Earth5R Research Article: Sustainability In Commerce, Accounting, And Finance: Bridging The Awareness Gap
Introduction
In Today’s world, Sustainability has transitioned from just a fashionable word to an important application. Commerce, Finance and Accounting sectors, that were driven by the pursuit of profit earlier, are now undergoing a major shift as they include Sustainability into their core business models and practices. Yet, the relationship between financial activities and Sustainable Practices remains less explored. To address this gap and understand the complex balance between economic viability and environmental responsibility, we have undertaken a comprehensive research survey.
This study aims to understand the attitudes, beliefs, and behaviors of diverse people coming from the field of Commerce, Accounting and Finance. Analyzing the perspectives of these individuals will give insights that have the potential to reshape business strategies, inform policymakers, and encourage financial institutions to align with the values of Sustainability.
By getting insights on topics ranging from Green Accounting and Corporate Social Responsibility (CSR) to Sustainable Finance and Ethical Investments, this research serves as a tool for firms and industries. The responses serve as a representation of consumer sentiment, preferences, and expectations, thus helping businesses understand catering to eco-conscious consumers.
Materials and Methods
Materials:
To conduct this study, two sources of materials were employed.
One-on-one Survey: Chosen as the primary tool for data collection due to its user-friendly nature, accessibility, and real-time response tracking capabilities.
Online Literature: Existing literature was reviewed to ensure that the survey captured the essence of Sustainability in the fields of Commerce, Accounting as well as Finance. Numerous websites, and publications were accessed to understand the trends, key terms, and critical topics in Commerce, Accounting and Finance from a point of view of Sustainability.
Methodology:
Research Survey
The survey was undertaken by the individuals that are a part of the Earth5R global community, leveraging a highly engaged, informed, and diverse set of respondents. This strategic choice ensured that the participants had a foundational understanding of the Commercial, Financial and Accounting sectors, ensuring the quality of responses.
Survey Design and Distribution
A one-on-one survey was conducted by means of a structured questionnaire which was designed in such a way so that it was easy for participants to understand and respond to.
The survey aimed to gather valuable insights on various aspects of Sustainability in the world of Commerce, Accounts and Finance, including awareness, consumer preferences, and behavior.
Data Collection
The survey was made available to a diverse group of participants, including individuals from different age groups, educational backgrounds, and regions. Participants were provided with clear instructions on accessing and completing the survey. Additionally, we ensured that data collection adhered to ethical principles, respecting participants’ privacy and confidentiality.
Data Analysis
Upon receiving 100 responses from various parts of the country, we performed a thorough analysis. Data analysis included quantitative methods to identify patterns, preferences, and trends among participants. We used simple statistical techniques to analyze and then summarize collected data.
Results
1. Demographics
The predominant demographic profile of our survey participants falls within the 18-24 age range, primarily college students. Gender distribution reveals that 55% are female, 44% male, and 1% preferred not to disclose their gender, and the majority of our respondents are based in India.
2. Sustainability Awareness
A substantial 95% of respondents said that they are familiar with the term ‘Sustainability’ and as high as 97% of respondents affirmed the importance of Sustainability within the Commerce, Accounting, and Finance sectors. Since the majority of the crowd consists of well-informed and literate individuals belonging to the age group of 18-24, the awareness of Sustainability as well as its importance in the Business sectors is high.
3. Corporate Transparency
Over half of the respondents (51%) strongly advocate for enhanced corporate transparency in Sustainability practices, while 42% agree to some extent, and 7% express neutrality. Moreover it was interesting to note that only 65% of the respondents place high value on institutions that are transparent about their ethical and sustainable practices,23% remain neutral and 12% place slightly high value.
Recognising the importance of Transparency in Sustainability Practices in the Corporate World, Business Responsibility and Sustainability Reporting Framework (BRSR) introduced by SEBI in 2012, has finally made it mandatory for reporting requirements so that they can enhance transparency and foster responsible and sustainable business practices. (Tripathi, 2023)
4. Consumer Preferences
A significant 86% of respondents prefer to buy from environmentally conscious companies, in contrast to a minor 3% who do not and 11% who remained neutral. We also observed that when it comes to checking product labels for environmental impact, 38% of the respondents always check the labels, a majority 61% of respondents do so sometimes and a minority of 1% never check the labels.
