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An accounting approach to create an environmentally sustainable company

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Schillinger, T. (2016). An accounting approach to create an environmentally sustainable company. Selection and Definition of Environmental Indicators with special reference to Suppliers in Developing Countries. Verlag Wissenschaft & Praxis. https://doi.org/10.3790/978-3-89644-722-7
Schillinger, Tanja. An accounting approach to create an environmentally sustainable company: Selection and Definition of Environmental Indicators with special reference to Suppliers in Developing Countries. Verlag Wissenschaft & Praxis, 2016. Book. https://doi.org/10.3790/978-3-89644-722-7
Schillinger, T (2016): An accounting approach to create an environmentally sustainable company: Selection and Definition of Environmental Indicators with special reference to Suppliers in Developing Countries, Verlag Wissenschaft & Praxis, [online] https://doi.org/10.3790/978-3-89644-722-7

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An accounting approach to create an environmentally sustainable company

Selection and Definition of Environmental Indicators with special reference to Suppliers in Developing Countries

Schillinger, Tanja

(2016)

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Abstract

Environmental issues have become ubiquitous, and so has the term sustainability. A plethora of policies, companies, customers, investors, NGOs, and societies discuss sustainability; but talking and acting are two entirely different realms. The corporate sector, as one of the main polluters, bears a special responsibility to behave and act sustainably. Many companies state that they care about sustainability. However, sustainability is often not actually implemented into the company’s culture and actions, but may represent a tool for looking good to the outside.

In order to truly ingrain sustainability, there is a need to have specific internal instruments that track the firm’s environmental performance. This is where indicators come into the picture - more precisely environmental indicators. These are useful tools which may be applied by the accounting function in a firm in order to track its environmental performance and to support the decision-making of the management. However, in order to be useful they first have to be accepted and implemented, and unfortunately up until now, environmental accounting still seems to be rather an unpopular outsider in accounting.

To support the development towards the implementation of environmental aspects into accounting, this bachelor dissertation seeks to provide practical advice for German companies by selecting and defining a set of environmental indicators. The aim is to provide applicable and well-defined environmental indicators that address the most important global environmental issues, and that are assigned to the different value chain stages of a firm and beyond. This will be achieved, by also assigning indicators to the firm’s suppliers, especially those suppliers from developing countries as they have become increasingly important to the supply chain, as well as offering corporate environmental indicators. This set of indicators will be summarized in the socalled ›Environmental Tree-Model‹ being proposed by the author.

Table of Contents

Section Title Page Action Price
Foreword 5
Meyer-Stiftung 6
Preface 9
Table of Contents 11
List of Abbreviations 15
List of Figures 17
List of Indicators 19
1 Introduction 25
1.1 Problem Definition and Purpose 25
1.2 Delimitation and Research Approach 26
2 Sustainability 29
2.1 Definition and Differentiation 29
2.2 State of Corporate Sustainability 30
2.3 Shareholder Value vs Stakeholder Approach 32
2.4 Triple-Bottom-Line 32
2.5 Benefits 33
3 Status quo in Developing Countries 35
3.1 (Environmental) Sustainability Awareness 35
3.2 (Environmental) Sustainable Practices 36
3.3 Important Considerations for the Control of DC Suppliers 37
4 Issues Caused by Unsustainable Behaviour and Unsustainable Business Practices 39
4.1 Underlying Thoughts 39
4.2 Environmental Issues 40
4.3 Drivers and Economic Issues 41
4.4 Other Issues 43
5 Introduction to Environmental Accounting and Indicators 45
5.1 Conventional (Management) Accounting 45
5.1.1 Classification and Tasks 45
5.1.2 Indicators 46
5.1.2.1 Term and General Information 46
5.1.2.2 Categories of Indicators 49
5.1.3 Indicator Systems 49
5.2 Environmental (Management) Accounting 50
5.3 Environmental Performance Evaluation – ISO 14031 52
5.4 Towards Environmental Indicators 54
5.4.1 General Information 54
5.4.2 Possible Challenges 55
5.4.3 Selection and Selection Criteria 56
6 Definition of the Selected Environmental Indicators along the Whole Value Chain 59
6.1 Environmental Supply Chain Management and Life Cycle Assessment 59
6.2 Porter’s Value Chain and its Adaptation 61
6.3 Structure and Categorization 63
6.4 Specific Divisional Environmental Indicators 64
6.4.1 Important Remarks 64
6.4.2 Inbound Logistics and Procurement with special reference to DC Suppliers 66
6.4.2.1 Supplier Management and Environmentally Conscious Purchasing 66
6.4.2.2 Conceptual Delimitation and Research Approach 68
6.4.2.3 Selecting and Monitoring Suppliers with the Help of Indicators 69
6.4.2.4 Procurement and Inbound Logistics 84
6.4.3 Technology Development: Product Design 85
6.4.4 Firm Infrastructure 87
6.4.5 Human Resource Management 90
6.4.6 Operations 92
6.4.7 Outbound Logistics 105
6.4.8 Marketing, Sales and Service 107
6.5 Corporate Environmental Indicators (KEIs) 110
6.6 Overall Environmental Indicator 117
7 Integration of Indicators into an Exemplary Framework for Implementation and Application: The ‘Environmental Tree-Model’ 121
8 Conclusion 125
8.1 Critical Evaluation and Limitations 125
8.2 Opportunities and Outlook 128
Appendices 131
Appendix 1: Geographic Distribution of Sustainability Science Publications 131
Appendix 2: Overall Increase in Publications on Corporate Sustainability 131
Appendix 3: Value Creation with the Help of Sustainability 132
Appendix 4: Four Approaches to Environmental Accounting 132
Appendix 5: Different Categories of Environmental Accounting 133
Appendix 6: The Value System 133
Appendix 7: Porter’s Generic Value Chain 134
Appendix 8: Overview of a Company’s Processes and Operations 134
Appendix 9: Operations of an Organization 135
Appendix 10: Inputs and Outputs of Manufacturing 135
Appendix 11: Conversion Table 136
Appendix 12: Conversion into Gigajoules 137
Appendix 13: The 3 Emission Scopes 137
Appendix 14: EcoMetrics of Interface 138
Appendix 15: The Original ‘Environmental Tree-Model’ 142
References 143
Alphabetical Index 181