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Accounting for Sustainability1
SUSTAINABILITY: AN INSPIRATION TO TRIPLE BOTTOM LINE REPORTING (TBL)
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Now days there is more focus on transparency and public accountability by the companies. Triple Bottom Line (TBL) reporting is one of the main initiatives in this regard. In this report, we will explain the concept of Accounting for sustainability and Triple Bottom Line Reporting in context of Ansell Ltd.
Importance of Sustainability accounting can be derived from these words of Nicolas Stern.
We can find our way to a new form of growth, which is energy secure, cleaner, quieter, safer and more bio-diverse. And the transition to this form of growth over the next few decades will probably be the most dynamic and innovative in our economic history. It will be something like electricity or railways in earlier periods, or the rise of information technology more recently, but probably still more dynamic and on a larger scale than this radical economic transformation. Put another way, high-carbon growth would kill itself, first from high prices of hydrocarbons and secondly, and more fundamentally from the hostile physical environment is created. On the other hand, low carbon growth presents a very low attractive and prosperous future. Pessimism and cynicism will be self-fulfilling; we must find a way. (Stern, 2009, P-4)
TRIPLE BOTTOM LINE REPORTING (TBL)
Emergence of Corporate Social Responsibility or Sustainable Accounting has made it compulsory to companies to report their performance in on the basis of non-monetary performance indicators in addition to financial accounting reports. In practice company is required to disclose its performance in terms of Environmental, Social and Economic dimensions of its activites. Reporting of the information on the basis of any one or all 3 demensions is called Triple Bottom Line Reporting.
Introduction and Purpose of This Report
Triple Bottom Line Reporting or Accounting for sustainability is a relatively new concept in the field of accounting and financial reporting. It is also called Social accounting. It is closely related to the concept of Corporate Social Responsibility. History of sustainability accounting dates back to around 20 years back. It is regarded as a sub branch of Financial Accounting. Under this concept a company generally mentions in its annual report about social benefit measures taken by it. For example : what is the target number of employment generation by the company in the next accounting year, or what measures has been taken by the company to reduce the harmful gases produced in its manufacturing process.
Ansell is a world leader in providing superior health and safety protection solutions that enhance human well-being. Ansell designs, develops and manufactures a wide range of protection solutions. Delivering quality solutions guaranteeing optimal protection levels have been Ansell’s underlying goal since its formation in 1905. With operations in North America, Latin America/Caribbean, EMEA and Asia, Ansell employs more than 10,000 people worldwide and holds leading positions in the personal protective equipment and medical gloves markets, as well as in the sexual health and well-being category worldwide. Ansell operates in four main business segments: Medical, Industrial, Specialty Markets, and Sexual Wellness. (Innovative for Growth, Annual Report of Ansell Ltd, 2012)
What is Triple Bottom Line?
The TBL is an accounting framework that incorporates three dimensions of performance: social, environmental and financial. This differs from traditional reporting frameworks as it includes ecological (or environmental) and social measures that can be difficult to assign appropriate means of measurement. (Tanya J. hall: Economic Research Analyst, 2011) Triple Bottom Line Reporting of Ansell Ltd.
Under triple bottom line reporting (TBL) a company is analyzed on the basis of following factors or performance measures. Let see how Ansell Ltd is meeting these responsibilities on the basis of some common accepted performance measures.
- Economic Performance Indicators
Broadly it relates to the financial performance of an organization, incorporating its profit and loss statement, and other economic indicators such as market share price. It is concerned with how much will it cost over the life of the project or product? Mainly in economic measures we consider how much profit the firm earns after meeting its cost and paying taxes to government. Good amount of taxes paid to government is termed as healthy business practice. We will discuss in brief all the topics under this performance measure.
- Personal income: Ansell Limited offers industry specific pay rate to its employees. This helps in the increase in the personal incomes of its employees.
- Job growth: Ansell is strived toward meeting growth and for this it is must to hire best talent. Company is following proper steps and policies in hiring people for particular jobs.
