Sustainability accounting.doc

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Sustainability accounting

Sustainability accounting(also known as social accounting, social and environmentalaccounting, corporate social reporting, corporate social responsibility reporting,or non-financial reporting) was originated about 20 years ago[1]and is considered asubcategory of financial accountingthat focus on the disclosure of non-financial informationabout a firm's erformance to e!ternal arties such as caital holders, mainly to stakeholders,creditors and other authorities" #hese reresent the acti$ities that ha$e a direct imact onsociety, en$ironment and economic erformance of an organisation" %ustainability accountingin managerial accounting contrast with financial accounting in that managerial accountingisused for internal decision making and the creation of new olicies that will ha$e an effect onthe organisation's erformance at economical, ecological and social (known as the trilebottom lineor #rile-&'s &eole, &lanet, &rofit) le$el"

%ustainability ccounting is a tool used by organisations to become more sustainable" #hemost known widely used measurements are the ororate %ustainability *eorting and thetrile bottom line accounting" #hese recognise the role of financial information and shows howtraditional accountingis e!tended by imro$ing transarency and accountability by reorting

on the #rile-&'s"

s a result of the trile bottom le$el reorting, and in order to render and guaranteeconsistency in social and en$ironmental information the +* (+lobal *eorting nitiati$e), wasestablished with the goal to ro$ide guidelines to organisations reorting on sustainability" nsome countries guidelines were de$eloed to comlement the +*" #he +* states thatreorting on economic, en$ironmental and social erformance by all organi.ations is asroutine and comarable as financial reorting"

%cheme of sustainable de$eloment/ at the confluence of three constituent arts"[]

History

The concept of sustainability accountinghas emerged from de$eloments in accounting,with roots in a broader sense o$er a eriod of the last forty years and in the narrow senseo$er the last ten years" #he de$eloment re$eals two lines of thought" #he first line is thehilosohical debate about accountability if and how it contributes to sustainablede$eloment and which are the necessary stes towards sustainability" #his aroach isbased on an entirely new system of accounting designed to romote a strategy ofsustainability" %econd line is the management ersecti$e associated with $aried terms andtools towards sustainability" #his could be seen as an e!tension of or modification to

con$entional financial cost or management accounting" #he former may be more aealing/#o de$elo sustainability accounting de no$o allows a comlete rearaisal of the relati$esignificance of social, en$ironmental and economic benefits and risks and their interactions incororate accounting systems"[]/"345#he de$eloment which leads to sustainableaccounting could be distinguished in se$eral time eriods in which a number of trends were
http://en.wikipedia.org/w/index.php?title=Sustainability_accounting&printable=yes#cite_note-1http://en.wikipedia.org/wiki/Financial_accountinghttp://en.wikipedia.org/wiki/Managerial_accountinghttp://en.wikipedia.org/wiki/Triple_bottom_linehttp://en.wikipedia.org/wiki/Triple_bottom_linehttp://en.wikipedia.org/wiki/People,_Planet,_Profithttp://en.wikipedia.org/wiki/Accountinghttp://en.wikipedia.org/wiki/Global_Reporting_Initiativehttp://en.wikipedia.org/w/index.php?title=Sustainability_accounting&printable=yes#cite_note-Adams2006-3http://en.wikipedia.org/w/index.php?title=Sustainability_accounting&printable=yes#cite_note-Schaltegger.2FBurritt-4http://en.wikipedia.org/wiki/Financial_accountinghttp://en.wikipedia.org/wiki/Managerial_accountinghttp://en.wikipedia.org/wiki/Triple_bottom_linehttp://en.wikipedia.org/wiki/Triple_bottom_linehttp://en.wikipedia.org/wiki/People,_Planet,_Profithttp://en.wikipedia.org/wiki/Accountinghttp://en.wikipedia.org/wiki/Global_Reporting_Initiativehttp://en.wikipedia.org/w/index.php?title=Sustainability_accounting&printable=yes#cite_note-Adams2006-3http://en.wikipedia.org/w/index.php?title=Sustainability_accounting&printable=yes#cite_note-Schaltegger.2FBurritt-4http://en.wikipedia.org/w/index.php?title=Sustainability_accounting&printable=yes#cite_note-1


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e$ident/ 16141670, 167141660, 166141663 and u to the resent" #hese eriods distinguishin $olume of emirical studies, normati$e statements, hilosohical discussion, teachingrogrammes, literature and regulatory frameworks"[3]

19711980

8y the end of the decade has been ublished a large $olume of emirical work and a numberof aers referring to the building of models which foster social accounting disclosures,although this early works suffered from roblems with sub9ecti$ity of analysis as well socialand en$ironmental accounting literature (%:;) was underde$eloed" nformation related tothe social dimension of accounting ha$e been mostly connected with emloyees or roducts":n$ironmental matters were treated as art of a generally undifferentiated and fairlyunsohisticated social accounting mo$ement"[3]/"7473:n$ironmental damage includeddamage to terrain, air, water, noise, $isual and aesthetic and other forms of ollution, andsolid-waste roduction"[3]/"75


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models of the 160s and adated them to the discussions about the $aluation of e!ternalities"%ustainability and the discussion of the role of management accounting in assisting withsustainable de$eloment ha$e become of growing interest"[3]/"65466

