Sustainability accounting Sustainability accounting (also known as social accounting, social and environmental accounting, corporate social reporting,

corporate social responsibility reporting , or non-financial reporting) was originated about 20 years ago [1] and is considered a subcategory of financial accounting that focus on the disclosure of non-financial information about a firm's erformance to e!ternal arties such as ca ital holders, mainly to stakeholders, creditors and other authorities" #hese re resent the acti$ities that ha$e a direct im act on society, en$ironment and economic erformance of an organisation" %ustainability accounting in managerial accounting contrast with financial accounting in that managerial accounting is used for internal decision making and the creation of new olicies that will ha$e an effect on the organisation's erformance at economical, ecological and social (known as the tri le bottom line or #ri le-&'s' &eo le, &lanet, &rofit) le$el" %ustainability (ccounting is a tool used by organisations to become more sustainable" #he most known widely used measurements are the )or orate %ustainability *e orting and the tri le bottom line accounting" #hese recognise the role of financial information and shows how traditional accounting is e!tended by im ro$ing trans arency and accountability by re orting on the #ri le-&'s" (s a result of the tri le bottom le$el re orting, and in order to render and guarantee consistency in social and en$ironmental information the +*, (+lobal *e orting ,nitiati$e), was established with the goal to ro$ide guidelines to organisations re orting on sustainability" ,n some countries guidelines were de$elo ed to com lement the +*," #he +*, states that -re orting on economic, en$ironmental and social erformance by all organi.ations is as routine and com arable as financial re orting-"

%cheme of sustainable de$elo ment/ at the confluence of three constituent arts" [0] History The concept of sustainability accounting has emerged from de$elo ments in accounting, with roots in a broader sense o$er a eriod of the last forty years and in the narrow sense o$er the last ten years" #he de$elo ment re$eals two lines of thought" #he first line is the hiloso hical debate about accountability if and how it contributes to sustainable de$elo ment and which are the necessary ste s towards sustainability" #his a roach is based on an entirely new system of accounting designed to romote a strategy of sustainability" %econd line is the management ers ecti$e associated with $aried terms and tools towards sustainability" #his could be seen as an e!tension of or modification to con$entional financial cost or management accounting" #he former may be more a ealing/ #o de$elo sustainability accounting de no$o allows a com lete rea raisal of the relati$e significance of social, en$ironmental and economic benefits and risks and their interactions in cor orate accounting systems"[1]/ "0234025 #he de$elo ment which leads to sustainable accounting could be distinguished in se$eral time eriods in which a number of trends were

e$ident/ 162141670, 167141660, 166141663 and u to the resent" #hese eriods distinguish in $olume of em irical studies, normati$e statements, hiloso hical discussion, teaching rogrammes, literature and regulatory frameworks" [3] 19711980 8y the end of the decade has been ublished a large $olume of em irical work and a number of a ers referring to the building of models which foster social accounting disclosures, although this early works suffered from roblems with sub9ecti$ity of analysis as well social and en$ironmental accounting literature (%:(;) was underde$elo ed" ,nformation related to the social dimension of accounting ha$e been mostly connected with em loyees or roducts" :n$ironmental matters were treated as art of a generally undifferentiated and fairly unso histicated social accounting mo$ement" [3]/ "1714173 :n$ironmental damage included damage to terrain, air, water, noise, $isual and aesthetic and other forms of ollution, and solid-waste roduction"[3]/ "175 <irst ideas about shadow rices and ma ing of e!ternalities arose to de$elo " (lbeit the contribution of this eriod was notable for e!tensi$e de$elo ments in the field of social audit, the methodology was nearly familiar with the historical financial accounting re orts" [3]/ "1724177 (t this time neither financial accounting standards nor regulatory frameworks had been de$elo ed to any e!tent" #he em irical studies and research were mainly descri ti$e" (lthough se$eral models and similar normati$e statements were enhanced, the hiloso hical debate was not wides read" [3]/ "300 19811990 #he first art of the decade showing increased so histication within the social accounting area and the second art of the decade an a arent transference of interest to en$ironmental accounting, with increasing sign of s ecialisation in literature" :m irical research was more analytical" )oncerns of social disclosures ha$e been re laced by a concentration on en$ironmental disclosures and regulation as an alternati$e means of reducing en$ironmental damage" =ormati$e statements and model building fostering now the en$ironmental area" ,n this eriod the de$elo ment of teaching rogrammes about social and en$ironmental accounting issues has its roots" [3]/ "1604161 >es ite an increasing use of conce tual frameworks, accounting standards, and legal ro$isions to reduce the degree of indi$idual inter retation in financial re orting little of this accounting structuration a lies to an own a ro riate framework of social and en$ironmental accounting" ;ess normati$e statement ha$e been made, but more articles discussing hiloso hical matters" [3]/ "1614163 1991199 #his eriod was characterised by the almost com lete domination of en$ironmental accounting o$er social accounting" #here ha$e also been a number of e!tensions from en$ironmental disclosures into en$ironmental auditing as well as the de$elo ment of framework to guide the a lications of en$ironmental auditing and in articular the de$elo ment of en$ironmental management systems" #here was still little regulatory framework affecting social and en$ironmental accounting disclosures and conce tual frameworks for accounting do not e!tend to non-financial ?uantification and social or en$ironmental issues" #he de$elo ment of a clear regulatory as well conce tual framework is getting closer in se$eral countries, whereas the rogress of en$ironmental regulation in the @A and :uro e was slower than in the @nited %tates, )anada or (ustralia" #he rogress was une$en but ra id com ared with that in the area of social accounting disclosures" ,n this times, there ha$e been se$eral te!tbooks and 9ournal articles co$ering both social and en$ironmental accounting" Bowe$er, there has been a relati$e lack of normati$eC hiloso hical work within accounting during this eriod/ :n$ironmental accounting has not been re$i$ed the

