Acca p1 chap 15 social & env issues


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Acca p1 chap 15 social & env issues

  1. 1. Chapter 15<br />Social & environmental issues<br />
  2. 2.
  3. 3. Sustainability<br />Meet present need without compromising future needs<br />Long term mtce of systems according to env, eco, social concerns.<br />Sustainability is an attempt to provide the best outcome for human beings and env. Both now and for the indefinite future.<br />
  4. 4. Importance of Sustainability<br />Gain awareness of org’s actions on the env<br />Nowadays co’s feel more responsible and accountable to limit damage caused to the env<br />A.k.a: Environmental footprints<br />Sustainable development implies intergenerational equity<br />CSR reports give details of env & sustainability actions<br />Sustainability – includes economic & social concern<br />Sustainability also include the concept of Triple bottom line developed by John Elkington<br />TBL shows full cost of development, i.e , Economic, Social & environmental.<br />Sustainability relates to the org i.r.oplannnig for LT growth, thus ensuring that the org will still operate in the foreseeable future.<br />
  5. 5.
  6. 6. Effects of economic activity<br />
  7. 7. Environmental footprint<br />Org operates at a cost to the Env- negative externalities.<br />E.F – Attempt to evaluate the size of a co’s impact on the env in 3 aspects<br />1)resource consumption<br />2)harm to the env- eg pollution, emissions<br />3)resource consumption &pollution emissions – qualitative and quatitative evaluations.<br />
  8. 8. Environmental footprint<br />Quotient approach<br />Subjective Approach<br />
  9. 9. Quotient Approach<br />Objective Approach.<br />Sustainability measured : Amt of resource available v/s actual use of resource.<br />- Has quantifiable measures of social & env footprints.- same as Tri Bottom line.<br />Progress towards sustainability can be measured by analysing , e.g , water usage over time…<br />Sustainability = usage < production<br />
  10. 10. Subjective approach<br />Measures intentions of org to achieve goals & objectives.<br />Progress achieved is not easy to quantify<br />Progress can be made , eg waste reduction <br />But org cant determine the exact amount and effect of this waste reduction.<br />
  11. 11. Social footprint<br />Evaluation in 3 areas:<br />1) social capital <br />2) human capital <br />3) constructed capital<br />Eco activities must be sustainable in all 3 areas.<br />Sustainability achieved when social needs of org are met.<br />Social capital- Social networks & mutually held knowledge to take effective actions.<br />Human capital – Personal health , knowledge , skills , human rights , ethics<br />Constructed capital – Physical infrastructures in society ; e.g roads<br />Anthro capital<br />
  12. 12. Accounting for Sustainability<br />- 2 methods to account for sustainability : Full cost accounting and Triple bottom line .<br />
  13. 13. Full cost accounting<br />Calculate total cost of Co’s activities , incl : env, eco & social costs.<br />Aim of FCA- include all costs , even those incurred outside the org.<br />Include all the costs of an action/ decision , into the costing system.<br />So now the product costing will contain both financial and non financial data.<br />Look for other examples<br />
  14. 14. TripleBottomLine accounting<br />Expands traditional reporting framework<br />Includes env & social perf over and above traditional eco & financial perf.<br />Consider Triple P’s : People, Planet , Profit.<br />Org need proper tools to measure success and monitor progress.<br />People- these are stakeholders of the Co. Actions of the co from the viewpoint of different user groups<br />Planet- Attempt to reduce ecological footprint. Limit env damage. Co wont be involved in resource depletion.<br />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.<br />
  15. 15. Internal management systems<br />EMAS- economic management & audit software.<br />Focus on disclosure of env systems<br />Help to improve co’s env perf<br />Co need to produce a regular public env stmt<br />Accuracy & reliability of info is checked by independent verifier – to ensure credibility & recognition<br />ISO 14000 is a pre-requisite before implementation of EMAS.<br />EMAS require org to implement an Env mgmt system( ems)<br />4 important elements in EMAS scheme:<br />1) Legal requirement <br />2) Dialogue/ reporting <br />3) Improved environmental performance <br />4) employee involvement<br />
  16. 16. Internal management systems<br />ISO 14000<br />Focus on compliance with internal environmental systems<br />Series of stds dealing with env mgmt, supported by audit programme<br />ISO14000 provides a basis for EMAS<br />ISO14000 focus in internal control systems, but provide stakeholders with assurance of good environmental mgmt<br />There are a Number of required to be fullfilled before obtaining iso accreditation<br />
  17. 17. Benefits of compliance with ISO or EMAS<br />Reduced cost in waste mgmt<br />Savings in consumption of energy & materials<br />Lower distribution costs<br />Improved supply chain<br />Improved corporate image/ integrity/ image/accountability in front of stakeholders<br />A framework for continuous improvement of co’s environmental performance<br />
  18. 18. Social & environmental audits<br />Social audit<br />- process where org assess & demonstrate social , eco, env – benefits & limitations.<br />- measure how much org achieve shared values set in mission stmt.<br />A process for env audit<br />S.A provides info , over and above traditional fin reporting<br />S.A links TBL with FCA<br />An important factor in S.A is the involvement of external stakeholders.<br />S.A evaluates org’s footprint within a given accounting period from the external perspective.<br />
  19. 19. Elements of Social audit<br />Stmt of purpose<br />External view - external stakeholders’ view to form opinion on the org’s position- outside/in approach.<br />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.<br />Review & planning- audit team manages social audit. Also the performance will be measured to be included in next year’s audit planning.<br />
  20. 20. Social audit report<br />Overview of the co<br />Salient features of the fs<br />Overview of products with negative env impacts<br />Co’s stance wrt: salaries, job security , policies on discrimination .<br />Social impact of the Co in terms of the community, social work<br />env impact from co’s activities/ operations<br />
  21. 21. Environmental auditing <br />AIM<br />assess org’s impact on the env<br />Help to implement env stds – emas & iso14000<br />It provides basic data for env accounting<br />Integrate env perf measures into core financial processes to generate cost savings <br />Reduce env impact through improved mgmt of resources<br />
  22. 22. Environmental auditing<br />3 elements to consider:<br />1) agreed metrics- what should be measured?<br />2) performance measured against the metrics<br />3) reporting on the levels of compliance / variance.<br />Env audit leads to env action plan<br />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.<br />
  23. 23. Environmental accounting<br />Supports integration of env perf measures<br />Social & env auditing provide meta data / empirical evidence of the achievement of social & env objectives<br />Social & env auditing makes env accounting possible.<br />
  24. 24. Benefits of Env accounting<br />Cost savings<br />Environmental preservation<br />Good corporate governance<br />
  25. 25. Examples of measuring impact on env<br />Env accounting – monitor water usage<br />Social footprints – choose suppliers using sustainable sources of raw mats, following adequate social & env practices<br />Env footprints – reduce waste , eg co2 emissions<br />