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Advanced Management Control and Sustainable Development

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1 Advanced Management Control and Sustainable Development
Lecture 12: SDGs : Integrating Sustainability Initiatives with Long-Term Value Creation Prof. Angelo Riccaboni University of Siena Department of Business and Law

2 Agenda The Evolution of Sustainable Development Creating the SDGs
What management accountants can do to implement SDGs? Making SDGs Happen Major Dates in Corporate Sustainability Making Sustainability a Driver of the Business Model The Role of Management Accountants

3 The Evolution of Sustainable Development
1987- Brundtland Report defined SD as “development that meets the needs of the present without compromising the ability of future generations to meet their own needs” 2002 – World Summit SD was defined as “embracing social inclusion and economic development as well as environmental aspects” 2013 – UNSDSN extended the inclusion of good governance as the 4th pillar, involving private, public and nongovernmental organizations directly in the attempt to coordinate the efforts regarding the sustainability agenda 2030

4 Creating the SDGs 21 century defined Millennium development goals – MDGs MDGs between achieved success in areas like reducing poverty and improving health and education in developing countries United Nations decided to expand the goals, encompassing developed and developing countries and expanding the challenges New areas were considered such as economic, social and environmental dimensions of SD This new development led to the identification of the SDGs These goals were created by an inclusive process reflecting substantive inputs from all sectors of society and from all parts of the world Governments can translate these goals into national action plans, policies and initiatives SDGs recognize the key role that business organizations play in achieving them

5 What management accountants can do to implement SDGs?
Win board and senior management commitment on a selection of SDGS Understand how key sustainability drivers and initiatives contribute to achieving business and financial strategies and goals Integrates key sustainability drivers and the SDGs into the organization’s strategy and BM Ensure that the SDGs and their connection with the organization's strategy are understood cross-functionally in the business organization

6 Break down SDG targets and objectives for the organization as a whole into targets and objectives that are meaningful for individual subsidiaries, divisions and departments Make SDGs a central element of the process of planning, budgeting, and performance measurement, and include sustainability targets and objectives in performance appraisal Connect SDGs and sustainability drivers with day-to-day decision making Monitor and report sustainability initiatives and performance toward the SDGs in an integrated way

7 Making SDGs Happen SDG alignment help: Increase revenues
Increase supply chain resilience Recruit and retain talent Spawn investor interest Assure license to operate SDGs involve inclusive BM, to : Reinforce their awareness regarding the multiple and heterogeneous resources Impact on the company’s stakeholders Integrate sustainability initiatives and business goals

8 Major Dates in Corporate Sustainability
1987 – The United Nations’ Brundtland Report – provides the most popular definition of SD 1997 – The GRI (Global Reporting Initiative) is formed ny the US-based nonprofits Ceres and Tellus Institute 2002 – The World Summit in Johannesburg – extends the definition of SD to embrace not only environmental aspects but also social inclusion and economic development 2011 – The Sustainability Accounting Standards Board – is created to develop and disseminate sustainability accounting standards 2013 – International IR Council – release its framework based on the concept of multicapitals to support the integration of financial and pre-financial data 2015 – The adoption of Agenda 2030, accompanied by a list of 17 SDGs and 169 targets

9 Making Sustainability a Driver of the Business Model
Main goal - to offer a comprehensive view of the process of value creation by monitoring and connecting key financial and pre-financial performances essential to sustain the execution of sustainable strategies IT and IR depart from : Deep analysis of financial and operating objectives featuring the organization’s strategic plan Link these data to the resources used, the initiatives implemented and the interdependencies among various drivers at work Purpose – to highlight the way in which initiatives of sustainability contributed to achieving the strategic targets of the company

10 Key drivers of the explorative strategy :
Medium-long term vision Focus on time to market Governance and management of exploration processes Professional development of workforce An ability to protect, disseminate and renew know-how Focus on the opportunities provided by technological innovation Rigorous attention on health, safety and environmental aspects

11 The Role of Management Accountants
Integration between Business goals and sustainability initiatives – strive to align competitiveness and sustainable growth Management accountants-play the major role They contribute to the identification-execution and monitoring of business decisions and strategies for long-term value creation But they set up ad-hoc targets and key performance indicators to include process of mediation between different stakeholders Business performance – is an outcome of a company’s purpose of creating value for its customers, employees and investors, which thereby can drive socioeconomic development and wealth creation They offer tools and engagement platforms that go beyond the representation of the initiatives


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