Accounting for sustainable development performance

Jan Bebbington

Jul 2007 · Elsevier

About this ebook

This CIMA research project provides insights into the interrelationship between existing management accounting practices and accounting tools which seek to guide organisations towards sustainable development and create information about accounting techniques which addresses the issue of sustainable development.Few studies have sought management accountants views on accounting techniques. This research project builds on the existing literature by paying attention to interactions between sustainable development performance data, management accountants, management accounting processes and management accounting generated data. The research also draws from FCA (full accounting technique)which is an accounting technique gaining currency within policy and business circles. The project points out that the SAM (Sustainability Assessment Model) is a form of full cost accounting and the research furthers our knowledge of FCA and its usefulness as an accounting tool.The project also examines how sustainable development data is used within a case study organisation (BP) and how such data can be used within other organisations. * Shows how Sustainability Assessment Model (SAM) performance data is perceived by project management teams. * Provides a broad perception of the SAM from the oil and gas industry. * Evaluates the usefulness of the SAM in the electricity and building industry

Ratings and reviews

Prof. Bebbington presents a tool for measuring, managing and target setting for Sustainable Development (SD) in UK project appraisal. It identifies and quantifies in monetary terms the costs & benefits from cradle to grave for four dimensions; economic, social, environmental and resource, using full cost, including “externalities”. There is of course much debate about the principles & practicalities of ascribing monetary values to all the four incomparable and non-substitutable dimensions. The principles behind the modelling and quantification are explained, but algorithms and value sources are not given. The concept of critical capital is introduced, but not used. The idea of attaching non-quantifiable issues as text bubbles is also considered, but not used. It is made clear that the use of the model and evaluation is for users to discuss and decide. Simplicity and immediacy were preferred design criteria to complexity and completeness (p68). SAM is reviewed in practice and (with some reservations about monetisation) meets with broad approval in BP in the UK as a practical means of reviewing all SD aspects of a project. In conclusion, the book considers that the SAM offers an initial but insufficient step towards the experimentation and discussion that are needed to progress towards metrics of SD performance. Project appraisal is an appropriate decision point at which to introduce the concepts to the user community. Different organisations are expected to develop their own ways forward in SD modelling and performance measurement (p115). A CRITIQUE SAM offers a useful approach to support decision making in an industry that needs it; the book presents it in understandable terms to the layman. Any evaluation tool may be used for public relations purposes as well as for the purposes of transparent evaluation of performance. However, in the widespread absence of SD evaluation tools in most organisations, the book makes a very useful contribution as an introduction to the principles of SD performance evaluation. It recognises that the art-form is embryonic: the internal dialogues surrounding SD are not only essential precursors of improved SD performance, but also necessary to improving the metrics and the tools used. In my own opinion, the monetisation of all four dimensions opens up an opportunity to use a common metric to weigh up the pluses and minuses and arrive at a net balance for the project as a whole. In all the organisations I know, this would be a huge advantage to the user community. To ignore it is to deny a major product-plus for SAM to potential users. If we accept a worldview that; 1 stasis is only a theoretical concept in that the whole world is in constant change, & 2 monetisation is only a metric, not implying superiority of one or other dimension, & 3 project appraisal recognises that a balance is required between benefits and costs, & 4 maintenance of social, economic, resource and environmental assets is the principle, there would seem to be no conceptual impediment to using net SAM value as a project metric. This would perhaps be along the lines of TruEVA (Thomas, Repetto & Dias 2007), but including a social dimension. By contrast, the SAM index, or SAMi, appears to offer no significant advantage. SAMi is the total net monetised value of a project’s four dimensions divided by the sum of the four absolute values. “The nearer this figure is to 100%, the more sustainable it could be said to be” (p54) the book claims. I beg to differ. Conceptually, it must be argued that SAMi can have no greater validity than SAM value itself. If aggregate SAM value is discredited, so is SAMi ipso facto. Dividing it by the sum of four absolute dimension values appears to me to do nothing in restitution of meaning. Comparability over unequal lives or of competing mutually exclusive projects are not considered in any depth, but are key aspects of project appraisal in most organisations. Also ignored is the balance of