Corporate Sustainability E-Book

Ann Brockett

• Herausgeber: John Wiley & Sons
• Kategorie: Fachliteratur
• Serie: Wiley Corporate F&A
• Sprache: Englisch

Seitenzahl: 447

Veröffentlichungsjahr: 2012

Beschreibung

Invaluable guidance for complete integration of sustainability into reporting and performance management systems Global businesses are under close scrutiny from lawmakers, regulators, and their diverse stakeholders to focus on sustainability and accept responsibility for their multiple bottom line performance. Business Sustainability and Accountability examines business sustainability and accountability reporting and their integration into strategy, governance, risk assessment, performance management and the reporting process. This book also highlights how people, business and resources collaborate in a business sustainability and accountability model. * Looks at business sustainability and accountability reporting and assurance and their incorporation into the reporting process * Focuses on how the business sustainability and accountability model are impacted by the collaboration of people, business, and resources * Presents laws, rules, regulations, standards and best practices relevant to business sustainability performance, reporting and assurance Organizations worldwide recognize the importance of all five EGSEE dimensions of sustainability performance and accountability reporting. However, how to actually assess sustainability risk, implement sustainability reporting, and obtain sustainability assurance remain a major challenge and best practices are evolving. Straightforward and comprehensive Business Sustainability and Accountability hits on all of the hottest topics around sustainability including multiple bottom line (EGSEE) performance and reporting, related financial and non-financial key performance indicators (KPIs), business social responsibility and environmental reporting.

Leseprobe

Contents

Cover

Series Page

Title Page

Copyright

Dedication

Preface

Purpose of the Book

Highlights of the Book

Organization of the Book

Acknowledgements

Part I: An Introduction to Sustainability Performance, Reporting, and Assurance

Chapter 1: Introduction to Business Sustainability and Accountability Reporting

Executive Summary

Introduction

The Case for Sustainability

Current Status of Sustainability and Accountability

Drivers of Sustainability Initiatives and Practices

Best Practices of Sustainability Programs

Principles of Business Sustainability

Business Sustainability and Corporate Accountability Framework

Key Performance Indicators

Emerging Issues in Sustainability Reporting

Promotion of Sustainability Development, Performance, and Disclosures

Conclusion

Action Items

Notes

Chapter 2: Brief History of Sustainability Reporting

Executive Summary

Historical Perspectives

Recent Developments and Initiatives

Status of Business Sustainability and Sustainability Reporting and Assurance

Going Forward

Conclusion

Action Items

Notes

Chapter 3: Business Sustainability and Accountability Initiatives, Reporting, and Assurance

Executive Summary

Multiple Bottom-Line Dimensions of Business Sustainability

Usefulness of Sustainability Information

The Sustainability Reporting Process

Sustainability Reporting in Action

Promotion of Sustainability Reporting

Future of Sustainability Reporting

Mandatory versus Voluntary Sustainability Reports

Sustainability Assurance

Continuum of Assurance on Sustainability Information

Internal Controls Relevant to Sustainability Performance

Sustainability Risk Management

Conclusion

Action Items

Notes

Part II: Dimensions of Sustainability Performance

Chapter 4: Sustainability, Corporations, Capital Markets, and the Global Economy

Executive Summary

Global Economy and Financial Crisis

Capital Markets

Role of Corporations in Society

Sustainability Information Needs of Investors

Corporate Reporting

Recent Initiatives in Corporate Reporting

Web-Based Corporate Reporting

Predictive Business Analytics

Narrative Reporting

Governance, Risk Management, and Compliance (GRC) Reporting

Sustainability Reporting

Conclusions

Action Items

Notes

Chapter 5: Economic Vitality as a Component of Sustainability

Executive Summary

Introduction

Economic KPIs

Public Trust and Investor Confidence in Financial Information

Internal Control Reporting

Internal Control Reporting Requirements

Integrated Financial and Internal Control Reporting

Conclusion

Action Items

Notes

Chapter 6: The Corporate Governance Dimension of Sustainability

Executive Summary

Corporate Governance Definition

Drivers of Corporate Governance

Global Convergence in Corporate Governance

Sarbanes-Oxley Act of 2002

Dodd-Frank Act

The United Kingdom's Financial Regulatory Framework

Listing Standards Related to Corporate Governance

Corporate Governance in the Post-Crisis Era

Corporate Governance Functions

Board Committees

Proxy Voting for Sustainability

Emerging Corporate Governance Issues and Challenges

Corporate Governance Reporting and Assurance

Conclusion

Action Items

Notes

Chapter 7: The Social Dimension of Corporate Sustainability

Executive Summary

Introduction

Social Performance

Social KPIs

Corporate Social Responsibility (CSR)

