Accounting: Business Reporting for Decision Making 7th Edition by Jacqueline Birt Solution manual
Additional ways that accountants could contribute to the sustainability efforts of organisations include the following.
- Reporting. Accountants are well versed in the application of standards for reporting. Their skills in this area can be applied to the reporting of a firm’s sustainability performance. Their systems could also be modified to incorporate environmental and social information. This could be used for both external and internal reporting purposes.
- Cost analysis. Comparison of two competing investment projects would require an analysis of economic profits, so to do decisions relating to social and environmental initiatives. For example, a development may require land to be brought back to its original condition, a decision as to what tyres to purchase given the costs and impacts on company maintained roads, or the cost of implementing energy efficient devices compared to the energy consumption costs.
- Audit and assurance services. The concept, process and practice of audit and assurance services are familiar ground for accountants. This makes them ideal candidates to help provide audit and assurance on the corporate social responsibility reports that are issued by organisations.
1.22 Suggest what the most important driver of sustainability would be and explain your rationale for its selection.
Sustainability is about meeting today’s needs without compromising the ability of future generations to meet their own needs. For a business to be sustained over time it needs to be profitable, it needs to maintain customer satisfaction, it needs to maintain product/service quality and it needs to maintain a good relationship with suppliers and to have sustained responsibility for its actions that impact on the environment and community.
Key drivers include the competition for resources, climate change, economic globalisation, and connectivity and communication. Students are likely to provide a range of answers which will provide an opportunity for a debate on the topic. Examples are shown below.
Competition for resources
The world’s population is projected to increase to more than 9 billion people by 2050. Rising living standards will result in both expanded markets for goods and services and unprecedented demands on the planet’s natural resources. Many of the resources once considered renewable — like forests and fresh water — have become finite when we consider that human demands are growing more quickly than the ability of natural processes to replenish them. While exhaustion of commodities can be monitored and measured, the impact of depletion on ecosystems is harder to gauge and often impossible to remedy. With resource depletion comes risk of conflict as people struggle to meet their basic needs. Take water — population growth, economic development and climate change are straining access to fresh water globally. By 2025, two-thirds of the world’s population will live in water-stressed countries, posing significant risks to the economic and social stability of entire regions and to the corporate operations in those regions.
Climate change
Our current fossil-fuel based economy has led to a growing concentration of greenhouse gases in the atmosphere that is driving more extreme weather events, more severe and frequent cycles of drought and flood, and rising sea levels. These phenomena are being met with new policies and regulations including those designed to limit and put a cost on carbon emissions. Businesses need to plan for a policy environment increasingly hostile toward carbon emissions and for the costs of adaptation to climate change. A large number of businesses and investors have come together to call on governments at the national and global level to implement comprehensive climate policy. These groups include Business for Innovative Climate and Energy Policy (BICEP), US CAP, The Prince of Wales Corporate Leaders Group on Climate Change, the Investor Network on Climate Risk (INCR) and the Institutional Investors Group on Climate Change (II GCC), among others. These businesses recognise the opportunity to profit from technologies that reduce emissions and create solutions to global warming.