Question 1

MEMO:
29.09.2015
MEMORANDUM TO: Board of Directors
FROM: Chief Financial Officer
SUBJECT:
Report
on
Proposed
Voluntary
information,
such
as
CSR/TBL/Sustainability Reporting, proposed to be added to companys
Financial Reporting.

CSR is a form of corporate self-regulation integrated into a business model. CSR

demonstrates a continuing commitment by an organization to behave ethically and contribute
to economic development, while improvising the quality of life of organisation employees
and their families, society and the local community (Watts & Holme 1999).
"People, planet and profit", also known as the TBL forms one way to evaluate CSR. TBL
involves companies evaluating their accomplishments against environmental, social and
economic criteria, how these results relate to the success of the business, and how potential
impacts, opportunities and risks are addressed (Media Releases And Speeches, 1996).
GRI helps the use of TBL as a path for organizations contributing to sustainable development
and to become more sustainable. GRI supports the worlds most broadly used standards on
sustainability reporting enabling businesses, governments, society and people to make better

choices based on information that matters. Sustainable development exhibits the idea that
social, environmental, and economic progresses are all achievable within the limits of our
earths natural resources.

SOCIAL CONTRACT:

It states that all business function under an unrecorded contract with the community,
in which the community grants the firm to do business under the obligation that its actions
will give advantage to community. This comprises, CSR, corporate philanthropy and
corporate governance.Its way to business assigns to the strategy an organization opts when it
obtain unofficial expectations from the people and makes environmental and social
responsibility crucial to its operations.
If Q.A. Construction Ltd. chooses to report upon its social and environmental performance it
might influence few parameters mentioned below.
1. Reputation Management
Q.A. achieving informal social responsibility guidelines gives it a meaningful protection
against possible reputation and legal risks that is anticipated by following an ethical line in
business.
2. Long-Term Profitability
Benefits Q.A. will have for encountering social responsibility expectations from the people
will have good client relationships and long-term profit potential. The rooted connection over
time will assuredly gives more sales and better profits.
3. Costs
Achieving social contract expectations will costs money to Q.A. because this will mean
commitment to impartial treatment of employees and to do this Q.A. has to invest in training

for employee and workplace development and also give back to the community from earned
profits by giving in charity and community programs.
4. Limited Focus
Each dollar and minute spent focusing on social contract will distract Q.A. from a core
business pursuit of profits.

ARGUMENTS FOR INCORPORATING SUSTAINABILITY REPORTING AND

RECOMMENDATIONS:

Pros of Sustainability Reporting

1. It helps company either overcome some negative publicity, or backing the image it has
already developed.
2. Employees are happy working in companies that take care of them and volunteer in, their
local communities both are appropriate parts of sustainability.
3. It directs a company to grab opportunities to develop operations and diminish risks that
they have recognized in connection to sustainability.
4. The report is not only for consumers, but also for company stakeholders. It clears the path
for accountability, feedback and conversation.
5. It also helps company clear its sustainability vision and strategy and ensure that they are
in line with company goals.

Cons of Sustainability Reporting

1. The TBL reporting way says that businesses should focus on profits along with focus on
the impact of their actions on people, community and the environment.

2. While company may quantify financial aspects such as sales & profits, its hard to
quantify social and environmental aspects. When a business makes a commitment to
protect the environment by recycling, its impact is not easily recognizable.
3. The management of company generally aims to increase returns to shareholders.
Sustainability reporting might construct competition for such business. Advantages of any
environmental and social actions that a business enlists in are likely to arise over the
period of time.

RECCOMENDATIONS:
Maximizing profits without keeping Environment and societys welfare in mind may lead to
legal but unethical practices.
It is recommended to directors of Q.A. to volunteer the reporting of TBL/sustainability
reports. This will sum accountability and clarity mechanisms to the reporting process,
facilitating the long term goals and ensuring survival of the company in a sustainable manner.
Reporting would be an inspiring step towards compliance to ISO 26000 (Social
Responsibility)

Question 2
PART A:
Externalities in financial matters are the cost or benefit that influence the gathering who
would not have liked to bring about the cost or benefit. For instance, if a company is
polluting nearby stream every one of the partners that utilization water from that waterway
are influenced by the externality. Externalities are being an incredible piece of current
financial examination whether to incorporate or reject them from the accounting reports.
Consider a company X produces $400 worth of products with work causing no pollution all
the while. Furthermore, another company Z that delivers another product of worth $800
which causes contamination all the while. So company Z lessens $100 of organization X
formation by the pollution brought on. Presently aggregate net yield is measured as $800 +
($400 - $100) = $1100. The industrial qualities contain are $1100 for company Z and $300
for company Y. The externality has become blended in current accounting framework. It is
not clear how to represent externalities in current framework. Presently governments are
charging polluters by moral rationale which is not known exactly.
Assets of the organization are also considered as resources, many organizations won't report
couple of things as a detail of their networking advantage because of different reasons. For
example, organizations old machinery or old transport vehicle that causes paralysing
contamination. Rather than going for the assets these will thus costs the organization to keep
up the advantages.
Expenses are also called as payments by a company to work in certain period of time. There
are many different expenses that won't be a piece of operating expenses on the grounds that
they are brought about by distinctive externalities. For instance; pacifying the bacteria contact
on vegetables, those are delivered near to a company which makes those bacteria by
discharging devastating gasses.

PART B:
The most vital point in question as of now all monetary reports or financial layouts is
externalities. There are abundant injurious response can be brought about by any
organizations production procedures such a contamination (pollution), commotion, loss of
biodiversity and numerous other. The basic conflict of the organizations to represent
externalities is; they are hard to judge which indicate there is reliable way to quantify them.
They say that we are making very large financial benefit of no real worth impact of
externalities, so they can be unnoticed. The off chance that we continue involving all these as
a component of costs our survival may be in question which thus causes monetary
emergency. Corporate additionally contend that on the off chance that we represent
externalities that raise the creation costs and thusly the item costs which will be an incredible
weight on society. By barring these immaterial things they are accomplishing most economic
outputs. In rundown corporate contend that externalities are little pay to increase more
prominent great.

PART C:
1. Bhopal Disaster, Chemical leak in 1984 in city of Bhopal, India.
EXTERNALITIES
Premature deaths of people.
Wildlife environment were deeply affected.
Have spill over costs and negative effect on the third party

2.

Oil Spill in Gulf of Mexico, 2010.

EXTERNALITIES

Many fisher folk lost the opportunity because of mangrove

contamination.

Marine productivity reduced because of disruption of the food chain

Opportunity cost because of government sending ships and aircraft

to do clean-up operations.
Loss of marine and coastal wildlife (e.g. fish, birds, turtles, sea

snakes, mammals)
Decline in aquaculture production (e.g. seaweed farms, fish cages,

shellfish beds)
Oil price hike due to lost oil production

References
Watts, P. and Holme, R. 1999. Corporate Social Responsibility: Meeting Changing
Expectations. World Business Council for Sustainable Development: Geneva.
Deh.gov.au, Media Releases and Speeches 1996 - 2013: Environment Portfolio (2015)
http://www.deh.gov.au/minister/env/2006/mr24mar06.html
Bhopal Disaster, 2014, Encyclopaedia Britannica.
Mole, B 2015, 'An Oil Spills Aftermath', Science News, vol. 187, no. 8, pp. 22-26.