Week 12 - Measuring and Reporting Sustainability Flashcards
What are the 3 interrelated outcomes that a business needs to achieve?
- A sustainable economy
- A sustainable society
- A sustainable environment
True or False: The primary purpose of making an organisation sustainable is to
make sure the organisation survives in the long-term.
False
True or False: Traditional profits measures can measure sustainability; the
information just has to be rearranged.
False
How can management accounting support sustainability?
- Facilitate control: Measure and report sustainability
- Facilitate decisions: Incorporate costs and performance
measures into decision contexts
What are the 3 performance indicators when measuring sustainability?
- Economic performance (focuses on financial measures and the impact on broader economy)
- Social performance (a firm’s activities influence on society)
- Environmental performance (A firm’s activities influence on the environment)
What are some examples of economic performance measures?
- Economic performance: e.g., profits, costs, and revenues
for the organization’s activities due to climate changes - Market presence: e.g., purchasing from local suppliers
- Indirect economic impacts: e.g., investments for public
benefits through commercial engagement
What are some examples of social performance measures?
- E.g., Employment: total number and rate of new employee
hires; employee turnover by age group, gender and region - E.g., Labour/Management relations: percentage of
employees covered by collective bargaining agreements - E.g., Occupational health and safety: rates of injury,
occupational diseases, lost days, and absenteeism and
number of work-related fatalities by region and by gender - E.g., Customer health and safety: percentage of significant
products that improve health and safety
What are some examples of environmental performance measures?
- Materials: percentage of materials used that are
recycled input materials - Energy: direct energy consumption by primary energy
source. - Water: percentage and total volume of water recycled
and reused - Emissions: Total weight of waste by type and disposal
method. - Biodiversity: description of impact on biodiversity
The best way to make businesses take into account the external costs of their activities is by:
A) fines
B) penalties
C) internalising those costs
D) None of the above
C) internalising those costs
The externalised cost of electricity generation is:
A) the cost of purchasing water to cool the plant
B) the cost of constructing the plant
C) the cost of buying coal
D) None of the above are externalised costs.
D) None of the above are externalised costs.
True or False: Environmental management accounting provides only nonfinancial measures of environmental-related performance.
False
True or False: One benefit of integrating social and environmental performance
into a traditional balanced scorecard is to show the strategy map
for the four aspects.
False, because it is a benefit of separating the social and environmental performance. With the 4 separated, we can link all 4 together.
What are the 2 approaches to using BSC to support sustainability?
- Integrate social and environmental performance into a
traditional balanced scorecard - Capture social and environmental performance in a separate
BSC
What are the 2 advantages to integrating social and environmental performance into a
traditional balanced scorecard?
- communicates the links among social, environmental and
economic performance - communicates a higher level of organizational commitment
to these dimensions of performance
What are the 2 advantages of capturing social and environmental performance in a separate BSC?
- Show the strategy map for the four aspects
- Show the leading factors that must be invested in order to
achieve social and environmental performance
What are the 3 difficulties of measuring sustainability?
- Future ecological and social issues are not always known - Difficult to predict future value and the impact on ecology
and society - Many costs and benefits are external to the organization - Difficult to identify and measure costs and benefits; Externality
- Many costs and benefits are difficult to measure in financial
terms (E.g., difficult to measure the costs arising from injury.)
What are the consequences of externalities?
Optimal outcomes for society will not be achieved if the cost is not incorporated into the pricing mechanism. People may overuse it.
How should you resolve the consequence of externalities?
- Internalize into an organisation’s cost structure
- Identify and allocate all the cost of producing and
distributing the products to the individual firms whose
actions cause them.
What is the environmental management system?
An EMS is the organisation’s formal and systematic process
for guiding, measuring and benchmarking their
environmental impact.
What is environmental management accounting?
EMA supplements the cost accounting system by providing
information about the environmental impact of the organization’s
activities
How is ABC used to support sustainability in the case of EMA?
ABC separates out the costs associated with
environmental impacts to manage environmental
performance.
