Corporate Sustainability
Accounting and corporate governance reform are important to ensure that proper monitoring of corporations. Conventional accounting considers only profit however new accounting methods seeks to account for the full environmental and social than a company has (Arriana Huffington “Triple Bottom Line Focuses on Getting it Right”). We must find “accurate, useful and credible indicators of progress in terms of economic prosperity, environmental quality and social justice.” For a company to prosper over the long term it must meet its needs for goods and services without destroying natural social capital, creating long term value “on an socially and ecologically sustainable basis.” Sustainable value creation depends on a deep shift in corporate culture values decision making processes and behavior.” For “value creation to be sustainable a company must acknowledge and manage the full range of relevant economic social ethical and environmental costs associated with its activities.”
Sustainability must be more than a seductive public relations marketing image-making. Governments, communities and companies and individuals must work together to ensure their triple bottom line. Corporate culture has endured a verbal tongue lashing from media pundits of late. Capitalism has a built in impulse to produce more than it sells, therefore creating the need for obsessive-compulsive behavior in society to absorb excess capacity and generate economic growth—to sustain conspicuous consumption. The industrial/commercial sector has a built in capacity to produce more than it can sell.
How do we define Value? Here are a few tools being developed to better understand the value of what corporate culture produces for humanity:
Economic value added (EVA) is promoted by investors concerned about whether a given company is adding or destroying value.
Market value added calculates (MVA) how much a company has created since it was founded.
To “measure total net value added however EVA and MVA values will need to be adjusted for the linked impacts both positive and negative on natural and human capital. The internalization of such costs and benefits represents one of the greatest challenges in creating an economy” that is truly accountable to both humans and the environment, according to Triple Bottom Line pioneer John Elkington in the “Shell and the SustainAbility Report”.
Barriers to sustainability:
Lack of standards and methodologies
Accountants and financial people with limited environmental/sustainability experience
Difficulties in determining actual environmental costs
Difficulties in finding complete and accurate valuations of assets and liabilities