Analysis of Boral Limited Company

Discuss about the Determinants and Long-Term Performance Outcomes of Corporate.

My report will entail the sustainability analysis of two companies, the Boral and the Brickworks Limited Companies. I will first analyze each company individually, then compare the results of the investigation in each company, and I will finally draw the conclusion on which company has the best social, environmental, and governance sustainability.

The Boral limited company has been fully committed to sustainability reporting because the company realizes sustainability reporting is significant in determining their success in the future (Henderson et al. 2015). As a result, the company has diversified their working conditions, created a conducive working environment for their people, reducing environmental effects, and approaching their operations in a socially ethical manner. We will give an outline of the company’s sustainability report for the past three years on their workforce on a full-time equivalence (Rao and Sudhakar 2017)

The average length of time that the workers of Boral worked and women’s composition in the company is outlined in the table below

There has been a gradual increase in the number of workers in the company, and the number of women working for the company has also increased.

For the past three years, the company has been committed. To agree to the set environmental standards, rules, regulations, and laws (Wilson 2015). The company has set standards to reduce the emissions of gases from greenhouses resulting from their operations. The Greenhouse Gas (GHG) Emissions have been decreased for the last three years (). The table below shows the amount of GHG emissions in a million tons of Carbon dioxide with their respective years.

The company has developed new strategies which will focus on reducing the GHG emissions.

One of the company’s primary goals is to ensure that its people work in an environment that is free from harm. The company has developed strategic plans to ensure that it achieves a healthy and safe environment (HSE). The company’s safety performance is marked by its TRFR (Total Recordable Frequency Rate). The company’s RITR is determined by both its LTIFR and MTIFR. The table below shows the company’s LTIFR and MTIFR values with their respective years.

The company’s LTIFR reduced between 2015 and 2016 but increased slightly in 2017. The company’s MTIFR has been growing gradually over the years and thus has contributed to the TRFR’s decreasing values over the years. The graph below shows the outline of the company’s TRFR costs with their respective years.

Analysis of Brickworks Limited Company

The company’s board of committees is divided into three main categories; the Auditing and Risk Taking Committee, the Compensation and Nominating, and the Health, Safety, and Environmental Committees. All these members review issues affecting the company for the board’s sake (Webb and Burton 2017). The graph below shows the composition of board members of both genders.

The company had set strategies to involve both genders in its management and employment opportunity. Below is a graph showing the composition of people employed in the company of both sexes and their respective years.

Boral company limited has made its rules and procedures very clear. Any breach of a system will attract punishment. Boral limited company reports cases of violations of their policies and punish them accordingly. Reports from the year 2015 had shown that about 20% of employees are fired by the company due to a breach of systems. The company gives reports on executive management who do not follow the company’s rules and regulation. They publish their names when they are submitting the annual reports as a punishment.

The company manufactures and supplies the materials for building and constructions. The industry has a high environmental impact because it needs to access most raw materials from the underground. The company mines these natural resources to acquire their raw materials, and this leaves holes in the ground which could cause many waterborne diseases. The companies’ manufacturing activities’ causes air pollution due to the gases emitted (Keen 2015). One of the most challenging issues the company faces is how to minimize the emission of these gaseous wastes to reduce pollution and hence create a sustainable clean environment. 

I will give the remuneration report regarding Fixed annual Remuneration, Short-term Incentive, Long-term Incentive, and TRI (Targeted Retention Incentive) for the past three years. The target remuneration for both the CEO and other senior executive committee was the same year 2015, and 2016 was the same.

This was different from the 2017 remuneration report whose CEO’s target was 100% amount, and the senior executive’s target was between 35% and 50%.

The reaction of share price on the publicized breaches

The share price has been reacting to the company’s publicized breaches of the company’s policies over time. If the company’s assets fail to meet its plans, the company declares that the assets do not meet the company’s laws. The share price has been taking advantage of buying the company’s assets at throwaway prices. In my view, I think this price reaction is unethical. I would recommend the share price to give the company some time before it shares the company’s assets.

