Archive for the ‘Environmental Accounting’ Category

Walmart’s Green Initiatives

May 31st, 2011 Comments off

Like arch-rival Target, Walmart is seeing investment in environmentally friendly practices flow to the bottom line.  It has long been my position that companies will embrace “green” when it results in “green” to their income.  That seems to be the case here as well.  Through some tweaking, Walmart has turned expenses into revenues:

A seemingly unrealistic goal of zero waste to landfills is suddenly looking attainable; the company cut its waste 81% in California, a pilot program now going nationwide. The trick to it was finding new uses for former trash: turning plastic waste into dog beds, food waste into compost sold in its stores, expired but still healthful foods into food bank donations. The waste Wal-Mart once paid to have hauled away is now earning the company more than $100 million a year.

Read more at:,0,5608647.story

Target tests “green” refrigerant at 11 stores

May 18th, 2011 Comments off

As mentioned in class, companies are taking a close look at environmentally-friendly initiatives and sustainability.  Management accountants can help with this by identifying opportunities and measuring performance against environmental criteria.  In a local example, Minnesota-based Target was featured in a Star Tribune piece this week as testing a new refrigerant at 11 stores with the idea that it could be expanded to other stores if it is successful.  This new material is supposed to result in fewer leaks and, ultimately, reduce operating costs though I’m sure Target will play up the fact that it is using “green” chemicals and processes as well.

The bottom line is that the gas is a “high temperature” refrigerant less prone to leakage and more energy efficient. It is also used in automobile air conditioners.

“These are very complex systems,” said Target’s Dan Riley of the coolers and freezers in the chain’s “PFresh” food sections. “In each Target store there are many, many miles of coils. At every junction there is an opportunity for a leak. These [existing] gases are very leak prone. They are under pressure.”

In December, Target announced its commitment to sustainability and the GreenChill program fit into the chain’s intention to use resources responsibly and reduce the company’s carbon footprint.

Ultimately I don’t think many companies will do things like this if they don’t see a benefit in terms of reduced costs or marketing opportunities, but those opportunities exist and the planet and society can benefit as a result.  Management accountants need to be prepared for this role and to seize the opportunities.

Target tests green chillin’; The retailer is trying a new, more energy-efficient refrigerant in 11 stores around the country as it tries to go green. By David Phelps. Star Tribune. Minneapolis, Minn.: May 15, 2011. pg. D.4

Coke’s Eagan operation: A new energy-efficiency model

March 1st, 2011 Comments off

Don Shelby of WCCO fame has landed at MinnPost and offers a look at local sustainability success at Coca-Cola.  As with nearly every business decision, the benefits have to outweigh the costs for any long-term efforts to take root.  As with other environmental initiatives elsewhere, the opportunity to save money, increase profits, and become more marketable to green-conscious consumers are all drivers of decisions to push environmental practices.  I expect this snowball to continue to grow.

Has Coca-Cola become a great steward of the earth? In many ways it has, but that alone won’t carry the day with businesses out to make money for investors. Coca-Cola gets the attention of the industrial world when it announces that all of these efficiencies have made, or will make in the future, higher profits for the company. Coca-Cola says the economic, environmental and social implications of business are more important than ever. “We understand that sustainability is core to our business,” the company says in a statement. Coke’s new in-house motto is “Live Positively.”


Mark Blaiser, executive director of the Chamber’s “Waste Wise” program, said: “Sustainability is smart business. Saving energy is smart business. Environmental sustainability is not going away, it is not a fad. There are great economic opportunities for businesses that adopt a sustainability model. Those are the businesses that will lead the way to the future.”

via MinnPost – Don Shelby: Coke’s Eagan operation: A new energy-efficiency model.

Should Business Benefit Society?

August 26th, 2010 Comments off

We discuss things like “sustainability” and the “environment” and “human capital investment” as new ideas in the business world…but are they really new?  I guess the increased focus is new but it seems like recent postings on this blog have linked to articles where the case has been made that focusing on these things is secondary to focusing on the financial aspects of business.  Many of the Environmental Accounting posts echo this sentiment…they say that business should focus on pleasing shareholders through increased profits and respond to environmental/sustainability only a means to that end.

