Management Accounting & Decisions II N12401

Lecture 9

Sustainability and

Management Accounting

by Hung Woan-Ting

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Learning Objectives

1. To explain the concept of sustainability in a business context

2. To understand the relevance of sustainability in operations management

3. To be aware of the (expected) role of management accounting in managing sustainability performance

A long-term programme involving a series of sustainable development practices, aimed at improving organisational efficiency, stakeholder support and marketing edge (CIMA).

Business practices that meet the needs of the present world without compromising the ability of the future generations to meet their own needs.

Linked to other contemporary business approaches (CSR; environmental management; corporate governance; business ethics)

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1.0 Sustainability in business

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1.1 Sustainability business practices

Sustainable Business Practices

Economic (PROFIT)

Environment (PLANET)

Social (PEOPLE)

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1.2 Business opportunities

Revenue Generation

Cost control Building

Trust

Risk Management

Source: CIMA (2011a)

Components of sustainable operations

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2.0 Sustainability for operations management

Sustainability

Total Quality

Environmental Stewardship

Process Safety

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2.1 Managing sustainability performance

Source: CIMA (2011a)

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3.0 (Management) Accounting for sustainability performance

Source: CIMA (2011a)

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3.1 Evidences in practice

To achieve the best sustainability outcomes companies need to have management accountants in strategy-setting roles.

Management accountants are fulfilling their traditional role as financial specialist BUT NOT YET acting as collaborators in driving towards sustainability as a goal.

(CIMA, 2011b)

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3.2 Evidences in practice

Management accountants are ideally placed to provide the alignment

mechanisms and collaborate with senior management in producing

fully integrated reports, reflecting sustainable strategies adopted by

organisations which fulfil the needs of stakeholder groups.

Global move towards Integrative Reporting

(CIMA, 2011b)

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3.2 The International Framework (2013)

Take Aways

Sustainability is gaining increasing emphasis and is the way forward in the business world.

Sustainability practices has clear implications on operational and strategic management.

Management accounting (and finance profession as a whole) has a key role in managing sustainability performance. Hence the need to gear up with the desired skill sets.

End of Lecture

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1.Read the following chapters in the prescribed textbooks GNBCY Ch1

2.Optional readings:

CIMA (2011a) Sustainability performance

management: how CFOs can unlock value, Thought Leadership Series.

CIMA (2011b) Sustainability and the Role of Management Accountant, Research Executive Summary Series, 7(14).

www.theiirc.org/international-ir-framework

Readings & Exe.

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3. Answer the following questions:

a) Explain the idea of sustainability in a

business context.

b) Do you agree that sustainability should be high on the corporate agenda? Why?

c) Discuss how management accountants may add value to better deliver sustainability performance.

Readings & Exe.