Index / News / College News
2020-06-28
711
Sustainable development is the future direction of development. Most of the UN member states have incorporated it into their national strategies, have made overall plans from a macro level, and have issued corresponding policies and measures to vigorously support and promote sustainable development. At the business level, more and more business leaders recognize the huge business development space brought about by sustainable development. According to a survey by PricewaterhouseCoopers, when the United Nations 2030 Sustainable Development Goals were adopted in 2015, 71% Interviewing business leaders have planned to participate in these goals.
However, in actual operations, there are still very few that truly apply sustainable development to corporate practice. The reason is that the author believes that there is a lack of full understanding of the commercial value of sustainable development, and a lack of effective tools and methods to measure the commercial value of sustainable development for enterprises.
Measuring the business value of sustainable development: motivation and motivation
For enterprises, sustainable development means adopting appropriate strategies and actions to meet the needs of enterprises and stakeholders, while also protecting, maintaining and upgrading human and natural resources to meet the needs of the future development of the enterprise. For a long time, most companies have taken the maximization of shareholder value as their starting point and regarded sustainable development as a cost and additional burden for the company. However, this is not the case. The business essence of sustainable development is to help companies balance internal and external, long-term and short-term interests within limited organizational resources, so as to maximize organizational value. It can be said that measuring the commercial value of sustainable development is of great significance. It can help business managers change their thinking, truly integrate sustainable development into corporate strategies, and create long-term sustainable stakeholder value.
Measuring the commercial value of sustainable development can help companies reduce costs, protect resources, manage risks, and obtain benefits. Controlling costs and managing risks are activities that all companies are interested in, and sustainable development provides a mechanism for these activities. For example, by using fewer resources (such as raw materials, energy, hazardous materials, people and water), improving process or process efficiency, reducing or eliminating waste, etc. These measures can not only help companies reduce costs, but also protect resources and manage the risks to companies due to insufficient resources. Measuring the commercial value of sustainable development can help companies manage resources and risks in actual production and operation, obtain greater benefits, and promote sustainable development.
Measuring the commercial value of sustainable development can better promote communication between companies and stakeholders. Stakeholders increasingly demand a more comprehensive and in-depth understanding of the company's comprehensive performance in terms of economic, social and environmental benefits. By quantifying the business value of sustainable development, the information needs of stakeholders can be better met and communication costs can be reduced.
Measuring the commercial value of sustainable development can attract new capital investment. Just as consumers are becoming more aware of the importance of sustainable development issues, so are investors and shareholders. Environmental and social standards are becoming an important part of investment risk assessment. Disclosing the commercial value of sustainable development can be more important. Effectively attract banks or investors to invest.
Measuring the commercial value of sustainable development can help companies enhance their competitive advantage. If companies do not understand and actively participate in matters related to sustainable development, they will be left behind. For example, climate change issues involve water, energy use and carbon emissions, which are closely related to the future development of enterprises. Oriented by sustainable development, identify and collect relevant business information to help companies predict and adapt to the rapidly changing world, including identifying new business opportunities and managing risks, so as to enhance their competitive advantage. In addition, it can also help companies continuously review management processes, continuously improve, and become stronger and bigger.
Measuring the business value of sustainable development: tools and methods
As a quantitative management tool, management accounting plays an important supporting role in measuring, analyzing, evaluating, reporting and managing sustainable development performance. It is one of the most powerful tools to help companies see the business value of sustainable development.
First, the use of management accounting cost management tools and methods can help companies determine the full cost of products or services, so as to make wise decisions. One of the responsibilities of a management accountant is to measure the full cost of the company’s products and services and correctly allocate them to the appropriate parts of the business. This is important for better understanding the profitability of the company’s products, product lines, departments, and customers, and making changes. Smart decisions are very important. If the environmental costs and social costs that are closely related to sustainable development are not identified and measured, this will cause managers to miss opportunities to make their products better and processes more efficient and influence decision-making. At the same time, incorporating the true cost into the product can also bring more reasonable pricing, enabling customers to make purchase decisions based on the social cost information of the product, and increase corporate profits.
Second, management accounting can help companies determine which issues related to sustainable development are most important to their business, thereby balancing short-term and long-term benefits. From the environment to society, from resources to pollution and climate change, there are more and more issues related to sustainable development. It is impossible for any organization to respond to all sustainable development issues. Management accounting can help companies collect and evaluate relevant information to determine which sustainability issues may have a significant impact on the organization’s performance in the short and long term, so as to carry out hierarchical management of sustainability issues and gradually incorporate them into corporate strategic decisions, creating long-term value.
Third, the use of relevant knowledge of management accounting performance management can measure the progress of sustainable development goals and stimulate change. Once the environmental, social and economic goals and indicators are determined, management accounting tools and methods can be used to incorporate environmental and social key performance indicators into the relevant decision-making and reporting processes of the entire organization to measure and evaluate the progress and assessment of sustainability-related goals. Implementation, encourage innovation and change, and create value.
Fourth, management accounting can measure the impact of corporate activities on society and enhance corporate brand image. Corporate activities often have an impact on the communities where they are located. Management accounting tools and methods (such as cost-benefit principles, return on investment, social return on investment, etc.) can quantify and measure the impact of corporate activities on the local environment and help companies adjust their value propositions. Thereby improving the effectiveness of the plan, enhancing the society's understanding of the impact of corporate activities, and conveying the value proposition to stakeholders, enhancing corporate brand influence.
Fifth, disclose sustainable development-related information to improve corporate transparency. Stakeholders increasingly require companies to disclose more comprehensive information to understand their performance in order to make investment and purchasing decisions. The key role of management accountants is to measure and convey the information used internally and externally in decision-making. In addition to financial information, by disclosing non-financial information such as sustainable development, it conveys the main elements of the company’s value creation, allowing stakeholders to have a more comprehensive understanding of the company Strategy and performance, making forward-looking investments or other key decisions.
Sixth, management accountants can enhance the credibility of sustainable development figures produced by companies. Financial reports are subject to audit or authentication procedures and their accuracy and credibility are relatively high. At present, there is no mandatory third-party verification of sustainable development report. Due to its accounting background, management accountants can link the rigor and skills of accounting with the complexity of sustainable development, so as to better integrate social benefits and environmental benefits into the daily management of enterprises and improve the credibility of sustainable development information.