Qantas and Virgin Australia Companies - Voluntary Disclosures in the Australian Corporate Sector - Case Study Example

Voluntary Disclosures in Australian Corporate Sector (Qantas and Virgin Australia Companies) Name Institutional Affiliation In today’s corporate environment, it is increasingly important for companies to voluntary disclose its operations to various stakeholders in a regular basis. Corporate social responsibility is currently an important aspect in the corporate sector and through sustainability reporting, companies can demonstrate it to its stakeholders. Sustainability reporting discloses to stakeholders the approach the company is undertaking in integrating environmental, economic, and social concerns into its operations. Companies in Australia are increasingly recognising the importance of voluntary reporting. For this reason, most of these companies are choosing sustainability reporting as a way of demonstrating corporate social responsibility. This is done despite no mandatory legal requirement for companies to carry out preparation and publication of sustainability reports in Australia. In this essay, sustainability reports of Qantas and Virgin Australia are discussed and evaluate the extent to which they comply with the Global Reporting Initiative Guidelines. Concepts of Voluntary Disclosure It is compulsory for listed companies such as Qantas and Virgin Australia to disclose their information to the stakeholders. However, due to the diversified nature of the information needs required by investors, listed companies have seen the need to disclose more information on a voluntary basis. Voluntary disclosure has gradually become a focus of Australian companies and other companies all over the world. This is because it positively impacts on corporate management agency communication and decreases information asymmetry to investors (Tian & Chen, 2009). Voluntary disclosure is an effective way for describing the prospect of a corporate entity and for communication of interest-related parties. Australian companies have found it useful to disclose their environmental perspectives to its stakeholders. They consider environmental credentials in their corporate governance. Voluntary disclosure of corporate governance information is important because it helps in raising equity capital and improves the marketability of shares of companies listed on Australian Stock Exchange such as Qantas and Virgin Australia. The information that is disclosed improves the liquidity of shares. Furthermore, voluntary disclosure improves organisational practices and management of environmental impacts as well as facilitating company’s reporting. Environmental, Social and Economic Disclosures Global Reporting Initiative Guidelines Global reporting initiative (GRI) provides guidelines to companies in regard to sustainability disclosures. This enables organisations to become transparent to their stakeholders in reporting its performance in important sustainability areas. GRI offer guidelines and principles that organisations can use in reporting and monitoring their environmental, social, and economic performance. GRI emphasise companies to provide sustainable reports to its stakeholders in a regular basis. Moreover, it provides a detailed reporting framework to organisations. Environmental, economic, and social issues are part of triple bottom line concepts of sustainability reporting. The environmental concept entails the impacts the company makes its products and services that include impacts of human health and natural environment. On the other hand, the economic concept deals with the consideration of financial performance, procurement policies and compensation of employees. Additionally, it consists of operations of the organisation that shapes the demand for company’s products and services. Qantas Airline and Virgin Australia are among the companies that are listed on Australian Stock Exchange and regularly provide sustainability reports. They follow the GRI guidelines in preparing their sustainability reports. Sustainability reporting guidelines have principles that are used in defining the surety of the reported information quality and content (Epstein & Rejc, 2014). It also includes standard disclosures that consist of performance indicators. In general, GRI reporting guidelines and principles of what companies should report and how they should report. The reporting practices of Qantas and Virgin Australia are discussed below and how they have followed GRI disclosures guidelines. Sustainability Reporting Triple bottom line is a reporting technique that corporations used in reporting their sustainability strategies. It covers environmental, economic, and social accountability of companies. It has been accepted as approach organisations can used in implementing sustainability concepts in their decision-making process. This is carried out in order to minimise the effects that result from their operations. Uyeda (2009) explains that sustainability reporting is important because it provides organisations the opportunity to enhance their business performance and corporate risk management. Moreover, it is a practice carried by an organisation in order to be accountable to both internal and external stakeholders. Sustainability reporting is geared towards the attainment of sustainable development in the organisation. Sustainability basically focuses on vices such as pollution and depletion of resources. However, in the recent times, sustainability has been expanded and it now includes issues such as biodiversity, productivity and equity. GRI has been in the forefront in the realisation of this expansion. In general, GRI is a multi-sector international undertaking that aims at developing and disseminating sustainability reporting guidelines. These guidelines are globally accepted and organisations used them voluntarily in reporting their environmental, social, and economic aspects of their activities, services, and products (Global Reporting Initiative, 2015). Qantas Airline In 1920, Qantas was founded in Queensland as an Australian national carrier. The airline was nationalised in 1947, and 1992, it was privatised through the Qantas Sale Act (Lafferty, 2012). Today, the airline is among the world leaders in the long distance carriage. Furthermore, Qantas is the second oldest airline in the world and the largest airline that operates both domestically and internationally in Australia (Qantas, 2014). Qantas airline serves many regions in Australia and also offer its services to Europe, Americas, the Middle East, Asia and the Pacific and Africa. As of 2014, Qantas covered a total of 44 countries by serving 182 destinations. It employed approximately 32, 500 people (Qantas, 2014). The main business of Qantas Group is transporting passengers by using its two airline brands, Jetstar and Qantas. Commercial, operations, customer and marketing are the arms of Qantas Airline (Qantas, 2014). Commercial arm include sales and distribution services while operations are comprised of flight operations, Qantas Aviation Services, catering, airports and engineering. Customer and marketing division consist of services entailing in-flight and marketing, cabin crew and development of product and service. All these operations must be actively managed in a manner that is sustainable. In addition, Qantas must undertake its operations in a manner that reduces environmental impact and balance the concerns and interests of all the stakeholders it serves. Qantas has a team that advises it on matters concerning fuel efficiency and environmental impact. Qantas periodically prepares sustainability reports in a show of its commitment to being a sustainable company. Qantas has adhered to voluntary disclosure of information as it has disclosed on their financial reporting information their financial statement, cash flows and measures to achieve environmental sustainability. It is an expectation of ASX that all the listed companies provide a report on environmental, economic, and social sustainability risk management by following the guidelines provided by GRI. Sustainability report should include a section that discusses inclusiveness of stakeholders. Stakeholder engagement means that the organisation providing sustainability report should identify its stakeholders and explain organisational response to their expectations and interests in its report (Epstein & Rejc, 2014). Qantas outlines in its 2014 sustainability report the measures the company has taken and continue to undertake in its efforts to achieve sustainable outcomes. It broadly discloses improvement or otherwise that have been achieved in engaging its stakeholders sustainably. Qantas sustainability report is described according to its commitment to having a sustainable business by considering environmental, economic and social issues in their operation. This helps in evaluation of the company’s performance for purposes of improving it when it is necessary. It also ensures that Qantas operates within their strategy that is pursuing low-cost operations for a very long time. Using GRI reporting guidelines on sustainability, Qantas inform its stakeholders on how it has performed in areas such as environmental, social and economic management. In fact, these have been outlined very well under several headings. For example, Qantas reduced carbon-dioxide emissions by 7 percent in 2013/2014 (Qantas, 2014). Virgin Australia Virgin Australia is an airline company that is part of the Virgin Group. Virgin Australia started its operations in the Australian aviation market in 2000 by operating as Virgin Blue. In 2001, it expanded its operations by launching 14 new routes and in 2002; the airline launched nine new routes (Virgin Australia, 2014). The airline revolutionises the air transport in the country by offering low-cost air services to attract more customers and fight off stiff competition from Qantas. The airline now holds a strong position in the Asia-Pacific region with its consolidated brand of Virgin Australia. However, the challenge for Virgin Australia remains how it can minimise the impact that its operations have on the environment. The airline has attempted to deal with this issue by adopting a new approach to sustainability by focusing its operations on the maintenance of fuel-efficient aircrafts. Virgin Australia is one the companies listed on ASX and providing sustainability reporting. Virgin Australia sustainable report of 2013 is detailed enough and it covers various topics as compared to that of Qantas. Engagement approaches that the airline undertakes with its stakeholders are provided in the report and it is consistent with GRI guidelines. Materiality concept stipulates that the information in the sustainability report should cover organisation’s topics and indicators that reflect the significant environmental, social and economic impacts of the organisation (Uyeda, 2009). In the sustainability report of 2013, Virgin Australia provided major highlights of the year, challenges and its future opportunities. The operations that were carried out in the year and their impact on the environment are discussed in the report. Conclusion In Australia, many companies are adopting sustainability reporting although in a slow pace. This can be attributed to the importance that voluntary disclosures have to its stakeholders. In fact, these companies have expanded corporate social responsibility to include voluntary sustainability reports. Qantas and Virgin Australia are the two airline companies in Australia that provides sustainability reports. The 2013 sustainable report of Virgin Australia covers many aspects but they should expand it by being more detailed. Specifically, sections on how their operations affect its stakeholders and what steps they are undertaking should be included. On the other, Qantas have highlighted all these issues by listing and outlining how they have engaged with its stakeholders. References Epstein, M. J., & Rejc, B. A. (2014). Making sustainability work: Best practices in managing and measuring corporate social, environmental, and economic impacts. San Francisco: Berrett-Koehler Publishers. Global Reporting Initiative. (2015). G3. AND G3 GUIDELINES. Retrieved from https://www.globalreporting.org/reporting/G3andG3-1/Pages/default.aspx. Lafferty, G. (2012). Mr Taylor Goes To Hollywood: Misbehaviour in Film and TV, In A. Barnes & L. Taska (Eds), Rethinking Misbehaviour and Resistance in Organisations (pp. 85-109). Bingley: Emerald. Qantas . (2014). Sustainability at Qantas. Retrieved from http://www.qantas.com.au/infodetail/about/investors/longreach-review-2014.pdf Tian, Y., & Chen, J. (2009). Concept of voluntary information disclosure and a review of relevant studies. International Journal of Economics and Finance, 1(2), 55-59. Uyeda, C. (Ed.).  (2009). Australian master environment guide. North Ryde, N.S.W: CCH Australia. Virgin Australia. (2013). Sustainability Reporting. Retrieved from https://www.virginaustralia.com/cs/groups/internetcontent/@wc/documents/webcontent/~edisp/annual-rpt-2013.pdf Read More