Contemporary Accounting Theory Report: TPG Telecom Sustainability

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This report delves into contemporary accounting theory, focusing on the significance of corporate social responsibility (CSR) for firms with financial objectives. It distinguishes sustainability reporting from CSR, presenting a holistic view of corporate responsibility. The report identifies and explains the stakeholder theory and legitimacy theory, which provide insights into the essence of sustainability reporting. Applying this theoretical knowledge, the report examines the sustainability reporting practices of TPG Telecom Limited, an Australian telecommunications company. It provides an overview of TPG Telecom's governance, ownership, and financial performance. A sustainability reporting scoring index, based on GRI guidelines, is developed to evaluate the quality and extent of the company's sustainability disclosures. The analysis assesses TPG Telecom's environmental performance, social initiatives, and governance practices, drawing conclusions on the effectiveness of its sustainability reporting efforts and its alignment with theoretical frameworks.
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Running head: CONTEMPORARY ACCOUNTING THEORY
Contemporary accounting theory
Name of the Student
Name of the University
Author Note
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CONTEMPORARY ACCOUNTING THEORY
Executive summary:
The paper is developed to explore the theoretical knowledge about the importance of
sustainability reporting to the firms by reviewing the literature. The holistic view of the
corporate sustainability reporting is provided by explaining the sustainability reporting versus
corporate social responsibility. In addition to this, paper also demonstrates the theories that
helps in explaining the sustainability reporting essence. The application of theoretical
knowledge of the importance of sustainability reporting is done by explaining the reporting
practices of the one of the leading telecommunication service provider that is TPG Telecom
limited. The sustainability scoring index in accordance with the principles of GRI has been
depicted for evaluating the quality of sustainability disclosures of TPG Telecom limited with
the help of information retrieved from the sustainability report or the financial report
published by the company.
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CONTEMPORARY ACCOUNTING THEORY
Table of Contents
Introduction:...............................................................................................................................3
Part A:........................................................................................................................................3
i. Evaluating the importance of corporate social responsibility for the firms having
financial objectives:...................................................................................................................3
ii. Evaluating the sustainability reporting in contrast with the corporate social
responsibility:.............................................................................................................................3
iii. Identifying the theories explaining the essence of sustainability reporting:...................3
Part B:.........................................................................................................................................3
iv. Presenting the overview of the governance, ownership and financial performance of
TPG telecom:.............................................................................................................................3
v. Preparing the sustainability reporting scoring index:.........................................................3
vi. Explaining the quality and extent of sustainability reporting of the company against
the sustainability reporting scoring index:.................................................................................3
Conclusion:................................................................................................................................3
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CONTEMPORARY ACCOUNTING THEORY
Introduction:
The report is divided into two sections, with one section depicting the importance of
corporate social responsibility and sustainability reporting and the link between them, while
other section depicting the application of such knowledge to explain the quality and essence
of sustainability reporting practices by the organization. The essence of sustainability
reporting and how the efforts of organization is shaped for addressing sustainable matters is
done by identification of two relevant theories. The sustainability disclosure of the chosen
company that is TPG Telecom is explained by evaluating the facts and the information
disclosed in the sustainability report by referring to the scoring index.
Part A:
i. Evaluating the importance of corporate social responsibility for the firms having
financial objectives:
Corporate social responsibility is becoming one of the most prominent business
practices in this era. For every individual company, the major objective is to produce output
and creates a positive effect on the society. The major objective of corporate social
responsibility is to make sure that the all the companies practicing CSR in their organization
should carry out their business in an ethical manner. This also takes into account the social,
economic and the environmental impact thereby taking the human rights also into
consideration. Every company aims to obtain a positive result on the society as a whole also
there should be a maximum creation of the shared value for the owners of the enterprise
which includes its employees, shareholders and stakeholders (Hawn & Ioannou, 2016).
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The companies are nowadays increasingly taking their focus into social responsibility
which might include several social and economic practices into the organization like
championing women’s rights, protecting the environment, or the effort to reduce or eliminate
poverty globally. For any operating firm, the implementation of corporate social
responsibility is becoming an indispensable part of their organization as from the optical
perspective, socially responsible companies’ project more and more attractive. In simpler
words it can be said that corporate social responsibility is to how a company manage their
business processes so as to obtain the overall positive impact. It is often believed by the
company’s executives that CSR can improve profits of the organization. It is also significant
for the CSR to promote the respect for their company in the marketplace which would
eventually result in higher productivity thereby higher sales. It also results in enhancing the
staff loyalty and eventually attracts more and more personnel to the organization. Corporate
social responsibility is sometimes also termed as the corporate citizenship (Mirvis et al.,
2016).
