This chapter wraps up the main conclusions derived in the study and evaluates how these meet the research objectives. Furthermore, it contains several recommendations and establishes some areas for further research. Finally, some concluding remarks are made.
This study embarked on the objective of determining the level of awareness and the drivers and obstacles local firms face in implementing Corporate Sustainability (CS) are, and discovering any currently undertaken initiatives. Findings proved that the majority of firms consider CS as very important with exceptional cases stating that Sustainability is also part of their strategy and company culture. Effectively, a number of environmental, social and economic initiatives are executed, some common to most firms more than others.
Currently CS is voluntary. Regulatory compliance, if it were to be introduced, is seen by respondents as the main driver of CS unless it is realized that such decisions would result in a financial payback and increased reputation to firms. From a different angle, CS is not yet management's top priority locally, particularly because it requires high implementation costs as workers need to be trained to operate such a system. Processes also need to be reengineered to allow for social and environmental costs. Furthermore, results prove that a difficulty still remains in measuring such costs and there is no technical standard measurement method.
Get your grade
or your money back
using our Essay Writing Service!
The second objective of this study aimed at assessing whether social, environmental and economic costs are allowed to feature in corporate decision-making by integrating them with Management Accounting Systems.
Although overall, firms have not yet fully grasped the concept of Sustainability; most costs are accounted for as overheads particularly if they can be translated into financial terms. It also resulted that local firms do cater for such costs within their budgeting systems and costing systems although most of them are unsure how much of their income is spent on CS. Firms also acknowledge that a SMAS can assist them in product pricing and mix decisions and in determining the impact on Financial Statements. However it still remains a fact that there is more to Sustainability than just quantifying impacts in monetary values, something which firms still have to come to terms with.
Lastly, the third objective was to understand whether local firms choose to disclose and audit their Sustainability reports, the reasons why, and whether this is in any way associated to the presence of a SMAS.
It was determined that Maltese firms overall are not keen on disclosing their Sustainability performance unless they are Public Listed Companies who are trusted by a large number of shareholders. This is because it is difficult to find a practical use for it and no enacted law, as yet, requires it. Additionally, this study concludes that there is a significant relationship between the presence of a SMAS and Sustainability disclosure therefore companies which incorporate social and environmental costs in their Management Accounting systems are more likely to be encouraged to disclose their Sustainability impacts.
It is believed that by auditing their Sustainability report, firms would enhance their credibility. Only four firms engage in such an audit, one of which is locally owned, and the main reason for not auditing their Sustainability report is the absence of a proper measurement system. The inability to trace quantitative figures therefore makes it difficult to follow a structured audit plan thereby generalizing that local companies which audit their Sustainability reports seem to apply some sort of SMAS.
The following propositions can be applied to this study:
6.3.1 AWARENESS CAMPAIGNS AND EDUCATION
By and large, more widespread awareness is needed about the relevance of Sustainability at a corporate level and even on a national level. This awareness must extend to both companies and customers/stakeholders. national bodies like the Chamber of Commerce, the MFSA or Malta Stock Exchange and MIA have a role to play in promoting good practice. As has already been done recently by the Chamber, large companies could be asked to deliver more public seminars about their initiatives thereby not only promoting CS but also mapping out the benefits to business and society.
Full Cost Accounting and Integrated Reporting can be introduced as new elements within University and other Accounting tuition courses. However, the philosophy of Sustainability can be applied to every profession therefore it would be vital to encourage its teaching in other courses especially those of a scientific background. As we go along, the Accounting profession is changing dynamically into one requiring a vaster array of skills and integrated thinking.
Always on Time
Marked to Standard
6.3.2 ADOPTING A MORE STRATEGIC APPROACH TO SUSTAINABILITY PERFORMANCE
It makes little sense to assess company performance by looking only at profits, when companies also have a social and environmental impact. A paradigm change in local corporate thinking and culture needs to be induced to cater for a new Sustainability perspective in the Balance Scorecard  (Kaplan and Norton, XXX) of performance. A triple bottom line approach to performance can be adopted whereby efficiency is measured using both financial and non-financial factors. Once this is up and running, firms will more concretely and holistically be able to report on their Sustainability performance.
This may seem a little over-ambitious especially for smaller entities lacking the required resources. But these should still find ways to promote CS, or benchmark such performance against that of large companies. A suggestion could be to introduce internal reward systems such as tying Sustainability practices to performance bonuses. This strategic way of thinking can be seen as a target for growth, hence their way forward.
6.3.3 REGULATION WITHIN A NATIONAL SUSTAINABILITY ACCOUNTING AND REPORTING SYSTEM
Many of the reasons of why Sustainability is not yet fully adopted in Malta center round the fact that it is still a voluntary activity. For companies to actively continue or start reporting and take interest in auditing their Sustainability reports, the Regulator needs to take the lead by introducing some form of legislation. A more lenient approach would be to introduce a conceptual framework on Corporate Sustainability, similar to the IFRS framework, allowing companies to apply standards to cater for their size and needs. This is being discussed internationally with the GRI framework but some believe it does not cater for small entities. Perhaps Malta could be a pioneer in developing this new framework and promote it at EU level for companies that are small in size and require standards of a less complex nature.
Another suggestion is the setting up of an independent body overseeing the applicability of CS, consisting of a mixture of stakeholders, regulators and government officials. A cohesive and practical measurement and monitoring system integrating Sustainability measurement at federal, municipal and corporate level could be developed. This will require a radical change to current practice but, with good management and stewardship it could be attained. At the same time this will ensure that there is a sustained commitment towards Sustainable Development in line with Europe's 2020 Strategy
6.4 AREAS FOR FURTHER RESEARCH
6.4.1 PUBLIC SECTOR APPROACH
A similar study could be conducted to determine whether the public sector departments integrate social, environmental and economic costs in their Management Accounting systems. Also, it would be useful to assess the approach to public sector Sustainability reporting and whether such reports are being audited.
It would also be interesting to examine whether there is any relationship between organizational size, responsibility and the adoption of a Sustainability Management Accounting System. Perhaps this could be generalized to a larger sample in the near future, if Sustainability awareness increases in Malta.
6.4.2 MARKET STUDY
A study about how much stakeholders and consumers will be willing to pay for manufactured products that incorporate environmental and social costs would be interesting. One may also investigate the extent to how useful stakeholders find a Sustainability report and whether this incentivizes them to invest further in a sustainable company than a company which does not disclose its environmental, economic and social impacts.
6.5 CONCLUDING REMARKS
This study determined that Maltese companies, although they may not be fully employing a SMAS, tend to account for social and environmental costs if they are given in monetary terms.
Despite the fact that there is some level of awareness there is still lack of overall maturity in this respect and locally-owned firms have a lot to learn from their foreign-owned counterparts. Particularly, they must understand that the idea of Sustainability 'measurement' may not necessarily give rise to a cost. Non-financial parameters can also be factored into decision-making. This will enable firms to expand traditional financial reporting by considering also social and environmental impacts. Correspondingly, new niches will be created for accounting and audit firms in providing Sustainability audit services with the help of other experts.
This Essay is
a Student's Work
This essay has been submitted by a student. This is not an example of the work written by our professional essay writers.Examples of our work
By far, the biggest challenge in all this is cultivating a national attitudinal change towards Sustainability. The options are either to remain intact, or efficaciously adopt a forward-looking approach, which presumably is the best foot forward.