crci assignment report

CRCI Coursework Assignment 201101

UNIVERSITI TUNKU ABDUL RAHMAN

FACULTY OF BUSINESS AND FINANCE

BACHELOR OF COMMERCE (HONS) ACCOUNTING

JANUARY 2011 TRIMESTER

YEAR 3 TRIMESTER 3

CORPORATE REPORTING AND CURRENT ISSUE

COURSEWORK ASSIGNMENT

Tutor: Puan Che Siti Lazrina binti MD Lazim

Submitted by:

Tutorial Group No.: Tutorial 4

Friday April 8, 2011 2pm

Group Members:

Total: 5589 words

Name Student ID No. Marks

1. Chan Yi Hui

08ABB04717

2.Chan Zuo-Yang 08ABB04556

3. Lee Hui Thing

08ABB04561

4. Lim Yng Xing

08ABB06578

5. Tan Huey Theng

08ABB04423

6. Wong Lixuan 08ABB04905


Assignment Mark Sheet

Part Questions Marks

a) Based on relevant literature, identify and discuss five (5)

possible environmental and social issues facing the

industry within which the organization is operating.

/15 marks

b) Identify four (4) stakeholders of the organization and

critically discuss the importance of its Environmental &

Social Report / Sustainability Report to its stakeholders.

/16 marks

c) Discuss thoroughly on the efforts, projects and programs

that has been undertaken by the company towards

sustainable development and evaluate how the project that

have been identified attempts to address the

environmental and social issues highlighted in part (a).

/ 25 marks

d) Based on the 2006 & 2008 reporting,

(i) Analyse the quality of the reports

Individually

Comparison

(ii)Suggest ways on how the organization can improve the

report.

/ 8 marks

/ 7 marks

/15 marks

References cited (on source materials, footnotes and

bibliography) as well as the overall presentation of the

assignment report.

/ 4 marks

Total

/90 marks


Content

Introduction -------------------------------------------------------- Page 1

Question (a) ---------------------------------------------------------Page 1- 7

Question (b) ---------------------------------------------------------Page 7- 9

Question (c) ---------------------------------------------------------Page 10-16

Question (d)(i) ------------------------------------------------------Page 16-18

Question (d)(ii) -----------------------------------------------------Page 18-20

Appendix ------------------------------------------------------------Page i - vii

Reference ------------------------------------------------------------Page viii - x


Brief Introduction

SP Setia Bhd is a public listed construction company focusing on property

development, construction & infrastructure, and wood base manufacturing & trading.

The slogan of S P Setia is:

Question (a)

Global Warming

The issue of global warming has gain wider attention by the construction

practitioners worldwide. It is caused by carbon dioxide emission from burning of

fossil fuels for the purpose of electricity generation especially in the construction

industry. Construction of buildings is contributing to the emission of waste gases, due

to the utilization of energy, lighting, and air conditional. For the production of bricks

and concrete energy as well as demolishment and rebuilding, intensive activities cause

energy use results in carbon dioxide production. There is challenge of improving

energy efficiency while yielding a return on investment simultaneously. Nowadays,

the norm worldwide is moving towards green technologies such as energy-efficient

buildings. Setia Eco Park developed the country‟s first energy-efficient homes

powered by the Building Integrated PhotoVoltaic (BIPV) solar technology1 and also

Setia City in Setia Alam which is designed under Malaysian Green Building Index

(GBI) and the US-LEED certification.2 Over the years, S P Setia attempted to develop

sustainable and low-carbon provision of housing as the effort of fighting global

1 BIPV- Solar technology which is generating electricity from rooftop solar panels for household consumption,

while excess energy will be sold to the National Electricity Grid..

2 GBI is a rating tool that provides an opportunity for developers to design and construct green, sustainable

buildings that can provide energy saving systems, renewable energy and water savings. The US-LEED aims to

reduce waste, conserve energy and water, healthierr for occupants, and reduce harmful greenhouse gas emissions.


warming. Referring to Figure 1, the temperature in Kuala Lumpur during the year

2006 is high. Global warming issue has been increasingly concerned by the

Government, companies as well as public. Therefore during year 2006-2009, the

temperature was reducing due to people‟s awareness. And in the year 2010, the

temperature increased and causes flood in the southern area.