CSR has a strategy which they need to implement into the organization so as to obtain
the maximum profitability from it and thereby matching the changing needs of today’s top
talent that is innovation. CSR has to allocate the resources and do the research and
development for integrating the socially responsible methods and the materials in production.
ii. Evaluating the sustainability reporting in contrast with the corporate social
responsibility:
Talking about the corporate responsibility and sustainability, it can be said that the
companies incorporate the social, environmental as well as economic creation. It helps to
improve the management of the risks associated with business and the arising opportunities
which will eventually result in enhancing the long term social and environmental
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CONTEMPORARY ACCOUNTING THEORY
sustainability. It can often said that sustainability is a comprehensive approach to manage the
organization thereby focusing on making and maximizing the economic, social and
environmental value on a very long term basis. When the word sustainability comes into play,
it is a much broader term since the organization is facing growing accountability needs which
varies in a wide range of stakeholders are needed to disclose the environmental and social
customs and tradition of the businesses (Epstein, 2018).
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 so as to obtain both the strategic implementation of
CSR and measurement and consequently reporting frameworks in order to implement CSR
and respond to the stakeholders’ 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
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 (Bradford et al., 2016).
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CONTEMPORARY ACCOUNTING THEORY
iii. Identifying the theories explaining the essence of sustainability reporting:
The essence of sustainability reporting can be explained with the help of stakeholder
theory and legitimacy theory and they provide different perspective in explaining the
phenomena of sustainability reporting. Legitimacy theory explains and helps in
understanding the factors leading to variation in the disclosure concerning sustainability. It
also determines how the actions of organization is influenced by the variable of interest in
seeking legitimacy. Moreover, it has been argued by some authors that legitimacy of an
organization can be explained in the best way using corporate disclosure. The theory posits
that the implicit contract between the society and business entity forms the basis of business
legitimacy to carry out its business in society. Therefore, as per the legitimacy theory, in the
event of change in any expectation of entities or the norms of society, business entities take
effort to legitimize their operation, they adopt social and environmental responsibility
reporting (Crane et al., 2019).
The stakeholder theory opines that there are two reasons why an organization engages
itself in the disclosure and reporting of CSR. An increase in the financial return is witnessed
because of creation of fruitful relation with the stakeholders that arises due to their social and
environmental disclosures. This also creates the view that the expectation and norms of the
stakeholders are being met which forms the legitimacy instruments. It is suggested by the
theory that the stakeholders are convinced about the operations of business and that the
organization are meeting their expectation, the disclosure of CSR is an important mode of
communication (Mishra & Modi, 2016). In order for the behavior of organization to be
perceived as legitimate, disclosure of appropriate environmental information is made by the
organization.
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Part B:
iv. Presenting the overview of the governance, ownership and financial performance
of TPG telecom:
TPG telecom limited is the information technology and telecommunication company
operating in Australia with specialization in the business internet, consumer services and
service of mobile phone. They are engaged in providing diversified range of communication
services to small and medium enterprises, residential users, wholesale customers and large
corporate enterprises. In the previous years of operation, TPG acquired AAPT, PIPE network
and acquisition of intra power and become forth mobile operator of Singapore in year 2016.
In the previous financial year that is 2018, strong cash flow was delivered by the group and
an increase in the revenue of corporate segment along with the reduction in total expenses. In
addition to this, there was a fall in profit before tax by 1% and a decrease in the earning per
share (Cooper, 2017). The fall in revenue is attributable to decline in fixed voice usage due to
declining industrial trend. As against previous year, an increase in the cost of consumer
segment was witnessed along with proportional increase in revenue in year 2018. Over the
year 2018, the average debt balance was in line with the previous year. Total amount of
dividend paid to the shareholders reduced and such reduction was reflected in the fiscally
prudent decision of the board intended to retain greater proportion of profits. Furthermore,
the financial performance of the group is impacted by increased competition due to rollout of
NBN and thereby affecting the ability of company to make money from offerings of service
and growth of customer base.
The most appropriate arrangement of the corporate governance, which is consistent
with stakeholder responsibilities is determined by the board of directors of TPG Telecom
limited and such governance is in the best interest of shareholder and company. In addition to
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CONTEMPORARY ACCOUNTING THEORY
this, the governance practices of the company complies with the recommendation and
principles of the corporate governance of ASX. The disclosure of the governance
performance of the company is based on the eight principles of the recommendation council
of corporate governance. The board of director of TPG Telecom consists of chairman, two
independent director, two independent non-executive director that is there is a total of five
directors, of which four are is non-executive and independent director (Ali et al., 2017).
v. Preparing the sustainability reporting scoring index:
The sustainability report prepared in accordance with the guidelines of content index of
Global reporting initiative. If the report has been assured externally, then there should be
inclusion of external assurance report. Recognition of the report is done by GRI in
accordance with guidelines of G3 and G3.1and G4 guidelines should be used by the
organization reporting for the first time. The reference to GRI standards have been listed and
the content index has been prepared according to the guidelines (globalreporting.org 2019).
