Class presentations

1. ORAL PRESENTATION OF FINDINGS
FOR
EXTENDED CASESTUDY REPORT
A COURSEWORK ON
ACCOUNTING FOR SUSTAINABLE DEVELOPMENT
(AC1109A)
BY
ABDULSALAM MAS’UD
(0903364)
A STUDENT OF
MSC OIL AND GAS ACCOUNTING
DUNDEE BUSINESS SCHOOL
UNIVERSITY OF ABERTAY DUNDEE, UK

2. INTRODUCTION

Sustainability is an issue of strategic importance to every
profession and discipline, hence accounting not an exception.
Therefore sustainability accounting refers to the modern
method of accounting which beyond the conventional level
incorporate three key issues into accounting: economic
viability, social responsibility and environmental responsibility.

Therefore, this work will discuss the research findings on the
following issues:
1 Sustainability in practice- a case study of Afren Plc
2 Role of accounting profession toward the sustainable
development
3 The impact of Socially responsible investment to accounting
for SD

Finally, a general conclusion will be drown

3. SUSTAINABILITY ACCOUNTING IN PRACTICE- A CASESTUDY OF AFREN
PLC

Afren Plc is a operator in upstream petroleum sector listed in
London stock exchange but 100% focused in Africa, including
the Nigerian controversial Niger Delta Region.

In analysis of its Corporate Social Responsibility (CSR) report ,
I understand that, Afren pay more emphasis on educational
and charitable activities rather than crucial sustainability issues
such as environmental pollution, global warming, security,
society, gas flaring and Green House Gas Emissions.

Though, issues of environment, health, safety, social,
employees and business ethics are part of Afren plans but in
practices its more involves in the issues of charities for orphans
and abandoned children and education: particularly the
actualisation of African Energy Institute which is partly for their
own benefit

4. Afren Plc

While people through their voice-NGOs are expressing more concern about water pollution that
kill different species of aquatic animal and deforestation through oil spillage that diminish the
mangrove forest of preserved nature together with concurrent crisis between militant and
soldiers for exploitation of Niger Delta endowed resources (see Amnesty International report
on Niger Delta) which may form part of Afren responsibility, Afren offer privileges by way of
charitable activities.

Environmental Right Action ( ERA-the friend of earth) Nigeria through workshop, seminars and
other public enlighten campaign always blame oil companies on environmental degradations
and lost of biodiversity without efforts for forestation and other positive environment upgrading
programmes. Hence, this indicate poor effort on by oil companies on this crucial sustainability
issues.

Centre for Environment, Human Right and Development (CEHRD) Nigeria has been actively
participating in campaign against the Niger Delta crisis, the question is that what oil companies
like Afren do as part of their social responsibility in resolving such conflict?

According to Sonangol, the Angolan National Oil Company 1999 estimates, Angola accounts for
0.03% of world energy consumption against 0.06% carbon emission, this can raise a question
that, what effort companies like Afren that operate in the region do in striking the balance in
this area as they contribute to the later? The challenge is that they are offering privilege by
way of charity instead of right inform reducing carbon emission.

5. Afren Plc

Therefore, it can be understood that in practice, some
companies either misunderstood or they are selfish in
sustainability issues. This is either by offering privilege instead
of right or claiming of doing what in practice is not the case.

Moreover, the company’s CSR report do less if not at all not
with regard to the compliance with Global Reporting Initiatives
(GRI) sustainability reporting guidelines, more especially in
relation to climate change, environment, human right, society
and security.

Finally, though, we may do favour to Afren Plc being a baby
multinational company if we consider that it is formed in 2004
and go upstream in 2008 through the discovery of it first oil in
that same year.

6. ACCOUNTING PROFESSION AND THE ISSUE OF SUSTAINABILITY

Accounting profession has being strongly recognised as having
public interest commitment in many areas, in this regard,
sustainability not an exception.

Therefore, this section will discuss what accounting profession has
said and done in the area of sustainable development by
assessing the effort of three(3)professional accounting
bodies and three(3) firms of accounting practitioners namely:
….professional accounting bodies
(1) Association of Chartered Certified Accountants (ACCA)
(2) International Federation of Accountants (IFAC)
(3) Institute of Charted Accountants of England and Wales (ICAEW)
....Firms of accounting practitioners
(1) KPMG
(2) PriceWaterhouseCoopers
(3) Ernst and Young

7. ACCA: public interest commitments towards sustainability
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No professional body in whatever profession regardless of Accounting that is
strongly committed to the issue of sustainability than ACCA. Its
commitments include but not limited to the followings:
It incorporates SEA issues into its new syllabus
Incorporates SD and CSR issues into its CPD program
Develop guideline materials for its members on how to address CSR and SD
issues
Funding of researches, seminars and organises awards on better SD
practices
Contribute technically in developing GRI sustainability report guidelines
Formed a partnership with FTSE Group to survey climates issues disclosure
within UK
Publish guidelines on the financial implication of and accounting for GHG
emission
Contribute to the sustainability accounting handbook prepared by SIGMA
project
Republish the US EPA guideline on environmental accounting

8. IFAC: public interest commitments towards sustainability

In 2009, this global network of professional accounting bodies
developed a highly sophisticated sustainability accounting framework.

