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Sustainability Assignment: Case Analysis of McGruder

Question

Task: You must prepare a sustainability assessment report in this sustainability assignment for McGruder Industries referring to the Consolidated Set of GRI Sustainability Reporting Standards 2016 that specifically addresses:

A. Economic sustainability
i) Disclosure 201-4 Financial assistance received from the government
ii) Disclosure 203-1 Infrastructure Investments and services supported
iii) Disclosure 204-1 Proportion of spending on local suppliers

B. Environmental sustainability
i) Disclosure 301-1 Materials used by weight or volume
ii) Disclosure 301-2 Recycled input materials used
iii) Disclosure 306-3 Significant spills

C. Social sustainability
i) Disclosure 408-1 Operations and suppliers at significant risk for incidents of child labour
ii) Disclosure 412-2 Employee training on human rights policies or procedures
iii) Disclosure 417-3 Incidents of non-compliance concerning marketing communications

Answer

Introduction
Sustainability practices in an organisation help in maintaining the scale of the competitive edge of its business at all levels. The main aspects related to sustainability practices have been identified as choosing non-toxic materials, positively regulating environmental elements, reusing and reducing resources, minimising the amount of waste, and using life-cycle cost analyses. There are some core principles related to sustainable business operations, which are based on three major pillars that are Economy, Environment, and Society. This study aims to represent a report on the effectiveness of McGruder Industries in Australia in maintaining sustainability practices. In accordance with the acknowledgement that is received from the CEO of the organisation, this report can be produced by emphasising the stress on relative CSR disclosures undertaken by the organisation. In this case, the appropriate utilisation of those disclosures, their impacts on the company and its sustainable pillars, and the respective remedies can also be determined through this report.

Economic Sustainability
McGruder Industries has faced a major issue after terminating the supply contract with Fabian Ltd in order to protest against the use of child labour for producing raw materials. After the investigation has been taken into account by the media, the company has found that Fabian Ltd is using child labour without any acknowledgement of McGruder Industries. This has led Fabian Ltd to breach the supply laws of McGruder Industries. However, according to the Disclosure 204-1, which states the “Proportion of spending on local suppliers”; it has been found that the organisation has established a deal related to supply with a local supplier. The deal was done within the procurement budget of the company (Miqdadet al., 2020). With the help of this, it has been seen that the organisation has become able to increase the volume of customers’ purchases in the local market by 75%. This has helped McGruder Industries to bring in a higher degree of economic success, which also supports the business environment of the local market.

Economic sustainability encompasses those business practices that support and enable economic growth in the long run. An economically sustainable organisation does not impose any negative effect on the environment, culture, and society, and relative aspects relevant to the community (Argentoet al., 2019). Henceforth, it can be stated that McGruder Industries may have the need to establish a social link by increasing the volume of sales of products and/ or services in the local market. With the help of this, it can be seen that the respective organisation may have facilitated the economic structure of the local operating market as well. In this case, the organisation may have the need to establish trade relationships with local marketers for accumulating resources and raw materials. With the help of this, the profit margin of McGruder Industries may be able to bring in equal distribution of economic elements within the entire market. This is because dealing with existing marketers in the local market may have led the organisation in contributing to the local or national economy indirectly (Miqdadet al., 2020). Through which, a shared economic growth can be achieved by the organisation and its related suppliers, which helps to bring in economic sustainability at all levels of the organisation.

On the other hand, the increased rate of investment of McGruder Industries in Research and Development programmes has helped the company in creating supportive services for its customers in the local market according to the Disclosure 203-1 that is “Infrastructure Investments and services supported”. In response to this, it has also been found that raw materials from the new local supplier are both recyclable and renewable, which leads to bringing in the cost-cutting approach into the organisation (Anugerahet al., 2020). Because of this, the organisation has become able to reduce the total weight of non-renewable raw materials up to 55 tonnes, while the company has increased the total weight of renewable materials for up to 45 tonnes. Apart from that, the total weight for recyclable raw materials for the company has been increased up to 25 tonnes. In addition to this, the Disclosure 201-4, which says “Financial assistance received from the government”has led the federal government to provide the company with an incentive of $15 million in order to invest in the Research and Development Programme. This may have been leading the company to continue with innovative business operations with the assistance of the organisational breakthrough research in the field of biotechnology (Acinet al., 2020).

