As the business world continues to expand into international territories, competition continues to grow fiercer. The effects of differentiation and price leadership are dwindling as more and more companies enter the fight for consumers’ money. A new way to encourage customers to purchase a company’s products has emerged, and that is sustainability. Sustainability is growing as a tool for companies to use to hopefully stand out from their competitors. This rise in sustainability efforts has resulted in an increased emphasis on the use of sustainability accounting, which helps to measure the effects of the efforts of companies working towards greener business practices. Corporations have long been criticized for their negative economic impact, but with the help of globalization and rising sustainability accounting standards, that stereotype is about to change.
The idea of globalization does not exactly come to mind when we think about sustainability. Actually, typically quite the opposite comes to mind such as cross-border pollution and widespread environmental destruction. But, the increased competitive environment in the business world due to ongoing globalization has made it necessary for corporations to continue to find new ways to please consumers and set themselves apart from other companies. One way they are doing this is to make efforts to become more sustainable and eco-friendly. For example, water bottle companies making smaller caps and snack food companies making their packaging out of recycled or biodegradable material. In most parts of industry, improved processes, quality requirements, and other areas associated with globalization have worked to reduce the environmental impact of commerce. As consumers continue to take interest in sustainability, and as the global market continues to grow, companies will have to take more steps to become environmentally friendly to keep the buyers happy and the competitors behind. The increased consumer desire for sustainability comes with the need to find a way to measure and regulate the actual efforts being made by companies to make sure they are actually doing what they claim they are doing.
As the corporate sustainability trend continues to grow, so does the need for a way to evaluate the truthfulness of environmental claims being made by companies. The idea of sustainability accounting is becoming more popular and is getting closer to being implemented. Sustainability accounting is a proposed way in which firms will be required to report their environmental impact for the public to see. This may seem like a death sentence for many companies, but some companies are finding that making small changes in their procedures can mean big savings and big public support. Even though these reports are not yet required, the companies that have taken the initiative to set environmental goals and release sustainability reports are realizing increased business value and substantial cost reductions. If that were not enough incentive to go green, “companies that don’t participate are getting shunned by shareholders and NGOs” (Kline). Making sustainability accounting a legal requirement is getting closer, and it will mean big changes. In the past, many companies were not necessarily unconcerned about their environmental impact, as much as they were just unaware. With the implementation of these standards of accounting, a huge change in the way we handle the environment will be possible. Even though integrating sustainability accounting into regular accounting procedures “alone cannot ensure sustainability it is a powerful mechanism to help us all make better decisions about the resources we consume and the lives we lead” (Lamoreaux). Implementing required sustainability accounting standards will not only get large companies to make necessary changes in their practices, but it will also in effect, result in consumers becoming more aware of their own actions regarding the environment as well.
In a business world of expanding horizons, the competition gets tougher to beat. Traditional methods of winning the customer do not cut it anymore. Sustainability is moving in as the next big way to get consumers’ attention. Companies are beginning to see sustainability as an essential resource to gain respect and sales from buyers. As sustainability gains popularity, the need for sustainability accounting standards is growing in order to measure the environmental impact of changes companies are making. Globalization is leading to an increased awareness of consumer support for sustainability and the need for a way to accurately measure the effects of changes businesses are claiming to make. This new go-green goal for corporations could change the way they behave and the way they are seen forever.