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CPE session

    Susan K Wolcott
    CPE #40 - Sustainability Accounting: What It Is and How to...
    CPE session posted July 31, 2010 by Susan K Wolcott, last edited April 7, 2012 
    1556 Views, 12 Comments
    title:
    CPE #40 - Sustainability Accounting: What It Is and How to Teach It
    leader(s), affiliation(s):
    Susan K. Wolcott, CA School of Business
    session description:

    Organizations are increasingly incorporating sustainability issues in strategic management and reporting on environmental and social performance.  during this workshop participants will:

    • Learn basic concepts and motivations for sustainability management, accounting, and reporting
    • Become acquainted with major frameworks such as Global Reporting Initiative (GRI) Sustainability Reporting Guidelines and ISO 26000 Reporting on Social Responsibility
    • Explore and discuss relationships of sustainability to accounting courses including financial accounting, management and cost accounting, ethics, and assurance.
    date:
    August 1, 2010 4:00pm - 7:30pm

    Comment

     

    • Susan K Wolcott

      Thanks to the participants in today's CPE workshop for great ideas and discussions about sustainability accounting!

      Here are a couple of follow-up items for the workshop:

      1. The figure at the bottom of page 5 of the handout should include information systems.  (Duh!)
      2. My husband wrote a couple of blog entries that I believe introduce some  new insights to the BP oil spill catastrophe:
      1.  

      Susan

    • Anton Du Toit

      Hi

      Thanks for the workshop I attended today!

      Just perhaps an interesting note: in South Africa the King III report came out in 2009, and this code is enforced for listed companies by the Johannesburg Stock Exchange. Not complying could lead to delisting. Thus all listed companies in South Africa should now have a proper sustainability report, not only as a separate document any longer, but as part of the annual report. The King III report can be viewed online and the code itself can be downloaded at the website of the publishers, the Institute of Directors in Southern Africa - www.iodsa.co.za

      Also note that most of the sustainability reports are in fact available on the websites of all the large companies, usually still as a separate document to the annual report. One of the best SA reports is that of Nedbank, www.nedbank.co.za

      Furthermore, all the sustainability reports complying with the GRI guidelines are available on the register of GRI.

      Lastly, I am doing my doctorate on the postulates of sustainability assurance, and I would like to know of anyone interested in this area, so that we can perhaps perform some collaborative research projects.

      Kind regards

      Anton du Toit

      Director: Accountancy Studies, Monash South Africa

    • Anton Du Toit

      Hi

      I think it is of critical importance to look at the competencies one would like to see present in a sustainability reporter (the person) before trying to teach that person. Although not exactly the same, there are common competencies between the preparer of sustainability reports and the person auditing it or providing limited assurance to it. I have done quite some work on the competencies of the assurance provider in sustainability, which might be of value to those who attended.

      In the attached file, that will be followed up with a post containing the slides as well, I have also made quite an extensive picture/drawing of all the stakeholders of a company, mainly derived from the South African King II report (of 2002) - see picture on page 7. You are welcome to use the picture or the slide picture for lectures, as long as you acknowledge me as your source.

      I have also done similar follow-up work on competencies for a paper presented at the British Accounting Association. I will also add this - it seems only 1 file could be attached at a time on this website.

      Kind regards

      Anton

    • Anton Du Toit

      Hi

      As promised in my previous post above, here is the relevant slide show as well, containing quite an extensive picture/drawing of all the stakeholders of a company, mainly derived from the South African King II report (of 2002) - see slides 10, 11 and 12. You are welcome to use the slide picture for lectures, as long as you acknowledge me as your source.

      Should you want to engage in correspondence with me, or meet me somewhere during the next few days, please contact me via anton.dutoit@buseco.monash.edu

      Kind regards

      Anton du Toit

      Director: Accountancy Studies, Monash South Africa

    • Anton Du Toit

      Hi

      Sorry, I am not trying to take over this post! It is simply that only 1 file can be attached to any post.

      After the paper and slides in the previous posts, I did some more work on the competencies and I presented a paper at the BAA. I now attach this paper as well.

