Social Environmental Accounting - Case Study Example

Social environmental accounting Social environmental accounting Part A The management accounting systems and techniques employed Initially, traditional businesses focused on financial or even the economic activities of their businesses (Hopwood, Unerman, & Fries 2010). This has been helpful in maximizing the profits and the value of shareholders for such organizations. There has been a growing need for the negative impacts of the social and the environmental impacts of various human actions. This has led organizations such as Aviva insurance to consider the overall impacts of their social and their environmental outcomes of their activities. This has led to Aviva making the issue as part of its decision-making concept. The company has employed various internal management accounting systems and techniques in relation to the social and environmental issues facing it (Marinova, Annandale, & Phillimore 2010). One of such system includes acting responsibly. This involves Aviva insurance using scientific research on the social and environmental impacts responsibly and engaging in good governance and management of the organization (Dalal-Clayton & Sadler 2014). It is important for organizations to balance possible environmental, social and economic impacts, risks and opportunities across the economic, social and economic spheres. This is a highly complex task to Aviva, its managers and the society at large. The complexity that is brought about by this is made more difficult through the requirement to identify the significance of various types and even time horizons of the outcomes. There may be instances where there is a positive overall societal, environmental and economic outcome while other activities leads to a positive outcome on one side and negative outcome on the other. Organizations, therefore, face difficulties in coming up with strategy and actions to balance the environmental, social and also their economic sustainability. Managers in Aviva recognize this and ensure that it is highly incorporated in the decision-making processed making it to be within the organizations acceptable behavior and impacts of a society (Burritt 2011). The second internal management accounting system is saving for various environmental projects. The organization through its management overseas the Aviva community funds to sustain the economic, societal and environmental aspects of the society (Docherty, Kira, & Shani 2008). The organization is also involved in the management of its environmental costs. The organization is increasingly becoming aware of their environmental sustainability responsibility in the society. This is considering that organizations that consider themselves as environmental friendly attract and retain more customers. The organization is engaging more on green growth and ensuring that it reports on its environmental performance in a similar manner that it reports on its overall financial performance. It reports on its emissions of carbon and measures it undertakes in reducing such emissions. Critical analysis of the internal systems and techniques There are various internal systems and techniques that Aviva adopts in a bid to enhance its environmental sustainability. One of them is in the attraction, retention and motivation of employees (Steiner 2008). For Aviva to continue with its mission of enhancing environmental sustainability, it has to employ and retain employees who have the same commitment to environmental sustainability. This is one aspect that they look for in their potential candidates and it has helped them in their move towards environmental sustainability. The company also highly motivates its employees by instituting better pays, good relation among their employees and other aspects of employee motivation. The sustainability performance this organization not only helps in improving the engagement its employees but also help in attracting and retaining more employees (Krosinsky 2012). Organizations that engage in environmental protection like Aviva exhibit high commitment levels. The second internal issue is on risk management. There are various risk management issues including the issue of political risk, business disruption, and shortage of skilled labor among others. Aviva engages in an overall management of its risks by conducting research and budgeting for the unknown to ensure that it is not caught unawares (Hancock 2009). Through this, it is able to engage more on environmental sustainability. The reason is that it is able to predict and know the vulnerability to regulatory change in carbon taxes or even tighten environmental permits requirements. The organization is also able to drive its operational efficiencies and cost reduction. By the insurance company acting in a more environmental friendly manner, it enables a direct cost on its savings. This is in terms of their energy use, travel costs and other costs that the organization requires. Costs from these areas increase due to an increase in the global demand and a greater increase in the environmental taxation. The company is also able to have an increased access to capital to enable its environmental sustainability (Krosinsky & Robins 2012). This has an impact on how the access to debt and equity finance. This enables the organization to come up with creative environmental friendly programs including the collaboration with carbon trust to ensure the overall management and reduction of carbon emissions. In addition, the company builds its brand and reputation from being environmental friendly. With such measures, the organization is able to identify their past and future environmental and social impacts, and they are able to forecast their financial outcomes form the resulting differences. The organization is also able to formulate and implement various strategic solutions that strengthen their business performance, and they are able to respond more effectively to the issue of sustainability. The organization is also able to support their management of risk through overall identification and analysis and response to various environmental sustainability-related risks and opportunities (Greenland, Bainbridge, Galloway, & Gill 2012). As a result, the organization is operating more eco-efficiently by ensuring that the organization is more eco-friendly in its operations. Recommendations The organization has to be committed and engage in innovative long-term solutions for their accounting to fully realize its role in the environmental sustainability arena. The organization has to develop imaginative and innovative sustainability accounting and also reporting practices. Such policies include the modes of communication to stakeholders on the organizational social and environmental policies that are aimed at reducing the negative impacts in the society (Krosinsky 2012). The organization also has to include the strategic decision making on their environmental and social sustainability considerations. This will enable the aversion of the significant environmental risks from climate change and capitalize on the opportunities of moving into a sustainable economy. Part b The theory This part will incorporate the use of the stakeholder theory of corporate responsibility (Blowfield & Murray 2011). The theory addresses morals and other values in managing an organization. Stakeholders are the interest groups of an organization including the society, shareholders, and