CO5103 Management Accounting- Sustainability Report of Toyota Motor

Introduction

In today’s world an organization operating within the economy not only impacts its customers or shareholders but impacts the place where it is operating in an economic, social and environmental level. This has led to the need of sustainability reporting. A sustainability report contains the details regarding how a company has affected the society on an economic, social and environmental level (Arbex, 2012). It also enables an organization to measure its performance based on social, economic and environmental parameters. In this report, two organizations have been selected and their sustainability reports have been analyzed in order to gain an understanding whether these companies have complied with the requirements of sustainability reporting (Roca & Searcy, 2012). Further, the sustainability reports of these organizations make the required and the relevant disclosures or not shall also be evaluated. The companies that have been selected for this purposes are Toyota Motor Corporation Australia Limited and

Analysis of Sustainability Report of Toyota Motor Corporation Australia Limited

Toyota Australia, is operating under Toyota and Lexus brands and is a leading manufacturer, exporter and distributer of vehicles (Toyota.com.au, 2017). It issues sustainability report on a yearly basis to make the stakeholders aware of its performance at the economic, social and environmental level. The company prepared its sustainability report using the GRI Reporting Guidelines (Toyota.com.au, 2017).

GRI Reporting Guidelines

Global Reporting Initiative (GRI) is a set of independent international standards that enables various entities to obtain an understanding and communicating the affects of their activities

1. The strategy of the organization and an analysis of the strategy mentioned.
2. A description of the profile of the organization should be incorporated in the report.
3. The material areas and boundaries that have been identified as influencing the society.
4. The stakeholder’s engagement needs to be included in the report.
5. The aspects of ethics and integrity are also required to be incorporated.

Toyota Australia

This company is a subsidiary company of Toyota Motor Corporation, which is a Japan based company (Toyota.com.au, 2017). At present, Toyota Motor Corporation is one of the largest vehicle manufacturing companies across the globe (Toyota.com.au, 2017). Toyota’s vehicles are sold in almost 170 countries. Toyota Australia is one of Australia’s leading automotive companies having consistent market share of almost 18.2% (Toyota.com.au, 2017).

Analysis of Sustainability Report of Toyota Australia

Ever since Toyota has been incorporated, it has been rapidly expanding and spreading its operations in different companies. Australia is one such company where Toyota is operating through its 100% subsidiary (Toyota.com.au, 2017). This company has largely influenced the society. Every year it issues sustainability report every year indicating its overall performance on economic, social and environmental levels. The sustainability report contains the details regarding the company’s performance for the year beginning from 1^st April to 31^st March of the next calendar year (Toyota.com.au, 2017). The sustainability report of Toyota Australia for the year 2015-2016 shall be analyzed.

GRI Compliance

The sustainability report clearly mentions that the report has been prepared using GRI G4 Guidelines. The report has all major aspects that are required to be covered under g4 Guidelines (Toyota.com.au, 2017). The report elaborates on the company’s commitment to sustainability. The report has highlighted how the company deals its economic, social and environmental issues (Toyota.com.au, 2017). The company has also obtained independent external assurance regarding the compliance of the GRI G4 reporting requirements (Toyota.com.au, 2017). This has made the sustainability report more authentic and reliable for the stakeholders.

The entire report has been segregated to cover the following topics (Toyota.com.au, 2017):

• Economic Performance
• Business Transition
• Guest Experience
• Employee and health safety
• Product safety
• Labour relations
• Vehicle transmissions
• Innovation
• Environmental management
• Energy use greenhouse and gas emissions
• Environmental compliance
• Compliance obligations
• Training and development
• Dealer Support

These broad headings cover all the major aspects that are required to be discussed in a sustainability report as per G4 requirements. The economic, social and environments aspects of the company are covered through these headings.

Environmental Management System 

The sustainability report of Toyota Australia has a separate heading, which primarily deals with environmental related aspects. The heading environmental management elaborates on the system that is in place to manage the risks associated with the environment. Toyota Australia has a framework on environmental management (Toyota.com.au, 2017). The company has its own environmental policy and action plan, which it implements through Toyota Australia Environmental Management System (TEMS) (toyota.com.au, 2017). This incorporates the requirements of ISO 14001. The company has a dedicated environmental team that is present at the site where the manufacturing process is carried on (Toyota.com.au, 2017). Moreover, the company has an environmental committee as well which is responsible for overseeing the overall performance of the company (Toyota.com.au, 2017). The sustainability report of the company has shed light on all these topics in depth. The environmental related challenges faced by the company and the environmental awards received by the company has also been incorporated in the report (Toyota.com.au, 2017).

