Sustainability reporting is still relatively new and its use is not yet mandatory. But from the standpoint of materiality, companies should disclose information if it has become important enough to influence the decisions of users of financial information.
The focus on sustainability has led to some notable innovation. For example, Tesla Corporation has become the United States’ premier electric car manufacturer and is planning an electric semi-trailer to compete with diesel semi-trailers. The company has also made huge strides in the development of economically viable battery and solar technologies, and developing affordable attractive glass solar tiles that can provide all the electricity necessary for the typical home. The Tesla Gigafactory, located in Sparks, Nevada, expects to be able to produce more lithium ion batteries in one year than were produced in globally in 2013.
If industries reduce carbon emissions and improve social responsibility, what issues remain to guide the quest for sustainability in the future? One possibility is the need for security against cyberattacks, which not only harm the company’s functioning but also dent consumer confidence. Another issue will be whether companies can continue to become or remain global in their operations, as political winds shift and the potential arises for backlash against the resulting economic changes in industrialized nations.
A third issue is the role of artificial intelligence (AI). As AI gains prominence and robots become more capable of undertaking complex tasks, white-collar workers of the 21st century may find themselves losing jobs like their 20th-century manufacturing counterparts did. This result will raise a number of ethical questions, such as whether corporations have a greater responsibility to society than to shareholders, and whether the use of robots should be taxed in order for governments to provide retraining to displaced workers and a universal basic income1.
AI can herald positive change as well. It is expected, for instance, that 10 million self-driving cars will be on the road by 2020,2 most of them electric and rechargeable using wind or solar power. In fact, you may not even need to own a vehicle at all! Instead, you can be taken to work in a driverless car that will drop you off and then collect other passengers.
These changes are examples of what some call the technological revolution.3 To maintain relevance, today’s worker must learn to be multi-skilled, more innovative, and have a good analytical mind that is able to think critically and creatively. These types of shifts can increase stress for employees and means that the business will be subject to high degrees of scrutiny by stakeholders. As a result, stakeholders will demand that companies be more accountable than simply providing financial reports.
In 2017, Microsoft founder, Bill Gates called for a “robot tax” to be introduced to offset the inequality expected to result from automation.4 He called for the robot tax to finance a Universal Basic Income (UBI). A universal basic income is the concept by which citizens would receive a regular and unconditional amount of money from the government that is sufficient to meet basic needs. Another similar concept is that of a Universal Basic Dividend (UBD) by which a portion of the initial public offerings (IPOs) of a company would go into a public trust that generates an income stream to pay the UBD.5
- What are the costs to society of increased automation?
- How might a robot tax be calculated and implemented?
The discussion of the environmental and social responsibility in this chapter only touched on some of the issues that affect our world. Sustainability reporting allows companies to not only report what they are doing to be good global citizens, it also makes them more aware of areas in which they need to improve. Awareness of the areas that need improvement allows companies to create a plan to continually improve their role in society. In addition, as more and more companies assess their own social responsibility and move to improve their sustainability, it draws attention to unreported sustainability issues as well as to companies that are not being socially aware. Social responsibility reporting has moved us a long way from merely reporting the financial results of businesses. It provides a foundation that links all businesses to all citizens, whether they are shareholders or not, and it helps bind us all in a way that says we are all truly part of a single, global environment that is determined by the actions of both businesses and citizens.
Key Concepts and Summary
- Innovation, security risks, and globalization mean that businesses must adapt quickly or risk becoming obsolete.
- Artificial intelligence is predicted to significantly change our lives in the future. Some of those changes may threaten the stability of employment for white collar workers. Workers must learn to be multi-skilled, more innovative and possess a good analytical mind.
- 1 Catherine Clifford. “Automation Could Kill 2× More Jobs Than the Great Depression—so San Francisco Lawmaker Pushes for Bill Gates’ ‘Robot Tax.’” CNBC. August 24, 2017. https://www.cnbc.com/2017/08/24/san-francisco-lawmaker-pushes-forward-bill-gates-robot-tax.html
- 2 Business Insider Intelligence. “10 Million Self-Driving Cars Will Be on the Road by 2020.” Business Insider. June 15, 2016. http://www.businessinsider.com/report-10-million-self-driving-cars-will-be-on-the-road-by-2020-2015-5-6
- 3 Klaus Schwab. “Are You Ready for the Technological Revolution?” World Economic Forum. February 19, 2015. https://www.weforum.org/agenda/2015/02/are-you-ready-for-the-technological-revolution/
- 4 Yanis Varoufakis. “Robot Taxes and Universal Basic Income.” Acuity. June 16, 2017. https://www.acuitymag.com/technology/robot-taxes-and-universal-basic-income
- 5 Yanis Varoufakis. “Robot Taxes and Universal Basic Income.” Acuity. June 16, 2017. https://www.acuitymag.com/technology/robot-taxes-and-universal-basic-income