Alvita works for a company that extracts minerals from the ground. Her new CEO wants to be sure the company can keep extracting minerals and continue to work with landowners to get mineral rights for many years. The CEO asks Alvita to audit how the likely the company will be able to sustain its operations long-term. What should Alvita keep in mind while conducting this audit?

Question

A) She needs to realize she is subject to more regulation than if she were conducting a financial audit.
B) She will need to report her results in the same format as any other audit.
C) She should consider company profits, the local people, and the local environment.
D) She can ignore financial and profitability data for the purposes of this audit.
E) She should do what pleases the local landowners, even if it is not profitable.

Answer 1

C) She should consider company profits, the local people, and the local environment.
Companies that are serious about sustainability conduct audits to evaluate how effectively they are serving all stakeholders and protecting the environment. Sustainability audits typically evaluate performance in terms of a triple bottom line—that is, the company's financial performance, environmental impact, and impact on people in the company and the communities where it operates. In practice, reporting a triple bottom line is not standardized and regulated the way financial reporting is. A company might report its profitability in the traditional way, its environmental impact in terms of efficiency of resource use, and its human impact in terms of general policies. Specific practices vary, but performing a sustainability audit can serve as a first step toward measuring and reinforcing sustainable business practices.