• Subject Name : Accounting and Finance

Advanced Financial Accounting - Answer A

Corporate Social Responsibility Concept

 Corporate Social responsibility refers to the responsibilities of the company or the business it has towards its stakeholders and the public. CSR depicts the consciousness of the companies towards the impact they are having on society and the environment. The company doing CSR depicts that it is contributing positively towards the society and environment. It refers to a self-regulation of business where business aims to become accountable socially (Jankalova & Jankal, 2016). In today's time, the importance of CSR has increased and people like to buy products from a socially responsible company and also employees like to work for those companies.

Sustainability Business Concept

Sustainable development is another concept that is gaining popularity. Sustainability is a concept that focuses on fulfilling the needs of the present generation while keeping in mind the needs of future generations. The sustainability concept has three pillars that are environmental, economic, and social. It includes 3P's that are profit, people, and planet. A sustainable business is usually called as a business that is green and has a very less effect on the environment or society or the community (Geissdoerfer, Vladimirova & Evans, 2018). Sustainable business is the one that strives on meeting the triple bottom line.

Importance of CSR and Sustainability Practices to The Business

The business doing CSR has various benefits attached to it and serves as an important tool for the business. The CSR tool from a business point of view has the following advantages:

  • Improved image in the public: Business doing the CSR activities and working sustainably will have an improved image in the public. The better the image, the more the consumers will be willing to buy the company's product. Even small activities of CSR like donating small amounts from each product sale or company's staff doing the work of charity for an hour will create an image of the company in the eyes of the public. In today's time, people are becoming more aware of the CSR activities of the business (Ben et al, 2018). The better the activities of the business, the better will be the public image of the company. CSR serves as an important tool in building a public image for the company.
  • Recognition of brand and increase awareness: CSR practices and sustainable activities also serve as an important tool for the recognition of brand and also improve the awareness about the brand in the society. Even a small donation from each product will promote the product. If the company follows the practices that are ethical than the news will spread fast. This will improve the awareness among the customers and brand for that product will be recognized faster than any other brand.
  • Advantage over other businesses: When a company gets into the activity of CSR and sustainable business practices than it helps them in standing out of the competitors in the business. The company will be able to establish itself a foot forward than any other company. The brand will be known and the image will be renowned in the eyes of the public. So, it will give an edge to the company over other businesses.
  • Employee engagement and retention: CSR and sustainable practice serves as an important aspect of employee engagement and retention. The people nowadays not only look for the money factor but also see various other perspectives that are involved with the business. Employees look above and beyond the monthly salary they get (Tien, Anh & Ngoc, 2020). They like to work for the companies which have an image that is positive in the public. Through the acts of CSR and sustainability values like loyalty and empathy are inculcated in the employees. This leads to better retention of employees in the business and also a low attrition rate.

Thus, these are certain important aspects that depict that CSR practices are important for business. Also, CSR and Sustainable development concepts are of varying importance from the viewpoint of society.

Importance of CSR and Sustainability Practices from Society's Viewpoint

CSR and sustainability practices are important from the viewpoint of society too. The activities of the business directly or indirectly affect society the most. Resources that are being consumed by the business are of the society and they are required to be used sustainably so that future generations can also utilize it. This makes CSR activities and sustainable business concepts of the utmost importance to society. There are various reasons why CSR and sustainability practices are important from the viewpoint of society that are as follows:

  • Improved product quality: When the business follows sustainable concepts and CSR, it produces products that are of good quality as they own a responsibility towards the community. This provides a better quality of life to the people in society as they will be consuming quality products.
  • Management of waste: Business while doing activities produces various hazardous wastes if left open. Business following CSR and sustainable development will opt for practices that will dump the waste appropriately. This will serve society as they will have a cleaner environment to live in. So the concept of CSR and sustainability serves its importance to society (Sardana et al., 2020).
  • Charity towards public and greener environment: When a business operates it takes away resources that are of varied use to the society in large like land, water, etc. When people in society get drifted away from their resources, they require certain things to return. Through CSR company gives back in proportion to the society. Also, the people in the society would like the resources too last longer. So, the company must follow CSR and Sustainable business practices from the viewpoint of society.

Advanced Financial Accounting - Answer B

About the Companies

Meridian Energy Ltd. is an electricity generator and also a retailer company in New Zealand. The company contributes one of the largest proportion of New Zealand electricity that is 35% of the total electricity that is consumed in the year. It is the 4th largest with a market share of 14% in the retail business of gas. The company was formed after the breakup of the Electricity Corporation of New Zealand. The company has appropriate standards for sustainable and CSR practices. The company produces an energy source that is green and renewable. But the CSR activities are not being appropriately undertaken by the company. The company is not following the practices correctly.

On the other hand Spark New Zealand commonly referred to as Spark is a company in telecommunication that provide services of fixed telephone lines, internet, mobile network etc. The company is one of the major providers of ICT in New Zealand. The company is one of the largest in value on the exchange of New Zealand. The major products of the company are the services of the mobile, broadband, landline, and spark sport. The company has appropriate sustainable and CSR practices. Various practices have been opted by the company which are successfully running. The company is fulfilling the sustainability requirement as it is planning to reduce carbon emission. With that company is also carrying out various activities for its CSR that includes Giveaway program etc. So, the company has appropriate practices for CSR and sustainability.

