The origins of management accounting can be traced to Commerce along the ‘Silk Road’, where traders calculated the cost of the venture and the profit they could make by undertaking such trade. Then with the advent of the industrial revolution, cost accounting became recognised as a profession in the ‘works’ departments of the many factories that sprung up in that period. Once again, the objective was profit maximisation, and cost accountants calculated the ‘cost’ of a product manufactured in this world of Industry. Cost accounting morphed into ‘management accounting’ where forecast of future profits were made. Management accountants provided information to general management as to the best mix of products and services that would enhance the future profitability of their organisations.
In more recent times we have come to know that ‘profit’ alone, ignoring all other ‘externalities’ (such as the needs of the environment and society) is not enough. There is no point earning large profits if it damages the rivers, pollutes the air and underpays the labour that toils to produce the goods and services demanded by our consumerist society. Worst still is when this labour is housed in sub-standard and unsafe ‘sweat-shop’ factories and in many cases even child labour is exploited.
But the most serious effect of this unrelenting chase to achieve maximum profits is the damage it is causing to this earth, and the ability of future generations to survive. The release of green-house gases and the damage it is causing to our climate is a scientific fact. Only politicians who are either after the funding and clout of big-business, or simply too ignorant to understand the science, try to run the argument that the climate change that we see all around us, in every country, is not caused by mankind. How management accountants can play a role in the area of ‘carbonomics’ is now part of the CMA syllabus. We can use tools such as life-cycle costing (LCC) to show the carbon emission impact of marketing our products; from the initial mining of the base raw material needed for the product; to the fuel needed to manufacture the product; to the transportation required to deliver the product to the point of sale; to the final waste disposal of the product after its useful life. Clearly, management accountants have to look beyond profits made by just only selling the products; to what damage this unrelenting chase for efficiency and productivity is causing to the Earth’s environment.
Now another issue that will affect our future generations to sustain itself has come about. This time not to our atmosphere, but to the plant seeds that are the basic building blocks of the food we eat and the very soil that is needed to nourish it to life. In the pursuit of profit on a global scale, companies that once created chemical weapons for war, first used that chemistry after the war to produce ‘fertilizer’ for lands that for centuries did not require such due to crop diversity. These lands have now become ‘drug addicts’ requiring larger and larger ‘shots’ of fertilizer. Next, the chemistry was used to create ‘Genetically Modified’ (GM)food in which have property rights attached to them, and thus the ability to make a ‘profit’ for those large companies like Monsanto that ‘manufactured’ these GM seeds.
The story of seed is unfortunately one of loss, control, dependence and debt. It shows how big business, from America and Europe wants to make vast profit by colonizing our food system, no matter what the true cost to our future generations is.
It’s time to change the story.
I implore you to watch the excellent documentary(use the link shown after title of this message) which is a shocking exposure on how big business is impacting the food chain in the pursuit of profit maximization. It is a landmark film narrated by Jeremy Irons.
Best Wishes to all members in their professional life.
Professor Janek Ratnatunga
CEO, CMA Australia
