The Accounting Function in Sustainability Management Essay

Revision 1: 26-Nov-2009

Case Study on sustainability-information direction patterns

Heidelberg Cement

Project 5-429:

Accounting Information and the Accounting Function in Sustainability Management

Executive Summary

Heidelberg Cement ‘s activities are related to both societal and environmental impacts. Thus the company has a long tradition in pull offing such facets as to lend to the long-run success of the company. The concern of the company allows accounting for the ( physical ) effects of these corporate activities. Although such accounting has taken topographic point for over a century now, the sustainability treatment has caused HC to rethink their sustainability public presentation and marks. The introductory chapter nowadayss HC and its sustainability challenges. Chapter 2 presents the administration of sustainability-related information and the maps involved in it. Chapter 3 delivers an overview of the Sustainability Dashboard, a direction system developed merely late to better suit the procedure of sustainability direction on the group degree. A reasoning chapter summarises the chief advantages of such an information direction system to the concern and propose how other concerns could develop such a system on their ain.

1. Heidelberg Cement and its ( part to work outing ) sustainability challenges

Heidelberg Cement is a German cement and edifice stuffs company. It is presently ( as of 2007 ) the universe ‘s 4th largest cement manufacturer with an annual production of around 80 million metric tons of cement per twelvemonth. It is besides the largest sums manufacturer worldwide. The company employs some 61,000 people at 2,600 locations in approximately 50 states with an one-year turnover of about EUR 15 billion.

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Cement industry causes environmental impacts at all phases of the procedure. These include emanations of airborne pollution in the signifier of dust, gases, noise and quiver when runing machinery and during blaring in preies, and harm to countryside from quarrying. Equipment to cut down dust emanations during quarrying and industry of cement is widely used, and equipment to pin down and divide fumes gases are coming into increased usage. Environmental protection besides includes the re-integration of preies into the countryside after they have been closed down by returning them to nature or re-cultivating them.

Carbon dioxide. Cement industry contributes nursery gases both straight through the production of C dioxide when Ca carbonate is heated, bring forthing calcium hydroxide and C dioxide, [ 14 ] and besides indirectly through the usage of energy, peculiarly if the energy is sourced from fossil fuels. The cement industry produces approximately 5 % of planetary semisynthetic CO2 emanations, of which 50 % is from the chemical procedure, and 40 % from firing fuel. The sum of CO2 emitted by the cement industry is about 900 kilogram of CO2 for every 1000 kilogram of cement produced.

Energy ingestion. A cement works consumes 3 to 6 GJ of fuel per metric ton of cinder produced, depending on the natural stuffs and the procedure used. Most cement kilns today use coal and crude oil coke as primary fuels, and to a lesser extent natural gas and fuel oil. Selected waste and byproducts with recoverable calorific value can be used as fuels in a cement kiln, replacing a part of conventional fossil fuels, like coal, if they meet rigorous specifications. Selected waste and byproducts incorporating utile minerals such as Ca, silicon oxide, aluminum oxide, and Fe can be used as natural stuffs in the kiln, replacing natural stuffs such as clay, shale, and limestone. Because some stuffs have both utile mineral content and recoverable calorific value, the differentiation between alternate fuels and natural stuffs is non ever clear. For illustration, sewerage sludge has a low but important calorific value, and Burnss to give ash incorporating minerals utile in the cinder matrix.

Local impacts. Producing cement has important positive and negative impacts at a local degree. On the positive side, the cement industry may make employment and concern chances for local people, peculiarly in distant locations in developing states where there are few other chances for economic development. Negative impacts include perturbation to the landscape, dust and noise, and break to local biodiversity from quarrying limestone ( the natural stuff for cement ) .

As a company that makes intensive usage of natural stuffs, Heidelberg Cement respects clime protection and the securing of resources as the foundation of future corporate development. With efficient production procedures and the increasing usage of alternate fuels and natural stuffs, an of import part to protecting the clime is made. Group-wide criterions for environmental protection and occupational wellness and safety aid to guarantee that ends are implemented worldwide. The preies and the sand and sums cavities from which natural stuffs are extracted are returned to a natural province or set to agricultural usage.

Heidelberg Cement is committed to sustainability and physiques on the three pillars: ecology, economic system and societal duty. The sustainable corporate administration places the primary focal point on clients, employees, stockholders and local spouses at all locations.

Heidelberg Cement publishes a sustainability study for the 3rd clip, transparently foregrounding in item the Group activities relevant to sustainability. The Sustainability Report 2009 provides information on the important advancement Heidelberg Cement has made in cardinal Fieldss of the Group sustainability scheme in the old ages 2007 and 2008: Both with regard to climate protection and saving of resources, the targeted ends were achieved. For case, the Group committedness to cut downing direct net particular CO2 emanations by 15 % by 2010 ( base twelvemonth 1990 ) was achieved in 2008, with a decrease of 18 % . With a proportion of 17.5 % , Heidelberg Cement is industry favorite in the usage of alternate fuels ( Beginning: Heidelberg Cement ) , whereby biomass histories for around one tierce of the entire alternate fuel rate.

