Implementation of Strategies That Reduce Environmental Cost - Research Paper Example

Social and Environmental Research Student’s Name Instructor’s Name Institution’s Name Course Name date Table of Contents Table of Contents 1 Introduction 3 Literature review and Research Questions 4 Methodology 5 Vodafone Annual report and Accounts 2010 6 GlaxoSmithKline Annual Report 2010 8 Sony Annual Sustainability Report 2010 10 Volkswagen Group, Annual Report and accounts 2007 11 Discussion 12 Recommendations and Conclusion 13 Abstract This paper intends to investigate the economic benefits and expenses on companies that have had explicit disclosure on social and environmental cost. It will also examine the methodologies employed by each company as far as social and environmental conservation is concerned. The study will majorly centre on companies from different countries in the world that have demonstrated considerable development in different areas with an intention of sustainable development. The paper will highlight the various methods that these companies used to implement their plans for maximum profit and at the same time take care of the environment. It will close by giving recommendations on the way forward concerning environmental sustainability. Introduction The recent economic crisis provided an opening for almost all business to focus on long-term and effective cost cutting measures. The effect was not only witnessed among the developing countries but also in the whole world. As a result, businesses have become more alert in their operations. The sole aim of establishing a company should be oriented towards maximizing profits. In addition to profit maximization, companies are required to be environmentally friendly so as to show their concern for the future generations (Hopwood, 2009). Global warming and other environmental threats are widespread effects of a degraded environment. As a result, companies are now making products that are safe for the environment in addition to employment of other cost cutting measures. They are also using processes of production that ensure cost reduction as well as safety of the environment (Hopwood, 2009). Financial accounting has gained significance in the global concern for the environment. This initiative has given forth to generation of innovative ways which ensure that people as well as organization interact with the environment safely. Consequently, there are companies that pose as good examples to be emulated by others in conservation of the environment for future sustenance. The management of these companies usually ensures that before a product is launched or project is initiated, it is well analyzed for compliance with procedures for environmental safety (Thompson, 2011). Cost evaluation for every project is compared against the probable gains so as to establish its economic viability. Literature review and Research Questions It is clearly evident that industrialization has taken the central aspect of global economic development. Therefore, there is need to consider several factors before implementing various projects. One of the major factors that are considered is carrying out a cost benefit analysis before making any financial decision within an organization (Lohmann, 2009). The progress of industrialization era gave forth to various changes in the accounting profession. Currently, accounting incorporates other essential professions in addition to focusing on people, planet and profit maximization. Cost-analysis is used within the business arena to ensure there is profit maximization during a company’s operations. Recently, sustainability reporting has been deployed and integrated in the whole process of corporate governance (Kolk, 2004). This is different from the conventional approach to corporate governance, which mainly focused on internal controls. The concept of environmental and social accounting was essentially introduced in classical Greek where all businesses were expected to be taking up on high morality. Nevertheless, there has been an established belief that business owners should be highly accountable towards both the environment and the society. Normally, corporate social performance incorporates four primary headings. The first one covers community involvement which is concerned with the day to day activities of individuals in such areas like health and education. The second category involves human resource and establishing that the required working conditions are favourable. The third category involves the physical resources and environmental contributions such as total adherence to environmental laws. Finally, the fourth category is on product contribution which focuses on the quality of products. Sustainability reporting covers the environmental and social implications of carrying out any stipulated business operation. This information is not only provided to internal but also external stakeholders. It is a report that covers a company’s responsibility towards the society and its wide range of stakeholders especially the shareholders. The article will address questions that seek to understand the mechanisms the companies have put in place to ensure that they remain eco-friendly and that they attain sustainable development. In addition to being eco-friendly, how cost-effective are these initiatives within the company’s operations? Can they be emulated by other institutions in the world to attain sustainable development? Methodology This research will mainly dwell on companies that are found in different nations, which have been reporting progress in different areas but all with an intended aim of sustainable development. Sustainability reports of these companies will be analysed to find out what initiatives have been employed. The study will show the various methods that these companies employed to ensure that their plans have been