CSR and Financial Performance

CSR Performance Measurement

CSR Programs

Components of CSR

CSR Reporting

Conclusion

Action Items

Notes

Chapter 8: The Ethical Dimension of Sustainability

Executive Summary

Business Ethics

Ethics and Law

Ethics KPIs

Workplace Ethics

Training and Ethics Education

Corporate Culture

Corporate Codes of Ethics: Rules and Best Practices

Financial Reporting Integrity

Ethics Reporting

Conclusion

Action Items

Notes

Chapter 9: The Environmental Dimension of Sustainability Performance: Government Policy, Societal Forces, and Environmental Management

Executive Summary

Introduction

Emerging Environmental Issues

Environmental KPIs

Environmental Regulations in the United States

Global Environmental Initiatives and Regulations

European Union Emissions Trading System (EU ETS)

Carbon Reduction Commitment (CRC)

California Assembly Bill 32

Global Progress

Societal Actors Influencing Corporate Environmental Behavior

International Organization for Standardization (ISO)

Environmental Management Systems (EMS)

Environmental Reporting

Environmental Assurance and Auditing

Conclusion

Action Items

Notes

Part III: Emerging Issues in Sustainability Performance, Reporting, and Assurance

Chapter 10: Business Sustainability in Action: Global Initiatives and Emerging Issues

Executive Summary

Introduction

Global Initiatives on Business Sustainability

Social Accountability International (SAI)

Macro Sustainability Issues

Climate Change

Sustainability KPIs

Business Sustainability in Action

Lessons Learned from Sustainability

Emerging Issues in Sustainability

Conclusion

Action Items

Notes

Chapter 11: The Future of Business Sustainability: Sustainability Reporting and Assurance

Executive Summary

Introduction

The Emergence of Business Sustainability

Sustainability Reporting

Sustainability Assurance

Sustainability Assurance and Internal Control

Emerging Trends in Sustainability Reporting

Sustainability Assurance in Action

Sustainability Database

Sustainability Education

Conclusion

Action Items

Notes

About the Authors

Index

Founded in 1807, John Wiley & Sons is the oldest independent publishing company in the United States. With offices in North America, Europe, Asia, and Australia, Wiley is globally committed to developing and marketing print and electronic products and services for our customers' professional and personal knowledge and understanding.

The Wiley Corporate F&A series provides information, tools, and insights to corporate professionals responsible for issues affecting the profitability of their company, from accounting and finance to internal controls and performance management.

Cover image: © grandeduc/iStockphoto

Cover design: John Wiley & Sons, Inc.

Copyright © 2012 by ZabihollahRezaee. All rights reserved.

Published by John Wiley & Sons, Inc., Hoboken, New Jersey

Published simultaneously in Canada

No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording, scanning, or otherwise, except as permitted under Section 107 or 108 of the 1976 United States Copyright Act, without either the prior written permission of the Publisher, or authorization through payment of the appropriate per-copy fee to the Copyright Clearance Center, 222 Rosewood Drive, Danvers, MA 01923, [phone], fax [phone], or on the web at www.copyright.com. Requests to the Publisher for permission should be addressed to the Permissions Department, John Wiley & Sons, Inc., 111 River Street, Hoboken, NJ 07030, [phone], fax [phone], or online at www.wiley.com/go/permissions.

Limit of Liability/Disclaimer of Warranty: While the publisher and author have used their best efforts in preparing this book, they make no representations or warranties with the respect to the accuracy or completeness of the contents of this book and specifically disclaim any implied warranties of merchantability or fitness for a particular purpose. No warranty may be created or extended by sales representatives or written sales materials. The advice and strategies contained herein may not be suitable for your situation. You should consult with a professional where appropriate. Neither the publisher nor the author shall be liable for damages arising herefrom.

For general information about our other products and services, please contact our Customer Care Department within the United States at [phone], outside the United States at [phone] or fax [phone].

Wiley publishes in a variety of print and electronic formats and by print-on-demand. Some material included with standard print versions of this book may not be included in e-books or in print-on-demand. If this book refers to media such as a CD or DVD that is not included in the version you purchased, you may download this material at http://booksupport.wiley.com . For more information about Wiley products, visit www.wiley.com.

