Sustainability Accounting and Accountability for Environment

Question: Discuss about theSustainability Accounting and Accountability for Environment. Answer: Introduction The Deepwater Horizon spill is a very controversial topic and although in the beginning the general public put full responsibility on BP for what they perceived to be negligence and disregard for the environment on the companys part that caused the manmade disaster, the blame quickly shifted on the Americans government because its response was not deemed strict and impactful enough given the serious nature of the situation. The Gulf of Mexico Oil Spill out more than twenty categories of important and profitable ecosystem services in the Gulf of Mexico as well as around it, some of it generating at least US$12-47 billion per year as it is the case for ecosystem services for the Mississippi River Delta. The Deepwater Horizon spill almost caused the extinction of the Louisiana commercial fishery which would have been a hard hit to the economy of the state as it generates US$2.5 billion per year (Houdet, Germaneau, 2011). To understand the full magnitude of the situation as well as the appropriate responses the involved parties need to have had it is important to look at the public interest theory as well as the role of regulators meaning politicians. Interest theory and role of regulators. According to the interest theory, regulations are policies that are determined by market forces, supply and demand but in this case, it is between the government who is the supply component and other interests groups who make the demand component (Uno and Bartelmus, 2013). The interest theory states that regulations are not developed by politicians but by industries, and the main purpose of these regulations is to create advantages for every player operating in those industries. So it is understandable why the general public felt that the government was being too lenient when setting sanctions for BP as the Oil and gas industry is one that designed the regulations that govern the market including lenient penalties for oil leakage because the well-being of its members matters the most. Also, industries operate these regulations without any interference from external mechanisms. Further, regulators permit players in an industry to participate in the decision-making regarding economic m atters that affect them, and although these representative groups are small in size to minimize running costs they will always act for the benefit of the members of the industry first, and the society comes second (Russel and Dey, 2017). So consumers that were affected by the Deepwater Horizon spill like the twenty categories of ecosystem services will not be the focal point when sanctions are being set because of the phenomena of cross-subsidization meaning that the regulations in the Oil and gas industry were developed to benefits companies the industry such as BP more than related industries in which the Louisiana commercial fishery operates in. The role of regulators is to impose the regulations that the industry has designed for itself to accomplish the economic goals of a country. So it would not have been possible for the American government to give anything else other than a pretax charge of US$40.9 billion as a penalty for the Deepwater Horizon oil spill because doing otherwise would have violated industry regulations and interfere with the accomplishment of some of the countrys economic goals. Another role that regulators have always had is to find ways to use the least amount of energy, time and money when dealing with different issues and to allow industries in develop regulations that will govern them is the best way to accomplish that role (Gray and Owen, 2014). Motivations of politicians as regulators and my personal opinion On paper, what motivates politicians to regulate an industry is the best interest of the society or the general public, but in reality politicians, they enforce regulations for their own benefit, and as a result, they are not predictable (Bebbington and ODwyer, 2014). For example, the regulations in the oil and gas industry are lenient because most of them have invested in companies like BP and it would not be in their best interest for the company to fall even if a lot of people depend on the ecosystem services. As regulators, politicians have perfected the art of not taking into consideration certain groups in the decision-making process to ensure that proper and fair decisions are not made regarding regulatory measures to enforce. Most of the time, the best interest of the society is not taken into consideration because all politicians are focusing on is ensuring that the members of a particular industry are happy and content in exchange for political support for example funding c ampaigns. Another thing is that when government establish regulatory agencies, they are usually controlled by people who have personal interest in certain industries so when it comes to enforcing regulations they will never act against them, and as a result they allocate resources per the needs of industry instead of the society(Gray and Owen, 2014). Because their personal interest drives them when regulating industries, I agree with the article that regulation for oil and gas activities needs to be increased and more reliable environmental accounting and reporting is one of the best ways to achieve that. Companies are responsible for most environmental problems we are facing today because of their goals for profit maximization, rapid technological developments and well as reckless consumption of natural resources. Oil and gas are one of the industries who greatly impact the environment due to the overproduction and emission of carbon dioxide (CO2) causing air and water pollution as in the cause of the Deepwater Horizon oil spill. Environmental accounting will be greatly beneficial for both internal and external stakeholders as it will help evaluate the environmental impact errors will have on organizational operations involving water, air, and soil as well as the health and safety of employees and the society in general. More reliable environmental accounting will facilitate compliance with internal, local and national environmental standards which will allow companies to develop much more effective techniques in preventing environmental errors (Gandhi, Dalvadi, 2017). More reliable environmental reporting will be greatly helpful in ensuring that companies are careful in their operations in order them to discharge any responsibilities to the society and future generations as inefficient use of natural resources and pollution of the environment will interfere with their quality of life. More reliable environmental reporting will also strengthen a companys responsibility to its stakeholders because by disclosi ng full environmental information will make it less likely for companies to commit any act that does not have societys best interest at heart. Increased environmental accounting and reporting would have increased the legitimacy of BP because, after the Deepwater Horizon oil Spill, internal and external stakeholders needed be reassured that the company has learned from its mistakes and that it will do everything possible to ensure that an incident that like never occurred again but BP failed to do that. Conclusion The Deepwater Horizon spill or the Gulf of Mexico Oil Spill was a serious and extreme environmental crisis that should receive equally serious and extreme responses from both regulators and BP, but they failed to that in an attempt to hide the real nature of the situation to both internal and external stakeholders. Regulators should ensure that interest of the society is the main focus, but they choose to put their personal interests first which creates a reckless atmosphere in the oil and gas industry when it comes to the use of natural resources. There is the need to have more reliable environmental accounting and reporting as it benefits both organizations and the society in general with its future generations. References Bebbington, J., Unerman, J. and O'Dwyer, B. eds., 2014.Sustainability accounting and accountability. Routledge. Gandhi, T., Dalvadi, Y. (2017). An analytical study on social environmental accounting and reporting. International Journal of Research in Management Social Science, 5(2). Gray, R., Adams, C. and Owen, D., 2014.Accountability, social responsibility and sustainability: Accounting for society and the environment. Pearson Higher Ed. Houdet, J., Germaneau, C. (2011). The finaicial impacts of BOs response to the Deepwater Horison Oil Spill: Comparing damage evaluation approaches highlighting the need for more reliable environmental accounting and reporting. Synergiz. Russell, S., Milne, M.J. and Dey, C., 2017. Accounts of Nature and the Nature of Accounts: Critical reflections on environmental accounting and propositions for ecologically informed accounting.Accounting, Auditing Accountability Journal, (just-accepted), pp.00-00. Uno, K. and Bartelmus, P. eds., 2013.Environmental accounting in theory and practice(Vol. 11). Springer Science Business Media.