Accounting: the expanded

FIGURE 4.1: Графическое изображение добавленной стоимости, показывающее традиционные и устойчивые методы строительства

Traditional accounting does not show the impressive additional social and environmental benefits (nearly $1 million) gained from a mere two percent increase in costs ($100,000) in order to make the building sustainable. The EVAS reflects these figures, and hence shows a much broader picture of the organization’s performance.

Discussion

The Expanded Value Added Statement shows that financial information alone does not tell the organization’s whole performance story. In the example posed in this chapter, the Expanded Value Added Statement focuses on value creation and creates greater awareness of at least three areas:

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  the impact of the organization on different stakeholders;
  

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  the role of the organization in creating economic, social and environmental value added; and
  
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  the interconnectedness of the economic, social and environmental dimensions of organizational activities.
  

Some of the limitations of the EVAS are imposed by the selection of items to be included and by the methods available to put a monetary value on them. In this regard, the challenges faced by the Expanded Value Added Statement are shared by other forms of alternative accounting and economics, namely identifying, measuring, quantifying, standardizing and placing a value on key social and environmental indicators which could encourage and measure sustainable performance (Ranganathan, 1999; White & Zinkl, 1999). In the example analyzed above, the figures suggest that the potential social and environmental benefits to larger society are very low in relation to the ones enjoyed by customers. This could be due to the choice of indicators used by Kats et al. and to the difficulties to assign a value to complex variables. Another challenge is to assess not only value added but also value subtracted, as it is important for accounting statements to illuminate both positive and negative impacts on sustainability. These are areas that require continued development and discussion (see Bennett et al., 2002; Bennett et al ., 2003; Rikhardsson et al., 2005; Schaltegger & Burritt 2000).
The strengths of the Expanded Value Added Statement lie in its ability to take a broader look at the organization and the role of stakeholders to put this into a larger socio-economic perspective. By including non-monetary items, the EVAS presents a fuller picture of an organization’s economic, social and environmental dimensions, and
on the interdependence amongst them. Although more work has to be done on coming up with acceptable valuation methods (as not everyone would agree with the estimates of projected value presented in this example), the change of focus from a profit-oriented bottom line, to an integrated economic, social and environmental bottom line provides an opportunity for organizations and society to think about impacts in a broader sense.
This brings us back to the initial assumption stated at the beginning of the paper, that is, that accounting is a driver of behaviour and can be conceived of as an explicit change agent in order to move organizations towards sustainability. By synthesizing financial data with social and environmental data, the Expanded Value Added Statement is one mechanism for understanding the dynamics of an organization and the inter-related economic-social-environmental implications of various choices made in day-to-day operations. In making these relationships more visible, hopefully the EVAS can help create a new awareness, which in turn can shape more sustainable attitudes and behaviours in organizations, and communicate this to a wider audience.