Management Accounting & Decisions II

N12401

Lecture 9
Sustainability and

Management Accounting
by Hung Woan-Ting

Learning Objectives

1.

To explain the concept of sustainability in a

business context

2. To understand the relevance of sustainability in

operations management
3.

To be aware of the (expected) role of

management accounting in managing
sustainability performance

1.0 Sustainability in business

A long-term programme involving a series of
sustainable development practices, aimed at improving
organisational efficiency, stakeholder support and
marketing edge (CIMA).
Business practices that meet the needs of the
present world without compromising the ability of
the future generations to meet their own needs.
Linked to other contemporary business approaches

(CSR; environmental management; corporate governance; business

ethics)
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1.1 Sustainability business practices

Economic
(PROFIT)

Sustainable
Business
Practices

Social
(PEOPLE)

Environment
(PLANET)
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1.2 Business opportunities

Revenue
Generation

Cost control

Building
Trust

Risk
Management

Source: CIMA (2011a)

2.0 Sustainability for operations

management
Total Quality

Components
of sustainable
operations

Sustainability

Process Safety

Environmental
Stewardship

2.1 Managing sustainability performance

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Source: CIMA (2011a)

3.0
(Management)
Accounting for
sustainability
performance

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Source: CIMA (2011a)

3.1
Evidences in
practice
(CIMA, 2011b)

To achieve the best

sustainability outcomes
companies need to have
management accountants in
strategy-setting roles.

Management accountants are fulfilling their traditional

role as financial specialist BUT NOT YET acting as
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collaborators in driving towards sustainability as a goal.

3.2
Evidences in
practice
(CIMA, 2011b)

Global move towards

Integrative Reporting <IR>
Management accountants are ideally
placed to provide the alignment
mechanisms and collaborate with
senior management in producing
fully integrated reports, reflecting
sustainable strategies adopted by
organisations which fulfil the needs of
stakeholder groups.
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3.2 The International <IR> Framework (2013)

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Take Aways
Sustainability is gaining increasing emphasis and
is the way forward in the business world.
Sustainability practices has clear implications on
operational and strategic management.
Management accounting (and finance profession
as a whole) has a key role in managing
sustainability performance. Hence the need to gear up
with the desired skill sets.

End of Lecture

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Readings & Exe.

1. Read the following chapters in the prescribed textbooks
GNBCY Ch1
2. Optional readings:
CIMA (2011a) Sustainability performance
management: how CFOs can unlock value, Thought
Leadership Series.
CIMA (2011b) Sustainability and the Role of
Management Accountant, Research Executive
Summary Series, 7(14).
www.theiirc.org/international-ir-framework

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Readings & Exe.

3. Answer the following questions:
a) Explain the idea of sustainability in a
business context.
b) Do you agree that sustainability
should be high on the corporate
agenda? Why?
c) Discuss how management
accountants may add value to better
deliver sustainability performance.
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