Westpac's Environmental and Social Impact

Part A- Critical Analysis

1. An overview of the environmental and social impacts of the firm’s operations.

Westpac Group is one of the largest companies in Australia, which is creating positive social along with environmental impacts for benefitting all. The firm's operation is based upon nonfinancial performances and other policies that lead to sustainability. The firm is committed towards regular reporting which are transparent thus enabling stakeholders to perform its task adequately. The operation of the firms is reliable as in the year 2016 it had a market capitalization of $99 billion with 622780 shareholders and about 13 million customers. It is stated that Westpac is significantly impacted by climate change as it affects the vision of the company and its operations (Westpac Group, 2015). Climate change has an impact over the economy; social along with environmental factors thus affects investment, lending along with the operational decisions.

The social impact of the business is to improve the vision and focus upon making differences by attaining the overarching goals to improve the nation by ensuring social change. The social impact is to help during the time of needs and enable inclusive banking along with building for economic importance. The next factor is investing in the economic well being along with enabling prosperity. The social impact is enormous as it is taking measures to invest upon proper leadership by training, educating along with creating opportunities for positive outcome. The company is taking measures to improve the financial sectors and ensuring responsibility for long term solutions (1Westpac Group, 2018). The environmental impact is to create proper framework by ensuring proper management so that the activities related to monitoring helps in reducing the energy and greenhouse emission. The impact upon biodiversity affects the lending activities along with opportunities. The impact is also witnessed upon the supply chain for better sustainable business practices.

2. A comparison of the quality and depth of environmental and social performance information provided with other firms in the sector

The business environment in the present world is complicated due to the increasing corporate sustainability that is based upon the environmental along with social impact. Westpac Group has a depth on environmental policies that impacts the operations of the company and leads to better sustainability and success. The impact of environment upon the company is direct or indirect based upon the operations as it affects the value chain. The company is taking measures to enhance the shareholder's return by managing the environmental impacts along with risk opportunities to reduce the cost of business and to enhance the shareholders return so that the environmental operations are enhanced. Westpac is one of the largest companies thus it has the ability to influence others in order to improve the environmental and social outcome (1Westpac Group, 2018). The company is committed to comply with the environmental legislation so that the operation is effectively managed. The company is managing the direct environmental impacts through proper monitoring and reducing the energy use and reducing the wastage. The intention is to improve the factors that are related to the climate change. The company is taking measures to certify the business as a carbon neutral business with a stated standard. The environmental impact is also based upon factors which include investing upon the efficient technologies so that the opportunities are explored with respect to cost effectiveness. It is also noted that the company has an impact upon biodiversity in terms of investment for the purpose of lending activities. The depth understanding is also based upon the fact that the environmental factors affects the supply chain management and leads to better standard in terms of sustainable development for better practices and commitment so that the process is improvement is continuous. The main aim of the impact is to meet the operations of the business by maintaining risks and understand the ethical issues that are associated with better performance management. The company is taking measures and is applying the Environmental, Social and Governance (ESG) Risk Management Framework so that the risk is mitigated for the effectiveness of the operations (Westpac banking Corporation, 2018).

The social impact is about attracting the community investment and to improve the focus of the group. The social framework focuses upon three factors which includes advancing the nation through social change, helping the stakeholders in time and enabling banking and building the financial capabilities. The main intention of the company is to invest in the wellbeing of the economy along with attaining greater prosperity. The social impact goals are to understand the diverse culture and build a strong foundation so that the financial sustainability is assured. The social activities are related with improving the financial hardship by improving the educational level and managing the confidence for better finances. Westpac Group is taking measures and developing solutions so that the challenges of the business can be met. The business is taking measures to bring change in Australia by playing a proactive role and making proper business practices. Social change is of relevance as it is helping to create value and is acting as an assessment tools. Sustainability is ensured by the sector based upon several factors such as environmental and social performance evaluation. The quality of performance is effective as it is improving the business standards based upon several policies and procedures.

3. A discussion of the key challenges faced by the firm when complying with the GRI Reporting Standards.

Global Reporting Initiatives (GRI) is guidelines which includes relevant principles regarding the policies along with procedures. The challenges faced while complying with the GRI is regarding transparency and sustainability. The intention was to augment the performances by following proper integrity with growth opportunities. The challenges that was being faced by the Australian company is based upon the financial services along with sustainability report which is about minimising the duplicity along with transparency in increasing the engagement by meeting the expectations (Global Strategic Alliance, 2019).

Westpac Group was facing key challenges while complying with the GRI based upon the reporting approach. The application of GRI framework was first initiated in the year 2002 by the firm but in the year 2014 it adopted GRI’s G4 reporting framework. The challenge was to update the financial services sector disclosures by focusing upon the different aspects of reporting. The challenge was to report by ensuring disclosures of the strategy by focusing upon ethics along with integrity so that extensive data are compared with the core G4 reporting options. While the implementation of the GRI reporting standard by Westpac Group the challenges was to implement the principles regarding the report content which is about stakeholder inclusiveness about the engagement regarding the influenced report content. The other challenge is regarding the sustainability context along with materiality and completeness to ensure significant impact for better and effective reporting. The challenge that was further faced was about the fundamental principles that had to be followed for the reporting process includes inclusivity, sustainability materiality along with responsiveness for proper decision making based upon the reporting standards (1Global Strategic Alliance, 2019). The assurance of the reporting is about data integrity and responsiveness.

