To enable a targeted action plan, the externalities, that have been previously valued (see Environmental and Social Impact Identification), should be analytically accounted for in the accounts.
Incorporating the externalities derived from valuation tools such as the internal carbon price or the living wage into the accounts allows the real cost of an activity, process or product to the company and its environment to be reflected in the company's reports, and progress on these externalities to be measured and disclosed over time.
This is an essential step in the decision-making process to avoid making decisions based only on apparent costs, which can encourage the depletion of natural resources or the exploitation of resource-poor countries. It should lead to more sustainable business practices.
The following cost allocation methods are examples of how externalities can be incorporated into accounting:
Activity Based Costing (ABC) - based on the activities that generate the costs, ABC allocates internal expenses to cost centres and cost drivers. For example, for the carbon emissions, ABC identifies potential activities that will generate carbon emissions and calculates their emissions data.
Material Flow Cost Accounting (MFCA) - is mainly used for manufacturing processes and focuses on identifying which processes can improve the use of raw materials, energy, water and waste. ISO 14051 outlines the requirements for an MFCA analysis, which is a useful tool for companies seeking a circular business model.
The suitability of the tool depends on the type of business (products or services) and the area of impact (energy, water, waste) you are dealing with.
38% decline in EPS (earnings per share)
for Danone in 2019 when using carbon-adjusted performance measures
(BwB)
South Pole has been at the forefront of decarbonization since 2006, developing and implementing comprehensive strategies that turn climate action into long-term business opportunities for Fortune 500 companies, governments and organizations around the world.
South Pole is more than a consultancy, its team of 1,200+ experts have developed projects, as well as designed innovative tools across finance, climate neutral APIs, and carbon offset solutions to help clients reach their carbon mitigation and Net Zero goals.
To date South Pole has worked with over 1,000 clients, and will soon have developed 800 offset projects across 30 offices globally.
Our solutions have created tens of thousands of jobs in developing countries, hundreds of millions of dollars for business, improved brand value and better living and working conditions for countless people in vulnerable communities around the world.
SustainableSG was started in September 2018 to accompany companies, non-profit entities and government agencies to review and implement effective and sustainable corporate strategies. Our services include:
Sustainao supports companies in their sustainability journey by building an impactful strategy, embedding sustainable practices across operations, and reporting performance to stakeholders.
Our sustainability consulting services are designed in a continuous improvement process:
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ACTIVATE - DESIGN - ACCELERATE. Our expert consulting services and trainings help business leaders understand the complexities of sustainability, consider climate- and nature-related risks and opportunities to make informed decisions and alleviate the administrative burdens of:
We work directly with SMEs or collaborate with other sustainability consulting companies on specific projects. We are actively involved in networks of sustainability professionals who share knowledge with public and educate other professionals to bring awareness and accelerate the transition in Singapore and worldwide (incl. The Matcha Initiative, Climate Fresk, etc.).
Our unique strength stems from understanding sustainability from the risk management perspective, creating a business case and using financial reasoning to adopt sustainable business practices and decarbonize.
At Tulyā, we are accredited sustainability consultants holding certifications in GRI, SASB and TCFD (now IFRS-ISSB), and ISO 14064 GHG Lead Verifiers, alongside being Singapore Certified Management Consultants. We are dedicated to driving sustainable business development across industries through Sustainable Management Accounting.
We help MNCs with:
We help SMEs with:
