What is sustainability reporting?
According to Cohen, (2018) sustainability reporting is an organizations report trying to demonstrate/show the company’s environmental, economic and social impacts on its everyday activities. It links the organization’s overall strategy to its commitment to the sustainability global economic idea. Through sustainability reporting, the company is able to present its values and governance model that eventually helps in measuring and understanding their main role to the commitment of a green economy. In an organization, the sustainability report acts as the main communication platform for negative or positive sustainability performance results (Cohen, 2018).
In Eweje, (2014) the more small enterprises are enjoining those large enterprises practicing the corporate social responsibility, the more the sustainability concept is widening up in the economy. More companies are embarking on how to reduce their impacts on the green environment by participating more on their benefits to the community. When such organizations are required to prepare their periodical sustainability report, the report needs to include the overall company’s objectives, overall goals, and overall tactics to achieve those goals as well as the overall benefits from such activities to both the enterprise and the surrounding community (Eweje, 2014).
According to Loska, (2011), sustainable reporting combines the financial and non-financial elements that contribute to the development of the entire organizations under the integrated reporting. Due to the difference in nature of the business accounting reporting, sustainability reporting can also be referred the triple bottom line reporting, non-financial reporting or corporate social responsibility reporting (CSR) (Loska, 2011).
Why public listed companies adopt sustainability reporting.
Although sustainability reporting should be prepared by organizations of all nature in the world, the benefits of its release supersede its existence in the industry. At the 21st-century sustainability reporting has emerged to be the best practice to ensure overall disclosure by community-oriented companies worldwide. Ideally focusing on sustainability have improved the organizations operating efficiency on natural resources, triggering the importance of managing the social environment amenities such as their employees, shareholders and related stakeholders. Benefits of sustainability reports include; improved risk management, improved customer confidence, increased innovation and improved overall corporate reputation (Ramanan, 2018).
Accordingly, public listed companies such as the WealthWise insurance company need to adopt sustainability reports for various reasons as below:
Good reputation. In Ernst & Young, (2017) corporate reputation survey showed that more than 50% of the target respondents reported sustainability reports as the basis of improved transparency and positive deeds for the success of a public entity. A public listed company releasing out its periodical sustainable reports has a higher chance of been trusted by the different classes of shareholders as compared to that does not issue out the report. Corporate sustainable reports help in engaging the stakeholders in the different activities the company is engaged such as corporate social responsibility (CSR) and in this case the stakeholders get the chance to account support for the value creation occasion (D’Aquila, 2018).
Improved efficiency and waste reduction. According to Ernst & Young, (2017) on the global survey of sustainability reports, indicated that decision-making process is more efficient in such organization adapted to the sustainability reports as compared to those do not. For the reports requires the organization to gather and collect financial and non-financial data, this data is however used to interprets the past performance and used as a benchmark for the coming financial year. In such the listed company gets an easier way to budget for the future and in most cases, such budgets turn to be an exact budget without having a midterm budget review. The exact budget improves the daily performance of the organizations resulting in reduced product wastage (Machado & Davim, 2016).
Why public listed companies adopt sustainability reporting?
Engaging stakeholders and honesty. According to Ayars, (2011), companies in the emerging world have identified the change in performance-based reporting. Companies especially listed need to continually engage their shareholders in the non-managerial activities outside the robust live of doing business. In order for the stakeholder to admit the existence of honesty from management, the business strategy of proving their honesty is through producing the sustainability reports as quantitative evidence (Ayars, 2011).
Key performance indicators by WealthWise.
Financial indicators.
Net profit. In a business net profit is the amount of leftover cash after clearing all bills. Usually, net profit is gotten after subtracting the total expenses from total revenues collected over a specified definite period of time. WealthWise as a business enterprise is required to ensure a large portion of the collected revenues remains as part of the profits to cover all unforeseen changes during the operation of the business. The higher the net profit, the higher the performance for the year (Baumohl, 2012).
Gross insurance premiums- These are the total premiums in the sum of all insurance types held by WealthWise insurance. The higher the gross insurance premiums in a defined period indicates the WealthWise performance in such period. It’s ideal to indicate the gross premiums in the sustainable reports as this will show the performance of the past period helping the stakeholders to predict for the coming year. WealthWise insurance is required to always maintain a positive balance in the gross insurance premiums to succeed in the market as well as remain listed in the securities exchange (Baumohl, 2012).
Return on Investments (ROI). This is a key financial performance indicator used to evaluate the investments efficiency during or after the investments. It’s also referred to as the rate of return. The rate on investments is also used traders in multiple investments to compare the efficiency of the different investments before allocating capital (D’Aquila, 2018). For key financial performance measure, WealthWise will be required to measure the return on their investment relative to the cost incurred in the investments. ROI is commonly demonstrated in percentages, the higher the percentages the higher the performance of such investments. It’s computed as; ROI= (Investment Gain-investment cost)/investment cost
The board of WealthWise Insurance can compute the ROI over the last one year and compare with a different period to determine the financial performance of the while insurance project (Baumohl, 2012).
Economic Indicators.
Economic indicators are economic data used by business and business analyst to interpret the investments possibilities in the current and in future. The statistics indicate the direction of the economy over a combined number of forces. The WealthWise board has adopted to consider policy and spending on local suppliers as an economic key performance indicator to understand the economic situation of the insurance business. In this case, the board intends to understand the perception of their suppliers towards their relationship and determine the willingness of the suppliers to continue in the engagement (Furgang, 2011).