suppliers among others. The theory recognizes the need for an organization to identify and take care of the interests and well-being of their stakeholders. The theory lists a number of individuals who likely to be affected by the tasks and the actions of an organization. This theory indicates that individuals who are affected by the company are rightful and have the obligation of participating and directing an organization (Brockett & Rezaee 2013). Thus, one way that EDF energy engages in. the organization realizes that their stakeholders are important for the well-being of the society. This makes it important for the organization to engage in actions that benefit and oriented towards the well-being of their stakeholders. Corporate social responsibility report EDF energy CSR report prioritizes the most important aspects of their business and their stakeholders. This is often identified through a formal CSR assessment of materiality (Belal 2008). This report is used to communicate the approach of the organization, their objectives, progress, the challenges they face and the priorities that they have regarding the business. The report will be out by mid-year 2015, five pages maximum and a minimum of two pages. The main target audience is its stakeholders mainly the customers and the society since the report will mainly focus on the environment and the sustainability part of the organization. The organization has achieved and won the platinum plus award from BITC for their practice of corporate responsibility. The report incorporates various issues including the governance and ethics. This involves their approach to CSR and their commitment to achieve good governance and overall ethical conduct in addition to their respect of human rights (Cuvilceva 2012). The report also incorporates the supply chain by including their sustainability into the assessment of their suppliers. The organization engages with their suppliers to enhance their capacity building. They also work with other people to address the global challenges evident in the corporate scene today. The report also includes how the organization offer engaging opportunities recognize the availability of achievements and enable a healthy workplace to ensure that their employees achieve their desired full potential (Idowu 2009). The report also incorporates the responsibility that the organization has for its society members. The organization uses its expertise and advanced technology and work with their partners to help their communities to thrive. They focus on community education, healthcare, development in the economic sector, response to disaster and the crucial human needs. Finally, the report incorporates how the organization is working to enhance the overall improvement of their environment using high level of advanced technology in helping stakeholders reduce the impacts. The company is determined to strengthen their commitment towards subcontracting, issues of biodiversity and their fight against climatic change in the society (Jagd 2014). Critical analysis of the CSR report Stakeholder’s theory recognizes the need for an organization to incorporate all its stakeholders for the improvement of their business performance. As such, it is important for an organization to incorporate all its employees and make it a part of their organizational culture (Horrigan 2010). EDF energy uses sustainability as their determiner of the performance of their business and as a means of branding. Branding acts as a way of enhancing their external image on the face of their employees. However, they incorporate some brand values in their organization. This includes the respect of all individuals, respect for the environment, integrity, and social responsibility coupled with excellent performance from their employees. Considering the operational approach and effect of market positioning on their overall branding, their commitment to the issue of sustainability exceeds their commercial objectives (Cramer & Bergmans 2013). The organization makes use of the five branding values to measure the level of success of their social, environmental and overall financial objectives. EDF strategy to engage in branding through sustainability is their main driver to the performance of their business. However, this became problematic for the organization considering that a balanced strategic plan is required for the achievement of sustainability (Idowu & Filho 2008). From this, the organization found it hard to establish sustainability to the hierarchy of employees due to them being unsure of the functional employees about the strategies since they were not involved directly in the operation. Despite this, it is important for this organization to ensure the involvement of all employees or else the level of motivation for the employees would diminish. Thus, a large number of employees make it difficult to establish sustainability initiative. This led to the importance of internal reporting to ensure that they report to all employees and ensure their involvement. It ensures that the employees are well aware of the clear intention of the organization ensuring that the sustainability objectives are well met by the employees thus improving the business performance of the organization. With CRF, EDF was able to set SMART goals for all employees to achieve thus increasing their sustainability. With the required sustainability, the organization is able to enable the interests of all their stakeholders both the internal and the external ones. Conclusion and recommendations Considering that EDF is set to enhance a corporate social responsibility to its stakeholders, a stakeholder’s theory has been incorporated in this project. This has enabled the establishment of a CSR report that shows the interest and objectives of the organization for its stakeholders. However, the organization should engage in internal reporting to keep the employees well –informed on the decisions that the organization undertook (Sun, Stewart, & Pollard 2010). This will enable a well-informed number of employees in all levels. The organization should also set measurable goals for its employees to achieve. In addition, the organization should also internalize its environmental and its external costs in the course of reporting its annual accounts. This is capable of enabling the organization to become competitive and achieve the long term profitability that it deserved. This will enable the organization to achieve its desires sustainability and profitability according to its goals and objectives. Bibliography Belal, A. R. 2008. Corporate social responsibility reporting in developing countries. Aldershot, Hampshire, England; Burlington, VT: Ashgate. Blowfield, M., & Murray, A. 2011. Corporate responsibility. Oxford: Oxford University Press. Brockett, A., & Rezaee, Z. 2013. Corporate sustainability. Hoboken, N.J: Wiley. Burritt, R. 2011. Environmental management accounting and supply chain management. Dordrecht: Springer, Cop. Cramer, J., & Bergmans, F. 2013. Learning about corporate social responsibility. Amsterdam, Washington DC: IOS Press. Cuvilceva, M. 2012. The importance and significance of Corporate Social Responsibility Reporting. Munich GRIN: Verlag GmbH. Dalal-Clayton, B., & Sadler, B. 2014. Sustainability Appraisal. New York: Routledge. Docherty, P., Kira, M., & Shani, A.2008. Creating Sustainable Work Systems. New York: Routledge. 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