ABILITY ACCOUNTING AND CORPORATE SOCIAL RESPONSIBILITY Assignment Help

Executive Summary

This report has discussed the grasps of Corporate Social Responsibilities of Mining Industry. A comparative analysis of Alumina Ltd and BHP Billiton Ltd CSR process is stated in the report. Evaluating both companies CSR process it is clear that BHP is maintaining advance CSR progress compared to Alumina. Based on Triple Bottom Line approach an organisation can maintain a positive impact on economic, social and environmental imperatives. Alumina Ltd has increased loss of control in the management. Compared to BHP, the organisation is unable to maintain an advance Triple Bottom Line approach. In case of Triple Bottom Line approach an organisation can follow the legislation of Company Act 2006. Based on the Employment Act 2002, Health and Safety at Work Act 1974 and Environmental Protection Act 1990 CSR process can improved in the business. Additionally, an organisation can use Shareholders theory and Rational Choice Theory to reduce key issues of Corporate Social Responsibilities.

Table of Contents

1.0 Introduction 4

2.0 Findings and Analysis 4

2.1 Discussion of Corporate Social Responsibility and sustainability accounting 4

2.2 Comparative analysis of CSR and sustainability accounting of Mining Industry 6

2.3 Legislative Requirements and Financial Accounting Theories of CSR and sustainability accounting 7

3.0 Conclusion 9

Reference list 10

Appendix: Sustainability Approach of BHP 12

1.0 Introduction 

Corporate Social Responsibility (CSR) is a process that manages business process of a company to produce the overall positive impact on society. It covers social impact, sustainability and ethics. This report has discussed about Corporate Social Responsibility of Alumina Ltd and BHP Billiton Ltd. Both organisations are a part of the mining industry. Alumina Ltd is situated in Melbourne, Australia and has collected sales revenue of $25 billion in 2017 (Aluminalimited, 2018). BHP Billiton Ltd is also situated in Melbourne, Australia and has collected sales revenue of $38 billion in 2017 (Bhp, 2018). The purpose of this report is to understand the grasp of CSR. Additionally, this study has presented a comparative analysis of CSR and sustainability accounting of both companies. Finally, this report has discussed the legislative requirements and financial accounting theories of CSR. Based on the financial theories this study has presented a grasp of corporate accounting and sustainability accounting.

2.0 Findings and Analysis

2.1 Discussion of Corporate Social Responsibility and sustainability accounting 

Corporate Social Responsibility manages business process of an organisation to maintain a positive impact on the society. This has included social impact, sustainability and ethics. In other words, Corporate Social Responsibility is a continuing commitment that an organisation has to maintain to contribute to the economic development. CSR is generally understood as the process through a business achieves a balance of economic imperatives. Based on Triple Bottom Line approach an organisation can maintain a positive impact on economic, social and environmental imperatives. In the opinion of Schwartz (2017, p.8), Corporate Social Responsibilities can help to maintain high market reputation of a business. Therefore, the company can attract more customers toward their business. Additionally, an organisation can have a positive impact on their stakeholders while maintaining progress in the economic imperative. The company can be able to attract investors in the business based on their economic progress.

Figure 1: Triple Bottom Line

(Source: As influenced by Schwartz, 2017, p.8)

However, CSR has some key issues such as poor environmental management, lack of responsible sourcing and unable to maintain labour standard. This can slow the Triple Bottom Line approach and the company can face market risks in the business. Additionally, sustainability accounting of an organisation can face difficulties based on these key issues. 

Sustainability accounting is considered as a category of financial accounting. This accounting process focuses on disclosure of non-financial information of a business. Sustainability accounting directly impacts on the economic, social and environmental performance of a business. Sustainability accounting also is known as Corporate Social Responsibilities Reporting as Triple Bottom Line approach also applies to it. In accordance to Sands and Lee (2015, p.1), sustainability accounting is a tool used by the business organisation to be more sustainable in the competitive market. Maintaining the Triple Bottom Line approach can help the companies to gain competitive advantage over the rivals. However, sustainable accounting does not involve in financial management of the company. Hence, the financial progress of an organisation cannot be understood by using sustainability accounting. 

