Is Sustainability Relevant to Business and Accounting - Tassal - Case Study Example

Table of Contents Executive Summary 2 Introduction 3 Purpose and Scope of the report 3 Discussion 4 What is sustainability? Is sustainability relevant to business and accounting? 4 Governance 6 Reputation 6 Risk Management 7 Is the notion of sustainability relevant to aquaculture industry in which Tassal operates? 7 Is the notion of sustainability relevant to Tassal? 9 Strengths 10 Salmon production 10 Science and Technology base 10 Opportunities 11 Luxury seafood demand 11 Access to market 11 If sustainability is relevant to Tassal, how might Tassal embrace sustainability in its operations? 11 Conclusion 12 References 13 Executive Summary Generally most common commercial fish species have almost been exploited by fishermen with most fished beyond their sustainable levels. Governments and other key stakeholders in the industry point out that aquaculture will be the most important wat to increase global fish supply and it is expected that by 2030 the industry will be dominated by aquaculture as opposed to current dominance by wild catch. Although Australian aquaculture contributes substantial percent to the export market, competition has increased in the recent years from the European countries, Asia and North America. There is potential for grow in the industry in Australia since over 60 percent of the seafood consumed is imported and trades at relatively low prices as compared to high quality exports from the country. With the increased interest in global standards of sustainability reporting, policy makers have faced the challenge of coming up with a universal meaning of sustainability or well-being, the private sector sustainability frameworks are generally guided by legal requirements, industry standards and a holistic view of the supply chain with closer consideration to the impacts on environment, economy and the cost involved. Introduction Sustainability is a broad concept borrowed from sustainable development. The UN Brundtland Commission viewed sustainability as economic growth which satisfies present needs of the inhabitants of the planet with no effect on the morrow’s generation’s ability to meet theirs. Sustainability viewed from the broader perspective includes human activities which affect the economy, society, and the natural environment with considerations to future developmental aspirations of the affected population. With the increased interest in global standards of sustainability reporting, policy makers have faced the challenge of coming up with a universal meaning of sustainability or well-being. For example sustainability reporting approach in the private sector largely differs with the approach public sector adopts in most economies. In the private sector sustainability frameworks are generally guided by legal requirements, industry standards and a holistic view of the supply chain with closer consideration to the impacts on environment, economy and the cost involved. In contrast, the public sector generally sustainability is driven by political pressure, international agreements, trade relationships agreements adopted by trading blocks and the role of different forms of government like the central and local governments. Purpose and Scope of the report This paper evaluate the available research work carried on sustainability in the private sector with the aim to bring in to light the specific sustainability issues relevant to the aquaculture industry where Tassal operates. The report focuses on highlighting the present and future expectations that businesses should put in to consideration when coming up with sustainability framework to adopt. In my view, accounting has a bigger role to play in ensuring business operations meet the changing expectations in corporate social responsibility and businesses should adopt new approaches so as to meet these expectations. The study also looked at the importance of sustainability in businesses and accounting practice while highlighting ways in which Tassal can borrow from the industry to improve its performance. Discussion What is sustainability? Is sustainability relevant to business and accounting? Sustainability is generally viewed as the economic growth satisfying present needs with no compromise on the morrow’s generation’s ability to meet theirs (Brundtland, 1987). Sustainability emphasizes the relationship between social, economic and environmental factors which form business operations. The interdependence of these macro-economic factors brings about sustainable development in the economy the businesses operate. Sustainability approach considers the economic, social and environmental factors as the key pillars to which will guarantee real development. Keeping environmental factors in check to ensure that natural resources can replenish themselves for future use and making sure enough resources are available to all the people at all time constitute to sustainable development. The UK government has formulated objectives which should be pursued at the same time so as to achieve sustainability. These objectives are; social progress for everybody, environmental protection, cautious use of resources provided by nature and maintaining high standards of steady growth of the economy and employment. This approach by the UK government guide businesses on how to implement sustainable development by developing intellectual and practical tools to achieve the objectives above. When strategic decisions are made in this context then, most likely they will contribute to sustainable development. The motivation of a business to pursue sustainability is often complex and diverse depending on the environment and legal requirements the organization operates. Most of sustainability approaches are geared to achieving the kind of environment the business will leave for future generations. Businesses have to formulate policies which demonstrate sustainability in its day to day operations. Individuals working in organizations also have a major role to play in doing their activities so as to ensure they pursue business opportunities which will promote sustainability and develop the current environment. Regardless of whether an organization decides to report on the economic, social and environmental impacts or not, it is evident that sustainability is important. This is because business operations in one way will help to shape the environment and social aspects of where it operates. Therefore, if the business doesn’t consider sustainable activities, then chances are the operations will impact the environment, economy and social aspects negatively. On a global perspective