ACCA AFM Syllabus A. Role Of The Senior Financial Adviser - Social and Environmental Issues - Notes ^{6 / 6}

Social and environmental issues in the conduct of business and of ethical behaviour

• Economic activity is only sustainable where its impact on society and the environment is also sustainable.

  Sustainability can be measured empirically or subjectively

Environmental Footprint

Measures a company’s resource consumption of inputs such as energy, feedstock, water, land use, etc.

Measures any harm to the environment brought about by pollution emissions.

Measures resource consumption and pollution emissions in either qualitative, quantitative or replacement terms. 

Together, these comprise the organisation’s environmental footprint.

A target may be set to reduce the footprint and a variance shown. 

Not all do this and so this makes voluntary adoption controversial

Sustainable development

The development that meets the needs of the present without compromising the ability of future generations to meet their own needs.

Energy, land use, natural resources and waste emissions etc should be consumed at the same rate they can be renewed

Sustainability affects every level of organisation, from the local neighborhood to the entire planet.

It is the long term maintenance of systems according to environmental, economic and social considerations.

Full cost accounting

This means calculating the total cost of company activities, including environmental, economic and social costs

TBL (Triple bottom line) accounting

TBL accounting means expanding the normal financial reporting framework of a company to include environmental and social performance. 

The concept is also explained using the triple ‘P’  headings of ‘People, Planet and Profit’

The principle of TBL reporting is that true performance should be measured in terms of a balance between economic (profits), environmental (planet) and social (people) factors; with no one factor growing at the expense of the others. 

The contention is that a corporation that accommodates the pressures of all the three factors in its strategic investment decisions will enhance shareholder value, as long as the benefits that accrue from producing such a report exceeds the costs of producing it.

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Lauren Laverne on Ethical trade

Nice article