Social and Environmental Sustainability versus Financial Sustainability - Assignment Example

SOCIAL AND ENVIRONMENTAL SUSTAINABILITY VERSUS FINANCIAL SUSTAINABILITY How do the concepts of social and environmental sustainability differ from that of financial sustainability, the accountant’s idea of going concern?  There are various factors that influence the success of a business. Among these factors is the social and environmental sustainability as well as the financial sustainability. Sustainability in itself refers to the ability to uphold something which may include a situation or production of materials or maintaining a certain condition with the coordination of interrelated factors. It can also refer to utilizing a particular resource without leading to its complete depletion. Social sustainability refers to the ability of a community to come up with various methods and strategies fulfill the needs of the current members of the community and also maintain the capacity of generations of the future to preserve a community that is healthy. Environmental sustainability refers to the capacity to preserve the rates at which resources renew themselves and their harvest and the indefinite continuation of productivity. Financial sustainability refers to the ability of a business or an organization to maintain the delivery f their products to the market at prices that cover expenses and continue the generation of profits. All these factors are unique to the performance of a business in their own ways but they are also interdependent and can function for the good of the business if success is experienced in each of these sectors individually. There are various differences between social and environmental sustainability and financial sustainability. Social sustainability deals with the aspect of the community as a whole and is more concerned with their role in ensuring the preservation of methods and strategies that will ensure its continued survival. They are more involved in the effort put to ensure sustainability for the benefit of the social sector. The environmental sustainability is centered more on the resources used in the business while manufacturing. The environment then requires to be taken care of so that the resources are maintained in the system and their rate of renewal is similar kept at a constant rate. It involves the role of the business in ensuring that the environment is not damaged and resourced extinguished as this would mean its collapse. In a way, the social and environmental sustainability concepts are similar in that they both involve the ability to maintain or preserve the rate of usage and renewal at a particular level to avoid heir depletion. The difference is that the social sustainability is centered more on the good of the community while the environmental sustainability is centered more on the continued performance of the business. The certain conditions are supposed to be met in order to maintain things at the productive yet sustainable level. On the other hand, the financial sustainability is more concerned with ensuring that the monitory aspect of the performance of the business and ensuring that a balance is struck between the rates of profit and the coverage of expenses (Melville, 2010 p. 21). Each of the strategies used in the business are then aimed at maximizing profits not just in the short term but also on the long term objectives. All these factors then come together in order to achieve the accountant’s idea of going concern. This measure makes it possible for each of the types of sustainability in the business to continue functioning effectively. This going concept is related to the social sustainability in that the constant entity is the resources that are supposed to be maintained at a certain level even for future generations. In the environmental sustainability concept, the going principle becomes the resource as it is valuable to the organization or business for as long as it is available for use. This is why the organization needs to ensure that the rate of the renewal of the resources is maintained in order for it to continue running. In the financial sustainability concept, the going concept becomes the capital and needs to be balanced in that the expenses paid off by the do not hinder the business from making profits. As long as the business still has a balance in its finances, then it can still continue running smoothly in the near future. It gives a particular assurance for financial stability. Each of these differing views about the three types of sustainability in business requires great consideration when starting and managing the business. even though the social sustainability may not be given much concern, it has a role to play in ensuring the continued stability of a business. There are different parties involved in the different types of sustainability and each is unique and useful. Te financial aspect focuses more on the value of finances, the environmental concepts centers more on the resources and the social concepts of sustainability emphasizes on the relation between the community and the resources (Milne, Kearins, Walton, 2006, p. 801). They all affect the business directly or indirectly. This graph shows the rates of financial sustainability. What implications do these differences have for the ways in which a) businesses operate and b) the ways in which they report on their activities? Each of the differences found in the social, environmental and financial sustainability has an impact on the ways in which a business operates. These include the way management will lay out the strategies of the business, the amount of capital assigned to different aspects of the business and the objectives that are out in place to guide the business in a certain direction. As a result, if the differences are not properly addressed, then there may be some wrong choices made which may affect the success of the business in the short term or in the long run. The social and environmental sustainability require concentration on the performance of the produce or renewability of the resource. This will mean that there should be more capital allocated to this sector to ensure that even though the materials are being used the consumption rates match up to the rates of their renewability. Financial sustainability on the other hand refers to the production of profits and maintenance of a balance in payment of expenses and income generation as more urgent or superior needs in the business (Dangelico, Pujari, 2010 p. 486.). This then brings about a difference as some may view