fully established (Thompson, 2011). In this case, the benefit of the plan was twofold, that is, profit gain and still take care of the environment for future generations as well. The research further provides a discussion on the effectiveness of the methods embraced bringing into light all the hindrances and barriers that could contribute to the failure of some companies embracing the idea. Five companies will be discussed in this context giving the extent of their disclosure on the social and environmental statements in their annual reports. In the discussion part of the paper, a number of the various measures will be looked at that Australian companies are taking to ensure they also incorporate sustainable development in their final annual reports. In order to explain issues in relation to the discussed companies, the document aims at enlightening individuals as well as companies on the importance of sustainable development especially a critical period like this when environment management has gained significance all around the world. Vodafone Annual report and Accounts 2010 The company acknowledges the need environmental impacts from manufacture and sale of electronics. The report realizes the magnitude of harm the activities of the company could have on the environment such as global warming due to emission of greenhouse gases into the atmosphere. Rolling out of network equipment contributes a lot to degradation of the environment due to the amount of carbon dioxide emitted into the air (Vodafone New Zealand Ltd, 2011). Consequently, conservation of the environment is paramount for its sustainability into the future generations. Safe environmental practices will ensure that the environment is taken care of and that the company remains competent to support the present generation adequately without depriving it the capacity to support the future generations (Vodafone New Zealand Ltd, 2011). It has implemented a number of measures that extend good care for the environment. Vodafone recognized that for it to be sustainable, it had to deploy smart technological methods that will ensure management of environmental impacts. The company launched its approach to environmental conservation in 2008, with an aim of reducing its emission levels by 50 percent by 2020. The New Zealand based company has the intention to integrate mechanisms in its operations that would help to minimize the amount of greenhouse gas emitted into the atmosphere (Vodafone New Zealand Ltd, 2011). The Vodafone annual report for 2010 shows that the direct carbon dioxide emissions increased slightly by 3.7 percent in 2009. Also, emission of greenhouse gases increased by 7.7 percent during the year, mainly due to increased growth in network coverage. However, the rate of transport emissions decreased by a significant 10.2 percent. The company is committed to use of wind and solar energy as a long lasting onsite solution to power requirements (Vodafone New Zealand Ltd, 2011). The company currently runs both second and third generation mobile technologies. However, Vodafone intends to decommission equipments used in the former second generation mobile technology as more people move to the newest third generation technology. Furthermore, deployment of fourth generation mobile networks will bring higher efficiency in management of economic costs. Furthermore, the company is committed to recycling of mobile communication handsets. The company usually collects old mobile phones for resale and reuse in the developing countries. This initiative provides an economic and social opportunity for people living in third world countries to access communication solutions at a relatively low cost (Vodafone New Zealand Ltd, 2011). Additionally, Vodafone has turned to reuse of its network equipments as an environmental management strategy. The third generation networks and other subsequent technologies are mounted on the pre-existing second generation network layout. There are other initiatives that are used by Vodafone Ltd to position it in a leading role in management of environmental and social issues. Besides its adherence to management of the environment, Vodafone employs good corporate management policies. It ensures engagement of all stakeholders to understand their expectations. It also responds to the stakeholders’ reactions on various company policies as well as reporting the progress of its operations to them (Vodafone New Zealand Ltd, 2011). This among other reasons makes their system of corporate governance be honoured and provide a good example for emulation by institutions in the world towards a safer environment. GlaxoSmithKline Annual Report 2010 The report portrays the firm’s commitment to environmental sustainability thereby showing numerous benefits that can be outlined and adopted by other institutions. The company launched a strategy that will help it become carbon neutral by 2050. Its efforts in management of environmental and social costs have paid off well especially after the company was awarded the Carbon Trust Standard certification in 2010 (GlaxoSmithKline, 2011). It is an award that recognizes institutions that minimize the amount of carbon emissions in all their operations. The company is committed to a long-term reduction of carbon levels in order to attain a neutral level by 2050. This implies that it will not be emitting any greenhouse gases throughout its operations. All processes from accessing of raw materials to distribution of its products will be free of carbon emission. GlaxoSmithKline is also committed to cut down on the amount of carbon emissions by 10 percent by 2015 and 25 percent by 2020 (GlaxoSmithKline, 2011). It further aims at minimizing the amount of water used during its operations by 20 percent by 2015. It has also employed other environmental management measures that will help to minimize waste to landfill