199present

#he con$ergence of global caital markets and the emergence of global and regional ?ualitycontrol issues 4 culminating for the accounting rofession in the sian financial crisisin166C1667 as well the :nronollase in 2001 4 led to a subse?uent high-le$el focus oninternational and national accounting"[5]/"47#he accounting literature has demonstrated aconsiderable increase in concern for the issues of sustainable de$eloment and accounting"Dia the e!loration of what sustainability accounting may entail, the accounting rofession islikely to be in$ol$ed in re-e!amining accounting fundamentals in the light of the challenge ofsustainable de$eloment" %e$eral roosals and significant statistical work as well as agrowing body of measurement on accounting for sustainable de$eloment is being carried outin many international and national settings"[]/"1:$en sura-national olicy bodies likethe @nited =ationsand the E:>ha$e sonsored work addressing accounting forsustainability"[]/"2[7]/"0 @ till now en$ironmental accounting is the most e$ol$ed form of

sustainability accounting and increasingly rocessed in the academic circle beginning with thework of *obert Bugh +rayin the early 1660s, and through the release of the %ustainabilityccounting +uidelines at the Forld %ummit on %ustainable >e$elomentin 2002"[6]/"47>ue tothe use of different frameworks and methods much uncertainty remains how this agenda willde$elo in the future" ertain is that the ast economic de$eloment and the current human(and hence business) acti$ities are not sustainable and has led to ?uestioning the currentmode of de$eloment" *ecent years ha$e seen an increasing accetance and e$enenthusiasm for these new reorting aroaches" lso energetic and inno$ati$ee!erimentation by far-sighted organisations ha$e demonstrated that sustainability asects inaccounting and reorting are crucially imortant, feasible and racticable as well"[10]n this

resect, thenternational


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Ba.ardous andnon ha.ardouswaste

*ecycling

&ackaging

trade

&ublic olicy

>i$ersity

%afety

nticorrution

:conomic erformance


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e!erience" and +*) would lead them to otentially reduce their credibility of ublishedinformation"

#he +*, E:> and @=%> (@nited =ations ommission on %ustainable >e$eloment)aresome of the main actors in integrating a olicy framework for better integrating the threedimensional le$el of sustainability by decouling economic growth from en$ironmentalressures"

#he +* is a multi-stakeholder organi.ation that is committed to de$eloing and maintainingthe %ustainability *eorting +uidelines" #he goal is the continuous imro$ement ofsustainability reorting, this is only a rotocol that aroaches the alication le$els, [1]thereare three le$els of reorting , 8 and , but these are not yet legally ratified fundamentalsand are only used to assist comanies with their sustainable reorts"

En the one hand the @=%> focuses only on the en$ironmental dimension of thesustainability accounting"

En the other hand the E:> (Ergani.ation for :conomic o-oeration and >e$eloment)focuses only focuses only in two frameworks/[]/"2the analytical and accounting frameworks"

'nalytical frame%or&s

nalytical frameworks are imortant for linking information from different areas" Darioustyes of frameworks are being used nowadays deending on the urose of measurement"

#hese frameworks seek to/

ntegrate the economic, en$ironmental and social dimensions of sustainablede$eloment

Ba$e sound foundations and to maintain key information needed to imro$esustainable de$eloment measurements

larify relationshis between different indicators and olicies"

%ome e!amles of analytical frameworks are &ressure 4 %tate 4 *esonse (&%*) model whichis based on one of its $ariants >ri$ing ri$ing


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acti$ities" %ome of these accounts focus on the hysical e!change between the economicsystem and natural en$ironment"

(ealth-based approachesto sustainability refer to the reser$ation of stock of wealth"%ustainability is obser$ed as the maintenance of the caital base of a country and thereforeotentially measured" number of en$ironmental changes are contained also in thesefinancial statements that are measured during an accounting eriod of time"

#he +* offers ad$anced material to hel organisations of all tyes to create theiraccountability reorts" #his ublished material lead organisations through the reortingrocess with main idea of becoming more sustainable in their ractices in e$eryday business"

)rganisations and initiatives

#he listed organisations and initiati$es assist comanies in finding the right ath tosustainability accounting"


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*ompany+)rgani,ation

escription .in&

ccountbility

ccountbility is an internationalrofessional institute that focuses onthe sustainable de$eloment,

accountability and ublic disclosure"

htt/CCwww"accountability"orgC

arbon >isclosure &ro9ect

#he arbon >isclosure &ro9ect is aninternational initiati$e to disclosurecororate information relatingclimate change"

htt/CCwww"cdro9ect"net

ndian entre for

ororate %ocial*esonsibility (%*)

%* is a =ot for &rofit +lobald$isory and #raining Ergani.ation

engaged in the 8usiness of romoting ororate %ocial*esonsibility in ndia and globally"

htt/CCwww"iccsr"org

Summary and outloo&

=e$ertheless, the de$eloment of regulatory frameworks is getting closer in se$eralcountries accountants will need to broaden their knowledge and to establish a commondialogue with social and ecological rofessionals" #he formation ofindeendent transdiscilinarysustainability teams to reare and audit sustainabilityaccounts would add credibility to the rocess"[6]/"2

;ike the sections abo$e illustrated sustainable accounting resulted in different interretationsand intended uses of accounting" #he de$eloment of a ragmatic set of tools for cororateractice is to rogress"


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measurements and reorting with the differentiated unitary information effects between thedimensions of sustainable de$eloment" #he multile units of measurement includenarrati$es of social olicy and rocedures as well traditional accounting rinciles andractice"

omonents of +oeff ;ambertons comrehensi$e sustainability accounting framework"

ssumtions underinning the secification of this framework are/

1" the ob/ectivesof the sustainability accounting framework and the reorting model2" the principlesunderinning the alication of the model

" techni2ueslike data cature tools, accounting records and measurements

" reportsused to resent information to stakeholders

3" and 2ualitative attributesof the information roduced and reorted"[6]/" 15-1

t is unrealistic to e!ect business to $oluntarily commit the resources re?uired for fullsustainable accounting imlementation"


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Sustainability accounting.doc

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