models of the 1620s and ada ted them to the discussions about the $aluation of e!ternalities" %ustainability and the discussion of the role of management accounting in assisting with sustainable de$elo ment ha$e become of growing interest" [3]/ "1654166 199 present #he con$ergence of global ca ital markets and the emergence of global and regional ?uality control issues 4 culminating for the accounting rofession in the (sian financial crisis in 1662C1667 as well the :nron )olla se in 2001 4 led to a subse?uent high-le$el focus on international and national accounting" [5]/ "247 #he accounting literature has demonstrated a considerable increase in concern for the issues of sustainable de$elo ment and accounting" Dia the e! loration of what sustainability accounting may entail, the accounting rofession is likely to be in$ol$ed in re-e!amining accounting fundamentals in the light of the challenge of sustainable de$elo ment" %e$eral ro osals and significant statistical work as well as a growing body of measurement on accounting for sustainable de$elo ment is being carried out in many international and national settings" [2]/ "1 :$en su ra-national olicy bodies like the @nited =ations and the E:)> ha$e s onsored work addressing accounting for sustainability"[2]/ "2[7]/ "00 @ till now en$ironmental accounting is the most e$ol$ed form of sustainability accounting and increasingly rocessed in the academic circle beginning with the work of *obert Bugh +ray in the early 1660s, and through the release of the %ustainability (ccounting +uidelines at the Forld %ummit on %ustainable >e$elo ment in 2002"[6]/ "247 >ue to the use of different frameworks and methods much uncertainty remains how this agenda will de$elo in the future" )ertain is that the ast economic de$elo ment and the current human (and hence business) acti$ities are not sustainable and has led to ?uestioning the current mode of de$elo ment" *ecent years ha$e seen an increasing acce tance and e$en enthusiasm for these new re orting a roaches" (lso energetic and inno$ati$e e! erimentation by far-sighted organisations ha$e demonstrated that sustainability as ects in accounting and re orting are crucially im ortant, feasible and racticable as well" [10] ,n this res ect, the,nternational <ederation of (ccountants (,<()), which ob9ecti$e is to de$elo the accounting rofession and harmonise its standards, today includes 152 member bodies in o$er 122 countries and re resents a ro!imately o$er two million accountants worldwide" [11] !ethodology %ustainability (ccounting has increased in o ularity in the last cou le of decades" Gany com anies are ado ting new methods and techni?ues in their financial disclosure and information about the core acti$ities and the im act that these ha$e on the en$ironment" (s a result of this, stakeholders, su liers and go$ernmental institutions want a better understanding of how com anies manage their resources to achie$e their goals to accom lish sustainable de$elo ment" (ccording to common definitions there are three key dimension of sustainability" :$ery dimension focuses on different subsets" "nvironmental factors

