The rise of sustainable development is regarded as the multifaceted concept with the help of social and environmental subjects that should be addressed to determine whether the policy, personal and organizational levels has the increasing influence on the accounting works. Additionally, examination of what sustainability establishes for accounting and finance, a rise in evaluations of sustainability reporting and assumptions on how accounting for sustainability may progress (Taleb, Gibson and Hovey 2015). Concerns relating to sustainability has been introduced to discuss regarding the annual reporting at managerial level. In majority of the nations, public and private organizations are under the obligations of law to publish the yearly report based on their financial performance.
The corporate decision making is largely reliant on the accounting information, despite that information not providing a complete picture regarding the company and their operational environment. A company’s success may not be reliant on its monetary outcomes but on the issues such as the ability of reducing the greenhouse gases and effectual usage of resources.
The issues related to environmental and sustainability cannot be termed as the only the ethical concern for the companies but it is of growing importance due to their financial implication (Giampietro et al. 2014). The essay pursues to initiate the auto-critique of accounting for sustainability through examining the meaning and contradictions of sustainability development. The present essay would not only place its focus on the literature of sustainability accounting but would also emphasize its focus on Hyundai Motors.
The business case for Sustainability Reporting:
Companies that distinguishes and adopts the vital sustainability reflectors can collect the future reward in the form of openings in the market and effective commercial operations. Studies conducted by Burritt and Schaltegger (2014) illustrates that companies that have established plans for sustainability would be able to obtain greater profit margin.
Consolidated sustainable is placed in better position to remain in course as companies such as Hyundai Motor Company submits report on the social environment issues that concerns its stakeholders, together with the human rights, labour, local community and supply chain in order to make sure that the issues are referred to the accountable departments. The way to advance remain sustainable company is not to entirely place focus on the direct factors such as increased profits and savings. Companies are also required to cover the indirect factors namely the environmental and social aspects with the involvement of employees, customers and suppliers.
The growth of environmental and social accounting and reporting during the last four decades has led to extensive range of real and potential accounts of company’s connections with the communications and natural atmosphere (Dyball, Thomson and Wilson 2015). In order to provide the wider perspective on their performance, there are some companies that have begun reporting on the financial performance, environmental issues, communal responsibilities or sustainable development. Sustainability reporting is regarded as the systematic tool that helps in gathering and presenting sustainable information for the process of management and shareholders. This includes the shareholders, customers, financial analyst and investors. Whether the companies decide to report or not the accounting information that impacts the environmental and communities has turned out to be straightforwardly available on the company platforms.
Concerns have been bought forward by Lee and Schaltegger (2018) over the social and environmental accounting. Failures by organizations in discharging their accountability or failure in embracing the proponents of accountings is certainly not trivial. This kind of dispute and concerns seeks the terms of balancing the power and responsibility of democracy and whether there is need for capitalism. It is widely well-understood in the literature that majority of the business reporting on the sustainability and majority of the business representative have very little to do with sustainability. Certainly, these accounts may be easily understood as how they organizations would like to understand sustainability and it would convenience the political body to accede such views.
Accounting for Sustainability:
Accounts is generally involved in interpreting the complex reality, particularly in the manner in which it is heavily weighted to favour the accountant in measuring and choosing the measures of particular schemes of accounting. As stated by Yao, Zhang and Murray (2017) accounts of business sustainability are multitude and appears appropriate to briefly rehearse some of the excess in this essay. The visions is that principles of sustainable development would become a natural part of day to day business. Companies are required to deliver the fair value to shareholders depending upon the competency, vision, reduction in risks and maximization of opportunities. Survey performed by the minister of accounting for sustainability reflects that the investors and analyst have a tendency to consider the external assertion as the important portion of company’s sustainability reporting procedure.
Sustainable development is regarded as highly sensible way of administering the long term assets. It is regarded as the dynamic process where companies can attain the balance of activities. A new trend was found by Lewellyn and Logsdon (2016) where it was observed that companies acquiring the strategy proactively to attain the balance in their initiative environmental, economic and social objectives of sustainability. Progressively, public sector companies are concerned in assessing their roles in broader framework of sustainability.
In few nations, sustainability information’s is involved in public sector nationwide financial records, development of sustainable strategies and assessing the impact of policies. The concept that collective business is probably the main cause of un-sustainability and it is not likely that any place in business appears to be implausible. With the help of such linguistic devices it helps in moving their attention completely away from the idea of relations between the corporate activity and sustainable activity.
There are varied range of efforts have been made to provide financial accounts of the company and their unsustainable seems to be widely motivated by the assumptions through financial representation of the report. An approach of construction of financial account of the company is un-sustainability of recognizing the sustainable costs of company activity. The approach introduces the concept of maintaining the capital as the analogue for environmental sustainability and critical natural capital at the company level (Cho et al. 2015).