Environmental Sustainability
Environmental sustainability can be considered as a multi-disciplinary approach of an organisation, which leads the organisation in imposing positive impact on the respective business and its operations on the natural environment (Tiwari and Khan, 2020). In this context, McGruder Industries may have the need to maintain the use of recyclable and renewable raw materials, reducing the scale of waste, maintaining environmental safety, decreasing the rate of greenhouse gas emissions, and maintaining weights of materials on the earth. Serious explosions, breakages, and spills may have affected the natural environment as McGruder Industries is a biotechnology-based organisation. In accordance with the “Disclosure 301-2 Recycled input materials used” in McGruder Industries, it can be seen that the organisation has increased the rate of the accumulated recyclable raw materials by 25 tonnes along with 45 tonnes of renewable raw materials (Tiwari and Khan, 2020). Apart from that, the organisation has become able to reduce the rate of non-renewable raw materials by 55 tonnes after starting the deal with a local supplier. With the help of this, the organisation has become capable of reducing the volume of waste on the earth for maintaining environmental wellness.

By taking into consideration the “Disclosure 301-1 Materials used by weight or volume”, it can be stated that the organisation is not able to maintain its effectiveness in reducing the volume and weight of resources that are required for its production. This may have created severe issues in the natural environment by creating pressure on the ground base of the company (Ordonez-Ponce and Khare, 2020). On the other hand, McGruder Industries has faced a certain amount of loss due to the spill of a fuel tank in Flintoff, which is one of the most serious sustainability issues and is related to a specific point of damage to the natural environment. This is because almost a total of 8 kilolitres of fuel broke out from the rupture in one fuel tank and that came out into the soil across the base. The spill was soaked directly within the ground and in response to which, the organisation has sprayed liquid hydrocarbon-eating bacteria in the affected area in order to remediate the ground. This is a breach of the “Disclosure 306-3 Significant spills''. In relation to this, it can be stated that the organisation has faced in maintaining the Disclosure 306-3 because of the spill of its fuel tank in its base (Michalczuk and Konarzewska, 2018). It is therefore understood that the organisation is at the urge of improving its supervision on its base in order to prevent any type of accidents in the workplace that can hamper the local and environmental aspects. However, it is determined that the organisation is efficient in undertaking remedial actions with quick decision-making ability. With the help of this, McGruder industries have skillfully handled the issue and reduced the amount of damage to the soil taken place because of the spill.

Social Sustainability
Social sustainability practices, on the other hand, take into account emphasising good vibes and positive impacts of business operations on the relative community and society. In this context, the concerned organisation may have the need to focus on its social actions that are undertaken for maintaining the wellness of the relative society (Fedorovaet al., 2019). Henceforth, it can be opined that McGruder Industries may be able to bring in socially sustainable practices if the organisation is capable of creating a proactive process of identifying as well as managing the effects of its business operations on its workers, employees in the value chain, consumers, suppliers, and the local community. It is, therefore, necessary for the company to have a certain range of social sustainability recognition, which significantly relationships with customers, employees, society, and the community.

McGruder Industries has set out its own and supply policies in such a way so that there is no use of child labour in producing raw materials or final products. However, a media investigation has identified that its supplier Fabian Ltd has been using child labour in producing raw materials. In response to this, McGruder Industries has followed the “Disclosure 408-1 Operations and suppliers at significant risk for incidents of child labour” and has terminated the supply-based contract with Fabian Ltd. Through which, the organisation has depicted its responsiveness towards the wellness of the relative society (Fedorovaet al., 2020).

In accordance with the social approach of McGruder Industries, it has been determined that the organisation has largely been focusing on facilitating the relative local community. With the help of this, the organisation is investing in social welfare in order to make sure that people under ignorance might get the opportunity to live their lives in line with the community standards (Hess, 2019). Such a generous approach of the company has reflected the enhanced social sustainability of the company. In response to this, it has been seen that McGruder Industries has completed a project health and welfare centre in Esperance in Western Australia; which is worth $10 million. This centre might have provided much more required support, which is completely free of charge to those families who are coping with a vast range of social issues. This can be termed as an extremely impactful and worthy initiative of the company, which has helped McGruder Industries in demonstrating the clear commitment of the organisation towards the society. Henceforth, it can be stated that the organisation is largely emphasising the stress on the social well-being of people who are comparatively less fortunate as compared to the standards of the community.

