GRI Sustainability & Risk Assessment Report for Tactical Group

Question

Task

Your assignment consists of two parts:

• Part A: You are required to identify the risks stated in the CEO’s letter and classify these identified risks into the four categories.
• Part B: You are required to prepare a sustainability assessment report for Tactical Group. You are required to watch the following YouTube clips:

1. The GRI Sustainability Reporting Standards: The Future of Reporting https://www.youtube.com/watch?v=AGqE4OO0_7g&t=3s
2. Introducing the GRI Standards: https://www.youtube.com/watch?v=RDe8Kkh1BrU&t=2s
3. How to use a Risk assessment matrix: https://www.youtube.com/watch?v=-E-jfcoR2W0

You must also read the Message from David Partridge, the CEO of fictional company Tactical Group.

A Message from the CEO

Dear Employees,

I wish to personally thank you for your professionalism and continued dedication to Tactical Group.

Last year was certainly the most challenging year our company has faced in its proud history and I would like to take this opportunity to dispel some of the rumors circulating around some of the issues that arose.

Obviously, the most serious matter for Tactical Group was the media investigation into the ongoing use of child labour in North Korean manufacturing facilities. The investigation revealed that one of our suppliers, Fabian Ltd, engaged manufacturers in North Korea that employ child labour to produce their products. This situation was not known to us and was a clear breach of our supply contract with Fabian Ltd. We therefore terminated our contract with Fabian Ltd.

The good news is we were able to find a replacement supplier relatively quickly – a local supplier that operates within our own metropolitan area. This new local supplier means that our percentage of products and services purchased locally has risen to 75% of our total procurement budget. Plus, the materials from our new supplier are both renewable and recyclable which means our total weight for non-renewable materials has decreased to 50 tonnes while our total weight for renewable materials has increased to 40 tonnes. And our total weight for recycled input materials has increased to 30 tonnes.

The second serious issue faced by Tactical Group this year was the Australian Competition and Consumer Commission (ACCC) investigation into our recent marketing communications. The investigation found that Tactical Industry Group had engaged in false and misleading conduct and issued an Infringement Notice with a penalty of $126,000. Tactical Group paid the fine and updated our marketing policies to ensure future compliance with all Australian Consumer Law provisions.

The third serious issue was a significant fuel spill at our warehouse in Horsham, Victoria. Approximately 15 kilolitres of fuel spilled from a rupture in one of the fuel tanks into the soil around its base. The spill soaked directly into the ground and we have sprayed the affected area with liquid hydrocarbon-eating bacteria to remediate the soil. It has certainly been a challenging year for us but we all must remember there have been some great wins too. The Federal Government awarded our organisation with a $20 million research and development grant that we will use to continue our breakthrough research into biotechnology.

This was also the year we completed our $10 million health and welfare centre project in Kalgoorlie, Western Australia. This centre will provide much needed support to families coping with a range of social issues completely free of charge. It is an extremely worthy initiative and demonstrates our clear commitment to the social well-being of those that are less fortunate in our community.

Finally, our employee training program on human rights was launched this year and has already completed 350 hours of training on aspects of human rights that are relevant to our operations. This means that 60% of our employees have been trained in human rights principles ranging from gender equality to human dignity and respect.

With your continued hard work and support I am extremely confident that Tactical Group can build further upon our success in the coming year.

Kind regards,

David Partridge

CEO Tactical Group

Answer

Introduction
The report presents a risk assessment of Tactical Group which is one of the manufacturing units that operate in the Australian Region. The company has faced a challenging history in the past year but the Tactical Group has been successful in coping with issues while also incorporating sustainable practices.

The purpose of the report is to research concepts on economic, environmental, and social sustainability thereby using GRI standards for preparing a report on Tactical Group. The report will also aim in detecting risks of the firm and measures taken for mitigating them.

Part A- Risk Assessment

1. Identification and Mitigation of risks
   

   The first risk identified is social risks where media investigation revealed employment of child labour on one of the factories of Fabian Ltd in North Korea. Fabián Ltd is one prominent supplier of the firm; hence this social risk might directly the brand image and investors' confidence. The manager’s undertook immediate actions thereby replacing overseas suppliers with local ones that follow industry standards and labour laws.

   The second risk relates to the economic in which ACCC investigation in marketing strategies of the firm revealed false and misleading conduct followed by the Tactical Group. The company was fined $126, 000 for the offense while the managers updated the marketing and promotion strategies complying with Australian Consumer Law provisions.

   The third risk was associated with the environmental factors as fuel spill was reported by staffs and supervisors in Horsham (Victoria) warehouse. It was reported that approximately 15-kilo liters of fuel were spilled from the rupture and was observed by the base soil. However, the managers of the company had sprayed liquid hydrocarbon eating bacteria (for remediating the soil) on the areas covered by fuel spill.

