Wesfarmers Limited International Trade and Enterprise

Question: Discuss about theWesfarmers Limited for International Trade and Enterprise. Answer: When it comes to the leading multinationals in Australia, one name that pops the mind is Wesfarmers Limited. The company, as a group, is a multi-industry company, the highest revenue generating company and the works as a conglomerate. The location of its global headquarters is 40 The Esplanade Perth, Western Australia (Wesfarmers, 2017a). The primary interest of the company is limited to Australia and New Zealand; however, the company has its operations in Bangladesh, United Kingdom and Ireland (ASX, 2016). Retail, coal mining, fertilizers, industrial and safety products, and chemicals are the key operations of Wesfarmers (AMP Capital, 2015). In 1914, the company was formed as a co-operative for making available the services, as well as, merchandise to the Western Australias farmers. The company was listed on the Australian Securities Exchange as WES and the first time it was listed was back in 1984 (Wesfarmers, 2017b). The company has an active shareholder base of nearly 530,000, which shows its substantial presence in the market (IBIS, 2016). Wesfarmers Limited has been the largest company in terms of its revenue for the previous year, i.e., 2016, and left behind both Woolworths and BHP Billiton and the figures showed AU$65.98 billion as the revenue. The 2016 Annual Report of Wesfarmers depicted the number of employees as 220,000 and this high figure resulted in the company being the largest private sector employer. And due to being in such a position, Wesfarmers enjoys a large number of indigenous employees and this figure depicted a number which is above 3,300 (Wesfarmers, 2016a). Wesfarmers has attained the topmost position in the nation, amongst two thousand companies. The key income generating source for Wesfarmers is its Grocery Stores, along with the Supermarkets which are running in the Australian industry. The revenue for the year of 2016 stood at $66,216,000,000 and this amount was inclusive of the sales and the other revenues figures. The Managing Director of the company is Richard Goyder, who is the Chief Executive of the company. And Michael Chaney, who is the Chairman of Wesfarmers, has been given the title of Non-Executive Chairman. The company has a diversified portfolio and operates in gas processing and energy distribution, supermarket, hardware, in addition to the earlier highlighted businesses (IBIS, 2016). The resources division of the company is metallurgical coal producer and an open-cut miner, and has interests in a number of different mining operations. The Bowen Basin in Queensland, where the Curragh mine is situated, is a coal mine which produces steaming and metallurgical coal, which is then exported to South America, Europe, Japan and South-East Asia. Wesfarmers retail division is divided into a range of different operations, and is inclusive of supermarkets, convenience stores, and hardware and office supplies. The company includes: Kmart: retailer of apparel, and general merchandise, in addition to automotive services department; Coles: groceries retailer, in addition to a range of other household consumables; Officeworks: retail office supplies stores; Home Improvement: operating through Bunnings brand, which has 357 trading chain locations in both Australia and New Zealand; and Target: retailer for general merchandise, apparel and homewares (IBIS, 2016). The companies have to follow the regulatory frameworks which govern their operations in the nation the regulatory framework is in form of acts, codes and regulations. Some of the regulatory frameworks which are applicable on Wesfarmers, for having its operations in Australia, have been stated below. As the income from any company is taxed, in the same manner, the same is done for Wesfarmers. Due to this, the Income Tax Assessment Act 1997 becomes applicable on the company. And as a result of its applicability, Wesfarmers has to adhere to the provisions contained in this ac; specifically pertaining to the provisions relating to Australian resident employees, covered in Division 83A of the act. The Wesfarmers Employee Share Acquisition Plan has been qualified as being a non discriminatory sharing scheme for the companys employees, as per this division of the Income Tax Assessment Act. And as is a standard phenomenon, Wesfarmers adheres to different Accounting Standards. AASB 101 is one of such accounting standards followed by Wesfarmers which relates to the Presentation of Financial Statement (Wesfarmers, 2016a). As the company is registered in Australia, there is a need for undertaking the compliances contained in the Corporations Act, 2001 (Cth). Hence, the company has to follow the norms regarding the naming of company, the memorandum