By guest blogger Martin Quinn
As a management accountant and a
researcher, what I am going to say here might be quite obvious. I completely
appreciate the work of CSEAR members as well as efforts made by some companies
to produce some form of environmental or sustainability reports.
I have a rather dull view of financial
reporting of any kind to be honest – it is only done because it has to be,
primarily to satisfy legal requirements and shareholders. I am in the middle of
reading Capital Wars by Daniel Pinto.
In the book he notes that the average period of holding a share in US public
companies is now 5 months (see also here: http://www.ft.com/intl/cms/s/2/b0c45128-890c-11e3-9f48-00144feab7de.html ). This give us some idea of the relevance of financial reports. So, yes I
would say this, but isn’t management accounting then more important? Perhaps what we need is companies to not only take sustainability and environmental
reporting seriously – and it will probably take laws to do this – but also to instil the same issues into their internal accounting. In my experience, it
does not take much for a management accountant to change their skills from
counting money to counting CO2 emissions, waste or energy consumed for example.
Maybe people like myself should
specifically teach such things in a standard management accounting course, but
as I said, management accountants are good at counting things and controlling
things – we just need to encourage them somehow. For example, over a decade ago
I worked for a paper company. Every piece of waste paper was captured, baled,
weighed and ultimately sold on for recycling. The primary reason for the
relatively complex control system was we could generate about €300,000 per
annum in revenue. Then, at some stage we had to join the Green Dot initiative
and account for waste to an authority. With the system already in place, the
changes needed were easily made. Basically, we had to define the type of waste
in more detail – cuttings of paper, waste sheets, and even dust. These changes,
along with the fact that the more waste we generated, the more we paid to Green
Dot , made managers focus on waste reduction and keep an eye on the reports to
see what was happening.
Taking my example above, it would be very
easy to report externally on waste generated, recycled or sold. But, in my
opinion there is a difference between this example and an externally imposed
report. As my example comes from within, it is accepted and used by all and
taken seriously. Something imposed from outside might not be as easily accepted
– well at least that’s what my research on organisational routines tells me.
Martin Quinn is
Lecturer of Accounting at Dublin City University, Ireland, where he teaches at
the undergraduate and postgraduate level. He is also a registered Chartered
Management Accountant. Martin’s blog on accounting related topics can be found
at martinjquinn.com. He is also a co-author of a major new Management
Accounting textbook – further details can be found at burnsetal.com.