      You are welcome to use the information for lectures or for planning your courses, as long as you acknowledge me as your source.

      Should you want to engage in correspondence with me, or meet me somewhere during the next few days, please contact me via anton.dutoit@buseco.monash.edu

      Kind regards

      Anton du Toit

      Director: Accountancy Studies, Monash South Africa

    • Anton Du Toit

      Hi

      My last one!

      Here is the slide show for my BAA presentation.

      You are welcome to use the information for lectures or for planning your courses, as long as you acknowledge me as your source.

      Should you want to engage in correspondence with me, or meet me somewhere during the next few days, please contact me via anton.dutoit@buseco.monash.edu

      Kind regards

      Anton du Toit

      Director: Accountancy Studies, Monash South Africa

    • Robert E Jensen

      Here's an opportunity for you to be creative as a liberal or conservative, get a prestigious publication, and win a prize from Harvard.

      "Reimagining Capitalism." by Polly LaBarre, Harvard Business Review Blog, February 27, 2012 --- Click Here
      http://blogs.hbr.org/cs/2012/02/reimagining_capitalism.html?referral=00563&cm_mmc=email-_-newsletter-_-daily_alert-_-alert_date&utm_source=newsletter_daily_alert&utm_medium=email&utm_campaign=alert_date

      Jensen Comment
      The comments following this article range across the entire spectrum of reactions we've seen for years about social responsibility accounting for business. Milton Friedman, of course, argued that the only responsibility of business is to obey the letter and spirit of the law without losing sight of the main goal of profit maximization.  Friedman argued that it's not the responsibility of business firms to make externality resource allocation decisions best left to government. This is reflected in the comment of Kozarms.

      The concepts herein are very disturbing. This strikes me as socialism, and a socialist mentality. "How do we build the consideration of social return into every conversation and every decision at every level in the organization?" That's easy - see any communist country, and ask yourself if those are great societies full of innovation despite their professions of acting for the common good. Who decides what is a good social return - everyone all at once? The government? And: "inspire sacrifice, stimulate innovation" - why would an innovator also being willing to contribute his/her work as a sacrifice to the masses? The problems attributed in this article to capitalism are problems are not related to capitalism at all, but are problems of the mixed up ideaology of this mixed economy. We need to return to the correct ideas about what capitalism really means, not an ideaology where the true innovators/leaders first ask permission from the masses.

      Ian Ford-Terry replies:

      Have you talked to Howard Bloom at all? His "Genius of the Beast: A Radical Revision of Capitalism" laid out some very similar concepts in 2009...

      Jensen Added Comment
      The supposed refutation of Friedman rests mainly on the idea of long-term versus short-term profitability. This refutation proceeds along the lines that short-term profit maximization may become self-defeating if constrains or destroys the long-term profitability. For example, a company that strips the tops off mountains in West Virginia to get at cheap coal (which is now technically feasible and a controversial proposal) might maximize short-term profits but destroy long-term profitability as such monumental degradation of the earth triggers massive lawsuits for the destruction of human health (e.g. leaching of heavy metals into water supplies), destruction of tourism, and the putting off of research for alternative energy alternatives.

      However, the long-term versus short-term "refutation" of Friedman is not legitimate since, in my viewpoint, Friedman was more interested in the long-term profitability and is falsely accused of being too short-term minded. I don't really think Milton Friedman would've advocated mountain top removal mining for the sake of short-term profits and then declaring bankruptcy before the environmental lawsuits commence.

      Mountain Top Removal Mining --- http://en.wikipedia.org/wiki/Mountaintop_removal_mining

      Critics contend that MTR is a destructive and unsustainable practice that benefits a small number of corporations at the expense of local communities and the environment. Though the main issue has been over the physical alteration of the landscape, opponents to the practice have also criticized MTR for the damage done to the environment by massive transport trucks, and the environmental damage done by the burning of coal for power. Blasting at MTR sites also expels dust and fly-rock into the air, which can disturb or settle onto private property nearby. This dust may contain sulfur compounds, which corrodes structures and is a health hazard.

