Question 1 (20 marks): Corporate sustainability is a new and evolving alternative to the traditional growth and profit maximisation model. Under corporate sustainability, corporate growth and...

CORPORATE SUSTAINABILITY
Table of Contents
Q1.    3
Q2.    4
Q3.    5
(a) Calculation of Ratios    5
(b) Performance of Tardic Plc    5
Q4.    6
(a) Background    6
(b) Analysis of the Company’s Industry and Competitors    6
(c) Key Financial Results    6
(d) Key Ratios    8
(e) Recommendations    9
References    10
Q1.
Corporate Sustainability refers to the organisational growth and profit without harming the environment or the society. It is an approach wherein every organisation should focus on its business growth and profitability taking into consideration the ethical, societal, economic, cultural needs of the business. According to Khan, Serafeim and Yoon (2016), many people get confused corporate sustainability with corporate social responsibility (CSR) but there is a significant difference between both the concepts. Corporate Social Responsibility is one of the pillars of Corporate Sustainability. Corporate Sustainability practices help the environment in a better way and leads to enhancement of the brand image of the company. It also helps in the improved productivity and thereby reduces the costs of the company. It is concept adopted by the organisation to maximise profits.
An analysis have been conducted on the financial performance of Neste Corporation Finland Petroleum Refineries, which has been rewarded as the top companies around the world for reduction in carbon waster and for the promotion of corporate sustainability. Neste Corporations is engaged in the business of production of renewable fuels and marketing of these fuels. It produces renewable fuels from wastes and residues and it is one of the largest jet fuel producer in the world. Looking at the financials of the company its operating profit have increased by more than 125% in 2019 from 1,022 million euro in 2018 to 2,229 million euro in 2019.
The company’s return on average capital employed has increased from 21.1% in 2018 to 26.6% in 2019. Overall it may be said that the financial performance of the company is quite impressing as it profitability, returns have increased considerably in 2019. Further, not only the financial performance but also its financial position has improved drastically. The company’s leverage ratio has decreased from -1.5 to -3.3 i.e. a decrease of 116% in 2019. Its Equity to asset ratio has increased from 56.4 to 60.8 in 2019, which is the main reason behind this surge in its financial performance and strong financial position of the company (Neste, 2020).
The company promotes sustainability. It has taken a pledge to reduce carbon footprints by 20 million ton for its customer, annually by 2030. The targets are way ahead of the targets set up by European Union Climate target. The company has set up a plan to make the planet healthier and safer. For this, the company is promoting the use of renewable resources. The company produces renewable diesels, renewable jet fuels and all these too from wastes and residues. In order to strengthen the company’s business, they have entered into chemical and polymer business wherein the company promotes use of sustainable chemicals.
The company has identified the importance of sustainability in its business. The consumers around the world try to become environment friendly and to use products, which does not cause pollutions. In addition, the Neste has turned this concern into opportunity. That is the main reason behind huge surge in its profitability and the financial position. The company manufactures is products from waste and residues, so it has negligible raw material costs. These low quality raw materials are being used to manufacture different high quality renewable products. Therefore, multiple high quality environmental products are being sold at high prices. Further, mandate of various countries like USA, UK and others lead to increase use of environmental friendly products.
With this moto, the company has helped to reduce the customers of the company has reduced greenhouse emission by 9.6 Mt in 2019 from 7.9 in 2018 and 8.3 Mt. in 2017. Further, it also provides motivation to its employees as 41% of its employees joined the company just to promote sustainability.
Q2.
As per AASB 101, Financial Statements are the delegation of the financial performance and the financial results of an entity. As noted by Engert, Rauter and Baumgartner (2016), financial Statements provide the users with the valuable results about the company’s financial position and financial reports. The main objective of the financial statements is to bestow all the necessary information regarding the assets of an entity, liabilities,...