there has been initiatives adopted to guide sustainable development especially in the by the developed nations. Under the Kyoto protocol, countries committed to reduce levels of greenhouse gases emissions by at least 5 percent by 2012 (Kyoto Protocol, 1997). The European Commission issued several guidelines regarding environmental and social sustainability in areas of pollution, emission, waste and waste management. Businesses have adopted sustainability management approaches to pursue the important sustainability issues highlighted by the above commissions. In order to achieve sustainable development, it is important for businesses to think about the intellectual and practical tools so as to advance our economic, social and environmental agenda. In this regard, development and adoption of suitable accounting techniques is an important part of this process towards development. Unfortunately most of the accounting principles currently do not capture all these economic aspects. The costs and benefits which are not accrued directly by the organization but are absorbed by the rest of the community can be tackled by proper accounting practices. For example, the jobs created by Tassal’s operations in the local community, traffic, noise and litter produced by the business can be internalized by adoption of a suitable eternal sustainability accounting method. Businesses currently are under scrutiny from regulators and general public in their sustainability agenda and are expected to formulate policies which incorporate sustainable development in operations. Therefore businesses are forced to incorporate sustainable development in accounting and finance profession. These include: Governance Due to changing corporate governance environment, companies are expected to hold investor engagement so as to disclose all the economic, social and environmental risks associated with the investment for purposes of reporting. Reputation Investors and companies are currently pursuing non-financial data when valuing their entities. This is as a result of development of financial products based on an assessment of sustainability performance such as FTSE4Goods indices. Risk Management There is increased demand to disclose and manage non-financial risk as opposed to earlier times when organizations only focused on financial risks. Business can gain from timely identification of risks emanating from social and environmental settings related to present financial performance. With proper accounting systems a business can appropriately identify and report these risks. Is the notion of sustainability relevant to aquaculture industry in which Tassal operates? Sustainability concept is very much relevant in aquaculture industry across the world since its operations directly impacts on the environment and natural resources available. Fish farming and other aquatic plants has been identified by European Union as a sector with potential to boost economic growth. Under the Common Fisheries policy, the member states were encouraged to develop major national aquatic policies to foster growth in the sector. Research shows that by 2011 a quarter of the seafood consumed in the European Union was produced in farms within the EU and about 1.2 million tons of aquatic goods were produced ( European Commission, 2014). The aquaculture industries in EU employed directly over 14,000employees by 2014. The commission called for more environmentally responsible business to venture in the industry so as to bridge the gap between the amounts of aquatic foods consumed and the amount caught from wild waters (European Commission, 2013). This clearly show that aquaculture industry plays a key role in the economic development and best practices should be employed to ensure that environment friendly operations are carried out by responsible enterprises. Over the years Australia has earned reputation in aquaculture and wild-catch fishing due to employment of latest technologies, modern management practices and world-class harvesting and post harvesting practices (Australian Trade Commission, 2013). This has led to production and supply of high quality sea foods produced using environmentally sustainable practices. In 2013 the aquaculture industry comprised of 35 percent of Australian volume fisheries production and 43 percent of the total industry. The aquaculture industry was valued at $ 2.4 billion annually and employing about 10,600 people. The aquaculture industry is an important industry in Australia with the ability to spur economic growth. With the support from the government the aquaculture industry has developed sustainable strategies to dealing with the challenges of growing a profitable and sustainable industry which complements the wild-catch fisheries while protecting the long-term Australia’s marine ecosystem for the future. The government of Australia is committed in supporting sustainable fisheries and protecting its marine environment with close monitoring of key species to avoid depletion of their stocks. In this regard the government offers training under the Australian’s Seafood industry Training Package (SITP) which covers all the sectors of the industry including aquaculture. The aquaculture industry in the country has developed substantial capabilities in consulting, equipment and technology, marketing and research. Companies have gained experience designing aquaculture equipment and systems such as ponds and tank systems and extensive capabilities in circulating aquaculture systems. Companies in southern Australia have adopted Integrated Multi trophic Aquaculture as a way of developing sustainable ecosystems for the industry. This involves farming of different aquaculture species together so as to allow one species waste such as salmon be recycled as feed for other species such as finfish. This approach has huge economic gains since it reduces costs of production and also contributes to greener aquaculture practices through reduction of waste in the marine environment. Clean sea tuna on the other hand have invested in research into closing the lifecycle of the Southern Bluefin Tuna with the aim of improving the availability of the stock for aquaculture hence boosting the sustainability of the industry. Bioremediation Company (MBD Energy) has developed a low-cost clean waste management processes with the option of reducing costs by producing commercial algae. The company has opened a new frontier in aquaculture industry where the costs of production are reduced through lower costs of waste management than alternative methods and protecting the environment by using the waste to grow algae which is food component in aquaculture. Is the notion