But maybe focusing on financial measures is exactly what creates the short-term approach and expectations that cause problems for companies and the economy. As I mentioned this week in class, strategy is supposed to be a long-term vision and positioning of a company but time and time again we see that the measures and incentives are increasingly short-term.  A posting at the HBR blog caught my eye with some thoughts on this issue.  Read more at HBR:

It’s an interesting notion that Business, held captive by a narrow definition of fiduciary responsibility, is not able to make the long-term investments that could benefit communities, the environment, and ultimately the shareholders. If this notion is even partly correct, then our most powerful institution will be unable to do enough to solve the social and environmental crises confronting us.

The HBR piece goes on to mention that the state of Vermont now provides for a new kind of organization: a Benefit Organization that exists not simply to pursue profits but also to provide a benefit to society.  Perhaps this is going to spread beyond Vermont and will ultimately cause companies to take longer-term views and set long-term strategies tied to incentives for their employees to think long-term.

Are the directors of a Benefit Corporation still obliged to act in the best interests of the company’s owners? Absolutely. But they have legal protection to make investments with an eye to the long term, aiming for sustainable returns, not fast paybacks for shareholders.

As I mentioned in class, the book The Big Short: Inside the Doomsday Machine by Michael Lewis talks extensively about how incentives influence behavior and that the impacts are real as evidenced by the recent economic meltdown on Wall Street and beyond (you can view a great 60 Minutes piece with the author on this site as well).

Whether through the expansion of the Benefit Organization concept or some other way I think that businesses with long-term visions and strategy ultimately do their shareholders a greater service than the ones that take risks for temporary, short-term gains.  Hopefully that philosophy becomes more prevalent and we begin to demand more of our business leaders so that their behaviors and decisions will align with this concept.

The Case AGAINST Corporate Social Responsibility

August 24th, 2010 Comments off

Here is an interesting take that I’ve not seen so bluntly stated before: CSR can be a bad thing for companies to focus on.  I’m a firm believer in the idea that there aren’t any “bad ideas” and that being exposed to more viewpoints is nearly always a good thing, so I offer you this Wall Street Journal piece as food for thought.  It appeared in a special section on Monday (the Journal often runs special sections on Mondays in place of Personal Journal, which runs the rest of the week).

The basis for this argument isn’t as crazy as it first sounds…in fact, the author seems to be echoing some of the thoughts I’ve posted before that companies that pursue profits end up being socially responsible.  Or vice versa.  In the end it might be the pursuit of financial goals that is the means to the end.

In the end, social responsibility is a financial calculation for executives, just like any other aspect of their business. The only sure way to influence corporate decision making is to impose an unacceptable cost—regulatory mandates, taxes, punitive fines, public embarrassment—on socially unacceptable behavior.

Pleas for corporate social responsibility will be truly embraced only by those executives who are smart enough to see that doing the right thing is a byproduct of their pursuit of profit. And that renders such pleas pointless.

WSJ Executive Adviser (A Special Report): The Case Against Corporate Social Responsibility: The idea that companies have a duty to address social ills is not just flawed, argues Aneel Karnani; It also makes it more likely that we’ll ignore the real solutions to these problems. Aneel Karnani. Wall Street Journal. (Eastern edition). New York, N.Y.: Aug 23, 2010. pg. R.1

Sustainability Reporting

August 24th, 2010 Comments off

Tom Hood has a piece today at CPA Success that mentions the idea that sustainability reporting may be on the fast track to becoming standardized and required.

On Monday, Aug. 2, 2010, the formation of the International Integrated Reporting Committee (IIRC) was announced. The committee is led by Prince Charles, The Prince’s Accounting for Sustainability Project (A4S) and the Global Reporting Initiative (GRI) in an attempt to add a globally accepted set of standards for accounting for sustainability.

