Contemporary Accounting Theory: CSR, Sustainability, and Dulux Group

This report delves into contemporary accounting theory, specifically examining the significance of corporate social responsibility (CSR) for businesses and its relationship with sustainability reporting. The report is divided into two main sections. The first section presents a literature review, emphasizing the importance of CSR for firms with financial objectives and exploring the holistic view of CSR by relating sustainability reports to other concepts. It also explains sustainability reporting using legitimacy and institutional theories. The second section evaluates the quality of Dulux Group Material Limited's sustainability report, assessing its reporting framework against the Global Reporting Initiative (GRI) sustainability index. The report also provides an overview of Dulux Group's governance, ownership, and financial performance. The analysis highlights the company's adherence to CSR principles and its commitment to transparent reporting, providing insights into how companies can effectively integrate sustainability into their core business strategies. The report concludes with an evaluation of Dulux Group's sustainability reporting quality based on the GRI guidelines.

Running head: CONTEMPORARY ACCOUNTING THEORY
Contemporary accounting theory
Name of the Student
Name of the University
Author Note

CONTEMPORARY ACCOUNTING THEORY
Executive summary:
The report is prepared to determine the importance of the sustainability reporting and the
association between the corporate social responsibility and sustainability reporting. Two
sections incorporates the whole report, with the first section focusing on the literature review
explaining the importance of the corporate social responsibility and relevance of the reporting
concepts to the sustainability reporting. This also involves discussion on the explanation of
the sustainability reporting using the theories such as legitimacy and institutional theory.
Another section demonstrates the evaluation of the quality of sustainability report of Dulux
group material limited. This has been done by assessing the reporting framework of Dulux
against the sustainability index of the GRI.

CONTEMPORARY ACCOUNTING THEORY
Table of Contents
Introduction:...............................................................................................................................3
Part A:........................................................................................................................................3
i. Reviewing literature for explaining the importance of corporate social responsibility for
the firms with financial objectives:............................................................................................3
ii. Evaluating the holistic view of corporate social responsibility by determining the
compatibility of the sustainability reports with other concepts:................................................5
iii. Explaining the sustainability reporting essence using relevant theories:........................6
Part B:.........................................................................................................................................7
iv. Description of the governance, ownership and financial performance of Dulux Group
Material:.....................................................................................................................................7
v. Preparation of sustainability reporting index in accordance with the guidelines of GRI
(Global Reporting Initiatives)....................................................................................................9
vi. Evaluating the quality of sustainability reporting of the company against the scoring
index of sustainability reporting:.............................................................................................10
Conclusion:..............................................................................................................................13
Reference list:...........................................................................................................................15

CONTEMPORARY ACCOUNTING THEORY
Introduction:
The paper is developed to review the importance of corporate social responsibility to
the firms along with evaluating its holistic review. There are two sections incorporated in the
paper with the first section outlining the relevance of corporate social responsibility for the
firms with financial objectives by reviewing the literature and demonstrating the explanation
of the essence of sustainability reporting using applicable theories. The other section gives an
illustration of the relevance of such reporting system by retrieving information from the
sustainability report of the listed entity. The selected company for this purpose is Dulux
Group Material, which is a leading manufacturer and marketer of the products of premium
brands for maintaining, enhancing and protecting the spaces and places where people live and
work. The quality of sustainability report prepared by Dulux is evaluated against the
sustainability disclosure index of GRI (Global Reporting Initiative) in terms of the
information presented therein.
Part A:
i. Reviewing literature for explaining the importance of corporate social
responsibility for the firms with financial objectives:
One of the most prominent business eras is the corporate social responsibility which, is
becoming an indispensable part of any organization. Any individual organization the most
significant goal of the corporate social responsibility is to make sure that all the companies
should have a good output with a positive effect on the society. It is becoming very essential
that all the business practices by the companies nowadays should be carried out in an ethical
manner, so CSR takes into account all these factors into account and makes sure that all the

CONTEMPORARY ACCOUNTING THEORY
practices and the method adopted by any business enterprise should be ethical and
environmentally, socially and economically accepted by all in and within the organization.
Moreover, there should be a maximum creation of the shared value for the owners of the
enterprise which includes its employees, shareholders and stakeholders ((Dumay et al., 2017).
Talking about the corporate social responsibility, one can describe it as a type of self-
regulation adopted by any private business enterprise which, targets at maintaining the
societal goals and targets. There are certain strategies that the CSR has taken into
consideration for running any organization that is to make positive impact not only on the
environment but also on the stakeholders, also the consumers, employees, investors and the
communities. From the ethical point of view, at times, CSR are adopted in the organization
because of the ethical beliefs of the senior management. For an instance, the company’s
managing director believes that it is environmentally objectionable to hamper the
environment. By implementation and operation of CSR in any organization operates with a
perspective of obtaining long term profits while the critics argue that CSR being the
economic role of the organization (Thomas, 2019). However, these were later on studied on a
wider scale which compared the existing econometric studies explaining the relationship in
between the social and financial performance. This finally came to a conclusion that the
contradictory results of the previous studies reporting positive, negative and the neutral and
the financial impact were due to flawed empirical analysis and also claims that the study is
appropriately specified, so it can declared that corporate social responsibility has a very
impact on the financial outcomes of the organization. Moreover, it is titled that CSR to aid
the targets and missions of the organization as well as to assist in representing to the
consumers what the company aims at serving its customers (Maas et al., 2016).

