Accounting Essay on Current Sustainability Issues
Question
Task
Prepare an accounting essay that discusses and provides a critical reflection on current issues and practices relating to accounting, and possible future developments in accounting
Answer
Introduction
Accounting is regarded as a process of assessing, communicating transactions relating to finance and recording. In this accounting essay, two articles are taken into consideration related to accounting and sustainability.
Summarization of two articles selected in this accounting essay
Article 1: Barker, Richard, Eccles, Robert G. and Serafei, George., The Future of ESG Is …Accounting? Harvard Business Review, December 2020
This article has been discussing the unavailability of standards relating to sustainability performance, while it has become the central concern for investors, managers, and consumers for the movement called ESG. Moreover, the Foundation called IFRs is revolutionizing IASB for setting required reporting to financial concerns as needed by most of the companies. Apart from that SSB is also making it possible for realizing integrated reporting along with FASB works for building the work (Harvard Business Review. 2021). Due to increased demand for sustainability performance by investors, it urges IASB and FASB to deliver information regarding sustainability performance to the investors. However, all issues of sustainability are not relevant for the investors. Therefore, SASB recognizes only particular issues required by the investors that vary through the industry. Furthermore, GRI focuses majorly on the issues of sustainability range that mostly matter to society as a whole. Hence, SSB must work in providing the information required by capital markets by building contacts with groups such as GRI that keep concerned for development in sustainable extending beyond the focus of the inventors.
Article 2: Whelan, Tensie, Douglas, Elyse., How to Talk to Your CFO About Sustainability, Harvard Business Review, January–February 2021
The other article talks about the relationship between financial performance and sustainability. The NYU Business of Sustainable Centre focuses majorly on providing links to explicit and tools required by the companies for improving and monitoring return on sustainability investment. Moreover, sustainability strategies also contribute to driving financial performance with mediating factors like ROSI methodology and carbon emissions (Harvard Business Review. 2021). Furthermore, these strategies are worked with processes such as identifying current strategies to sustainability, identifying changes related to management and operational practices, determining and quantifying the result benefits, and calculating overall money value. Hence, this article mainly concentrates on providing necessary standards that have been implemented by the corporations and organizations for supporting sustainable development.
Relating to current issues and practices within the accounting
Sustainability issues yields in affecting financial performance and value creation of an organization with issues relating to environmental and social aspects. Sustainability challenges directly relate to one of the major capitals which cover particular social, economic, and environmental matters for ensuring resilient models required by the business. As stated by Braam and Peeters (2018), some of the companies are transforming their thinking skills related to the products, business models, processes, and technologies. Moreover, with the application of useful strategy that helps in iterating material issues related to sustainability resulting into business models enabling a positive impact on the environment, economic and social. The current issues about sustainability are depletion of natural resources, climate change, and scarcity, growth in the middle class, urbanization, and population growth that ultimately affects sustainable growth. Operational and strategic implications are caused by sustainability issues that could have a higher impact on audit and financial statements (Harvard Business Review. 2021). For example regulations to climate change creates carbon cost that has a financial, strategic and operational impact. As opined by Brandi (2017), the rapid change in the environment and regulations put on the environmental issues could yield the company to suffer from huge losses that directly reflect on the financial performance. However, there are measurable practices to sustainable issues as implemented by organizations and corporations that publicly reports and measures environmental, economic, and social performance. Apart from that sustainability reporting is done which communicates and discloses ESG goals and determines the company’s progress on meeting social, environmental, and economic goals. As discussed by Hussain, Rigoni, and Cavezzali (2018), the major impact of sustainable issues will cause on executives while making decisions on capital allocation and strategies. Concerning the article, there are SASB and GRI practices used for identifying metrics of sustainability material (Harvard Business Review. 2021). Apart from that application of ROSI methodology will also help in addressing issues related to material sustainability which includes water conservation, waste management and developing electric vehicles, and reducing carbon emission.
