Assessing The Sustainability Of Timberwell Constructions
Climate change and its risks for Timberwell Constructions
Timberwell Constructions, located in the Stanwell Council District, is a residential development company; it constructs apartment complexes within the area. The company, on average employs a total of 58 male employees within a variety of trades and professions in the construction industry. There is a rising demand for skilled employees within the market and as such Timberwell is faced with the challenge of sustaining skilled employment to maintain its competitiveness in the market. The following report aims to assess Timberwell Constructions’ sustainability in the context of economic, environmental and social sustainability guided by the Consolidated Set of GRI Sustainability Reporting Standards 2016.
- Economic Sustainability
- Disclosure 201-2 Financial implications and other risks and opportunities due to climate change
Climate change presents various risks and opportunities to business; the risks can be classified as physical, regulatory or other (GSSB, 2016). Physical risks are those that manifest directly, for example, changes in temperature, sea-level, and health effects on workers among others. Regulatory risks include changes in legislation which should be adopted to address climate changes. Other risks may include, litigation, shareholder activism, market changes, changes in supply chains or customer bases among others (NCCARF, 2011). Essentially, the effects of climate change on a business are influenced by the nature of the business and the potential degree of exposure. In the construction sector, for example, rainfall changes and high temperatures are some of the climate change variables of concern. They could lead to delayed construction and reduced productivity which increases the cost of production (Whelton, 2011; Smith, 2013).
For Timberwell Constructions, rising temperatures due to climate change have led to an increased bushfire risk. The risk arises in a development site located within the Stanwell District; a proposed Local Environmental Plan (LEP) aims rezone this area into a bushfire prone region. While rising temperatures present a physical risk such as higher chances of bushfires, compliance with the requirements of the proposed LEP present regulatory risks which are expected cost Timberwell Constructions a total of $4 million in compliance costs. In order to fully comply with the regulatory requirements and attempt to minimise the financial implications, the company has also contracted an external town planning firm to aid in managing the application of the LEP proposals. The services offered by the firm are expected to cost $50,000.
- Disclosure 205-3 Confirmed incidents of corruption and actions taken
Corruption is a significant factor in any organisation as it is recognised as one of the factors reducing public trust (Hawrysz & Maj, 2017). Public trust is essential for legitimising business; it facilitates transactions, guarantees customer satisfaction and boosts employee morale and commitment (Pirson, et al., 2014). According to La Rocca, corruption or illegal activities within an organisation impede its development both in the short-term and long-term; the lack of trust significantly stifles growth opportunities (La Rocca, 2017). Under GRI standards corruption may include, bribery, extortion, fraud, money laundering, facilitation payments, and gifts, among other rewards or engagements for facilitating an illegal or dishonest act. The expected negative impacts include poverty, misallocation of funds, abuse of power and human rights among others (GSSB, 2016).
Corruption scandal uncovered in Timberwell Constructions
A complaint to the State Corruption Commission by a former employee resulted in the unearthing of a corruption scandal involving two Timberwell business partners and five employees. Bribes were offered to council project officers by the aforementioned persons in order to fast tract Timberwell’s development applications. The five employees and an external consultant were charged with corruption by the commission. Timberwell undertook special action by suspending the charged employees without pay pending prosecutions and terminating its partnership with the external consultants. The aim is to preserve its public trust as an organisation which, as identified above, is a significant aspect in ensuring continued growth and development.
- Disclosure 206-1 Legal actions for anti-competitive behaviour, anti-trust, and monopoly practices
According to the OECD Guidelines for Multinational Enterprises (2008), completion among enterprises should be informed by relevant laws and regulations which prohibit anti-competitive behaviours like price fixing, rigging bids, market division and output restrictions among others. Competition has been identified as a mode of ensuring consumer well-being; it improves general performance of an industry and consequently a country’s economy and reduces the cost of commodities while encouraging quality production (OECD, 2011). However, there is the notable risk of rising oligopolies and monopolies through unfair competitive practices (Stucke, 2013).
During the reporting period, a complaint by a former employee led to the institution of proceedings by the Australian Competition and Consumer Commission (ACCC) against Timberwell Constructions. In the proceedings, the ACCC alleged that Timberwell had engaged in anti-competitive behaviour through misuse of market power and exclusive dealings. Essentially, ACCC avers that Timberwell threatened to terminate supplier and contractor contracts if they engaged with a new rival development company. According to the allegations, Timberwell’s aim was to monopolise the Stanwell district market or reduce competition in the market which translates into anti-competitive behaviour. At the time of reporting, the case was scheduled for hearing before the Federal Court of Australia in four months.
- Environmental Sustainability
- Disclosure 302-1 Energy consumption within the organisation
The achievement of sustainable development is highly dependent on energy consumption policies and practices; unsustainable practices facilitate environmental deterioration which included use and misuse of non-renewable resources and over-exploitation of renewable sources (Brohmann, et al., 2009). A viable balance should be stuck to ensure environmental efficiency in a corporation.
During the reporting period, guided by calculation tools provided by the Australian Department of Industry and Science, Timberwell released data highlighting its energy consumption. The total fuel consumption from non-renewable resources amounted to 1.0gigajoules; that is 1billion joules. Fuel consumption from renewable sources, on the other hand, amounted to 0.5 Gigajoules; that is 500 million joules. Timberwell Constructions also relied on electricity consumption for its operations reported as2.0 Gigajoules; that is 2 billion joules. Based on the provided information, the total energy consumed within the organisation for the reporting period is (1+0.5+2) 3.5 billion joules. In order to improve its energy efficiency, Timberwell has committed to increasing its use of renewable resources with a target of 50 per cent of its total fuel consumption in the next three years.