The sustainable concerns have been introduced to debate regarding the organization level yearly reporting as well. Most of the public and private companies by law are required to publish in their yearly report regarding their financial performance. The comprises of all the relevant information and it is presented in the structural way. Generally, the financial report is audited by the external auditor so that the users are provided with the reasonable assurance regarding the comprehensiveness and accurateness in the public sector to properly show the monetary liability of the assessed company.
To offer the wider viewpoint on their financial performance, few companies have begun reporting their performance on the issues related to environment, namely the public accountability or ecological progress together with the monetary issues. Sustainability reporting is regarded as the methodical instrument of gathering and presenting sustainable info for the administration procedure and to the numerous stakeholders (Thomson 2015). The sustainability reporting is largely practiced by the developed nations. More progressively, public sector companies are attentive in assessing their part in the broader outlook of sustainability. In few nations, sustainability info is included in public sector nationwide financial records sustainable progress strategies and evaluating the effect of laws.
Nature of Sustainable Information:
The sustainable information comprises of the financial and non-financial elements. The sustainability indicators act as the tool of measuring the sustainability performance. There are several organizations that holds the data on the sustainability issues and can easily recognize the sum of office paper that is used yearly or their yearly costs of waste disposal. In addition to this, several customer or employee satisfactions classify the industrial accidents (Ceulemans, Molderez and Van Liedekerke 2015).
Sustainable reporting comprises of the information that consists of both the monetary and non-monetary information. Monetary evidence has the direct connection with the system of accouning and the same is conveyed in financial way. Non-financial material’s represents that it is not presented in the financial terms and are not based on the bookkeeping standard. The non-monetary info can be quantitative and qualitative as well.
The non-financial information is regarded as very much difficult to handle in comparison to the financial information since there are no such generally accepted reporting principles with the data can be taken away in different forms. There are regular cases that evidence is qualitative and may at times be problematic to measure. The problems must not restrict the use of non-montary information as this type of information may be very much germane for the users of information (Maas, Schaltegger and Crutzen 2016). The sustainability information is not entirely non-accounting information. Sustainable information may also comprise of the accounting information despite the sustainability reporting practices represents only the little use of monetary value in disclosures. For example, a company can measure and present the information associated to the energy in the financial terms by referring to the expenses on energy.
Under non-accounting terms, it is about the emission of carbon dioxide where the difference between the energy obtained from the renewable and non-renewable sources making the difference. There are some environmental factors that are very easily converted in the financial terms. Therefore, to make the sustainability measurable and reportable, performance indicators should be selected (Schaltegger, Etxeberria and Ortas 2017). In order to make the sustainable reporting meaningful, it should be related with the strategy of the company. The indicators should be relevant for the company. With reference to sustainability there are risks that indicators selected may not be best possible one. For instance, the sum of recycled waste may be less important than whether the company was successful in lowering the criteria of waste in the initial instances.
Moving towards Integrated Reporting:
The accountability and better governance plays a vital role in the public sector while sustainability reporting can assist in supporting these goals. In the public segment, the main purpose of sustainability reporting is the transparency, accountability and better governance. As understood the environmental accounting seems to be particularly restricted in the willingness of capital to enable research and engagement (Silva, Lourenço and Branco 2017). Any attempt of approaching the organizational account of sustainability requires individuals to address how the account would articulate would articulate with the global level understanding of the word.
Even though the global reporting initiative is presently the most extensive reporting context for sustainability reporting. A new international reporting on the integrated reporting takes a further step by signifying that the sustainability reporting issues must not be dealt distinctly from the yearly accounting matters but as an alternative in the integrated statement. The focus of this initiative is reporting for the large companies with the needs of their investors. The global initiative reporting is regarded as the joint initiative by the companies that supports the sustainability reporting (Fonseca, McAllister and Fitzpatrick 2014). The sustainability reporting helps in developing the outline for the reporting fiscal, ecological and governance information in the integrated layout.
Majority of the motivation for moving towards the integrated reporting originates from the shortfalls of present financial reporting in the private sector. According to Junior, Best and Cotter (2014) traditional reporting has been created for the industrial companies which mainly emphases on the narrowly historical financial performance and is driven by compliance. As reports places an emphasis on the manufacturing capital and financial capital they fail to take into the consideration the social and human capital.
Such reports may be presented in the CSR sections but separate from the company accounts which is not generally integrated in the business strategy decisions. The main purpose of the integrated reporting is to provide guidance to the companies on communicating in the clear and constant manner regarding the wider range of accounting information that stakeholders and investors require.
