74 Accounting: Business Reporting for Decision Making
Summary of learning objectives
2.1 Describe business sustainability, outline its key drivers and principles and compare key
theories in the area.
Business sustainability considers the use of the world’s resources in a way that does not
compromise the ability of future generations to meet their needs. Key drivers include the
competition for resources, climate change, economic globalisation and connectivity and com-
munication. Principles include ethics, governance, transparency, business relationships, financial
return, community involvement/economic development, value of products and services, employ-
ment practices and protection of the environment. By necessity, decision making in business
incorporates a certain level of ethical contemplation. This includes a consideration of corporate
social responsibilities, such as a consideration of employees, the lifecycle of a product or ser-
vice, the impact of the entity generally on society and the environment, and the need to report
such effects, both positive and negative. Shareholder value is concerned with the increase in the
shareholders’ wealth (owners of the corporation). Stakeholder theory suggests that many groups
other than shareholders have a stake in the activities and performance of an entity, and that cor-
porate governance needs to reflect the wider duty of care that society is placing on the decision
makers of entities. Stewardship theory suggests that directors are a steward of some cause or
group.
2.2 Appraise CSR reporting frameworks and the accountant’s role in CSR.
The triple bottom line approach and the GRI reporting framework are two common methods used
for reporting CSR. The three dimensions of the triple bottom line approach espouse the need to
report on economic, social and environmental dimensions. The GRI reporting framework supports
this view and outlines principles and standard disclosures required, technical protocols and infor-
mation relevant to different sectors. The standard sustainability report should contain the strategy
and profile of the entity, the management approach and the entity’s economic, social and environ-
mental performance indicators. Accountants can help organisations in applying the reporting
framework by using their expertise in gathering, collating and reporting information, including
sustainable-relevant information in their analysis for business decisions and through the provision of
audit and assurance services.2.3 Explain the concept of corporate governance.
Corporate governance refers to the direction, control and management of an entity. The board of
directors is given the authority through a company constitution and the Corporations Act 2001 to act
on behalf of shareholders.2.4 Outline corporate governance guidelines and practices.
Corporate governance guidelines help to foster improved corporate governance practices. An
example is that put forward by the ASX Corporate Governance Council. The guidelines foster
awareness of a director’s responsibilities, and help communicate society’s expectations to the wider
business community. Such guidelines generally include items such as board structure, financial
reporting, ethics, stakeholders, remuneration and disclosure.2.5 Outline the role of ethics in business and compare ethical philosophies relevant to business
decision making.
Business decision makers influence the use of the world’s resources and can affect the lives of many
people. Ethics is central to the study of humankind, and so should be explored in a business con-
text. Two key approaches are teleological and deontological theories. The teleological approach is
concerned with the consequences of decisions, while the deontological approach is concerned with
the action or decision itself.