Identifying and explaining key issues for developments in the future within the accounting
Issues relating to sustainability are a major concern for organizations and corporations that affects the future development of a company. The behavior and attitude of the public and requirements of changing customers will keep affecting the organization in long term caused due to sustainable issues. As quoted by Souza, and Alves (2018), the nature of increasing regulation, standards to sustainability, investors focus and policy will affect the business operations for the long run. Since most of the customers and the public are more concerned with environmental issues and support those entities that apply relevant standards and policies of sustainability. One of the major issues of sustainability is the social barriers which include unsustainable consumption, population growth and patterns of production within the wealthy are challenges in achieving future development in sustainable growth. As stated by Wijethilake (2017), sustainability issues cause a fundamental, technological, and societal change in making developments for the future. Moreover, most organizations have to say that sustainability management is considered to be a major factor for success in the business for the long term. Hence, if sustainability is not managed up to date then there might be consequences faced by the public and organizations in the future as well as current development. The companies need to take appropriate steps on monitoring and taking action on corporate sustainability as decision-making will get hampered if necessary standards and policies are not implemented within an organization. Hence, there is a great impact on future development in case sustainability issues are not resolved in the current phase. As opined by Braam and Peeters (2018), financial performance gets hampered if required sustainability strategies are not applied within the business for future development. Hence, both sustainability and financial performance are relayed to each other; therefore, appropriate standards like SASB, ESG goals, and GRI need to be implemented within the organization for future development.
Reflection
The sustainability issues are a major concern for me as well as from this study I got to know the importance of sustainability standards that have been formulated by governments and organizations in support of limited use of resources and environmental concerns. In my opinion, I believe that knowing the impact caused by sustainability issues is important which not only helps me in gaining knowledge but also helps me in my future career if any such concerns concur relating to sustainability. Furthermore, being an individual and citizen of a particular country I need to know the impact caused by overutilization of resources and other issues like growth in population and other depletion of natural resources. As per my interests, I also came to know about certain standards and policies like SASB, ESG goals, and GRI from this study, which controls and monitors the organizations and corporations to use limited resources without affecting the environment. Hence, through the help of this study, I came to know how important sustainable development is for the people as well as the organizations that reflect in their financial performance. Apart from that I also developed an understanding and knowledge regarding the importance of sustainability strategies for managing financial performance and their relationship with accounting. Hence, this study helped me develop an interest in finding the major impact caused by sustainability issues both for the public as limited resources would be available for future development and organizations.
Conclusion
From the above study, it can be concluded that there were multiple issues related to sustainability required by organizations and corporations to look into by adopting suitable measures and standards that enhance the financial performance.
Reference List
Braam, G. and Peeters, R., 2018. Corporate sustainability performance and assurance on sustainability reports: Diffusion of accounting practices in the realm of sustainable development. Corporate Social Responsibility and Environmental Management, 25(2), pp.164-181.
Brandi, C.A., 2017. Sustainability standards and sustainable development–synergies and trade?offs of transnational governance. Sustainable Development, 25(1), pp.25-34.
Harvard Business Review. 2021. How to Talk to Your CFO About Sustainability. Accounting essay [online] Available at:
Harvard Business Review. 2021. The Future of ESG Is … Accounting?. [online] Available at:
Hussain, N., Rigoni, U. and Cavezzali, E., 2018. Does it pay to be sustainable? Looking inside the black box of the relationship between sustainability performance and financial performance. Corporate Social Responsibility and Environmental Management, 25(6), pp.1198-1211.
Souza, J.P.E. and Alves, J.M., 2018. Lean-integrated management system: A model for sustainability improvement. Journal of Cleaner Production, 172, pp.2667-2682.
Wijethilake, C., 2017. Proactive sustainability strategy and corporate sustainability performance: The mediating effect of sustainability control systems. Journal of environmental management, 196, pp.569-582.