      A January 2010 report in the journal Science reviews current peer-reviewed studies and water quality data and explores the consequences of mountaintop mining. It concludes that mountaintop mining has serious environmental impacts that mitigation practices cannot successfully address.[7] For example, the extensive tracts of deciduous forests destroyed by mountaintop mining support several endangered species and some of the highest biodiversity in North America. There is a particular problem with burial of headwater streams by valley fills which causes permanent loss of ecosystems that play critical roles in ecological processes. In addition, increases in metal ions, pH, electrical conductivity, total dissolved solids due to elevated concentrations of sulfate are closely linked to the extent of mining in West Virginia watersheds.[7] Declines in stream biodiversity have been linked to the level of mining disturbance in West Virginia watersheds.

      Published studies also show a high potential for human health impacts. These may result from contact with streams or exposure to airborne toxins and dust. Adult hospitalization for chronic pulmonary disorders and hypertension are elevated as a result of county-level coal production. Rates of mortality, lung cancer, as well as chronic heart, lung and kidney disease are also increased.[7] A 2011 study found that counties in and near mountaintop mining areas had higher rates of birth defects for five out of six types of birth defects, including circulatory/respiratory, musculoskeletal, central nervous system, gastrointestinal, and urogenital defects. These defect rates were more pronounced in the most recent period studied, suggesting the health effects of mountaintop mining-related air and water contamination may be cumulative.[37] Another 2011 study found "the odds for reporting cancer were twice as high in the mountaintop mining environment compared to the non mining environment in ways not explained by age, sex, smoking, occupational exposure, or family cancer history.”

      A United States Environmental Protection Agency (EPA) environmental impact statement finds that streams near some valley fills from mountaintop removal contain higher levels of minerals in the water and decreased aquatic biodiversity.The statement also estimates that 724 miles (1,165 km) of Appalachian streams were buried by valley fills between 1985 to 2001.[5] On September 28, 2010, the U.S. Environmental Protection Agency’s (EPA) independent Science Advisory Board (SAB) released their first draft review of EPA’s research into the water quality impacts of valley fills associated with mountaintop mining, agreeing with EPA’s conclusion that valley fills are associated with increased levels of conductivity threatening aquatic life in surface waters.

      Although U.S. mountaintop removal sites by law must be reclaimed after mining is complete, reclamation has traditionally focused on stabilizing rock formations and controlling for erosion, and not on the reforestation of the affected area. Fast-growing, non-native flora such as Lespedeza cuneata, planted to quickly provide vegetation on a site, compete with tree seedlings, and trees have difficulty establishing root systems in compacted backfill. Consequently, biodiversity suffers in a region of the United States with numerous endemic species.[41] In addition, reintroduced elk (Cervus canadensis) on mountaintop removal sites in Kentucky are eating tree seedlings.

      Advocates of MTR claim that once the areas are reclaimed as mandated by law, the area can provide flat land suitable for many uses in a region where flat land is at a premium. They also maintain that the new growth on reclaimed mountaintop mined areas is better suited to support populations of game animals.

      Continued in article

      Jim Martin's MAAW threads on social responsibility accounting ---
      http://maaw.info/SocialAccountingMain.htm

      Bob Jensen's threads Triple-Bottom (Social, Environmental, Human Resource) Reporting --- "
      http://www.trinity.edu/rjensen/Theory02.htm#TripleBottom

    • Robert E Jensen

      The Australian Centre for Corporate Social Responsibility (ACCSR) has released a research report on how stakeholders read sustainability reports, how they use them, how this affects an organisation’s reputation, and what causes stakeholders concern, April 2012 ---
      http://www.iasplus.com/en/news/2012/april/australian-research-report-sheds-light-on-sustainability-reporting

      We should wait for a safer way to get at this gas --- this is not a long term efficient solution and may do irreparable damage
      Hydraulic Fracturing Concerns --- http://en.wikipedia.org/wiki/Fracking
      Gasland - OTRAVIREA VOITA A APEI. METODA FRACTIONARII HIDRAULICE
      http://www.youtube.com/watch?feature=player_detailpage&v=iLal7aUqZRM 
      Thank you Dan Gheorghe Somnea for the heads up.

