Introduction to Accounting for Sustainable Development
Sustainable development is very essential element for each organization which allows them for present and future growth of the business by carefully balancing future and current demands (Hess, 2013). Sustainable development helps in attaining the present needs and requirements without sacrificing the ability of future generations to attain their self needs and requirements. The present research report is about the accounting for sustainability and it comprises the assessment of consideration of organization towards the sustainable development. Along with this research also helps in measuring the sustainability of the company and role of accountants in computation of sustainabil
Including this impact of socially responsible investment on the promotion of sustainable development of company are also describing in the following paragraphs of the report. Baxter organization has been chosen for the whole research; it is a leading organization of United States in healthcare industry. It focuses on long term sustainability approach towards their social, economical and environmental responsibilities with their business priorities.
Task 1: Assessment Of Sustainability Report
Baxter is an international healthcare foundation which considers the sustainability development as a long term approach and it includes various responsibilities in their business operations, such as social, economical and environmental accountability of organization (Baker, 2006). Along with this Baxter organization is doing efforts for create alignment of sustainable development areas in attaining their mission, vision and goals of organization. All these areas help in attaining their main objective of saving sustaining lives.
Genuine commitment to sustainability:
Sustainability report of the Baxter shows that sustainability is the major strength of this organization and it helps in providing a sustainable value to its stakeholders (Sisaye, 2013). Sustainability report of Baxter comprises some major areas such as priorities and goals, governance, ethics and compliance, employees, environment, health and safety, product responsibility, supply chain, community support and public policy.
Major commitment of the Baxter to sustainability includes the conservation of resources and reduction of adverse aspects of Environmental, Health and Safety (EHS), disasters and hazards and association of this commitment with its product services and operations. Along with this Baxter have some other commitment towards their stakeholders, such as (Roders and Oers, 2014):
- Employees: Baxter will provide safe, effective and healthy working environment.
- Compliance: Baxter will follow all laws and rules regarding the EHS management and organization requirements.
- Business integration: Baxter will integrate various EHS considerations into their different business activities.
- Customers: Organization will attain all environmental, health and safety needs of customers (Purvis and Grainger, 2013).
- Community and Government: Baxter will take participation in each and every EHS program and initiatives of community and government.
- Product sustainability: Baxter will take step towards the sustainable product life cycle, research and development and design.
- Supply chain: Organization will develop a secure and safe supply chain management for company which ensures about the patient safety (Yu, Chawla and Simoff, 2013).
As per the above discussed commitment Baxter is doing various efforts for attaining their objectives and goals of organization towards sustainable development. As per the Global Reporting Initiative (GRI) Index, Baxter gets level B for their sustainable development accountability. According to the GRI index some major areas which are covered by Baxter for sustainable development are as follows (Sustainability at Baxter, 2012):
Major commitment of Baxter is environmental, health and safety and performance of Baxter towards this commitment can be measured by the notice of violation, environmental fines and compliance indicators, etc. company has received 22 environmental notice of violence and paid £28,400 in terms of environmental fines in 2013. For managing all these compliance Baxter facilitates significant changes in waste water treatment facilities and system provides surface water ways, for instance rivers, streams or creeks, etc. all these things help in following all responsibility of Baxter towards the environment (Sustainability: the role of accountants. 2014).
To fulfil the commitment towards health Baxter has developed a profile which is BeWell@Baxter and it helps in increasing the awareness about the various factors which affect individual’s health such as life style choices, family history, etc. Along with this Baxter promotes some other programs and initiatives such as Flu Vaccine, health promotion programs, smoke free work place, etc (Sustainability: the role of accountant, 2014).Towards the safety commitment company is doing various programs and initiatives such as it focuses on enhancing safety culture and performance.
It spotlights on injury reduction strategies and building a zero-harm workplace at Baxter. Along with this organization arrange some training guides for global training for confined space as well as near miss reporting is also an appropriate strategy for enhancing engagement of in improvement of hazards (Baxter International Inc (NYSE:BAX) publishes 2013 Sustainability Report, 2014).
Baxter provides complete potential and rewards to their employees for their performance, efficient working environment, appropriate training and development programs and opportunities, benefits and compensations, diverse working environment and participative cultural for managing personal and professional lives of employees.
For fulfilling the commitment in the direction of compliance Baxter has established corporate responsibility office (CRO). It ensures about ethics, compliance laws and legislations are followed by company with highest level (Lawn, 2006). Baxter has developed some effective principles which ensure that company is following effective corporate governance or not.
GRI reflects that Baxter follows sustainable product life cycle which considers life cycle assessment; pursues bioethics policy and statements and maintains all standards for clinical trials; as well as considers all policy for animal welfare, etc. Therefore, Baxter ensures about maintaining high standards in quality, safety and integrity of products (Bebbington, 2007).
Baxter focuses on effective participation and communication of suppliers in key sustainability issues, such as utilization of energy, emissions of gas, reduction of wastage and impact of inputs on environment which are used by Baxter for developing a product (Borowy, 2013).