There are many ecological aspects of Brickworks limited company. Some are by proper waste disposal, less energy consumption, less water consumption, adequate utilization of materials, and less emission of carbon dioxide. The emissions of carbon IV oxide in Australia by the Brickworks Company could benefit from either direct or indirect consumption of fuel. The graph below shows the comparison between the direct and indirect fuel consumptions over the past three years.

The results show that the amount of carbon dioxide emitted from the manufacture of bricks has been increasing for the past few years (Saltary and Thorpe 2016). Despite the company’s efforts to minimize these emissions, their efforts have been fruitless, but the companies have to strategize their plans.

The company has implemented several practices to minimize some environmental impact of the company’s operations. Some of them are; substitution of fuel, making energy more efficient, recycling of water, recycling of raw materials, product development, and substituting materials (Kumarasiri and Jobb 2017). The company submits its emissions every year, and it complies with the NGERS (National Greenhouse and Energy Reporting Scheme). The table below shows the emissions of the gases and the amount of energy used.

One of the Brickworks Company’s commitments is to minimize the health risk of their workers and ensure their safety. The health improvement and safety maintenance strategy are crucial in creating a sustainable working condition.  The models for calculating the safety and determining the health risks are the TRFR (Total Risks Recordable Frequency Rate), LTIFR, and the MTIFR. The table below shows the composition of the LTIFR, MTIFR, and the TRFR value within the three years.

It is clear from the table that the health and the safety conditions at the company is improving since the TRFR value has been decreasing over the past three years. A graph would show a better correlation. Below is a chart of the above table (Ukwatta et.al 2018). The figure shows a partial decline in the TRFR value every year, and this marks the company’s ability to sustain a clean and safe environment. The company has managed to create a clean, safe, and healthy environment by encouraging its workers to consult the health workers regularly.

The company’s board of committees is divided into four main categories; the Auditing and Risk analysis, the Compensation and Nomination, the Independent Board and the Health, Safety, and Environmental Committees (Backhouse and Wickham 2017). All committee members review issues affecting the company for the board’s sake. The graph below shows the composition of board members of both genders.

An excellent executive composition would mean better sustainability of the company.

The company elaborates its policies. They also outline that any breach of their systems is punishable, but they do not give a detailed explanation of how much action they take on any breach of contract. Even then, we assume that the company would take a severe legal step on anyone or any organization that breaks their policies.

The company designs, develops, manufactures, markets, distributes, and sells building and construction materials (Henderson et.al 2015). Brickworks Company has a very medium impact on the environment as compared to the Boral Company because it emits a secondary volume of GHG emissions. The company also extracts raw materials through mining thus leaving open holes on the ground which would be filled with water when it rains. These holes could lead to the spread of waterborne diseases as well as the spread of malaria when it floods because mosquitos survive well in flooded areas. Some of the most significant sustainability issues the company faces are the challenge to eradicate the emission of gases to maintain the environmental sustainability. Another problem that the company faces is the challenge to minimize the amount of energy they use in production and recycling of water and raw materials to maintain the economic sustainability of the company.

The board members are divided into the Auditing and Risk Committee, the nomination committee, the Compensation Committee, and the Independent Board Committee. Over the past two years, the STI and the LTI of the Managing Director and the CFO have changed considerably. The table below shows that composition of the managing director’s percentage change in STI and LTI.

The TSR value is measured alongside the TSR. The executive interests which are in line with the shareholders are enhanced. The company’s alignment of the outcome with the financial performance has encouraged the culture of the organization to be developed and maintained (Datta, Gopalakrishna-Remani and Bozan 2015). The culture of the organization is featured in the endeavor of the cooperative and mutual respect which has impacted some of the company’s performance.

The total payment of the executive members and the MD consist of both the STI and the LTI. The graph below shows the comparison of the percentages of the fixed remuneration, the STI, and the LTI between the executive members and the managing director.