Figure 1 GISS Surface Temperature Analysis

Source: National Aeronautics and Space Administration (2011). GISS Surface

Temperature Analysis . Retrieved March 23, 2011

Pollution

Construction industry are involved in activities such as land clearing,

demolition, burning and usage of toxic materials that lead to air pollution. Chemicals

that are widely used on construction sites are also one of the factors that contribute to

air pollution. It also generates high levels of dust. These chemicals may cause water

pollution and harm human health. Construction wastes such as nails, rubble, bricks,

and concrete which may harmful to the environment. Construction sites produce a lot

of noise, mainly from vehicles, heavy equipment and machinery. The public is

looking forward that companies implement appropriate steps to deal with this issue of

pollution. The government has also enforced environmental regulations such as


Environmental Quality Regulations which has been regulated since 1977. Over the

years, the landscape team of Setia Eco Park recycled the materials from the land

clearing process. The sprawling Setia Pearl Island project site was quiet, devoid of the

usual roar of bulldozers, trucks and excavators. The construction work plan of Setia

EcoLakes has been designed specifically to minimize pollution and protect natural

habitats and ecosystems. However, with the massive industrial development of recent

years, and an increase in urbanization and vehicle use, air and water pollution are of

growing concern. The changes in pollution, especially air and water, are illustrated in

Figure 2 to 4 （Find in Appendix. According to Figure 1 and 2）, the figures show

that the air quality status in west coast peninsular Malaysia has improved from year

2006 to 2009. However, based on Figure 3, it shows that although there was a slight

decrease in the number of polluted rivers, rivers that was rated as clean in year 2005

were slightly polluted in 2006. This indicates that companies either in construction

industry or other relevant industries will still need to continue their effort extensively

on reducing water pollution.

Figure 2: Air Quality Status, West Coast Peninsular Malaysia, 2006

Source: Department of Environment. (2006). Malaysia Environment Quality Report

2006.


Figure 3: Air Quality Status, West Coast Peninsular Malaysia, 2009

Source: Department of Environment. (2009). Malaysia Environment Quality Report

2009.

Figure 4: River Water Quality Trend

Source: Sharifuddin, S. S. (2010). Progress of water environmental

governance/management and future challenges in Malaysia.


Environmental degradation

Environmental degradation is the deterioration of the environment through

depletion of resources such as air, water and soil where it causes destruction to

ecosystems and wildlife extinction (Johnson et. al., 1997). This issue is especially

important for construction industry, which plays a significant role in developing

countries‟ economic and involve in logging and expansion of land. Ecological

destruction is determined to have produced toxins, carbon, and waste whose

maintenance management is neglected. Destruction of agricultural land and forests is

a contributing factor to the green house effect because of the increase of CO2, and

thus the whole community will suffer. SP Setia Bhd is also involved in wood base

manufacturing & trading which may cause habitat destruction due to wood extraction

and deforestation. However, SP Setia has developed and adopted the gold standard for

green buildings.3. Prior to land clearing, the flora and fauna in the project site were

migrated to a nursery to preserve the native bio-diversity in the project site.

Malaysia's deforestation rate is accelerating faster than that of any other tropical

country in the world, according to data from the United Nations. However, the

deforestation rate in Malaysia has slowed down in the recent years because Malaysia

is actively involved in reforestation projects.

Health and Safety

It is defined that occupational health and safety (OSH) is a cross-disciplinary

area concerned with protecting the safety, health and welfare of people engaged in

3 Green buildings are designed to reduce the impact of the built environment on human health and the natural

environment by efficiently using energy, water and other resources; protecting occupants' health; and reducing

waste, pollution and environmental degradation


work or employment (Stellman, 1998). Employees working in construction may be

exposed to electrical hazards, lifting and health problems caused by noice, dust and

fumes. These companies are increasingly required to ensure their employees‟ health

and safety by providing programmes relating to issues such as industrial hygiene,

engineering safety, occupational medicine, etc. Management‟s responsibility towards

employees‟ health and safety increases because human resources could contribute to a

company‟s success. In addition, the public and media are paying close attention to

safety issues when accidents occurred in workplace. Thus, this can affect the

reputation of the company. SP Setia encouraged employees to participate crane and

lifting gear training to enhance safety. It also set up Setia Learning Academy for

training and first-aid training to provide the basic skills to help others in times of

need, especially in workplace. This is very commendable as it reflects greater

awareness among employees regarding occupational safety and health. However,

companies tend to often ignore workplace safety and take accidents for granted

(Occupational Health and Safety, 2010). Hence companies are under pressure to

comply with OSH legislations such as OSH Act 1994 and to voluntarily provide

programmes to increase employees‟ concern in OSH.

