Sustainability refers to the ability to maintain or support a process continuously over time. In Environmentally Sustainable Development terms, sustainability seeks to prevent the depletion of natural or physical resources, so that they will remain available long term.
Sustainable development means “meeting the needs of the present without compromising the ability of future generations to meet their needs. This idea of meeting our needs without sacrificing the needs of our children, or our children’s children, tends to form the basis of most sustainability definitions” the United Nations’ 1987 Brundtland Report
Sustainability Accounting (Green accounting) is the ‘cost’ impact of implementing or not implementing sustainable development activities within your organisation. It includes the effects of social and environmental costs on the profitability of a business, as well as the standards developed for communication of the sustainability efforts of a company. There are many ways of accounting for Sustainability – one of which is Material Flow Cost Accounting, which assists managers to recognise material and energy inefficiencies in production processes and creating cost savings for the organisation.
Examples of sustainable development activities.
• Manufacturing business: sourcing more expensive recycled materials, end-to-end supply chain reform to reduce carbon footprint, efficient machinery using less electricity etc. – there are many.
• Service company, your focus could be on energy use, paperless office, nontoxic cleaning equipment, and working from home policy to reduce carbon footprint through the office commute, again there are many.
The cost of acting, whilst we know changes within an organisation to support sustainability development will most likely add cost to a company and impact profitability (not all the time but most of the time). These costs should be seen as an investment in the future of the organisation as it would any investment and therefore should be measured in the same way with crucial performance indicators looking at areas such as revenue, customer response, employee engagement, reduced carbon footprint etc.
The cost of not Any organisation not interested in this space will feel the pressure as time goes on through hiring challenges, customers turn to other more sustainable brands, they will be left behind etc… There is plenty of help afoot though with support in the form of funding, training, and a multitude of other supports from government agencies.
What is key here is that we must appear to act we must act…. As accountants we are trained to think of the cost impact of activities therefore, we can help…. ask Pinnaklo