The tripartite EU agency providing knowledge to assist in the development of better social, employment and work-related policies. This document lists further sources of information on the commerce sector that may be of interest to the reader. Eurofound, Wyattville Road, Loughlinstown, Co. Brussels, Belgium eurofound.
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The way in which they keep accounts is failing to deliver the complete information that they need to track assets and liabilities properly. As more companies use the principles of sustainable management to guide strategy, they need more sophisticated approaches to inform them of the value of these investments and strategic choices. The currently popular approaches in accounting cannot discern this value, help companies to capture it, or track its presence or loss.
Over twenty studies including those done by Deloitte, Goldman Sachs, and McKinsey show that companies that are leaders in environmental, social and good governance policies have stock value that is higher and growing faster, have higher market capitalization, and are better protected from value erosion, than their more conventional competitors.
For example, in , A. Kearney released the findings of their report, Green Winners, comparing the economic performance of companies with a commitment to sustainability to companies in the same industry without such a sustainability program. The report tracked the stock price performance of 99 firms on Dow Jones Sustainability Index and the Goldman Sachs list of green companies, over six months prior to November In the study period of three months the positive differential between the companies with and without a commitment to sustainability was ten percent and over six months 15 percent.
However, few companies are tracking the value of such liabilities and assets in management accounting reports. For example, a company that may face liability for pollutants, legal expenses, costs, and damage to brand value from unsustainable behavior rarely tracks such risks in management accounting reports. These omissions represent a potentially significant under- or over-statement of future business performance. The field of accounting has helped drive change in business since the beginning of written history.
Elkington now agrees that, as a framework, Triple Bottom Line is neither complete nor accurate. The TBL approach as practiced tends to lead a company to consider programs to enhance people and protect the planet as expenses, bolted on to profit as a cost-center-driven approach to sustainability.
This leads management to view sustainability as a liability, reducing returns. This cost-centered perspective blinds executives to a significant amount of business value that sustainability-oriented practices confer on the better-managed companies.
Natural Capitalism Solutions helps companies reframe their approach to designing and implementing sustainability programs, using an approach we call the Integrated Bottom Line.
This approach provides more accurate analyses of business performance. The Integrated Bottom Line approach enables managers to use more sustainable practices to build core business value, integrating sustainability into every aspect of enhancing shareholder value. This Integrated Bottom Line approach:. This process identifies previously unaccounted for assets and liabilities and incorporates them into corporate accounts in clear, compelling terms that highlight strategic choices.
Using a team of internationally recognized sustainability leaders Natural Capitalism is developing credible, replicable, transparent methodologies to monetize key sustainability metrics and import these Integrated Bottom Line account codes into traditional management reports. The value sustainability brings to a business is missed by current accounting practices.
The value to a company of reduced employee recruiting and retention costs is not zero. Businesses that invest in green building improvements reap very attractive ROIs both in decreased operating costs and more importantly enhanced labor productivity averaging six to sixteen percentage.
The impact on brand reputation can mean live and death to a company. Reduced costs and increased access to socially responsible investment capital is significant. This line item tangibly increases or decreases the value of an enterprise. Integrated Bottom Line accounting will enable managers to track the reasons and factors contributing to the enhanced value, and provide executives with a more accurate tool for quantifying and managing sustainable business performance.
To guide a company successfully, managers and directors need accurate, insightful and timely data. At present, financial and sustainability reporting are kept entirely separate, leaving managers in the dark about the impact of programs now recognized as critical to competitive advantage.
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