Lecture 11: Sustainability and Accounting Flashcards
1
Q
Sustainability
A
Means considering all of the financial, social and environemntal impacts of business’ activites.
2
Q
Issue(s) with sustainability reporting
A
As it is voluntary to report on, there may be suspicion amongst stakeholdrs why a business is going out of their way to report on it and thus, we must make this information reliable to increase stakeholder confidence
3
Q
Incentives to report their sustainability
(5)
A
- Agency theory - individuals act in their own self-interest.
- Legitimacy theory - the business strives to show they are operating within moral boundaries in order to make people like them and to make future operations easier.
- Stakeholder theory - businesses should want to satisfy the needs of all their stakeholders.
- Institutional theory - business want to be sen like their more sustainable competitors so they can copy their good aspects and become more like them over time.
- Signalling theory - a business wants to be seen as a leader, so they disclose more information than necessary in order to show initiative.
4
Q
Techniques thar enable sustainable business practices
A
- Value chain analysis - analysing how sustainability could be incorporated into each of the business’ areas.
- Life cycle costing - understanding how sustainabilitiy is incorporated into each stage of the devekopment, distribution and disposal of goods/services sold, as well as minimising any negative impacts