Social

"conomic )ommunity in$estment Forking conditions Buman rights and fair

:nergy Fater +reenhouse gases :missions

(ccountability C #rans a rency )or orate go$ernance %takeholder $alue

Ba.ardous and non ha.ardous waste *ecycling &ackaging

trade

&ublic olicy >i$ersity %afety (nticorru tion

:conomic erformance <inancial erformance[12]

%ustainability accounting connects the com anies' strategies from a sustainable framework by disclosing information on the three dimensional le$els(en$ironment, economical and social)" ,n ractice, howe$er, it is difficult to ut together olicies that romote simultaneously en$ironmental, economic and social goals" #his trend has made com anies not to em hasi.e in the creation of $alue but also in the risk mitigation that are linked to the en$ironmental and social subset of sustainable de$elo ment" #his de$elo ment has being dri$en by multi le factors connected to/ 1" %ustainability issues that materially affect a com any's creation of $alue, risk and liabilities 2" #he need for business to a ro riately res ond to sustainable growth" #eporting formats #he conce t of sustainability accounting is being carried out in an international setting with a $ast and growing le$el of e! erience in the measurement of sustainable de$elo ment" #his new financial accounting tool is used by organisations to become more sustainable" ,t recognises the role of financial information and shows how this can be e!tended to the social and en$ironmental le$el" (lthough there isn't an established framework of re orting the content of a com any's re ort can be largely determined by factors and re orting standards, guidelines and regulations" #his trend offers com anies a greater fle!ibility than financial statements, but an effecti$e re ort needs to deli$er information aligned to the com any's o$erall ob9ecti$es and engage with the audience in a manner that romotes the e!change of ideas and communication" =owadays, there are se$eral ways and mechanisms of re orting, such as assurance statements, en$ironmental, social and economic erformance re orts,that ha$e been noted" %ome of these re orts include shorter and more concise re orts" %ome com anies are including in their re orts a combination of hard co ies and online resources as well as downloadable &>< files" %ome e!am les can be found at the +*,, which is the most o ular framework for com anies that are looking for hel and assistance in how to create their sustainability re ort"[10] (s the trend to roduce sustainability re orts increases, so too do the guidelines and frameworks to re ort on the social en$ironmental information" $rame%or&s %ustainability accounting continues to de$elo " ,t is therefore of im ortance that com anies understand the scenery of re orting frameworks, standards and guidelines that may affect the form and content of their re orts" #here are se$eral organisations that offer ser$ices to com anies that want to change the traditional financial statement disclosure for sustainability re orting" ,n mostly all countries around the world, there are currently no go$ernmental re?uirements for com anies to re are and ublish sustainability re orts" )om anies that ha$e started to ado t this new method of re orting ha$e faced new challenges in re orting due to the lack of

e! erience" <ailing to re ort accordingly to the guidelines and frameworks ro$ided (see E:)> and +*,) would lead them to otentially reduce their credibility of ublished information" #he +*,, E:)> and @=)%> (@nited =ations )ommission on %ustainable >e$elo ment)are some of the main actors in integrating a olicy framework for better integrating the three dimensional le$el of sustainability by decou ling economic growth from en$ironmental ressures" #he +*, is a multi-stakeholder organi.ation that is committed to de$elo ing and maintaining the -%ustainability *e orting +uidelines"- #he goal is the continuous im ro$ement of sustainability re orting, this is only a rotocol that a roaches the a lication le$els, [11] there are three le$els of re orting (, 8 and ), but these are not yet legally ratified fundamentals and are only used to assist com anies with their sustainable re orts" En the one hand the @=)%> focuses only on the en$ironmental dimension of the sustainability accounting" En the other hand the E:)> (Ergani.ation for :conomic )o-o eration and >e$elo ment) focuses only focuses only in two frameworks/ [2]/ "2 the analytical and accounting frameworks" 'nalytical frame%or&s (nalytical frameworks are im ortant for linking information from different areas" Darious ty es of frameworks are being used nowadays de ending on the ur ose of measurement" #hese frameworks seek to/

