Accounting Theory for Sustainable Built Environment-myassignmenthelp

Question: Discuss about theAccounting Theory for Sustainable Built Environment. Answer: Introduction Emission of the green house gases is the major activity harming the environment today. In order to have a little control over the rapid climate change, the proposal of reporting on carbon emissions by the corporate has been introduced. Climate change has been referred to as the greatest environmental challenge which the world is facing currently. In order to have a control over emissions, many companies involved in the business of manufacturing or power supply have been required by the government to report on the carbon footprint (Flood, 2017) . The authorities are of the view that if high numbers are reported by these corporate, then they would take initiative in order to control the carbon emissions, so that the value of their company is not affected. Many countries have taken part in this initiative. In Australia the National greenhouse and energy reporting scheme was introduced, in order to meet up with international reporting standards and provide a single framework on energy co nsumption and carbon emissions reporting. This scheme is guided by the National Greenhouse and Energy Reporting Act 2007 (Freeman, 2011). The scheme acts towards reducing the carbon emissions by the corporate in the country by making policies and conducting researches for the same. Literature Review The corporate are facing increased stress form the various shareholders, investors, stakeholders with respect to disclosures and measures for the carbon emissions. These are huge expenses related to carbon emissions. Some of these include heavy capital expenditure on the carbon efficient machinery and technology. The corporate are required to take steps in order to reduce the carbon footprint (Kauffmann, 2010). Huge expenditure on research is being made in order to produce carbon efficient products. The carbon emissions also define the risk profile of the corporate. Research has showed that the carbon emissions have impact on the value of the firm. These can be classified into three major heads. Firstly, the costs incurred due to mandatory reporting of carbon emissions by regulatory authorities, secondly, the costs in connection with capital expenditure for emission control and lastly the costs in correction with voluntary reporting of carbon emissions. In the article by Tony Nwanji in The Stakeholder Theory in the Modern Global Business Environment, the author has stated how the duty of the company is more than just earning profits (Nwanji, 2016). The stakeholder theory states that it is the responsibility of the company is more than just towards its shareholders. A stakeholder is any person who can be affected by the decision of the company. They include customers, employees, creditors, etc. Stakeholder theory plays a very important role in the corporate responsibility of the company. The companys which are involved in processes involving carbon emissions, have a duty towards the environment and the stakeholders. In order to fulfil their duty towards the stakeholders it is important that the corporate report on the carbon emission which is due to their activities. They should report on the measures take in order to offset the carbon emissions. In the paper - Institutional Theory as a Driver of CSR: An Integrative Framework, by Sanket Sunand Dash, the author has explained how the institutional theory just like stakeholder theory assists the company in corporate social responsibility (Dash, 2016). The institutional theory states that the behaviours of an institution is dependent and is affected by the factors it Is surrounded by. The social environment is one of such factors. Increasing globalisation has shown that the social factors have a huge impact on the behaviours of an organisation. Therefore, in the case of carbon emission the company will be obligated to report on the carbon footprint. The traces which they leave on the environment are likely to have affect on the organisation, which will result in better accountability. Just like the theories mentioned above the author James Guthrie in his work on legitimacy theory has explained how the companies seek to work within the boundaries which are set by the society (Guthrie, 2012). In other words they try to legitimate the work done by staying within the social boundaries. When an action of the organisation affects the social factors, then it is to have effect on the organisation. When polluting the environment, the organisation understands that they have breached a boundary. In order to make up to it and exist, they will be required to report on the same. All the theories above are of the view that there are some social obligations of the organisation. In order for them to meet up with these obligations the company will report on carbon emissions and that is likely to control the impact on environment. In our study below we have discussed in details the actual affect of reporting on carbon emissions. Analysis Environmental safety has become a very important taking into the climate change. Emission of the greenhouse gases by the corporate are the major contributors to the climate change. In order to control these emissions, many steps including establishment of legislation for reporting was tried to be implemented. But in vain, no step was put into action. Later, incidents like that of the BP oil spill in the Gulf of Mexico created the alarming need to control the harm being made to the environment. It was then that the Environmental Protection Agency (EPA) came into action and initiated the greenhouse gas reporting program. This became a law in the year 2010, and as a result almost all of the Top emitters of Greenhouse gases in US were made to report on the emission made by them. Later, the remaining emitters of the greenhouse gases were also required to mandatory report on the greenhouse gas emissions. It was the first and the foremost step which was taken in order to control the carbon emissions (Ihlen, 2009). Though it was expected from introduction of this legislation, that reporting will force these corporate to control the emissions, but no such major effect was noticed. Also, this act aimed the corporate to opt for more environment friendly products and processes, so that more consumers could be attracted, but the studies show no major claims for the