ACCOUNTING FOR SUSTAINIBLITY

Accounting for Sustainability



Accounting for Sustainability

Introduction

The issues of the sustainability and corporate social responsibility (CSR) have been of much research interest by academia and implemented by practitioners for several decades. Sustainability and CSR have received international attention and debate, especially after the second half of the 1990s. Current financial reporting no longer satisfies reporting needs to reflect corporate long term development because activities which cannot be quantified and fairly measured must be excluded from financial reports. However, some of these activities are important and relevant to corporate sustainability and social responsibility, such as social activities in human rights and organisations' impacts on society. The concerns of corporate reporting in CSR and sustainability date back to the 1950s, proliferated in the 1970s, and received increased popularity and attention in the 1990s and the 2000s. The emergence of social reports in the 1970s showed the awareness of society on non-financial activities of a company, especially regarding human rights and employment issues. The trend somewhat waned due to the lack of reliable and quantifiable measurements in subsequent years. Therefore, all the issues related to Accounting for Sustainability will be discussed in detail.

Review for Literature

Sustainability accounting is defined as a subset of accounting that primarily deals with the activities, methods and systems which are needed order to record the data in an appropriate way. Sustainability accounting measures the interactions and connections among the social, environmental, and economic issues which comprise the three dimensions of sustainability. Sustainability management is essential for long-term corporate development and performance. Research showed that companies embracing sustainable practices reported lower operation costs, improved corporate reputation, developed more green products and performed much better at risk. Sustainable business entities contribute significantly to a nation's environment, economy, and social well-being at the macro level management (Bebbington, 2008, 361).

The information demand for corporate performance on sustainability suggests the need to create an agreed-upon reporting model for each organisation to follow. The emerging trend is for corporations to report social, environmental, and economic information simultaneously in a format similar to what is known as the Triple Bottom Line (TBL). It is also crucial to include discussion on a company's viability and strategic operations. A corporation should never ignore its social responsibility because of its vulnerability to lawsuits, boycotts, and loss of firm reputation and brand value which, in turn, results in negative impacts on market acceptance, positioning, and demand. Various guidelines have been developed by groups proposing models or frameworks for reporting. Universal Sustainability Reporting Standards and reporting formats, similar to the International Financial Reporting Standards (IFRS, also known as the International Accounting Standards) can be developed. Currently, not all corporations include economic, environmental, and social information in their reporting. Even if they did, they would not use the same indicators to measure those non-financial activities in their sustainability reports. This causes barriers to make comparisons. A set of generally accepted standards increases the transparency, credibility, and validity of sustainability ...