Accounting for Sustainable Management - Paraway Pastoral Company - Case Study Example

Sustainability in Pastoral Industry: A Case of Paraway Pastoral Company Name Institution Course Date Sustainability in Pastoral Industry: A Case of Paraway Pastoral Company Introduction Sustainability is arguably one of the hottest topics of the modern times. Sustainability has attracted a heated debate across industries and professions and the debate is exuberated by the growing concern of the role of businesses in climate change (Laszlo & Zhexembayeva 2011, p. 121). Today, climate change has become a serious problem that the world is grappling with and trying to find a solution. The effects of climate change are felt far and wide and include increased prolonged droughts, flooding, rising sea levels, typhoons, wildfires becoming common and increase ice melting and glacial movements among others. Although scientists have discovered that climate change and environmental degradation are caused by a combination of many factors, businesses are the greatest victims of environmental degradation and climate change that consequently adversely affects human and all living things (Thiele 2013, p. 12). Because of this, businesses are increasingly being persuaded to take initiative to invest in sustainable programs so as to ensure the wellbeing of the current and future generations. This report begins by explaining the term sustainability and its relevance to business and accounting. The report proceeds to analyze the relevance of sustainability to the pastoral industry in which Paraway Pastoral Company Limited operates. The third part of the report discusses the specific sustainability issues that Paraway is facing. Lastly, the report will discuss the ways in which Paraway can embrace sustainability in its operations and then wrap up with a summary of the findings. Sustainability Defined Sustainability is a broad concept and means different thing to different persons. Its definition also varies from one industry to the next. The term sustainability first appeared in Brundtland Commission’s report that defined sustainable development as the adoption of practices that meets the present needs of the people without compromising the ability of the future generations to fulfill their needs (Laszlo & Zhexembayeva 2011, p. 12). Thiele (2013, p. 4) defines sustainability as the adoption of business practices that promotes social, economic and environmental wellbeing. This definition means that a company has a responsibility not only to make profits, but also to promote social and environmental wellbeing so as to ensure the wellbeing of the people and the environment in the long-term. In the supply chain management field, the term sustainability had been defined as the idea that businesses have the responsibility to ensure that commerce, markets, finance and technology advance in a manner that benefit economies, ecosystem, societies and the company stakeholders. In other words, sustainability here means adopting business practices that cause no harm, but promote the development of a more maintainable and inclusive global economy. Relevance of Sustainability to Businesses and Accounting Sustainability is often at odds with businesses because its implementation consumes money that would otherwise be meant for shareholders. Milton Friedman is regarded as one of the theorists who opposed the idea of a company promoting sustainability, arguing that the sole purpose of a business is to maximize investors’ returns (Wells 2013, p. 49). However, this notion has been refuted by other theorists key among them been Freeman whom is his stakeholder theory argued that businesses have a duty to the society to the extent that they must ensure that their activities do not harm all its stakeholders (Freeman 1998, p. 5). By this, Freeman was suggesting that businesses have a responsibility to not only promote the interest of their shareholders, but also the other stakeholders who either have an interest or impacted by the business operations, such as employees, suppliers, customers, government, community and environment. Notwithstanding the debate by theorists about sustainability, businesses are recognizing that sustainability is important to the extent that, to remain relevant and competitive, they must invest in sustainable business practices. First, sustainability has relevance to businesses and accounting because it makes businesses attractive to investors. Today, the majority of investors are only interested in investing in good business practices. In this regard, Blowfield (2013, p. 51) notes that a large number of investors now look for worthy projects, such as the impact of the business activities to the environment and this underscores the importance of improving sustainability measures. For instance, Wells (2013, p. 74) notes that most investors of today tend to avoid investing in firms that are destructive to the environment. Accordingly, this means that, for a business to attract investors to invest their money in the business, they must improve their sustainability position by implementing sustainable business practices. Sustainability also has relevance to businesses and accounting it promotes competitiveness. Today, businesses operate in complex, dynamic and highly competitive environments. Therefore, to achieve a competitive advantage, businesses must ensure that they adopt effective strategies by being innovative and relevant to the changing times. Fortunately, sustainability has become a source of competitive advantage for businesses today. Although theorists like Milton Friedman believed that sustainability is at odd with business, empirical evidences indicate that companies that promote sustainable strategies are generating greater profits than do those that do not (Laszlo & Zhexembayeva 2011, p. 136). In this regard, it has been shown that sustainable businesses tend to innovate because they regularly review their business processes in a bid to find solutions. Contrastingly, firms that do not care about sustainability tend to stick with their old business processes without necessarily thinking of introducing better and greener