You have recently been hired by Bedford, a new manufacturing company, as a senio

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Question

You have recently been hired by Bedford, a new manufacturing company, as a senior accountant. The company is located in Denver, but it plans to expand into the national market within two years and into the global market within five years. Bedford plans to fund expansion efforts through the use of venture capitalists. Michael Gross, the CFO, informs you that several potential venture capitalist investors have inquired about Bedford’s Corporate Social Responsibility (CSR). They also want to know Bedford’s short-term and long-term plans to maintain sustainability. Until now, the company has not discussed this topic, and executives know very little about CSR. Mr. Gross has asked you to research the topic and report back to him. Particularly, he wants to know the following:

what is sustainability,

what are the costs and benefits,

a recommendation whether or not Bedford should consider sustainability when developing strategies to meet organizational goals and objectives, and

the reason for your recommendation.

Prepare a memo to the CFO addressing his requests.

Possible Discussion Topics

- Should companies be required to issue sustainability reports? All companies (i.e. public, private, large, small)?

- For companies who issue sustainability reports, should assurance be provided by and independent thirds party?

Explanation / Answer

Sustainability is the capacity of an organisation not only to stand, but also grow from strength to strength, in the face of challenges, necessities and also adversities-- ie. mainly it is the capacity to keep pace with time and technology, around the world.

Sustainability could be defined as an ability or capacity of something to be maintained or to sustain itself. It's about taking what we need to live now, without jeopardising the potential for people in the future to meet their needs. If an activity is said to be sustainable, it should be able to continue forever.

It is all about enduring;in organisations, it is about enduring systems and processes, in place;conducive to the growth of the organisation , its owners- shareholders,employees, vendors and customers, society in which it opeartes, the governments under whose jurisdiction it operates.(Responsible and timely compliance of the rules and laws applicable from time to time).

The above referred is termed as comprehensive Corporate Social Responsibility(CSR) - conducting the business in a way that is beneficial to the society at large, and at the same time , maximising shareholders' wealth. Tthe implementation is bound to involve heavy expenditures in the beginning, these are sure to give benefits in the long-run , for the life of the company, in terms of name and fame-- So to be treated as deferred revenue expenditure or even capitalised.

CSR leads to sustainability , which in turn helps to meet organizational goals and objectives. A sustainable company can make long-term plans for the benefit of all involved.It is imperative for investors to analyse these aspects - for a low return company with sustained repute is far preferable for a high return quick-rise one.

Venture cappitalists, who provide start-up funds to businesses, are better to insist on sustainability reports, irrespective of the size and stature of the business , as ultimately they need a decent return on their investment and also as a matter of security for their money involved. Sustainability reports, are a sort of assurance or guarantee and instills confidence in the minds of the investors - measurement of riskiness/otherwise of the venture.

It is certainly better if Sustainability reports are assured by an independent third party, as it will carry an image of truthfulnness and sincerity of purpose. There is cross-checking by the signing third party and the company is vouched in the eyes of the public.There is elimination of bias, to a certain extent.

Thus potential venture capitalist investors are more interested in organisations having good sustainable growth and development,and that too vouched by unconnected independent third parties.

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You have recently been hired by Bedford, a new manufacturing company, as a senio

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