As I have posted previously, there have been more companies voluntarily heading down this path or even requiring suppliers to do some limited sustainability reporting, but these have been largely voluntary efforts.  The Blocher textbook dives into this issue as well by discussing “sustainability” as the “5th perspective” of the balanced scorecard. As this ball gets rolling and as the public demands ever more information on environmental impacts from companies it makes sense to have standards to allow for comparability. Keep watching for more of this…

Read more:

Why is Google buying wind energy?

July 22nd, 2010 Comments off

Here is a short piece I heard this morning on MPR that talks about environmental initiatives at Google which include buying wind energy.  Listen to the audio at the link below for more detail and for a discussion as to why Google would do this.  Mainly it boils down to making business sense in that some customers will use Google primarily because they are doing things like this…or at least that is the opinion of the person from CNET that is being interviewed.

Interesting to see companies enter “non-traditional” areas like this I think.

Most news from Google involves stuff like search ads, web services, mobile computing. The occasional Buzz or Wave, perhaps, that is a little confusing. But at the very least, no matter what Google does, it always involves a computer in some way. Well, not any more. Google has begun investing in wind power. This week, Google agreed to buy 114 megawatts of electricity from an Iowa wind farm.

via Why is Google buying wind energy? | Episodes | Future Tense with John Moe | American Public Media.

Embedding sustainability in company culture – The Globe and Mail

April 28th, 2010 Comments off

To be truly effective, big initiatives have to become part of every-day life.  My company has done this with safety but the same concept applies to other concepts like sustainability, work-life balance, etc.  It is not effective to “do as I say, not as I do” because people see through that quickly.  Here is something from The Globe and Mail about a couple companies and the efforts they have undertaken at every level of their firm to make environmental choices a part of every decision.

Embedding sustainability in company culture – The Globe and Mail.

The Emergence of the Triple Bottom Line

March 13th, 2010 Comments off

We will be looking at a framework in a couple weeks that explores the idea that accounting systems need to change to measure environmental impacts/costs.  I happened to come across an article that predicts that the movement in this direction will expand and will take on an increasingly external-focus as opposed to Corporate Social Responsibility efforts that have been more internally focused.

The days of purely measuring business performance by financial result may well be numbered. In its place, I believe that discerning investors will look for something broader to measure an entity’s real contribution and performance.

That something could be in the shape of the “triple bottom line”; an amalgam of financial results and an assessment of the social and environmental impacts of a business. Or, put another way: People, Planet and Profits.

As we discuss in class, one of the biggest hurdles companies need to overcome is that their existing accounting systems are built to report numbers according to financial rules and pulling data out of the accounts to track environmental costs can we quite difficult.

Regardless of whether or not you agree with the direction this takes us in, you do then have to ask the question of just how many businesses are in a position to report on such non-financial performance aspects. Bearing in mind that recent research2 has highlighted businesses’ and their finance functions’ shortcomings when it came to dealing with the financial result alone (and not forgetting that they’ve just endured two years of being battered by recession-busting cost reduction initiatives), it’s hard to imagine how many could easily transition into this new mindset.

Read more at: The Emergence of the Triple Bottom Line.

The Greener, Cheaper Way of Doing Business

October 27th, 2009 Comments off

WSJ_LogoThe second piece from yesterday’s WSJ section, “Business Insight“, that caught my eye has to do with companies embracing a greener approach to doing business.  Not surprisingly, the way to get the attention of business people is to appeal to the “better AND cheaper” aspects of making a particular choice.  I would venture to guess that only when green technology pays off in terms of dollars will it be widely adopted.  Perhaps the time is near.

Business Insight (A Special Report): Sustainability — Greener, Cheaper: Companies can get there from here, and use a lot less energy than they do now. Susan L. Golicic, Courtney N. Boerstler, Lisa M. Ellram. Wall Street Journal. (Eastern edition). New York, N.Y.: Oct 26, 2009. pg. R.7