BAE Business Report on

CSR Limited

Student Name: Ly Hoang Thanh (Rai)

Student Number: 33242

Teachers' Names: Elizabeth Williams and Anea Hurdle

Course Name: BAE 15

Due Date: 23th January, 2014

Word Count: 1286

TABLE OF CONTENTS

Executive Summary 1

1 Introduction 2

2 CSR limited company and Ethical investment 3

2.1 Environmental ethics 4

2.2 CSR limited and environment issues 5

2.3 Profitability analysis of CSR limited 5

3. Recommendation 6

References

Executive summary

This document is produced for client interested in ethical investing in CSR

Limited. We provide them an overview of a business performance and advice in terms

of ethical investing. It demonstrates the ethical issues and the financial situation of a

leading building products company in Australia and New Zealand. A literature search

and an analysis data method are used to evaluate the ethical business of CSR limited

company that involves the pollution of Parramatta river and revenue, growth rate and

sales. After the eviroment issues , CSR limited has changed the policy which cosiders

in sustainable grow and cares much about evironmental ethics. However, with the

downward trend in profit in recent years, especially loss $145 AUD millions in 2013,

this report recommnend that CSR company is not a good option for investors.

1

Introduction

The purpose of this document is to evaluate CSR limited company whether

they concern in ethical issues, specifially in evironmental issues, in business and

profitability situation. It should be considered that the report limits its research to only

two aspects of CRS which are environment issues and the profitability history after this

proplem.

Ethical investing or ethical business are the essential criterias that the investors

consider carefully nowadays in modern business so, a critial evaluation before

implement is extremely neccessary. Ethical investing also can be called social

responsibily investing which " has been broadly identified as the investment decisions

that are based on evironmental, social and govermance standards" (Fung, HG, Law,

SA & Yau, J 2010, p.4). As an investor, apart from strict analysis of financial

performance, they should concern consequences of investments, both-side effects on

society and evironment (Fung, Law & Yau 2010, p.4).

CSR Limited is an Australian public company that mainly generates revenue

from manufacturing and supplying building products and aluminium. The

headquartered of company is located in Sydney and employs more than 3,580

employees across its operations in Australia, New Zealand and Asia. CSR is listed on

the Australian Securities Exchange, under the code CSR. With the rank is number

229 out of the top 2000 companies in Australia, the majority of income of the

company is generated from the Non-Metallic Mineral Product Manufacturing in

Australia industry.

2

After providing the some reasons for ethical investing, this report will weigh

CRS limitd base on two aspect: ethical issues and profitability situation. Finally, A

suggestion will be made to the client who interesting in ethical criteria consider

investing in.

2. CSR limited company and Ethical investment

2.1 Environmental ethics

Environmental ethics are one of two main aspects concerned for evaluating

CSR limited in this report. According to Keller (2010, p.3), environmental ethics

involves the impact of both human behavior and natural nonhuman features on

ecological systems. Harris (2012) also meantions about environmental justice that by

generating the benefit of people, perfomance of industry results in polluting inviroment.

2.2 CSR limited and environment issues

In 2008, CSR Building Products caused a spill in New South Wales of 3,250

litres of a hazardous chemical from tank, causing serious pollution to the Parramatta

River, affecting the waterway for 2.5 km. CSR was ordered to pay more than $430,000

in penalties. (Raynolds, 2011)

Martin Cole, CSR spokesman, also admits that The Land and Environment

Court of New South Wales judged CSR Building Products Limited (CSR) a wholly

owned subsidiary of CSR Limited guilty of an offence against the Protection of the

Environment Operations Act 1997, specifically, it is responsible for the pollution of the

3

Parramatta River between the Rydalmere Ferry Wharf and the Camellia Rail Bridge at

Camellia (CSR News Releases 2008, paras 1).

Because of the spill of between the 2,250 to 3,250 litres of GEP2 on Saturday,

the chemical elements of waters was changed in a localised area in Parramatta River

(AustLII 2008). Under the conditions of the tides and environment in the River at that

time, the split GEP2 possibly had caused to seriously damage on "parts of the inter-

tidal mangrove swamp, for example the crabs in the sediment holes, during the initial

stage of the spill" (AustLII 2008). This adversely affected sediment-dwelling organisms

in the mangrove by physically trapping and/or smothering them (AustLII 2008). Since

the direct exposure with hydrocarbon solvent component of GEP2, it was difficult for

the recovering of affected organisms (AustLII 2008). ‘White gluey material’ is the term

usesd to desbribe the left residues of GEP2 floating on water and hanging like ‘thick

spider web’ on mangrove root system (AustLII 2008). In addition, a part of chemical

components may been also dissolved into the water column. In conclusion, there was

actual harm occasioned to the riverside mangroves and ecosystem of invertebrates,

despite of no signs of dead or dying mangroves or biota (AustLII 2008). It is also

agreed that it is likely, even very likely, that the substantial short term environmental

harm occurred (AustLII 2008).