    • Robert E Jensen

      "Highly scrutinised SEC conflict mineral regs. include new audit requirement," by Ken Tysiac, CGMA Magazine, August 23, 2012 ---
      http://www.cgma.org/Magazine/News/Pages/20126307.aspx

      The US Securities and Exchange Commission (SEC) on Wednesday approved disclosure rules designed to increase transparency around companies’ use of so-called “conflict minerals” and payments to governments for access to natural resources.

      The rules, advocated by certain human rights groups, will implement two sections of the US Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, P.L. 111-203.

      But they contain disclosure provisions that divided the SEC commissioners’ votes and have been criticised by some business groups as being unworkable, in the case of conflict minerals, and likely to put US companies at a competitive disadvantage, in the case of the natural resource payment reporting requirements.

      Section 1502 of the Dodd-Frank Act requires yearly reporting on whether US public companies use conflict minerals originating in the Democratic Republic of the Congo (DRC) or neighbouring countries. Section 1504 requires US public companies that extract resources to disclose in an annual report how much they pay the US and foreign governments around the world for access to oil, natural gas and minerals.

      The conflict minerals statute was included in the Dodd-Frank Act with the intent of cutting off funding for warlords in the DRC. Armed groups there are accused of atrocities against local populations and funding their activities by using forced labour to mine for gold and other minerals used in products ranging from jewellery to cell phones.

      By requiring companies that use conflict minerals to document their chain of custody, the statute aims to choke off the market for raw materials produced in mines using forced labour. The regulation intends to use transparency to prompt companies to shun conflict minerals.

      Human rights groups had encouraged the regulation. In a comment letter, seven human rights groups said the rule has “enormous potential” to transform the conflict.

      “While the DRC government must take up its responsibilities to protect civilians and establish governance and infrastructure, U.S.-based companies and consumers also have a crucial role,” the groups wrote. “We are all connected to the conflict through the minerals we use in so many everyday items.”

      Business groups disappointed

      But some business groups say requiring companies to audit their supply chains and monitor those of their vendors is unreasonable because of the complexity of the supply chains. In an opinion piece for The Hill, Tom Quaadman, vice president of the Center for Capital Markets Competitiveness at the US Chamber of Commerce, said the rule will create an unworkable regulatory regime that will be exploited by bad actors and difficult for honest market participants to implement.

      The rule passed on a 3–2 vote. Dissenting commissioners Troy Paredes and Daniel Gallagher said the implementation of the rule did not fit the SEC’s mission of protecting investors. Gallagher said it was unclear whether the rule would have the unintended consequence of harming the populations it aimed to protect because it could create what amounts to an economic embargo of the DRC and other nations as US issuers pull their business from the region altogether in an abundance of caution.

      Businesses will be required to determine if the products they manufacture or contract to manufacture contain conflict minerals. If they use such minerals, they will need to determine whether they financed armed groups in the DRC or its adjoining countries.

      Continued in argument

       

       

    • Robert E Jensen

      Sustainability Accounting
       "Australia's water accounting system singled out:  But will today's liquid measures leave enough water for the future?" InTheBlack, September 12, 2013 ---
       http://www.itbdigital.com/opinion/2013/09/12/australias-water-accounting-system-singled-out/

    • Robert E Jensen

      Sustainability Accounting Standards Board --- http://en.wikipedia.org/wiki/Sustainability_Accounting_Standards_Board

      Notice from the SEC to the Sustainability Accounting Standards Board (SASB) and Other Unauthorized Accounting Standard Setters
      Only the FASB is Authorized by the SEC to Set Accounting Standards

      "SEC's Gallagher Rails on Third-Party Rule Makers," by Tammy Whitehouse, Compliance Week, April 16, 2014 ---
      http://www.complianceweek.com/secs-gallagher-rails-on-third-party-rule-makers/article/342928/

      Third parties trying to set disclosure standards for public company financial reports are ruffling some feathers at the Securities and Exchange Commission.