Performance Indicators

There are many environmental and social performance indicators. Three such environmental or social performance indicators of the company are mentioned below.

Energy Use and Greenhouse Emission

The company mainly uses electricity and natural gas for manufacturing purposes. As per the sustainability report, the consumption of these resources in this year was more in comparison to the previous year (Toyota.com.au, 2017). However, the consumption in this year has increased in this year. The report also states the company consumed more water for production purposes this year but the consumption per unit remained constant (Toyota.com.au, 2017). There was slight increase in the green house emission due to increase in productivity. However, it was within the target limits (Toyota.com.au, 2017).

Environmental Compliance

As per the sustainability report of the company, the company has participated in several environmental programs during the year. The most significant was the national tree day which organized by the company in partnership with other organization (Toyota.com.au, 2017). Further, the company has received award for best waste performance during the year (Toyota.com.au, 2017). There are no reported cases of non-compliances of environment related laws. Hence, the company has been able to achieve its target (Toyota.com.au, 2017).

Community Commitment

The company has sponsored various activities and organizations including Australian Paralympics Committee, Australian Cricket League and Australian Football League. Moreover, it supports many environmental groups. Additionally, it has provided road safety education to many individuals during the year (Toyota.com.au, 2017).

AGL Energy

This company is one of Australia’s leading energy providing companies that provides electricity, gas, solar and other renewable sources of energy to businesses and homes of Australia (Agl.com.au, 2017). It is engaged in both generating and retailing of energy for commercial and residential use (Agl.com.au, 2017).

Analysis of Sustainability Report of AGL Energy

The sustainability report of AGL Energy covers all the key aspects that indicate the social, environmental and economic performance of the company. It highlights material issues faced by the company, the company’s sustainability framework and the overall performance of the company (Agl.com.au, 2017).

GRI Compliance

The company has strictly complied with GRI G4 guidelines in the preparation of the sustainability report. The company has complied with G4 Sector Disclosure for Electric Utilities sector (Agl.com.au, 2017). For this purpose, the company has firstly, identified all material issues and then elaborated on each issue. Moreover, the company has also obtained an external independent assurance that the company has complied with all requirements that are applicable to it (Agl.com.au, 2017).This will enhance the reliability of the report for the stakeholders. AGL has also taken other guidelines into consideration when developing this report, including the Australian Council of Superannuation Investors (ACSI) and the Financial Services Council (FSC) ESG Reporting Guidelines for Australian Companies 2015, published in March 2016 (Agl.com.au, 2017).

Environment Management System

The company has a separate system in place for managing the environment related issues. The details regarding the same have been mentioned the sustainability report of the company. Further, the company has also been certified by ISO (Agl.com.au, 2017). The company has an environmental policy says it should be followed by everyone associated with the company (Agl.com.au, 2017). The environmental management system focuses on managing greenhouse and energy related issues discovering renewable sources of energy water management biodiversity and cultural heritage and rehabilitation of assets upon the cessation of activity (Agl.com.au, 2017). Further, the company also gets its environment management system by an external audit party (Agl.com.au, 2017). This audit is conducted in line with EPA Victoria 'Accredited Licensee System - Guidelines for Environmental Management System Certification’ (Agl.com.au, 2017).

Performance Indicators

The performance indicators indicate the performance of the company. Three such performance indicators have been mentioned below.

Energy Market Evolution

This aspect aims to develop an electricity market design and a framework that facilitates to supply safe and decarbonized electricity. The target of 2016 and the actual performance of the company in this aspect are given below:

Ethical Conduct

The company has AGL Code of Conduct, which requires everyone to follow the same and to act ethically under all circumstances. The table given below indicates target reduction in the rate of issues relating to unacceptable behavior and the actual reduction in the reported issues of unacceptable behavior.

Legislative Compliance

The company aims to comply with all the legislative requirements across the organization.

Conclusion

It can be concluded from the analysis of the reports of both the companies that both a companies have complied G4 requirements. Further, both the companies have proper environment management system in place. Toyota Australia is performing well in environmental and social areas. It has made efficient use of energy and controlled the emission of greenhouse gas to a maximum level. Moreover, it has company has no reported cases of non compliances of environment related laws. Further, the company has actively contributed good amount of sums to promote and organize various social activities. The performance indicator of AGL indicates the company has complied with AGL Greenhouse Gas Policy requirements. Further the company has ensured that the all the activities of the company the company are carried out in an ethical manner. There are also no non compliances of Australian Consumer Law. However, the company had to pay certain fines in relation to environmental compliances. The company should take precautions to ensure that this does not happen in future as it affects the company on a financial level.

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