of the company, the appointment and duties of directors, the meetings to be scheduled, and the required disclosures. This can be evidenced from the disclosures which have been made by Wesfarmers in its Annual Report 2016. One of these was the general standard of independence of the auditor, covered through the provisions of this act. Wesfarmers also made a declaration regarding the proceedings which were brought by or on behalf of the company as per section 237 of Corporations Act (Wesfarmers, 2016a). For the purpose of this act, the substantial shareholding of the company has also been declared by Wesfarmers. The prohibitions relating to the key management personnel of Wesfarmers, in addition to the closely related parties, are reflected in the securities trading policy of the company. The provisions contained in 300A are also followed by the company. The Corporations Act, through its provisions also governs the key personnels remuneration (Wesfarmers, 2016a). Another act applicable on the company is the Competition and Consumer Act, 2002 (Cth), due to Wesfarmers being a provider of goods and services in the nation. The Federal Government announced that for 2016 it was making certain changes to section 46 of this act. As a result of these changes, if a company has a considerable market power, which allows it to act in a manner which is competitive and also provides benefits to the consumers, but at the same time, has the effect of reducing the competition, due to the exit of inferior or inefficient competitors, the same would be deemed as unlawful. The result of these provisions is the competition discouragement, due to which, the uncertainty for the company has been increased. And the company has already conveyed its disappointment to the government. These changed provisions have raised the chances of litigations being initiated against it (Wesfarmers, 2016a). The regulatory framework in Australia is confined to its jurisdictional limits. And as the company works in different parts of the world, a number of international agreements, convention and treaties have to be followed by the company. Some of these have been stated below. Wesfarmers has recognized its duty towards ensuring a sustainable future and taking a step in this direction the company follows and adheres to the Global Reporting Initiative Guidelines or the GRI Guidelines. Wesfarmers followed a range of these in 2015, each of which was for a different aspect under a different category. The GRI G4 Guidelines are divided in three categories of social, economic and environmental. The company followed the GRI G4 Guidelines of G4-DMA and G4-EN5 for the energy aspect under environmental category; for effluents and waste, G4-DMA and G4-EN23, for customer health and safety under the social category, the G4-DMA and G4- PR1; and for economic performance under the economic performance aspect, the G4-DMA and G4-EC1 (Wesfarmers, 2015). The company has made a commitment towards bringing down the GHG or the greenhouse gas emissions. In order to do so, the company actively manages and monitors its emissions, and also takes steps for reducing these. The particular risks which take place as a result of changing climate have been understood by the company, especially for its business, and the company makes continuous attempts towards reducing these risks. More than 2% of the GHG emissions were reduced by Wesfarmers for 2016 in comparison to 2015. Moreover, the same have been reduced by more than 30% in comparison to the levels of 2012 (Wesfarmers, 2015). These steps, for reducing the GHG emissions, have been taken in light of the international treaties like the United Nations Framework Convention on Climate Change, in short, UNCCC, and the Kyoto Protocol. The year of 1992 saw the inception of the international convention of 1992. The same works towards the stabilization of the GHG emissions so as to reduce the negative impact of these emissions on the climate. Through this convention, the limits for GHG are specified, instead of stating merely an international treaty (Harrison, 2013). In line with UNFCCC, the Kyoto Protocol was established in the year of 1997 and it is also focused upon the reduction in the GHG emissions. The reason for these is the clear presence of the global warming at the present day, which is a result of the carbon dioxide emissions, which form as a result of the actions of the man (Krber, Schwirzenbeck and Barth, 2008). The objectives of UNFCCC are implemented by the Kyoto Protocol. This makes both these treaties work in a similar direction of reducing the concentration of the GHG in the atmosphere, so as to fight global warming. This is done by bringing these to a level which enables the prevention of the hazar dous anthropogenic interferences with the climate system (Massai, 2011). Under the