2. Classifying and Justifying four major categories of risks
   

   Avoidance: That relates to the seriousness of the risks that should be avoided for reducing the opportunities of losses (Doma?ski et al 2016, p. 230).

Addressing social practices and environmental issues is immediate hence it should be avoided. Thus, verification of the supplier’s practices (Fabian Ltd) should have been done at the time when contracts were being formed. Also, the contracts should have conditions like a penalty if the suppliers are violating the terms of contracts and legal aids. The fear of heavy penalties and legal actions would encourage the suppliers in practicing ethically thus avoiding social risks.

The fuel spill in the warehouse indicates that warehouse management was weak due to which storage was inadequately done. It could be avoided by applying efficient technological tools and strict supervision in the warehouse for reducing such disasters

Reduction: Some risks cannot be avoided but reduced like socials risk(Sadgrove2016, chap 1). It is often observed that suppliers often conduct misleading practices when the manufacturing units are based overseas. Hence, Tactical Group can ensure that its suppliers work in an ethical and legal environment by replacing its procurement activities with local ones thus, frequent verifications can be conducted and risks can be reduced. Also, the marketing and promotional strategies should have been updated by the managers for avoiding penalties of $126, 000 by Australian Competition and Consumer Commissions (ACCC).

Transferring the Risk: Tactical group can transfer the risks to its economical risks by hiring a legal organization for updating its marketing and promotion policies. It can also transfer the risks of damage like fuel spills by purchasing insurance policies to combat the risks if fuel spills or other incidents occur.

Monitoring: The risks can be reduced by placing measures for monitoring that measures are effective in the operations of the firm (Doma?ski et al 2016, p. 230). Hence, the Tactical group should place appropriate tools for managing the storage of fuels for reducing risks related to spills. The managers and supervisors can give a random check on local suppliers for monitoring third party practices.

Part B- Sustainability Report of Tactical Group
Global Reporting Initiative (GRI) is an international non-profit organization that is based on network structure. It helps the companies for reporting their performance of economic, social, and environmental concerns. To prepare the Sustainability Report, GRI Standards will be followed that is foundations (101), general disclosures (102), and management approach (103). The GRI 100 series constitute 101, 102, and 103 that will be used for preparing reporting standards of Tactical Group (Berinde et al 2015, p.20).

Economic Sustainability
The economic sustainability practices of the organization support the long-term monetary growth without negative impacts on the social, environmental, and cultural contexts of the communities. In recent times, global growth and development are taking place which has improved the quality of life in many regions of the world. However, international trade and globalization have increased several economic issues like income inequalities, changes in technologies, financial crisis, and many others. For instance, the outspread of the pandemic has disrupted global supply chains thus impacting employment, incomes, and business regularities in many developing regions of the world (Blandin et al 2015, p. 27). The management approach for all business organizations should be to adopt strategies for coping with the challenges of global trade thereby protecting income losses for all.

In many regions of the world, the use of IoT and AI devices will increase income inequality as job opportunities will decline. The companies are heavily investing in technological tools like robotics, data analytics, IoT devices, AI-equipped machines to support decision making and improve profitability however this will have major impacts on the labour market that will further reduce household spending while also weakened the purchasing power of the individuals. The management approach should include the use of both technology and human for balancing the impacts of technological advancements on society.

The organizations undertake anti-competitive behaviours like cartels, boycotts that hinder the economic growth of the entire nation. Thus, the management approach will imply the use of healthy competitive strategies for promoting economic development for all.

Disclosures 201- 4 financial assistance received from the government: Tactical Groups has been awarded financial assistance of $20 million as a grant for research and development. The management approach will be using this grant for continuing the breakthrough in biotechnology research.

Disclosure 203-1 Infrastructure Investments and services supported: Tactical Group has invested in the infrastructure and services. Thus, overseas suppliers have been replaced with local suppliers in the metropolitan region of Australia. The management approach will be improving the use of recyclable and reused products of the firm. The company has expanded its social service infrastructure by completing a project of $10 million in Kalgoorlie that will provide health and welfare services for free to families that are facing several social issues. The management approach will be providing services to as many people as possible.

The company has implemented employee training programs on human rights that have already completed 350 hours indicating that 60% of the employee base has obtained insights on human rights, dignity, gender equality, and respect. The management approach will be training all employees on regular intervals on varied other aspects.

Disclosure 204-1 Proportion of spending on local suppliers: The replacement of locally purchased products has increased spending on locally procured materials up to 75%. The management approach should be increasing local spending while verifying the practices of these suppliers to avoid any social and other risks.

