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Acca p1 chap 15  social & env issues
 

Acca p1 chap 15 social & env issues

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    Acca p1 chap 15  social & env issues Acca p1 chap 15 social & env issues Presentation Transcript

    • Chapter 15
      Social & environmental issues
    • Sustainability
      Meet present need without compromising future needs
      Long term mtce of systems according to env, eco, social concerns.
      Sustainability is an attempt to provide the best outcome for human beings and env. Both now and for the indefinite future.
    • Importance of Sustainability
      Gain awareness of org’s actions on the env
      Nowadays co’s feel more responsible and accountable to limit damage caused to the env
      A.k.a: Environmental footprints
      Sustainable development implies intergenerational equity
      CSR reports give details of env & sustainability actions
      Sustainability – includes economic & social concern
      Sustainability also include the concept of Triple bottom line developed by John Elkington
      TBL shows full cost of development, i.e , Economic, Social & environmental.
      Sustainability relates to the org i.r.oplannnig for LT growth, thus ensuring that the org will still operate in the foreseeable future.
    • Effects of economic activity
    • Environmental footprint
      Org operates at a cost to the Env- negative externalities.
      E.F – Attempt to evaluate the size of a co’s impact on the env in 3 aspects
      1)resource consumption
      2)harm to the env- eg pollution, emissions
      3)resource consumption &pollution emissions – qualitative and quatitative evaluations.
    • Environmental footprint
      Quotient approach
      Subjective Approach
    • Quotient Approach
      Objective Approach.
      Sustainability measured : Amt of resource available v/s actual use of resource.
      - Has quantifiable measures of social & env footprints.- same as Tri Bottom line.
      Progress towards sustainability can be measured by analysing , e.g , water usage over time…
      Sustainability = usage < production
    • Subjective approach
      Measures intentions of org to achieve goals & objectives.
      Progress achieved is not easy to quantify
      Progress can be made , eg waste reduction
      But org cant determine the exact amount and effect of this waste reduction.
    • Social footprint
      Evaluation in 3 areas:
      1) social capital
      2) human capital
      3) constructed capital
      Eco activities must be sustainable in all 3 areas.
      Sustainability achieved when social needs of org are met.
      Social capital- Social networks & mutually held knowledge to take effective actions.
      Human capital – Personal health , knowledge , skills , human rights , ethics
      Constructed capital – Physical infrastructures in society ; e.g roads
      Anthro capital
    • Accounting for Sustainability
      - 2 methods to account for sustainability : Full cost accounting and Triple bottom line .
    • Full cost accounting
      Calculate total cost of Co’s activities , incl : env, eco & social costs.
      Aim of FCA- include all costs , even those incurred outside the org.
      Include all the costs of an action/ decision , into the costing system.
      So now the product costing will contain both financial and non financial data.
      Look for other examples
    • TripleBottomLine accounting
      Expands traditional reporting framework
      Includes env & social perf over and above traditional eco & financial perf.
      Consider Triple P’s : People, Planet , Profit.
      Org need proper tools to measure success and monitor progress.
      People- these are stakeholders of the Co. Actions of the co from the viewpoint of different user groups
      Planet- Attempt to reduce ecological footprint. Limit env damage. Co wont be involved in resource depletion.
      Profit- Normal , traditional bottom line. Aim is to maximise profit to maximise shareholders’ return. A TBL org will balance/synergise profit objective with 2 other objectives.
    • Internal management systems
      EMAS- economic management & audit software.
      Focus on disclosure of env systems
      Help to improve co’s env perf
      Co need to produce a regular public env stmt
      Accuracy & reliability of info is checked by independent verifier – to ensure credibility & recognition
      ISO 14000 is a pre-requisite before implementation of EMAS.
      EMAS require org to implement an Env mgmt system( ems)
      4 important elements in EMAS scheme:
      1) Legal requirement
      2) Dialogue/ reporting
      3) Improved environmental performance
      4) employee involvement
    • Internal management systems
      ISO 14000
      Focus on compliance with internal environmental systems
      Series of stds dealing with env mgmt, supported by audit programme
      ISO14000 provides a basis for EMAS
      ISO14000 focus in internal control systems, but provide stakeholders with assurance of good environmental mgmt
      There are a Number of required to be fullfilled before obtaining iso accreditation
    • Benefits of compliance with ISO or EMAS
      Reduced cost in waste mgmt
      Savings in consumption of energy & materials
      Lower distribution costs
      Improved supply chain
      Improved corporate image/ integrity/ image/accountability in front of stakeholders
      A framework for continuous improvement of co’s environmental performance
    • Social & environmental audits
      Social audit
      - process where org assess & demonstrate social , eco, env – benefits & limitations.
      - measure how much org achieve shared values set in mission stmt.
      A process for env audit
      S.A provides info , over and above traditional fin reporting
      S.A links TBL with FCA
      An important factor in S.A is the involvement of external stakeholders.
      S.A evaluates org’s footprint within a given accounting period from the external perspective.
    • Elements of Social audit
      Stmt of purpose
      External view - external stakeholders’ view to form opinion on the org’s position- outside/in approach.
      Internal view – views of directors, staff.. To assess ways of working and rewards . Also to ensure mgmt & i.c.s can achieve stated purpose & objectives.
      Review & planning- audit team manages social audit. Also the performance will be measured to be included in next year’s audit planning.
    • Social audit report
      Overview of the co
      Salient features of the fs
      Overview of products with negative env impacts
      Co’s stance wrt: salaries, job security , policies on discrimination .
      Social impact of the Co in terms of the community, social work
      env impact from co’s activities/ operations
    • Environmental auditing
      AIM
      assess org’s impact on the env
      Help to implement env stds – emas & iso14000
      It provides basic data for env accounting
      Integrate env perf measures into core financial processes to generate cost savings
      Reduce env impact through improved mgmt of resources
    • Environmental auditing
      3 elements to consider:
      1) agreed metrics- what should be measured?
      2) performance measured against the metrics
      3) reporting on the levels of compliance / variance.
      Env audit leads to env action plan
      Main areas in env audit: waste mgmt, emissions, ground/water protection, surface water protection, energy consumption, protection of env sensitive areas(ozone layer), mgmt of contracts.
    • Environmental accounting
      Supports integration of env perf measures
      Social & env auditing provide meta data / empirical evidence of the achievement of social & env objectives
      Social & env auditing makes env accounting possible.
    • Benefits of Env accounting
      Cost savings
      Environmental preservation
      Good corporate governance
    • Examples of measuring impact on env
      Env accounting – monitor water usage
      Social footprints – choose suppliers using sustainable sources of raw mats, following adequate social & env practices
      Env footprints – reduce waste , eg co2 emissions