Integrated Sustainability and its Impact on Accounting and Finance

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Seminar paper from the year 2011 in the subject Business economics - Investment and Finance, grade: 1, 3, International University of Applied Sciences Bad Honnef - Bonn, course: Current Issues in Accounting and Finance, language: English, abstract: In a time, where globalization and global prosperity foster a continuous chasing after outstanding business success, environmental and social aspects are more and more taking a back seat in the decision-making processes of organizations. With a world population of nearly seven billion people and an expected growth to more than nine billion people by the year 2050 (UN, 2008), the urgency to preserve the resources of the world is now greater than ever. Due to this global situation, the importance of corporate sustainability as an integral part of organizations' strategic directions is increasing gradually. Additionally, customers' growing awareness for environmentally friendly products and actions is further boosting the pressure on companies to act in a sustainable manner. Although first steps towards an eco-friendly future have been done in the fields of mobility and efficient consumption of energy and materials, continuous improvements in environmental and social aspects are crucial. Responding to external pressure, corporations have started to implement sustainability in their businesses. However, some firms are being accused of pursuing a sustainability strategy only, to satisfy expectations of the public society. Although the real intentions for a company's business actions are difficult to determine, at least the number of organizations that have integrated sustainability into their business has increased, according to a study of PwC (2010). Referring to this research, which took only German firms into account, about 75% of the participants have connected sustainability at least to some of their core business areas. Furthermore, every fourth of the surveyed companies has increased its sustainability engagement. The main driver for that is seen in the pressure of society, media and NGOs, which reflects the high public awareness for topics related to environmental, social and economic aspects. Despite many companies are showing the will to work on their sustainability performance, many of those fail because they are not communicating their strategic direction internally and are lacking adequate measures to report the impacts of respective actions. According to the study of PwC, only half of the surveyed companies analyze the impacts of their sustainability initiatives from an efficiency and productivity point of view.