Community Development

Community development is an occupation or a way of working communities

for the purpose of building communities based on justice, equality and mutual respect

(Community Development Exchange, 2009). It is also to meet needs of a country‟s

citizens in a way that promotes good civic design, convenience, health, safety,

efficiency and economy (Greeley, 2011). Community development is increasingly

becoming important for various companies. Companies were only focused on

achieving their goal of profit maximization in previous years4

. This creates a

challenge for companies to be socially responsible as well as to satisfy shareholders. S

4It has been very vital nowadays for companies to have their goals beyond the objective of maximizing profits to

include responsibilities and accountabilities towards the environment and society. Hence, companies are under

pressure to be socially responsible due to the expectations of their shareholders. For social aspect, companies are to

remove unacceptable disparity of conditions and infrastructure that affect people‟s quality of life and to help solve

community problems. Shareholders who are not satisfied tend to divest.


P Setia Foundation‟s is to help community in the areas of education, general welfare

and medical needs. Setia Adoption Programme is to give needy children equal access

to good basic education to chart a better future. S P Setia is well-known for the

meticulous planning and vast expanse of greens which provide a healthy living

environment for the community. Current awareness on community development is

important since year 2006 and increased in the period of 2009-2010 due to the

financial crisis in 2007 and companies are increasing their level of commitment

towards community development in order to retain customers‟ and investors‟

confidence and trust.

Question (b)

The three key economic centres of Malaysia are Klang Valley, Johor Bahru

and Penang. The four major stakeholders of organization are shareholders, employees,

corporate clients and community.

The main stakeholder is shareholders who decide whether to invest or not to

invest in the company. The source of capital of S P Setia is from the shareholders.

They rely on the annual report to obtain decision making information. They are not

only looking into the profit statement, but also non-financial statement - Sustainability

report. Since S P Setia is mainly in construction industry, it needs capital from

shareholders to undertake that housing projects which are adopting environment

friendly concept. Therefore, shareholders are to look into the initiative and ethics

regarding the issue faced. In the aspects of environment, the Setia group focuses on

3Rs- Reduce, Reuse, and Recycle. It believes that it is responsible to protect the

planet from climate change and other environmental threat. For Setia Eco Park

Project, it developed energy-efficient homes powered by the Building Integrated

PhotoVoltaic (BIPV) solar technology and houses which is designed under Green

Building Index (Annual report, 2009). Setia honoured the World Environment Day

by shutting down its construction site for a day (annual report, 2008). Recycling

campaign is another way to create the awareness of environmental preservation

among its residents and the community. They organised recycling campaign among

households (annual report, 2007) as well as Newspaper Recycling Campaign for


schools in Klang Valley (annual report, 2009). All these will improve S P Setia‟s

reputation. A good reputation company will give confidence to their shareholders as it

helps to maintain or even increase the company‟ share price. In today business world,

shareholder wealth maximization is still the main objective of company.

Secondly, Setia always believe that the company is also responsible to the

community and social welfare. The information disclosed by S P Setia is also

important for the society to make decision as well as giving a good impression to the

society. They would like to know whether their welfare is being protected. This group

of society may become Setia‟s future clients. Here is the information which might

help them. The S P Setia Foundation is a charity trust to provide aid to

underprivileged individuals and charitable bodies (annual report, 2007). S P Setia

Foundation has contributed to education, welfare and healthcare while focusing on

education and the Setia Adoption Programme which is to fund the educational needs

of underprivileged students nationwide (annual report, 2006). Moreover, the

Foundation collaborated with the nation‟s “Feel Good Channel” ntv7 to bring out

some of the daily issues faced by vernacular schools and their need for funding

(annual report, 2009). The project is called Project Sunshine. The Foundation‟s major

fundraising activity is the annual charity dinner. It also provided financial assistance

to the flood victim who destroyed many homes and public buildings in Johor Bahru at

the end of 2006 (annual report, 2007).

Thirdly, Setia recognized the employees as the company‟s asset. Setia

understands the importance of talented, committed and capable employees. As a job

seeker, one may first look into the report to make sure that the company treated

employees well before he or she apply the job. One has to make sure there is no

negative issue of employment in the company such as abuse of employees or work

overtime without pay. Besides that, as a future employee, one has to ensure good

reputation of the company, to assure timely salary pay in the future. Most importantly,

employee would like to know whether the company is the place to build up their own

career, further improve themselves and to be a professional to fulfil their dreams.

Thus, for all these purposely, employee needs to analyze the sustainability report for

decision making. The information that might help them is stated here. Annual dinner

is one of the events that gather all the employees and different themes are set for


every year to let the employees have fun during the event (annual report, 2009). Setia

shows the appreciation to the employees‟ contribution and hard work. It will

definitely motivate to employees to work harder and increase their job satisfaction.

Setia tried to develop their people and facilitate learning and sharing of knowledge

among employees to improve and strengthen their skills and knowledge. Setia focuses

on employees training and succession planning. They have launched Setia Leadership

Development Programme to identify and groom future leaders of the company.