In addition to this, McGruder Industries has initiated an integrated training programme for employees with respect to human rights in the current year, which has already accomplished a training programme of 100 hours. This has helped the organisation in following up the “Disclosure 412-2 Employee training on human rights policies or procedures” through this training session (Cohen et al., 2019). Through which, the organisation has become able to acknowledge its employees about the core aspects related to human rights, which are largely relevant to business operations of McGruder Industries. In this context, it has been observed that 35% of the total base of employees within the organisation was provided with training on principles related to human rights. With the help of this, the respective employees may have become able to understand values ranging from human dignity to respect and gender equality at the workplace.

The Australian Competition and Consumer Commission (ACCC) investigated that McGruder Industries has breached marketing communication policies by misleading as well as falsifying the marketing communication. Because of this, the organisation has been penalised with an amount of $12600. After paying the fine amount, with regards to the “Disclosure 417-3 Incidents of non-compliance concerning marketing communications”, the organisation has restructured its marketing communication policies. These policies have been updated by the company in order to make sure that legal compliance in relation to the Australian Consumer Law can be maintained in the future (Miqdadet al., 2020).

Conclusion
At the end of this study, it can be stated that McGruder Industries was breached by one of its suppliers that is Fabian Ltd, as they were using child labours for producing raw materials without any acknowledgement of McGruder Industries. The company has protested them by terminating the contract of supplies, which has also affected the production of the organisation. However, the company succeeded in social practices by establishing a deal with a local supplier. On the other hand, financial issues also took place as the company came to the urge of paying a fine of $12600 due to misleading marketing policies by falsifying the marketing communication. The major environmental issue occurred because of the breakage of the fuel tank in Flintoff, for which the company sprayed liquid hydrocarbon-eating bacteria. In order to maintain the social well being, it is seen that the company completed a health and welfare project that is worth $10 million. Along with that, the organisation has invested in providing an integrated 100 hours of a training programme to employees for maintaining faqs related to sustainability practices.?

References
Acin, V.M.P., Sorsa, K. and Varis, K., 2020. Chapter Nine Sustainability in Supply Chains: Assessment Based on CSR Reports, Management Practices and Indicators in Leading Finnish Industrial Companies.

Responsible Business Professionals: A Strategic Perspective of the Global Challenges, p.171.

Anugerah, E.G., Miqdad, M., Sulistiyo, A.B.S.B. and Wardhaningrum, O.A., 2020.An assessment of faculty sustainability reporting guideline (FRSP).International Journal of Research in Business and Social Science (2147-4478), 9(1), pp.94-105.

Argento, D., Grossi, G., Persson, K. and Vingren, T., 2019. Sustainability disclosures of hybrid organisations: Swedish state-owned enterprises. Meditari Accountancy Research.

Cohen, E., Maurer, I., Mariappanadar, S. and Müller-Camen, M., 2019.Sustainability reporting and sustainable HRM.Sustainable Human Resource Management: Strategies, Practices and Challenges, p.245.

Fedorova, E., Aaltonen, K. and Pongrácz, E., 2020. Social Sustainability Dilemma: Escape or Communicate? Managing Social Risks Upstream of the Bioenergy Supply Chain.Resources, 9(1), p.7.

Hess, D., 2019. The Transparency Trap: Non?Financial Disclosure and the Responsibility of Business to Respect Human Rights. American Business Law Journal, 56(1), pp.5-53.

Michalczuk, G. and Konarzewska, U., 2018. The use of GRI standards in reporting on actions being taken by companies for sustainable development.Optimum.Economic Studies, (4 (94)), pp.72-86.

Miqdad, M., Anugerah, E.G., Sulistiyo, A.B. and Wardhaningrum, O.A., 2020. An assessment of faculty sustainability reporting guideline (FRSP): Indonesia's sustainable development goals for higher education. International Journal of Research in Business and Social Science, 9(1), pp.94-105.

Miqdad, M., Anugerah, E.G., Sulistiyo, A.B. and Wardhaningrum, O.A., 2020. An assessment of faculty sustainability reporting guideline (FRSP): Indonesia's sustainable development goals for higher education. International Journal of Research in Business and Social Science, 9(1), pp.94-105.

Ordonez-Ponce, E. and Khare, A., 2020. GRI 300 as a measurement tool for the United Nations sustainable development goals: assessing the impact of car makers on sustainability. Journal of Environmental Planning and Management, pp.1-29.

Tiwari, K. and Khan, M.S., 2020. Sustainability accounting and reporting in the Industry 4.0.Journal of Cleaner Production, p.120783.

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