alternatives. Besides, Wells (2013, p. 79) observed that emphasis on sustainability is important for businesses because it builds a culture of accountability in the entire organization, which in turn ensures business success and competitiveness. Moreover, Blowfield (2013, p. 58) shows that consumers are increasingly becoming environmental conscious. The modern consumer cares a lot about their health and the processes used to produce the product they buy. According to Laladhas et al. (2016, 17), modern consumers want to identify with sustainable products and services to the extent that they ensure that the products they buy are sourced and produced in a sustainable manner. Considering this consumer behavioral trend, businesses that hope to remain relevant and competitive have no option but to invest in sustainable practices. Being sustainable help raise the reputation of a firm, thus making it attractive and appealing to modern consumers. This is supported by Thiele (2013) study that shows that about 25% of consumer behavior is driven by reputation. Relevance of Sustainability to the Pastoral Industry Raring livestock is one of the farming practices that have a lot of impact on the environment. Like in any other business, sustainability has a lot of relevance to the pastoral industry in which Paraway operates (Paraway Pastoral 2017). First, sustainability has relevance to the pastoral industry as it ensures environmental conservation which is good for livestock farming. One of the greatest concerns for pastoral farmers is environmental degradation. Over the last few decades, environmental degradation has occurred at a level never seen before and this has seen the major resources of the world get exhausted and this is having a negative effect on the environment. In particular, environmental degradation has resulted in depletion of fresh water that is needed to feed livestock and to keep them in good health (Laladhas et al. 2016, 311). This has resulted in increased suffering of livestock some of which die because of lack of fresh water. At the same time, the global warming effect that the world currently experiences has resulted in increased incidences of prolonged drought that affect pastoral farming. Today, pastoral farming businesses, such as Paraway is struggling with lack of pasture to feed their animals because grass has dried out for lack of rain. Therefore, the adoption of sustainable business practices is important for pastoral industry as it is good for the environment. For instance, by adopting sustainable farming, this ensures that there is less pollution to the environment, thus mitigating the global warming effect, which in turn ensures environmental sustainability, which is good for pastoral farming. At the same time, adoption of sustainable business practices ensures responsible use of water sources by ensuring that fresh water sources are not depleted (Thiele 2013, p. 63). Consequently, this is good for pastoral industry as it ensures that livestock have abundant waster and pasture to feed livestock. Additionally, sustainability has relevance to pastoral industry because of its effects on animal health. Today, most pastoral farmers face the challenge of increased pests and disease that affect livestock. Pastoral business presently spends hundreds of dollars in treating animal disease that have become increasingly prevalent. Unfortunately, Laladhas et al. (2016, 319) link the increased diseases and pests that affect livestock to global warming effect. For this reason, sustainable business practices has relevance to pastoral industry as it ensures that negative environmental impacts, such as pollution that is responsible for global warming is mitigated, which consequently ensures reduced rates of diseases and pests that affect the lives of livestock. According to Wells (2013, p. 102), sustainability is significant to businesses because it minimizes risk of being prosecuted by the government for failing to abide by laws such as laws and regulations on carbon emission. Besides, sustainability makes a company attractive to employees. Sustainability issues that Paraway Faces According to the Triple Bottom Line, a company has three aspects of sustainability that include economic/financial, social and environmental sustainability. The Triple bottom line (TBL) model holds that a company has a duty to promote these aspects of sustainability. Unfortunately, analysis of Paraway indicates that the company has experiencing various sustainability issues that threaten the company’s competitiveness and survival. The first sustainability issue facing Paraway has to do with financial sustainability. According to the TBL, a company has a responsibility to generate profits to ensure that it is able to operate effectively and deliver value to stakeholders, such as investors in the long-term. Unfortunately, analysis of Paraway’s annual report indicates that the pastoral company made losses amounting to $23 million in 2013 (Cranston 2013). The losses means that the company is not was not able to generate returns to its investors and the losses did put the jobs of employees at stake, as well. Although the company’s performance has improved in subsequent years, the company’s financial/economic sustainability is questionable. Paraway is also being accused of environmental degradation by environmentalists. Because the company rare a large herds of livestock, this impacts negatively on the environment through the destruction of soil, which exposes the land, where the animals are grazed to erosion. Environmental assessments that have been conducted on the grazing firms owned by Paraway, such as those in the Riverina area indicates that the soils on these grazing lands are highly exposed to erosion and this impacts negatively on the environment (Cranston 2016). Additionally, to keep animals in good health, Paraway has to regularly spray its livestock with insecticides. However, this is having a negative effect on the environment as the insecticides are carried by air, which people in the neighborhoods breathe and this exposes employees and people living near the stations to risk of developing airborne diseases. Some