Professional Documents
Culture Documents
Anand Balaji
ISEG SCHOOL OF MANAGEMENT, LILLE-PARIS
December 2014
ACADEMIC DIRECTOR:
Prof. Endneich Cristoph
Anand Balaji
ISEG SCHOOL OF MANAGEMENT, LILLE-PARIS
December, 2014
ACADEMIC DIRECTOR:
Prof. Endenich Cristoph
Acknowledgements
Apart from the efforts of me, the success of this thesis depends largely on the
encouragement and guidance of many others. I take this opportunity to express my
gratitude to the people who have been instrumental in the successful completion of
this thesis.
I wish to express my whole hearted gratitude to the God Almighty for his
constant care and blessings, without which I would never have succeeded in making
this, venture a reality.
I am greatly indebted to IESEG School of Management, Lille, France for
providing me an opportunity to do my project.
I am grateful to Prof. Endneich Cristoph, my thesis Director for his valuable
suggestions and providing all necessary support and advice as a guide throughout my
thesis.
I am extremely thankful to all the executives of Air France-KLM for their kind
co-operation to complete my research.
Finally, I would like to thank my parents and friends for their understandings
and supports on me in completing this project.
Anand BALAJI
Abstract
The objective of this research is to well comprehend the concept of accounting for
sustainability and find out how would Air France-KLM, a company from the aviation
industry benefit from the use of accounting for sustainability. Related to corporate
social responsibility, accounting for sustainability is the generation, analysis and use
of monetary environmental and socially related information in order to improve
corporate environmental, social and economic performance. With an intention to find
out how accounting for sustainability works in a given company under a given
industry, we proceed with the case of Air France-KLM. Since this is a qualitative
research, we would try to interview officials of Air France-KLM at the higher
hierarchical level in order to obtain an ideal answer for our research question. Based
on previous studies we were able to understand the accounting for sustainability is
influenced by seven factors. These factors include the different approaches by the
accounting bodies, the concept of going concern, the monetary unit concept, the
reporting entity concept, the time period concept, the triple bottom line and the
quadruple bottom line. In the research we would take these factors as its respective
propositions and interview the executives of Air France-KLM. From analyzing the
transcripts of the conducted interviews we look to find an answer for our research
question of how Air France-KLM is benefiting from the use of accounting for
sustainability. This research accurately describes the concept of sustainability, how it
works, why it is needed, how can it contribute to benefiting a company, how does it
make a tie with accounting, the aviation industry, Air France-KLM and finally try to
answer the research question of how does Air France-KLM benefit from the use of
accounting for sustainability?
Contents
Table of Contents
1.1 What is accounting for sustainability?...........................6
2.1
2.2
2.3
2.4
2.5
2.6
2.7
Proposition
Proposition
Proposition
Proposition
Proposition
Proposition
Proposition
1.................................................................................... 40
2.................................................................................... 41
3.................................................................................... 43
4.................................................................................... 44
5.................................................................................... 46
6.................................................................................... 48
7.................................................................................... 49
ONE......................................................................................... 63
TWO........................................................................................ 67
THREE..................................................................................... 71
FOUR....................................................................................... 75
FIVE......................................................................................... 79
SIX........................................................................................... 83
1. Introduction
Throughout the past decade, the world has witnessed a huge increase in technology
due to the steady climb of globalization and an increase in demand and consumption.
Most of the industries today have started to seize this opportunity. This may seem like
a benefit in the short term but unfortunately is a damaging component in the long
term. All these instant developments have brought about unforeseen damages to our
planet through the degradation of the environment, changing of the civil rights,
changing the knowledge of people and social inequity. When these sudden
developments add themselves to the already occurring health hazards, the decrease in
the benefits of globalization and the continuous increase in the interest of people to
attain economic wealth through both technological jumps and industrialization, they
on a total just result in an increased exploitation of the earths natural resources which
in turn lead slowly to the destruction of our planet. In order to put an end to this issue
at the earliest, the concept of sustainable development was created which in turn
lead to the creation of sustainability accounting.
concepts that are involved in accounting for sustainability and find out as to how a
company such as Air France-KLM is using these concepts in its business. Before
getting to know about Air France-KLM, the paper shall gradually point out the
different concepts that are key in accounting for sustainability and also explaining
why it emphasizes more on a company from the aviation industry. There are several
dilemmas that global aviation companies have faced since the very beginning. These
issues were mostly related to the social, financial and economic situation that
surrounded those companies, as a result of which they were resolved with relative
ease. Today, however, companies are increasingly introduced to various difficult
dilemmas. The companies today are facing great pressure in reducing the cost
associated with the supply chain, which if succeeded by shifting to a cheaper supplier
might result in an increased effect on the social and environmental factors that would
in turn lead to different reactions from several stakeholders, employees, clients and
authorities which may affect the financial performance of the company in a negative
manner. One other issue would be that in regards to decisions of the management with
respect to the location of the facilities. Traditionally senior management would have
to overcome several complications in this area that would be caused due to costs
relating to their raw materials, shipping and labor. (Helmut 1989) Nowadays they
have to think about the risks their decisions could have on the social, environmental
and political factors that surround the company. They are all searching for a more
effective and efficient way to carry out their operations without having to risk the
state of the environmental, social and political factors. This is where sustainability
comes in. Following sustainability by using some of its models like the corporate
sustainability model (Epstein 2008) would not only help understand the drivers of
success and the consequences that occur due to investing in sustainability but, would
also help to analyze the economic, environmental and social impacts of the
commodities produced by such companies. This paper is broken into sections in
which we would try to achieve a better understanding about sustainability, why it is
needed, how can it contribute to benefiting a company, how does it make a tie with
accounting, the aviation industry, Air France-KLM and finally try to answer the
research question of how does Air France-KLM benefit from the use of accounting for
sustainability?
2. CONCEPTUAL BACKGROUND
7
execution of different acts that turn the world against itself (Sherry, 1987). Similar to
this criticism, Arrington (1990) proved that this type of accounting is responsible for
the non-beneficial results of advances through its capitalist rationality. And also
Roslender (1992) stated that such association and obsession of accounting with profit
was one of main reasons for economic and social insecurities. Apart from the
profession of accounting itself, the independent accountants have not been spared any
criticisms what so ever. It is due to the unethical accounting scandals caused by the
acts of such independent accountants that the corporate capitals lost money, people
became unemployed, businesses that were unsustainable took place and also other
accounting acts that resulted in destroying the environment (Burrit and Maunders,
1991). Adding to all of this is the low disclosure level about the actual performance of
companies by the professional accounting firms that has been widely criticized
(ACCA, 2002, p.9). All these criticisms combine to have the ultimate problem with
accounting for sustainability since accounting has always only considered superior the
interests of its clients when compared to that of the environment and would hence
provide information that would only in paper benefit both the society and the
organization whereas in reality it is only the organization (client of the accounting
firm) that benefits out of the whole process (Davids and Boyce, 2005; Roberts and
Dwyer, 2004). Hence we understand why this study is required, in order to not only
find out if the sustainable accounting done today in the aviation sector are working in
proving these criticisms wrong, but also to find out how sustainable accounting would
actually benefit the organizations in the aviation sector.
Now that there is a general idea about the research problem, how the sustainable
development is associated with accounting and why accounting for sustainability has
been criticized thus far, it will be ideal to know about how far have organizations
reached in accounting for sustainability?
report. It became important to include the activities of risk assessment, assurance and
auditing into this circle. Hence, it became clear that the concept of sustainability went
beyond referring to mere ecological and social issue but also included the direct
factors of the company such as production, marketing, sales alongside being
sustainable in more than just the financial way. A study by Thomas L. Friedman in
2009 shows that there exists a connection between the financial sustainability and the
environmental sustainability which makes them both belong to the same concept as it
was the inadequate accounting which was the one that did not make adequate
consideration for the risk which may have well resulted in the 2009 financial crisis.
This shows that the financial crisis in 2009 was a result of improper accounting for
sustainability. (Friedman 2009, pg. 15)
From the discussion of the report of Millennium Ecosystem Assessment of the UN
(2005) it is understood that the act of not putting a price on the natural resources that
are consumed by a nation would result in those resources of being low in value and
the resources would hence be overexploited, the profits arising out of which would be
taken by the companies and losses would belong the rest of the society. (Friedman
2009, pg.25)
From the discussion with respect to the World Wild Life Funds Living Planet Report
(2008) it can be seen that the main reason behind most of the world todays
difficulties apart from it giving more value to its financial assets are due to the
environmental shortage which is caused by the undervaluing of all the environmental
assets which are the backbone for both the present and future generations. (Friedman
2009, pg. 25)
Hence it can be understood from previous papers that there exists a tendency to fail in
considering for sustainability risk as a result of which enters underpricing of the assets
and products that are sold. (Friedman 2009; Epstein 2008)
There has also been increased focus provided towards integrated reporting which
came from the Accounting for Sustainability Project that was initiated in Britain
(www.accountingforsustainability.org) among several other places. The International
Integrated Reporting Committee (IIRC) has also been working on creating the ideal
reporting model that will best help analyze the joint impact of the financial, social,
environmental and governance factors. Although this intention seems like the required
step forward, there are mixed notions about integrated reporting. Some state that it is a
combination of environmental and social factors including the financial information
while other state that the word integrated stands for bringing together all the
sustainability factors into the accounting measure.
11
12
In this section, we focus on the link that exists between accounting for sustainability
and traditional accounting. Accounting for sustainability, that has traditionally been
treated in order to account solely for ecological and social issues is now being given
more importance due to rising recent problems that have not been addressed through
traditional accounting and financial reporting.( www.accountingforsustainability.org )
In order to address this aspect, we first look at integrated reporting. Integrated
reporting is widely used to either report sustainability problems alongside the
financial reports or merging the sustainability problems in relation to different
measures
of
accounting
within
the
financial
reports
or
both.(
http://www.integratedreporting.org ) In this process however, there exists many
inconsistencies that need to be addressed. One type of such inconsistency is with
respect to how the financial reporting is used in the Anglo-Saxon countries to analyze
the timing at which the future cash flows would take place, creating an invisible link
between accounting measures and cash flows. According to this theory, future cash
flows are effectively assessed using accrual accounting. But, most of the ideas about
including sustainability and accounting measures do not contain the use of direct cash
flows, for example; the use of environmental resources with the exception of cases
where the carbon taxation need to be examined. Hence it is practically impossible to
add such measures without changing a huge aspect about the fundamentals of
traditional reporting which exists in a lot of countries. These four concepts are also
included in both the US GAAP and IFRS. They are:
Going concern
Monetary unit
Reporting entity and
Time period
Of these four fundamental concepts, the going concern part is one in which an
assumption is made according to which the instrument under analysis would be in
complete function for at least the foreseeable future and would help attain all of its
assets and obligations (Faux, 2008). Since this concept acts as a basis for the auditors
report, a problem with this concept can have a negative impact on the report. The
impact of such failures can be depicted in the case of the collapse of Enron that also
resulted in huge social expense that in turn implies that there is an improper use of
sustainability.
