Accounting Perspective for Sustainable Supply Chain Management: Focus on Sustainability Reports

Accounting Perspective for Sustainable Supply Chain Management: Focus on Sustainability Reports

Mehpare Karahan Gokmen (Ondokuz Mayis University, Turkey)
DOI: 10.4018/978-1-5225-8970-9.ch009

Abstract

Growing interest in sustainability has gained momentum due to increased globalization. Especially the proliferation of international trade has reinforced the importance of sustainability in supply chains. Internal and external stakeholders are also willing to be informed about these sustainability practices. Accounting provides a proper communication media with sustainability reports. Hence, accounting ensures its relevance in preparation of reports with the inclusion of required information. Additionally, uniformity is brought among sustainability reports that increase comparability and understandability of them. The aim of this chapter is to reveal how companies represent their sustainable supply chain practices in sustainability reports. At the result of the research on companies in Borsa Istanbul it is found that preference for local suppliers, sustainability assessment for suppliers, raw material sustainability, product safety and quality and stakeholder engagement are commonly represented practices that are related with sustainable supply chains.
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Introduction

Sustainability has become increasingly vital for companies. It is clear that health of a company is tightly bound to well-being of stakeholders, community and environment. Companies understand that taking sustainability into their agenda is a must both for long-term success and for creating value for the community they live in. Globalization has a significant role in spread of sustainability concerns among companies. This is a two-way role. Because reasons for raising sustainability concerns majorly aroused due to globalization race of companies. And on the other side in fast spread of sustainability, globalization has an undeniable effect.

Globalization and proportionately boosted international trade have also increased dependency on supply chains. Owing to increasing sustainability concerns and high impact zone of supply chains on sustainability, “sustainable supply chains” are getting much interest recently. According to the commonly cited definition of Seuring and Muller (2008) sustainable supply chain management (SSCM) is defined as “the management of material, information and capital flows as well as cooperation among companies along the supply chain while taking goals from all three dimensions of sustainable development, i.e., economic, environmental and social, into account which are derived from customer and stakeholder requirements.” Companies which are taking action regarding sustainability pursue improving their social and environmental performance for both products and processes besides economic performance. Through sustainable supply chains companies aim to create value for all stakeholders who are involved in any stage of production, consumption, and supply of goods and services to customers. Value created may be environmental, economic or social. Also, it should be noted that companies need to care for protection and improvement of long-term value as well as creation of value. Securing sustainability in supply chains also provide company transparency and legitimacy in their operations.

Informing related parties about sustainable chain management practices is important as well as engaging in these kinds of activities. Positive and negative impacts of companies should be transparently disclosed to stakeholders. The aim of this study is to emphasize the role of accounting in reporting sustainable supply chain practices of companies.

Accounting’s main function is to provide relevant financial information to the related parties to be used in their economic decision-making process. As a result of globalization and ever-changing company environment, scope and process of accounting have been evolving. Most recently stakeholders demand information regarding social and environmental performance of the company as well as economic performance. Also, competitive pressure and some other motivations make managers more willing to share this information. Accounting needs to fulfill these requirements in order to retain its relevance. (Buritt and Schaltegger, 2014).

Terms such as corporate social responsibility reporting (CSR reporting), triple bottom line, social responsibility reporting, and some other synonymous terms may be used instead of sustainability reporting. They are representing basically the same thing. Also, all of these reporting efforts may be seen as a vital part of integrated reporting that joins together both financial and non-financial information. Sustainability reports provide means that a company may convey valuable information for decision making or accountability considerations regarding economic, social and environmental aspects of company activities (Elkington, 1988). These activities involve all goods, processes, governance models, value creation. Sustainability reports are vital tools for communicating either for positive or negative practices about sustainability. Additionally, it provides some advantages for company; such as measurement of social, environmental and economic performance before reporting to the related parties. Measurement brings a better understanding of practices and undesirable or unfavorable practices may be managed more effectively.

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