Working in team helps to gather ideas from different perspective and employees can

performs effectively and efficiently. Therefore, the S P Setia Foundation Volunteers

Club to promote the practice of voluntarism amongst the employees (annual report,

2009). The volunteers are required to work in teams to make home visits to families

receiving aid under the Setia Adoption Programme, visit orphanages and homes to

help clean up, and read to the blind.

Lastly, Setia recognized it clients as the major stakeholders. A client might

want to know about the projects that are undertaken by the company previously and

whether projects are done without harming the environment and society. A good

impression is given if the company like S P Setia is going on environmental friendly

concept. A good impression means good reputation of the company. Clients would

also like to know about employees‟ welfare. For example, cases of Nike Indonesia,

abuse of employees causes boycott of the consumers towards the brand. Thus, clients

may look into larger areas of the sustainability reporting. It covers all initiatives that

mentioned above. In addition to that, S P Setia introduced the attractive 5/95 Home

Loan Package. Purchasers are required to only pay a 5% down payment and nothing

else during construction. With 95% financing provided by the banks to eligible

borrowers and all-time low interest rates, communities can own a Setia dream home

(annual report, 2009). These strategies could attract more clients‟ interest to purchase

the Setia Homes.


Question (c)

The major projects which are undertaken by S P Setia from the year 2006 are: Setia

Eco Park and Setia Alam. There are also many initiatives undertaken by Setia

towards sustainability. All these effort, projects and initiatives are proven to be

success by referring to The Star newspaper as well as those pictures published to the

public (Find in Appendix).

Setia Eco Park is a remarkable showcase of an eco sanctuary that harmonizes the

built space with the natural environment. It works towards sustainable development

by undertaken efforts:

• The flora and fauna in the project site were migrated to a nursery prior to land

clearing to protect them, and recycle the materials from the land clearing process.

• Setia‟s landscape team has demonstrated their resourcefulness by landscaping the

lake bank with boulders and created ideal habitat for natural organism.

• NKVE-Setia Alam Link is built to ensure residents‟ convenience and to help

relieve congestion in Klang town by dispersing traffic.

• Developed the country‟s first energy-efficient homes powered by the Building

Integrated PhotoVoltaic (BIPV) solar technology where one can generate his own

electricity from sunlight in an environment friendly manner. (Refer to question(a))

• Introduced the attractive 5/95 Home Loan Package where purchasers are required

to only pay a 5% down payment coupled with 95% financing provided by the

banks to eligible borrowers and all-time low interest rates


Setia Alam located in a township which located at the Industrial-free zone. It works

towards sustainable development by undertaken efforts:

• Adopted MASMA (Manual Saliran Mesra Alam Malaysia) requirement for Setia

Alam housing project and designed the house under GBI and the US-LEED

certification to combat with global warming.5

• It provides facilities Village green which is included village green houses

playgrounds, tadika and Pusat Rukun Tetangga for „Neighbourhood Watch‟.

• During the World Environment Day, UTAR‟s Associate Professor under the

Department of Construction Management gave a talk on “Tackling the Waste

Challenge – Conversion of Waste into Resource” to a packed audience.

• Collaborated with MBSB to introduce an exclusive 100% financing for Setia

Alam‟s low and medium cost homes to ensure that the lower income group could

also benefit from the attractive financial packages available in the market

• The new police beat has a built-up to help deter crime and safeguard residents‟

welfare and enhancing the overall value of the township.

Issue:

From the above, this project can be related to the issue of global warming, pollution,

environment degradation, and community development. S P Setia attempted to

5 MASMA requirement- huge dangerous concrete drains will be replaced with wide gentle sloping and meandering

earth drains and ponds which will be landscaped for recreational purpose. It also follows the green street concept

like other Setia projects.


develop sustainable and low-carbon provision of housing and office-space as the

effort of fighting global warming and consequently climate change. It combines man’s

skill and nature’s artistry to create a harmonious and sustainable environment. The

development is also featured specially created tropical landscape with a diversity of

flora and fauna in order to prevent green house effect. Besides that, S P Setia creates

healthy, harmonious, fully integrated environments to nurture a vibrant and caring

community spirit, and tried to fulfill the needs of the community and enhance their

safety and convenience as well as helped them through financial loan package to

lighten their burden. Activities that benefit the environment as well as the community

are established to fulfill their social responsibilities. With plenty of amenities,

residents can “live, learn, work, play” in the same township in a low cost.

Others activities and programmes:

Year 2006

Over the years, Corporate Social Responsibility activities of S P Setia Bhd are mostly

undertaken by the charity trust, S P Setia Foundation.

Education:

Under its Setia Adoption Programme (SAP), they held activities:

• Donations to the schools which are in need of financial assistance and furniture.

