Accounting for sustainable management 1 Essay Example

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3Accounting for Sustainable Management

Executive Summary

The idea of sustainable development, from which the concept of sustainability can be understood, is associated with the need to have a future that supports every aspect of life, even the economic aspect, as in this case. However, it can be argued that sustainability is a broad concept that tends to explore various aspects of life, including technology, the environment, and social science. Sustainability draws on politics, economics, and philosophy, as well as many other social sciences. Its association with environmental awareness is the key requirement for good practice amongst businesses and related activities. Companies need to remain accountable for their actions and impacts on the community. They are required to ensure that their stakeholders’ needs are addressed based on the intended impact. In this regard, corporate social responsibility (CSR) is one of the major ideas that addresses the effects of an organisation on their stakeholders as well as the environment. Accounting practices are also part of good practice, and this means demonstrating the accountability and responsibility of an organisation. Tassal is facing various sustainability issues concerning social, economic, and environmental challenges and how its activities have an impact on the stakeholders. To address these issues, it is necessary to address the approaches that it uses to conduct its business, and the controversies that arise from them. In addition, its reporting framework should be assessed to ensure that it demonstrates accountability and transparency with respect to the stakeholders.

Accounting for Sustainable Management

Introduction

Sustainable accounting is a growing area in the aquaculture sector across the world. In Australia, it is practised and monitored closely by strong regulatory bodies on a local and global platform. It is understood that, as countries become more reliant on aquaculture products, the issue of sustainable practices becomes more sensitive since they endanger the lives of not only people living in the present day but also of future generations. It is important for companies that practise aquaculture to ensure that the products they make available in the market are fit for consumption. Tassal is a firm that operates in the aquaculture industry. Its operational activities are subject to laws that regulate and guide company practices to ensure that they are sustainable. Sustainable practices help boost the image of a company and its competitive edge. These practices can further help a company increase its revenue. Therefore, in order to enhance its image through sustainable accounting practices and other green projects, Tassal has to re-engineer their current production and reporting methodology. Adjusting the company’s practices and addressing the problems raised by stakeholders will help increase Tassal’s competitiveness, productivity, and profits. This report will, therefore, propose ways in which Tassal can increase the level of sustainability in its practices.

Sustainability and Its Relevance to Business and Accounting

As mentioned earlier in this paper, the concept of sustainability is a vast one, and draws on many fields, especially the sciences. To define sustainability, Bebbington (2000) suggests that it is necessary to consider the primary structure of the term, and Gray (1992) argues that it is the ability to sustain available resources to address future needs. In business management, sustainability has been considered an important aspect in ensuring that organisational operations do not cause deterioration in the environment.

Accounting practice is fundamental in harnessing sustainability in businesses. Due to the rising concerns and need for entities to become more accountable regarding their business operations, the concept of sustainability accounting has become a generic paradigm in the contemporary corporate world. According to Schaltegger and Burritt (2010) sustainability accounting, just like any other accounting, focuses on information about whether businesses comply with the underlying legislative requirements. Therefore, it is crystal clear that, in accounting practice, sustainable reporting is imperative, not for the financial aspects of the entity, but in order to measure and evaluate the compliance of a business with respect to sustainable standards.

Sustainability creates opportunities for business as well as threats (Schaltegger 2011). The effectiveness of management can be benchmarked against how efficiently it meets sustainability goals. While poor governance results in an inability to undertake green projects efficiently, good governance provides management with the opportunity to showcase their managerial expertise in dealing with environment-unfriendly operations. Consequently, management earns the business a competitive force, which in turn puts it above its competitors. In fact, in New Zealand sustainability practice has been motivated by business economic rationalism and pragmatism (Bellringer, Ball & Craig 2011). The environmental implications that their operations inflict become an opportunity that a business can capitalise on. Otherwise, it becomes a threat if such impacts are not addressed by management.

Importantly, social expectations are dynamic and they have resulted in accounting for sustainability practice. The post-modern accounting era criticises the earlier financial reporting methodology, whose structure was financial performance-oriented. The adverse consequences associated with climate changes have spurred a general change in the way businesses report their activities. In order to ensure that all the information regarding a business’s activities is captured, the reporting framework has changed to include a section on sustainable reporting.

Sustainability and Its Relevance to the Aquaculture Industry

In Australia, the demand for sustainable sources of food is very high. The demand for seafood in Australia is increasing at a huge rate with each passing year. In fact, it has increased to such an extent that it exceeds the current supply for both domestic and international markets. This is a hallmark of the growing aquaculture sector, which has been the backbone of this country. Nonetheless, whilst it is important to ensure a steady flow of aquaculture products, regulating this sector is fundamental, and this has been achieved through very strict environmental programmes and legislations. These strict regulations and programmes seek to ensure that aquatic animals, the environment, and all of the biodiversity are protected and not depleted, while still meeting the high demand for seafood. Therefore, there is a greater need for sustainability in the aquaculture industry for the sole reason that the interests of the coming generations should be protected at the present time.