financial sustainability as more valuable to the business compared to social and environmental sustainability. This graph shows the rates of financial sustainability When the management of the business fails to strike a balance between the amounts of capital distributed in each of these aspects of the business then one ends up suffering and negatively affecting the business in the long run. When the business administrators chose to pay more attention to the financial sustainability then they will pay up their expenses and maintain generation at a constant level. This may however be a short term result as the administration of the business will face lower profit in the future. This is because the produce or resources that are mainly used to generate the profits and whose income is also used to pay off the expenses of the business will be reduced. Therefore there will be a downfall in the progress of the business and a deterioration of its finances in the long-run. On the same account, should the views of the business administrators favor the social and environmental sustainability factors of the business, then there is a likelihood that the finances will also suffer. It is important that the rate of renewal of a commodity is maintained at a certain level so that even when used it is not totally depleted, but too much concentration of the enterprises funds of this sector will then lead to the neglecting of the payment of its expenses (.Darnall,Jolley, Handfield, 2008 p. 45) On the other hand, the purpose of the business will then be off course because the purpose of any business is ensuring that it makes profit as it continues to operate so that it can manage its expenses and bills and have capital for growth and expansion. Different views on the different types of sustainability which include social and environmental as well as financial sustainability may affect the way different members of a business report on their activities within the business (Criado-Jiménez, Fernández-Chulián Larrinaga-González, Husillos-Carqués, 2008 p. 245). This is because the differing opinions may lead to conflict as well as different reactions within the business. those who feel that their views are superior may disappointed when their views are not taken into consideration by the business due to various factors such as being viewed as irrelevant or lack of enough capital. They may then attend to their duties with low moral they may also have the opinion that the organization is at fault and is heading towards the wrong direction. Their level of commitment to the business may deteriorate on the account that they do not feel valued in the business. The contribution of each and every member of the organization contributed to the direction it takes and the way it manages its level of sustainability on the three aspects of social environmental and financial sustainability. How the management of a business works hand in hand with the staff and collects information on ideas and prepositions may dictate whether they achieve business sustainability or the business goes downhill (Hutchins, Sutherland, 2008 p. 1688). Hence there can be different forms of reporting within the business. Integrated reporting in an enterprise may be used to improve the sustainability of a business. this graph shows the ratio of the sustainability of the asset or resource. How, if at all, might these differences be reconciled? What are the major obstacles to reconciling the differing views?  The various differences in viewing the different forms of sustainability within a business can be fixed when all the members of the business are willing to cooperate with the administration and play their role in contributing towards the direction of the business and the strategies to be put in pace. This requires not just their labor input but also the input of their views and opinions so that they can all be keenly observed and a viable conclusion can be arrived at. when a business’s administration or management expresses interest in the views of the various members of a business, then they encourage their commitment towards the business as they know that their opinions are being put into consideration and they also feel that they are an integral part of the business. This effort of the business to acquire the different opinions that their staff may have on how to promote sustainability in the business will also encourage productivity and education in their duties within the business. It is therefore fruitful attempt toward the reconciliation of the differing values on sustainability in the aspects of social, environmental and financial (Dillard, Dujon, King, 2008 p. 3). It brings together different opinions before coming to a viable conclusion on what is the best strategy to put in place in order to facilitate a brighter future for the business as a whole. It is also important that the management of the business keenly looks into the strong points of each aspect of sustainability before determining the course of action to be taken in order to lead to the growth and expansion of the business. In the social sustainability the business management has to put into consideration how their activities will affect the environment. The business should therefore ensure that it does not neglect its corporate social responsibility. These include the effects of their activities not just to the environment but how this also affects the community in this environment. This will have a contribution in determining the performance of the business. Each of these sustainability aspects has a crucial contribution to the success of the business and the administration should therefore ensure that all these factors are used in an appropriate manner. I an attempt to reconcile the differing views on social environmental and financial sustainability, it is important that the amount of capital present is evaluated keenly before determining the amount to be distributed to each sector. In order to set a balance in the sustainability of the business, then there has to be a balance in the distribution of finances to each sector of the development of the business (Lo, Sheu, 2007 p. 345) . When all these factors operate in harmony then the business is set on the right truck of achieving its objectives. However, a business may encounter various obstacles while trying to reconcile the differing views in the business. These obstacles may hinder progress and appropriate setting up of strategies that will drive the business towards it success. Some of these obstacles may include a hostile community, lack of