Question

The movement for improved accounting of sustainability has grown substantially in recent years. The calls for integrated reporting and improved sustainability accounting metrics have created new forces within accounting bodies. The recent efforts of the Sustainability Accounting Standards Board (SASB) highlight the potential for this enhancement to corporate reporting. Discuss how sustainability is being incorporated into corporate reporting today and some of the reasons for these changes? Provide examples for some of this reporting

Answer 1

Solution:-

Incorporation of sustainability in corporate reporting:

Through integrated reporting and improved sustainability accounting we can take the purpose of broadening and integrating the traditional financial approaches to corporate performance measurement, taking stakeholder needs to due account. Integrated reporting is focused on showing the connectivity of strategic objectives, risks and performance to demonstrate how organisations create value i.e. it is focused on how strategic objectives are linked to critical success factors and key performance indicators and how this is translated throughout an organisation. It encompasses the need to address risk, external influences, stakeholders, non-financial results, etc. It addresses the importance of selecting the right performance management techniques, information systems, reporting functions to ensure performance is delivered at all levels and over short and long term. Sustainability can also be incorporated by initiating and establishment of organisational development and organisational learning processes.

Reasons:

Some of the reasons for these changes are as follows

1) Real time data: Real time data is becoming the best way for every organisation to improve control and governance.

2) Better decision making: Through improved accounting in sustainability and integrated reporting faster and better decisions can be taken.

3) Transparency: Knowing how different areas of your business intereract, influence each other and impact overall performance is vital to achieving optimal business efficiency.

4) Streamlined process: Optimal performance depends on clear communication and a common purpose. By streamlining your operating system through digital integration, every area of business can share and benefit the same information, leading to greater resource efficiency, employee satisfaction, etc.

5)Thinking ahead: Envisioning the future enables companies to generate fresh ideas for implementation. These ideas can provide a better image for the organisation.

Examples: Capital Cooling ltd. contributing to economic growth by maximizing the resources and reducing the carbon footprint of operations, In financial sector Royal bank of Scotland plc , HSBC, ING, etc are also some of the examples.

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