Study Guide Q & A Flashcards
What is sustainability?
Development that meets the needs of the present, without compromising the ability of future generations to meet their own needs.
What are the three dimensions of sustainability?
Social: Universal human rights, basic necessities
Environmental: Maintenance of ecological integrity, where the rate of consumption is less or equal to nature’s rate of replenishment
Economic: Ability for communities to maintain independence, and access the resources necessary to meet their needs
Why does sustainability matter?
Increasing global temperatures, rising seas, unemployment, precarious work etc. are threatening the survival of human societies.
What are the UN Sustainable Development Goals?
“Blueprint to achieve a better and more sustainable future for all.”
Universal goals and targets to be achieved by 2030.
Leading global framework for international cooperation, that requires actions on ALL fronts.
What is the Ehrlich equation?
Environmental Impact = Population x Affluence x Technology
- Population of an area
- Affluence: Average consumption of each person in the population
- Technology: Resource intensity of the production of affluence
What is the climate mitigation gap?
“We conclude that there are opportunities to improve existing education and communication structures, to promote the most effective mission-reducing strategies and close this mitigation gap.”
Who are the catalysts of changes in sustainable development?
Adolescents, who have the freedom to make large behaviour choices that will structure the rest of their lives.
What are moderate-impact actions?
- Home heating/cooling efficiency
- Using public transportation, cycling, walking
- Buying energy-efficient products
- Hang-drying clothes
What is engaged citizenship?
Individual and collective actions: Living your values in your personal life, living your values in your community life, volunteering, putting political pressure
What is biocapacity?
The capacity of a given biologically-productive area to generate an ongoing supply of renewable resources, and absorb its spillover wastes.
What is ecological reserve/deficit, for an area?
Ecological Reserve: Biocapacity > Ecological Footprint
Ecological Deficit: Biocapacity < Ecological Footprint
How can an area address its ecological deficit?
Importing biocapacity through trade, or by liquidating regional ecological assets
What is ecological overshoot?
Global ecological deficit, that can’t be compensated through trade.
According to Friedman, what is the social responsibility of business?
Corporations are artificial persons, that have artificial responsibilities.
Businesses are responsible for increasing its profits, maximizing money, while staying within the rules of the game.
Can an individual proprietor exercise his social responsibility?
The individual proprietor can reduce the returns of his business to exercise his “social responsibility”.
As he is spending his own money, there are less side effects.
What is collective capitalism?
Big businesses being called on to help fix economic and social problems. Working towards broader social goals, rather than self-interest.
What are the two problems associated with collective capitalism?
- Lack of accountability: It is unclear what society wants from companies. End result? A small number of unrepresentative business leaders end up with immense power in setting societal goals.
- Lack of dynamism: Collective capitalism leans away from change (job cuts, new social goals)
What is enlightened capitalism? How can we make it happen?
Enlightened capitalism: Innovation, widespread ownership, diverse firms adapting fast to social needs.
We need to ENHANCE accountability and dynamism, by…
- Having the purpose of companies set by its owners, not the executives. This will ensure that long-term value is considered.
- Adapting to society’s changing preferences.
- Encouraging competition (stimulates proactivity) and an effective government.
What is a deliberation?
A form of reasoning and conversation, where the costs and consequences of various options and perspectives for action are weighed and considered.
Collaboration, learning relationship, many potential solutions.
Discovery of a shared direction, guided by what we value most.
What is a debate?
A competitive relationship for which the goal is winning your idea. There are two opposing sides that aim to prove each other wrong.
One solution, attempt to find others’ flaws and weaknesses (criticize)
What is the first wave of sustainability (first two phases of sustainability)?
- Rejection (Opposition): All resources are exploited for immediate economic gain. Firm’s primary motive is maximizing its profits. Environmental impacts are dismissed, disregarded and opposed, as are activist activities and external claims.
- Non-Responsiveness (Ignorance): Lack of awareness, ignorance. ‘Business as usual’ - No incorporation of sustainability into decision-making. Disregarding environmental consequences of activities.
What is the second wave of sustainability (third to fifth phases of sustainability)?
- Compliance (Risk): Reducing risk of sanctions for failing to meet standards. ‘Decent employer and citizen’, avoiding environmental abuse that could lead to litigation. Reactive to requirements and expectations.
- Efficiency (Cost): Awareness of the real advantages of incorporating sustainable practices, to reduce cost and enhance efficiency. The additional expenses lead to additional payoffs, making it worthwhile pursuing.
At this stage, the company is beginning to incorporate sustainability as an integral part of its business. - Strategic Proactivity (Competitive Advantage): Making sustainability as an important part of the business strategy, to gain competitive advantage. Taking a leadership position in sustainable business practices. A commitment to sustainability, embedded in the quest for maximizing long-term profitability. However, the company is still acting in its self-interest.
What is the third wave of sustainability (sixth phase of sustainability)?
- The Sustaining Corporation (Transformation): Internalization of the ideology of working for a sustainable world. The company actively promotes sustainability values and practices in society. There is a commitment to sustainability - facilitation of the emergence of a society that supports ecological vitality, and contributes to equitable social practices. THE NATURE OF THE CORPORATION IS REDEFINED.
What are the similarities and the differences between a BCorp and a Benefit Corporation?
Both are leaders of the global movement to use businesses as a force for good, meeting higher standards of accountability and transparency.
