The alignment between business sustainability and management accounting
The main objective of business organizations has evolved from profit maximization to increasing shareholder wealth. In recent years, this objective has changed considering the recent developments in corporate governance and business sustainability to create shared value for all stakeholders. To effectively achieve this new objective, corporations are expanding their performance to both financial/quantitative economic performance (ESP) and non-financial/qualitative environmental, ethical, social and governance (EESG) sustainability performance. Reporting ESP and EESG sustainability performance demands a new integrated corporate reporting regime. The number of public companies worldwide that disclose sustainability performance information has recently increased significantly to more than 15,000, and starting in 2017, more than 6,000 European companies will be required to disclose their sustainability performance information. This growing trend toward sustainability integrated reporting and assurance is expected to continue worldwide. The primary purpose of sustainability is to create shared value for all stakeholders and as such management accountants play an important role in continuously improving financial ESP and non-financial ESG sustainability performance toward achieving the main goal of creating shared value.
Cost management and performance management practices have recently received considerable attention in management and financial accounting and the business community. Cost management is defined in the context of enterprise sustainability as a process of planning and controlling the costs of products and services to promote maximum utilization of scarce resources in generating revenue and delivering high-quality and environmentally safe products and services to customers. Performance management, in the context of sustainability, consists of all business activities that generate financial ESP and non-financial ESG sustainability performance to maximize firm value and create shared value for all stakeholders. This book addresses the integrated effects of both economic factors and managerial incentives on cost behavior and sustainability performance. My talk attempts to build a bridge between managerial accounting and financial accounting by focusing on both internal information systems (cost management) and external information systems (performance management), as these two functions are interrelated and integrated. This talk provides insights into managerial initiatives for advancing corporate sustainability from greenwashing and business branding to creating opportunities for revenue generation, cost management, business growth, and products and services innovation.