Contemporary Accountability - Lecture 6

Question 1

What is accountability?

Answer 1

The fact of being responsible for what you do and able to give a satisfactory reason for it, or the degree to which it happens

Question 2

Why is accountability important?

Answer 2

Correct disclosure and accountability can prevent scandals and corporate failures

Question 3

What scandals and corporate failures could accountability have prevented?.

Answer 3

.VW emissions scandal
.Carillion collapse
.Patisserie Valerie accounting fraud

Question 4

What are the three key accountability challenges (The three P’s)?

Answer 4

.People - The social equity bottom line
.Planet - The environmental bottom line
.Profit - The economic bottom line

Question 5

What are the two extremes - Models of accountability?

Answer 5

.Mitlon Friedman (1970) “A friedman doctrine? The social responsibility of business is to increase its profits?
.Ernst von Weizsacker Factor Five (2009) “What would the organization do if it were focused on responsibility and sustainability?

Question 6

What are the key aspects of Milton Friedman’s model?

Answer 6

.Business makes profits, politicians should mould social goals
.The company’s shareholders are the primary stakeholders (only)
.Managers are not social engineers or climate experts

Question 7

What are the key aspects of Weizsacker’s 2009 model?

Answer 7

.Whole-system approach to unite engineers, designers, scientists to reduce energy consumption by 80% by 2050
.Recognises deep-rooted conflicts
.Provides managers with a series of difficult choices about what the company can and can’t do

Question 8

Why does climate change relate to accountability?

Answer 8

.Threatens our existence
.Caused by excessive consumption
.Facilitated by companies meeting demand
.Subject to voluntary disclosures

Question 9

How is climate change shown in company reports?

Answer 9

.Integrated reporting - Capitals include natural resources but IR is voluntary and not audited
.Triple bottom line - Not incorporated into GAAP and mainly voluntary
.Task force on climate-related financial disclosures - Voluntary measures

Question 10

What are the four core elements of the recommended climate-related financial disclosures?

Answer 10

1. Metrics and targets
2. Risk management
3. Strategy
4. Governance

Question 11

According to the task force on climate related financial disclosures, what are the four industries with the highest exposure to climate change?

Answer 11

.Energy
.Transportation
.Materials and buildings
.Agriculture

Question 12

What are the six principles for effective disclosures by the Climate change financial disclosure task force?

Answer 12

1. Specific and complete
2. Clear, balanced and understandable
3. Consistent over time
4. Comparable within sector
5. Reliable, verifiable and objective
6. Provided on a timely basis

Question 13

What is carbon accounting?

Answer 13

Quantifying emissions for disclosure purposes, e.g. tonnes of Co2 per annum

Question 14

What are the benefits of carbon accounting?

Answer 14

.Consolidated to identify a country’s emissions and set new targets for reductions
.Helps identify the impact of carbon reduction initiatives

Question 15

What is life cycle management (LCM)?

Answer 15

A framework to analyse and manage the sustainability performance of goods and services

Question 16

What are some key aspects of life cycle management (LCM)?

Answer 16

.Used by all businesses large or small
.Ensures more sustainable value chains
.Encourages continuous improvement
.Aims to reduce carbon footprint while maximising economic value

Question 17

What are the three scopes of carbon footprint’s?

Answer 17

Scope 1 - Direct emissions (Vehicles, machinery, chemical processes)
Scope 2 - Electricity and heat indirect emissions from purchased utilities
Scope 3 - Other indirect emissions (Extraction and production of purchased materials)

Question 18

What are the essential tools for fighting climate change?

Answer 18

.Life cycle management
.Carbon accounting