The monetary units concept was one that was traditionally used in financial
reporting. In this concept, an equal monetary amount is allotted for all the nonmonetary items. This is interesting given the fact that all the environmental and social
data that are mentioned in such reports to date are in non-monetary terms. It was for
this reason that Friedman (2009) introduced a new form of accounting that combined
the environmental risk including the financial risk into pricing the products. But even
here, there is no measure that can be used to include the abuse of environmental
13
resources or the considerable damage that the environmental resources undergo from
the release of harmful gases such as carbon dioxide. In this line thus far there has been
no accounting method that can be used to measure the cost of emitting carbon dioxide
and including the same into the products that are produced by such businesses.
The next concept namely the reporting entity deals with defining the entity for which
the financial reports are being prepared (Faux, 2008). Reports are traditionally
prepared for an economic entity but through integrating financial reporting it are
observed that the required entity for sustainability reporting would differ a lot from
that which is used for the financial reporting.
The concept of time period may be one of the crucial concepts with regards to this
research especially due to its implications. Traditionally the financial reporting is done
on information collected over a span of one year. Two methods are used depending on
the user of the information in order to take appropriate decisions (Gray, Fagerstrm,
Hassel, 2011). The first method is called the revenue-expense method and the second
is called asset-liability method. Of these two methods, the asset-liability method is the
one that is widely used by both the US GAAP and the IFRS since it is more feasible
for sustainability accounting due to its concentration on the resources that can be
consumed by a company that would ensure its sustainability both at its start and at its
end.
From understanding these four concepts and thereby the link between accounting for
sustainability and integrated reporting it is understood that the integrated reporting
faces problems when it comes to financial reporting caused due to its rigid notion.
After understanding about integrated reporting, doubts arise with respect to how do
the users of financial information rely on the information provided. The reason for
this is not only to know about the factor that convinces people in and around a
business to believe in it but also that such a factor would convince the proper working
of accounting for sustainability. Hence the understanding of this part seems significant
prior to exploring the factors that affect accounting for sustainability. It is clear from
the previous parts that the users of financial information or shareholders need a
certain level of assurance with respect to the information provided about
sustainability. This can be achieved by obtaining assurance on information provided
in the environmental reports. Such assurance seems necessary in the part of investors
in order to evaluate risks related to sustainability and to overcome the fake
environmental statements produced by certain companies like in the Massey Coal
case (Harris 2011). Assurance of the environmental reports of a company can create
huge benefits for the companys reputation, which in turn adds value to the company.
Through this it can be understood that the interests that the investors and creditors
have on assessing the risk of sustainability of a company before making decisions
have been only recently realized and hence arises the importance for assured
sustainability information.
14
Figure 1.1
Economic
Performan
ce
Sustainabili
ty
Performanc
e
Social
Social
Performan
Performan
ce
ce
Environment
Environment
al
al
Performance
Performance
15
familiar only with how to go about the economic performance, which deals directly
with their current financial and economic concerns. Such concerns can only be
answered by analyzing the social measure and the environmental performance. Most
companies fail or neglect to emphasize on the social measure and the environmental
measure. This lack of attention to these two factors would not only affect the involved
companies but the environment as a whole in the long run. One example to show the
importance of these factors is The Bhopal gas tragedy where in, the lack of social
and environmental responsibility by Union Carbide resulted in a disaster that not only
took away thousands of lives but also affected the environment, the results of which
can be seen till today.(Soderstrom 2013) Triple Bottom Line (TBL) is a model in
which, the main aim is to report on the impacts of corporate, social and environmental
activities. It is one of the most accurate methods used to reveal the non - transparent
information about the effect of a companys operations on the environment and
society. Although it may be very effective, TBL accounting seems to have problems
with regards to the entity interests of the corporations that use this method that makes
the very cause of sustainability accounting look like just that of an environmental
concern. This would in turn cover the existing environmental problems that are
actually caused by the company. Hence the initial claims made by the professional
accountants and corporations lose their trust and seem to be a weak method to
sustainable development (Gray, 1992).
Since TBL is initially proven to be an effective medium to unveil information about
how a companys actions affect the environment, this study would try to analyze the
information obtained from the aviation sector using the TBL accounting method and
find out how does sustainable accounting benefit the companies in the aviation sector.
Furthermore the TBL (triple bottom line) model is a performance measurement model
that is used for measuring sustainability. The TBL model deals with three types of
performance that influence sustainability. These are the economic, social and
environmental performance of the given company or organization. These three
dimensions are a close-knit set and are hence termed as the three Ps. The three Ps
stand for profit, people and planet. It is to be understood from this that every company
must maintain the equilibrium between their profit; meaning their financial and
economic growth and their people; meaning their focus on the society around them
which includes the health, safety, awareness and quality of life of the people who are
located in and around their company and finally planet; meaning how responsible do
these companies prove themselves to be with regards to the environment.
Considering the consequences that the lack of these dimensions can have on both the
society and the environment, it is obligatory that this problem should be dealt with
high importance. When looking at the importance of the profession, one model to be
considered is the quadruple bottom line (QBL) model (Suharto 2009). The QBL is
also a social responsibility model that consists of the same three Ps as in the TBL
model, the profit, people and planet along with an all-new P which stands for
purpose.
16
Figure 1.2
Profit
Profit
People
People
QB
L
Planet
Planet
Purpos
e
e
1.
2.
3.
4.
5.
This model is useful to understand that, in order to be successful, the companies had
to be appreciated by their employees, they should have provided good value to their
clients and most of all they should have the lasting relationship with their suppliers.
The QBL model seems more important due to its focus on purpose that is used to
stimulate passion as purpose in the accounting profession represents the following
factors:
The ethics of the organization
The values of the organization
The governance of the organization
The ability of the organization to meet pubic expectations
The ability of the organizations to increase the stakeholder value
Furthermore, there was a study by Collins (2012) that researched on the different
sustainability based initiatives that the accounting profession took in order to favor
sustainable development. The key point to notice here is that, the paper by Collins
focused on how effective was the sustainability initiatives taken by people in the
accounting profession? This is similar to in idea to the aim of this paper as this paper
focuses on discovering how does sustainable accounting benefit companies that use
them and relate it more particularly to the aviation sector. Hence the use of the paper
by Collins (2012) would be of extreme importance and would also add more precise
information from a professional standpoint. The findings from this study show that
there were several initiative taken in the lines of sustainability in order to support
sustainable development. However the study also reveals that the commonly used
sustainability accounting is nothing more than a least effective version of the actual
sustainability for development. Other studies indicate that such form of problems in
the day to day usage of sustainability accounting were found to be caused by the
following factors:
17
1.
2.
3.
4.
5.
take a significant toll on the environment as opposed to that on the ground which is
preceded by its impact on the ozone layer. It is also noted that the temperature of the
earth was reduced by 1-2 degree Celsius post the air flight halt that took place during
the 2001 9/11 crisis (Burritt, Schaltegger, Tingey, 2011).
From the information obtained up until now, it is possible to see three things clearly:
The need for sustainability in the aviation industry
What would happen if nothing is done to control emissions
What benefits can be attained if emission are controlled
Of these three observations, the first and second ones directly relate to the need for
sustainability that in turn would lead to the need for accounting for sustainability in
the aviation industry. But, the third point about the benefits that can be attained was
not clear and needs to be laid out in the lines of sustainability which in turn would
lead us to how does accounting for sustainability work under such circumstances.
This is essentially the purpose of this research, to find out as to how does one of these
companies benefit from the use of accounting for sustainability which will help to in
turn in answering the research question of how does Air France-KLM benefit from the
use of accounting for sustainability?
This paper would hence focus on different factors that relate to how the accountants
would account for the challenges faced by sustainable aviation that they would have
to in turn communicate to the stakeholders and customers of the respective
companies. These factors also consist of the different thinking and strategies that each
company would incorporate in carrying out effective accounting for sustainability.
The aviation sector as of late is focusing a lot on biofuel. This is due to two reasons,
one is the need for sustainability and the other is due to the increased fuel costs. The
result of this choice of fuel is the need to further trim their carbon dioxide emissions
which would not only affect the environment but would also cost the companies due
to the newly initiated airport carbon tax. Due to the existence of such serious
environmental and financial consequences, the companies in the aviation industry are
obligated to keep using biofuel. But are they using it effectively and to their complete
benefit? This is one question we are looking forward to answer through accounting
for sustainability in this paper. It is for this reason that this research shall be conducted
strictly within the boundaries of the aviation sector. Since this type of research has not
been conducted in the lines of the aviation sector, this will be a new approach to
understand how accounting for sustainability helps the companies in the aviation
sector.
20
The group goes on to use these objectives to create their yearly programs and road
maps.
21
22
4%. The use of all of these practices and efforts have resulted in a carbon di oxide
reduction of 110,000 ton and 35,000 ton reduction in fuel consumed last year (2013)
when compared to the previous year 2012, resulting in a saving of nearly 28 million
euros.
Figure 1.3
Air France-KLM fuel consumption (Air France-KLM CSR, 2013)
However, saving fuel was not where Air France-KLM wanted to stop, the group
wanted to use this as a foundation towards its interest in sustainability and build on it.
A part of this effort was fleet modernization, a process in which the group changed
most of its aircrafts to ones that are more energy efficient, have better environmental
performance and finally economic. The new fleet would last for more than 10 years.
This fleet includes their joint acquired flights that shall be delivered in 2015. The fleet
itself consists of 25 Boeing 787s and another 25 Airbus A350s. The group not only
ensures that is has the most efficient and modern fleet in order to achieve
sustainability but it also makes sure that it operates in an efficient manner by
following their new policy of reducing the weight that is carried on board. This
reduction of weight is achieved by reducing the technical documentation for the pilots
and by improving to lighter trolleys, carpets and seats. Air France also enabled the
entire of its fleet with improvised and light baggage containers that were designed out
of composite fiber. A total of 3,650 such containers had been replaced which in turn
resulted in a reduction in the annual carbon dioxide emissions by 8000 tons. Air
France-KLM along with Martinair Cargo authorized new cargo nets that are much
lighter and made with extremely resistant fiber. Their objective is to replace all of
their existing cargo nets with these new and improvised nets that would in turn reduce
the overall weight and result in an annual carbon dioxide reduction of 55,000 tons. Air
France has always focused on reducing the weight of its cabin equipment. As a result
of its continuous effort, it had finally reduced the weight by 15% in the last 5years.
