Trang chủ Bản tin chuyên ngành Vietnam – Sustainability Accounting

Vietnam – Sustainability Accounting

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Sustainable development is a term describing present development which can be continued in the future.

Sustainable development has become a hot topic in many conferences of the United Nations World Summit on Sustainable Development and in universal declarations. Many countries have made it their goal and built up a suitable strategy considering the conditions of their own economy, society, culture, etc.

Truly sustainable development has been shown to consist of three elements:

  • economic growth
  • social progress
  • environmental protection

What are the difficulties that every nation, especially developing nations, has run into in achieving sustainable development? In most developing countries, economic growth is the foremost goal. Their governments have therefore offered policies to attract foreign investments by licensing resource exploitation and facilitating factory construction and projects. It is undeniable that foreign investors have brought many benefits in terms of tax revenue and local employment. However, 20 years since the opening up of its economy, Vietnam now is facing a number of negative consequences, known as its “environmental/ social footprint”, caused by those projects. The first six month period of 2016 has seen many occurrences of dead fish on the seashore of central Vietnam, red mud invasion in residential areas in the Central Highlands and floods in big cities after rain deluges. Millions of fishermen have nothing left to support themselves and children cannot go to school. In order to tackle this issue, along with governmental actions, enterprises should also be made aware of the importance of the sustainable development to their business.

The role of professional accounting.

Currently, the obligation to pay compensation for damage to the environment, natural resources or to society is not mandatory and not even mentioned in many legal documents on accounting. Normally, accountants only record environmental cost when penalties or compensation are imposed by the court. They do not fully understand the impact of this cost on the long-term development of the enterprise. Even managers are not completely aware of their future obligation to dismantle, remove and restore sites before installing assets. Besides this, including environmental cost means higher selling prices and less competitive products. That is why many companies in Vietnam ignore this cost when calculating production cost.

It is therefore advisable for accountants to record environmental cost as a separate cost item, assessed periodically so as not to mix it with other indirect costs. Every enterprise should also make transparent calculations, include environmental cost in the production cost and prepare a periodic provision to charge for environmental loss or invest in environmental protection in the long run.

Outlook.

In the future, the consumer’s awareness of sustainable development will definitely be improved. When that happens, consumers will prefer to use environmentally-friendly products, which are good both for them and for their off spring. If research and development activities are invested in, they can bring benefits to the environment.

Also, positive data on cost, emission, pollution and reproduction rate etc. in annual statements will help attract investors who favour sustainability. The resulting benefit for enterprises monitoring environmental cost will be to strengthen their prestige, make their products more competitive and achieve the goal of sustainable development.

“Every enterprise should include environmental cost in the production cost and prepare a periodic provision for environmental loss or invest in environmental protection.”
Hang Phuong Nguyen ECOVIS VSBC, Hanoi, Vietnam

Development co-operation

Vietnam is a partner in Germany’s development co-operation work. This work concentrates on the areas of sustainable economic development, environmental protection, preservation of resources and the healthcare sector.

Contact us:

ECOVIS VSBC

Level 2, Kinh Do Building
292 Tay Son Street, Dong Da District
Hanoi
Vietnam
Tel.: +844 38 567 777
Fax: +844 39 446 455
E-Mail: hanoi@ecovis.com
www.ecovis.vn

ECOVIS VSBC

Level 11, MB Building
538 Cach Mang Thang Tam Road, Ward 11, District 3
Ho Chi Minh City
Vietnam
Tel.: +84 839 90 77 77
E-Mail: hochiminhcity@ecovis.com
www.ecovis.vn

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