Accounting Research Harvard Case Solution & Analysis


The main purpose of this research report is to determine the impact of environmental issues on the businesses. There are many environmental issues which are affecting the businesses; the most common are sustainable development of water and raw materials, industrial waste and air emissions. These environmental issues make it necessary for the businesses to change their production and manufacturing methods and procedures to meet the imposed standards related to the environment. However, implementing these standards within the businesses, costs businesses a lot of money. The businesses therefore, pay for the proactive environmental measures and protective environmental measures and they reap the rewards through the creation of customer goodwill and an increase in customer base.

Apart from these issues, in many of the developing countries of the world, many development projects have harmed the environment. All these projects are under criticism for damaging the environment. As the investments in the developing world are increasing these concerns for environment are also further increasing. It was in the late 1990’s that more attention and emphasis was drawn to one of the United Nations project to get corporate sponsorship and collaboration on supporting the environmental issues and human rights and being more accountable and responsible towards it.

An extensive report was released in May, 2002, regarding the United Nations Environment Program (UNEP). This report stated that the gap between the efforts to reduce the impact of industry and businesses on the nature and the declining state of the environment is increasing. The reason for this is that only a small number of companies in each of the industry are actively involved to save their environment by integrating environmental and social factors into their business decisions.

Apart from this, due to increased consumerism, there has been a rise in the number of the environmental groups. These groups are campaigning on various issues related to the environment such as the production of environment friendly products. However, there are also many areas where the corporation’s involvement in the various environmental issues could lead towards environmental problems as a result. Corporations are the world’s most major entities and their activities have an enormous impact on the lives of the people and the concerns of corporate-led globalization are increasing which is further increasing the environmental problems. The purpose of this report is to demonstrate the impact of environmental issues on the various stakeholders of the company and the business itself.


The importance of organization’s attitude towards the stakeholders is gaining a lot of importance. The concerns of the environmental issues due to business activities are increasing rapidly.  Many leading corporations of the world are now taking the responsibility for their environmental impacts and therefore, they are trying to communicate and improve their environmental performance via an environmental report and the performance indicators related to the environment. There has been a lot of progress made related to this as compared to 10 years ago from now, however, the reporting today is still poor. The information that is delivered to the shareholders and the stakeholders of the company is not properly reported and it is unevenly reported across all the sectors and all the companies and the relationship of this reporting with the financial fortunes of the company is also unclear.

The reporting in the financial statements regarding the environmental risks is limited. This jeopardizes the sound investment of the company. The reporting of the external costs related to the environment is also virtually non-existent. This represents a very large but hidden subsidy and this is given by the society to the company’s shareholders. The value of this reported information is therefore, very much limited. Due to the limited use of this reporting the external investors and all the stakeholders of the company could make very little use of this information.

The table above lists the main environmental issues and the business consequences as a result. These are not the only issues but they are the core issues related to the environment, which the businesses need to address and pay adequate attention towards it.

The financial communities are itself not certain that what kind of information related to the environmental concerns would be of use and interest to the stakeholders of the company. However, many parts of the financial sectors are now showing more interest towards the environment......................

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