- Disclosure 304-2 Significant impacts of activities, products, and services on biodiversity
Reported anti-competitive behavior of Timberwell Constructions
Biodiversity includes the various life forms in form of plant and animal life from mammals to microorganisms within the environment. Over the years, there has been a conscious shift to addressing environmental threats and biodiversity conservation on an international level (Kulkarni, 2012). Within the corporate social responsibility agenda, the protection of biodiversity has been limited; however, guidelines like the GRI standards provide a measure for monitoring biodiversity impact (Overbeek, et al., 2013). Companies whose activities impact biodiversity can utilize these standards to measure their impact and develop strategies to reduce it.
During the reporting period, and Environmental Impact Assessment test was conducted at Otford Park, one of Timberwell Construction’s development sites. According to the report, 60 per cent of the site served as a habitat for the wallum sedge frog, a rare species. It was reported that the residential development which the company aimed to undertake on the site posed a negative impact as it would amount to irreversible damage on the frog’s habitat consequently hindering its survival. As a result, Timberwell has committed to working with the Stanwell Council and local environmental groups to formulate a strategy that would mitigate the negative effects of development on the site so as to conserve the frog’s habitat.
- Disclosure 307-1Non-compliance with environmental laws and regulations
A complaint filed by a former employee during the reporting period led to an investigation against Timberwell Constructions by the Department of the Environment and Energy. The investigation unearthed that Timberwell had undermined environmental laws and regulations by clearing 0.45 hectares of a region that had been recognised under the State Planning Scheme to contain important plant and animal life. Clearing severely endangered ecological community coastal grasslands amounted to a fine of $200,000. In addition to this, Timberwell is also expected to review its vegetation management plan, expand its contractor audit program and execute a rehabilitation plan bound to cost a minimum of $440,000.
- Social Sustainability
- Disclosure 401-1 New employee hires and employee turnover
With the increasingly competitive business environment, the retention of skilled employees has become a primary concern for management as these determine the success and competitiveness of an organisation in the business environment (Goud, 2013). Essentially, high turnover rates limit the sustainability of individual organisations as well as the overall contribution of the industry to social development (Brereton, et al., 2003).
During the reporting period, Timberwell Constructions is estimated to have employed a total of 58 male employees aged between 30 and 50 years. At the time of reporting, Timberwell has only one employee above the age of 50 who later resigned. In the reporting period, Timberwell employed a total of 12 new apprentices to substitute the loss of 17 employees who left to establish their own organisations or work for rival companies. The employee turnover rate for the reporting period amounted to 30.6 per cent (17/55 x 100). In order to improve its turnover rates and sustain the current employee number, Timberwell Constructions has committed to increasing pay rates as well as rolling out a monthly scheduled day-off as an incentive.
- Disclosure 406-1 Incidents of discrimination and corrective actions taken
Timberwell’s energy consumption and efficiency practices
In order to facilitate decent working environments that indoctrinate human dignity, the International Labour Organization adopts four pillars to guide in developing ‘decent work’ policies. Key among these are rights at work which include the elimination of discrimination in employment (Frey & MacNaughton, 2016). Discrimination can be on grounds of age, gender, religion and disability among other characteristics. In Australia, the Equal Opportunity Act 2010 provides guidelines as to non-discrimination in the workplace context among others. The Age Discrimination Act 2004 (Cth) prohibits discrimination specifically on grounds of age.
During the reporting period, one incident of discrimination was reported. An employee, who has since resigned from the organisation, filed a complaint with the Fair Work Commission citing workplace harassment on the ground of age. At their time of employment, the employee had been the only worker above the age of 50 and as such was the subject of age-related jokes from other co-workers. Following the complaint, the company was instructed to compensate the employee $4,000 in damages. Additionally, Timberwell Constructions was ordered to review and update its anti-discrimination policy and subject all employees to anti-discrimination training. The organisation has since complied with the required orders and the incident is no longer a subject to action.
- Disclosure 413-1 Operations with local community engagement, impact assessments, and, development programs
During the reporting period, as aforementioned, Timberwell Constructions undertook an Environmental Impact Assessment test on its Otford development site which led to the discovery of the wallum sedge frog habitat. There are ongoing discussions to develop an environmentally friendly strategy that would ensure development is conscious of the preservation of the habitat. Additionally, the organisation has committed to engaging local communities, performing impact assessments and facilitating social development programs at its proposed residential development areas. Timberwell Constructions engages locals through meetings and community development programmes to address the need for affordable social housing. It also conducts Environmental Impact Assessments to identify how its developments affect the local community and its activities.
Conclusion
The report above has highlighted Timberwell Constructions’ sustainability status within the context of economic, environmental and social sustainability. Economically, Timberwell faces risks arising from climate changes in the form of bushfires and has undertaken measures to manage potential risk and comply with regulatory risks arising from the LEP proposed to tackle bushfires in the region. The organisation has also encountered a corruption case and anti-competitive behaviour charge. In the environmental context, Timberwell has committed to energy efficiency by adopting a strategy to boost its use of renewable resources as opposed to non-renewable resources in its operations. Additionally, it has committed to biodiversity protection in one of its development sites where a wallum sedge frog habitat was discovered. Despite these commitments, during the reporting period, Timberwell defied local regulations by clearing 0.45 hectares of an endangered ecological community. It was fined and ordered to implement a rehabilitation program as well as review its vegetation management plan and expand its contractor audit program. Finally, within the social context, Timberwell reported a 30.6 per cent employee turnover rate. In order to reduce this rate, the organisation has increased employee pay and established a scheduled day off roster. During the reporting period, Timberwell was also charged with age-discrimination against one of its employees. This resulted in an order for compensation as well as a requirement for an update of anti-discrimination policy and employee training on anti-discrimination. Timberwell has also committed to facilitating development programs within the community in line with community needs for affordable housing.
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