Its aim is to support the poor community school and student in need, especially

those which are in rural areas.

• Sponsored library system software to ensure students are learning in a comfortable

environment which can motivate them to study better.

• Donation of 10 units of software-ready computers and a colour printer to Beautiful

Gate Foundation (Kampar, Perak) to provide a more pleasant learning

environment for the disabled students in line with the aim & purpose of the

Organization.

• Donation of RM20,000 grant to Montfort Boys Town to enhance the welfare of

underprivileged youths in the country and train the students from unfortunate


homes to be independent. 6

Issue: The issue concern is community development, where it is important to giving

funds for the poor schools and student to have better comfortable study environment.

They also giving more concern on those communities who are physically disable by

donating computer software to make them more adapt to the learning environment. It

meets the needs of communities by giving more convenience

Community

• Donation a set of special equipment worth RM49,000 which transcribe regular

text to Braille to Penang-based St Nicholas Home which provides training to the

blind. With the ability to translate books into Braille, it will make knowledge

more accessible to the blind to improve their future employability.

• Donation of RM100,000 to help flood victims repair their homes following the

recent floods in several southern states.

• Rise a total of RM1 million to Setia Badminton Academy to promote badminton

in the country. 7

• S P Setia Foundation Charity Dinner 2006 successfully raised a sum of RM5.8

million. Some 60% of S P Setia Foundation‟s annual budget is spent on

educational causes while the balance is channeled to other medical and general

welfare causes in answering the plight of needy Malaysians.

Issue: The issue concern is community development. It is essential to be socially

responsible to the society at large and play a role as a caring corporate citizen. With

the aim of caring for the society, Setia is socially responsible to the communities who

in need of financial assistance due to the attack of disaster or physical disable person

who need special tools to assist them carry out daily activities.

6 Monfort Boys Town is a training vocational center that provides training to less-academically-inclined students

from unfortunate homes to ensure that they are equipped with useful skills and good discipline that will enhance

their employability in the job market.

7 S P Setia Foundation‟s five-year funding programme for the Setia Badminton Association has seen the training

center grow into one of the most prominent in the country that is steadily producing a string of champions at the

various school, district and state level tournaments.


Year 2009

Education

• Sponsored a total of RM1.25 million to UTAR to establish an academic Chair to

be allotted over the next five years to fund research and development in

environmental engineering and green technology.

• Sponsored 41,000 copies of the newspaper to be distributed to 10 semi-urban

schools for the duration of one year.

• Donated financial assistance to poor rural schools.

• Collaborated with ntv7 for Project Sunshine and allocated RM200,000 to

highlight some of the daily issues faced by vernacular schools in particular, and

their need for funding and aim to help primary schools get financial aid from the

public.

• Donated a new van to the Blessed Peniel Prayer House (BPPH) to transport

underprivileged children from their homes to attend free classes of BPPH.

Issue: The issue related is community development. As mentioned, Setia Foundation

is providing funding and donations to many schools which are in needs of financial

assistance and serve better education life. Besides that, it also provide fund to

research and development of organization to promote the green environment in

Malaysia. It aims to make a positive difference to all our communities.

Community

• Under Setia Alam Community Project, more than 80 families were selected to

receive sundry necessities once every month, where it aims to lighten the hardship

faced by low income families living nearby.

• Pledged a sum of RM600,000 annually to lower the burden of kidney patients in

low income families by subsidizing part of their treatment cost.

• Donated a dialysis machine worth RM44,000 to MAA-Medicare Kidney Charity

Fund and RM200,000 to provide free erythropoietin (e-poeitin) injections for

poor patients as these injections will increase the haemoglobin level of those

haemodialysis patients who have anaemia.

• Visit to the Malaysian Association for the Blind (MAB) to help sending out


brochures to donors, arranged the books in the library, read out loud to the low

vision and vision impaired members, and typed books for conversion into talking

books.

• During the World Health Day, Setia Eco Park organised a Community Health

Talk which was collaborated with medical and health care professionals from

Pantai Hospital to promote healthy lifestyles amongst the residents.

• Collaborated with the Malaysian Kennel Association to organize the 278th &

279th MKA All Breeds Championship Show for show dogs to provide dog owners

with the opportunity to get-together and share their knowledge on dogs breeding,

training, as well as protection knowledge.

Issue: The issue concerned is community development. This is more concerned for the

communities as a whole. The foundation was organizing a string of events to spread

the joy and love as well as to extend the passion and care. All these have proven the

commitment of S P Setia in corporate responsibility as well as true spirit of teamwork

and sportsmanship in the race. Another issue concerned is employees’ welfare. It

demonstrated the genuine commitment make employees gain extra benefit and

happiness from those activities by working together to foster community ties.