CONTEMPORARY ACCOUNTING THEORY
ii. Evaluating the holistic view of corporate social responsibility by determining the
compatibility of the sustainability reports with other concepts:
For any workforce in any organization, it is very essential for any company as it is a
very thoughtful method of giving back to the society. When the businesses are conscious of
their social and environmental impact of the world, they can beneficial to the society by
giving back and helping back to find solutions to the everyday arising issues. For any
operating firm it is often believed by most of the executives in any organization practicing
CSR that implementation of the corporate social responsibility in the company can help to
improve the profits and thereby help in the overall growth of the organization. In the
marketplace, CSR also plays a very significant role by increasing the respect and reputation
of the company which ultimately results in increasing more and sales of the company,
consequently the overall productivity of the companies are increased and thereby it can be
also said enhance the loyalty of the employee and also attract better firm personnel. Whether
it is about championing about the women’s rights or protecting the women rights or
attempting to obliterate the poverty on a global scale. From the optical perspective point of
view the companies which are socially more and more responsible project that are very
attractive to the consumers and the shareholders alike, which assists in serving positively to
the consumers consequently affecting their bottom lines (Shnayder et al., 2016).
Additionally a rising number of it has assured to divide the corporate social
responsibilities into strategies and operations, thereby making and developing robust
measurements and reporting frameworks for obtaining both the strategic implementation of
CSR and measurement and consequently reporting frameworks in order to implement CSR
and respond to the stakeholder’s accountability requirements. But designing the sustainability
performance measurement systems within the organization for supporting the strategic
changes and the alterations which the CSR needs to make in the specific issues the company

CONTEMPORARY ACCOUNTING THEORY
has to face which is not appropriately reflected in the generic sustainability reporting
frameworks. For understanding the relationship in between the SPM and SR there needs to
make a number of exploratory cases. Thereby, it can be said that the corporate social
responsibility enables the companies to create the different values including the social,
environmental and economic values into the core strategy and operations. It will ultimately
assist in bringing in more and more opportunities whilst enhancing long term social and
environmental sustainability. CSR is a self-regulating business practice that helps any
company in being socially accountable that means ranging from the company itself, to its
stakeholders and finally the public (Schaltegger & Hörisch, 2016).
iii. Explaining the sustainability reporting essence using relevant theories:
The perspective of phenomena of sustainability is explained differently by different
theories such as legitimacy, stakeholder holder or institutional theory. The essence of
sustainability reporting of the country is explained by identifying two relevant theories that is
institutional theory and legitimacy theory. It is stated by the institutional theory that the
institutional field or environment governs the behavior of the firm which tends to make the
business practice uniform through the mimetic, coercive and normative. The existence of
institutional mechanism for the communication between the government institutions and
different stakeholders helps in strengthening the corporate social responsibility (Parsa et al.,
2018). The policy of CSR and the spending made by the company on CSR is driven due to
the institutional pressure. Any difference in the corporate governance at the national level is
explained by the institutional theory. The tendency of organization towards CSR
homogenization and increased use of the guidelines of sustainability reporting is driven by
the explicit CSR and adoption of operations of firms at global level (Bouten & Hoozée,

CONTEMPORARY ACCOUNTING THEORY
2015). It has been found that the most influential driver of reporting of CSR is the
government.
The behavior and attitude of organizations in developing and implementing the
voluntary environmental and social disclosure of the information that assist the organization
in fulfilling their objectives in a dynamic environment. When it comes to environmental and
social accounting, legitimacy theory is one of the most cited theories. As per the legitimacy
theory perspective, it is viewed that the behavior of the company is legitimized by the
information generated from corporate social reporting with the objective of influencing the
perception of the society towards the stakeholder and in influencing stakeholders. The usage
of the theory has been done in the literature for supporting the idea that the legitimacy crisis
would be voided by making social disclosure. Furthermore, it is also suggested by the
legitimacy theory that organization having poor environmental performance in an effort to
diminish the increment in the legitimacy threat by providing more extensive and positive
environmental disclosures. Any change in the legitimacy threat is responded by the
organization by way of decreasing environmental disclosure (Andriof et al, 2017).
Part B:
iv. Description of the governance, ownership and financial performance of Dulux
Group Material:
Dulux is a leading manufacturer and marketer of wood care coatings, decorative
paints that are premium branded and texture coatings. The company has become number one
brand for trade professionals and home owners with its heritage dating back to year 1918.
Dulux is regularly voted as the most trusted brand and it has grown to become the brand that
is known for trade professionals and home owners. The Dulux trade mark is the countries