Therefore, GRI index report shows that company is concerned towards the sustainable development in context of social, environmental and economical. There are various reasons behind it, such as it is doing significant efforts towards fulfilling its sustainable commitments and it has covered different areas of sustainable development.
Task 2: Role Of Accountant On Sustainability Of Organizations
Sustainability is a most primary goal and economic necessity and it is the most significant resource to meet their opportunities and reduce risks from business. Environment, society and business performance play an important role in decision making of organization (The role of accountants in measuring environmental sustainability, 2012). Accountant’s role in an organization is not only monitoring and reporting the financial data of organization but also they play and significant role in expands the management data as per the social and environmental outcomes. There are various accounting and financial functions of the accountant of organization and are required for developing a significant concept and measurement tool for sustainability. These are as follows:
- Sustainability accounting: it can be define as quantifying, recording and analyzing the impact of various economic and environmental operations and society community.
- Reporting of sustainability: It is a significant tool for providing the important information to the public such as importance of impact of sustainability on stakeholders of organization (Hopwood, Unerman and Fries, 2010).
- Sustainability assurance: It includes the opinion of an expert and experienced and responsible executive of organization about the declaration and assurance of the sustainability report of company.
- Management of sustainability: This function includes various operation and activity of organization that help in identifying key impacts and issues of sustainability which are faced by organization. It also comprises various management activities for reducing and managing the risk of company (Osnes, 2013).
Worldwide accounting professions also have significant contribution in environmental sustainability of organization. There are various accounting professions which play an important role in measuring environmental sustainability of company; these are as follows:
Institute of Chartered Accountants of Scotland (ICAS) has launched an easy competition in 2012 and increasing the awareness about the environmental sustainability of company is the major objective of this competition as well as this accounting profession also wants to determine the role of accountants in environmental sustainability and relevant issues (Environmental Aspects of Sustainability: SMEs and the Role of the Accountant, 2012). This activity of this accounting profession result out that environmental sustainability of the organization can be attained by the qualitative and quantitative data of the organization which are generally recording, analyzing and reporting by the accountants of the organization.
International Auditing and Assurance Standards Board (IAASB) released an international standard for developing an environmental sustainability which includes assurance greenhouse gas (GHG) statement of different organization. This standard help in ensuring the high quality assurance about the green house gas emission information of those organizations which are released the GHG statement.
International Federation of Accountants also plays a significant role in environmental sustainability of organizations. Committee of the IFAC published a framework which is a very important tool for integrating the sustainability of organization with strategy operation and reporting of the company.
Along with this Association of Charted Certified Accountants (ACCA) also provides guidelines about the engagement of stakeholders in determining different ways for doing well when business if performed very nice. This guidance also helps in attaining the objectives of Corporate Social Responsibilities of an organization (Ayre and Callway, 2013).
As per the above discussion various international professions have huge contribution in developing sustainability of organization as well as resolving various issues relevant to environmental sustainability of company. Accountant is a very significant person which plays an important role in all above discussed functions of company regarding the sustainability of association. Major role of accountants in sustainability of organization are as follows:
Accountant provides assistance in developing different policies for managing different issues of environmental sustainability. They help in apply these policies in organization and monitor the overall performance of organization for effective management of operation risk of company (Promoting Development through Corporate Social Responsibility - Does it Work, 2003).
Accountants are important part of organization which increases the awareness about the various issues regarding the sustainability of company and they spotlights available opportunities for company and provide various ways and direction for attaining these opportunities.
Accountants have interferences in formulation, implementing and monitoring of different policies, standards and management systems for effective procurement and supply chain management of organization (Royo, Yserte and García, 2012).
In identification and determination of environmental and social rules and regulations which are more suitable for an organization as well as they helps in applying these rules and regulations in available managerial information system of organization.
Accountants provide assistance in protection and expansion of the awareness about the regulations and rules relevant to the account of organization and tax policies of the company and their relationship with environmental and social issues of company.
Skills and knowledge of accountants have a link with initiatives for resolving the sustainability issues (Ahmed and Hanson, 2011).
They play an important role in discussion of public on various ways for promoting sustainability.
Accountant’s augments transparency and pressures for expand the sustainable responsibilities of organization as well as they highlight the importance of corporate social responsibilities for attaining the competitive advantages and effective corporate image of organization.
Auditors have a responsibility towards the consideration of all purchasing policy of the organization for maintaining all supply chain standards (Sampaio and Gosling, 2014).
Sustainable development accountability of organization also includes effective rating and benchmarking for appropriate publication of accounts and financial statements of the organization and for completing these responsibility accountants provides relevant and reliable information regarding financial performance of company.
For developing a sustainable advantages organization requires to provide appropriate information about financial performance of company to their stakeholders and investors. By audit report and suitable financial reporting accountants facilitates these sustainable advantages for organization (Ahmed and Hanson, 2011).
Therefore, various worldwide accounting professions and accountant’s plays an important role in developing sustainable advantages for organization. All these roles are helpful for measuring the sustainability of company in terms of environmental, social and economical aspects of organization.