Library of Congress Cataloging-in-Publication Data:

Brockett, Anne.

Corporate sustainability : integrating performance and reporting / Anne Brockett, Zabihollah Rezaee.

p. cm. — (The Wiley corporate F&A series)

Includes bibliographical references and index.

ISBN 978-1-118-12236-5 (cloth); ISBN 978-1-118-22471-7 (ebk);

ISBN 978-1-118-23806-6 (ebk); ISBN 978-1-118-26279-5 (ebk)

1. Sustainable development reporting. 2. Sustainable development—Economic aspects. 3. Sustainable development—Accounting. I. Rezaee, Zabihollah, 1953-II.Title.

HD60.3.B76 2013

658.15'12—dc23

2012022658

This book is dedicated to Mrs. Brockett's family, Mike, Zachary,Noah, and Jacob and the loving memory of Dr. Rezaee's parents,Fazlollah and Fatemeh Rezaee.

Preface

Corporate failure is typically a reflection of ineffective corporate governance and the lack of focus on sustainability performance. Events significant enough to bring down high-profile companies (AIG, Bear Stern, Societe Generale, and Olympus) do not happen overnight and often relate to lack of sustainability performance. In a message to shareholders in the 2012 Annual meeting, the president and CEO of Starbucks underscores the importance of business sustainability in creating value for all stakeholders including shareholders, customers, and communities. This book presents recent developments in sustainability performance and sustainability reporting and assurance. Business organizations are key contributors to sustainability performance to ensure long-term sustainable development of the economy and society. In this context, sustainability reporting and the assurance process in collecting, analyzing, and disclosing sustainability performance is important. The concept of business sustainability and corporate accountability has become an overriding factor in successful strategic planning for many organizations worldwide. Business sustainability is a process of increasing the positive impacts and reducing negative effects of operations on sustainable economic, social and environmental performance. The idea is that an organization must extend its focus beyond making profit by considering the impact of its operation on the community, society, and the environment. The concept of the “triple bottom line” is often used to assess an organization's success from three perspectives—profit, people, and the planet. This expansion of determining an organization's sustainable performance and long-term value-adding strategies has driven a need for new reporting and accountability structures which extend beyond financial statements into nonfinancial key performance indicators based on environmental impact and social responsibility.

This book provides an introduction to the importance, relevance, and benefits of business sustainability and accountability reporting in all areas of economic, governance, social, ethical, and environmental performance (EGSEE). The book identifies financial and nonfinancial key performance indicators (KPIs) for each of the five areas of EGSEE and their integration into the organization's strategic mission, goals, operations, and culture. Traditionally, business enterprises have focused on earnings as the “bottom line” and the major financial KPIs for measuring sustainable performance. As businesses evolved and their role in society as a good citizen was developed and their impacts and possible external costs became more noticeable, the refocus on a multiple-bottom-line was inevitable. The “multiple-bottom-line” does not replace but rather supplement the conventional bottom-line by measuring performance in all areas of EGSEE. Many companies issue sustainability reports to communicate with a variety of stakeholders on their EGSEE performance. Auditors in providing assurance on sustainability reports play an important role in identifying both strengths and concerns of sustainability performance and lend credibility to sustainability reports.

Globalization, technological advances and a move toward stakeholder theory of corporations have given impetus to the sustainability reporting movement. The overriding principles of sustainability are responsibility and accountability to all stakeholders and effective disclosures of EGSEE sustainability performance to such stakeholders. It appears that research and books in business sustainability are fragmented with a lack of an integrated approach covering all EGSEE. Moreover, different authors address one or more components of business sustainability without a comprehensive framework for interdisciplinary integration. Business sustainability practices required integrated approach of systematically addressing EGSEE.

Sustainability performance and accountability reporting have gained a new interest during the recent financial crises and resulted global economic meltdown. The ever-increasing erosion of public trust and investor confidence in sustainability of large businesses, the widening concern about social responsibility and environmental matters, overconsumption of natural resources, the global government bailout of big businesses and the perception that government cannot solve all problems of businesses underscore the importance of keen focus on sustainability performance and accountability reporting. The true measure of success for corporations should not only be determined by reported earnings, but their governance, social responsibility, ethical behavior, and environmental initiatives. Business sustainability education demands knowledge-based in business sustainability. Wouldn't you want to leave more resources for the next generation? Wouldn't you want your business to grow continuously? Wouldn't you want to govern your business effectively? Wouldn't you want to have an ethical and competent organization culture? Wouldn't you care about your corporate social responsibility, customers' and employees' satisfaction and ethical workplace? Wouldn't you care about green and lush environment? Wouldn't you care about profit, planet, and people? If you answer yes to any of the above questions, this book will be of interest to you.