CONTEMPORARY ACCOUNTING THEORY
such as Papua New Guinea, New Zealand, Australia, Fiji and Samoa is owned by the
company Dulux Group Limited. The sustainable and strong competitive advantage of the
company lies in the core capabilities of the organization such as the platform for compelling
growth options and stable earnings profile. Such capabilities and core values of the
organization has helped in developing and findings a market leading solution for retail,
consumers and trade consumers (duluxgroup.com.au 2019).
Dulux delivers for its shareholders due to its strong framework of corporate
governance which makes the management and the directors committed to conduct the
business in a fair, ethical and transparent manner in accordance with the corporate
governance standards. A culture of compliance valuing the accountability, corporate integrity
and continuous improvement is fostered in the organization due to robust corporate
governance framework. The governance policy framework of Dulux Group incorporates
political donation, code of conduct, bribery, fraud and corruption control, continuous
disclosure, share trading policy and consumer and competition law (Baumgartner & Rauter,
2017).
Looking at the financial performance of the company, it is observed that the revenue
in both the countries of operation that is Australia and New Zealand grew by 5.3% and 2.3%
respectively. There has been modest increase in the market of protective, powder, wood care
and texture coatings along with the new construction market. In the current financial year, a
solid financial results were generated with an increase in the net profit after tax by 5.4%. An
increase in the amount of EBIT, EBITDA and EBIT as a percentage of sales has also
increased. The financial outlook for the financial year 2019 is the company is targeting
continued EBIT growth and revenue for the full year margin. Given the strong market
growth, the revenue growth is slightly biased with the moderate increase in the raw material.
It is expected that the net expected cost would increase low to mid-single digits with an

CONTEMPORARY ACCOUNTING THEORY
increase in the rate in first half. Growth in earnings has been driven by an improvement in
margin and revenue along with increasing investment in growth projects and marketing
(Parsa et al., 2018). The traditional and new distribution channel helps in targeting profit and
revenue growth. Furthermore, the dividends payable to the shareholders has also increased to
28.0 cents as against 14 cents indicating 5.7% from the prior year. Shareholders are provided
with the superior return by maintaining appropriate level of funds to the expansion of value
generation and generating strong cash.
v. Preparation of sustainability reporting index in accordance with the guidelines
of GRI (Global Reporting Initiatives)
The sustainability reporting scoring index has been prepared by refe3rring to the
different aspects of the sustainability principles and is depicted in the table below.
General standard
disclosure
Maximum score
Sustainable technology 90%
Quality -35%
Human rights and labor 120%
Integrity, Ethics, and
governance
120%
Volunteering and Education 80%
Inclusion and Diversity  40%
Climate change and energy -30%
Supply chain responsibility 100%
Profits and Innovation  25%

CONTEMPORARY ACCOUNTING THEORY
Safety and Health < 0.15%
Waste and Chemicals 100%
Water -15%
Community 60%
Development and
engagement
+ 20
Supporting family 80%
Employee safety < 0.25%
vi. Evaluating the quality of sustainability reporting of the company against the
scoring index of sustainability reporting:
Adoption of framework of GRI (Global Reporting Initiative) has not been done formally
by Dulux Group Material. However, the sustainability report is prepared by company by
referring to the core principles of the reporting framework of GRI as it is related to social,
environmental, governance and social performance and practice. It is observed from the
sustainability report of Dulux group material limited that different aspects of sustainability
that is environmental, economic, corporate and social has been explained referring to the
guidelines of GRI sustainability reporting framework. It is also observed that the
sustainability report of Dulux group material has reported quantitatively the extent to which
there have been the mitigation of the impact of the products and services on the environment
during the reporting period (Gallego & Ortas, 2017).
Sustainability goals have been achieved in terms of increased participation in the local
communities and safety performance improvement. For improving its relation with

CONTEMPORARY ACCOUNTING THEORY
communities, Dulux has assisted more than 250 local community organizations and more
than 1600 hours is spend by people addressing the needs of communities. For the habitat in
New Zealand, 6000 litres of paint and more than 100 historic assets and huts were painted.
When it comes to innovation, Dulux has been ranked 40 in terms of the most innovative
companies for the financial year 2018 in the Australian financial review.
General standard disclosure Maximum score
Inclusion and Diversity 43%
Safety 18%
Communities  250 communities received
assistance from Dulux.
Water The consumption of water increased by
2% per tonne of production.
Serving people or communities 200th club painted
Waste and Chemicals Products contain 69% high concern
chemicals.
Consumption of energy Reduction by 3%
Injuries  3%
Safety Fatality free > 24 years
Tax transparency 35% of employees withholding tax
As per the reporting guidelines of the financial assistance received from the
government, it is required by the entities to make disclosure about any financial assistance in
terms of total monetary value provided by the government such as research and development
grants. It is observed that although Dulux has been investing in the research and development
by employing technologist and scientists and engaging in the industrial projects, scholarships,