Part 1

Introduction For Socially Responsible Investment

This part of the report is going to analyse the commitments of coca-cola for its accounting for sustainability in past five years. Coca-cola is operating a number of activities including coca-cola foundation and saving polar bears for its responsibility towards environment but on the other hand the company is being consider as one the worst corporations for violating human rights and environmentally destructive.

Accounting for sustainability development

Without compromising the ability of future generation to meet their needs, development that meets the needs of the present is called sustainability development. It has three fundamental components: environmental protection, economic growth and social equity. These three areas have become key dimensions that should be addressed by policies of sustainable developments.

An overview of sustainability reporting framework [GRI]

The sustainability accounting, national annexes, sector supplements and the boundary and technical protocols are consisted in GRI Framework. The foundation of GRI’s framework is sustainability reporting guidelines and presently in its 3rd generation. It enables an organization to be more transparent about their performance in key sustainability areas.

Company Overview

The chosen company for this study is Coca-Cola which is an American multinational beverage corporation. Company was formulated in 1886 and in present scenario its revenue has crossed the limit of 48 billion US$. The company generated revenue of US$48.01 billion along with building a workforce of 146,200 employees’ worldwide (Coca-Cola Company Annual report, 2012).

Coca-cola is a well-known name in world food and beverage industry due to its comprehensive business performance in more than 125 years. Besides its namesake company serves over 1.7 billion servings daily in over 200 countries with its more than 500 brands. According to its annual report for the year 2012 company has a workforce of more than 146,200 employees worldwide.

Objectives

The objective of company is to use its formidable assets such as its financial strength, brands, global reach, talent, strong commitment and universal system to achieve long-term sustainable growth.

Evaluation and examination of sustainability reporting in the Coca Cola Company

During the last five years the company’s interest is increased about sustainability reporting corporate responsibility. In 2007 Coca cola calculated its ecological footprint for the first time and set that for a baseline. Company has published its five sustainability reports in last five years.

Presently company is operating its business in more than 200 countries and one the market leaders in food and food and beverage production. Based on this diverse and wide productivity there are significant social, economic and environment impacts. Firstly company is influenced by a wide variety of stakeholders.

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Conclusion

On the basis of above discussion it can be said that company has made positive improvement in sustainable reporting in last five years. And so company was marked with B+ by Global Initiative Reporting for its last report in 2011. The last report’s leading indicators will probably improve future sustainable reporting by shaping sustainable development of company.

Part 2:

Introduction

Individuals, government and societies are interested in social, economic and environmental impact of enterprises and an interesting role is likely to have in meeting those concerns by professional accountants in business and in practice. There are eight different mechanisms to foster sustainable development, including steps taken by business, governments and other organizations, these mechanisms are corporate policies, supply chain pressure, stakeholder engagement, voluntary codes, rating and benchmarking, taxes and subsidies and tradable permits. In order to support each of these mechanisms, organizations, tax authorities, governments, stakeholders, and market regulators need to rely on credible information flow if they are to operate effectively. While working in this area professional accountants can help where necessary. This part of the study is going to assess the impact of accounting profession on the provision of guidance on accounting for sustainability.

Role of Professional Accountants in sustainability accounting

Organization can gain the effectiveness by sustainable business practices and professional accountant in business plays a key role in demonstrating, understanding and achieving it. The generation, analysis, assurance and reporting of accurate and robust information determines the pursuit of sustainability. So it is very important for PAIBs to understand the sustainability concept and challenges poses by it in achieving long-term growth in value for money and shareholders money.

The specific activities and roles include:

  • Policy development for addressing the issues of sustainability, their application and monitoring them along with managing the associated operating risks across the organization.
  • Involvement with operating, design and monitoring of purchasing policies, management standards and systems relating to the supply chain.
  • Assisting with the collection and analysis of stakeholder feedback and supporting stakeholder engagement processes with reliable and readily accessible information.
  • With an existing management system identifying the appropriate voluntary social or environmental codes.