Purpose of the Book

This book offers guidance to organizations that focus on sustainability performance and accountability reporting in reflecting their key performance indicators (KPIs) in all areas of EGSEE business affairs. For the purpose of this book, sustainability reporting refers to the ongoing process of identifying, measuring, recognizing, disclosing, and auditing sustainability performance in the five areas of EGSEE. Traditionally, organizations have reported their performance on economic affairs. Their focus only on financial results has become complicated and irrelevant to the extent that many corporate stakeholders find conventional financial reports less value-relevant. Furthermore, investor activisms, stakeholders, global organizations, and the public have increasingly demanded information on both financial and nonfinancial KPIs in this platform of accountability and sustainability reporting. This book examines the development of sustainability performance initiatives and strategies as well as sustainability reporting and assurance.

The primary theme of this book will be on the examination of sustainability performance and accountability reporting and their integration into strategy, governance, risk assessment, performance management, and the reporting process of disclosing governance, ethics, social, environmental, and economic sustainable performance. This book also highlights how people, business, and resources collaborate in a business sustainability and accountability model.

The emerging issues of sustainability performance, reporting, and assurance are integrated into all chapters. This book includes features, practical examples, and refinements valuable to professionals of all levels, corporate leaders, directors, and executives, as well as auditors, practitioners, and educators. This book is helpful to the following:

Auditors: External and internal auditors should find the chapter materials on sustainability EGSEE performance and reporting relevant, useful, and suitable to their audit functions, gearing their audit procedures toward providing sustainability assurance services. External auditors should expand their audit services beyond conventional audit of financial reports and provide assurance services on all five EGSEE dimensions of sustainability performance reporting.

Corporations, their board of directors, audit committees, executives, legal counsel, managers, supervisors, and employees: Business sustainability and sustainability performance, reporting, and assurance is becoming the theme of the 21st century, and corporate stakeholders have shown interest in and demand for sustainability EGSEE performance disclosures. Best practices of sustainability initiatives and strategies as well as sustainability reporting and assurance discussed throughout the book should help public companies and their board of directors, executives, financial advisors, and legal counsel effectively discharge their responsibilities and assume accountability for achieving sustainability performance.

Business schools and training programs: The book can also be utilized in educational and training programs of business schools, accounting programs, and professional organizations. Other professionals, such as compliance officers, management accountants, environmental activists, ethics and compliance officers, socially responsible activists, and financial institutions, who provide sustainability training services to corporations, will find this book useful to their professional services and activities.

Global sustainability professionals: Promotion of global sustainability performance, reporting, and assurance by high-profile organizations such as the Global Reporting Initiative (GRI) and International Integrated Reporting Council (IIRC) makes the book attractive to corporations, business schools, and professionals worldwide.

Highlights of the Book

Obviously, much is needed to be done in this emerging area of business sustainability performance, reporting, and assurance including a book covering the following important topics:

Introduction to business sustainability performance.

EGSEE dimensions of sustainability/accountability reporting.

Sustainability assurance services.

Roles and responsibilities of key players in sustainability reporting.

Laws, regulations, rules, standards, and best practices governing sustainability reporting and assurance.

Designing green business cutting-edge facilities and green accounting and reporting.

Development, adoption, and implementation of sustainable technologies.

Preparation of business sustainability and accountability reporting and assurance education.

Regulatory reforms and best practices in the post-SOX and Dodd-Frank (DOF) era are integrated into all eleven chapters.