from its operations by a considerable 25 percent by 2015 (GlaxoSmithKline, 2011). All these management strategies are aimed at attaining environmental sustainability for the present and future generations. They provide a solid ground for GlaxoSmithKline to express its commitment to improvement of the quality of human life. Toyota Annual Report 2011 Toyota Company has demonstrated some important provisions that have confirmed their commitment to minimization of their social and environmental costs. Toyota Company respects the culture of every region where it operates and takes part in the development of their social wellbeing. The company is also committed to reduction of environmental problems through manufacture of vehicles that are eco-friendly throughout the vehicle life cycle. This implies that from the process of manufacture of new vehicles to disposal of end-of-life vehicles, measures are taken to check on environmental conservation (Toyota Motor Corporation, 2011). The company has implemented action plans for global environment, which is integrated into its environmental action plan. Toyota Earth Charter is one of the policies on environmental management. Toyota also launched an initiative in 2006, dubbed fourth environmental action plan, which it has successfully accomplished. The action plan comprised of four major categories. The first one on energy and global warming aimed at minimization of greenhouse gases in all the operations of the company. The report further illustrates that the company promoted employment of technologies that ensured efficient use of fuel in addition to clean-energy vehicles. The second categories of the environmental action plan centered on recycle of resources (Toyota Motor Corporation, 2011). This is aimed at ensuring that the materials used in manufacture of vehicles are recyclable and that they have minimal environmental hazards. Recycling of used materials is also a cost-cutting measure, in addition to conservation of the environment. Furthermore, the report showed that Toyota is committed to decrease the use of harmful substances such as lead and mercury in the manufacture of its products. Finally, the last category that constituted the environmental action plan was on atmospheric quality. Almost all cities in the world experience high traffic congestion due to the high number of vehicles in urban areas. In this case, Toyota Company is committed to the designing and manufacture of vehicles and vehicle parts that have low emissions (Toyota Motor Corporation, 2011). This ensures that the quality of air in the atmosphere is improved greatly in all regions for the current and future generations. In 2011, the company intends to develop another action plan which will guide it in attaining environmental sustainability. These are some of the initiatives implemented by the company in its effort to realize a sustainable business and a safe environment for the current as well as the future generations (Toyota Motor Corporation, 2011). Sony Annual Sustainability Report 2010 Sony is a multinational corporation that deals with manufacture of a wide range of electronics. It employs innovative technologies that ensure efficient usage of energy with less impact on the environment. It manufactures television sets that make use of light emitting diode (LED) technology for enhanced performance and low consumption of energy. As a matter of fact, more innovative technologies continue to be developed such as the use of organic light emitting diode (Sony, 2011). It is a technology that allows production of amazing backlight under low energy consumption. Furthermore, the company produces lithium-ion batteries that are rechargeable as a strategy to minimize carbon dioxide emissions. The report shows the company’s commitment to environmental sustainability through the use of current and innovative technologies (Sony, 2011). The company has a well established research and development department, which generates eco-friendly products. In addition, Sony supports programs that foster community development. It facilitates a number of activities that are aimed at improving the welfare of the people living in different parts of the world. Moreover, Sony does not only focus on technological innovativeness of its products, but also in manufacture of sustainable substances. Sony has its own international management standard for its products and as raw materials. This standard is called the Green Partner Environmental Quality Approval Program for vetting suppliers of raw materials to the company. It ensures that the company gets materials from suppliers that qualify for certification as Sony green partners (Sony, 2011). Before a product is manufactured and even launched into the market, it is first evaluated for compliance with requirements of environmental sustainability. One of the requirements involves use of renewable sources of energy as recycling of used materials. All these initiatives demonstrate the company’s dedication towards having a zero impacts on the environment from all its business operations. Volkswagen Group, Annual Report and accounts 2007 The company has employed important initiatives that have displayed their commitment to reduction of their social and environmental costs. The company is committed to manufacture and sale of end-of-life vehicles that ensure adherence to environmental management standards (Volkswagen Group, 2011). Projections made into the future concerning safety of Volkswagen vehicles, and their spare parts, is a clear indication of the company’s commitment to caring for the environment and future generations (Volkswagen Group, 2011). It has continued to align itself with the internationally accepted standards for environmental sustainability. For example, manufacture of Volkswagen vehicles with low emissions of greenhouse gases into the atmosphere guarantees