Answer To: Assessment Type: Group Assignment - Report and Video Presentation. All members of the group will be...
Tanmoy answered on Sep 11 2021
Topic: Identify and apply theories and models in accounting to a current topical issue related to Rio Tinto
Student Name: Sudarshan
Executive Summary
Rio Tinto is the second largest mining company in Australia behind BHP. They are experts in production of iron ore, diamonds, aluminium, uranium and copper. It was founded under a transnational consortium in Spain by investors of mine complex in the year 1873. It is a company which is listed both on London Stock Exchange and Australian Stock Exchange. It also trades its American Depository Shares in the New York Stock Exchange. The mining and extraction of minerals and ores lead to various hazards like water scarcity, environmental pollution, social, economic and financial risks. To overcome these issues there is need to adhere to the ethical standards and sustainable developmental programs. This will encourage the corporate social responsibility which is the call of the day for every industries and companies operating in their respective communities. In this research we will analyse the annual report of Rio Tinto from 2015 to 2019 to determine the accounting models used by the organization to create corporate social responsibilities by implementation of sustainable development programs like water conservation, community investment, and employees’ health, reduction in green house gases and industrial effluents and carbon emission. We will also research on the achievements made in this regard by Rio Tinto till now and the penalties and fines imposed on them due to non-adherence to these norms.
Table of Content
Analysis…………………………………………………………………Pg 1 to 2
Sustainability Report 2019 Rio Tinto…………………………………...Pg 2 to 4
Impact on Rio Tinto Financial Statement……………………………….Pg 5 to 7
Findings – Fines and Penalties…………………………………………..Pg 7 to 8
Conclusion………………………………………………………………..Pg 8
References………………………………………………………………...Pg 9
Analysis
Rio Tinto is a mining company headquartered in Australia and various parts of the world. Rio Tinto operates in more than 36 countries with mines, smelters and refineries and also have their offices situated in different locations having modernized sales offices, data centers, research and developmental labs. Rio Tinto deals with extraction of various mineral resources like iron ore, copper, salt, aluminium, borates, titanium dioxide and diamonds. In the year 1990, Rio Tinto was able to deliver safe, fair and sustainable mining and metal industry through the sustainable development initiative conducted by the International Council of Mining and Metals (ICMM). In 2008, Rio Tinto was able to launch the world’s first driverless car fully automated, heavy haul rail network and for heavy duty – AutoHaul using the next generation automation technology. This world’s largest robot helped Rio Tinto to run their operations more smoothly, efficiently, with safety and minimized the cost of production. Also, there was clear evidence of Rio Tinto following ethics where it is observed that the company was able to publish a tax report in 2010 of taxes and royalties payment to the government mentioned in the report which also helped them to create trust and credibility. In the 2012 London Olympics, Rio Tinto supplied approximately 8 tonnes of gold, silver and copper for making 4700 medals. Their ethical, environmental friendly and sustainable practice is also reflected as been the founding member of Responsible Jeweller Council (RJC). In 2015, Rio Tinto signed a pack with the Paris government to support them in every possible ways to restrict the global temperature rise to less than 2°C. In 2016, Rio Tinto introduced the world’s first low carbon certified aluminium which contained less than 4 tonnes of carbon dioxide per tonne of aluminium known as ‘Renewal’. In 2018, Rio Tinto declared themselves as the first major mining organization to be free of fossil fuel production. Thus the accounting model used Social and Environmental Accounting or SEA. In this modelling the role of the accountant or the finance manager is to analyse the social and environmental responsibility and also conduct proper audit, verification of the social and environmental reports. Thus in terms of social and environmental accounting, it is the duty of the financial accountant to verify the assets and liabilities of the social and environmental features and publish report on the same as per the standards specified in the corporate social responsibility. (Medley, 1997; Igalens, 2006)
Sustainability report 2019
As per the latest sustainability report of Rio Tinto 2019, the ultimate aim of initiating the corporate social responsibility is to generate long term growth and earn sustainable profitability by investing in the development and modernization of the communities where it operates. The activities contribute to the social development as well as advancement and enhancing the economy of the community. Rio Tinto works as per the United Nations Sustainable Developmental goals and try to focus on water and climate changes, adherence to ethical standards and transparency, human rights and safety and security of the employees. The social and environmental accounting aims at providing transparency and increasing the delivery of corporate social responsibilities to the external stakeholders like the suppliers, government, potential investors, etc from whom the business has non-economic benefits. (O’Dwyer, 2006, p.220)
As per the latest 2019, sustainability report of Rio Tinto there has been a significant falls in the frequency rates of injury over the last 10 years by 48%. There was also a decrease in the rate of occupational illness in 2018 by 34%. In 2009 the all injury frequency rate was 0.81 declined to 0.42 in Rio Tinto per 200000 hours worked in the organization. This is a clear sign of Rio Tinto’s valuing their employees towards the safety and well being of their employees, workers and the daily...