Sustainable and Effective Governance Structures - Free Samples

Question: Discuss about the Sustainable and Effective Governance Structures. Answer: Introduction: Legitimacy can be defined as the generalized perceptions or set of assumptions that provides that actions of an entity must be desirable, appropriate and designed within the social norms, beliefs, values and other important definitions so that it can adhere with the corporate social responsibility required to be fulfill mandatory. In other words it can be said that legitimacy theory highlights the extent to which disclosures of corporate social and environment disclosures are impacted by the boundaries made by the society in order to be safe and not be adversely impacted by the communities in which the entities operate in (Guthrie and Ward, 2006). The corporate social responsibility is completely dependent upon the legitimacy theory and it can be said that it is highly significant for the disclosures of social and environment related matters by businesses. As per the Legitimacy theory, the organizations must regularly check their business for evaluating their social and environmental impact. In order to comply with these requirements it has been made compulsory for all the organization to disclose their CSR practices in their annual report briefly and also prepare sustainability report if it has been required to do so by the regulatory bodies (Tilling, 2004). As legitimacy theory is adopted by mostly all the organization and according to this theory it is voluntary that companies should report on the activities that impact the social communities in which company operates and also provides steps taken to control the issues and framework developed to control all such activities. There is saying that the theory of legitimacy is dependent on presence of social contract between the company and society (Idowu, Capaldi, Zu and Gupta, 2013). So to make compliance to this contract, business entities are required to deliver the socially responsible outcomes and also disclose information relating to economic, social or political benefits realized from their operational activities. The voluntary requirements to disclose the corporate social responsibilities in their annual report will provide the brief overview to the society on the practices followed by the company in relation to CSR and what steps are taken to control the impact on society through their business operations. So, legitimacy theory makes it compulsory for the organization to voluntary disclose about their social and environmental performance in the annual report so that people can be information about the CSR practices followed by the entities (Aluchna and Idowu, 2017). Comparison of CSR reporting in annual reports of AGL Limited for year 2015 and 2017 All the business corporations listed on ASX need to disclose the issues relating to Corporate Social Responsibility (CSR) within their annual report for improving the transparency and accountability of their business operations. In this context, AGL Energy Limited also provides information related to the corporate social responsibility issues in its annual reports as analyzed of the year 2015 and 2017. As analyzed from the annual report of the company for the year 2015, it has disclosed information relating to its greenhouse gas policy, sustainable business strategy and energy policy uncertainty. The greenhouse gas policy of the company is developed as per the NGER Act and has stated the information about its annual emission of greenhouse gases. The sustainable business strategy has discussed about the measures adopted by the company at present and to be adopted in future for promoting its sustainable growth. The energy policies adopted by the company for promoting its long-term grow th have also been discussed in the annual report for the year 2015. The sustainability performance of the company is measured against 12 material issues on the basis of established targets and commitment. The performance of the company against each target is disclosed in the sustainability performance section of the annual report for the financial year 2015. The material issues used for evaluation of the sustainability performance are achieving customer satisfaction, employee commitment , health and safety, profit earned, legislative issues, ethical behavior, corporate governance, talent management , community development, public policy, energy policy and water conservation (Annual Report: AGL Energy Limited, 2017). On the other hand, the annual report of the company or the year 2017 has not provided significant formation relating to the CSR issues. The company has only discussed only little information relating to sustainability in the Chairman report under the strategic imperatives driving performance. It has only disclosed some highlights of the sustainability performance of the company in the year 2017 that ahs been provided in detail in its sustainability report. Thus, unlikely of the year 2015, the sustainability performance of the company against each performance target is not disclosed in the annual report. However, it has discussed information related to its corporate governance policies under the section Corporate Governance that is not present in the annual report of the company 2017. Thus, it can be said that as the company has stated to develop and disclose its sustainability report, it has largely reduced the amount of information published about CSR issue sin the annul reports (An nual Report: AGL Energy Limited, 2015). AGL Energy Limited also discloses information relating to its sustainability issues on its corporate website to seek the interests of the investors. The section entitled What We Stand For on the company website has disclosed detailed information relating to the company commitments towards the customers, sustainability issues, corporate citizenship and sponsorship and its approaches to establish long-term relations with the communities through the program of Energy for life. Thus, the company website also encloses the sustainability report of the company for gaining more detailed information about the sustainability issues. The CSR reporting on the company website is largely different from that in its annual report in the year 2017 on account of the theme and content (AGL Energy Limited, 2018). There is specific theme on the company website for discussing the matters relating to sustainability. Also, the content is organized into separate sections that make it relatively easier to und erstand the company performance on different sustainability matters. On the other hand, the annual report does not enclose a specific theme for discussing CSR issues and the content is also not adequately organized. Thus, the company website provides more information about the CSR strategies of the company in comparison to its annual report of the year 2017 (Annual Report: AGL Energy Limited, 2017). References AGL Energy Limited. 2018. [Online]. Available at: https://www.agl.com.au/about-agl/what-we-stand-for/energy-for-life [Accessed on: 9 April 2018]. Aluchna, M. and Idowu, S.O. 2017. Responsible Corporate Governance: Towards Sustainable and Effective Governance Structures. Springer. Annual Report. 2015. AGL Energy Limited. [Online]. Available at: https://www.agl.com.au/-/media/DLS/About-AGL/Documents/Investor-Centre/150826_AnnualReport_1466512.pdf?la=enhash=7B0EE3991CE2F09590FA82C73852B8972F2740BF [Accessed on: 9 April 2018]. Annual Report. 2017. AGL Energy Limited. [Online]. Available at: https://agl2017.reportonline.com.au/sites/agl2017.reportonline.com.au/files/full_financial_annual_report.pdf [Accessed on: 9 April 2018]. Guthrie, J. and Ward, L. 2006. Legitimacy Theory: A Story of Reporting Social and Environmental Matters within the Australian Food and Beverage Industry. [Online]. Available at: https://www.csringreece.gr/files/research/CSR-1290000469.pdf [Accessed on: 9 April, 2018]. Idowu, S.O., Capaldi, N., Zu, L. and Gupta, A.D. 2013. Encyclopedia of Corporate Social Responsibility. Springer Berlin Heidelberg. Tilling, M.V. 2004. Refinements to Legitimacy Theory in Social and Environmental Accounting. [Online]. Available at: https://www.flinders.edu.au/sabs/business-files/research/papers/2004/04-6.pdf [Accessed on: 9 April, 2018].