24
Each kilogram of such reduced weight would result in the annual reduction of carbon
dioxide by 73 tons.
Figure 1.4 (Air France-KLM CSR, 2013)
Optimizing the routes of the flights and the path of the flights can save fuel, it is for
this reason that Air France has taken part in implementing a new procedure to save
fuels whilst the fleet arrive at Paris-CDG called point merge. Due to air traffic
control issues alone the fuel consumption level of the Air France group is at 70,000
tons per year. Any effort to reduce this level could help greatly towards reducing the
companys carbon footprint. Since KLM managed to improvise the usage of airspace,
it was able to reduce almost 12000 tons of carbon dioxide in 2013. The pilots of Air
France-KLM utilize procedures such as flight plan precision, taxiing with one engine,
speed adjustments and use of aircraft ground power units or GPU instead of auxiliary
power unit or APU with a goal of making and following the most fuel efficient
procedures possible. This is a sole example to understand that everyone in the Air
France-KLM group, from the management to the employees play a vital role in the
groups path towards being sustainable. But Air France-KLM knows that this is not
going to get them to a sustainable future by itself. They wanted to get their customers
aware about sustainability and also give them the chance to control the carbon dioxide
emission levels through offsetting. Under this option, Air France-KLM would provide
their clients with carbon dioxide calculators that function based upon the actual
emissions of each flight. By opting to offset, the customer would be awarded
sustainable carbon reduction credits by means of the groups tie up with GoodPlanet
and CO2ZERO program. The success of this means is seen by the reduction of
25
170,000 tons of carbon dioxide in the past years. This result shows how efficiently the
group has been handling the issues related to sustainability.
2.8.7 Biofuels
As seen in the previous sections, Air France-KLM (Air France-KLM CSR, 2013) is a
group that is clearly motivated towards sustainability and most certainly upon the fact
that it can be achieved by the use of biofuels and that it can be carried out in a safe
manner. The objective of Air France-KLM is to establish a market that does not
hesitate to use biofuel. In order for that to happen, the biofuel must comply with the
existing strict economic, environmental and social criteria. This compliance would
not only enable for other companies and clients to view biofuel as a safe alternative to
traditional fuel but shall also trigger a demand for it in the coming years. In order to
make this dream possible, Air France-KLM made partnerships with many corporate
clients, logistic partners and airports. The group supports any innovative idea as long
as it favors its much valued sustainability criteria that include the reduction of the
carbon dioxide emission, low impact on its biodiversity and a support towards the
development of its local communities. Due to its involvement in biofuels Air FranceKLM became members of the Roundtable on Sustainable Biomaterials (RSB) in
2008. This standard is so renowned that it has been included in the European
Commissions Regulation (RED). Apart from solely committing to such innovations,
KLM struck a deal with the Dutch government in 2011 to make possible a market for
biofuels. Air France on the other hand is making its own efforts towards producing
biofuel from forest waste as a part of the SYNDIESE project which is organized by
the Atomic and Alternative Energies Commission and aims to demonstrate how easy
it is to produce a complete production line of biofuels. This method can be used to
produce up to 22000 tons of biofuel annually. While Air France was involved in ways
to produce biofuel, KLM was testing the sustainable aviation biofuel produced by
ITAKA, an European founded collaborative project. Air France even teamed up with
companies like Airbus, Safran and Total to organize a test flight from Toulouse to Le
Bourget with their Airbus 321 that was equipped with Sharklets. What made this
flight special was that it was flying purely on the Bio-jet A-1 biofuel that was
produced through a new research for processing sugar. This project flight not only
proved the capability of biofuel to the groups customers and partners but it also
showed the technical expertise of the members of Air France-KLM. It also shows
their dedication towards protecting this planet. The group also chaired ACARE
(Advisory Council for Aviation Research and Innovation in Europe) since the summer
of 2013. This council contributes more towards developing an aviation that is not only
competitive but also environment friendly aviation through new discoveries in the
lines of biofuels, the design of the flights, the perception of the clients about these
innovations and finally the European certification processes that is made for aircraft
components and systems.
26
27
Monetary
Monetary unit
unit
[PROPOSITION
[PROPOSITION
3]
3]
Reporting entity
entity
Reporting
[PROPOSITION
[PROPOSITION
4]
4]
Time
Time period
period
[PROPOSITION
[PROPOSITION
5]
5]
Going
Going concern
concern
[PROPOSITION
[PROPOSITION
2]
2]
Different
Different
approaches by
by
approaches
national
national
accounting
accounting
bodies
bodies
[PROPOSITION
[PROPOSITION
1]
1]
TBL
TBL
[PROPOSITION
[PROPOSITION
6]
6]
Air
France
-KLM
QBL
QBL
[PROPOSITION
[PROPOSITION
7]
7]
Based on this model it is possible to conceptualize the research question with the help
of the key concepts that are used for this study as the following propositions:
P2: How does the going concern aspect benefit Air France-KLM
28
It was possible to arrive at these propositions from previous studies that implicated
the importance of each proposition in driving accounting for sustainability.
Proposition 1: How do the different approaches used by the national accounting
bodies benefit Air France-KLM
The first proposition relates to the various approaches that are used by the different
national accounting bodies like Australian EPA, European Environmental Agency
(EEA), Federation des Expert Comptable Europeens (FEE), Forum for the Future
(FoF), Global Reporting Initiative (GRI), International Emission Trading Association
(IETA), Intergovernmental Panel on Climate Change (IPCC), Japanese EPA, OECD,
UK Emission Trading Authority (UK ETA), USA EPA, United Nations Framework
Convention on Climate Change (UNFCC), United Nations Commission on
Sustainable Development (UNCSD), World Business Council on Sustainable
Development (WBCSD) and World Resource Institute (WRI) can affect the
companies in the aviation industry. This proposition was drawn from previous studies
(Deegan et al., 1996) that conveyed that the corporate accountants were initially not
concerned about the problems relating towards environmental concerns. Other studies
(Gray et al., 1998) were reassuring the lack of responsibility on behalf of corporate
accountants to consider environmental impacts and how finally (Laura J, Gloria A.,
Leonardo R., 2012) important has accounting for sustainability become for different
national accounting bodies.
Proposition 2: How does the going concern aspect benefit Air France-KLM
The second proposition relates how the going concern aspect of accounting for
sustainability can impact the companies in the aviation industry. As per prior studies
by Friedman (2009) it was seen that an assumption is made according to which the
instrument under analysis would be in complete function for at least the foreseeable
future and would help attain all of its assets and obligations which translates that the
aspect itself is having a significant contribution towards accounting for sustainability.
29
Hence it will be interesting to see how such an aspect would impact companies in the
aviation industry.
Proposition 3: The monetary unit aspect benefits Air France-KLM
The third proposition deals with how the monetary unit aspect of accounting for
sustainability impacts companies in the aviation industry. Based on prior research
Friedman (2009) states that an equal monetary based amount was assigned to all the
expenses that were caused for the environment, it will be interesting to see how the
monetary unit factor could impact companies in the aviation industry.
Proposition 4: The reporting entity aspect benefits Air France-KLM
The fourth proposition is how the reporting entity of accounting for sustainability
impacts the companies in the aviation industry. According to prior studies by Faux
(2008), it can be seen that reporting entity deals with defining the entity for which the
financial reports are being prepared and through this we can not only see what the
defining entity in the aviation industry is but also find out how does entity reporting
itself impact companies in the aviation industry.
Proposition 5: The time period aspect benefits Air France-KLM
The fifth proposition deals with how the time period aspect impacts the companies in
the aviation industry. As per information gathered from the US GAAP and the IFRS
regarding this concept time period may be one of the crucial concepts with regards to
this research especially due to its implications. This is mainly due to the two methods
that are used under it, depending on the user of the information in order to take
appropriate decisions. The first method is called the revenue-expense method and the
second is called asset-liability method. Of these two methods, the asset-liability
method is the one that is widely used by both the US GAAP and the IFRS since it is
more feasible for sustainability accounting due to its concentration on the resources
that can be consumed by a company that would ensure its sustainability both at its
start and at its end (Gray, Fagerstrm, Hassel, 2011). Since it is found that the asset
liability method is the most widely used due to its feasibility with regards to
accounting for sustainability, we will check under this research as to how such a
method is helping companies in the aviation industry and thereby knowing how does
time period itself affect the industry.
Proposition 6: The triple bottom line (TBL) benefits Air France-KLM
The next proposition deals with how does the triple bottom line (TBL) affect
companies in the aviation industry. As per prior researches (Hollos, Blome, Foerstl,
2011) we can see that the TBL (triple bottom line) model is a performance
measurement model that is used for measuring sustainability. The TBL model deals
30
with three types of performance that influence sustainability. (Hollos, Blome, Foerstl,
2011). These are the economic, social and environmental performance of the given
company or organization. These three dimensions are a close-knit set and are hence
termed as the three Ps. The three Ps stand for profit, people and planet. It is to be
understood from this that every company must maintain the equilibrium between their
profit; meaning their financial and economic growth and their people; meaning their
focus on the society around them which includes the health, safety, awareness and
quality of life of the people who are located in and around their company and finally
planet; meaning how responsible do these companies prove themselves to be with
regards to the environment. Out of these three measures, most companies or
organizations are very familiar only with how to go about the economic performance,
which deals directly with their current financial and economic concerns. Such
concerns can only be answered by analyzing the social measure and the
environmental performance. Most companies fail or neglect to emphasize on the
social measure and the environmental measure. We intend to find out how do these
measures play out to impact accounting for sustainability in the aviation industry and
thereby determine how does the TBL impact the companies in the aviation industry.
Proposition 7: The quadruple bottom line (QBL) benefits Air France-KLM
The final proposition deals with how the quadruple bottom line aspect (QBL) affects
companies in the aviation industry. According to prior studies by Collins (2012), the
QBL is a social responsibility model that consists of the same three Ps as in the TBL
model, the profit, people and planet along with an all-new P which stands for
purpose. This model is useful to understand that, in order to be successful, the
companies had to be appreciated by their employees, they should have provided good
value to their clients and most of all they should have the lasting relationship with
their suppliers. The QBL model seems more important due to its focus on purpose that
is used to stimulate passion as purpose in the accounting profession represents the
following factors:
1. The ethics of the organization
2. The values of the organization
3. The governance of the organization
4. The ability of the organization to meet pubic expectations
5. The ability of the organizations to increase the stakeholder value
Hence from this study, we are looking forward to find out how the QBL impacts
companies in the aviation industry.