Task: 3: Impact Of Socially Responsible Investment On Promoting Sustainable Development Of Organization
Socially Responsible Investing (SRI) can define as that type of outlay which has two types of objectives, such as appropriate return in terms of money and social wellness (Singh and Debnath, 2012). Generally social responsible investment of different investors helps in encouraging the corporate practices, corporate social responsibilities, environmental sustainability, protection of consumer and human rights and diversity management, etc. Socially responsible investing generally avoids some specific businesses such as tobacco, gambling, pornography, weapons and alcohol, military etc. Decisions of the SRI about their investment is based on some specific analysis and measurements, such as environment emissions, recycling programmes and toxic material of organization, human rights policies such as minority and gender treatments, labour rights and employment policy of the company, inventory contents such as alcohol, tobacco, gambling, etc. along with this society development and charitable activities are an important criteria for SRI (Djeflat, 2010). Some major roles of the SRI in promoting sustainable development of organization are as follows:
Social responsible investment help in growth of sustainable capital flows of the organization that facilitates appropriate amount of funds for different sustainable activities of organization such as, environmental, social and economical functions of the organization (Roders and Oers, 2011).
Social responsible investor’s generality paying attention on different issues of sustainability and those organizations which contributes towards the sustainable development. This attention of SRI encourages the sustainable activities of organizations for obtaining funds from social responsible investing (Moon, 2007).
As per the criteria of the SRI growth the company investment generally done by investors in those organizations which have continuous competitive and effective financial performance and appropriate attention on social and environmental issues. Therefore, SRI increases the financial performance of the organization with suitable sustainability.
SRI has a significant impact on the range of social and environmental issues which influences the sustainability practices and aspects of the business (Sisaye, 2013).
Due to the pressure of social responsible investing company’s developed various sustainable disclosure which leads environment, social and economical effectiveness of organization.
Social responsible financing creates anxiety to the organizations for improving various policies such as human rights, employment, stakeholder, minority, diversity and women rights, etc (Mofuoa1, 2010 ).
Along with this, SRI encourages the importance of qualitative material in global climate changes and effective operation and production system in environmental pollutions.
Social responsible investing help in developing globalization of the industry or organization. Because social and environmental performance are major factors for attaining competitive advantages and differentiation of products and services of the organization in globalization of company. Thus, SRI helps in improving the social and environmental performance of company as well as in globalization also.
SRI focuses on reducing some environmental issues such as global warming, greenhouse effect and environmental pollution by different operations of the organization. Thus, that organization develops business strategies which lead the elimination of all these issues and these strategies help in raising capital from SRI funds (Ahmed and Hanson, 2011).
SRI creates stress on organization for maintaining balance between global population and resources consumption. Thus, SRI helps in effective globalization of organization.
For getting funds from SRI, organization tries to maintain transparency in communicating information regarding the financial, social and environmental performance of the company. It also facilitates the favourable aspects for globalization of organization.
Social Responsible Investing has positive impact on the corporate social responsibility of organizations and it encourages organizations for developing effective relationship with stakeholders by corporate social responsibility. These corporate social responsibilities are major part of the sustainable development of organization (Sampaio and Gosling, 2014).
Social responsible investing addresses the environmental, social and governances considerations of the organization and improves the sustainability development of organization.
SRI plays an important role in long term success of the company because long term success of company depends on the sustainability development of the organization and sustainability depends on the importance of the shareholders.
Social responsible investing protects human and customers rights of the workforce of the organization because they invest those companies which follow the effective employment and social policies (Djeflat, 2010).
SRI helps in resolving the various sustainable issues of the organization such as environment, social and governance challenges in operation and transportation system of the organization.
On other hand social responsible investment has some negative impact on shareholders because in some cases the investors get very low financial return for their investment.
Therefore, above discussion shows that social responsible investing has various positive impacts on sustainability development of the organization because it helps in resolving various environmental, social and economical issues of companies. On other hand in some situation it has negative impacts on investors in terms of low monetary return for their financial outlays (Roders and Oers, 2011).
The current report focuses on the Baxter and its sustainable development. Critical evaluation of its sustainable report shows that company is concerning about the sustainable development of organization. Because, it follows its commitments very effectively such as fulfilling the commitment of environmental, health and safety they established an EHS management which focuses on the environment, social and health issues of their stakeholders. Along with this organization has taken various initiatives towards the sustainable development of organization. Baxter develops effective stakeholder relationship and engagement as well as it also follows its corporate social responsibilities very effectively. Including this report also concludes that various international or worldwide accountants’ professions play an important role in measuring and reporting of financial performance of organization with consideration of sustainable development. ICAS focuses on increasing awareness about the environmental sustainability of organization; IAASB spotlights on assurance emission information of greenhouse gas (GHG) in sustainability report of organization and IFAC develops policies for stakeholder’s engagement and CSR policies of company.
Along with this accountant also play an important role in decision making of organization because it provides all information about the financial performance of the organization. Social responsible investing is very important for sustainable development of organization. Investors of SRI encourage companies for those operations which are favorable for environmental, social and economical aspects of organizations.