- Establishment sizes: Ansell is an International concern with manufacturing units in many countries. It is a public company and a large scale establishment.
- Revenue by sector contributing to gross state product: Ansell contributes to a significant amount to the economy of Australia in health care products sector.
- Environmental Performance Indicators
It is concerned with life cycle assessment of energy consumption, reduction of harmful emission of gases, waste generation and depletion of natural resources etc. Ansell Limited is strived to minimize harms to the environment by its production and manufacturing activities. Ansell’s Environmental Management system is based on the international ISO 14000 Standards for environment managements. It has 9 manufacturing units and all are ISO 14001: 2004 Certified. Under this section we will discuss following points:
- Electricity consumption: Ansell Limited has launched Green productivity program. This program is focused on energy management and company has implemented this program for its manufacturing operations. Energy management at Ansellfocuses on achieving the most efficient and effective use of energy and simultaneously reducing greenhouse gas emissions. Ansell has installed the equipment to recover energy from the flue gas emitted from the boiler chimneys as an energy source to heat water. They have installed energy saving devices too.
- Solid waste management: Ansell has well efficient system of decomposing the solid waste.
- Hazardous waste management: The Company has taken adequate measures to prevent the open disposal of hazardous waste products. They have taken proper measures in this regard.
- Prevention from harmful gases: Ansell Ltd. has reduced the emission of the Carbon Dioxide gases by 36% in the period from 2004 to 2012 in all the manufacturing units. There is target of more reduction of such harmful gases during the period of 2013-2015. Company has also installed biomass boiler system at its various manufacturing units as an initiative toward eco-friendly environment.
- Social Performance Indicators
It is mainly concerned with How the activities of the business organization will impact the Society? Ansell formalized its approach to diversity and inclusion with adoption of the Ansell Diversity Policy. The Policy is underpinned by certain key principles including striving to leverage diversity in all its forms (including gender, skills, background and experience) to compete more effectively in the global marketplace and driving customer satisfaction, innovation and company performance:
•maintaining fair and equitable recruitment and compensation practices and fostering development and career progression based
on performance and merit;
•fostering an inclusive culture that treats our workforce with fairness and respect; and
•monitoring and measuring our diversity performance and striving for continuous improvement. a. Unemployment Rate: Ansell keep recruiting at time to time to meet its work requirement. It helps in reducing unemployment in the country.
- Female Labor Force Participation Rate: Ansell recognizes the concept of women empowerment. They have taken adequate measures to ensure that there is equal opportunities to male and females to work in the company. They have also made it compulsory that there must be at least one female member in board of directors out of 8 members’ total.
- Relative Poverty: Ansell Limited has also done significant work to address relative poverty concept.
- Health-adjusted Life Expectancy - Ansell Ltd. has taken various measures to prevent its workers from unforeseen accidents and other related problems. Ansell strives to implement a safety culture where workers are provided safe environment to work.
Critical Analysis of the Bottom Line Reporting of Ansell Limited
If we critically analysis the policies adopted and implemented by Ansell Limited we found that company is doing appropriate things to cope with corporate social responsibility. It has planned well to meet the expectations of various categories of the society like customers, environment, government, general public etc.
After discussing the all points of Triple Bottom Line analysis of Ansell Limited we came to know that company is doing everything to meet the target of corporate social responsibility. We also learned other things like what is the application of TBL in real life situation. For example a company must charge its customers for the goods and services provided by it, it is also a part of social responsibility, hence a part of Triple bottom line.
Stefan Schaltegger, Martin Bennett, Roger Burritt: Sustainability Accounting and Reporting
Anthony G. Hopwood, Jeffrey Unerman, Jessica Fries: Accounting for Sustainability: Practical Insights
Nicholas Stern : Managing climate change and overcoming poverty: facing the realities and building a global agreement
Last accessed at 5:10 PM, January 22nd , 2014 at
Annual Report, Ansell Ltd. 2012
Last accessed at 5:35 PM, January 22nd, 2014
Tanya J. hall: Economic Research Analyst, 2011