CSR can help to manage the business process and sustainability accounting present a report showing the impact of CSR. A proper sustainability accounting statement can help to understand CSR impact on Triple Bottom Line Approach. Moreover, if CSR process faces any issues then the sustainability accounting statement can help to identify it. On the contrary, Tai and Chuang (2014, p.117) argued that, a business has to maintain an authentic sustainability accounting statement to maintain business progress in the market.

2.2 Comparative analysis of CSR and sustainability accounting of Mining Industry 

In the recent year, many organisations have faced difficulties on their business progress. The companies did not maintain a relevant CSR process. Therefore, the companies received negative impact on their economic, social and environmental imperatives. The mining industry has faced such difficulties in their business regarding ethics, sustainability and social impact. Unsustainable position in the market increased loss of control for Alumina Ltd. The company management operation has reduced in the past year (Aluminalimited, 2018). Hence, the organisation can reduce their financial performance from year to year (Aluminalimited, 2018). Additionally, Alumina has reduced their shareholders as the company did not maintain Corporate Social Activities (Aluminalimited, 2018). The sustainability statement of Alumina is clearly stating that the CSR is facing various issues regarding their labour standard. As stated by McWilliams (2015, p.2), an organisation has to reduce the key issues of their CSR process to maintain sustainability in the market. However, issues regarding their labour standard have increased their market risks in the business. Customers of the company have decreased and Alumina Ltd increased negative impact on the society. 

On the contrary, the sustainability statement of BHP Billiton is clearly showing that has company has faced issues regarding responsible sourcing. Issues of responsible sourcing have increased their capital requirements in the business. However, BHP Ltd has maintained a positive impact on their Triple Bottom Line Approach. As argued by Carroll (2015), the organisation has to maintain advance Triple Bottom Line Approach to resolve the issues of CSR. Therefore, BHP can maintain the positive impact on their social, economic and environmental imperatives to reduce capital requirements [Refer to Appendix]. High capital requirements can slow their management progress and market reputation can decrease. 

Based on both companies CSR process it is clear that Alumina Ltd is unable to maintain advance business process compared to BHP. In the recent year, Alumina has decreased their sustainability process in the business. However, it is clear that BHP Ltd is able to maintain advance Triple Bottom Line Approach. Therefore, BHP can be able to reduce their CSR issues in a fast manner. On the other hand, Alumina Ltd can increase their market risk in the business. Hence, the company can reduce competitive advantage and cannot stabilize their position in the competitive market. However, BHP can improve their CSR by maintaining their current Triple Bottom Line Approach. Furthermore, the organisation can reduce their capital requirements in the future and sustain their position in the competitive market.

2.3 Legislative Requirements and Financial Accounting Theories of CSR and sustainability accounting 

As studied by Steenkamp (2017, p.209), sometimes there is an overlap concerning requirements for Corporate Social Responsibilities and for corporate governance. In case of corporate governance legislation, defined codes and regulations is highly required to maintain relevant process. On the other hand, CSR is a voluntary initiative so no such legislation requires in this process. However, Schneider (2015, p.525) argued that, if an organisation applying the Triple Bottom Line Approach then they requires relevant legislation and regulation under the rules of Companies Act 2006. This legislation is based on the Employment Act 2002, Health and Safety at Work Act 1974 and Environmental Protection Act 1990. These following acts can help to maintain positive impact on social, economic and environment of the business. Additionally, the company can understand the requirements of their stakeholders to expand their business progress in the market. The company can be able to reduce the key issues on CSR by applying the regulations in their Triple Bottom Line Approach. Applying the regulation in the CSR progress can maintain dominant progress in the competitive market. 

In the opinion of Schaltegger et al. (2017, p.113), the shareholder theory can help to understand the social impact of a company. This theory helps the organisation to understand the ethical obligations of the business. This theory lists and describes all groups and individuals can be affected by a company’s action. Based on their action the impact of society can be determined. The organisation can be able to expand their business in the market by increasing positive impact on society. Shareholders theory can improve CSR process in a business. Additionally, the company can be able to reduce the key issues of CSR based on the shareholders theory.