The framework is a web-based tool that allows users to easily navigate
online to those sustainability issues that are most important to their
role and to select and use those examples of good sustainability
practices that can work in their organisation

This framework also challenge the conventional way of thinking about
economic, social and environment achievement, as such it recognised
the importance of three main dimensions of sustainability: that is
economic viability, social responsibility and environmental responsibility
as well as their interconnectivity.

Finally, this extraordinary framework aimed at providing a means and
motivation for addressing sustainability issues by professional
accountants with greater vigour.

9. ICAEW: public interest commitments towards sustainability

This English and Wales Accounting body take a different dimension in contributing and
demonstrating the public interest commitment in the issue of sustainability
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This has been done by publishing a report in 2004 that outlined eight mechanisms for
which sustainability could be enhanced.

These mechanisms aimed at encouraging or smartly forcing organisation to internalise
external costs and benefit as if they were initially its own internal cost and benefit. The
eight mechanisms are as follows:
(1)
(2)
(3)
(4)
(5)
(6)
(7)
(8)
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Corporate Policies
Supply Chains
Stakeholders engagement
Voluntary codes
Rating and benchmarking
Tax and subsidies
Tradable permits
Requirements and prohibitions
Therefore, it can be understand that sustainability is not an exception with regard to the
self-bowed commitment of accounting profession to the public interest.

10. KPMG, PWC & ENRST AND YOUNG: public interest commitments
towards the sustainability.
…..KPMG
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International Survey of Corporate Responsibility Reporting 2008
KPMG/CIES Report 2008: Sustainability seen as driver of change rather than cost
Sponsor ACCA award for sustainability in UK
......PriceWaterhouseCoopers
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Sponsor vision 2050 project of World Business Council for Sustainable Development (WBCSD)
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Designed sustainable forest finance toolkit in conjunction with WBCSD
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Developed two new indices in 2009 for G20 economies for achieving low carbon emission in
response to Copenhagen calling:

PWC Low Carbon Achievement (LCA) Index

PWC Low Carbon Challenge (LCC) Index
…..Ernst and Young
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Green for go supply chain sustainability survey 2008
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Hospitality Going Green Report 2008
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Created an internal leadership position of Director for environmental sustainability ’08
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Therefore, it can understand that, public interest commitment of accounting profession is also
evident in sustainable development

11. SOCIALLY RESPONSIBLE INVESTMENTS
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This section describes SRI and evaluate the empirical research on the
impact of SRI on sustainability issue, taking into consideration whether
improved financial returns flows from improve social responsibility.
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Socially Responsible Investment (SRI) refers to the investment
strategy that aims at shooting two bird with single bullet, that is
maximising financial returns and achieving social good with a single
investment.
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There are two approaches to this technique that is screening and
engagement
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Screening involves the use of sustainability index families like:
Financial Times Stock Exchanges 100 Stock Index for Good
(FTSE4GOOD), Dow Jones Sustainability Index (DJSI) and Advanced
Sustainability Performance Indices (ASPI). Whereas engagement
means active involvement through voting and resolutions in the
administration of investment activities of companies (AAML, 2008)

12. SRI
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Based on the above, this work evaluates three empirical researches to assess the
impact of SRI to SD and confirm whether improved financial return flows from improved
social responsibility as follows:
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Redefinition of stocks from conventional form to SRI index families : FTSE4GOOD, DJSI,
and ASPI only indicates a significant temporary abnormal positive returns but thereafter
normalise to its conventional levels (Blancard and Couderc 2009).
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Similarly, however, in linking socially responsible investment with improved social
responsibility and financial performance the result indicates that only short term
improvement compared to conventional performance using four years measurement
period (Mill, 2006).
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Contrarily, Lin et al (2008) found that, though improved social responsibility does not
have much positive impact on short-term financial performance, it does offer a
remarkable long-term fiscal advantage.
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Therefore, I opine that, though the evidences are mixed but even the worse scenario
did not indicate that negative financial returns flows from improving social
responsibility. Hence SRI remained a good initiative by incorporating sustainability
issues into investment decision thereby impacting the accounting for sustainable
development.