3. METHODOLOGY
3.1 METHODS OF DATA COLLECTION
31
The information required for the purpose of this research shall be collected from
sources within Air France-KLM. The information required for this research shall be
collected from these sources by means of interviews with the officials in the higher
hierarchy of Air France-KLM who possess decision making power and authority. The
type of each of these interviews would vary depending upon the time, place,
availability and convenience of the interviewees.
The main objective of this interview is to obtain the information that is required to
support anyone or even all of the seven propositions that have been identified in the
conceptual model. The first proposition, how the different approaches used by the
national accounting bodies benefit Air France-KLM was developed from previous
works that conveyed that the corporate accountants were initially not concerned about
the problems relating towards environmental concerns (Deegan et al., 1996) and how
important has accounting for sustainability become for different national accounting
bodies (Laura J, Gloria A., Leonardo R., 2012). The second proposition, how does the
going concern aspect benefit Air France-KLM developed from the work of Friedman
(2009). The third proposition, the monetary unit aspect benefits Air France-KLM was
also developed using prior work of Friedman (2009). The fourth proposition, which
states that the reporting entity aspect benefits Air France-KLM was made based on the
work of Faux (2008). The fifth proposition, the time period aspect benefits Air
France-KLM was made based on the work of Gray, Fagerstrm and Hassel (2011).
The sixth proposition, the triple bottom line (TBL) benefits Air France-KLM was
developed using the work of Hollos, Blome and Foerstl (2011). Finally the seventh
proposition, the quadruple bottom line (QBL) benefits Air France-KLM was
developed based on the work of Collins (2012). The objective of this paper is to prove
that these propositions that are discussed in the conceptual model in the above section
are influencing the accounting for sustainability followed by Air France-KLM. The
information obtained through this manner would also relate to how Air France-KLM
benefit from using accounting for sustainability, which is in other words the result for
this research. Since this is a formal research that revolves not around new ideas but
upon the understanding about the already existing ones, these interviews shall contain
strictly such type of questions only. These questions will then help answer how do
each proposition from the conceptual model function under a real life circumstance.
The real life circumstance in this context refers to how the proposition under
discussion would be used by Air France-KLM. Air France-KLM has been seen to be
very prominent when it comes to sustainability by making it a part of the companys
productions and services (Air France-KLM CSR, 2013). It would hence be interesting
to see how such a company would benefit from one or all of the propositions
mentioned above.
As for the manner in which the interview shall take place, the time and place of each
interview would vary depending on the availability and convenience of the respective
interviewees. In order to meet this requirement so that the interviews can be facilitated
without any hindrance, there are three methods in which these interviews shall take
32
place (USC Career Center, 2014). These are either personally (USC Career Center,
2014) or through online video conversations (The Student Success Centre, 2014) or
through telephone conversations (USC Career Center, 2014). Having these options
open for interviewing are more advantageous since they would not only be useful in
completing the interviews quicker but would also be very helpful when interviewing
officials who are in the higher hierarchy of Air France-KLM.
There are three broad stages that are involved in this section with regards to
conducting the interviews and using the information obtained for the purpose of this
paper. These include the stage in which the interviews are conducted and transcribed,
the stage in which the transcripts are verified and approved by the interviewees and
finally the stage where these approved transcripts are analyzed to obtain information
that can be used to support the research question.
In the first stage there are two phases. In the first phase, the interviewer on the basis
of the availability and convenience of the interviewees organizes the interviews. Since
this is a qualitative research and the size of the sample would play a key role in the
analysis of the obtained information in the upcoming sections, these interviews would
be conducted with six executives from Air France-KLM. Each of these interviews
shall last between thirty minutes to one hour depending on the availability of the
interviewees. Within this period of time, the interviewees shall be interviewed with
questions that are framed targeting the seven propositions. Since the location and
availability of each interviewee is different, the interviews shall take place in one of
the following three possible means:
The face-to-face approach
The video conferencing approach
The telephone approach
The first type of interview is carried out using the face-to-face approach. Here, the
interviewer based on their availability interviews the interviewee personally (USC
Career Center, 2014). This type of interviewing is the best option for collecting good
quality data through direct interaction with the interviewees. This is the best method
of data collection for this research not just because it is based on the quantity of data
that is collected but also because it provides an opportunity to observe the character of
the interviewee when being posed with each question which in turn would add to the
quality of information that is obtained. The truthfulness of the interviewee is
determined through his/her behavior, body language, nature, and commitment.
Combining these aspects of the interviewee along with their respective responses to
the questions would not only provide a good source of data but it would also help
understand, from the way the interviewee behaves for each question if their answers
are precise or not with regards to the researchs propositions.
The second type is one in which the interview is conducted through video
conferencing. Here, the interviewer based on their availability interviews the
33
to the next stage of the research where he shall analyze the obtained information from
the interviews.
The third and final stage of the research methodology deals with how the researcher
analyzes the information obtained in the form of transcripts from the interviews with
the six executives from Air France-KLM. After conducting all the six interviews and
getting their respective transcripts approved from the interviewees, the researcher now
has to focus on using this obtained information to support the research problem by
which it would be possible to answer the research question. In order to do this, the
researcher must use software to analyze the obtained information/data. For the
purpose of this research, we decide to use Nvivo 10 (University of Oxford IT services,
2012). Since this is purely a qualitative research, it consists of primary data that is
collected in the form of interviews. In the analysis stage, the researcher would upload
the documents containing the interview transcripts into the software Nvivo 10 and
then analyse the given data by organising them and putting relevant parts of the data
that support each of the given propositions into nodes. With the use of these nodes, it
is now possible to make different types of queries that would help in understanding
the similarities between different contexts. Upon understanding the queried data, it is
now possible to interpret the information from Nvivo 10. Based on these continuous
steps, the researcher would be able to draw the results from the data analyses. Based
upon the interpretation of these results, the researcher can form a conclusive relation
to what had already been understood in the line of accounting for sustainability and
finally answer the research question of how Air France-KLM is benefiting from
accounting for sustainability?
The following is the structure in which the interview is to take place:
35
1.1 INTRODUCTION:
1. Could you please introduce yourself?
2. What is your position in AF-KLM along with your tenure and function in AF-KLM?
1.2 FACTORS AND PRACTICES:
3. Could you please talk about the accounting for sustainability practices in AF-KLM?
{Along with an explanation about the role of these practices, their importance and
how they are carried out in AF-KLM?} (PROPOSITION 4)
4. What are the key sustainability factors that currently exist in the reports of Air FranceKLM?
{This question tries to find out which are the most important sustainability factors
according to Air France. The mention of such factors would be enough.}
(PROPOSITION 4)
1.3 ACCOUNTING BODIES AND IMPLICATIONS:
5. What are the different types of accounting bodies that you have to follow each year?
{The purpose of this question is to get an idea about the different types of accounting
bodies for example IFRS, IPSASB, AcSB, ANC, etc. that Air France-KLM has to take
into consideration each year for making its reports. Just a mention of the names of the
accounting bodies would suffice.} (PROPOSITION 1)
6. How does following the rules of these accounting bodies help Air France-KLM with
respect to adding or altering their practices related to accounting for sustainability?
{The purpose of this question is to know how the different accounting bodies impact
(positive or negative) Air France-KLM in creating practices that use accounting for
sustainability.} (PROPOSITION 1)
1.4 GENERATING AND APPLYING REGULATIONS:
7. What are the main social compliances that Air France-KLM has today?
{This question aims to find out the current scenario revolving Air France with respect
to its social obligations. Points of one or more current social compliances are
required.} (PROPOSITION 2)
8. When it comes to the rules and regulations of Air France-KLM, how does the
company ensure a strict application of their rules in every country? Especially those
rules that tend to overlap with a countrys particular rule?
{This question is made with the regulations of different countries in mind and aims to
find out how does Air France-KLM follow its rules in such countries with or without
altering them. Just a mention of whether the existing rules of Air France-KLM are
followed equally in every country would suffice.} (PROPOSITION 2)
9. Could you please explain the key steps that the company takes to ensure that it
follows these rules effectively?
36
{This question tries to find out how does Air France-KLM ensure that it is working
under such rigorous regulations throughout the year. An explanation of how the
company takes such decisions would be enough.} (PROPOSITION 2)
10. How do you generate and maintain the monetary unit (as per the definition of
accounting for sustainability) of different environmental factors in Air France-KLM?
{This question is made keeping in mind the difficulty that exists when it comes to
measuring the damages that environmental resources undergo from the release of
harmful gases and allotting a value for such damages in monetary terms. An answer
containing one or two such factors along with an explanation about their perceived
value would be enough.} (PROPOSITION 3)
11. How do you choose the different sustainability factors to fit into your CSR (corporate
social responsibility) reports?
{This question looks to find out the method that Air France-KLM follows in order to
classify the most important sustainability factors in order to fit them into its annual
reports. An explanation of how the company decides on such factors would suffice.}
(PROPOSITION 4)
1.5 METHODS AND APPLICATION:
12. Which method does the financial reports of Air France-KLM follow? Is it the
revenue-expense method or the asset-liability method? Please explain why?
{This question tries to find out the method followed by Air France-KLM in its
financial reports and why it chose that method.} (PROPOSITION 5)
13. How does Air France-KLM manage to maintain the equilibrium between its profit, the
people and the environment (planet)?
{In order to understand how Air France-KLM tackles sustainability, this question
focuses upon the key factors that influence sustainability. An answer explaining the
how the company maintains each of these three factors would be enough. }
(PROPOSITION 6)
14. How does Air France-KLM represent purpose? The purpose of Air France-KLM
according to their mission statement is represented by factors like achieving its
corporate aims alongside the economic and social development. Could you please
explain in detail how are these goals being achieved?
MISSION (KLM): With Air France, KLM is at the forefront of the European airline
industry. Offering reliability and a healthy dose of Dutch pragmatism, 32,000 KLM
employees work to provide innovative products for our customers and a safe,
efficient, service-oriented operation with a proactive focus on sustainability. KLM
strives to achieve profitable growth that contributes to both its own corporate aims
and to economic and social development.
KLM works to create sustainable growth at Schiphol, to gain access to any market
that will increase the quality its network and to maintain a level playing field for all
industry players. It also works to ensure a balance between the companys interests
and those of the people living and working close to the airport.
{In this question, the word purpose is used as a stimulant of passion. Hence the
answer should be in terms of what is Air France-KLM more passionate about and
what drives it?} (PROPOSITION 7)
37
THANK YOU
**********
For the purpose of this research, six executives from Air France-KLM were chosen
and interviewed using the third approach of interviewing called the telephone
conversation approach. When presented with three options with regards to the type of
interview they preferred, each executive chose at some point the telephone
conversation based approach. This choice was understandable given the busy schedule
of each personnel. Due to the convenience and feasibility it provided to the
interviewees it was decided to move forth with this approach. As a result, there were
six interviews that where conducted using the telephone conversation approach (USC
Career Center, 2014) with different executives at the higher hierarchical order of Air
France-KLM. At the end of each interview, the transcribed information gathered in the
form of responses to questions relating to particular sections were sent to back to the
interviewees asking for their verification and approval before proceeding to analyze
the data. The verification of the information provided would ensure two things, for
one it will confirm the quality of the data that is obtained and secondly would also
help create a trustworthy relationship between the interviewer and the interviewee.
