module 10

Question 1

key drivers of sustainability

Answer 1

1. Competition for resources:
2. Climate change: fossil-fuel based economy
3. Economic globalisation
4. Connectivity and communication: rep of companies

Question 2

reasons for CSR reporting

Answer 2

1. a benefit to an entity’s profits.
2. limit gov interference
3. morals

Question 3

agency theory

Answer 3

Managers act on behalf of shareholders and controls are required to ensure that managers act in the best interests of shareholders.

Question 4

Stewardship theory

Answer 4

• Directors act in the interest of a group(s) of stakeholders and not shareholder value.
• Contributes to the rise of independent non-executive directors.

Question 5

Legitimacy theory

Answer 5

• Theory that entities must conduct operations in accordance with societal expectations.
• Society allows the entity to operate (pursue its objectives and rewards) so long as the entity agrees to act in a socially acceptable manner.

Question 6

Global Reporting Initiative (GRI)

Answer 6

• Reporting Principles and Standard Disclosures
• Implementation Manual.
• They suggest suitable measurements (metrics) and disclosures

Question 7

GRI reporting principles

Answer 7

content (stakeholder inclusiveness, sustainability context, materiality and completeness)
quality (balance, comparability, accuracy, timeliness, clarity and reliability).

Question 8

triple bottom line

Answer 8

economic performance
environmental performance
social performance.

Question 9

The concept of abundance encourages businesses to think about using resources to embrace both:

Answer 9

1. literal abundance (what nature provides ‘in abundance’)

2. functional abundance (where scarce material is cycled endlessly via redesigned industrial models).

Question 10

the 3 roles of accountants in sustainability

Answer 10

1. reporting
   * Report the entities sustainability performance, includes environmental and social information.
2. Cost analysis:
   * Include economic, environmental and social information in decision making processes.
3. Audit and assurance:
   Internal controls to ensure the integrity of the information

Question 11

entity’s goals are usually expressed in the …

Answer 11

mission statement

Question 12

external evaluation of performance

Answer 12

key data are compared with benchmark data to assess good or bad performance framework.

Question 13

internal evaluation of performance

Answer 13

• internal or external to the entity, accounting or non-accounting, or financial (quantitative) or non-financial (qualitative).

Question 14

Balanced scorecard

Answer 14

Provides a set of performance measures that reflect entity’s goals and strategies from 4 perspectives

Question 15

the 4 perspectives of a balanced scorecard

Answer 15

1. Financial — How do we create value for our shareholders?
2. Customer — What do new and existing customers value from us?
3. Internal operations — What processes must we excel at to achieve our financial and customer objectives?
4. Innovation and improvement activities — How can we continue to improve and create value?

Question 16

KPI

Answer 16

are performance measures that are critical for the success of the entity.

Question 17

criticisms of balanced scorecard

Answer 17

Focuses on shareholders.
Does not give proper attention to employees and suppliers.
Does not address adequately the selection of specific measures or the role of performance targets.

Question 18

Eco-efficiency

Answer 18

‘expresses the efficiency with which ecological resources are used to meet human needs’.

• The purpose is to integrate ecological impact with economic information.
• The result will show the environmental impact added per chosen unit of economic performance.

Question 19

Greenhouse gas accounting:

Answer 19

• Many companies and countries report on their performance in relation to their CO2 emissions.
• The objective of placing a price on carbon is to promote lower carbon ways of living, either pay the price or invest in lower carbon emitting processes.

Question 20

Integrated report

Answer 20

coalition of regulators, companies, investors, the accounting profession, the standard setter and other interested groups.

Question 21

non-financial performance advantages

Answer 21

More user friendly and relevant to non-management employees.
More likely to lead to long term performance gains.
Identify problems in a more timely fashion.
Can be easily structured to suit an organisation’s goals.
Can be benchmarked easily.