Introduction

Introduction

Management and accounting activities to improve sustainability performance

The internal management perspective covers a range of management activities to support and improve (a) an organization's sustainability performance, and (b) its integration into management and operational activities. These activities, if performed without a strategic perspective, and particularly without leadership and conviction, (see Leadership and Vision) will likely be fruitless. Equally, good motives and strategy are less effective without management action and performance management. The internal management perspective focuses on those activities on which an organization depends to implement its strategy and fulfill its commitment to sustainability performance.

The first issue covered is the importance of an integrated management and internal control system to ensure that sustainability performance is aligned to organizational objectives. A sustainability management system can complement an organization's internal control system to help define sustainability objectives and ensure their delivery. However, it is crucial to integrate a sustainability management system into the overall internal control and management system. This section also considers the merits of an environmental management system using the International Standards Organization (ISO) family of standards. The areas covered in this perspective include a number of widely available standards from the ISO. The main ones are listed in Caption 14.

Focusing on quick wins

Before considering the benefits of sustainability (and environmental) accounting, which help provide the information flows to support decision-making and reporting, waste minimization is promoted as providing quick wins that every organization can consider to reduce costs and its carbon footprint. Waste minimization includes improving energy efficiency, and reducing waste and water consumption. Organizations can do much to improve their environmental performance with simple measures based on a better understanding of their patterns of consumption.

Improving information to support decisions

More formalized processes for improving information flows to support decisions can be found in sustainability (and environmental) accounting. There has been much debate on the meaning of sustainability and environmental accounting and the activities it includes. IFAC's International Guidance Document, Environmental Management Accounting (EMA), recognized that In the real world, EMA ranges from simple adjustments to existing accounting systems to more integrated EMA practices that link conventional physical and monetary information systems.

In taking a pragmatic approach, this Framework discusses the key considerations of these approaches, considerations in which many professional accountants will be involved in their organizations. This section covers four important issues for professional accountants in business:

• Identifying significant, material, and relevant environmental and social issues
• Determining requirements for environmental and social information
• Identifying, defining, and classifying costs in a useful way
• Using environmental, social cost, and other non-financial information for decisions.

Performance management and measurement

The remaining sections focus on the performance management activities of ensuring that activities are aligned to strategy and objectives, and that performance can be clearly demonstrated. Performance evaluation and measurement fosters accountability for performance, and provides feedback on the impact of sustainability initiatives. This section emphasizes the importance of identifying and understanding the causal relationships between various alternative actions, and their impact on financial and non-financial performance. It encourages the incorporation of social and environmental issues in existing performance management and measurement frameworks, such as the balanced scorecard.

Sustainability performance metrics and KPIs help to monitor performance and to measure environmental, social, and economic impacts. A list of generally accepted sustainability KPIs is provided. However, the organizational context and strategy and sustainability objectives being pursued will determine the relevant measures and KPIs an organization should use. Developing eco-efficiency indicators helps to measure an organization's environmental impact; these are discussed along with socio-efficiency indicators and other useful sustainability metrics.