The next step once the verified transcripts have been obtained is the analysis of these
transcripts.
38
growing interest in sustainability (Harris B., 2012) and why it is needed (Helmut
1989), how can it contribute to benefiting a company, how does it make a tie with
accounting (Burrit and Schaltegger, 2001), the aviation industry, Air France-KLM and
finally try to answer the research question of how does Air France-KLM benefit from
the use of accounting for sustainability?
The research question would hence be as follows:
"How is Air France-KLM benefiting from the use of sustainable accounting?"
4.2.1 Proposition 1
Findings
The motive of these questions was to find out if Air France-KLM is benefiting from
accounting for sustainability because of the different approaches of the national
accounting bodies (Laura J, Gloria A., Leonardo R., 2012) . In order to find this out, it
is necessary to first analyze the responses that are gathered from the interviewees with
respect to the different approaches of the national accounting bodies.
According to interviewee number 1 To me sustainability and accounting for CSR is
supported by legislation. The through driver is the direction the company takes in its
managerial decisions to act on the subjects like sustaiability, the accounting for those
actions is merely backward looking.
Interviewee number 3 AF-KLM following the rules of the accounting bodies and
accounting for sustainability are both done due to the same thing. Corporate decision.
Hence I dont think that there are any negative implications on one due to the other. I
39
4.2.2 Proposition 2
Findings
The motive of these questions was to find out if Air France-KLM is benefiting from
accounting for sustainability because of the concept of going concern (Friedman,
2009). In order to find this out, it is necessary to first analyze the responses. There are
three questions that were asked during the interview pertaining to this proposition, out
of these three questions, the responses to the first and third questions are those that
would help determine if the concept of going concern is helping AF-KLM benefit
from accounting for sustainability.
Interviewee number 1 Oh well, in that aspect we have to comply with the CLA,
environmental related like noise, waste, CO2 and developing our locality.
40
As I said for the last question, these steps are not controlled by one person but are
governed through the various disciplines. In addition there are Letters of
representation and other related documents that are issued at various levels of the
company in order to make sure that our rules are obliged unanimously. Moreover, our
audits, and most importantly the tone at the top cover these subjects in detail.
Interviewee number 2 There is much social compliance that our group has today. To
name a few, I can immediately think of the universal declaration of human rights, the
ILO, controlling pollution and developing our surroundings.
This is again the same response as the previous question, we have different teams to
work on these aspects. In addition to those we have to consider the different types of
documents that are issued by the company for each level of work.
Interviewee number 3 There are quiet a few at AF-KLM like labour union related,
humanitarian related and controlling emerging issues with the environment.
Again, this is governed through many people. In addition to these there are other
related documents that are issued at various levels of the company. It also, at certain
times depend on the decisions taken at the superior level.
Interviewee number 4 We currently have many environmental related compliances
like our waste management, water management, carbon emissions and yes the biofuel
production.
As I already mentioned in the previous question there are various powers that control
these activities. It is not a one-man show.
Interviewee number 5 We are focusing on many compliances. Some of them include
controlling the pollution, CLA related and also, of course environmental related.
I think the response to this would be the same as the previous question, this is
governed through the different initiatives along with certain extra input from the
members of the board.
Interviewee number 6 AF-KLM is currently focusing more on the humanitarian side
and the environmental side as there are more objectives to be achieved under these
domains.
As I mentioned earlier, these are not the function of one company as a whole but
involves the different divisions that exist under the companys umbrella. These rules
are sent to the higher authority for acceptance only.
41
As evident from previous studies by Friedman (2009), the going concern concept
functions when and if a company such as AF-KLM is in function for the foreseeable
future by getting its assets and meeting its obligations. It is seen from the responses to
the first question that AF-KLM has to meet with a lot of social obligations such as
controlling pollution, CLA related obligations, waste management, water
management, carbon emissions, biofuel production, human rights and labor union
related obligations. Since a lot of these obligations are dealing with sustainability,
there is a good chance that the concept of going concern can benefit accounting for
sustainability in AF-KLM. The next question tried to find out how does the company
manage to follow its rules and regulations in different countries in order to meet these
obligations. Though there was no one particular answer that specified how exactly
were the companys rules and regulations followed in other countries in order to meet
its obligations, there were a lot of common factors that were pointed out by all the
interviewees that played a role in controlling the rules and regulations. These include
various letters of representation, different teams that work in each country, documents
issued at different levels of the company and finally based on the extra input from the
board. Through this analysis it is possible to understand that AF-KLM is using the
going concern concept in different locations using the rules and regulations that are
decided by many factors ranging from different divisions that are responsible for the
function to direct input from the board members and as a result be able to meet its
growing social obligations that are observed from both previous reports (Air FranceKLM CSR, 2013) and responses of these interviews associated to accounting for
sustainability. As a result helped in proving that Proposition 2 is possible in the case
of Air France-KLM.
4.2.3 Proposition 3
Findings
The motive of this question was to find out if Air France-KLM is benefiting from
accounting for sustainability because of the concept of monetary unit (Friedman,
2009). In order to find this out, it is necessary to first analyze the responses gathered
from the interviewees.
42
Interviewee number 1 The measure of these types of damages and their related
aspects are calculated by our environmental specialists. The same applies to human
resources. These teams are responsible for calculating say the amount of carbon
dioxide released per year, how much damage it causes for the environment and
propose how or what we must do in order to undo that damage in terms of either our
products or services.
Interviewee number 2 Im not involved in these decisions. Our environmental and
humanitarian teams deal with these decisions.
Interviewee number 3 This question does not relate to my field. It is to do with our
environmental board. They are the ones who calculate these damages and report them.
The rest of the group uses that to create future objectives. For example if our carbon
emission is high this year, they would calculate the damages and we would work to
make sure that such situation does not happen in the following years. This you can see
from our past CSR reports.
Interviewee number 4 I do not control this division. So I dont think I can help you
with this.
Interviewee number 5 Im sorry but I am not involved in this function. It is to do
with a completely different department.
Interviewee number 6 Im sorry but I am not in this division. I am not sure how it
functions exactly.
Based on the obtained responses it is seen that although interviewees 2, 4, 5 and 6 did
not have any information that can be analyzed to find if monetary unit concept
benefits accounting for sustainability in AF-KLM, the remaining two (interviewees 1
and 3) were able to provide information relating to how this concept works within AFKLM. From analyzing the responses of these two interviewees few things could be
understood regarding monetary unit such as teams specialising in environmental
activities are responsible for calculating such expenses, how they do the same and
finally represent these values in the companys reports. These values, as already seen
in the literiture review can be found in the companys CSR reports (Air France-KLM
CSR, 2013) under different topics that relate to the environment such as reducing
carbon emissions, wherein the company reduced its carbon emissions to 110,000 tons
by reducing its fuel consumption to 35000 tons and ultimately resulting in saving 28
million euros. As evident from previous papers presented in the literature review
(Friedman, 2009), the concept of monetary unit is in effect when an equal monetary
amount is alotted to all the benefits or damages, including that of the environment. If
these benefits or damages cannot be measured, then the resulting savings or expenses
43
can be measured. Since this is exactly how AF-KLM is benefiting from reducing its
carbon emissions, it has as a result helped in proving that Proposition 3 is true in the
case of Air France-KLM.
4.2.4 Proposition 4
Findings
The motive of these questions was to find out if Air France-KLM is benefiting from
accounting for sustainability because of the concept of the reporting entity (Faux,
2008). In order to find this out, we must first analyze the responses of all the
interviewees and then compare those responses to previous studies as well as the
companys reports for any similarities that would help in ensuring that AF-KLM is
benefiting from accounting for sustainability through use of the reporting entity
concept. The interviewees were each asked three questions with regards to reporting
entity for which they answered as follows
Interviewee number 1 CSR related reporting is performed at corporate, based on
input from the businesses. In the local reporting this is populated mainly through the
Risk sheets, Safety reporting and HRM related reporting (incidents, sick leave, etc).
The key factors that exist in sustainability at the moment are our focus in reducing the
environmental footprint, make our clients aware through molding sustainable products
into customer experience, create local value at our hubs and destinations and finally,
creating effective social policy and motivate our members (employees) towards
sustainability.
If you look at our CSR report, we explain that our sustainability factors our chosen
and revised each and every year based upon the current happenings along with
bearing in mind our obligation to meet the needs for the future.
Interviewee number 2 Focus on sustainability is of prime importance for us at AFKLM. The reports associated to it are prepared at our headquarters, based upon our
performance each year. These activities in the line of sustainability were pioneered by
AF-KLM so it plays an important role in all of our decisions.
We choose the different factors that need to be included in our CSR reports based on
our surroundings. We explore which aspects around us require more attention then
device an approach to make it better. We then set these factors as our goals for the
upcoming years and mention them in our CSR reports.
Interviewee number 3 CSR is at the heart of AF-KLM at all times, meaning it is
always our priority. The reports related to CSR are prepared at corporate after
receiving the required information from all our branches on an annual basis.
There are many factors that we focus upon in order to help benefit the environment.
As of this year, we are strongly focusing on Biofuels and their related innovations.
we are focusing on all the existing factors of sustainability, this includes human
resources, the environmental aspects as a whole, our customer experience by offering
our clients sustainable yet innovative products and the development of all our
45
Right now I think the most important for us is water and fuel conservation. We keep
innovating in these lines to make our group as eco friendly as possible.
Our companys CSR reports focus on almost every sustainability related factors there
is in the aviation field. This is because we have incorporated sustainability into every
single operation that we carry out. So to answer your question we do not cherry-pick
these factors.
According to existing information from previous works (Faux, 2008), reporting entity
is the entity for which financial reports are prepared, an entity that engages in
economic activities, controls economic resources and remains unchanged. The
questions asked in the interviews were aimed at finding out what are the different
entities relating to sustainability within the company that are being reported and how
are these chosen. It can be seen from the answers to the second question that AF-KLM
currently holds many sustainability factors such as water and fuel conservation,
human resources, customer experience, the development of surrounding areas,
Biofuels, sustainable catering, molding sustainable products into customer experience,
create local value at hubs and destinations and creating effective social policy and
motivate members (employees) towards sustainability. From these information it is
possible to see that there exist factors like Biofuels (Air France-KLM CSR, 2013) that
are used in economic activities as a replacement for gas, which in turn will help
reduce the dependency on traditional gas. The same applies to water conservation
where in AF-KLM is able to control the wastage of water by 40% when compared to
the previous years. Hence it is not only possible to see how these different factors,
that are considered by AF-KLM become a part of entity reporting but it is also
possible to see how well the factors that are a part of reporting entity help the
company fullfil its goal in sustainability and as a result help in proving that
Proposition 4 is possible in the case of Air France-KLM.