Furthermore, Heidelberg Cement strives to set up a leading function in advancing biodiversity in quarrying sites – through the execution of Group-wide criterions and guidelines, among other things. Sustainability besides plays an progressively of import function in merchandise development: With advanced merchandises, the Group makes touchable parts towards sustainable edifice.

The company is besides committed to run intoing the Sustainability Ambitions 2020: Fieldss of action for sustainability. The aspirations are defined by the nucleus concern:

  • Giving highest precedence to occupational wellness and safety: Heidelberg Cement strives for nothing accidents, hurts and occupational unwellnesss ;
  • Protecting the clime: Heidelberg Cement works continuously to understate its nursery gas emanations and delivers solutions for version to climate alteration.
  • Delivering a outstanding positive part to biodiversity: Heidelberg Cement aims to set up a leading place in the development of biodiversity at its excavation and quarrying sites.
  • Working for sustainable building: Heidelberg Cement works towards presenting sustainable edifice stuffs, which positively contribute to the public assistance of our society and to our environment – during and after their life-time.
  • Using waste as a resource: By sing waste and byproducts as a resource, Heidelberg Cement reduces the usage of natural resources and offers solutions for sustainable waste direction.
  • Further cut downing other environmental impacts: Heidelberg Cement aims to be best in category in pull offing and understating its environmental impacts.

2. Information administration and duties

Heidelberg cement has a long tradition in pull offing environmental and societal facets of concern. This direction has measurably contributed to the long-run success of Heidelberg Cement. Assorted information on both societal and environmental facets of concern activities has been collected for much longer than the sustainability ( or environmental ) section has existed. Of initial concern were societal issues, chiefly employees, subsequently on environmental issues started garnering importance and promotion. Nowadays, non-financial information is used for decision-making, public presentation control and coverage. Due to the fact that extra-financial facets have been used for doing informed determinations for a long clip now, it is hard to gauge how corporate scheme and day-to-day activities have been influenced by paying attending to and undertaking sustainability challenges.

The importance of such non-financial information can be visualised by the fact that its monetarisation, i.e. being expressed in pecuniary footings, has been considered unsuitable, or insufficient at best, for determination devising. Clearly, extra-financial information is of import to visualize the fiscal impacts of societal and environmental activities.

The information direction in respect to extra-financial information is instead diversified. Despite the centralised ( due to the hierarchal construction of the company ) information direction, the information behind a figure facets is dealt with within the several section. In this sense, the sustainability section has an overarching map entirely every bit far as external ( partly internal ) coverage maps are concerned. For illustration, environmentally related information is managed by the environmental section, societal issues are tackled within the HR ( internal ) and sustainability for externally relevant facets. Climate alteration information is besides managed individually and so passed on to the environmental sections every bit good as to other sections that require it, e.g. for emanation trading.

The accounting map is involved in the procedure of pull offing extra-financial information, in so far as the bulk of the information, roll uping on a regular footing is passed on to the accounting section for confirmation and centralized direction. The information system has been spread outing to suit non-financial facets that have gained importance in the tally of clip. This has happened bit by bit and without a cardinal alteration in the information direction system. For illustration as the subject of C emanations grew beyond the threshold to be ignored and related information aggregation mechanisms were established to roll up informations and procedure it. The purpose of these mechanisms was to replace older mechanisms, which served to change over e.g. coal ingestion or milage to carbon equivalents. Yet, such transition methods were used to retrospectively cipher ( and gauge where sufficient item was missing ) emanations prior to mensurating them. Therefore, the base twelvemonth was established – 1990 – to which increase public presentation is to be measured.

The information flows do show a challenge to the company, due to its peculiarly complex construction and the fact that it operates in over 50 states. Yet, the direction is more concerned with the range of the information direction and its value to determination devising and public presentation rating, therefore this facet is given precedence. This fact is besides reflected in this instance survey.

Interviewee, rubric: Function and duties

Dr. Brigitte Fickel,

Director Group Communication

Mrs. Fickel is a senior group communicating officer. She coordinates the external communicating on a group degree, i.e. the single sections study to her.

Stefanie Kaufmann,

Communication officer

Mrs. Kaufmann is a group communicating officer, peculiarly involved in ( external and internal ) societal coverage.

Bernard Mathieu,

Director Group Environmental Sustainability

Mr. Mathieu ‘s maps as a manager of environmental sustainability are rather diversified. His squad is in charge of developing policies, aims and marks. At the same clip the squad is responsible for developing indexs to mensurate the advancement towards accomplishing the antecedently set marks every bit good as benchmarking public presentation ( both within the company and on an industry degree )

Thomas Ruddenklau,

Corporate CO2 Expert & A ; ( Environmental ) Information Management

Mr. Ruddenklau has been working for HC since 2003. His maps have besides been diversified – he is responsible for information direction and besides CO2 -related issues, such as developing a strategy to mensurate the emanations exactly, etc.