B-Corps: 3rd party certification administered by B Lab, based on the company’s verified performance on the B Impact Assessment.
Benefit Corporation: Legal structure for a business, legally empowered to pursue positive stakeholder impact and profits. Holds three key legal attributes, being accountability, transparency and purpose.
What is the ‘Take, Make, Waste’ (linear production) model?
TAKE - Resources degraded through the extraction process
MAKE and MANUFACTURE, to enable USE
WASTE - From the extraction process, from the manufacturing and from the post-use disposal
What is the ‘Borrow, Use, Return’ (Cradle-to-Cradle) model?
BORROW renewable and non-renewable resources, and the product offered
USE the product’s services
RETURN the product back to the manufacturer, the nutrients to the two cycles
What is the business case for sustainability?
REDUCE COSTS. Use less resources, more efficient processes, minimize/eliminate waste
PRESERVE RESOURCES. The raw materials needed for production are threatened.
COMPLY WITH LEGISLATION. Increases in standards, and costs/consequences to non-compliance (risk mitigation)
ENHANCE REPUTATION AND POINT OF DIFFERENTIATION, hence an increased market share.
ATTRACT QUALITY EMPLOYEES, who will feel proud of working for sustainability-driven employers.
SATISFY CUSTOMER NEEDS, to meet the growing eco-conscious (LOHAS) consumer population, who are environmental stewards
INCREASING PRESSURE FROM MOVEMENTS AND BOYCOTTS.
MEET STAKEHOLDER EXPECTATIONS, by increasing transparency and thus, maintaining investor confidence.
ATTRACT CAPITAL INVESTMENT, as there is a changing investment climate
What are the best ways of integrating sustainability into current corporate operations?
Be informed, create a coalition, pick your moment carefully, package the information appropriately, choose who will give out information, offer a vision, present the problem.
The greatest impact is when sustainability is embedded into strategy and culture.
What is sustainable investing?
Sustainable investing considers environmental, social and governance (ESG) factors into its portfolio selection and management.
What are sustainable investing activities/strategies?
- Negative/exclusionary screening
- Positive/Best-in-class screening
- Norms-based screening
- ESG Integration
- Sustainability-themed investing
- Impact/Community investing
- Corporate engagement and shareholders’ action
Why does sustainability matter for accounting professionals?
- Changing rules of the game: Need to create long-term, sustainable stakeholder value
- Increasing demand for sustainability information: Accounts need to understand this info, in order to report on and comply with requirements
- Sustainability strategy requires the development of measurable objectives and targets, for which the accountants collect data
- Better decision-making: Better understanding of the business, identification of potential cost reductions and eliminations, revenue opportunities, risk management
- Getting ahead of the game: The effors in climate change will lead to disclosure requirements around water & energy use, emissions generated
- New and increasing sustainability-associated economic and market instruments, such as permits, liabilities, charges, taxes: Accountants need to understand how they affect businesses
How can accounting professionals incorporate sustainability into their work?
- Collect information to assist internal users
- Prepare information for external users (sustainability in financial statements, using integrative reporting, standalone sustainability reports)
- Provide assurance on published results, to ensure accuracy and enhance credibility
What is materiality?
Materiality: Determining which sustainability-related issues are important. The omission of material issues could create a significant difference in decision-making.
Important issues are those…
- with direct, short-term financial impact
- where the company has made policy-related statements or commitments
- that stakeholders consider important
- that are considered social norms
What is full/true cost accounting?
Measuring the full costs of products and services, by considering the environmental and social costs, such as…
- Hidden/overhead costs: Waste disposal, R&D, Monitoring
- Contingent/Liability costs: Remediation, fines
- Intangible costs: Reputation, motivation, productivity
- Societal costs: Impact on human health, and other externalities
What are key performance indicators?
Measures to gauge progress against environmental, social and economic goals
How can we measure social impact?
- Inputs (costs)
- Outputs (direct results of goals)
- Outcomes (changes that occur in the long-term as result of the activity)
- Impacts (outcomes, less an estimate of what would’ve happened in absence of the program)
What is sustainability reporting? What should it contain? How is its quality measured? What are its benefits?
Sustainability report content should be material, identify stakeholders, and their expectations and interests, be contextual, and be complete.
The report quality is defined by its reliability, its clarity, its balance (S/W), its comparability, its accuracy and its timeliness.
Sustainability reporting increases the understanding of short-term and long-term risks and opportunities, provides a benchmark and assessment on internal and external sustainability performance, and increases transparency (aka improving reputation and brand loyalty).
What is the sustainability mindset?
Embedding sustainability into the company DNA: Integrating values, attitudes, assumptions and issues related to sustainability into the thinking, strategy, planning and operations of all departments
What is the HR management’s role in sustainability?
HR can link the company’s strategy with its’ employees’ behaviour, throughout all HR processes (workforce life cycle).
What are the key stages in the workforce life cycle, in adopting a sustainability mindset?
- Employee engagement
- Employee attraction
- Performance management
Stage in the workforce life cycle: Employee selection
How can HR processes incorporate sustainability?
- Employee branding: Place sustainability-related values as key elements in the employer brand, and the employee value proposition
- Targeting and recruitment: Highlight relevant sustainability skills and knowledge; Find employees whose knowledge and values math the company’s sustainability goals.
- Hiring: Discuss sustainability issues, expectations, requirements, and the company’s sustainability mission and goals.
