Wk2 - Accounting for Society & Environment

What are organisations expected to focus on beyond financial performance?

Social and environmental performance, accountability, and climate change

What are externalities?

Impacts of a business on external parties (positive or negative)

What are the two duties of accountability?

1. Take actions to meet stakeholder expectations 2. Provide an account of those actions

Who do accountants provide information to?

Internal and external stakeholders

What is Corporate Social Responsibility (CSR)?

Responsibility of a business for its social and environmental impacts

What is social accounting?

Reporting a company's impact on people and society

What is environmental accounting?

Reporting a company's impact on natural systems

What is a value chain?

All activities a business uses to create value

What are the two parts of a value chain?

Primary activities and support activities

What is the purpose of a value chain?

Improve efficiency, measure activities, and identify externalities

What is a supply chain?

Flow of resources from suppliers to customers

What is a value-added activity?

An activity customers are willing to pay for

What is a non-value-added activity?

Wasteful activity customers wouldn't pay for

Give an example of value-added vs non-value-added activity.

Value-added: producing a product; Non-value-added: waiting time

What is the shareholder approach?

Focus on maximising profits and shareholder wealth

What does maximising shareholder value involve?

Increasing earnings, increasing share value, increasing dividends

What financial reports show shareholder value?

Income statement, cash flow statement, balance sheet

What is the stakeholder approach?

Creating value for all stakeholders

Who are stakeholders?

Employees, customers, suppliers, community, environment

What is Integrated Reporting (IR)?

Reporting financial, social, and environmental value over time

What is the main focus of IR?

Long-term value creation for stakeholders

What types of information are included in IR?

Financial, social, and environmental information

What is GRI?

Global standards for sustainability reporting

What is the purpose of GRI?

Improve transparency and comparability

Give examples of GRI reporting.

Waste reduction, energy use, social impact

What is the "big shift" in accounting?

Moving from shareholder focus to stakeholder focus

How are businesses now evaluated?

Based on impact, not just profit

What does "impact per share" mean?

Measuring value beyond just financial profit

Why might a business choose a shareholder approach?

Maximise profit, attract investors, focus on growth, reduce costs

Why might a business choose a stakeholder approach?

Improve reputation, build relationships, be ethical and sustainable, support long-term success

What is CSR reporting?

Reporting social and environmental impacts of a business

Give examples of social reporting.

Fair wages, training programs, community support, diversity policies

Give examples of environmental reporting.

Sustainable materials, reduced packaging, carbon emissions, recycling initiatives

What are Sustainable Development Goals (SDGs)?

Global goals for sustainable development

Give examples of SDGs relevant to business.

Decent work, responsible consumption, climate action, clean water, gender equality

What is financial performance?

Performance measured using money

Examples of financial performance?

Revenue, profit, costs, ROI

What is non-financial performance?

Performance not measured in money

Examples of non-financial performance?

Customer satisfaction, employee retention, sustainability use, waste reduction