3. Information direction patterns

3.1. Description of the Sustainability Dashboard

The environmental section has developed a system for monitoring and pull offing environmental public presentation, called the Sustainability Dashboard ( SD ) . The SD presents a series of indexs that express assorted environmental facets that are managed by Numberss. The to the full updated SD was implemented and taken into operation as this study was prepared. Yet, the SD comprises a set of indexs, which are invariably adjusted so that they are of good informational value. The Dashboard produces quarterly studies, which are handed over to senior direction.

3.2. Advantages of the Sustainability Dashboard over old systems

Puting up such a Sustainability Dashboard appears to unite a figure of advantages of antecedently used options, while avoiding the downsides of each of these options.

A. Avoiding confusion: by developing group-wide indexs, the assorted divisions and sections are cognizant of what ( environmental ) public presentation is measured and therefore what their ( environmental ) attempts have to be concentrated on. Although these indexs are developed top-down, each division and unit provides their sentiment on proposed steps, based on which it is decided whether a certain index is accepted or non.

B. Avoiding dual work. By administering duties it is made certain that information is produced and reported with maximal efficiency. In contrast, old information systems were organised in a manner that required the proprietor of certain prosodies to describe them several sections in different signifier. This causes extra resource burden on the supplier of the prosodies but it besides requires that users of the information petition it from assorted sections. This is avoided thanks to the centralization provided by the Dashboard.

C. Clear processs. By supplying a clear definition of how each index or metric is calculated, confusion is minimised. Whereas old systems left it up to single sections and units to specify their prosodies and the procedures taking to their production, the Dashboard defines these on company degree, therefore avoiding such discrepancies.

D. Reliability / confidence

Last but non least, the Dashboard enables an confidence procedure that has antecedently non been possible. By subjecting the natural information to a cardinal section, the confirmation takes topographic point outside the section / unit where the information was produced. This external confidence additions transparence and secures informations intregrity.

3.3. Examples of indexs

A big figure of indexs ( 100+ ) have been developed ( and are still being developed ) to fit the Dashboard with utile and relevant indicant of HC ‘s environmental and fiscal ( sing environmental affairs ) public presentation. The bulk of these prosodies and indexs are instead straightforward to explicate, step and study. Examples of such indexs are entire energy consumed over a clip period, the sum of energy used per metric ton produced cement, the efficiency of the procedure per employee or the sum of energy saved per Euro invested. Specifying indexs clearly is indispensable for the procedure, so that the quality of the information obtained is higher and tendencies can non be disguised due to hapless truth or a different attack to measurement.

Yet, a figure of indexs are based on qualitative information and demand to be translated into quantitative units, so that they can be subjected to sustainability accounting. Such indexs present a major challenge to the environmental direction, since the higher the figure of facets monitored – the more crystalline the system and the more effectual the direction, since public presentation measuring and determination devising are now based on difficult facts.

3.4 Application of the Dashboard

Clearly, a direction accounting system ‘s chief intent is easing determination devising. By a ) supplying a elaborate set of prosodies and indexs and B ) doing certain they are dependable and unvarying group-wide, the Sustainability Dashboard support the determination devising procedure.

The 2nd advantage of the Dashboard is its ( internal and external ) benchmarking map. By consisting uniformly calculated indexs and prosodies, the Dashboard enables users to compare public presentation between divisions or procedure public presentation within the same division ( e.g. all the impacts of bring forthing a metric ton of cement at different plants/facilities ) . This allows division directors to portion ideas on bettering public presentation. The other advantage ( specific to the cement industry ) is the handiness of industry criterions, which other companies publish. This allows to benchmark HC ‘s public presentation against that of rivals and potentially discover betterment potencies.

The 3rd chief advantage of the SD is the addition in transparence that is achieved by holding quantitative information. This allows a ) to bring forth a comprehendible for stakeholders account of how determinations are made and B ) support statements by supplying difficult facts.

4. Decision

Both environmentally-related impacts on the company and company-related impacts on the environmental are considered of highest importance which is reflected in the ( type of ) information collected and used.

Despite being decoupled from fiscal information, extra-financial information has been partly integrated into the accounting system of the company. This has happened rapidly, every bit shortly as certain factors appeared of import for the public presentation of the company. Yet, a bulk of facets are dealt with in a parallel accounting system, the Sustainability Dashboard, described above. Although the Dashboards is simply a information aggregation and processing system, it requires that the informations aggregation patterns of information proprietors are established on a corporate degree in order to supply utile consequences. Both the Dashboard and the information flows can be set up in conformity with the demands of the specific companies, and the above instance survey serves to supply a counsel of what troubles

5. Further links

hypertext transfer protocol: //

Sustainability study 2009


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