Environmental sustainability
In the past decades, development has paced up due to which environmental degradation has also increased. The commercial units have exploited all convectional resources which have not depleted the resource reserve for future generations but also increased environmental pollution. Increased landfills, acid rains, ozone layer depletion, climatic changes are some of the examples of environmental degradation on a global basis. The management approach should be using non- convectional resources like solar power, wind power for shifting energy consumption patterns. This approach will not save the earth but also help the firms in reducing costs. The management approach for the organization that is engaged in the manufacturing, mining, packaging, and production should be devising strategies to reduce combustions and emissions to maintain the air quality (Dente2013,chap 3). Many national and international regulations and frameworks have been established for monitoring the operations and practices of the manufacturing units. Thus, the management approach should be updating the organizational policies with environmental standards by the government and international frameworks.

Disclosure 301-1 Material used by weight or volume: Tactical groups have increased the use of renewable and recyclable products which will reduce the total weight of non-renewable resources to 50 tonnes. On the contrary, the weight for the renewable resource has been improved to 40 tonnes while that of recyclable materials has increased to 30 tonnes. The management approach should improve the weight of renewable and recyclable materials in the upcoming years.

Disclosure 301-2 Recycled input materials used: The use of recyclable materials has increased to 30 tonnes due to replacing its procurement activities from local suppliers. The management approach should be improving the use of recyclable inputs in the production and operational fronts.

Disclosure 306-3 Significant spills: The warehouse located at Horsham (Victoria) faced the issues of fuel spilling from the fuel tanks to the soil base. The management approach should be to devise strategies for strict monitoring, supervising, and applying tools for storing fuels to reduce risks of such damages to the environment.

Social Sustainability
Social sustainability refers to the practices of improving disadvantages in the communities and economy as a whole. The social sustainable factors should be included in management styles and organizational culture for improving gaps that impact employee morale while also shaping the community perceptions. The organizations should use strategies for reducing attrition rate, discrimination, and gender pay inequality within the organizational culture. As a social responsibility, the company HR and other managers should policies that relate to compensation, working conditions, mediclaim, work-life balance, employee engagement, and others. The management approach should be updating policies and procedures to prompted employee satisfaction, growth, and turnover (Weingaertner & Moberg2014, p.122).

Social sustainability will also comprise programs and initiatives that will improve social disadvantages like access to education, medical facilities, safe drinking water, employment opportunities in remote areas, and others. The management approach should be planning social opportunities and forming collaborations to reap the identified opportunities for the betterment of the societies and community at large.

Disclosure 408-1 Operation and suppliers at significant risk for incidents of child labour: The media investigation revealed employment of child labour in manufacturing units of Fabian Ltd in North Korea. The management approach should be verifying the documents of the new suppliers while conducting random checks for monitoring the factories and operations of the third parties.

Disclosure 412-2 Employee training on human rights policies or procedures: Tactical Group launched employee training on human rights which has already completed 350 hours of training thus updating the knowledge of 60% of the workforce. The management approach should be imparting training to all staff while also including new topics of updating the knowledgebase and practices of the workforce.

Disclosure 417-3 Incidents of non-compliance concerning marketing communications:Tactical group was charged approximately $126000 for engaging in false and misleading conduct. The management approach should be updating the policies and seeking help from experts if new policies are to be incorporated.

Conclusion
Tactical Group has encountered social, economic, and environmental risks; however, appropriate measures were taken by the management in addressing them. GRI is referred to as an independent framework that is made of several modules that are referenced and utilized together. Tactical Groups faced major issues on social, environmental, and economic fronts thus, GRI Series 101, 102, and 103 was used to prepare sustainability reports of the firm.

Reference List
Berinde, M & Andreescu, NA 2015, ‘Reporting corporate social responsibility according to GRI standards’, The Annals of the University of Oradea. Economic Sciences, vol.24, pp.17-23.

Blandin, G, Verliefde, A., Tang, CY & Le-Clech, P 2015, ‘Opportunities to reach economic sustainability in forwarding osmosis–reverse osmosis hybrids for seawater desalination’, Desalination, vol.363, pp.26-36.

Dente, B 2013, ‘Environmental policy in search of new instruments (Vol. 3)’, Springer Science & Business Media, chap3

Weingaertner, C & Moberg, Å 2014,‘Exploring social sustainability: Learning from perspectives on urban development and companies and products’, Sustainable Development, vol. 22, no. 2, pp.122-133.

Doma?ski, J2016, ‘Risk categories and risk management processes in nonprofit organizations’, Foundations of Management, vol. 8 no. 1, pp.227-242.

Sadgrove, K 2016, ‘The complete guide to business risk management’, Abington, Routledge, Chap 1