Since a large audience would prefer engaging with environmentally friendly companies, Patagonia initiated its Common Threads Recycling Program, successfully reclaiming 45 tons of apparel for recycling and converting 34 tons into new garments. This effort became a pivotal moment in the brand’s recent two-year history, leading to the repair of over 30,000 articles of clothing in a year and a half. As a result, the company saw a 30% surge in revenue, amounting to $540 million in the subsequent year. (Umapathy, 2020)
5. Regulatory Environment
A majority of 82% of respondents favor mandatory corporate disclosure of Sustainability metrics in financial reporting, while 15% are uncertain and 3% do not favor the mandatory disclosure. When we asked the respondents if they would trust and advocate for financial institutions more if they complied with International Sustainability Regulations, more than half (54%) said they would, 30% said they probably would, 12% were neutral and only 4% said they probably would not.
Understanding what the youth favors and bringing necessary changes in the mode that Businesses operate, beginning in 2024, the European Union’s Corporate Sustainability Reporting Directive (CSRD) is set to revolutionize the way ESG reports are made. This new mandate will require nearly 50,000 businesses, including those from outside the EU with subsidiaries in the region or listed on EU-regulated exchanges, to disclose their sustainability metrics. (“Get Ready for the Next Wave of ESG Reporting,” 2023)
6. Green Accounting and Sustainable Finance
Awareness about ‘Green Accounting’ is at 58%, with 25% being unaware and 17% having partial knowledge. Another interesting observation that we made was that about 57% of the respondents have heard of ‘Sustainable Finance’; however, 21% are unaware, and 22% have limited understanding.
A study conducted by Siedschlag & Yan, 2020, suggests that boosting a nation’s investment in eco-friendly financing can indirectly elevate a company’s effectiveness while bettering its environmental practices. Additionally, Chen & Ma (2021) make the case that sustainable financing plays a significant role in mitigating environmental degradation and enhancing eco-friendly performance.
7. Investment Preferences
A majority (63%) express willingness to invest in Green Bonds or Sustainable Funds, although 6% would not be interested and 31% remain uncertain, and an overwhelming 91% believe financial institutions should intensify investments in renewable energy, with 9% unsure.
Owing to the importance of Green Bonds, Apple has set aside $4.7 billion to fast-track its objective of achieving a carbon-neutral supply chain by the year 2030. The initial bonds from 2016 and 2017 have been fully designated for specific projects. The Green Bond from 2019 is backing 50 different initiatives, one of which includes the groundbreaking low-carbon aluminum technology. These collective projects aim to reduce or offset approximately 2.88 million metric tons of CO2 equivalents, install close to 700 MW of global renewable energy capacity, and further recycle R & D. (Apple, 2023)
8. Circular Economy and Sustainable Business Models
We saw that 59% of respondents were familiar with the concept of a circular economy, 20% somewhat understood the concept while 21% were not familiar, and we also observed that a staggering 93% advocate for companies to transition towards more sustainable business models while 6% remained unsure and a minority of 1% do not advocate for sustainable business models.
Further, 50% of our respondents also felt that businesses today are more ethical in terms of Sustainability than they were 10 years ago, 34% were unsure and 16% do not agree.
Circular Economy is an integral aspect of a Sustainable Business Model. This is well reflected in H&M’s “Close the Gap” initiative launched in 2013. Items in good shape are refurbished and sold to new owners , while those that cannot be repaired or refurbished are recycled into materials for new products. Shoppers who donate their used clothing earn vouchers for future discounts at H&M stores, thereby encouraging a full-circle Circular Economy model. (Dilmegani, 2023)
9. Consumer Willingness to Pay
Over half (56%) indicate possible willingness to pay a premium for sustainable goods, while 35% affirm they might and 9% are unwilling.
10. Influence of Consumer Choices
A significant 88% believe their consumer choices can shape corporate Sustainability practices, 10% were unsure while only a minority of respondents of 2% thought that consumer choices do not influence Sustainability practices.
11. Corporate Social Responsibility (CSR)
A substantial 82% of the respondents felt that CSR activities should prioritize Sustainability, 15% were unsure and 3% do not think sustainability should be a priority in CSR activities. The survey data also suggested that 69% would trust in the companies that are actively engaged in Sustainability based CSR, 27% were unsure and 4% said they would not trust.