Environment

• Collaborated with Jabatan Perhutanan Negeri Selangor, WWF-Malaysia and

Malaysian Nature Society to launch „Green Legacy: The Bukit Cherakah

Expedition‟ and work closely together to conduct research on the flora and fauna

and to create awareness among the community.

• Efforts in the Housing Projects as mentioned.

Issue: The issues concerned are pollution, global warming and environment

degradation which is being concern by the people in the recent year. To mitigate the

impact of activities have on the climate, they reduced carbon footprint as well as

increasing awareness of the importance of environment to the citizens. The campaign

would not only instill good habit of recycling and replanting amongst the staff but

also contribute positively to the welfare of people. SP Setia was responsible and


taking into account environmental concerns. S P Setia create green havens that are in

perfect harmony with nature to enhance the quality of life. The conferment of

numerous landscaping awards over the years is testament of our firm commitment

towards responsible environmental management.

Question (d)(i)

Both sustainability report 2006 and 2009 of S P Setia Bhd can be found in the

separate sections in the annual report under the title of Corporate Social

Responsibility as well as in the corporate website. The sustainability report is

prepared in an organized way in four pages.

Sustainability Report 2006

Firstly, it makes a brief introduction about the S P Setia Foundation and Setia

Adoption Programme. And then, it listed down the contribution of S P Setia

Foundation towards sustainability from different aspect like education, general

welfare, medical, and sports in point form. However, it doesn‟t mention about the

benefit or consequences that communities may get from the CSR activities. It contains

environment management reporting under the sub title of the sustainability report.

However, it mainly discuss about the targets and achievement and slightly about

environment performance.

The sustainability reporting is slightly tied towards the business strategy of S P

Setia. Since the issues of global warming and pollution are just started to aware by

society, Setia tried to disclose its environmental friendly as a basic attempt to attract

communities‟ interest on its housing projects.

Sustainability Report 2009

It is first introduced about the policy statement of SP Setia towards the

sustainability. Next, it showed the initiatives undertaken by SP Setia during the year

2009. For each initiative, it provided benefits as the description in a short paragraph.

Furthermore, there are more pictures can be seen in the sustainability report 2009


compared to the previous year 2006. It makes clear and understanding for the users of

the annual report. It does not clearly explain about the environmental management.

However, we can find the environmental management strategy in the different section

of annual report which is under „Review of operation‟ (Page 26). The environmental

management strategy is stated under each of the projects it undertaken during the year

2009.

The sustainability reporting is tied towards the business strategy of S P Setia.

The disclosure of CSR activities builds trust and promotes transparency as well as

solicits feedback on their performance from a growing number of stakeholders and

shareholders. While the shareholders are having more confidence to invest in S P

Setia, there will be more capital available. To survive in this competitive industry, S P

Setia realizes that it needs to spend more capital for the projects in order to earn profit

in the long term. For our information, there are a huge amount of cost for the

development of projects such as cost of adopting MASMA, and cost of BIPV solar

technology. And, the stakeholders may be interested in this company and paying more

capital since it is ethical towards the world. This is actually a cash flow cycle.

Compare:

The structure of sustainability report is different for both years. For the year

2006, it is organized in point form, and slightly stated about the environment

performance and achievement. This shows that S P Setia was not focus on

sustainability activities. For the year 2009, it is organized in short paragraphs. CSR

activities are reported attached with pictures. It looked more tidy and easy to

understand, and the users of annual report may gain for information about the

company. Environment management is stated in another part of annual report. S P

Setia was making use of sustainability activities to gain attention of society.

During the year 2006, S P Setia is not much disclosing CSR activities in terms

of environmental, since the awareness of the communities towards environmental is

low. S P Setia does not using CSR activities which it involved to position itself for the

future. As mentioned, the sustainability report is just listed down the CSR activities

without in details. During the year 2009, the disclosure of S P Setia regarding the

sustainability activities is better than year 2006. The activities and efforts are more


disclosed in the annual report. It also explained the impacts of the activities which

might gain by the society. This is more encouraged, because it shows that the

company is working towards the benefit of the society rather than for its own. It tries

to use CSR activities which it involved to position itself for the future of the company

by enhancing society‟s confidence and trust.

During the year 2006, there are many construction companies existed in this

country, for example, YTL corp, Hup Seng, Ho Hup Construction Company Bhd, and

Timeless Element Sdn Bhd. There is no differentiation among them including S P

Setia because the CSR activities and efforts it undertaken are less and not much

disclosed, although their revenues are not much difference among each others. In year

2009, the global financial crisis brought consumer sentiment to an all time low. S P

Setia had think of new ways to reignite consumer interest to make it stand out from

competitors in the industry. With the high CSR effort and activities it involved for the

society, there is more disclosure. Nowadays, S P Setia is the one of the top companies

in construction industry.