The sustainability reporting index in according with the guidelines of the GRI is presented in
the table below:
General standard
disclosure
Maximum score
Health and safety < 0.15%
Labor and Human rights 120%
Diversity and Inclusion 40%
Development and
engagement
+ 20
Quality -35%
Innovation and profits 25%
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CONTEMPORARY ACCOUNTING THEORY
Employee safety < 0.25%
Sustainable technology 90%
Water -15%
Community 60%
Energy and climate change -30%
Waste and Chemicals 100%
Education and volunteering 80%
Supporting family 80%
Supply chain responsibility 100%
Ethics, integrity and
governance
120%
vi. Explaining the quality and extent of sustainability reporting of the company
against the sustainability reporting scoring index:
The quality and extent of sustainability reporting of TPG Telecom services is explained
against the sustainability scoring index as per sustainability guidelines of GRI. The
importance of corporate, social and environmental sustainable business practices for
generating long term success of the business is recognized by TPG Telecom limited and the
disclosure of the environmental performance of the company is made according to the
sustainability reporting guidelines of GRI. The company deal with the internal and external
stakeholders by maintaining the highest standard and the importance factor for the success of
business is to deal with the stakeholders in an effective manner (Hasan et al., 2018).
General standard disclosure Score allotted to TPG Telecom limited
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Workplace diversity 30%
Company intends to achieve gender
equality by increasing the presentation
of women on the board.
Employee safety 0.005%
TPG Telecom has not recorded any
contracts or employees injury and safety
(Tpg.com.au, 2019).
Employee wellness and health < 0.002%
TPG Telecom has not implemented
adequate measures for addressing the safety
and health risk of employees. However,
there is an employee assistance program in
place to assist employees for encouraging
healthy lifestyle.
Supporting families 80%
For ensuring smooth working of employees,
TPG telecom have achieved a significant
retention rate (Tpg.com.au, 2019).
Training and education 80%
TPG Telecom has several methods to impart
training and education to employees and
maximum employee are covered under this.
Community 50%
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A multicultural and diversified community
is reflected by the workforce and this is
done by embracing people from different
communities.
Ethics integrity and governance 100%
TPG limited provide disclosure about the
performance of the company and ethical
standard adopted for maintaining integrity.
The company makes a disclosure of its corporate, social and environmental
sustainability. Social sustainability disclosure has been made in terms of workplace diversity,
employee safety, employee health and wellness, training and education, supporting families,
community, ethics, integrity and governance. As per the reporting guideline of GRI, social
performance of disclosure is made in terms of employment, occupational health and safety,
equal opportunity, diversity, equal remuneration for women and men (Hummel & Schlick,
2016). The workforce of TPG is diversified that provides a numerous range of benefits.
Potential inequity in the workplace can be detected if there exist any incompatibility or
uneven pattern. However, TPG has not employed committee for involving the workers in
improving their safety and health.
Furthermore, TPG has not made any disclosure about the relevance and compilation
of the training and education provided to their employees. However, different programs
employed by the company to develop skills management for managing the career endings and
employability of skills. Therefore, there is a disclosure about the programs adopted for
enhancing the skills of the employees.
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CONTEMPORARY ACCOUNTING THEORY
TPG limited is committed to supporting the communities by sharing the journey and
supporting the business towards sustainable development. Employees are provided with the
opportunities to both the international and local community by supporting global and local
charity group. Employee are welcomed to participate in several multi-cultural celebrations.
The sustainability guidelines concerning the disclosure of contribution towards communities
is done by the percentage of operations that is implemented by engaging local community,
development programs and assessing the impact created. It is essential for the organization to
adopt the development program of community and there should be identification of potential
and significant cultural, social, economic and environmental impact on the communities by
taking into account the durability, intensity, reversibility and scale of the impact. Reporting
entity should also adopt the community development program to compensate, minimize and
mitigate the economic and social impact (Tpg.com.au, 2019). It can be observed from the
sustainability report of TPG telecom limited that there is no adequate disclosure on the efforts
taken for managing the communities.