Procedures for hiring local staff is another key performance indicator, the board has embraced to study and understand. In Stengel, (2011), it’s economically ideal for a business to hire from within than hiring from outside its locality. Hiring from outside locality encloses additional charges to the insurance company, especially if such staff requires authorization and work permits from the government which should be covered by the employer. The idea to hire from outside cannot be sustainable and eventually can cause a negative in the sustainable report vis a vis causing to reduced overall efficiency resulting to a bad reputation (Stengel, 2011).
Benefits of sustainability reporting
Development projects for public benefits. Corporate social responsibility in an organization is one of the modern ways of attracting new investors. In case the board of directors for WealthWise goes for developing projects for the benefits of the public, the idea will create a good reputation in the industry compensating with an increased number of stakeholders will like to be associated with the insurance company. This will eventually increase the gross insurance premiums for the business with an increased net profit for a better financial performance. Further, an entity engaging in public benefits project is considered in the annual taxation benefits, where they will be allowed for less taxation hence more saving (Bennett “et al” 2014).
Social indicators.
According to Parmenter, (2012) social indicators are performance indicators relating to the social activities in the organization. In measuring performance, the board will be required to consider the overall satisfaction employee as compared to a certain period or competitor in the same industry. The more satisfaction the better the performance is.
In the 21st century it’s important to consider the less privileged in the society and therefore to empower the indigenous employees by incorporating them in key managerial position. Also, a good social performance report should indicate how the entity has embraced hiring unemployed youths/teenagers as compared to hiring the old. The overall number of women in the composite if the managers is another key performance indicator which can be used by the stakeholders to analyze the future of such enterprises and whether to invest on or hold (Marr, 2012).
Environmental indicators.
In Dada “et al” (2013) the aim of the sustainable report is to understand the commitment to the green economy. In organizations, the sustainability report acts as the main communication platform for negative or positive sustainability performance results. The overall efforts of the organizations to remain on recycled items is an indication of a well-performing organization. Satisfaction from the government regulators on their activities is a key performance indicator the stakeholders normally apply to determine the compliance to the 2030 sustainable development goals set out globally. In such the board need to comply with environmentally friendly materials and increase sales (Dada “et al” 2013).
Alternative performance measures.
Other key performance indicators KPIs WealthWise should apply to achieve its mission include;
Customer satisfaction. As an insurance company, the WealthWise insurance needs to track all its customers’ relations to maintain the already existing trust. For the future performance, any business is supposed to retain all its onboard customers happy at all time. WealthWise insurance can do this by offering promotional packages that will eventually increase the client’s loyalty towards the insurance business (Jackson, 2017).
Employee turnover rate (ETR). In Jackson, (2017) to determine the performance of an organization the external stakeholders can consider the number of departed employees and reason for the departure. In this case, the average overall number will show a negative or positive performing organization. In examining the WealthWise key performance indicators, the ETR percentage with corresponding reasons, spend and culture at the workplace defines the overall future performance (Jackson, 2017).
Report to the chief executive officer.
Although the overall business has been reporting profits they need to go back to the drawing board and in conclusion relook on the insurance business mission statement as follows.
Insurance clients and general community.
At this era of technology, more insurance companies have continued to emerge with more promising packages than the WealthWise. In this case, the insurance company needs to incorporate technology into its mission statement and adopt a more convincing unique way of retaining its already existing clients (D’Aquila, 2018). As we can see the existence of negative media report from the 2004 Tsunami floods, the insurance company diverged from paying the insurance claims by translating contracts clauses otherwise. Although the reasons not to pay may be genuine, the insurance claims may also be genuine and should have been paid. In case the insurance company has embraced technology the correct data would be available to clear the doubts (Marr, 2012).
Employee’s growth. In the 21st century, the era of competition, any employer should not allow any discontent from the employees. For the many years the insurance company has been in existence and with a population of more than 50,000 people, the company lacks a structured way of impacting satisfaction into employees. This is a major threat to the success of the business (Parmenter, 2012).
Insurance business. Although WealthWise is a registered insurance company, the company still continues to make losses in its core business while it makes profits on its non-core businesses. The board should relook the vision statement or its original goal and revise on its core activities (Marr, 2012).
References.
Ayars A, (2011). Why Your Company Should Produce a Sustainability. Report
Baumohl B, (2012). The Secrets of Economic Indicators: Hidden Clues to Future Economic Trends and Investments opportunities.
Bennett W, Lance C & Woehr D, (2014). Performance Measurement: Current Perspectives and Futures Challenges.
Cohen E, (2018). The Sustainability Reporting Experience: How Sustainability Reporting Empowers People and Drives Organizational Change.
Dada A, Stanoevska K & Gomez J, (2013). Organizations Environmental Performance Indicators: Measuring, Monitoring and Management.
D’Aquila J, (2018). The Current State of Sustainability Reporting: A Work in Progress.
Ernst & Young, (2017). Value of sustainability reporting. Retrieved on 14/10/2018.
Eweje G, (2014). Corporate Social Responsibility and Sustainability: Emerging Trends in Developing Economics.
Furgang K, (2011). Understanding Economic Indicators: Predicting Future Trends in the Economy.
Jackson T, (2017). 18 Key Performance Indicator (KPI) Examples Defined.
Machado C & Davim P, (2016). Green and Lean Management.
Marr B, (2012). Key Performance Indicator (KPI): The 75 measures every manager needs to know.
Loska T, (2011). Integrated Reporting.
Ramanan R, (2018). Introduction to Sustainability Analytics.
Parmenter D, (2012). Key Performance Indicators for Government and Non Profit Agencies.
Stengel D, (2011). Working with Economic Indicators: Interpretation and Sources.
Order an Essay Now & Get These Features For Free:
Turnitin Report
Formatting
Title Page
Citation
Outline