a better and safer environment for the future generations. Additionally, production of vehicle parts that are environmental friendly is another strategic measure towards environmental cost reduction. The company uses Nickel metal- hydride batteries rather than lead-acid counterparts in the manufacture of its vehicles. The advantage of Nickel metal-hydride batteries is that they are environmental friendly even upon their disposal. The company is therefore committed to production of eco-friendly vehicles right from their manufacturing process to recovery of end-of-life cars (Volkswagen Group, 2011). Therefore, besides focusing on the whole life of a vehicle, the company still centers on ultimate recovery and recycling of such products. Use of recyclable parts is not only eco-friendly but also results to cost reduction. Therefore, companies should be encouraged to use materials that can be recycled owing to its associated twofold benefit. The design and development process of the vehicles is made in such a way that the products are as recyclable as possible. This shows that Volkswagen aims at reducing risks and ensuring timely discovery of growth opportunities as well as maximization of profits. Discussion The above five examples of companies have shown sustainable development especially in line with putting measures that will safeguard the environmental. Attainment of sustainable development among these companies is a major step towards securing good care for future generations. This study has shown that some companies have incurred an extra cost in the short-term, in ensuring that their products are eco-friendly (Lohmann, 2009). However, the long-term benefits are immense and thus they overrun the cost involved. Integration of sustainability report to the annual report is a phenomenon that has led to corporate reporting. It is the fundamental way in which a company can address various categories of its influence (Hopwood, 2009). This information will in no doubt be very helpful to the Australian companies which want to adopt these techniques for sustainable development (Thompson, 2011). They will only be required to customize an idea that was implemented by another company to fit into their local setting in Australia. Adoption of cost-analysis measures will help these companies to maximize on profits and at the same time conserve the environment. The study focused on companies from different categories and therefore, this will provide resourceful information from a large pool of alternatives (Thompson, 2011). The studied examples contain some of the best strategies in handling environmental issues that were employed by companies from all over the world. Recommendations and Conclusion Most of the companies that were studied had formulated their own long-term as well short-term goals as far as environmental cost reduction is concerned. For instance, they set short-term objectives with the aim of minimizing the amount of carbon and other related emissions into the atmosphere. On the other hand, long-term efforts towards reduction of environmental degradation involved attaining a ground zero carbon emission within a stipulated time period (Kolk, 2004). The study has shown that implementation of strategies that reduce environmental cost have yielded good fruits. Therefore, it is highly recommended that other organizations and business entities in the world adopt such innovative strategies on environmental sustainability. This is the surest way to safeguard the safety of our environment for the present as well as the future generations. Amidst the harsh economic conditions in the current business environment, the study has established that there institutions that are thriving well owing to their sustainability efforts. They have put in place mechanisms to ensure that they operate on cost efficiency in addition to reduction of environmental hazards. Employment of environmental sustainability ensures that before a new product enters the market, it is first scrutinized to check on its impact to the environment (Hopwood, 2009). Use of these approaches help in reduction of social and environmental costs as much as possible. Their adoption will protect the present as well as future generations from environmental deprivation and other related dangers. Reference List GlaxoSmithKline, 2011, March 18, GlaxoSmithKline Annual Reprot 2010, Retrieved October 3, 2011, from http://www.gsk.com/investors/reps10/GSK-Annual-Report-2010.pdf Hopwood, A, 2009, Accounting and the Environmnet, JOurnal of Accounting, Organnizations and Society , 34, 433-439. Kolk, A, 2004, Sustainability, Accountability and Corporate governance:Exploring Multinational's Reproting Practices, Business Strategy and the Environment , 1-18. Lohmann, L, 2009, Towards a Different Debate in Environmental Accouting: The cases of carbon and cost-benefit. Journal of Accounting, Organizations and Society , 34, 499-534. Sony, 2011, October 3, Help create a more sustainable future. Retrieved October 3, 2011, from http://www.sony.co.uk/hub/eco Thompson, I, 2011, Is Accounting for Sustainability actually Accounting for Sustainability....? Social and Environmental Accountability Journal , 98-100. Toyota Motor Corporation, 2011, September 05, Retrieved October 03, 2011, from Sustainability Report 2011: http://www.toyota-global.com/sustainability/sustainability_report/pdf_file_download/pdf/sustainability_report11_se.pdf Vodafone New Zealand Ltd, 2011, Corporate Responsibility: Environment. Retrieved October 2, 2011, from http://www.vodafone.co.nz/about/corporate-responsibility/environment.jsp Volkswagen Group, 2011, July 28, Sustainability Report 2010. Retrieved October 3, 2011, from http://www.volkswagenag.com/vwag/vwcorp/info_center/en/publications/2011/05/Report_2010.-bin.acq/qual-BinaryStorageItem.Single.File/VWAG_Nachhaltigkeitsbericht_online_e.pdf Read More