Coca-Cola is intensifying its commitment to Sustainability, targeting crucial sectors like climate change, waste management, farming practices, water conservation, and product integrity. With a vision for ‘Zero Waste,’ the company plans to retrieve and recycle each bottle they distribute, make all their packaging fully recyclable, and restore all the water consumed during production back to natural ecosystems. By the year 2030, Coca-Cola aspires to slash its carbon emissions by a quarter. (Simon @ DMI & by Digital Marketing Institute, 2022)
12. Government Regulations
Earth5R survey shows that a strong 79% call for stricter government regulations on corporate Sustainability, but 6% disagree and 15% remain neutral.
13. Sustainability Policies and Importance in Business Engagement
Surprisingly, only 47% are informed about existing Sustainability policies within the field of Commerce, 23% were unaware and 30% were unsure. Interestingly for only 66% of respondents, Sustainability is an important factor when selecting a business for engagement, 13% saying that sustainability is a slightly important factor, 19% saying they are unsure and 2% saying sustainability is not a crucial factor while selecting a business.
14. Community and Educational Engagement
Only 28% of the respondents are part of Sustainability-focused communities while 72% are not. The data also shows that only 35% actively educate themselves on Sustainability topics, 64% occasionally educate themselves and only 1% does.
15. Sustainable Living and Carbon Footprint
A commendable 83% practice sustainable living while 17% do not, but very surprisingly an equal percentage (83%) have never calculated their carbon footprint and the remaining 17% have calculated their carbon footprint.
16. Ethical Practices and Punishments
A resounding 90% insist that companies should be penalized for unethical environmental practices and only 10% say companies should not be penalized.
Understanding the importance of following environmental regulations, The U.S. The Attorney’s Office in Manhattan declared on 14th January 2021 that Toyota Motor was penalized $180 million for persistent non-compliance with the Clean Air Act. This marks the highest financial sanction ever imposed for failing to meet federal guidelines on emissions reporting.(Hiroko Tabuchi, 2021)
17. Social Media Engagement and influence of Social Media Campaigns
Our studies show that 48% of respondents would invest in firms prioritizing ethical investments, 32% probably might invest, 17% are neutral and 3% would not invest.
Moreover, our data suggests that 30% frequently engage with Sustainability-promoting businesses on social media, 50% occasionally engage, 18% rarely engage and 2% never engage.
When asked about the influence of a company’s Sustainability campaign on social media, 26% of the respondents said that they would be highly influenced, 51% are moderately influenced, 15% are neutral, 7% are slightly influenced and the remaining 1% are not influenced.
With regards to liking and sharing posts on social media regarding Sustainable Practices in Businesses, 44% said they only liked the posts but did not do anything further. Only 10% of the people took the effort to share the posts even if they may not have liked it. 38% of the people actually liked as well as shared such content and only 8% neither liked nor shared anything.
When asked if the respondents would value educational posts and infographics on Social media related to Sustainable Finance and Ethical investments, 70% of them said that they would value such posts, 19% were neutral and only 11% would give it slight value.
Lastly, when asked how likely were the respondents to trust and follow recommendations from Social Media influencers coming from the backgrounds of Commerce, Accounting and Finance, only 47% said they would likely trust and follow the recommendations while 51% remained neutral and only 25% said they are unlikely to trust or follow the recommendations.
18. Employee perspectives
For Businesses to understand what their employees value and would want from their employers in terms of Sustainability, the respondents were asked a series of questions. We first asked them how they felt about Financial Institutions actively funding and supporting Local Community Development Projects, 76% felt very positively, 17% remained neutral, 6% felt only slightly positively and 1% did not feel positively.
In terms of favorability, 74% of the respondents would view a Business as more favorable if a Business provided Regular Sustainability training to its employees. Only 14% would view it as slightly favorable and 12% remained neutral. 68% of them also said that they would value an open channel of Communication where they could provide feedback on the company’s Sustainable Commercial Practices,25% were neutral,6% would only slightly value and only 1% would not value .
66% of the respondents said they find it important that Businesses in the Financial sector have strategies to deal with economic downturns sustainably, without massive layoffs, 23% remained neutral and 11% found it only slightly important. We also saw that 62% of the respondents would be more loyal to a company that prioritized Sustainable Growth over immediate profits, 26% probably will be more loyal, 11% are neutral and only 1% probably will not be loyal .
Finally when asked how likely the respondents were to engage with a Company that upheld high Ethical Standards in its practices, 65% said they would be inclined, 24% were neutral, 9% were only slightly inclined and only 2% were not inclined.