However, after the great damage of this incident, CSR limited concerns about

restructure its policies and grow sustainably. In 2013, CSR belongs top 20 innovative

companies in Australia by presenting the 8 star energy efficient house. It means that

CSR House saves 70 per cent of consumed energy more than the normal house of

similar size (BRW 2013, paras 3). In additon, CSR also introduce the launch of the

Edmonds Odyssey Ventilator which is one of selections of Good Design Awards.

334

Odyssey is the intelligent system which provides the cool and healthy housing

atmosphere by using high flow hybrid and automatical control system (Good Design

Awards n.d.) .CSR also established Energy Solutions to  provide assessments and

equipment for saving energy in the residential area and then extend this program to

busines (DSDBI 2013 paras 1-8). Moreover, to penetrate the solar hot water market,

the company has extended its scale of users in offering in solar PV (DSDBI 2013

paras 1-8). An internal target also was set to reduce 20% of company unit energy

consumption by 2020 and then, energy saved was changed into Greenhouse Gas

Savings (DSDBI 2013 paras 1-8)

2.3 Profitability analysis of CSR limite

2009 2010 2011 2012 2013

-400

-300

-200

-100

0

100

200

300

400

500

600NPAT

NPAT $ AUD Million

Adapt from: IBIS world 2013, IBIS Company Report CSR Limited, view 13

January 2014, <http://www.ibisworld.com.au/enterprise/home.aspx>

5

The diagram shows the profit of CRS Limited company during the last five year.

On the line chart, the x-axis represents the years and the y-axis indicates the net profit

after tax of CSR company each year. In general, after the dramatically increasing in

the first half period, there was a down trend of profit in recent years. In 2009, with the

loss of company stayed at 320$ AUD millions, the profit increase signigicantly and end

at the loss of 110$ AUD millions in 2010. The upward trend probally resuIts from the

revison after financial global crisis in 2008. In 2011, the company started to get profit

and it continuely increased until reach the peak of 500$ AUD millions in the end of

year. However, the figure decrese remarkablely to 76$ AUD millions in 2012. It maybe

that CSR spent a great amount of money in investing and restructure the company

and so, it affected the capital of financial situation. The trend continued down

significantly and got loss of 145$ AUD millions in 2013.

3. Recommendation

In terms of ethical issues, CSR has totally acted responsibly in incident of

pollution Parramatta river. Moreover, CSR tend to concentrate in growing sustainably

which concern about environment by a series of activities recently. However, with

downward of profit in recent years, even loss 145 $ AUD millions in 2013, it is

undoubted that CSR probably confront with a poor financial performant and not good

earnings growth. In conclusion, it is recommended that CSR Limited is not a good

company for investing.

6

References

Australasian legal Information Institute 2008, Environment Protection Authority v

CSR Building Products Limited, NSWLEC 224, NSW,  viewed 13 January

2014, AustLII Databases

CSR News Releases 2008, Prosecution of CSR Building Products Limited for

pollution of waters, viewed 13 January 2014 <http://www.csr.com.au/

Investor-Centre-and-News/NewsReleases/Pages/news_release081009

.aspx>

Department of State Development, Business and Innovation 2013, Submission by

CSR Limited to the ESI Review Issues Paper, Victoria, viewed 13 January 2014

<http://www.energyandresources.vic.gov.au/energy/about/legislation-and-

regulation/energy-saver-incentive-scheme-management/ris/submissions/veet-

submission-csr-limited>

Fung, HG, Law, SA & Yau, J 2010, Socially responsible investment in a global

evironment, , viewed 13 January 2014 <http://books.google.com.au/ books

?id=rzuLSKhlEfEC&pg=PA4&dq=ethical+investing&hl=vi&sa=X&ei=_3

HJUp-EKIOilQWxv4GwDg&ved=0CFIQ6AEwAg#v=onepage&q=ethical

%20investing&f=false?>

IBIS world 2013, IBIS Company Report CSR Limited, view 13 January 2014,

<http://www.ibisworld.com.au/enterprise/home.aspx>

Harris, F 2012, Globla environmental issues, 2rd edn,viewed 13 January 2014

<http://books.google.com.au/books?id=4qa1Io0-

zW0C&printsec=frontcover&hl=vi#v=onepage&q&f=false>

Keller, DR 2010, Environmental Ethics: the big question,viewed 13 January 2014

<http://books.google.com.au/books?id=YKQmqFfrT5EC&printsec=frontc

over&dq=environmental+ethics&hl=vi&sa=X&ei=8IzJUrrJLYrmkAXJu4

Bg&ved=0CCsQ6AEwAA#v=onepage&q=environmental%20ethics&f=fa lse>

Reynolds, C ,Publish and evironmental health law, viewed 13 January 2014

<http://books.google.com.au/books?id=MknWt8I0dkMC&pg=PA214&lpg

=PA214&dq=csr+pollute+parramatta+river&source=bl&ots=Zb3r9OvsEZ

&sig=WJCJg7uVOZJ_CGMOO7U1QQb87f4&hl=vi&sa=X&ei=ssPGUu_

uEYrIkAX4r4GACQ&ved=0CFMQ6AEwBA#v=onepage&q=csr%20poll ute

%20parramatta%20river&f=false>