same. Later in the year 2012, United Kingdom followed the step of United States, and made it mandatory for all the companies listed on the London stock exchange to report of the carbon emission (Scott, 2014). This made the listed companies in UK report on greenhouse gas emission yearly in their annual report. In the year 2006, the international standard on environment protection launched the ISO 14064 standard, which laid down the methods to control greenhouse gas emissions along with its reporting and monitoring (Schnapf, 2011). It was a globally recognised standard which was expected to launch both regulated and voluntary programs to protect the environment. The Paris Agreement in 2015 was set forward keeping in view the increasing danger to the environment due to climate change. The countries all over participated in this agreement with a view to reduce the carbon emissions for environment safety. The World economic forum in 2017 stated that the weather risk was the most significant issue which was to be faced by the businesses everywhere. In order to evaluate the result of corporate reporting on carbon emission, a lot of studies and researches were conducted. The studies indicate three possible effects of reporting (Rogers, 2015) . The theories discussed above in the literature review all point towards one conclusion, that is the company has some social obligations which makes is responsible to report on the harms to the environment done by it. But mere reporting on issues created is not a solution for these issues. There should be actions and penalties which the corporate should be entitled to in case of harm caused by it. They should be made to take measures in order to cut off the carbon emission and help protect the environment. Reporting on certain issues will only bring to attention to the problem, it is important solution be devised in order to solve the problem. Secondly, it may be said that the impact of carbon reporting will not immediately be seen (Strathern, 2010). The level of greenhouse gases has increased over the years and there effect has been increasingly see in the last few years. The researchers are of the view that the effect of reporting on these emissions will be witnessed with time. It is not important that the results will immediately be reflected by measures. Lastly, the measures of reporting lack impact oriented information. The corporate are required to report on the measures taken by them to control the carbon footprint, but it fails to calculate the impact of measures on the result (Wahlen, 2012). Therefore it is important that the corporate also report on the impact they are likely to have on carbon emissions and control. The impact of carbon reporting has been huge on the corporate worldwide. They have actively taken part and adopted the carbon management principles (CMP) in order to meet up with the regulations. The recent study showed that of the top 500 global companies only 43% took part in the reporting in 2004. This number increased gradually to 50% in 2010 and 82% in 2015 (Donanldson, 2012). Also these corporate allocated a part of their management in order to take responsibility for the issues related to climate related change. The theoretical knowledge and implementation of reporting was expected to have larger impact on carbon emission reporting. But practically the resultant effect was not at par (Wolk, 2013). The theories that have been mentioned above also state that the companies would fulfil their social obligations by reporting on the environmental issues caused by them. But this was not the actual result. Therefore, measures in order to ensure actual effects on the control of carbon emissions should be taken. Conclusions: It was faith in the policymakers and the companies that reporting on carbon emission and good management practices will help them control and have better performance in carbon control. Because of this faith, other policies and measures which were likely to have effect were not given much attention. It has now become a fact that the most comprehensive data on carbon emission and measures to control the emission have failed to show any major impact on the actual outcome. However it has still not been established that the failure to obtain major results is due to lack of data or due to lack of relationship between the corporate management principles and the performance or due to lack of emphasis of companies on the actual performance of management principles (Eliskandarani, 2014). The management need to opt for result oriented plans, so that the actual result on the carbon emissions can be accounted for. References Dash, S. S. (2016). INSTITUTIONAL THEORY AND CSR. Retrieved from www.anzam.org: https://www.anzam.org/wp-content/uploads/pdf-manager/2844_ANZAM-2016-407-FILE001.PDF Donanldson, T. (2012). Ethical issues in business. New Jersey: Prentice Hall. Eliskandarani, E. (2014). Approaches to reducing carbon dioxide emissions in the built environment: Low carbon cities. International Journal of Sustainable Built Environment . Flood, J. M. (2017). Wiley GAAP 2018. [S.l.]: JOHN WILEY. Freeman, K. P. (2011). Managing environmental risk through insurance. Boston (Mass.): Kluwer Academic Publishers. Guthrie, J. (2012). LEGITIMACY THEORY. Retrieved from www.csringreece.g: https://www.csringreece.gr/files/research/CSR-1290000469.pdf Ihlen, . (2009). Business and Climate Change: The. Norway: Routledge. Kauffmann, C. (2010). 10th OECD ROUNDTABLE ON CORPORATE RESPONSIBILITY. TRANSITION TO A LOW-CARBON ECONOMY: . Nwanji, T. (2016). Retrieved from https://www.managementjournals.com: https://www.managementjournals.com/journals/ig/vol1/21-1-1-1.pdf Rogers, C. G. (2015). Financial Reporting of Environmental Liabilities and Risks after Sarbanes-Oxley . Hoboken, N.J.: John Wiley Sons. Schnapf, L. P. (2011). Environmental Issues in Business Transactions . Chicago, IIIl.: American Bar Assocation, Business Law Section. Scott, W. R. (2014). Financial Accounting Theory. Toronto: Pearson. Strathern, M. (2010). Audit cultures: anthropological studies in accountability, ethics and the academy. London: Routledge. Wahlen, J. M. (2012). The FASB Accounting Standards Codification: A User-Friendly Guide for Wahlen/Jones/Pagach's Intermediate Accounting Reporting Analysis . Mason, OH: South-Western Pub. Wolk, H. I. (2013). Accounting Theory: Conceptual Issues in a Political and Economic Environment. Thousand Oaks, CA: SAGE.