19. Important factor to improve Sustainability in Commerce, Accounts and Finance
The respondents were asked an open ended question wherein they were asked to share their thoughts on important factors that could improve Sustainability in the fields of Commerce, Accounts and Finance. Some of the inputs that the respondents shared included:
- ESG Integration: 22% of respondents advocate for incorporating ESG principles into business decisions.
- Ethical Supply Chains and Transparency: 8% responses touch on the need for an ethical supply chain, indicating that businesses should not only focus on profitability but also on the social and environmental impact of their operations. 9% saw transparency in these operations as crucial for holding companies accountable.
- Stable Funding and Investment: 25% of respondents pointed out the necessity of having stable funding sources, especially for Sustainability projects.
- Government Policies: 5% of responses pointed to the need for stronger government policies to enforce Sustainability practices.
- Technological Innovations: The adoption of environmentally friendly technologies was mentioned as crucial by 8% for improving Sustainability. This includes waste management practices, renewable energy sources, and digital solutions to reduce waste.
- Consumer Behavior and Education: 5% mentioned the role of consumer demand and education in driving Sustainability.
- Resource Management: There were mentions of resource management practices like waste management, reducing carbon footprints, and water conservation as additional but essential aspects of improving Sustainability.
- Political Influence: Only 1% of the responders said that politics play in shaping and enforcing Sustainability efforts.
20. Sustainability in Commerce, Accounting and Finance
The final concluding question that was given to our respondents asked them to mention comments or suggestions with respect to implementing Sustainability in the fields of Commerce, Accounting and Finance. Their inputs included:
- Innovation and Research: 3% Respondents emphasize the need for innovative approaches in product design, accounting methods, and financial instruments that prioritize Sustainability. The call for investing in R&D is loud and clear, underlining the sector’s potential as a hotbed for sustainable innovation.
- Metrics and Accountability: 5% Respondents urge organizations to develop robust Sustainability metrics and Key Performance Indicators (KPIs). They recognize the value of data-driven decision-making, both for internal assessments and broader societal impact.
- Circular Economy: The concept of a circular economy finds support from 6% respondents, with suggestions for recycling, reusing, and refurbishing to minimize waste and optimize resource utilization.
- Carbon Accounting and Decarbonization: Carbon accounting practices are recommended to measure and reduce greenhouse gas emissions. 5% Respondents also express the need to decarbonize energy systems.
- Ethical and Sustainable Investment: 22% respondents demand for investment portfolios to include green bonds, impact investing, and other ESG-compliant financial products.
- Ethical Procurement and Supply Chain Management: 8% Respondents want procurement to involve ethical sourcing and sustainable supply chain management, reducing negative environmental and social impacts.
- Regulatory Compliance and Policy Advocacy: A call for regulatory frameworks that enforce sustainable practices is evident. Many urge active policy advocacy and collaboration with governmental bodies.
- Financial Literacy and Education: The importance of educating stakeholders in financial literacy with a focus on Sustainability is promoted by 3% of the respondents.
- Collaboration and Stakeholder Engagement: 3% respondents push for collaborative efforts involving businesses, governments, NGOs, and civil society, as well as active engagement with shareholders on Sustainability matters
Conclusion
The following Research done to understand prevailing Sustainability in the sectors of Commerce, Accounting and Finance unveils a robust demand among young adults, particularly those within the 18-24 age range, for sustainable practices in the realms of commerce, accounting, and finance. A staggering 97% endorse the importance of Sustainability in these sectors, and 86% prefer buying from environmentally responsible companies. The data also shows a strong call for corporate transparency, and a notable 79% advocate for stricter government regulations on Sustainability.
Consumer behavior is shifting towards responsibility, with 88% believing their choices can influence corporate Sustainability practices. However, there is still room for growth in awareness about green accounting and sustainable finance, despite significant willingness to invest in ethical funds.
On the social media front, 25% are highly influenced by Sustainability campaigns and educational content, highlighting the power of digital platforms in shaping perceptions. Employee perspectives reveal a favorable view of businesses providing regular Sustainability training and open communication channels on sustainable practices.
In summary, the findings make it abundantly clear that the individuals belonging to the age groups of 18-24 are not just leaning but pushing strongly towards a more sustainable future in Commerce, Accounts and Finance. Their ideas, suggestions and comments must be taken into consideration by the Businesses to enhance their consumer engagements. In conclusion, the pan India survey conducted by Earth5R data serves as a roadmap for businesses to align their strategies with emerging Sustainability in the realms of Commerce, Accounting and Finance.
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