PROF. K. R. PRABHU, DEAN – SMI BUSINESS SCHOOL
ARTICLE ON ENVIRONMENT “SUSTAINABILITY” - IS A TALK OF TODAY
Sustainability consciousness is developing rapidly in the minds of people. This consciousness is much highlighted in INDUSTRIAL ENGINEERING. We get every element for our living from ENVIRONMENT and it is cardinal duty of every person to protect our treasure of wealth given by nature environment (Prakriti). Industrial Engineering tool for analysis is CRITICAL EXAMINATION TECHNIQUES. It is applied at 1) Source 2) Operations/conversion and 3) Disposition.
We are greedy to exploit the natural resources like pure air, sun-light, water, bio-products, mining products etc at the cost lower level of productivity. Industrial Engineering analyses in order to add maximum of value at each stage and makes a mass attack on waste and unproductive methods. In a nutshell, we have to protect the hygiene part of the population by attacking pollution in every place and protect our natural resources/environment for the future generation at all costs. How?
The UN World Commission on Environment and Development, defined sustainable development in 1987, as the “development which meets the needs of the present without compromising the ability of future generations to meet their own needs”
Businesses, in ancient days, centered around the barter system that involved simple exchange of goods. Later, for the sake of convenience, the ‘goods for money’. Cut to the present times, and there’s not a single sector where monetary transactions are not involved, regardless of the product or service.
While business was once considered as a profit making activity, it has now sadly degenerated to a money making exercise. Simple profits are not enough and huge cash inflows are expected. In this dog-eat-dog race for money, ethics and responsibilities towards the society has largely taken a backseat.
The concept of continuity, one of the core concepts of accounting, requires businesses to form long-terms policies with an assumption that it will run perpetually with no possibility of the business along with continuous development is the moot point here.
The UN World Commission on Environment and Development defined sustainable development in 1987, as the “Development which meets the needs of the present without compromising the ability of future generations to meet their own needs.”
It is obvious from today’s cutthroat market competition that the latter part of the definition has not attracted proper attention. Resources are demanded and routinely exploited by businesses. There is a palpable concern among environmental experts on whether enough will remain for our future of today’s ventures. India’s increasingly vanishing forest cover leaves much to fear.
WHAT IS 3-Ps APPROACH?
It is said that there are three ‘p’s that should concern a business. The proprietor and/or owners are always concerned with only one of them i.e. ‘p’ for profits. But with greater accessibility to information, environmentalists and social activists have become more concerned with the other two ‘p’ s: people i.e. human beings, and planet or environment. And it’s not entirely without reason that businesses have been quite a few instances where companies were pulled up by courts for violating environment norms.
As already said, the demand for natural resources are
Ever increasing which has led to their exploitation. It is the responsibility of the society to provide the resources to the business in the form of human and natural capital.
Any business venture needs three types of capitals to run: financial, human, and natural. As such, it is necessary for any business to report on the utilization of these capitals. The first, financial capital is taken care of. It is properly measured and reported, but a glance at the financial statements of a company usually reveals no representation of human and natural capital involved in the business.
Similarly, when the income statement is prepared, financial expenditures and incomes are recorded to determine the profit. However, social and environmental costs find no place in the statement. One major reason behind this trend is that environmental and social factors cannot be valued in monetary terms and hence cannot be recorded in the books of accounts. Thanks to the money measurement concept of accounting.
With the rise in awareness about the depletion of environmental resources, it is the duty of every business to account for the activities that have an (direct or indirect impact on the environment. This has led to the emergence of the concept of green or environmental accounting.
Green accounting does not mean less use of papers or preparing accounts on computers. It seeks to record costs incurred and revenues generated through activities that have an impact on the environment i.e. destruction and protection of the country’s green cover, in terms of money. Green accounting involves identification and reporting of environment specific costs. Some of the environmental.
Factors that must be considered by companies include energy (consumption, natural gas consumption and alternative fuel usage), water (consumption), greenhouse gas emission, toxis release inventory and number of air pollution ozon action days, global warming and climate change, management of hazardous and non-hazardous wastes (trends in recycling refuse and yard waste), packaging, overall recycling, land contamination and remediation, public transportation, and noise and Adour.
While new environmental guidelines are being suggested there is a need for a clearer understanding of sustainability concepts, defining environmental and social indicators for different types of industries, uniform measure of accounting, and comparable presentation of accounting statements.
With the rise in awareness about the depletion of environmental resources, it is the duty of every business to account for the activities that have an (direct or indirect) impact on the environment.
For centuries, man has upset the delicate ecological balance to whet his greed. Goa, the smallest state in India, is known for its scenic beauty, and attracts thousands of tourists both from within the country and abroad. But rampant mining has disturbed Goa’s flora and fauna. While the accounts prepared by the mining companies were quite forward in sharing the economic benefits earned, they were hesitant to report on the environmental damage caused by their activities. Had green accounting been compulsory, environmental awareness would have generated better awareness with specific fundamental approach towards Goa’s ecology.
While new environmental guidelines are being suggested, there is a need for a clearer understanding of sustainability concepts, defining environmental and social indicators for different types of industries, uniform measure of accounting, and comparable presentation of accounting statements. Green Accounting, with more content, will lead to more effective disclosure, measuring and reporting. The path is difficult and full of obstacles, but the goal to achieve that is essential for the sustainability of a business.
It is us-humans-who must now determine our fate within the fragile environment in which we have to live. We owe it to our coming generation to do all in our power to secure their future.