The behavioral standards have been introduced in the employees of TPG limited using
learning management system by bribery and anti-corruption training. Some privacy principles
and online information system has been launched an online information. This is done to make
the employees aware of the obligations to protect the sensitive data and protecting the
consumers (Tpg.com.au, 2019).
The environmental and corporate sustainability disclosure has been done by the
company in its sustainability report. However, the disclosure concerning environment and
corporate sustainability by the organization has not been made in accordance with the
requirement of Global Reporting Initiative. The environmental impact is actively considered
by the company by embracing technology and adoption of the report development such as
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environmental month (Thoradeniya et al., 2015). Nevertheless, the framework of the
guidelines of the GRI has not been adopted by the company.
Conclusion:
The report is prepared for establishing the association between sustainability reporting
and corporate social responsibility and its importance to the organizations with financial
objectives. The sustainability reporting has been explained using two theories such as
stakeholder theory and legitimacy theory. With regard to this, the governance and ownership
of TPG Telecom limited has been explained by identifying the requirements of the
sustainability reporting guidelines of GRI (Global Reporting Initiative). From the analysis of
the sustainability reporting of the company, it has been inferred that while the disclosures
made by the company concerning sustainability has been done by adhering to the
requirements and principles of GRI. However, the disclosures concerning environmental and
corporate sustainability has been inadequate done as the aspects of disclosure has not been
discussed. In addition to this, it has been ascertained that the company has not adopted the
proper measures to improve the quality of their sustainability information. This is so because
TPG Limited has not adopted and developed proper program and measures that would help in
improving the communication of the information to stakeholders and improving the
sustainable performance of the company (Rodriguez, 2016).
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CONTEMPORARY ACCOUNTING THEORY
References list:
Ali, W., Frynas, J. G., & Mahmood, Z. (2017). Determinants of corporate social
responsibility (CSR) disclosure in developed and developing countries: A literature
review. Corporate Social Responsibility and Environmental Management, 24(4), 273-
294.
Barnett, M. L. (2019). The business case for corporate social responsibility: A critique and an
indirect path forward. Business & Society, 58(1), 167-190.
Bradford, M., Earp, J. B., Showalter, D. S., & Williams, P. F. (2016). Corporate sustainability
reporting and stakeholder concerns: Is there a disconnect?. Accounting
Horizons, 31(1), 83-102.
Cooper, S. (2017). Corporate social performance: A stakeholder approach. Routledge.
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CONTEMPORARY ACCOUNTING THEORY
Crane, A., Matten, D., & Spence, L. (Eds.). (2019). Corporate social responsibility:
Readings and cases in a global context. Routledge.
CSR information for TPG Telecom Limited. (2019). CSRHub - Sustainability and Corporate
Social Responsiblity (CSR) ratings on over 32,098 of the world’s largest public and
private companies.. Retrieved 30 September 2019, from
https://www.csrhub.com/CSR_and_sustainability_information/TPG-Telecom-Limited
Epstein, M. J. (2018). Making sustainability work: Best practices in managing and
measuring corporate social, environmental and economic impacts. Routledge.
Hasan, I., Kobeissi, N., Liu, L., & Wang, H. (2018). Corporate social responsibility and firm
financial performance: The mediating role of productivity. Journal of Business
Ethics, 149(3), 671-688.
Hawn, O., & Ioannou, I. (2016). Mind the gap: The interplay between external and internal
actions in the case of corporate social responsibility. Strategic Management
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How to use the GRI Standards. (2019). Globalreporting.org. Retrieved 30 September 2019,
from https://www.globalreporting.org/standards/questions-and-feedback/how-to-use-
the-gri-standards/
Hummel, K., & Schlick, C. (2016). The relationship between sustainability performance and
sustainability disclosure–Reconciling voluntary disclosure theory and legitimacy
theory. Journal of Accounting and Public Policy, 35(5), 455-476.
Mirvis, P., Herrera, M. E. B., Googins, B., & Albareda, L. (2016). Corporate social
innovation: How firms learn to innovate for the greater good. Journal of Business
Research, 69(11), 5014-5021.
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Mishra, S., & Modi, S. B. (2016). Corporate social responsibility and shareholder wealth: The
role of marketing capability. Journal of Marketing, 80(1), 26-46.
Openbriefing.co.uk. (2019). Retrieved 30 September 2019, from
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%2F20181019%2F02036216.pdf
Rodriguez-Fernandez, M. (2016). Social responsibility and financial performance: The role
of good corporate governance. BRQ Business Research Quarterly, 19(2), 137-151.
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Tpg.com.au. (2019). Retrieved 30 September 2019, from
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Principles-and-Standard-Disclosures.pdf
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