The integrated reporting framework demands rethinking of information that is required to offer clear and concise picture of the financial performance, its effect and interdependence. Small and medium companies may interpret the probable mandatory sustainability frameworks in the form of undesirable top down burden. According to the research by Ball, Grubnic and Birchall (2014) global reporting standards suggest that some form of harmonization has been made in the sustainability reporting across the companies through different nations thereby reducing the role of domestic framework for reporting. Harmonization has been taken for the community and employment issues while the rights issues and economic effect reflect the domestic features greater than the global standards.
Sustainability at Hyundai Motor Company:
Sustainability forms the core for the future growth in Hyundai Motor Company since the success of the company requires looking further than the short term growth. The company has commitment towards the product responsibility for maintaining the perfect quality with solidification in the position as top brand (Kerr, Rouse and de Villiers 2015). As measure of delivering eco-friendliness the company has accelerated its speed towards sustainability growth.
Hyundai Motor Company has strengthened its long term strategic partnerships with the suppliers as the company not only helps in enhancing their quality and technology but also supports them by laying down the strong foundations for the growth in the future. Hyundai Motor Company has continued its focus towards generating sustainable value for the society in the fields of environment, health and education of global communities. The company promotes sustainability among its employees by striking the right balance in the work and building an active culture.
At Hyundai Motor Company it is committed to its shareholders by creating a long term shareholders value interest. Hyundai has also set down its corporate governance charter to promote the transparency and the accountability of the higher level management under the administration of professional and independent board of directors (Greiling, Traxler and Stötzer 2015). At Hyundai Motor Company, the committee of board promotes transparency of actions by expanding its communications with the shareholders and simultaneously exploiting wide range of policies to initiate and protect the shareholder’s rights.
To make sure that the sustainable growth is maintained the company has progressively promoted the improvement of organizational-wide commercial scheme. Hyundai Motor Company has also deployed the management system that meets the framework of GRI G4 which is a recognized global guideline, while striving to improve the integrated synergy all through the systematic and efficient operations of its strategic business functions.
Hyundai Motor Company spirit and value are particularly driven by three important phrases namely the unlimited sense of responsibility, respect to mankind and realizing the possibilities (Greco, Sciulli and D’Onza 2015). Depending upon these sustainable philosophy Hyundai Motor Company has created the management vision of realizing the dreams of mankind by creating the new future through the ingenious thinking and constantly challenging the new frontiers.
Hyundai Motor Company unlimited sense of accountability suggests the pursuit of sustainable growth while simultaneously it maintains the accountability in the direction of all the stakeholders to invest in the new areas. Stakeholders have recently voiced their concerns with regulations are becoming increasingly stringent, the accountability of the business lies in meeting the social responsibilities (Lodhia and Hess 2014).
Evidences from literature suggest that Hyundai Motor Company is committed towards accountable responsible management by not simply creating its brand image but also promotes the sustainable development. The company has put in place the ethics and compliance management by forging collaborative partnerships with the wide range of stakeholders so that it can fulfil its economic, environmental and social responsibilities.
Role of sustainability in Business benefits:
The supporters of sustainability reporting and GRI have stated that disclosure provides the company with wide range of intangible benefits. However, new research have suggested that value of disclosure also spreads across its balance sheet. According to Hahn and Lülfs (2014) relations between corporate social and environmental performance to corporate financial performance suggest that company may obtain the benefit from increased communications of their better deeds. The studies have suggested that transparency and reporting portrays the positive market reactions towards sustainability reporting.
According to the recent research the quality of environmental disclosure and the value of firm has the positive relationship. Despite applying the control for the environmental performance majority of the transparent company have reported a higher cash flow (Adam 2015). Finally, through sustainable communication efforts might witness general quality of the company help in lowering the cost of equity especially the competitive market.
Recommendations:
To be more successful in future, it is necessary to establish the point of arc companies want to incorporate in future. The precise length of sustainable proposals enable those that are responsible in decision making and recognizing what works in the best interest of the company. Sustainable performance management have emerged as the business tool that creates the baselines, tracks the cots and control them.
A strong sustainable performance management procedure offers integrated responsibility in decision making from numerous aspects which is both concrete and substantial for obtaining the greater sustainability. The main challenge remains in making the pathways stronger in an effectual manner and possible measures that can be taken in meeting the reporting needs. The sustainable reports must contain the valuable information that is required for accountable decision making and recognizing those areas that fails to reach their objectives.
Conclusion:
The essay makes a contribution to the literature that analyses the course of sustainable development in the corporate reports and in context of the organizations more widely. Conclusively the Hyundai Motor Company sustainability represents compliance management with the framework of sustainability. The company has established the compliance management support system and implements the diverse compliance programs.
The literature contributes that Hyundai Motor Company has the sustainability report more for the descriptive purpose instead of communicating regarding the accounting tool. The literature contributes significantly in eliminating the gaps in sustainability reporting by widespread analysis on the accounting practice at the organizational level. The degree of accounting disclosure in the sustainability report of Hyundai Motor Company appears to be typically low.
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