CSR and Sustainability practices of Spark NZ. and Meridian Energy

Meridian energy puts their customer first and believes in sustainability leadership. The company's sustainability goals majorly involves the climate action and also the production of affordable and cleaner energy. For a sustainable growth company has a policy of Health and safety that includes its employees and the customers. According to the report, no public members were harmed. While there were 4 members of the team who got injured. The company has provided them time off and working to make this injury ratio to 0.

Another important step in the area taken by the company is to move towards a 100% renewable generation of energy. The company also practices activities that emit low carbon in the atmosphere. By practicing this policy the company has been able to attain net-zero carbon for the emission that is operational through the offsets of carbon. Also, for the workplace, the company believes in gender equality and has 40% of women at senior and leadership levels. The company promotes the adoption of solar electricity in the country. 

For its CSR activities, the company has provided help to the farmers for measuring the footprints of carbon. The company partnered with Westpac to provide farmers with a calculator of carbon. These are certain practices for sustainability that are being followed by the company around the year (Meridian Annual Report, 2019).

In the same manner Spark NZ. Follows various CSR and sustainability practices. The company is into the business of telecommunication so data safety is one concern for sustainability. The company makes sure that its customers are saved from scams and keeps its team active for any fraudulent activity. Also, the company practices a mentally healthy workplace program for its employees. This helps the employees of the company to be more mentally fit and stable. The company has the same practice as Meridian energy for Gender diversity. It provides equal opportunities to all irrespective of gender for the person. Also, the health and safety practice of the company for its employees is the same as the Meridian energy. The only difference is that Spark Nz. Did not have any injuries during the year. Climate-related policy is also followed in the company. The company has a target of reducing 25% carbon emission from the level of 27 emission of carbon in 2016 to the year 2025. This is where the company is lacking behind from Meridian Energy. The energy company has attained net-zero carbon emission for the company. Another practice of sustainability and CSR that is followed in the company is of 4R’s. Recover, Re-use, Resell and Recycle. The company even practices for managing its e-wastes (Spark NZ., 2019).

For its CSR activities, the company has redefined the Spark Foundation and is providing broadband to school aged children who were not able to access the broadband. The company is working towards reducing the digital divide in the country. The company also runs various programs through its foundations like Code club where it provides kids age 9 to 13 years to learn computer programming and software designs. Another program that is run by the company is an electric garden, where teachers deliver technology education to children of 5 to 8 years of age. Also, there is a program that is run by the company named Give little where funds are raised and provided to the people in need. This shows that Spark NZ. Is following sustainability and CSR practices both in line while Meridian energy is lacking behind in their CSR activities.

Recommendations on Sustainable Business Model Innovation

Meridian Energies should opt for CSR activities. They are not doing any charity activities that will promote their brand. The company could start a fundraiser where they can select kids who are underprivileged and provide them with education. They can also start donations and doing public charity as that will help them in creating their brand. Other than that company has its appropriate climate goals. For its safety practice, the company should focus more on the safety of its employees and reduce the incidents to zero. This will improve the value of the company.

Spark NZ is doing various CSR activities and has also undertaken sustainability activities. They should focus more on promoting sustainable activities. Other than that company is following appropriate practices of sustainability and CSR.

Conclusion on Sustainable Business Model Innovation

Sustainability and Corporate Social Responsibility is a growing concept in today's environment. People, employees, and the company are becoming more focused on these activities. Meridian energies and Spark NZ sustainability and corporate social responsibility practices show that both the companies are working towards climate and are trying to reduce the emission of carbon. Also, they are managing their wastes. But there is a difference between the CSR practices as Spark NZ is doing various CSR activities while Meridian CSR activities are very limited. So, it is suggested that Meridian Energy improves its CSR practices.

References for Sustainable Business Model Innovation

Annual Report. 2019. Meridian Energy Ltd. Available at: https://www.meridianenergy.co.nz/assets/Investors/Reports-and-presentations/Annual-results-and-reports/2019/91eab4a432/2019-Integrated-Annual-Report.pdf

Annual Report. 2019. Spark NZ. Available at: http://investors.sparknz.co.nz/FormBuilder/_Resource/_module/gXbeer80tkeL4nEaF-kwFA/doc/FY19_H2/SPK-2019-Annual-Report.pdf

Ben Youssef, K., Leicht, T., Pellicelli, M., & Kitchen, P. J. (2018). The importance of corporate social responsibility (CSR) for branding and business success in small and medium-sized enterprises (SME) in a business-to-distributor (B2D) context. Journal of Strategic Marketing26(8), 723-739.

Geissdoerfer, M., Vladimirova, D., & Evans, S. (2018). Sustainable business model innovation: A review. Journal of cleaner production198, 401-416.

Jankalová, M., & Jankal, R. (2016). The proximity rate of the corporate social responsibility concept in the excellence models. Calitatea17(155), 71.

Sardana, D., Gupta, N., Kumar, V., & Terziovski, M. (2020). CSR ‘sustainability' practices and firm performance in an emerging economy. Journal of Cleaner Production, 120766.

Tien, N. H., Anh, D. B. H., & Ngoc, N. M. (2020). Corporate financial performance due to sustainable development in Vietnam. Corporate Social Responsibility and Environmental Management27(2), 694-705.

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