46
4.2.5 Proposition 5
Findings
The motive of these questions was to find out if Air France-KLM is benefiting from
accounting for sustainability because of the concept of time period (Gray, Fagerstrm
and Hassel, 2011). In order to find this out, we must first analyze the responses that
were gathered from the six interviews. The responses gathered from the interviews are
as follows
Interview number 1 We use the asset-liability method for our financial reports. The
reason for this is a part of our Corporate decision. It is of high confidentiality and I am
not allowed to discuss it in this interview.
Interview number 2 At AF-KLM, we follow the asset liability method. It has been
this method for a long time. We are not permitted to comment on its purpose for
corporate reasons.
Interview number 3 At AF-KLM we always follow the asset-liability style of
reporting. This is what has been decided by the people at the highest level of our
companys hierarchy. So I am afraid I cannot explain why.
Interview number 4 We only use the asset-liability method to create our financial
reports. There are two reasons for this, one it is feasible to use and two because it is a
corporate decision and we are bound to follow it.
Interview number 5 We only follow the asset-liability method. We follow this
method mainly because this is what has been decided at a corporate level.
Interview number 6 Our corporate decision dictates us to follow the asset liability
method. We are supposed to follow it.
On comparing the points understood from each interviewees response with regards to
the method that is followed by AF-KLM in its financial reports, it can be observed
that all the responses stated that the asset-liability method is the approach that AFKLM follows in its financial reports. The reason for the company choosing this
approach is also observed to be kept confidential and as a part of the companys
corporate decision. According to the already existing information
obtained from previous studies (Gray, Fagerstrm, Hassel, 2011) time period
47
may be one of the crucial concepts with regards to this research especially due to its
implications. This is mainly due to the two methods that are used under it, depending
on the user of the information in order to take appropriate decisions. The first method
is called the revenue-expense method and the second is called asset-liability method.
Of these two methods, the asset-liability method is the one that is widely used by both
the US GAAP and the IFRS since it is the most feasible option for sustainability
accounting because of its concentration on the resources that can be consumed by a
company that would ensure its sustainability both at its start and at its end. As per the
interpretation of the findings, all of the interviewees have answered that AF-KLM
does follow the asset-liability method in its financial reports and as understood from
previous papers, the asset-liability method is one of the two parts of the time period
concept that is widely preferred due to the convenience of accounting for
sustainability. Hence proving that Proposition 5 is very much possible in the case of
Air France-KLM.
4.2.6 Proposition 6
Findings
The motive of these questions was to find out if Air France-KLM is benefiting from
accounting for sustainability because of the concept of triple bottom line (Hollos,
Blome and Foerstl, 2011). In order to find this out, we must first analyze the
responses that are gathered from the six interviews that were conducted with different
executives from AF-KLM. The responses obtained from the six interviewees for the
question regarding the concept of triple bottom line are as follows:
Interviewee number 1 Well, you see in AF-KLM we put our involvement to the
society at the core of our Corporate Strategy. I cannot explain to you how our
corporate strategy exactly works due to our regulations but what I can say is that we
do our best to protect the environment and incorporate the same ideology in our
services and that is what results in our profits.
Interviewee number 2 Our primary focus at AF-KLM is to protect the environment
by reducing the damages caused by us to the environment. We also focus on providing
a lot of additional services on a humanitarian basis to the people who are located in
and around our hubs. This objective of us moves deeply into our corporate strategy
and keeps evolving year after year and it helps us maintain our position.
Interviewee number 3 At AF-KLM, we do not try to manage an equilibrium between
profit, the people and the planet. All we are focused upon is to incorporate
48
sustainability into our companys DNA so that we can help benefit the environment.
Our goal is to help protect the environment and the people through our innovative
products and services and that always keeps us on top.
Interviewee number 4 We plan to achieve this through our Corporate Strategy. But I
cannot explain on its details.
Interviewee number 5 We manage to achieve this since it is part of our corporate
strategy. I am not authorized to explain it in detail.
Interviewee number 6 Our Corporate Strategy enables us to strike this balance and
we try to keep it as updated and confidential as possible. So I am sorry, but I cannot
state its working.
The question that was asked to the interviewees was aimed at finding out how AFKLM manages the equilibrium between the people, planet and its profits. As per prior
researches (Hollos, Blome, Foerstl, 2011) we can see that the TBL (triple bottom line)
model is a performance measurement model that is used for measuring sustainability.
The TBL model deals with three types of performance that influence sustainability.
(Hollos, Blome, Foerstl, 2011). These are the economic, social and environmental
performance of the given company or organization. These three dimensions are a
close-knit set and are hence termed as the three Ps. The three Ps stand for profit,
people and planet. It is to be understood from this that every company must maintain
the equilibrium between their profit; meaning their financial and economic growth
and their people; meaning their focus on the society around them which includes the
health, safety, awareness and quality of life of the people who are located in and
around their company and finally planet; meaning how responsible do these
companies prove themselves to be with regards to the environment. Out of these three
measures, most companies or organizations are very familiar only with how to go
about the economic performance, which deals directly with their current financial and
economic concerns. Such concerns can only be answered by analyzing the social
measure and the environmental performance. Most companies fail or neglect to
emphasize on the social measure and the environmental measure. Hence, asking such
a question would not only show how responsible AF-KLM is when it comes to the
social and environmental measure but it would also help prove if or not the triple
bottom line concept is existing in the case of AF-KLM. By analyzing the responses of
all the interviewees, it is possible to see that AF-KLM never fails to include its
commitment to the society as a part of its corporate strategy while it makes its
commitment to the environmental aspect visible by utilising a pro environmental
ideology into its services. Its social contribution goes so far as to provide services to
people in and around the locations of its junctions. The other contributions the
company has made in this line include incorporating sustainability into its DNA that
49
would help in turn to put sustainability in the forefront of all its products and services.
The analysis of these responses are not only in line with the information obtained
from the companys reports (Air France-KLM CSR, 2013) but also ensure the
existence of an equilibrium between the three Ps (planet, profit and people) as
understood from previous studies and as a result proves the perfect functioning of the
triple bottom line concept in AF-KLM
and as a result helped in proving that Proposition 6 is absolutely possible in the case
of Air France-KLM.
4.2.7 Proposition 7
Findings
The motive of these questions was to find out if Air France-KLM is benefiting from
accounting for sustainability because of the concept of quadruple bottom line (Collins,
2012). In order to find this out, we must first analyze the responses that are gathered
from the six interviews that were conducted with different executives from AF-KLM.
The responses obtained from the six interviewees for the question regarding the
concept of triple bottom line are as follows:
Interviewee number 1 One person alone cannot answer this question because of its
content being too sensitive. We are only allowed to reveal what we are planning to do
in the future, but as for how we plan to do it is confidential. Only members of our
board are allowed to respond to that and even they would refuse to due to its
confidentiality.
Interviewee number 2 Our purpose is to create a safe and reliable experience to our
customers and stakeholders. We try to achieve this by focusing on innovation and
using it to benefit us in the short and long run. But I am afraid I cannot explain any of
these in depth due to our company policy.
Interviewee number 3 I dont think I am permitted to answer this question in detail.
It is to do more with our policies. Although I cant say how we achieve our goals, I can
respond to the first part of your question. We aim to create first of all a good
experience for our clients and use our resources to help our surroundings.
Interviewee number 4 Our purpose is to keep innovating within the aviation field
while having respect for the environment at the same time. I cannot go into the details
of how we plan to achieve this since it is company secret.
50
51
then the resulting savings or expenses can be measured it can be seen that his is
exactly how the monetary unit concept functions in order to benefit AF-KLM.
In the case of the fourth proposition, if the concept of reporting entity benefits AFKLM, from the analysis of the responses it can be seen that AF-KLM currently holds
many sustainability factors such as water and fuel conservation, human resources,
customer experience, the development of surrounding areas, Biofuels, sustainable
catering, molding sustainable products into customer experience, create local value at
hubs and destinations and creating effective social policy and motivate members
(employees) towards sustainability. From these information it is possible to see that
there exist factors like Biofuels (Air France-KLM CSR, 2013) that are used in
economic activities as a replacement for gas, which in turn will help reduce the
dependency on traditional gas. The same applies to water conservation where in AFKLM is able to control the wastage of water by 40% when compared to the previous
years. Hence it is not only possible to see how these different factors, that are
considered by AF-KLM become a part of entity reporting but it is also possible to see
how well the factors that are a part of reporting entity help the company fullfil its goal
in sustainability and as a result help in proving that Proposition 4 is possible in the
case of Air France-KLM. This means that AF-KLM is benefiting from the reporting
entity concept, which is a factor of accounting for sustainability that in turn implies
that AF-KLM is benefiting from accounting for sustainability. This result is also in
lines with the already existing information from previous works by Faux (2008)
according to which the reporting entity is the entity for which financial reports are
prepared, an entity that engages in economic activities, controls economic resources
and remains unchanged.
In the case of the fifth proposition, if the concept of time period
benefits AF-KLM, from the analysis of the replies obtained from the
interviews all of the interviewees have answered that AF-KLM does follow the
asset-liability method in its financial reports and as understood from previous papers,
the asset-liability method is one of the two parts of the time period concept that is
widely preferred due to the convenience of accounting for sustainability. Hence
proving that Proposition 5 is very much possible in the case of Air France-KLM. This
means that AF-KLM is benefiting from the time period concept, which is a factor of
accounting for sustainability that in turn implies that AF-KLM is benefiting from
accounting for sustainability. This result obtained when compared to the already
existing works by Gray, Fagerstrm and Hassel, (2011) tends to compliment
their opinion according to which time period is a crucial concept with regards
to the two methods that are used under it, the revenue-expense method and the assetliability method of which, the asset-liability method is the one that is widely used by
both the US GAAP and the IFRS since it is the most feasible option for sustainability
accounting because of its concentration on the resources that can be consumed by a
company that would ensure its sustainability both at its start and at its end. In the
case of the sixth proposition, if the concept of the triple bottom line
53
Based on the results of all the interviews and analyzing the same, it
can be said that Air France-KLM is benefiting from accounting for sustainability
because of the different approaches by the accounting bodies, the time period concept,
the reporting entity concept, the going concern concept, the monetary unit concept,
the triple bottom line and the quadruple bottom line. This means that these seven
propositions are being used by Air France-KLM to benefit from accounting for
54
This study is limited solely to the Air France-KLM group. This study is solely within
the aviation industry. All the results derived from the analysis also belong to the
company of this case study. The results derived from the analysis of this case study
cannot be taken as universally applicable. Any interpretation or implication that was
made in this case study are made taking into consideration the factors influencing AFKLM and hence may not be applicable for other companies. All the factors benefiting
AF-KLM in this case study were taken bearing in mind the companys current state
and hence may not function similarly if used in another case under different
circumstances. The number of interviews carried out for the purpose of this case study
is due to the genre of the research and to avoid complexity in the analysis section. The
information gathered from interviews with officials of AF-KLM were obtained with
the permission of the interviewees. Any and all assumptions that were made for the
purpose of this paper are only applicable in this paper and may not function similarly
under other circumstances.
