MN30469 Advanced Management Accounting
Lecture 9 – Sustainability and Management Accounting
Essay Question to research
With reference to published research discussed in the lectures, critically appraise
following statement:
“Management accounting effectively supports managers’ efforts to implement
sustainable business practices.”
ANSWER
As the world experiences unprecedented environmental and social change, businesses are becoming
increasingly conscious of the need to consider sustainability. Sustainability is achieved by seeking
development which ‘met the needs of the present generation without compromising the ability of
future generations to satisfy their own needs’ (UNWCED, 1987). The challenge for business is how to
adapt their strategies, business models and practices to respond to social and environmental
challenges while creating financial success and value for shareholders (CGMA, 2014).
Sustainability accounting (SA) describes a subset of accounting that deals with activities, methods
and systems to record, analyse and report: environmentally and socially induced financial impacts,
ecological and social impacts of a defined economic system, the interactions and linkages between
social, environmental and economic issues constituting the 3 dimensions of sustainability
(Schaltegger and Burritt, 2010). The Triple Bottom Line examines a company’s social, environmental
and economic impacts.
From the managerial perspective, SA is viewed as a set of pragmatic tools that provides help with
management decision making. CGMA report (2014) stated that SA helps connect environmental and
social issues to commercial outcomes, and the oversight to link these issues to strategic objectives.
Corporations are realising that CSR activities make business sense and that engagement with
stakeholders can be used to help improve corporate economic performance (Aras, 2009). According
to Brown (2009), a good information management leads to win-win outcomes and efficiency gains
for every kind of organisation.
Critical theorists argue that any evaluation is flawed and simplistic because sustainability is
insufficiently understood (Aras, 2009); sustainability cannot be conceived at organisational level
(Schaltegger and Burritt, 2010). SA must also be unknown and fraught with possibilities of
conspiratorial actions by managers – vested interests (Gray and Milne, 2002). Simon (1954) argued
that SA should be abandoned. Yet, some companies remain keen to adopt SA because of diverse
pressures from internal parties (managers), external parties (public pressure) and the resulting
perceived opportunities (reputation, competitive advantage) (Burritt, 2010).
In the Durden (2008) paper where the New Zealand company did not measure or monitor social
responsibility, it was found that both formal and informal measurements are needed for
Lecture 9 – Sustainability and Management Accounting
Essay Question to research
With reference to published research discussed in the lectures, critically appraise
following statement:
“Management accounting effectively supports managers’ efforts to implement
sustainable business practices.”
ANSWER
As the world experiences unprecedented environmental and social change, businesses are becoming
increasingly conscious of the need to consider sustainability. Sustainability is achieved by seeking
development which ‘met the needs of the present generation without compromising the ability of
future generations to satisfy their own needs’ (UNWCED, 1987). The challenge for business is how to
adapt their strategies, business models and practices to respond to social and environmental
challenges while creating financial success and value for shareholders (CGMA, 2014).
Sustainability accounting (SA) describes a subset of accounting that deals with activities, methods
and systems to record, analyse and report: environmentally and socially induced financial impacts,
ecological and social impacts of a defined economic system, the interactions and linkages between
social, environmental and economic issues constituting the 3 dimensions of sustainability
(Schaltegger and Burritt, 2010). The Triple Bottom Line examines a company’s social, environmental
and economic impacts.
From the managerial perspective, SA is viewed as a set of pragmatic tools that provides help with
management decision making. CGMA report (2014) stated that SA helps connect environmental and
social issues to commercial outcomes, and the oversight to link these issues to strategic objectives.
Corporations are realising that CSR activities make business sense and that engagement with
stakeholders can be used to help improve corporate economic performance (Aras, 2009). According
to Brown (2009), a good information management leads to win-win outcomes and efficiency gains
for every kind of organisation.
Critical theorists argue that any evaluation is flawed and simplistic because sustainability is
insufficiently understood (Aras, 2009); sustainability cannot be conceived at organisational level
(Schaltegger and Burritt, 2010). SA must also be unknown and fraught with possibilities of
conspiratorial actions by managers – vested interests (Gray and Milne, 2002). Simon (1954) argued
that SA should be abandoned. Yet, some companies remain keen to adopt SA because of diverse
pressures from internal parties (managers), external parties (public pressure) and the resulting
perceived opportunities (reputation, competitive advantage) (Burritt, 2010).
In the Durden (2008) paper where the New Zealand company did not measure or monitor social
responsibility, it was found that both formal and informal measurements are needed for
