ACCT1101 Lecture 10: L10

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29 May 2018

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ACCT1101

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Lecture10:SustainableBusiness

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CorporateSocialResponsibility:managementphilosophythatincorporatesthebroaderpublic

interestintobusinessplanninganddecision‐making.Importanttofirmsbecauseenvironmentaland

socialimpactsareoftenbusinesscosts(emissiontaxes).

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AccountinginformationusedtoreportomCSRactivitiesandperformanceviafinancialstatements

TripleBottomLine:considerseconomic(firmstatementsandwiderimpactslikejobscreated),

environmental,andsocialperformance.

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Environmentalperformance:usesindicatorslikeenergyuse,emissions,waste

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Socialperformance:howthebusinessinteractswiththecommunity.Indicatorslikeemployeerights,

education

SustainabilityReporting:

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Increasingtrendforbusinesses,governmentsandnot‐for‐profitorganisationstoreporton

sustainabilityreporting

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Triplebottomlineisoneexampleofsustainabilityreporting

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GlobalReportingInitiativeisthegenerallyacceptedframeworkforsustainabilityreporting

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Sustainabilityreportingcontainsthreetechniques:lifecycleanalysis,materialcostflowaccounting,

eco‐efficiency

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Sharepercentagereferstoaproportionaloutputofanactivityvsitsoveralloutput(recycledwaste

asapercentageoftotalwaste).Alsoappliestopercentageofmaterialsinaproduct.

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Lifecycleanalysis:usedtoassessthepotentialandrealenvironmentalimpactsduringallstagesofa

productslife.Usefultocompareproducts

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5stagestoaproductlifecycle;rawmaterialextractionandprocessing,productdesignand

manufacturing,packaginganddistribution,productuse,productendoflife

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Purposeistodesign,marketandmakemoresustainableproducts

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Lifecycleanalysisinvolves3stages;inventoryofpossiblematerialsandenergyrequiredfora

product,assessmentofactualandpotentialenvironmentalimpacts,reviewoftheproductto

asses/improvesustainability

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Hardtogatherandcollectalltherequiredinformationtodoanalysis

Materialcostflowaccounting:traceinputmaterialsthatflowthroughproductionprocessesandmeasure

theoutputofthoseproductionprocessesintermsoffinishedproductsandwaste

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Oftenformsapartoflifecycleanalysis

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Identifiescostsofwasteandemissions

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Workstoreducewasteandimproveproductivity(intheproductionprocess)

Eco‐efficiency:managementphilosophythatencouragesbusinesstosearchforenvironmental

improvementsthatyieldparalleleconomicbenefits.

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Determiningeco‐efficiencyofproductsandservicesisimportantpartinlifecycleanalysis

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Helpsto‘evaluatealternatives’howeverotherindicatorssuchasreliabilityandmaintenancecosts

alsoimportant

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Manyratiosareusedinmicroandmacroeconomicstocompareproductsbasedonecological

impactvscostacrossalternatives

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Comparativedatacanbehardtofindhowever

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Ecoefficiency=(product/servicevalue)/(environmentalinfluence)

EnvironmentalProjectAppraisal:

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