Views of Professional Accountants about accounting for sustainability

A big part of accounting processionals feels that what has they got to do with sustainability or environmental reporting. A serious thinking on these regional subjects has been developed by the largest accounting bodies since 90’s. Sustainability accounting can be defined as accounting for environmental, social and economic aspects of decision making. In order to compute sustainable level of reporting and profits on the social, economic and environmental aspect of organizational activates it can be measured and coasted physical emissions and social externalities. Creating long term share holder value by managing risks and embracing opportunities from environmental, social and economic development should be an approach. For successfully reducing and avoiding sustainability costs and risks it is to harness market potential.

Challenges being faced by profession in sustainability accounting

While providing sustainability report with auditor assurance there are two major challenges, one is the slandered of performance and reporting which are being used by the auditor and suitability used by criteria management while preparing its sustainability report. These challenges should not be deterred from seeking a solution by national and international standard setters; these reports are needed to protect the public through auditor verification.

Conclusion

On the basis of above study it can be concluded that accounting profession has a key role in sustainability. The accounting professionals provide important guidance to the organizations for their responsibilities towards stakeholders. The reports presented by processionals provide the base for evaluating their sustainability growth.

Part 3

Introduction

An organization has number of responsibilities towards its stakeholders and it has to effectively plan its actions in order to get sustainable the needs of all stakeholders. This part of the study is going to assess whether the global increase in Socially Responsible Investment in recent years is due to short-term self-interest or a genuine long-term concern for sustainability.

Social Responsible Investing

Basically such kind of investments encourages corporate practices that promote consumer protection, diversity, environmental stewardship and human rights. It refers to practices that look to avoid harm by screening companies. The origins of SRI can date back in 1758 from Religious Society of Friends. 1960s political climate evolved the modern era of SRI. For targeted investments trade unions arranged multi-employer pension fund duty during 1650s and 60s. SRI is increasingly being defined as a means to encourage environmentally sustainable development since 1990s.

Current level of SRI

Companies all across the globe are increasingly making investments which are in alignment with corporate social responsibilities. Such investments are generally touted to be socially conscious, sustainable and ethical. It takes into consideration both profitable returns as well as social good. Socially responsible investing is at times used to refer to the practices which intend at avoiding damage by screening organizations covered in the investment portfolio. These so called socially responsible investments decisions face contradictions as some authors claim them to be just short term self interest investments rather than genuine long term concern for sustainability (Fowler and Hope, 2007). Classical theorists say that some companies make such type of investments as means to create a good image in minds of its stakeholders. They advocate that these companies are not genuinely concerned about the community’s well being and just try to showcase a misleading image of benevolence. On the other hand, there are actually some companies like Siemens, Virgin and etc. which are honestly committed to social good. In recent years socially responsible investing has become a booming market in Europe. At the start of 2010 the assets in socially screened portfolio climbed to $3.o7 trillion which is increased by 34% compare to 2005.

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Conclusion

On the basis of above discussion it can be concluded that there can be two possible reasons behind the recent increase in SRI. Either it can be short term self interest or genuine long term concern for sustainability. Most of the organizations are making their contribution for future sustainability as such contribution provides the commitment of the organization towards its responsibilities.

References

  • Adam, A.M. and Shavit, T. 2008. How can rating based method for assessing corporate social responsibility provide an incentive to firms executed for socially responsible investment indices to invest in crs? Journal of Business Ethics. 82(4). pp. 899-905.
  • Altman, E., 2012. Financial ratios, discriminant analysis and the prediction of corporate bankruptcy. The Journal of Finance. 23(4). pp.589-609
  • Bendell, J. 2005. In whose name? The accountability of corporate social responsibility. Development in Practice. 15(3-4). pp. 362–374.
  • Bengtsson, E. 2008. A history of Scandinavian socially responsible investing. Journal of business ethics. 82(4). pp. 969-983.
  • Benits, T. 2010. A framework of comparing socially responsible investment market. Business Ethics. 19(1). pp. 50-63.
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