of sustainability relevant to Tassal? Sustainability is the guiding principle for Tassal. Tassal aims at achieving best practices across all the operations and is committed to maintaining high standards of corporate governance to operate in an unique environment, effectively managing risk, and enhancing corporate responsibility (Tassal Sustainability Report, 2016). The company has developed governance framework which guides its operations and outlines commitment to act ethically, openly, honestly and fairly. Also the company shows commitment to accountability by through publishing sustainability reports, certification to the Aquaculture Stewardship Council (ASC) and online publication of Audit reports and Environmental Impact Statements. Also the company has focused on sustainability risk minimization by implementing the Risk Management System aligned with the precautionary approach to ensure accountability. The company has relied heavily on research both within the company and external so as to drive innovation and cope with the ever changing operating environment. This approach has greatly ensured compliance and establishing accountability and informed decision making to foster a culture of good governance. Tassal has developed sustainable development goals in line with the United Nation’s sustainable development goals which has reaffirmed its commitment to pursuing a sustainable future and taking care of the environment. Strengths Salmon production Tassal has remained to be a global sustainable producer of salmon. The approach of the company is to be a custodian of marine environment where environmentally and socially responsible and sustainable production is the driver of the company’s long-term development agenda. Sustainability at Tassal moves beyond our commitment to environmental sustainability (Tassal Sustainability Report, 2016). Science and Technology base The company has relied heavily on research both within the company and external so as to drive innovation and cope with the ever changing operating environment. The company has also partnered with Fishlistic which is a sustainable seafood consultancy which provides science-based solutions to Tassal on wild capture fisheries and aquaculture operations. Opportunities Luxury seafood demand Tassal has a ready market for its products both local and internal. Most of the salmon are retailed locally within Australia. Access to market The company has established multiple channels to access the market. These channels include direct, retail, wholesale and export to maximize stability and stability of earnings. If sustainability is relevant to Tassal, how might Tassal embrace sustainability in its operations? Tassal has to a great extend embraced sustainability in its operations and all it operations are geared towards achieving an economic, social and environmentally friendly outcomes. However, much needs to be done in terms of preparedness, innovation and research and development because of the ever changing environment the company operates. As the company focuses on increasing aquaculture production, there will be need to develop new technologies to curb waste management. Tassal should partner with companies such as MBD Energy which develops a low-cost clean waste management processes with the option of reducing costs by producing commercial algae. The company has opened a new frontier in aquaculture industry where the costs of production are reduced through lower costs of waste management than alternative methods and protecting the environment by using the waste to grow algae which is food component in aquaculture. Also the company is faced by the challenge of increased population along the coastal line where most of its operations are based hence underpin the reputation of the company as a clean sea food supplier. The company should invest more in research and development so as to come up with reliable solutions of dealing with diseases which affect fish farming. Most cases of new diseases are spread by non-native aquaculture species (Peeler et al, 2011). For example, Anguillicoloides crassus, a parasite which was introduced in to Europe through imported species from Japan has spread across European countries and it affects both wild and farmed species. When such a catastrophe strike without proper preparedness, then this can drastically affect the level of production hence affect the company’s profits. Since the company rarely uses antibiotics to treat their salmon, the company should focus more on developing alternative preventive measures to reduce chance of using of antibiotics in case of an outbreak. Conclusion Sustainability in the aquaculture industry has been an area of concern over the few decades especially on environmental issues. Though significant improvement in efficiency and research has been witnessed as the sector expands further in Australia, more needs to be done to ensure continuous environmental improvement. As the industry is very unique characterized by biological assets more investment should be done in research backed by scientific evidence so as to develop practical solutions. Tassal has achieved key milestones in its sustainable development agenda and in return it has acquired reasonable market share within the country. References United States Department of Agriculture, ( 2007). Sustainable Agriculture. Retrieved from https://www.nal.usda.gov/afsic/sustainable-agriculture-definitions-and-terms Our Common Future: Report of the World Commission on Environment and Development”. UN Documents. Retrieved from http://www.un-documents.net/ocf-02.htm The Role of Accountants. Sustainable business Initiative Retrieved from https://www.icaew.com/-/media/corporate/files/technical/sustainability/sustainability-the-role-of-accountants-2004.ashx?la=en Australian Government, (2016). Aquaculture industry in Australia. Retrieved from http://www.agriculture.gov.au/fisheries/aquaculture/aquaculture-industry-in-australia Primary Industries and Regions South Australia, (2014). South Australian Aquaculture: a summary of its diversity, production and innovation. Retrieved from http://pir.sa.gov.au/__data/assets/pdf_file/0008/221993/Aquaculture_IndustryBooklet.pdf European Commission, (2015). Science for environment policy. Retrieved from http://ec.europa.eu/environment/integration/research/newsalert/pdf/sustainable_aquaculture_FB11_en.pdf Peter et al (2012). Sustainable Aquaculture. Retrieved from https://industry.gov.au/science/PMSEIC/Documents/SustainableAquaculture.pdf Tassal, (2016). Tassal Sustainability Report 2016. Retrieved from http://www.tassal.com.au/wp-content/uploads/2013/12/Tassal-Sustainability-Report-2016.pdf Read More