      EC Commissioner Daniel Gallagher recently singled out the Sustainability Accounting Standards Board as a group not authorized by the SEC to tell companies what they should disclose in their financial statements, even though SASB issues standards that it says tell companies what they should disclose related to various sustainability topics. Aside from the Financial Accounting Standards Board, which writes financial accounting rules, the SEC has not given any other body the responsibility or authority to establish disclosure requirements, he said.

      Gallagher was speaking at a law conference when he used SASB as an example of an outside entity trying to influence corporate disclosures, especially as the SEC undertakes an effort to re-examine corporate disclosure requirements. “We must take exception to efforts by third parties that attempt to prescribe what should be in corporate filings,” he said. “It is the commission's responsibility to set the parameters of required disclosure.”

      SASB is an independent, nonprofit group that writes industry-specific standards for disclosing material sustainability issues that the SEC requires companies to address in their mandatory filings. In a letter to Gallagher, SASB pleads it is only trying to help. SASB "is a market-driven response to the problem of disclosure overload and immaterial information," says Jean Rogers, founder and CEO of the board. "SASB develops standards that assist companies in fulfilling their disclosure obligations. The standards help companies to identify those factors that are material to the company's short- and long-term sustainability and to provide a model for reporting on those factors in a decision-useful way for investors in the MD&A section of the Form 10-K."

      Rogers has said the board isn't seeking to supplant SEC requirements, but to give companies some guidance around how to determine materiality of sustainability issues and fulfill the disclosure requirements that exist. She has said SASB seeks to provide an infrastructure for how to comply with disclosure requirements related to sustainability areas, much the way FASB provides the infrastructure for how to comply with financial accounting requirements.

      Gallagher, one of five commissioners, is having none of it. “The SASB argues that its disclosure standards elicit material information that management should assess for inclusion in companies' periodic filings with the commission,” he said. Except for FASB, however, the SEC has given no outside group such authority, he said. “So while companies are free to make whatever disclosures they choose on their own time, so to speak, it is important to remember that groups like SASB have no role in the establishment of mandated disclosure requirements.”

      Jensen Comment
      There are ways to be misleading in standard setting. One is an act of commission --- to lie about being authorized in the law as a standard setter. The other is an act of omission --- to never lie about being authorized in the law but also by never pointing out that your board is not authorized in the law. I seriously doubt that the SASB is misleading by either commission or omission.

      I think the following statement at the SASB Website suffers some from omission ---
      http://www.sasb.org/sasb/

      What others write might be even less clear with respect to omission. For example, the first paragraph in Wikipedia does not, in my opinion, make this entirely clear at
      http://en.wikipedia.org/wiki/Sustainability_Accounting_Standards_Board

      Both of the above Web pages should be rewritten to make it entirely clear that the SASB standards are in no way recognized in the law, and that the SASB is not authorized by the SEC or any other government agency to set accounting standards.

      Having said this I applaud the efforts of the SASB to set voluntary standards with respected experts who have some reporting goals that are, in my viewpoint, worthwhile. Compliance, however, with SASB standards probably will be totally voluntary for quite a long time to come.

      Bob Jensen's threads on standard setting controversies are at
      http://www.trinity.edu/rjensen/Theory01.htm#MethodsForSetting

    • Robert E Jensen

      Sustainability Accounting --- http://en.wikipedia.org/wiki/Sustainability_accounting  

      A New Assignment for Bob Herz

      From the CFO Journal's Morning Ledger on October 15, 2014

      Sustainability accounting group taps former FASB chairman ---
      http://blogs.wsj.com/cfo/2014/10/21/sustainability-accounting-group-taps-former-fasb-chairman/?mod=djemCFO_h
      Robert Herz, the former chairman of the U.S. Financial Accounting Standards Board, will join the board of the nonprofit Sustainability Accounting Standards Board, which is working to write industry standards for corporate sustainability and environmental reporting, reports CFO Journal’s Emily Chasan. SASB sets voluntary standards for firms to disclose information on material social, governance, energy and environmental issues to investors.