The energy and natural resources sector : an analysis of strategy disclosure for 2011

Arnot, Michelle (2013-03)

Thesis (MBA)--Stellenbosch University, 2013.


Traditionally organizations have reported largely on financial information. The Global Reporting Initiative and the King III Code of Corporate Governance have become important guidelines in assisting organizations on how to report and consequently integrated reporting is quickly gaining popularity. As the potential effects of climate change and other environmental and social impacts of businesses become more apparent, stakeholders are placing pressure on these organizations to be more transparent in how they are dealing with these impacts. Strategy cannot be separated from sustainability (SAICA, 2009: 7); therefore there is increasing pressure on organizations to disclose their strategies. Not all companies disclose information relating to strategy and sustainability to the same extent. There are a range of factors that influence strategy disclosure. This study updates the 2010 study (Meyer, 2011) evaluating the extent of strategy disclosure in the energy and natural resources sector of five companies (BP, Eskom, Mondi, Sappi and Sasol) using a three-point evaluation scale. In addition the following analyses were done:  A benchmarking exercise comparing the strategy disclosure and sustainability reporting of the five companies analysed against two industry leaders (Repsol and Enagas).  Development of the drivers of strategy disclosure from the literature which were compared to the results from the three-point evaluation scale.  The analysis was repeated using a six-point evaluation scale, as this more clearly determined the extent of strategy disclosure, which was then compared to the drivers of strategy disclosure. The results, obtained from the six-point evaluation scale, supported the drivers of strategy disclosure and concluded that product type, the competitive environment and risk are some of the main determinants of strategy disclosure in this study based on the companies evaluated. It was also concluded that, based on the three-point and the six-point evaluation scale, the average level of disclosure for the energy and natural resources sector is good, and had improved from 2010. Furthermore, it was also observed that strategy is not disclosed to the same extent as sustainability information. Baseline One had more of a focus on sustainability information, whereas Baselines Two and Three focussed more on strategy. The level of disclosure in Baseline One was more than that of Baselines Two and Three.

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