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SUSTAINABILITY MANAGEMENT ACCOUNTING

WITH EXAMPLES CITED FROM

SAMSUNG ELECTRONICS CO. LTD

---Handouts & a copy of this presentation

can be downloaded free under:

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JohanaTchansi (534785)

Stiliyan Stoyanov (524094)

K. N. Phifer (523482)

22 January 2013

Management Accounting ClassInstructed byProfessor D. Arora

University of Applied Sciences (HTW) Berlin, Germany

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OUTLINE

1. Definition of Sustainability

Management

2. Samsung‘s Sustainability

Management System

3. Benchmarking

4. Cost-Benefit Analysis

5. Discussion

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WHAT IS SUSTAINABILITY MANAGEMENT ACCOUNTING?

Originated ca. 20 years ago

Subcategory of financial accounting focusing on non-

financial information about a firm’s performance

Disclosed to external parties

(capital holders, stakeholders, creditors other

authorities)

Covers three areas:

Economy, Environment, Society

(=Profit, Planet, People)

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SAMSUNG‘S SUSTAINABILITY MANAGEMENT SYSTEM

First company in Korea to be in Dow Jones Sustainability Index for 9 years in a row

SDI (Sustainability Development Initiative)

Nine areas their report(s) focus on:

- Creative Organizational Culture- Employee Health & Safety- Integrity Management- Increasing Social Contribution- Patents- Climate Change & Energy- Water Management- Mutual Growth & Supplier CSR

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BENCHMARKING Green Management Strategy

Samsungs´ efficient communication

securing patent competitiveness

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BENCHMARKING

Green management strategy has:

BASIC PHILOSOPH

YVISION SLOGAN

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BENCHMARKING Green Management Strategy

IDENTIFICATION OF KEY ENVIROMENTA L ISSUES

RISK ANALYSI

S

INTERNAL

CAPACITY

STRATEGY

DEVELOPMENT

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BENCHMARKING Samsungs efficient Communication

Listening to you

Customer satisfaction

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BENCHMARKING Securing patent competitiveness

Filled patent applications worldwide

Expanded the cross-licence patent cooperation

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BENCHMARKING

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COST-BENEFIT ANALYSIS

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ECONOMY: SUSTAINABLE GROWTH

Focusing on shared growth.

Initiation of support programs

for first- tier suppliers

Various support policies for

second and third- tier suppliers

Graded ‘’Excellent’’ by the

Korean shared growth committee

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Source: Samsung Sustainability Report 2011, http://www.samsung.com/us/aboutsamsung/ir/corporategovernance/corporatesocialresponsibility/download/2011Environmentalnsocialreport.pdf

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CREATING ECONOMIC VALUE FOR S. KOREA Samsung Electronics makes major

contribution to S. Korea’s economy.

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SOCIETY/ FINANCIAL CONTRIBUTION

*Increase in brand value

*Profiting from increased social wellfare

*Intangible benefits

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EMPLOYEE RELATED EXPENSES

* Low resignation rate: 5% in Korea and 15% overseas.

* Creating a work force of well trained and dependable professionals

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GREENHOUSE GASSES (GHG) MANAGEMENT

• Invested 1.01 trillion KRW (US $ 865 Million) in the implementation of ‘’Planet First’’ Initiative

• Pledged 6 trillion KRW (US $ 5.1 Billion) into the creation of a division focused on the development of solar panels

• Total of US $ 20.6 Billions to be invested into solar, energy efficiency, light emitting diodes and other green market

• Aiming at being number 1 in solar by 2015

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GHG REDUCTION ASSOCIATED WITH PRODUCTION PROCESS

• Reduction of GHG emissions associated with the production process in the period 2009 – 2013 – 50%

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GHG REDUCTION ASSOCIATED WITH PRODUCT USE

• The amount of GHG emissions caused by electricity consumption for use of sold products

• Decrease of emissions despite an increase in the number of sold products

• Achieved 17,630 tons of greenhouse gas emissions compared to 2008 baseline

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BENEFITS FROM GHG MANAGEMENT • Increase in brand value

• Undisputable benefits for the environment

• Product quality

• Exploring new markets

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DISCUSSION QUESTIONS Are the benefits of sustainability equal to the costs? - Prevention doesn‘t necessarily have a price. - Costs can‘t often be directly linked to actions, i.e

environmental pollution, adverse health affects

Are there any challenges in implementing sustainability management?

- Financial costs - Material issues (example: Coltan, a rare metal used in

producting electronics, found mainly in the Democratic Republic of Congo)

How can companies be truly motivated (incentives, penalties, etc.) to become more sustainable?

- Legislation w/ fines for violation or added import/export duties; international treaties

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THANKS FOR YOUR ATTENTION!Sources: Samsung Sustainability Report

www.samsungsdi.com/sustain/s4_3.jsp Tilt, C.A. (2007). "Corporate

Resposability Accounting and Accountants". Idowu, Samuel O.; Leal Filho, Walter (Eds.), Professionals' Perspectives of Corporate Social Responsibiliry, Springer-Verlag Berlin Heidelberg 2009.