This study is a case study that is limited to AF-KLM group within the aviation
industry. Future studies can be carried out using other companies in the aviation
industry with respect to accounting for sustainability. For future researches, the
factors used in this case study such as triple bottom line, quadruple bottom line,
different approaches by the accounting bodies, the time period concept, the reporting
entity concept, the going concern concept and the monetary unit concept can be used
individually along with companies within or outside the aviation industry. This study
can also be repeated as a field study using more than 5 companies within the aviation
industry. Future studies can also be done in industries outside the aviation sector in
order to find how such companies benefit from accounting for sustainability.
55
REFERENCES
BOOKS:
Boulding E. 2000. Cultures of peace. Syracuse university press. New York.
Brundtland, Gro H. 1987. Our common future: the world commission on environment
and development. Oxford university press. UK.
Epstein, Marc, 2008. Making Sustainability Work. 1st ed. Berrett-Koehler Publishers.
France.
56
Epstein, Mark. 2008. Making sustainability work, best practices in managing and
measuring corporate social, environmental and economic impacts. Greenleaf. San
Francisco. USA.
Friedman, Thomas L. 2009. Hot flat and crowded. Picador/Farrar, Straus and Giroux.
NY. USA.
Galeano E. 1998. Upside down: A primer for the looking-glass world. Metropolitan.
New York. USA
57
Articles:
Adams, Carol. 2010. Editorial. Sustainability accounting, management and policy
journal. Vol. 1, No. 1, pp. 5-9.
Andrew J. 2001. Environmental accounting and accountability: Can the opaque be
transparent? Faculty of commerce papers. University of Wollongong: Wollongong.
Arrington F. 1990. Intellectual tyranny and public interest. Advances in public interest
accounting. Vol. 3, pp. 1-16.
Bebbington J, Gray R. 2001. An account of sustainability: failure, success and
reconceptualization. Critical perspectives on Accounting 12: 557-587.
Bebbington J, Gray R, Thomson I, Walters D. 1994. Accountants attitudes and
environmentally sensitive accounting. Accounting and business research. Vol. 24. No.
94, pp.109-120.
Bebbington J, Tan J. 1997. Accounting for sustainability. Charted Accountants Journal
February. pp. 37-40.
Bremser, Wayne G.2014, A Growing Interest in Sustainability., CPA Journal. pp. 1517.
Bryer RA. 1993a. The late nineteenth-century revolution in financial reporting:
accounting for the rise of investor or managerial capitalism. Accounting,
Organizations and Society 18(7/8). pp. 649-690.
Bryer RA. 1993b. Double entry bookkeeping and the birth of capitalism: accounting
for the commercial revolution in medieval northern Italy. Critical perspectives on
Accounting 4: pp. 113-140
58
Burritt R, Maunders KT. 1991. Accounting and ecological crisis. Accounting, auditing
and accountability journal. Vol. 4, No. 3, pp. 9-26.
Burritt R, Schaltegger S. 2001. Eco-efficiency in corporate budgeting. Environmental
management and health. Vol. 12, No. 2, pp. 158-174.
Burritt R, Schaltegger S, Tingey J. 2011. Accounting for sustainable aviation. Charter.
Vol. 82, pp. 3-22.
Catchpowle L, Cooper C, Wright A. 2004. Capitalism, states and accounting. Critical
perspectives on accounting. Vol. 15, NO. 8, pp. 1037-1058.
Cooper, Richard N., 2000. International Approaches to Global Climate Change. World
Bank Research Observer, Vol. 15, Issue 2, pp. 145 - 172.
Daly, Herman E., 1992. Steady-State Economics: Concepts, Questions, Policies.
GAIA - Ecological Perspectives for Science and Society, Vol. 1, Number 6, pp. 333338(6).
David C, Boyce G. 2005. An abrogation of social and ethical responsibility: conflicts
of interest in professional accounting. In social responsibility in India, Crwther D,
Jatana R (eds). Social responsibility Research Network: Leicester; pp. 6-14.
Deegan C, Staunton J, Geddes S. 1996. A survey of Australian accountants attitudes
in environmental reporting. Accounting forum. Vol. 19. No. 4, pp. 399-416.
Dwyer PD, Roberts RW. 2004. Known by the company they keep: a study of political
campaign contributions made by the United States accounting profession. Critical
perspectives on Accounting 15(6/7), pp. 865-883.
Gary, Cunningham M., Arne Fagerstrm, Lars G. Hassel. 2011. ACCOUNTING FOR
SUSTAINABILITY: WHAT NEXT? A RESEARCH AGENDA. THE ANNALS OF
THE UNIVERSITY OF ORADEA. Vol. 97.
Gray, Rob. 2013, Accounting Education. Sustainability + Accounting Education: The
Elephant in the Classroom., Vol. 22 Issue 4, pp. 308-332.
Gray R. 1992. Accounting and environmentalism: an exploration of the challenge of
gently accounting for accountability, transparency and sustainability. Accounting
Organisations and Society. Vol. 17. No.5, pp. 399-425.
Gray R. 1994. Corporate reporting for sustainable development: accounting for
sustainability in 2000 AD. Environmental Values 3(I), pp. 17-45.
Gray R. 2006. Social, environmental and sustainability reporting and organizational
value creation? Whose value? Whose creation? Accounting, auditing and
accountability journal 19(3), pp. 319-348.
Harris, Jean E. 2011. A new model from old energy for promoting corporate social
responsibility: the case of Massey energy company. Unpublished working paper.
Helmut, Ritcher, 1989. Thirty Years of Airline Operations Research. Interfaces, Vol.
19 Issue 4, pp. 3-9.
Herath G. 2005. Sustainable development and environmental accounting.
International Journal of Social Economcs. Vol. 32 Issue 12. pp 1035-1050.
Hollos D, Blome C, Foerstl K. 2012. Does sustainable supplier co-operation affect
performance? Examining implications for the triple bottom line. International Journal
of Production Research, Vol. 50. No.11, pp. 2968-2986.
60
Soderstrom N. 2013. Sustainability reporting: past, present, and trends for the future
How sustainability reporting develops will have dramatic implications for the practice
of accounting and auditing in the future. Insights Melbourne business and economics.
Vol. 13, pp. 31-37.
Suharto T. 2009. Sustainable urban development. In a quadruple bottom line
assessment framework. Brisbane, 2009. Brisbane: Queensland University of
Technoogy. pp. 228-238.
.
Tinker AM, Merino BD, Neimark MD. 1982. The normative origins of positive
theories. Accounting, organizations and society. Vol. 7. No. 2. pp. 167-200.
Web-reference:
Air France-KLM (http://www.airfrance.com/indexCOM.html) [Accessed
18 September 2014]
AF-KLM.CSR.2013.
http://www.airfranceklm.com/fileadmin/user_upload/pdf/rapports_annuels/2013_RA
DD-en.pdf. [Accessed 20 September 2014]
61
[Accessed
20
[Accessed
10
WWF - The 2008 Living Planet Report. 2014. WWF - The 2008 Living Planet
Report.
http://wwf.panda.org/about_our_earth/all_publications/living_planet_report/living_pl
anet_report_timeline/lpr_2008/. [Accessed 16 August 2014].
63
64
Internal reporting is based on the standards set forth by corporate accounting, who
bases on IFRS and US-GAAP. This accounting manual is enforced through the
accounting organization and is fully checked with the external auditors.
Dutch and French GAAP are followed for local statutory reporting. Foreign
establishments are sometimes obliged by local legislators to perform reporting
according to local GAAP, this is on a country by country basis.
How does following the rules of these accounting bodies help Air France-KLM with
respect to adding or altering their practices related to accounting for sustainability?
{The purpose of this question is to know how the different accounting bodies impact
(positive or negative) Air France-KLM in creating practices that use accounting for
sustainability.}
To me sustainability and accounting for CSR is maybe supported by legislation. The
through driver is the direction the company takes in its managerial decisions to act on
the subjects, the accounting for those actions is merely backward looking.
1.4 GENERATING AND APPLYING REGULATIONS:
What are the main social compliances that Air France-KLM has today?
{This question aims to find out the current scenario revolving Air France with respect
to its social obligations. Points of one or more current social compliances are
required.}
oh well, in that aspect we have to comply with the CLA, environmental related like
noise, waste, CO2 and developing our locality.
When it comes to the rules and regulations of Air France-KLM, how does the
company ensure a strict application of their rules in every country? Especially those
rules that tend to overlap with a countrys particular rule?
{This question is made with the regulations of different countries in mind and aims to
find out how does Air France-KLM follow its rules in such countries with or without
altering them. Just a mention of whether the existing rules of Air France-KLM are
followed equally in every country would suffice.}
This is governed through the respective disciplines, eg the finance discipline within
the company ensures the financial regulations are followed. We have separate
disciplines in each country that would match the rules of that particular country.
Therefore there will be no overlap.
Could you please explain the key steps that the company takes to ensure that it
follows these rules effectively?
{This question tries to find out howdoes Air France-KLM ensure that it is working
under such rigorous regulations throughout the year. An explanation of how the
company takes such decisions would be enough.}
As I said for the last question, these steps are not controlled by one person but are
governed through the various disciplines. In addition there are Letters of
representation and other related docs that are issued at various levels of the company
65
in order to make sure that our rules are obliged unanimously. Moreover, our audits,
and most importantly the tone at the top cover these subjects in detail.
How do you generate and maintain the monetary unit (as per the definition of
accounting for sustainability) of different environmental factors in Air France-KLM?
{This question is made keeping in mind the difficulty that exists when it comes to
measuring the damages that environmental resources undergo from the release of
harmful gases and allotting a value for such damages in monetary terms. An answer
containing one or two such factors along with an explanation about their perceived
value would be enough.}
The measure of these types of damages and their related aspects are calculated by our
environmental specialists. The same applies to human resources. These teams are
responsible for calculating say the amount of carbon dioxide released per year, how
much damage it causes for the environment and propose how or what we must do in
order to undo that damage in terms of either our products or services.
