measures such as reducing the manufacturing waste, incorporating the modern innovations
and enhancing efficiency would eventually allow the organisation to minimise the negative
impact on environment and improve their financial performance. Therefore, with the
implementation of adequate business models organisations are able to improve their current
operations, while reducing the total carbon emission. This will eventually improve the level
of income that can be generated from investment.
Communicating the company innovative to stakeholders:
The major concern for the organisation is to communicate the company’s innovations
to the stakeholders, as the declining financial income would directly affect their current
income. Therefore, the company needs to come up with an adequate plan for delivering the
information regarding the level of innovations that has been conducted to support the
measures of sustainable growth. The issue of integrated reporting needs to be conducted by
the organisation for delivering the level of innovations that has been conducted during the
fiscal year. This communication would eventually help in transferring the information from
the organisation to the stakeholders of the company (Baumgartner, 2014).
Evaluating the sustainability report of Rio Tinto for understanding the significance of
Sustainable strategy:
After evaluating the sustainability, report of Rio Tinto adequate changes in the current
report format in comparison to 2015 can be identified. The organization during 2015 was

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mainly focusing on economic, environmental and social factors that were connected to the
inner workings of your organization. However, the evaluation of 2017 sustainability report
mainly affected level of different measures that has been utilized by the organization to
support the sustainability strategy. The company started to evolve the current operation and
implement innovative ideas for reducing the level of carbon emission and reducing the
negative impact of their operations on environment. In this context, Pearce, Lonnroth and
Raviglione (2016) stated that Companies using sustainability approach is relatively like to
buy the society and government, as they are complying with all the relevant regulation while
conducting their operation.
The evaluation of the sustainability report relatively helps in depicting the changes
and alteration that has been conducted by Rio Tinto in formulating the report of 2017 as
compared to 2015. During the fiscal year of 2015, the organization was mainly focused on
the GRI reporting index for detecting their current sustainable measures. Therefore, the
reporting was relatively limited to the economic environment class Social measures that have
been conducted by the organization during the year. However, the organization did not
innovate any kind of further improvements which could be reduced current environmental
damages that was been conducted through their operations. Rowledge et al., (2017) stated
that GRI index relativity lays the reporting format, which needs to be followed by the
organization to depict their current operations to their shareholders. Hence, it could be
understood that Rio Tinto followed the minimal requirements for completing with the
preparation of sustainability report during the fiscal year of 2015. On the other hand, the
measures taken by the company during the fiscal year of 2017 was relatively different by
preparing the sustainability report (Riotinto.com, 2018).
The evaluation of 2017 sustainability report of Rio Tinto relatively depicted the
different contents that were addressed by the organization. The report relatively depicted that

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all the reporting matters we discussed in the sustainability section where your organization
followed all the regulation mentioned by the government in controlling there environmental
damages. The company focused the sustainability report in developing and representing the
methods that was used in supporting their employees. Furthermore, the relationship with the
community that was addressed in the sustainability report directly depicted the measures
taken by Rio Tinto for improving the relationship and reducing the negative impact on
environment. Further information was also delivered about the Environment protection
method that was used by the organization for reducing the damages through the mining
operations. The company adequately developed and innovative technology for reducing the
damages to the environment and maintaining the output capacity, which was eventually
supported by the management. Additionally, the Government of integrity was also discussed
in the sustainability report of Rio Tinto.
Further discussion that was conducted on disability report was of value chain analysis,
which indicated the improving method that was implemented by the organization to support
their operational. Likewise, the sustainability fundamentals and performance data of Rio
Tinto was discuss in the sustainability report, which reflected the operational improvement of
the organization during the value of 2017. The information regarding the Global reporting
initiative index that has been followed by the organization is also depicted in the
sustainability report. From the evaluation should be understood that the organization has
fulfilled maximum of the Global reporting initiative index, while preparing the sustainability
report. Hence, it could be understood that the organization has followed maximum of the
Global reporting initiative index while preparing their current reports for 2017. Moreover, the
company has adapted to sustainable strategy, which eventually allowed the organization to
improve their operation and reducing the negative impact on environmental damages
(Riotinto.com, 2018).

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Conclusion:
From the overall evaluation of the above assessment could be identified that
organization needs to have sustainable strategy in the current era, as both the society and
government implements ESG laws that need to be followed by management. Therefore,
organizations need to have an adequate strategy, which would eventually help in supporting
the sustainable and financial performance. The example of Rio Tinto has been taken into
consideration feasibility report of the organization is evaluated for the use of 2015 and 2017.
This evaluation eventually helps in detecting the level of changes that has been implemented
by the organization during these years. The change and alteration that has been imposed by
the organization has relatively seen an upward trend for the company, as the adoption of
innovations has supported their operations. Hence, the implementation of sustainable strategy
would eventually allow the organization to generate high level of income, while maintaining
the ESG laws.

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Reference and Bibliography:
Baumgartner, R. J. (2014). Managing corporate sustainability and CSR: A conceptual
framework combining values, strategies and instruments contributing to sustainable
development. Corporate Social Responsibility and Environmental
Management, 21(5), 258-271.
Hbr.org. (2013). Harvard Business Review. Retrieved 6 September 2018, from
https://hbr.org/2013/05/the-performance-frontier-innovating-for-a-sustainable-
strategy
Pearce, D Lönnroth, K., & Raviglione, M. (2016). The WHO's new End TB Strategy in the
post-2015 era of the Sustainable Development Goals. Transactions of the Royal
Society of Tropical Medicine and Hygiene, 110(3), 148-150.. (2014). Blueprint 3:
Measuring sustainable development. Routledge.
Riotinto.com. (2018). Riotinto.com. Retrieved 6 September 2018, from
https://www.riotinto.com/documents/2015_RBM_Sustainable_Development_Report.
pdf
Riotinto.com. (2018). Riotinto.com. Retrieved 6 September 2018, from
http://www.riotinto.com/documents/RT_SD2017.pdf
Rowledge, L. R., Barton, R., Brady, K., Fava, J., Figge, C., Saur, K., & Young, S.
(2017). Mapping the Journey: case studies in strategy and action toward sustainable
development. Routledge.