On the contrary, Steenkamp (2017, p.210) argued that, an organisation can apply the Rational Choice Theory to improve their CSR progress. Rational Choice Theory can reduce CSR ke issues and compared to Shareholders theory, it is more effective. Rational Choice Theory can help to improve Triple Bottom Line Approach and helps to understand economic and social behaviour of stakeholders. Applying this theory can help to maintain advance business progress in the market.

3.0 Conclusion 

Based on the above findings it can be concluded that BHP is maintaining advance CSR progress compared to Alumina. CSR has managed business progress so BHP can have a positive impact on the society. Based on Triple Bottom Line approach an organisation can maintain a positive impact on economic, social and environmental imperatives. Alumina Ltd has increased loss of control in the management. Compared to BHP, the organisation is unable to maintain an advance Triple Bottom Line approach. In case of Triple Bottom Line approach an organisation can follow the legislation of Company Act 2006. Based on the Employment Act 2002, Health and Safety at Work Act 1974 and Environmental Protection Act 1990 CSR process can improved in the business. Additionally, an organisation can use Shareholders theory and Rational Choice Theory to reduce key issues of Corporate Social Responsibilities. Rational Choice Theory is able to improve Triple Bottom Line approach.

Reference list

Aluminalimited, (2018), About Us, Available at: http://www.aluminalimited.com/ [Accessed on 23rd August, 2018]

Bhp, (2018), About Us, Available at: https://www.bhp.com/ [Accessed on 23rd August, 2018]

Carroll, A.B., (2015). Corporate social responsibility. Organizational dynamics44(2), pp.87-96. Available at: https://www.researchgate.net/profile/Archie_Carroll/publication/273399199_Corporate_Social_Responsibility/links/59db781c0f7e9b2f587ff0d4/Corporate-Social-Responsibility.pdf [Accessed on 23rd August, 2018]

McWilliams, A., (2015). Corporate social responsibility. Wiley encyclopedia of management, pp.1-4. Available at: https://onlinelibrary.wiley.com/doi/abs/10.1002/9781118785317.weom120001 [Accessed on 23rd August, 2018]

Sands, J. and Lee, K.H., (2015). Environmental and sustainability management accounting (EMA) for the development of sustainability management and accountability [Guest editorial]. Issues in Social and Environmental Accounting, 9(1), pp.1-4. Available at: https://eprints.usq.edu.au/27940/ [Accessed on 23rd August, 2018]

Schaltegger, S., Etxeberria, I.Á. and Ortas, E., (2017). Innovating corporate accounting and reporting for sustainability–attributes and challenges. Sustainable Development, 25(2), pp.113-122. Available at: https://onlinelibrary.wiley.com/doi/pdf/10.1002/sd.1666 [Accessed on 23rd August, 2018]

Schneider, A., (2015). Reflexivity in sustainability accounting and management: Transcending the economic focus of corporate sustainability. Journal of Business Ethics127(3), pp.525-536. Available at: https://www.researchgate.net/profile/Anselm_Schneider/publication/261438444_Reflexivity_in_Sustainability_Accounting_and_Management_Transcending_the_Economic_Focus_of_Corporate_Sustainability/links/00463534470b4a6c10000000/Reflexivity-in-Sustainability-Accounting-and-Management-Transcending-the-Economic-Focus-of-Corporate-Sustainability.pdf [Accessed on 23rd August, 2018]

Schwartz, M.S., (2017). Corporate social responsibility. Abingdon: Routledge. Available at: https://www.researchgate.net/profile/Archie_Carroll/publication/261827186_Corporate_Social_Responsibility_A_Three-Domain_Approach/links/54a17ab80cf267bdb902c00f.pdf [Accessed on 23rd August, 2018]

Steenkamp, J.B., (2017). Corporate Social Responsibility. In Global Brand Strategy (pp. 209-238). Palgrave Macmillan, London. Available at: https://link.springer.com/chapter/10.1057/978-1-349-94994-6_8 [Accessed on 23rd August, 2018]

Tai, F.M. and Chuang, S.H., (2014). Corporate social responsibility. Ibusiness, 6(03), p.117. Available at: http://file.scirp.org/pdf/IB_2014091916083406.pdf [Accessed on 23rd August, 2018]

Appendix: Sustainability Approach of BHP

(Source: Bhp, 2018)