13. CONCLUSION

In practice some companies mostly treat the issues of CSR and SD
as a mere privilege rather than sovereign remedy to the
ecosystem.
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Accounting as a profession that posses a self bowed commitment
to public interest is doing best in the area of sustainability
especially these three prominent professional accounting bodies:
ACCA, IFAC and ICAEW and the three(3) firms of accounting
practitioners: Ernst and Young, KPMG and PWC.

Though, there are mixed evidences that indicate inconsistent flow
of improved financial returns from improved social responsibility or
stocks redefinitions but even the worse scenario did not indicate a
flow of negative financial returns by adopting SRI and improving
social responsibility. Hence, SRI remained a good initiative by
incorporating SD and CSR issues into corporate investment
decisions.

14. REFERENCES
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Aberdeen Asset Management Limited (AAML), 2008. Aberdeen’s Socially Responsible Investment (SRI)
Capacity; Placing Ethical Screens and Engagement at the heart of our investment. Available at:
http://www.aberdeen-asset.co.uk/pdfupload.nsf/7C84156BFB51C8F1802570D00052A8E8/$file/SRICapabilities.pd
[Accessed 04 April 2010]
Afren Plc, 2009. Annual Reports and Accounts 2008. Available online at:
http://www.afren.com/download.axd?id=567 [accessed 21 December 2009]
Amnesty International, 2009. Petroleum, pollution and poverty in the Niger Delta. London: Amnesty
International secretariats.
Association of Certified Chartered Accountants (ACCA), n.d. Going Concern? A Sustainability Agenda For
Actions, TECH/CG/001. Available online at http://www.accaglobal.com/pdfs/technical/tech/gc-001.pdf.
[accessed 19 March 2010]
Blancard, G. C. and Couderc, N., 2009. The impact of socially responsible investing: evidence from
stock index redefinition. The Journal of Investing, 18(2), pp. 76-86.
Centre for Environment, Human Right and Development (CEHRD), 2006. Soldiers raid village, harass
local residents, News Letters, 1(1). Available at: http://www.cehrd.org/Release.htm. [accessed 31
January 2010]
Environmental Right Action (ERA- The Friend of Earth Nigeria), 2000. Testimonies: The Environmental
Refuges of Escravos, Near a Major Chevron Facility. Porthacourt: ERA secretariat. Available at:
www.essentialaction.org/Shell/era/escravos.htm. [Accessed 7 march 2010]
Ernst and Young, 2008. Green For Go Supply Chain Sustainability Survey
Ernst and Young, 2008. Hospitality Going Green Report: A Global Sustainability Insight
Institute of Chartered Accountant in England and Wealth (ICAEW), 2004. Sustainability: the role of
accountants, ICAEW Reports. Available at: http://www.icaew.co.uk/bettermarkets. [accessed 16
February 2010]
International Federation of Accountants (IFAC), 2009. New IFAC sustainability framework supports
organisation in improving products, lowering cost and raising goodwill. IFAC Release. Available at:
http://www.ifac.org/mediacentre/?q=node/view/614 [accessed 20 March 2010]

15. REFERENCE Cont.
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KPMG, 2008. International Survey of Corporate Responsibility Reporting.
KPMG/CIES, 2009. Survey: Sustainability Seen as a Driver of Innovation Rather than Cost
Lin, G.H. et al., 2008. The impact of corporate social responsibility on financial
performance: evidence from businesses in Taiwan. Technology in Society, 31(2009), pp.
56-63.
Mill, G. A., 2006. The Financial performance of socially responsible investment overtime
and possible link with corporate social responsibility. Journal of Business Ethics 63(2006),
pp.131-143.
PriceWaterhouseCoopers, 2009. Estimating the order of magnetitute of additional
sustainability business opportunities in key sectors. Available online at:
http://www.pwc.co.uk/eng/publication/vision_2050_pwc_economic_estimates.htm
[Accessed 24 March 2010]
PriceWaterhouseCoopers, 2009. Copenhagen calling-low carbon economy index. Available
online at: http://www.pwc.co.uk/eng/issues/low_carbon_index_html
[Accessed 24 March 2010]
PriceWaterhouseCoopers, 2009. Sustainable Forest Finance Toolkit
Available online at: http://www.pwc.co.uk/eng/issues/forest_finance_home.html
[Accessed 24 March 2010]
Sonangol, n.d. Resource and Investment. Available at:
www.un.int/wcm/webdav/site/angola/shared/documents/country%20Facts/resources
%20and%20investment.pdf.
[accessed 20 March 2010].