The company does not make their violations of policies public, and so the share price has not reacted to any violations of systems. When the company makes some of the breaches of their laws and regulations public, they do not give a clear indication as to what happened, and so the share price cannot react (Henderson et.al 2015). There has been no evidence of share price responding to the company’s publicized breaches of the law.

Comparison of Boral limited Company and Brickworks limited Company

The differences between the two companies on their environmental sustainability was determined by the difference between their emissions of carbon IV oxide. It is clear from our analysis that the Boral limited company emitted more carbon dioxide into the air than the Brickworks limited company. The GHG values in 2017 for the Boral company was 2.01 million tons of carbon dioxide while the GHG value for the Brickworks Company for the same year was 0.364228 million tons of carbon dioxide (Damert, Paul and Baumgartner 2017). The contrast between the GHG values of the two companies shows that the Brickworks limited Company has higher environmental sustainability than the Boral limited company.

The social sustainability of the two companies will be determined by the different rate of health and safety records. It is evident from the report that the Brickworks limited Company has a lower history of health and safety measures (Ukwatta et.al 2018). This is determined by the companies’ LTIFR, MRIFR, and TRFR (PLN 2015). It is clear that the health risks of the Brickworks limited Company are higher than that of the Boral limited Company.

The Medically Treated Injured Frequency Rates were also prominent figures in determining the health and safety of the workers of the two companies (Webb and Burton 2017). It was evident that the MTIFR of the Brickworks limited Company was higher than that of the Boral Limited Company indicating that Boral’s health and safety sustainability is higher than that of Brickworks Limited Company (Kiron et.al  2017). The graph below shows the comparison of Boral limited company and the Brickworks Company in the values of their MTIFR, LTIFR, and TRFR during the year 2016

We have discovered that both companies have almost the same board representations. Each year, the average board members are about eight, four from each gender, but executive managers and board members are higher in the Brickworks Company than in Boral Company (Ukwatta et.al2018).

The remuneration of the executive management

The executive’s salary was determined by the companies’ payment to the executive using the FAR (Fixed annual Remuneration), STI (Long-Term Incentives), and LTI (Long-term Incentives).

The tables above compares the Boral’s remuneration and the Brickworks’ target remuneration for the year 2017. Brickwork’s remuneration shows that the company paid a higher Fixed Annual Remuneration than the LTI’s and the STI’s to its executive members and the managing directors (Wilson 2015). The Boral Company, on the other hand, paid its managing directors a relatively equal FAR, STI, and LTI amount. The company spent the other executive members a higher FAR which was about 50% of their total remuneration and a relatively equal STI and LTI amount.

We have discovered that the Boral Company is more transparent on its breach of policies than the Brickworks Company. We have also realized that the Brickworks Company is involved in more business activities than Boral Company (Rao and Sudhakar 2017).

Conclusion

From the result of my analysis, I would recommend that the Brickworks Company has higher sustainability than the Boral’s for various reasons. First, the GHG emissions in the former are lower signifying higher environmental sustainability as compared to the later. I have also realized that the company has more durability on its governance than the Boral’s management. Though the company has lower social sustainability than that of the Boral’s, this is still negligible, and the company has opportunities for improving.

References

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Kiron, D., Unruh, G., Reeves, M., Kruschwitz, N., Rubel, H. and ZumFelde, A.M., 2017. Corporate Sustainability at a Crossroads. MIT Sloan Management Review, 58(4).

Kumarasiri, J. and Jubb, C., 2017. FRAMING OF CLIMATE CHANGE IMPACTS AND USE OF MANAGEMENT ACCOUNTING PRACTICES. Asian Academy of Management Journal of Accounting & Finance, 13(2).

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Ukwatta, A., Mohajerani, A., Setunge, S. and Eshtiaghi, N., 2018. A study of gas emissions during the firing process from bricks incorporating biosolids. Waste Management.

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Wilson, J.P., 2015. The triple bottom line: Undertaking an economic, social, and environmental retail sustainability strategy. International Journal of Retail & Distribution Management, 43(4/5), pp.432-447.