Consumers in the global market pressurise organisations in the aquaculture industry by sharing their worries concerning ecological and health sustainability. In Thailand, the production of black shrimps was hazardous and, in fact, it prompted the need for a shift to a more environmentally friendly species. According to Lebel et al. (2010), rearing white shrimps not only has an economic benefit, but also produces less waste than farming black shrimps. Similarly, new developments in Europe’s aquaculture industry clearly indicate the rising need for sustainable food production. The Recycling Aquaculture System (RAS) in Europe’s aquaculture industry has undergone several changes to heighten waste management practice, reduce water wastage, and improve nutrient recycling (Martins et al. 2010). On a global map, Europe and Thailand’s aquaculture sectors are both competitors for Australia’s aquaculture industry. Even though it has earned a global reputation, Australia experiences various sustainability issues relating to sewage and waste management that directly affect the production of seafood. However, plans are underway to make Australia a “clean-green” seafood supplier.

Sustainability is relevant to the aquaculture industry in which Tassal operates. As is evident from the results of various empirical investigations, the production of seafood significantly affects the environment. Therefore, stakeholders, such as the government, consumers, and the producers of seafood have the responsibility to ensure that sustainable practices are followed. For this reason, entities are required to report on all the activities pertaining to aquaculture activities so as to inform other stakeholders about the efforts they are putting into conducting sustainable farming.

Sustainability and Its Relevance to Tassal

Tassal, just like many other aquaculture organisations, has various sustainability issues that affect its operations and ability to develop in line with its mission and goals. Even though it conducts annual sustainability reporting that communicates information to stakeholders about its activities, it is evident that its endeavours to expand its business activities attract controversies and questions about sustainability. Environmental sustainability is considered in the accounting literature in the context of social and environmental accounting and reporting. Therefore, controversies arise as it is implied that Tassal has not been adequately considering the need to consider the perspectives of all its stakeholders whilst reporting on sustainable development.

As far as accounting or reporting and sustainability are concerned, the company should communicate in such a way that it demonstrates the actual and potential impacts of its organisational activities and strategies so that it can address them. Failure to effectively demonstrate such competencies would result in controversies, some of which Tassal is currently facing. Sustainable development would, therefore, entail an examination or assessment of particular areas where accounting or sustainable reporting would affect the environment and wellbeing of stakeholders and the use of accounting tools to remedy or correct the effects.

Various controversies concerning environmental, health, and sustainability issues have been raised. For instance, according to an article in The Mercury, Humphries (2017) argues that Australian Ethical Investments had moved from Tassal following sustainability issues in the Macquarie Harbour operations. According to the article, the company is facing sustainability issues concerning its operations, especially with respect to its use of anchovies in salmon feed. Allsopp et al. (2008) report that nutrient pollution is one of the major sustainability challenges facing the aquaculture industry. According to the authors, anchovies in salmon feed as well as the organic waste from cage activities result in a depletion of oxygen levels, which in turn affects the activities that occur in the surrounding areas. In this respect, most of the sustainability reporting by the company has not been addressing these issues in a manner that clearly attempts to mitigate the impacts. When inappropriate or inaccurate reporting about issues that concern sustainability is practised, another major issue, human rights violation, arises. Due to the use of methods and materials that deplete the nutrients in the surrounding area, there is concern about the sustainable development that it intends to realise since there would not be any natural resources that would sustain its expansion in the future.

Whilst stakeholders are entitled to accurate information about the impacts of the company and its operations on their wellbeing and interests, it is also necessary that the company considers the effects of its activities on the natural environment. Therefore, Tassal is evidently affecting the social, economic, and environmental wellbeing of society, which then leads to the controversies that it is facing. Because of these issues, there is intense objection to its activities relating to any expansion. Its activities are not accepted by the stakeholders on an environmental level due to nutrient pollution. Furthermore, they are apparently economically inviable due to depletion of the oxygen levels in the surrounding area. Additionally, Tassal is also facing social sustainability issues due to the fact that their activities are being criticised for jeopardising people’s wellbeing.

How Tassal Can Embrace Sustainability

Tassal should embrace new technologies. There is a need to adopt and implement adaptation and mitigating measures to manage the plummeting quantities of fish and aquaculture products. The fact that the world is experiencing climate change has necessitated a growing demand for sustainable measures. For this reason, various countries have started adopting new technologies that are efficient in terms of production and waste and coastal management. For instance, Tassal can employ technologies such as land-based systems that can be used to control water conditions. Seafood, such as fish, shellfish, and crustaceans, are essential sources of nutrients. Therefore, land-based systems that will improve the quality of nutrients in the seafood would be crucial. For instance, Tassal can increase microbial activity in land-based ecosystems such as ponds so as to improve the nutrients in the seafood (Avnimelech et al. 2008).