Organization of the Book

The focus of this book is on sustainability performance, reporting, and assurance. The organization of the book provides the maximum flexibility in choosing the amount and order of materials on sustainability. This book is organized into three parts, as follows:

PartSubjectChaptersIAn Introduction to Sustainability Performance, Reporting, and Assurance1–3IIDimensions of Sustainability Performance4–9IIIEmerging Issues in Sustainability Performance, Reporting, and Assurance10–11

Each chapter starts with an executive summary, an examination of real-world sustainability, and each chapter closes with a list of action items which helps the reader further identify how to apply the chapter's materials to sustainability performance, reporting, and assurance. The eleven chapters of the book are organized into three parts. The first part contains three chapters, which describe the importance of sustainability performance, reporting, and assurance. These chapters also present initiatives, rules, regulations, standards, and best practices of sustainability performance, reporting, and assurance. Part II, presented in chapters 4 through 9, discusses each of the five economic, governance, social, ethical, and environmental (EGSEE) dimensions of sustainability performance and reporting. These chapters constitute the foundation of the book. Part III includes two chapters, which present emerging issues and best practices of sustainability performance, reporting, and assurance. These chapters also discuss future trends in sustainability performance, reporting, and assurance.

Acknowledgments

We Acknowledge the Public Company Accounting Oversight Board, American Institute of Certified Public Accountants, Global Reporting Initiative, and the Prince of Wales's Accounting for Sustainability Project, the International Integrated Reporting Committee, and the International Federation of Accountants, Securities and Exchange Commission, the United Nations, Canadian Institute of Charter Accountants, and Big Four Accounting Firms for permission to quote and reference their professional standards and other publications.

The encouragement and support of our colleagues at Ernst & Young and the University of Memphis are also acknowledged. Specifically, we appreciate the invaluable advice and insights from several colleagues at Ernst & Young, including Steve Starbuck, Chris Walker, Robert Brand, Chuck Glazer, and Jim Gaynor. We thank the members of the John Wiley & Sons, Inc., team for their hard work and dedication, including Chris Gage for managing the book through the production process, Andrew Wheeler for his marketing efforts, and Stacey Rivera and Tim Burgard for their editorial guidance.

Our sincere thanks are due to our families, the Rezaee family, Soheila, Rose and Nick; and the Brockett family, Mike, Zachary, Noah and Jacob. Without their love, enthusiasm, and support, this book would not have come to fruition when it did.

Ann M. BrockettZabihollah Rezaee

Part I

An Introduction to Sustainability Performance, Reporting, and Assurance

Chapter 1

Introduction to Business Sustainability and Accountability Reporting

ExecutiveSummary

In this chapter, we introduce the concept of business sustainability and corporate accountability, its importance, relevance, and its various components. The wave of financial scandals in the early 2000s, the 2007–2009 global financial crisis, and subsequent regulatory responses have galvanized considerable interest in business sustainability, corporate governance, ethical, and corporate accountability. Businesses and professional organizations worldwide have also responded by developing a business sustainability framework consisting of five overriding dimensions of economic, governance, social, ethical, and environmental (EGSEE) performance.

The most important and commonly accepted dimension of EGSEE is economic performance, which is the cornerstone of business sustainability. Organizations survive and produce sustainable performance when they continue to be profitable and produce enduring performance that creates shareholder value. However, EGSEE dimensions are not mutually exclusive, they supplement each other and trade-offs can occur between them. On one hand, organizations that are run ethically, governed effectively, and are socially and environmentally responsible are expected to maintain sustainable performance, create shareholder value, and gain public trust and investor confidence. On the other hand, more economically profitable and viable organizations are in a better position to create jobs and wealth, which enables them to better fulfill their social and environmental responsibilities. Although the primary goal of many business entities will continue to be creating shareholder value through producing sustainable economic performance, organizations must also effectively deal with ethical, social, and environmental issues to ensure they are adding value to all stakeholders involved.

Introduction

For business, sustainability is defined in several ways. For example, the 2010 United Nations’ (UN) publication “Corporate Governance in the Wake of the Financial Crisis” broadly describes business sustainability as “conducting operations in a manner that meets existing needs, without compromising the ability of future generations to meet their needs and has regard to the impacts that the business operations have on the life of the community in which it operates and includes environmental, social and governance issues.” The UN report further links business sustainability to corporate governance and suggests that sustainability information pertaining to social, governance, ethical, and environmental issues be incorporated with financial information in a single report that includes professional assurance on sustainability information. The 2009 International Federation of Accountants' (IFAC) “Sustainability Framework” makes a similar recommendation. The IFAC suggests that sustainability be integrated into all aspects of business models from strategic decisions to operations, performance, and communication with stakeholders. The IFAC's approach as described in “Sustainability Framework” addresses four different perspectives: “business strategy, internal management, investors, and other stakeholders.” Corporate sustainability can be summed up as conducting business to create value for present shareholders while protecting the rights of future shareholders and stakeholders.