Essay Example on Carbon Footprint Accounting: Measuring Greenhouse Gas Emissions

Introduction

A carbon footprint is described as the total set of greenhouse gas emissions that is caused directly and indirectly by a product, organization, and individual. Carbon footprint accounting is the measure of total greenhouse gas emission that is embodied in consumption. In determining the carbon footprint accounting, it is important to consider three scopes (Ali et al., 2018). Scope 1 refers to the accounting of direct greenhouse emission that mainly occurs from sources controlled or owned y an organization, for instance, emission from vehicles, furnaces, and boilers.

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In scope 2, carbon footprint accounting refers to the accounting of indirect greenhouse gas emission for the generation of purchased electricity that the company consumes. Consequently, in scope three, it refers to the accounting of indirect greenhouse gas emission that occurs due to activities of the firm but from sources that are not controlled or owned by the organization (Ali et al., 2018). Examples in scope 3 include the use of sold products and services, transportation of purchased fuel, and the extraction and production of purchased materials.

On the contrary, water footprint refers to the total freshwater volume polluted or consumed within a particular territory (Week 10, 2020). Water footprint accounting is a tool of assignment used to how the production of goods and services affects freshwater resources across the globe. Moreover, water footprint accounting provides a conceptual framework and transparency for envisioning water consumption and identify areas that need improved efficiency (Ali et al., 2018). To identify the water footprint, it is important to consider the full range of activities to assess the economic, social, and environmental sustainability of the water footprint, locate and quantify the water footprint of producer, consumer, product or a process, and formulate a response strategy (Week 10, 2020).

This is important both for internal and external use. Organizations need to determine their contribution to pollution both in carbon dioxide and water. With such information, the organization can determine how it will formulate ad implement policies and strategies that will help in reducing pollution and its impact. Consequently, this is important mainly to the stakeholder. Stakeholders use information from carbon and water footprint accounting to determine which organization they will engage with, buy their products and services, and which have better policies. A stakeholder is mainly interacting with organizations that have minimal water and carbon pollution (Ali et al., 2018). Therefore, companies need to make sure that they have policies and strategies in place to ensure that they have reduced water and carbon pollutions. Consequently, companies have the responsibility of ensuring that the environment they are operating in is safe and clean.

In reporting for their carbon and water footprint, organizations need to highlight the policies and strategies they have in place to reduced the impact of such pollutants. Moreover, they need to report on the amount they release to the environment. The main issue with the concept is that they do not take into account the impacts of the pollutants on the environment, climate change, and human health. In taking into consideration such factors, organizations will become more responsible in their dealing with and will work to ensure they maintain a safe environment (Ali et al., 2018).

Corporate Social Responsibility

Limitations in Relation to CSR Assurance and the Implications to the Assurance Process and Reliance on the Resulting Assurance Report

Some of the limitations of CSR assurance are CSR cost money to implement, conflict with the profit motive and consumers are wise to greenwashing. CSR costs fall disproportionally on small organizations (Lins et al., 2017). The organization has judiciary responsibility to its shareholders, and CSR directly results in a conflict with this as the main responsibility of the managers is to maximize profits (Week 5, 2020). Likewise, the consumer is aware of the strategies that organizations are using to make them look more economically friendly, therefore making them wary of corporate greenwashing.

The implications of the report include higher expectations form the community, higher profit margins, consumer approval, and better consumer relations. CSR improves the company image and brands in the community (Lins et al., 2017). The community will accept organizations that give back to society by taking some responsibilities. Therefore, it enhances the organization's reputation among investors and consumers.

The Concept of Assurer Independence and Application on CSR Assurance

Any assurance engagement is for the public interest, and therefore, the Assurer is expected to conduct his or her activities independently and as required by the code of ethics (Week 5, 2020). This is because their reports will be used to enhance the user's degree of confidence with the organization about the measurement or evaluation of the subject matter against the criteria (Lins et al., 2017). Moreover, the assurance will help increase trust, credibility, recognition, reduce risk, and improve stakeholder's communication on CSR assurance.

Why is it Important for the Assurer to be Independent?

The need for the independence of the Assurer arises because the users of the reports and other third parties have insufficient information and data or knowledge to understand what the organization's statements contain (Lins et al., 2017). Therefore, they mainly rely on the Assurer's independent assessment. Moreover, public confidence in the conduct of entities mainly relies on the credibility of the reports and opinions provided by the independent Assurer.

Issues that Need to Be Considered to Ensure Independence

Independence of the Assurer is paramount in providing credible reports and engagements. Some of the factors to consider to ensure independence include self-review threat, self-interest threat, multiple referrals threat, ex-staff, and partner threat, advising threat, and relationship threat. Having a personal relationship with one of the employees affects the credibility of the report as the Assurer can be easily manipulated (Lins et al., 2017). Moreover, the assurer to not provided any advice to the client, and this will be difficult to have an independent report (Week 5, 2020). Moreover, the Assurer should not provide any services to his former employers. Likewise, the Assurer should not accept multiple referrals from one client, as this will affect their independence.

References

Ali, Y., Pretaroli, R., Socci, C., & Severini, F. (2018). Carbon and water footprint accounts of Italy: A Multi-Region Input-Output approach. Renewable and Sustainable Energy Reviews, 81, 1813-1824. https://doi.org/10.1016/j.rser.2017.05.277

Lins, K. V., Servaes, H., & Tamayo, A. (2017). Social capital, trust, and firm performance: The value of corporate social responsibility during the financial crisis. The Journal of Finance, 72(4), 1785-1824. https://doi.org/10.1111/jofi.12505

Week 10. (2020). Accounting and accountability for fresh water.

Week 5. (2020). Governance and Sustainability assurance