Question (d)(ii)

The sustainability report of S P Setia can be improved further. The report

should be issued as the hard copy stand alone environmental or sustainability

performance report. The stand-alone reports were issuing better quality reports on

their social performance.

We recommend S P Setia to use Global Reporting Initiative (GRI) as the

sustainability reporting guidelines. It is to standardize the dimensions of sustainability

reporting, which are environmental, economic and social. It is widely internationally

as a generally accepted reporting framework and can ensure the report quality:

balance, comparability, accuracy, timeliness, reliability, and clarity (Global Reporting

Initiative, 2006).

According to GRI, a sustainability report refers to a single, consolidated

disclosure that provides a reasonable and balanced presentation of performance over a

fixed time period. There is no minimum length for a report using the GRI Framework

as long as the organization has properly applied the Guidelines and Framework

documents it has chosen to use (Global Reporting Initiative, 2006).


There are three indicators as below, each of them is recommended to be

disclosed its goals and performance, policy, training and awareness, monitoring and

follow-up as well as others addition information like key strategies, successes, and

shortcomings.

Environmental Indicators cover performance related to inputs (e.g., material,

energy, water) and outputs (e.g., emissions, effluents, waste). In addition, they cover

performance related to biodiversity, environmental compliance, and other relevant

information (Global Reporting Initiative, 2006).

Society Performance Indicators focus attention on the impacts on the

communities by the company, and disclosing how the risks are managed and

mediated. The disclosure should include information about community, corruption,

public policy, anti-competitive behavior and compliance. (Global Reporting Initiative,

2006)

The economic dimension of sustainability concerns the organization‟s impacts

on the economic conditions of its stakeholders and on economic systems at local,

national, and global levels. The Economic Indicators illustrate the flow of capital

among different stakeholders and main economic impacts of the organization

throughout society (Global Reporting Initiative, 2006). The disclosure should be

discussed from the aspects of economic performance, market presence, and indirect

economic impacts.

SP Setia can use GRI reporting to help measure and benchmark performance,

and encourage employees to contribute better performance. GRI can help to enhance

the comparability of the reporting. The sustainability report of S P Setia is difficult to

be compared for previous years, because the structure and reporting are different each

year. Up to the year 2009, S P Setia only covered part of the guidelines recommended

by GRI. GRI never force the companies to comply its guidelines. However,

companies are asked to clearly indicate how they have used the guidelines. With time

and practice, S P Setia is encouraged to move gradually towards more comprehensive

reporting built on the content of the GRI framework. With the adoption of GRI, it

provides information of interest to stakeholders who are particularly important to S P

Setia.


Since that S P Setia is more focus on environmental activities, it should follow

the accreditation ISO 14000 family which is concerned with environmental

management. In other words, S P Setia should minimize harmful effects on the

environment caused by its activities, and achieve continual improvement of its

environmental performance. Independent verification by an accredited body greatly

enhances this public disclosure, by providing confidence and assurance to

stakeholders.

On the other hand, the information disclosed in the report should be

timeliness. We found that there are some information disclosed in the year 2006

reporting are outdated and therefore an unused data. For example, some activities

disclosed in the report are not undertaken in the year of reporting. The information

need to be further updated to enhance effective decision making of stakeholders and

shareholders.

The reported information should be sufficiently accurate and detailed for

stakeholders to assess the reporting organization‟s performance. We found that some

of the information disclosed in the previous years is inaccurate. For instance, the

amount of funds donated to the poor students in rural areas is inaccurate as compared

to the figure which is recorded in news of The Star newspaper. The qualitative

statements in the report should be attached with any available evidence. This could

affect the decision making of shareholders and stakeholders.

Lastly, we also found that S P Setia‟s reporting is lack of clarity and

reliability. Effort made by S P Setia is not disclosed clearly regarding its impact to the

society and environment. It does not contain information that is required by the

stakeholders, because it doesn‟t being disclosed in details. Some information is

ambiguous and is not supported by relevant evidence. The report should contain the

level of information required by stakeholders, but avoids excessive and unnecessary

detail. Information should be presented in a manner that is comprehensible to

stakeholders to have more understanding of the organization and its activities.

Graphics and consolidated data tables can make the information in the report

accessible and understandable. Disclosures about performance that are not

substantiated by evidence should not appear in the report unless provides

unambiguous explanations.


Appendix

Setia Adoption Programme, which has

adopted 2300 students of all races from

119 primary schools, is the core activity

of the Setia Foundation. It helps primary

student in education, from equipping

them for the new school year to paying

their school and tuition fees.

