SUSTAINABILITY
ES-17A Sustainability and short-term decision making (Learning Objective 1)
Over the past several years, decommissioned U.S. warships have been turned into artificial reefs in the ocean by towing them out to sea and sinking them. The thinking was that sinking the ship would conveniently dispose of it while providing an artificial reef environment for aquatic life. In reality, some of the sunken ships have released toxins into the ocean and have been costly to decontaminate. Now the U.S. government is taking bids to instead dismantle and recycle ships that have recently been decommissioned (but have not been sunk yet.)
Assume that a recently decommissioned aircraft carrier, the USS Stingray, is estimated to contain approximately 40 tons of recyclable materials able to be sold for approximately $41.5 million. The low bid for dismantling and transporting the ship materials to appropriate facilities is $43.1 million. Recycling and dismantling the ship would create about 500 jobs for about a year in the Rust Belt. This geographic area has been experiencing record-high
- 1. Is it more financially advantageous to sink the ship (assume that it costs approximately $0.7 million to tow a ship out to sea and sink it) or to dismantle and recycle it? Show your calculations.
- 2. From a sustainability standpoint, what should be done with the decommissioned aircraft carrier? List some of the qualitative factors that should enter into this analysis.
- 3. As a taxpayer, which action would you prefer (sink or recycle)? Defend your answer.
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Managerial Accounting (5th Edition)
- Analyze CSR initiatives at Green Manufacturing Green Manufacturing is a traditional manufacturing company located in the midwestern United States. The companys operations manager is developing a strategy to become more CSR-oriented. In an effort to evaluate possible areas where CSR initiatives can be implemented, the manager has gathered the following data regarding three potential CSR activities: The recycling activity would carry on indefinitely. The solar panels would have a useful life of 30 years. The replacement of assembly room light fixtures with natural light is assumed to have an 80-year effect. A. Identify which CSR activities Green Manufacturing should implement. B. For each CSR activity you recommend, identify an appropriate related performance metric.arrow_forwardPollution Prevention, P2 Investment Heaps Company produces jewelry that requires electroplating with gold, silver, and other valuable metals. Electroplating uses large amounts of water and chemicals, producing wastewater with a number of toxic residuals. Currently, Heaps uses settlement tanks to remove waste; unfortunately, the approach is inefficient, and much of the toxic residue is left in the water that is discharged into a local river. The amount of toxic discharge exceeds the legal, allowable amounts, and the company is faced with substantial, ongoing environmental fines. The environmental violations are also drawing unfavorable public reaction, and sales are being affected. A lawsuit is also impending, which could prove to be quite costly. Management is now considering the installation of a zero-discharge, closed-loop system to treat the wastewater. The proposed closed-loop system would not only purify the wastewater, but also produce cleaner water than that currently being…arrow_forwardPollution Prevention, P2 Investment Heaps Company produces jewelry that requires electroplating with gold, silver, and other valuable metals. Electroplating uses large amounts of water and chemicals, producing wastewater with a number of toxic residuals. Currently, Heaps uses settlement tanks to remove waste; unfortunately, the approach is inefficient, and much of the toxic residue is left in the water that is discharged into a local river. The amount of toxic discharge exceeds the legal, allowable amounts, and the company is faced with substantial, ongoing environmental fines. The environmental violations are also drawing unfavorable public reaction, and sales are being affected. A lawsuit is also impending, which could prove to be quite costly. Management is now considering the installation of a zero-discharge, closed-loop system to treat the wastewater. The proposed closed-loop system would not only purify the wastewater, but also produce cleaner water than that currently being…arrow_forward
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- Refer to the XYZ Company example in the chapter and the results in Panels A and B of Exhibit 12.7. On the basis of this information, management of the company has decided to delay the implementation of the project for 1 year. Those managers are now interested in knowing how sensitive this decision is with respect to the assumptions they’ve made regarding the basic analysis. Therefore, they have asked you to prepare some supplementary analyses regarding Panel B of Exhibit 12.7. Required: 1. Holding everything else constant, what is the expected NPV of the decision if the probabilities for the three scenarios are as follows: high (20%), medium (47%), and low (33%)? 2. Holding everything else constant, what is the expected NPV of the decision if the probabilities for the three scenarios are as follows: high (24%), medium (43%), and low (33%)? 3. Prepare a 5 × 3 table containing the estimated NPV of the decision to delay for each combination of the following: risk-free rate of interest…arrow_forwardTrue or False Sustainable development as a concept was launched in the late 1990s. Sustainability reporting started with public sector companies. Sustainability information includes both financial and non-financial information. Sustainability reporting can be a tool to attain cost savings One of the main developers of sustainability reporting has been the Global Reporting Initiative (GRI)arrow_forwardRefer to Problem 14.41. In the environmental benefits section of the report, three types of benefits are listed: income, savings, and cost avoidance. Now, consider the following data for selected items for a four-year period: The engineering design costs were incurred to redesign the production processes and products. Redesign of the product allowed the substitution of a material that produced less ozone-depleting substances. Modifications in the design of the processes also accomplished the same objective. Because of the improvements, the company was able to reduce the demand for pollution control equipment (with its attendant depreciation and operating costs) and avoid fines and litigation costs. All of the savings generated in a given year represent costs avoided for future years. The engineering costs are investments in design projects. Once the results of the project are realized, design costs can be reduced to lower levels. However, since some ongoing design activity is required for maintaining the system and improving it as needed, the environmental engineering cost will not be reduced lower than the 90,000 reported in 20x5. Required: 1. Prepare a partial environmental financial statement, divided into benefit and cost sections for 20x3, 20x4, and 20x5. 2. Evaluate and explain the outcomes. Does this result support or challenge ecoefficiency? Explain.arrow_forward
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