UNFCCC is the Paris Agreement which relates to the adaption and mitigation of the GHG and this is addition to the finance for the same, which is set to initiate from 2020. The representatives of 195 different nations negotiated upon the wordings of the Paris Agreement and the same took place in Paris at the 21st Conference of the Parties of the UNFCCC on December 12th 2015 (Blau, 2017). This agreement has the goal of enhancing the implementation of the UNFCCC by maintaining the global average temperate increase to under 2?C over the pre-industrial levels. In addition to this, efforts are made for putting limits to the increase of these to 1.5C over the pre-industrial levels (Bates, 2015). Wesfarmers has recognized that the change in the climate is the result of human actions and also acknowledges that Australia, as a nation and Wesfarmers, as a company, play a key role in the mitigation of this climate change. For doing the same, the company has undertaken different initiatives so that the climate can be safeguarded. The levels set under the Paris Agreement have been taken seriously by the company and it works towards restricting the global warming to the levels of 1.5C to 2C higher in comparison to the pre-industrial levels. The company believes in working together with both the government and the entire industry for the attainment of these preferred goals. For undertaking the decarbonisation in an efficient, as well as, affordable manner, the company realizes the need for assurance in the long term policies. Due to these reasons, Wesfarmers has vowed to carry on the improvements of the GHG efficiency in the operations undertaken by it, which would help in reducing t he risks based by the companys business and also the costs, in addition to making a contribution towards the improvement of changes in climate (Wesfarmers, 2017c). Taking a step in this direction, Wesfarmers has encouraged the Federal Government to make an application to the Emissions Reduction Fund, so that the additional energy efficiency initiatives can be implemented across the retail business of across the company. LED lights have been used in the businesses of the company for the development of its new stores. The retrofitting of more than 200,000 new highly efficient light fittings in its pre-existing stores has been made economically viable as a result of this, in addition for the distribution centers, in the time of seven years. Through this, an additional value of 15,000 tonnes of CO2e, i.e., carbon dioxide equivalent per year can be reduced (Wesfarmers, 2016b). Target, which is one of the retail businesses of Wesfarmers, undertook a widespread due diligence program so that it could be ensured that the importation of the regulated timber products did not include any unlawfully logged sources. The same was a response to the adoption of the Illegal Logging Act 2012 of the Europe and its regulations, by the Federal Government of Australia (Wesfarmers, 2016c). References AMP Capital. (2015) AMP Capital Sustainable Share Fund. [Online] AMP Capital. 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Available from: https://www.ibisworld.com.au/australian-company-research-reports/retail-trade/wesfarmers-limited-company.html [Accessed on: 23/04/17] Krber, C., Schwirzenbeck, M. and Barth, K. (2008) The Kyoto Protocol. Norderstedt: GRIN Verlag. Massai, L. (2011) The Kyoto Protocol in the EU: European Community and Member States under International and European Law. Prato, Italy: Springer Science Business Media. Wesfarmers. (2015) GRI G4 Content Index. [Online] Wesfarmers. Available from: https://www.sustainability.wesfarmers.com.au/our-data/gri-g4-content-index/ [Accessed on: 23/04/17] Wesfarmers. (2016a) 2016 Annual Report. [Online] Wesfarmers. Available from: https://www.wesfarmers.com.au/docs/default-source/reports/2016-annual-report.pdf?sfvrsn=4 [Accessed on: 23/04/17] Wesfarmers. (2016b) Stakeholder engagement. [Online] Wesfarmers. Available from: https://sustainability.wesfarmers.com.au/our-approach/stakeholder-engagement/ [Accessed on: 23/04/17] Wesfarmers. (2016c) 2016 Sustainability Report. [Online] Wesfarmers. Available from: https://sustainability.wesfarmers.com.au/media/1835/edited-extract-of-wesfarmers-2016-sustainability-report.pdf [Accessed on: 23/04/17] Wesfarmers. (2017a) A New Head Office Wesfarmers House. [Online] Wesfarmers. Available from: https://www.wesfarmers.com.au/who-we-are/our-history/a-new-head-office-wesfarmers-house [Accessed on: 23/04/17] Wesfarmers. (2017b) Our History. [Online] Wesfarmers. Available from: https://www.wesfarmers.com.au/who-we-are/our-history [Accessed on: 23/04/17] Wesfarmers. (2017c) Environment. [Online] Wesfarmers. Available from: https://sustainability.wesfarmers.com.au/our-principles/environment/climate-change-resilience/ [Accessed on: 23/04/17]