,ntegrate the economic, en$ironmental and social dimensions of sustainable de$elo ment Ba$e sound foundations and to maintain key information needed to im ro$e sustainable de$elo ment measurements )larify relationshi s between different indicators and olicies"

%ome e!am les of analytical frameworks are' &ressure 4 %tate 4 *es onse (&%*) model which is based on one of its $ariants >ri$ing <orce 4 &ressure 4 %tate 4 ,m act 4 *es onse used by the :uro ean :n$ironment (gency (::() or the >ri$ing <orce 4 %tate 4 *es onse" [2]/ "1 'ccounting frame%or&s ,n the other hand the accounting frameworks seek to ?uantify information in the three dimensions of sustainability accounting" #he %ystem of =ational (ccounts (%=() has ro$en that measuring sustainable de$elo ment with the con$entional system of financial re orting is inade?uate"[2]/ "2 #he accounting structure im oses a more systematic a roach that is not too fle!ible in com arison to the standards and frameworks that offer the +*, and E:)> among others" (ccounting for sustainability therefore re?uires an e!tension of its standard framework" #he E:)> offers two different a roaches to the accounting framework for sustainability accounting" 1" measuring en$ironmental-economic-social interrelationshi s 2" Fealth-based a roaches !easuring understanding economy" ,t is flow accounts environmental-economic-social interrelationships needs a clear of the relationshi s that e!ists between the natural en$ironment and the not ossible without understanding the hysical re resentation" #he hysical are hel ful in showing the characteristics of roduction and consum tion

acti$ities" %ome of these accounts focus on the system and natural en$ironment"

hysical e!change between the economic

(ealth-based approaches to sustainability refer to the reser$ation of stock of wealth" %ustainability is obser$ed as the maintenance of the ca ital base of a country and therefore otentially measured" ( number of en$ironmental changes are contained also in these financial statements that are measured during an accounting eriod of time" #he +*, offers ad$anced material to hel organisations of all ty es to create their accountability re orts" #his ublished material lead organisations through the re orting rocess with main idea of becoming more sustainable in their ractices in e$eryday business" )rganisations and initiatives #he listed organisations and initiati$es assist com anies in finding the right ath to sustainability accounting" <or further information about why and how to re ort consult the following organisations" *ompany+)rgani,atio n

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#he +lobal *e orting ,nitiati$e's (+*,) ro$ides re orting guidelines htt /CCwww"globalre orting"o +lobal *e orting ,nitiati$e and is the most ado ted framework rg for sustainably re orting"

( global association with 200 Forld 8usiness )ouncil for com anies, it ro$ides a latform for htt /CCwww"wbcsd"org %ustainable de$elo ment com anies to e! lore sustainable de$elo ment"

)or orate *egister

,s the largest online directory of com anies that has issued a )*%, htt /CCwww"cor orateregister sustainability or en$ironmental "com re orts"

A&G+

Ene of the world's leading consulting com anies" ,t also ro$ides ser$ices htt /CCwww"k mg"com related to sustainability disclosure and related to ics"

:rnst and Houng

Ene of the world's leading consulting com anies" ,t also ro$ides ser$ices htt /CCwww"ey"com related to sustainability disclosure"

%ustain(bility

( widely recognised consultancy on htt /CCwww"sustainability"co issues related to sustainable m de$elo ment, accountability"

*ompany+)rgani,atio n

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(ccount(bility

(ccount(bility is an international rofessional institute that focuses on htt /CCwww"accountability"or the sustainable de$elo ment, gC accountability and ublic disclosure"

#he )arbon >isclosure &ro9ect is an international initiati$e to disclosure )arbon >isclosure &ro9ect htt /CCwww"cd ro9ect"net cor orate information relating climate change"

,))%* is a =ot for &rofit +lobal ,ndian )entre for (d$isory and #raining Ergani.ation )or orate %ocial engaged in the 8usiness of htt /CCwww"iccsr"org *es onsibility (,))%*) romoting )or orate %ocial *es onsibility in ,ndia and globally"

