Sustainability: formula sheet

Key formulas

Definition of sustainability

Meet present needs without compromising the ability of future generations to meet their needs

Learn this wording. It is the standard definition and earns easy marks.

Triple bottom line

TBL = Economic (profit) + Social (people) + Environmental (planet)

Not a single calculated number. Each area needs its own measures and targets.

Stakeholder priority

Power high + Interest high = Manage closely (key player)

From Mendelow's matrix. Use it to rank which stakeholders drive sustainability policy.

Triple bottom line

Sustainability performance = economic + environmental + social results

A concept, not a calculation. Use it to organise KPIs into three groups.

Sustainability Balanced Scorecard perspectives

Financial | Customer | Internal process | Learning and growth (+ optional environment and society perspective)

Either embed sustainability measures in each perspective or add a fifth. State which approach you use.

Performance Prism facets

Stakeholder satisfaction | Stakeholder contribution | Strategies | Processes | Capabilities

Start with stakeholder wants and needs, then work to the other facets.

GRI standards structure

Universal standards + sector standards + topic standards (economic, environmental, social)

Used for external disclosure of impacts. Do not quote detailed standard numbers unless the question gives them.

Good KPI test

Linked to objective, measurable, relevant, controllable, with a target and timeframe

Use this to justify any KPI you propose.

Four-way environmental cost classification

Conventional + Hidden + Contingent + Image and relationship = total environmental cost

Use these four labels in the exam. Give a reason for each classification from the scenario.

MFCA total cost of a process stage

Total cost = material cost + system cost + energy cost + waste management cost

System costs are labour, depreciation and other overhead. Waste management cost (disposal and treatment) is wholly negative product.

MFCA positive and negative product split

Negative product cost = material, system and energy cost × (loss quantity ÷ input quantity) + waste management cost

Allocating by physical quantity is the usual MFCA approach. Positive product cost = total cost − negative product cost.

Negative product share

Negative product cost ÷ total cost × 100%

Shows how much of total spend is wasted. It is usually far higher than the waste disposal bill alone.

Life cycle cost

Life cycle cost = design and development + production + operating + end-of-life costs

Include disposal and decommissioning. If asked for a present value, discount each cash flow at the given rate.

Carbon footprint

Carbon footprint (tCO2e) = Σ (activity quantity × emission factor)

Emission factors are given in the question. Do not memorise factors.

Six capitals (IIRC)

Financial, Manufactured, Intellectual, Human, Social and relationship, Natural

Name the capital and say how it is increased, reduced or transformed. A bare list earns little.

ISSB disclosure structure (IFRS S1 and S2)

Governance → Strategy → Risk management → Metrics and targets

IFRS S1 covers sustainability-related risks and opportunities in general. IFRS S2 covers climate-related ones.

Integrated report purpose

Strategy + governance + performance + prospects → value creation over short, medium and long term

Use this to explain how integrated reporting differs from a standalone sustainability report.

Greenwashing red flags

Vague claims + selective data + unsupported targets + no assurance

A checklist for evaluating a report, not a formal rule.

Quick revision

• Sustainability means meeting present needs without harming the ability of future generations to meet theirs.
• CSR is how a business takes responsibility for its impact on society and the environment beyond legal minimums.
• Always identify the stakeholders in the scenario and what each one expects.
• Sustainability performance is often framed as economic, social and environmental results, sometimes called the triple bottom line.
• Good measures are linked to strategy, are measurable and have clear owners and targets.
• Frameworks should be judged on fit with the business, data availability, cost and usefulness for decisions.
• Environmental costs include both visible costs, such as waste disposal, and hidden costs, such as lost materials and reputation damage.
• Environmental management accounting aims to make hidden environmental costs visible so managers can act on them.
• Sustainability reporting builds trust but can be selective, so consider reliability and assurance.
• Integrated reporting explains how an organisation creates value over time using different forms of capital.
• Balance each answer: give benefits, costs, limitations and a clear recommendation.
• Tie every point to the scenario facts and finish with a recommendation.

Common mistakes

• Treating sustainability and CSR as identical and defining neither. Fix: State that sustainability is the outcome or goal and CSR is the responsible behaviour and policy used to pursue it. One sentence each is enough.
• Describing the triple bottom line as profit plus two extras without explaining measures. Fix: Give an example measure for each area from the scenario, such as emissions, staff turnover and return on capital.
• Listing generic KPIs such as 'reduce pollution' with no measure or link to the scenario. Fix: Write the KPI as a measure with a unit and timeframe, for example tonnes of CO2 per unit produced, and tie it to the scenario.
• Describing a framework from memory without applying it. Fix: Spend most of your answer on scenario-based measures. Keep the definition to one or two sentences.
• Treating all environmental costs as conventional costs. Fix: Ask of every cost: is it buried in overhead (hidden), possible in future (contingent), or caused by stakeholder perception (image)? Use all four categories.
• Putting only waste disposal cost into the negative product in MFCA. Fix: Lost material also carries its share of material, system and energy cost. Allocate these by quantity and add waste management cost on top.
• Treating integrated reporting and sustainability reporting as the same thing. Fix: State that integrated reporting explains value creation across capitals, mainly for financial capital providers. Sustainability reporting focuses on environmental and social impacts for a wider group.
• Listing the six capitals without applying them. Fix: For each capital you mention, give a scenario example and say whether it rises, falls or is transformed.

Exam tips

• Always define the term first in one line, then spend the rest of your time on application to the scenario.
• Use stakeholder power and interest to justify why a firm acts, and name the stakeholders from the case.
• Give balanced answers. Show costs and benefits, then conclude.
• Offer concrete measures and targets, as APM links sustainability to performance management.
• Use a clear layout with short headed paragraphs to earn professional skills marks.
• Always tie KPIs to the named organisation and its stakeholders. Generic lists earn few marks.
• Know what each framework is for: GRI for external disclosure, the scorecard for strategy-linked management, the prism for stakeholder-driven design.
• Give each KPI a unit or target. A measurable indicator scores better than a vague aim.