Chapter 4 - Sustainability Flashcards
What is sustainability?
This is the ability to last. Uk government has increased emphasis on the importance of green policies for organisations and individuals. However it is not simply being green that supports sustainability, organisations must ensure the responsible, long term management of resources that they use. Sustainability also involves economic and social issues.
The Brundtland Report
The our common future report highlights three key components of sustainable development:
Economic growth
Environmental protection
Social equality
The triple bottom line
The three elements of sustainable development that were identified by the Brundtland committee are sometimes also referred to as the triple bottom line. Economic growth, environmental protection and social equality may also be abbreviated to profit, as planet and people.
Economic growth and sustainability
For sustainable development to happen the resources to allow it must be available. Economic growth provides therese resources. It relates to:
Individual countries - growth in the economy of a country should lead to an overall increase in the wealth of that country
Individual organisations - profit generated by organisations will increase the wealth of the owners and employees
Economic growth should not be pursued at the expense of the other factors
Environmental Protection and sustainability
The green policies of an organisation are those most commonly associated with sustainability. The protection of the environment is key to conserving the worlds resources. Examples of environmentally friendly policies that contribute to sustainability are:
Supermarkets charging customers for plastic shopping bags to encourage customers to recycle their old bags
Recycling paper, metal and certain plastics
Promoting car sharing schemes and the use of low emission company vehicles
Only trading with suppliers that have certified green policies
Encouraging staff to reduce energy usage by turning off lights
Even though the primary objective of greeen policies is to protect the environment the business can also benefit from this as it can save on energy costs and waste.
Social equality and sustainability
This objective of sustainability focuses on the social well being of people. Businesses should consider the social equality of the local community as well as the workplace.
Organisations can promote social responsibility both locally and in a worldwide context in a number of ways. These are listed below:
Making charitable donations which help and support the socially underprivileged
Only trade with overseas suppliers that provide evidence of reasonable pay and working conditions for its staff
Supporting local initiatives to get people back into work
Sponsoring local sports events that give something back to the local community
Corporate social responsibility
Large organisations are publishing corporate social responsibility reports. These reports detail how the organisation takes responsibility for supporting sustainable development through its policies and procedures. It also identifies to what extent it is achieved its csr objectives.
There is pressure on businesses to be transparent in the way which they operate so this means organisations are are choosing to voluntarily report on their csr. There is no legal requirement to however businesses realise the public and investors want to see their attitude to sustainability.
CSR initiatives include:
Reducing co2 emissions
Supporting charitable fundraising
Trading with reputable organisations
A business reporting on csr should state the right balance of positive and negative information. This is so they don’t overplay their green credentials to people reviewing the report.
The responsibility of accountants to uphold sustainability
Public interest duty - accountants have public interest duties to protect society as a whole. They must consider the economic, social and environmental aspects of their work in order to support sustainability and sustainable development. This should include ensuring the long term responsible management of resources used by their organisation. As well as contributing to the organisation in a sustainable manner and minimising risk to the organisation and society of not acting sustainably,
Promoting an ethics based culture -
Accountants must act ethically and should promate an ethics based culture that discourages decision making that does not consider the longer term.
Promoting sustainability - an accountant should promote sustainable development with their organisation and clients. However accountants must also remain objective which means they should give equal consideration to all relevant issues before making a decision. Also they should support promoting sustainability initiatives for CSR objectives as well as considering the effects on the operation of the business.
Reputations risk
Failure to act sustainably can have an adverse effect on the reputation of the business. However sustainable development will have a positive effect on the organisation’s reputation as ethical and sustainably aware
Consider the triple bottom line
Accountants must ensure that the triple bottom line is considered as part of their reporting on the performance of the business and sustainable development is actively encouraged.
Promoting sustainable practices
Accountants must also promote sustainable practices through the organisation in relation to each of the following:
Products and services - produced from sustainably resourced materials and that suppliers staff have fair pay and working conditions
Customers - businesses should supply to their customers in a sustainable manner through efficient delivery methods and fair long term pricing strategies
Employees - encouraging good working conditions
The workplace - implementing green policies and then monitoring staff in participation of these schemes
The supply chain - encouraging their organisation to source supplies from suppliers with an ethical approach to sustainability
Business functions and processes - accountants should review the business to make sure it operates in way that supports sustainability and sustainable development
Raising awareness of social responsibility
Qualified professional accountants are expected to promote the need for corporate social responsibility and to encourage employers and clients to assess the impact of their decisions and actions on sustainable development in the future.