Summary and outloo& =e$ertheless, the de$elo ment of regulatory frameworks is getting closer in se$eral countries' accountants will need to broaden their knowledge and to establish a common dialogue with social and ecological rofessionals" #he formation of inde endent transdisci linary sustainability teams to re are and audit sustainability accounts would add credibility to the rocess" [6]/ "21 ;ike the sections abo$e illustrated sustainable accounting resulted in different inter retations and intended uses of accounting" #he de$elo ment of a ragmatic set of tools for cor orate ractice is to rogress" <uture research needs to address the real challenge to cor orate management to de$elo ragmatic tools for a well described set of business situations" #his need to address the decision and control needs of cor orate managers, whether the case they are res onsible for en$ironmental, social or economic issues associated with cor orate acti$ities" #he trade-offs and com lementary situations need to be identified, analysed and accounting that ro$ides a basis for mo$ement towards cor orate and general sustainability de$elo ed"[1]/ "070 ,t is to recognise that to fall short of a con$incing conce tuali.ation will lea$e sustainability accounting as a broad umbrella term, with little ractical usefulness" #he linkage between sustainability accounting and sustainability re orting needs to be e!tended as well" ,n this conte!t, sustainability re orting as well remains at an unfinished stage of de$elo ment and at resent is still more of a bu..word than a well defined a roach" #he debate remains o en to challenge this goal on the remise of sustainability, its o erationalisation and its accountings" ,n $iew of these as ects +eoff ;amberton ro$ides a romising framework for the $arious forms of accounting" ,t draws together the fi$e general mayor themes e$ident in social and en$ironmental accounting research and ractice, including the +*, %ustainability (ccounting +uidelines" Be de icts a com rehensi$e sustainability accounting framework which dis lays the com le! interconnections between the $arious com onents and dimensions of sustainability" ,t balances the need for integration of the $ariety in information,

measurements and re orting with the differentiated unitary information effects between the dimensions of sustainable de$elo ment" #he multi le units of measurement include narrati$es of social olicy and rocedures as well traditional accounting rinci les and ractice"

)om onents of +oeff ;ambertons com rehensi$e sustainability accounting framework" (ssum tions under inning the s ecification of this framework are/ 1" the ob/ective0s1 of the sustainability accounting framework and the re orting model' 2" the principles under inning the a lication of the model' 0" techni2ues like data ca ture tools, accounting records and measurements' 1" reports used to resent information to stakeholders' 3" and 2ualitative attributes of the information roduced and re orted" [6]/
" 15-12

,t is unrealistic to e! ect business to $oluntarily commit the resources re?uired for full sustainable accounting im lementation" <or financing the im lementation of sustainability accounting and re orting one o tion would be to use en$ironmental ta!es to raise re$enue and to discourage negati$e en$ironmental im acts" Ence the sustainability accounting system is established ta! rates could be linked to (sustainability) erformance outcomes to encourage the transition to sustainability at the organi.ational le$el" [6]/ "21 ( romising trail in similar way may be the conce t of the community welfare economics (+erman/ -+emeinwohl-Ikonomie-) by )hristian <elber" Gore like a framework for sustainability accounting it is a framework or an alternati$e way of economics and the society in general" ,t suggests that business should measure its contributions of economic success according to the benefits reimbursed to the society as social and ecological factors" %imilar to ta! rinci les, the business erformance is s ecified by an accounts of oints (re resenting the contributions to o$erall well-being) and therefore the com any recei$e (ta!) benefits or su ort in other $arious form, or e$en not" [13] ( further interesting e!am le is ro$ided by the %ustainability <lower which was de$elo ed in 2006 by an international grou of rominent ioneers and inno$ators of the organic mo$ement" #he <lowers erformance indicators were defined on the basis of the +*, +uidelines and looks to unite four dimensions of sustainability (economic life, societal life, cultural life and ecology with si! sub dimensions) in a model" [15] ( further romising a roach toward the measurement of human, social and natural ca ital including en$ironmental ?uality, health, security, e?uity, education and free time is made by the 8uddhist foundation and the 8hutan +o$ernment toward o erationalising the ob9ecti$e of +ross =ational Ba iness" #hese inno$ati$e ro9ects may demonstrate that an alternati$e cultural ers ecti$e is needed as well to inform an accounting that is ca able of making a genuine contribution to sustainability" #he future direction of sustainability accounting and sustain economic de$elo ment should continue to dis lay the essential ?uality of di$ersity" Bumankind has much to lose if this transition does not take lace"