of the insecticides used have the potential of causing diseases such as asthma and skill problems. Additionally, water is a precious resource not just for animals but also for human beings. Unfortunately, Paraway has been accused of polluting rivers flowing near its livestock farms. Reports gathered indicates that the company releases its large herds to the nearby rivers for water and in the process they step into the rivers and pollute it and this exposes people using the polluted water downstream to risk of developing health problems, such as skill rashes, diarrhea and other waterborne diseases (Cranston 2016). The continued pollution of nearby rivers has put the company in collusion path with the residents. Ways in Which Paraway Can Embrace Sustainability in Its Operations As indicated, sustainability has become an important source of competitive advantage that Paraway must consider promoting to enhance its position and competiveness (Laszlo & Zhexembayeva 2011, p. 138). For this reason, it is important that Paraway embrace sustainability and make it part of its business model and if possible transform it into a business culture. There are various strategies that the firm can adopt to promote sustainability in its business operations. First, Paraway can promote sustainability by relooking at its water management system. Instead of releasing animals to the nearby river to drink, which results in water pollution, the company should instead introduce a system where livestock are provided with water in a bucket or a system that do not allow animals to step into the flowing rivers (Hooft et al. 2012, 256). This way, Paraway would ensure that rivers are not polluted, thus promoting their sustainability. Second, Paraway can embrace sustainability by relooking at the pesticides used to spray the animals. In this respect, Paraway needs to ensure that animals are sprayed with pesticides that do not expose those who spray these chemicals and the neighboring community to health risks. This implies that the company needs to e sure that only pesticides that are safe to the environment and humans are used to ensure that there is neither environmental destruction nor exposure of human to health problems. Additionally, Paraway needs to consider improving sustainability in its grazing lands. As indicated, the large herds of livestock kept by the company cause massive soil erosion, where threatens the environmental sustainability. Therefore, as part of sustainability, the company needs to participate in planting grass and trees to minimize soil erosion that has become a problem for the company (Hooft et al. 2012, 266). Planting grass and trees will ensure that there is adequate cover to minimize soil erosion and this would improve the company’s position as far as environmental sustainability is concerned. Further, Paraway needs to focus on promoting responsible waste management. Waste disposal is a big environmental issue that pastoral businesses like Paraway faces. The large animals kept by Paraway produces tons of waste daily (Paraway Pastoral 2017) and these wastes needs to be properly disposed to ensure the wellbeing of the environment and for the good health of the employees that handle the livestock. In particular, the company can consider establishing a waste management plant, where the animal wastes are transformed into fertilizers and biogas energy for use in the livestock firms. Moreover, the company can embrace sustainability by promoting social sustainability. Paraway can do this by participating in social responsibility programs that involves giving back to the society where it operates (Hooft et al. 2012, 285). Social responsibility areas that Paraway can consider include sponsoring the needy in the locality, engaging in women empowerment programs, promoting health and wellness in the society, as well as promoting cultures in Australia and beyond. Conclusion Sustainability is certainly a hot topic today. As indicated, companies across industries are increasingly embracing sustainability because of the increased recognition of its relevance to businesses and accounting. As indicated in the report, sustainability has relevance to the pastoral industry as it promotes the wellbeing of the environment, which in turn minimizes destruction to fresh water sources, as well as minimizing global warming that impact negatively on pastoral industry. Paraway faces a number of sustainability issues that include water pollution, aggravating soil erosion, and air pollution with pesticides among others. However, the company can embrace sustainability by addressing the sustainability issues it faces, such as minimizing pollution of rivers, ensuring safe use of pesticides, effective waste management and addressing soil erosion through grass and tree planning, as well as promoting social sustainability by giving back to the community. References Blowfield, M. 2013, Business and sustainability. OUP Oxford, Oxford. Cranston, M 2013, Paraway posts $23m loss, viewed 23 March 2017 http://www.farmweekly.com.au/news/agriculture/agribusiness/general-news/paraway-posts-23m-loss/2653482.aspx Cranston, M 2016, Macquarie Group's Paraway Pastoral pays more than $100m for Western Grazing stations. Financial Review 10 May, viewed 23 March 2017 http://www.afr.com/real-estate/macquarie-groups-paraway-pastoral-pays-more-than-100m-for-western-grazing-20160510-goqg6k Freeman, M. M. R. 1998, Inuit, whaling, and sustainability. Rowman Altamira, Sidney. Hooft, K., Wollen, T. S., & Bhandari, D. P 2012, Sustainable livestock management for poverty alleviation and food security. CABI, Chicago. Laladhas, K. P., Nilayangod, P., & Oommen, O. V 2016, Biodiversity for sustainable development. Springer, Harvard. Laszlo, C., & Zhexembayeva, N 2011, Embedded sustainability: The next big competitive advantage. Greenleaf Publishing, New York. Paraway Pastoral 2017, About Paraway, viewed 23 March 2017 http://www.parawaypastoral.com/about/ Thiele, L. P 2013, Sustainability. John Wiley & Sons, Hoboken, NJ. Wells, G 2013, Sustainable business: Theory and practice of business under sustainability principles. Edward Elgar Publishing, Cambridge. Read More