Sustainability accounting
These periods distinguish empirical studies, normative statements, philosophical discussion, teaching programmes, literature and regulatory frameworks.
[8] By the end of the decade, a large volume of empirical work and a number of papers referring to the building of models which foster social accounting disclosures have been published.
Albeit the contribution of this period was notable for extensive developments in the field of social audit, the methodology was nearly identical with the historical financial accounting reports.
The development of a clear regulatory as well as conceptual framework grew in several countries, whereas the progress of environmental regulation in the UK and Europe was slower than in the United States, Canada or Australia.
Several proposals and significant statistical work as well as a growing body of measurement on accounting for sustainable development is being carried out in many international and national settings.
Energetic and innovative experimentation by far-sighted organisations state that sustainability aspects in accounting and reporting are crucially important, feasible and practicable as well.
A4S convenes leaders in the finance and accounting communities to catalyse a fundamental shift towards resilient business models and a sustainable economy.
As a result of this, stakeholders, suppliers, and governmental institutions want a better understanding of how companies manage their resources to achieve their goals to accomplish sustainable development.
This trend has encouraged companies to not only emphasize creation of value but also risk mitigation that are linked to the environmental and social subset of sustainable development.
An effective report delivers information aligned to the company's overall objectives and engage with the audience in a manner that promotes the exchange of ideas and communication.
Failing to report accordingly to the guidelines and frameworks provided (see OECD and GRI) would lead them to potentially reduce their credibility of published information.
[10]: p.2 The accounting structure imposes a more systematic approach that is not too flexible in comparison to the standards and frameworks that offer the GRI and OECD among others.
Specific techniques to measure information in sustainability accounting include:[20] The Inventory Approach focuses on the different categories of natural capital and their consumption and/or enhancement.
[20] In other words, this amount represents how much it would cost an organization to return the biosphere to its natural state at the beginning of the accounting period.
They add that there are certain business areas that financial data cannot precisely evaluate, such as customer satisfaction, organizational learning, and product quality.
Companies that place emphasis on sustainability practices have higher financial performance, as measured by profit before taxation, return on assets, and cash flow from operations, than their counterparts.
Nevertheless, the development of regulatory frameworks is getting closer in several countries; accountants will need to broaden their knowledge and to establish a common dialogue with social and ecological professionals.
Future research will address the real challenges to corporate management to develop pragmatic tools for a well described set of business situations.
The multiple units of measurement include narratives of social policy and procedures as well traditional accounting principles and practice.
Assumptions underpinning the specification of this framework are: It is unrealistic to expect business to voluntarily commit the resources required for full sustainable accounting implementation.
[12]: p.24 A promising trail in a similar way may be the concept of the community welfare economics (German: "Gemeinwohl-Ökonomie") by Christian Felber.
It suggests that business should measure its contributions of economic success according to the benefits reimbursed to the society as social and ecological factors.
[24] A further interesting example is provided by the Sustainability Flower which was developed in 2009 by an international group of prominent pioneers and innovators of the organic movement.
[25] A further promising approach toward the measurement of human, social and natural capital including environmental quality, health, security, equity, education and free time is made by the Buddhist foundation and the Bhutan Government toward operationalising the objective of Gross National Happiness.
These innovative projects may demonstrate that an alternative cultural perspective is needed as well to inform an accounting that is capable of making a genuine contribution to sustainability.
In 2016, SASB conducted a study analyzing the current state of disclosure by observing the practices of the largest ten companies (by revenue) in each of the 79 industries.
The study showed that challenges faced by companies during the KPI development process varied widely, from adapting for different geographic regions and cultures to creating targets.
Adams and Frost suggest that an increase in governmental involvement may lead to adoptions that will in turn improve corporate performance.
Furthermore, the increasing demand by shareholders for non-financial information is expected to serve as an impetus for greater transparency, such as the use of standardized reporting metrics.
Adams and Frost state that despite the positive correlation between sustainability and financial performance, transparency must improve to meet the needs of the shareholders.