appropriate communication between the community and the business, obstructing laws on the environments as well as differing cultural values (Hawken, 2010 4). Due to these factors, business has to tread very slowly when there are conflicted views on various matters. When people have different faiths then it is very challenging to bring them to a consensus on various matters such as the use of particular resources to benefit the community itself. This notion would lead to confusion for instance in a region that does not have a literate community. On the other hand, with patience and dedication, it is possible to overcome these differences and come up with rules and guidelines that will strike a balance between the differing view and the operation of the business (Crane, Matten, 2010 p. 1). Appropriate strategies can be useful in dealing with such situations and ensuring that the differences are amicable solved and a viable conclusion s arrived at without making one party feel suppressed by the rules and conclusions that are arrived at. What might the implications for the future of business (operational and reporting) be of reconciling these differing views? What might the implications be of not doing so? In future, it might be beneficial to ensure that all aspects of sustainability in the business are reconciled including the operational and reporting factors. The operational reporting would do the business good if current information on the consumer market was provided. Then the views would be more concrete as there would be evidence about the certainty of the factors that are in the society and in the environment. The needs of the organization would then be substantially addressed based on whether the managers find it fit to distribute the finances in the right manner. This manner would have to be fair and balancing between all aspects of the sustainability of the business to ensure that no branch suffers. The process of productivity would also improve as a result of better management. When the governing post shows that it is ready to research the market and take the necessary measures in order to ensure the sustainable running and development of the business, it expresses a consensus among the manager which also convinces the workers about the direction the business is going towards being the right one (Salzmann, Ionescu-Somers, Steger, 2005 p. 36). The system of governing employed is therefore going to have a great influence on the way matters within the organization will run. On the other hand, when the operational and reporting aspects of the business give detailed information in their data presentations then the organization or business will be at a better position of determining the best way forward. Accurate information will help the management properly decide the rate at which resources are renewing themselves and will also enable them decide funds required in order to take care of the matters that are concerned with harvest of resources and payment of expenses (Wagner, 2005 p. 118). The business will have stable financial audits as it will have a prior plan on the steps to be taken towards promoting social, environmental and financial sustainability. With adequate information, the operation of the business will not just be aimed at benefiting the business but it will also put into consideration the needs of the society and how they are affected by the environment. In fact, when all goes well in the sustainable use of resources from the environment and the society is not displeased with the outcome, then the business has a chance of getting labor input from the very members of the community (Carrier, Hoffman, Hartman, Peirce, Christensen, 2007 p. 347). This will promote the coordination of the different factors of sustainability within and around the business which will boost it making of profits and the operational and reporting aspects of this business. The business will also be more flexible in the operational reporting sector in order to accommodate new changes and developments in the industry. These changes may include the incorporation of new and adequate technology that will help in the reduction of pollution to the environment and be more cost effective in the long run. New technologies and upgrades in the business management system will keep the business up to date and may also improve the quality of their products. This may in turn lead to higher profits and expansion of the business. Promoting sustainability requires constant analysis of the market and adjusting of different factors which may sometimes depend on the season in the market or the type of resources that are used. When all factors of a business are handle in such a manner that the management recognizes the contribution of each in promoting sustainable development of the business and also how each is connected with the other factor, the future of the business is appropriately secured should the factors of production remain constant. The business is therefore able to come up with relevant strategies that will promote its success and satisfaction of its workers (Balkenhoi 2007 p. 1). Despite there being differing views about the social and environmental sustainability as well as the financial sustainability, a reliable operational system will ensure that the reports given are essentially convincing to the opposing side and will provide facts that can be used in determining the future steps that the business will be taking. In conclusion, there are various factors that contribute to the sustainability of the business. These include social factors, environmental factors and financial factors. As a result, it is essential that the management is keen on using all these factors wisely to benefit the business. in order to o this then they need facts that are workable which can only come from studying the market and coming up with the necessary information required and appropriate data that will enable them determine the strategies it will undertake to strike a balance in usage of resources and their rates of renewal as well as in the financial sector. It will also help in the structuring of the long term and short term objectives of the business. Work Cited Balkenhoi, B. 2007. Microfinance and public policy. pp. 1 Christensen, L. J., Peirce, E., Hartman, L. P., Hoffman, W. M., & Carrier, J. 2007. Ethics, CSR, and sustainability education in the Financial Times top 50 global business schools: Baseline data and future research directions. Journal of Business Ethics, no. 73(4), pp. 347-368. 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