Annual Excellence Awards Night

http://thestar.com.my/metro/story.asp?fil

e=/2008/3/22/southneast/20722302

Donation of school bags

http://www.highbeam.com/doc/1P1-

86183354.html

Donation of computers to Beautiful Gate

http://thestar.com.my/news/story.asp?file

=/2006/3/10/central/13588150&sec=ce

ntral

Donation of grant to Montfort Boys


e=/2009/12/18/central/5307879&sec=c

entral

Sponsored cost of refurbishment to

Yayasan Latihan Insan Istimewa

Ipoh, Perak

http://www.mind.org.my/news/abandone

d-boy-staff039s-darling?theme=Lite

http://thestar.com.my/metro/story.asp?file=/2008/3/22/southneast/20722302

http://thestar.com.my/metro/story.asp?file=/2008/3/22/southneast/20722302

http://www.highbeam.com/doc/1P1-86183354.html

http://www.highbeam.com/doc/1P1-86183354.html

http://thestar.com.my/news/story.asp?file=/2006/3/10/central/13588150&sec=central



http://thestar.com.my/metro/story.asp?file=/2009/12/18/central/5307879&sec=central



http://www.mind.org.my/news/abandoned-boy-staff039s-darling?theme=Lite

http://www.mind.org.my/news/abandoned-boy-staff039s-darling?theme=Lite


Donated equipment to Penang-based St

Nicholas Home


e=/2007/7/10/central/18244476&sec=c

entral

Donation to Setia Badminton Academy


e=/2009/6/22/central/4070160&sec=cent

ral

Setia Foundation Charity Dinner 2006

http://findarticles.com/p/news-

articles/new-straits-

times/mi_8016/is_20060702/sp-setia-

dinner-raises-rm58m/ai_n44328282/

NKVE-Setia Alam Link


=/2006/6/16/central/14553086&sec=cen

tral

Sponsor RM1.25m to UTAR


e=/2009/6/9/central/4062300&sec=centr

al

Environmental preservation through

education

Setia Alam Community Project


e=/2010/11/16/central/7428647&sec=ce

ntral







http://findarticles.com/p/news-articles/new-straits-times/mi_8016/is_20060702/sp-setia-dinner-raises-rm58m/ai_n44328282/














Project Sunshine

http://mstar.com.my/cerita.asp?sec=mst

ar_hiburan&file=/2010/8/28/mstar_hib

uran/20100827094203

Donation to kidney patients in low

income families


=/2009/3/19/focus/3507453&sec=focus

Donation of a dialysis machine to MAA-

Medicare Kidney Charity Fund


e=/2009/4/29/central/3782922&sec=ce

ntral

Donation of a new van to the Blessed

Peniel Prayer House (BPPH)


e=/2009/7/10/central/4258960&sec=cent

ral

Sponsor of newspaper to semi-urban

schools

Community Day & beach cleaning

activity

http://emrcjohor.blogspot.com/2009/12/s

etia-indah-community-day.html

http://mstar.com.my/cerita.asp?sec=mstar_hiburan&file=/2010/8/28/mstar_hiburan/20100827094203



http://thestar.com.my/news/story.asp?file=/2009/3/19/focus/3507453&sec=focus

http://thestar.com.my/news/story.asp?file=/2009/3/19/focus/3507453&sec=focus







http://emrcjohor.blogspot.com/2009/12/setia-indah-community-day.html

http://emrcjohor.blogspot.com/2009/12/setia-indah-community-day.html


Introduce of the 5/95 Home Loan

Package

http://biz.thestar.com.my/news/story.asp

?file=/2009/1/20/business/3062212&sec

=business

278th & 279

th MKA All Breeds

Championship Show


e=/2009/7/17/central/4306955&sec=ce

ntral

Sponsored 2 teams to Edge Bursa

Malaysia Kuala Lumpur Rat Race 2009

http://www.klse.com.my/website/bm/me

dia_centre/110809_ratrace.html

SetiaBecamex JSC project in Vietnam

http://www.iproperty.com.my/news/770/S

-P-Setia-officially-opens-EcoLakes-

Show-Gallery-in-Ho-Chi-Minh-City

http://biz.thestar.com.my/news/story.asp?file=/2009/1/20/business/3062212&sec=business






http://www.klse.com.my/website/bm/media_centre/110809_ratrace.html

http://www.klse.com.my/website/bm/media_centre/110809_ratrace.html

http://www.iproperty.com.my/news/770/S-P-Setia-officially-opens-EcoLakes-Show-Gallery-in-Ho-Chi-Minh-City




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