Tassal can also embrace sustainability through the practice of corporate social responsibility (CSR). Even though CSR is a common practice, the strategies used differ in terms of the extent of their effectiveness. In fact, some aquaculture firms have faced severe legal consequences due to CSR issues. Hence, Tassal should turn to consumer-driven CSR. Consumer-driven CSR refers to an approach where the real consumers of seafood products drive the CSR activities, such that consumers demand credible and sustainable products (Malik 2016). One of the most important aspects of consumer-driven CSR is the level of assurance that the CSR reports give them. Tassal needs to rely on external auditors or professional accountants since consumers rely a great deal on CSR reports that are audited by external professional bodies (Malik 2016). This will help to ensure that not only does the company become profitable as a result of its CSR practice it will also gain a long-term corporate image due to its sustainability practices.

Tassal could further increase its sustainability by integrating its fish farming with crop farming, for example rice (Reynolds 2012). The crops introduced in the areas that the fish are reared in will help reduce how much the company relies on manufactured foods for feeding the fish. As a result, this will help reduce the level of environmental pollution associated with the process of manufacturing the fish food. This method would help increase the revenue raised by the company as the crops grown would be sold, thereby diversifying the company and increasing its target market. This method has a high success rate, as recorded in countries such as Bangladesh.

Tassal could alternatively incorporate the use of recirculating systems in its operations (Reynolds 2012). These systems work by having water flow from the fish tank to a treatment tank, which has water-based plants. Using this system would help reduce the level of chemicals used in the farming. The plants in the treatment tank will help purify the water so that it can be fit for reuse in the fish tank. The nutrients from the fish tank, on the other hand, will help the plants thrive and, therefore, increase the company’s source of revenue. This will help reduce the rate of environmental pollution that the company causes.

Tassal could also increase its sustainable practices by incorporating the use of wrasse in its fish farming areas. According to Powell et al. (2017), wrasse are necessary for getting rid of sea lice that attack salmon, both in the ocean and in farming areas. The wrasse are used as agents for cleaning the water and making it suitable for the salmon to inhabit. Sea lice are difficult to control and contain as they can be spread from one fish to another, even when they are miles apart (Reynolds 2012). Fish farming companies mostly rely on the use of medicines to control sea lice attacks, which is not as effective as the farming companies would wish. The use of wrasse would, therefore, lead to better management of the attacks and increased production as well as a reduced negative impact on the environment due to the reduction of chemical substances introduced into the environment.

Conclusion

Aquaculture is a very sensitive sector and one that attracts the attention of all environmentalists and consumers of its products. The production of seafood and its distribution need to be conducted in a manner that ensures that the environmental impacts do not endanger the current status quo of people and future generations. In order to hold aquaculture firms accountable for their contribution to the sustainable production of seafood, sustainability accounting is very important. It is a corporate governance practice that ensures consumers are sold products that have met sustainable strategies. In the case of Tassal, engaging in suitability accounting is extremely relevant since it operates in the aquaculture industry. The company has to employ empirically-based strategies that can help it to achieve sustainability goals. These strategies include adopting new technologies, especially those that relate to land-based systems that ensure high productivity and effective water and waste management. Furthermore, Tassal should practise consumer-driven CSR. The company should also either use a water recirculating system or grow crops in the water to increase productivity. In addition, it should incorporate the use of wrasse to deal with the threat posed by sea lice. A combination of these strategies will help increase the company’s competitiveness and sustainability.

Reference
List

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Avnimelech, Y, Verdegem, M, Kurup, M & Keshavanath, P., 2008, ‘Sustainable land-based aquaculture: rational utilization of water, land and feed resources’, Mediterranean Aquaculture Journal, vol. 1, no. 1, pp. 45-55.

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Bellringer, A, Ball, A & Craig, R., 2011, ‘Reasons for sustainability reporting by New Zealand local governments’, Sustainability Accounting, Management and Policy Journal, vol. 2, no. 1, pp. 126-138.

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Food and Agriculture Organisation (FAO)., 2015, ‘Sustainable aquaculture development’, Fisheries and Food Security, viewed August 8, 2017, http://www.fao.org/focus/e/fisheries/sustaq.htm

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Humphries, A 2017, Australian ethical investments divests from Tassal over Macquarie Harbour, sustainability concerns, Mercury, viewed on August 8, 2017 http://www.themercury.com.au/news/politics/australian-ethical-investments-divests-from-tassal-over-macquarie-harbour-sustainability-concerns/news-story/5bed4bd928940bc5525cd6a5aa2b633d

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Martins, CI, Eding, E, Verdegem, M, Heinsbroek, L, Schneider, O, Blancheton, J, d’Orbcastel, E & Verreth, J., 2010, ‘New developments in recirculating aquaculture systems in Europe: a perspective on environmental sustainability’, Aquacultural Engineering, vol. 43, no. 3, pp. 83-93.

Powell, A, Treasurer, J, Pooley, C, Keay, A, Lloyd, R, Imsland, A & Garcia de Leaniz, C., 2017, ‘Use of lumpfish for sea-lice control in salmon farming: challenges and opportunities’, Reviews in Aquaculture, vol. 0,pp. 1-20.

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