4. An evaluation of whether widespread compliance with the GRI Reporting Standards by other comparable organizations would benefit potential investors, current shareholders and other stakeholders of the firm

It is vital to comply with the reporting standard so that the organization would benefit the potential investors along with current shareholder and other related stakeholders. The benefit is that GRI would create activities which include multi-stakeholder input. In this regard the benefit is that it improves the level of engagement concerning technical expertise along with diversity in order to improve the reporting of the company. The benefit is because the reports are created using the consensus-seeking approach which improves the stakeholder interest so that the sustainability is ensured. The GRI report is useful. Thousand the standard improves the report by about 92% thus leading to sustainability and effectiveness in performance. Another potential aspect is that it improves the investor’s communications because of the reporting standards that augments the level of engagement. The potential for the stakeholders is that the risks can be easily analysed and also costs are reduced based upon the actual value, respecting the norms along with codes. Furthermore, the potentiality is also based upon the fact that the reporting positively influences the business creating better performance standards. There are several aspects that impact the potentiality such as the reporting helps to understand the real value of the business concerning tangible along with intangible assets. Proper GRI reporting improves the reputation of the company and helps to increase the loyalty thus improving the actual value along with sustainability (1Global Strategic Alliance, 2019). The GRI strengthen the policies that ensure clarity and helps to create corporate awareness so that the development is ensured with proper awareness. Another factor is that GRI helps to maintain the aspects that are related to human rights for better actionable plan and strategies.

Part B Strategic Initiative Briefing

1. What are the likely significant costs associated with the ongoing operation for this strategic initiative? Estimate the cost behaviour (fixed, variable, or otherwise) of each of the identified costs.

In the on-going operation, the cost associated is the high-level costs that are associated with the strategic initiative. Cost-benefit analysis is a technique which is used to ensure better decision making based upon net present value. The cost that is includes which affects the value is based upon physical resources and is compared with the revenues. The costs are identified through the help of the cost behaviour analysis that is about the operating costs. Cost behaviour is about increase and decrease in the semi-variable costs (Harvard Business School, 2019). Costs here are related to the monetary valuation which is linked with effort, material, and resources along with time. Variable costs affect the business and strategic initiatives for making proper decisions.

2. A balanced scorecard that could be used to evaluate the success of this initiative

For the effectiveness of the business and to measure the initiatives, it is vital to implement the balanced scorecard so that the process of innovation increases the benefits through the use of new strategies. Balance scorecard is useful to measure the performances through the analysis of the initiatives which is based upon the strategic objectives of the business. Based upon the balanced scorecard method it is vital to note that the scorecard is also based upon four perspectives.

3. Evaluation of break-even analysis would be a useful and reliable screening tool to assess the desirability of pursuing this new initiative

The break-even analysis is of importance and relevance in order to determine the profitability level of the business. The analysis is useful to determine the costs along with profits to earn proper revenue. The analysis is useful and reliable to assess the desirability of the business as it is part of the costs which includes fixed along with variable costs so that the revenue impacts the business. It acts as a tool for management which is about managing the capital by determining the relationship amid costs along with production for better forecast and profit accuracy.

The key features of the scorecard are that it helps in making effective decision making by augmenting the process. The critical reasons for the measures are that increase in satisfaction of customer helps to augment the market share by purchasing the new ranges of products. There are several other factors that are being considered upon for the internal business perspectives which are associated with safety incident index and project performance index so that the Jerry can survives the increasing competitions. The measures are adequate to ensure growth.

4. Discuss the impact of the initiative on the organization's resources with reference

For the effectiveness of the business and to ensure the break-even analysis, it is essential to analyse the organization resources.

Breakeven Point = Fixed Costs/ (selling price – variable costs)

= 540/(900-45)

= 63.157

It is determined from the analysis that the company needs to sell about 63.157 self-cleaning dishwashers to attain the breakeven point. This implies that the business will not break the margin by selling about 63 products.

The next aspect is to determine the break-even for greater effectiveness by determining the contribution margin. The contribution margin is about analysing the net profit by subtracting variable costs from selling costs. The break-even is strategically attained by raising the prices and cutting the costs. The strategy is useful as it is about prices, new products, planning and goals for better powerful business move. This move will help to improve the sales mix thus reducing the wastage. The strategies can influence variable and fixed costs for attaining the breakeven point.

The after-tax profit is $1,250,000 with depreciation of about $325000. The proposed strategy is influential in forecasting the break-even as it is about deducting variable cost from selling. The selling price is $900, and variable cost is $45.

Contribution Margin = 900-45

=855

The analysis is effective as it is used for the process of budgeting and helps the company to attain the profit by following the simple break even. The approach is effective as it is realistic with achievable targets for ensuring sales and profitability. This strategy might lead to proper monitoring and help in cost-effectiveness and control.

References

Adam S. Maiga and Fred A. Jacobs, (2003). Balanced Scorecard, Activity-Based Costing And Company Performance: An Empirical Analysis. Journal of Managerial Issues, 15(3) 283-301.