How do you choose the different sustainability factors to fit into your CSR (corporate
social responsibility) reports?
{This question looks to find out the method that Air France-KLM follows in order to
classify the most important sustainability factors in order to fit them into its annual
reports. An explanation of how the company decides on such factors would suffice.}
If you look at our CSR report, we explain that our sustainability factors our chosen
and revised each and every year based upon the current happenings along with
bearing in mind our obligation to meet the needs for the future.
1.5 METHODS AND APPLICATION:
Which method does the financial reports of Air France-KLM follow? Is it the
revenue-expense method or the asset-liability method? Please explain why?
{This question tries to find out the method followed by Air France-KLM in its
financial reports and why it chose that method.}
We use the asset-liability method for our financial reports. The reason for this is a
part of our Corporate decision. It is of high confidentiality and I am not allowed
to discuss it in this interview.
How does Air France-KLM manage to maintain the equilibrium between its profit, the
people and the environment (planet)?
{In order to understand how Air France-KLM tackles sustainability, this question
focuses upon the key factors that influence sustainability. An answer explaining the
how the company maintains each of these three factors would be enough. }
Well, you see in AF-KLM we put our involvement to the society at the core of our
Corporate Strategy. I cannot explain to you how our corporate strategy exactly
works due to our regulations but what I can say is that we do our best to protect
the environment and incorporate the same ideology in our services and that is
what results in our profits.
66
How does Air France-KLM represent purpose? The purpose of Air France-KLM
according to their mission statement is represented by factors like achieving its
corporate aims alongside the economic and social development. Could you please
explain in detail how are these goals being achieved?
MISSION (KLM): With Air France, KLM is at the forefront of the European airline
industry. Offering reliability and a healthy dose of Dutch pragmatism, 32,000 KLM
employees work to provide innovative products for our customers and a safe,
efficient, service-oriented operation with a proactive focus on sustainability. KLM
strives to achieve profitable growth that contributes to both its own corporate aims
and to economic and social development.
KLM works to create sustainable growth at Schiphol, to gain access to any market
that will increase the quality its network and to maintain a level playing field for all
industry players. It also works to ensure a balance between the companys interests
and those of the people living and working close to the airport.
{In this question, the word purpose is used as a stimulant of passion. Hence the
answer should be in terms of what is Air France-KLM more passionate about and
what drives it?}
One person alone cannot answer this question because of its content being too
sensitive. We are only allowed to reveal what we are planning to do in the future,
but as for how we plan to do it is confidential. Only members of our board are
allowed to respond to that and even they would refuse to due to its confidentiality.
Wouter Heikens | Finance Director EPCOR B.V.
Tel: +31203161745 | Mob: + 31613969742
1119 NT, Schiphol-Rijk, The Netherlands
Wouter.Heikens@Epcor.nl
EPCOR proudly extends its APU MRO Support with the Boeing 787 APU
Capability, the APS5000;
INTERVIEW TWO
OBJECTIVE: The purpose of this interview is to gather information that shall be
analyzed to answer the main research question that is;
How does a company in the aviation industry benefit from the use of accounting
for sustainability?
What is accounting for sustainability?
Related to corporate social responsibility, accounting for sustainability is the
generation, analysis and use of monetary environmental and socially related
67
1.1 INTRODUCTION:
Could you please introduce yourself?
Dwight Lont, Safety Risk Management
What is your position in AF-KLM along with your tenure and function in AF-KLM?
I am employed by KLM since 1997.
I started within the division Cargo and remain there until now.
I have worked in various operational functions, including Supervisory functions in
several departments of operations.
At the moment I work for the Compliance and Auditing department, which is part of
the Cargo Operational Integrity department. The Director Operational Integrity and
Division Safety & Compliance Monitoring Manager reports hierarchically to and
advises the Postholder Cargo. The Postholder Cargo is responsible for the daily
operations worldwide.
Secondary tasks I fulfill are as a safety advisor for KLM. I am a qualified auditor,
investigator and safety facilitator.
Could you please talk about the accounting for sustainability practices in AF-KLM?
{Along with an explanation about the role of these practices, their importance and
how they are carried out in AF-KLM?}
Focus on sustainability is of prime importance for us at AF-KLM. The reports
associated to it are prepared at our headquarters, based upon our performance each
year. These activities in the line of sustainability were pioneered by AF-KLM so it
plays an important role in all of our decisions.
What are the key sustainability factors that currently exist in the reports of Air FranceKLM?
{This question tries to find out which are the most important sustainability factors
according to Air France. The mention of such factors would be enough.}
Our sustainability factors include reducing environmental impact, developing the
environment of our destinations and locations for the future and making all our
stakeholders and clients aware about our involvement and encourage them to
contribute in different ways.
into consideration each year for making its reports. Just a mention of the names of the
accounting bodies would suffice.}
We follow Dutch and French GAAP for our local statutory reporting. Our branches
that are situated outside France would follow each of their respective versions of
GAAP. This depends on which country it is situated in and so on. The decisions
regarding who follows which type of accounting would depend on the terms set forth
by our corporate accountants who are responsible for the decisions.
How does following the rules of these accounting bodies help Air France-KLM with
respect to adding or altering their practices related to accounting for sustainability?
{The purpose of this question is to know how the different accounting bodies impact
(positive or negative) Air France-KLM in creating practices that use accounting for
sustainability.}
I dont think that our practices involving accounting for sustainability are affected by
the rules of the bodies that we have to oblige. This is because both of these decisions
are taken on a corporate level after a thorough setting of the groups objective for that
year.
1.4 GENERATING AND APPLYING REGULATIONS:
What are the main social compliances that Air France-KLM has today?
{This question aims to find out the current scenario revolving Air France with respect
to its social obligations. Points of one or more current social compliances are
required.}
There is much social compliance that our group has today. To name a few, I can
immediately think of the universal declaration of human rights, the ILO, controlling
pollution and developing our surroundings.
When it comes to the rules and regulations of Air France-KLM, how does the
company ensure a strict application of their rules in every country? Especially those
rules that tend to overlap with a countrys particular rule?
{This question is made with the regulations of different countries in mind and aims to
find out how does Air France-KLM follow its rules in such countries with or without
altering them. Just a mention of whether the existing rules of Air France-KLM are
followed equally in every country would suffice.}
Actually, it does not work like you think. The rules keep changing from country to
country depending on each countrys regulations and conditions. It is for this reason
that we have designated separate teams in each country to control such affairs. This
is the same under every line of work in the group.
Could you please explain the key steps that the company takes to ensure that it
follows these rules effectively?
{This question tries to find out howdoes Air France-KLM ensure that it is working
under such rigorous regulations throughout the year. An explanation of how the
company takes such decisions would be enough.}
69
This is again the same response as the previous question, we have different teams to
work on these aspects. In addition to those we have to consider the different types of
documents that are issued by the company for each level of work.
How do you generate and maintain the monetary unit (as per the definition of
accounting for sustainability) of different environmental factors in Air France-KLM?
{This question is made keeping in mind the difficulty that exists when it comes to
measuring the damages that environmental resources undergo from the release of
harmful gases and allotting a value for such damages in monetary terms. An answer
containing one or two such factors along with an explanation about their perceived
value would be enough.}
Im not involved in these decisions. Our environmental and humanitarian teams deal
with these decisions.
How do you choose the different sustainability factors to fit into your CSR (corporate
social responsibility) reports?
{This question looks to find out the method that Air France-KLM follows in order to
classify the most important sustainability factors in order to fit them into its annual
reports. An explanation of how the company decides on such factors would suffice.}
We choose the different factors that need to be included in our CSR reports based on
our surroundings. We explore which aspects around us require more attention then
device an approach to make it better. We then set these factors as our goals for the
upcoming years and mention them in our CSR reports.
1.5 METHODS AND APPLICATION:
Which method does the financial reports of Air France-KLM follow? Is it the
revenue-expense method or the asset-liability method? Please explain why?
{This question tries to find out the method followed by Air France-KLM in its
financial reports and why it chose that method.}
At AF-KLM, we follow the asset liability method. It has been this method for a
long time. We are not permitted to comment on its purpose for corporate reasons.
How does Air France-KLM manage to maintain the equilibrium between its profit, the
people and the environment (planet)?
{In order to understand how Air France-KLM tackles sustainability, this question
focuses upon the key factors that influence sustainability. An answer explaining the
how the company maintains each of these three factors would be enough. }
Our primary focus at AF-KLM is to protect the environment by reducing the
damages caused by us to the environment. We also focus on providing a lot of
additional services on a humanitarian basis to the people who are located in and
around our hubs. This objective of us moves deeply into our corporate strategy
and keeps evolving year after year and it helps us maintain our position.
How does Air France-KLM represent purpose? The purpose of Air France-KLM
according to their mission statement is represented by factors like achieving its
70
corporate aims alongside the economic and social development. Could you please
explain in detail how are these goals being achieved?
MISSION (KLM): With Air France, KLM is at the forefront of the European airline
industry. Offering reliability and a healthy dose of Dutch pragmatism, 32,000 KLM
employees work to provide innovative products for our customers and a safe,
efficient, service-oriented operation with a proactive focus on sustainability. KLM
strives to achieve profitable growth that contributes to both its own corporate aims
and to economic and social development.
KLM works to create sustainable growth at Schiphol, to gain access to any market
that will increase the quality its network and to maintain a level playing field for all
industry players. It also works to ensure a balance between the companys interests
and those of the people living and working close to the airport.
{In this question, the word purpose is used as a stimulant of passion. Hence the
answer should be in terms of what is Air France-KLM more passionate about and
what drives it?}
Our purpose is to create a safe and reliable experience to our customers and
stakeholders. We try to achieve this by focusing on innovation and using it to
benefit us in the short and long run. But I am afraid I cannot explain any of these
in depth due to our company policy.
THANK YOU
Dwight Lont
Safety Risk Management
Safety Advisor: Auditor - Investigator - Facilitator
KLM Cargo | Compliance & Auditing SPL/FQ
T +31(0)206495036 | M +31(0)610698495 | Grip 95036 | E dwight.lont@klmcargo.com
Handelskade 1 3 | Building 546 | Room 2311 | P.O. box 7700 | 1117 ZL Schiphol | the Netherlands
KLM Safety Principles , Never compromise on Safety: Work Safely Stick to the Rules Report
Unsafe Situations Help & Challenge Each Other Be Fit for Work
INTERVIEW THREE
OBJECTIVE: The purpose of this interview is to gather information that shall be
analyzed to answer the main research question that is;
How does a company in the aviation industry benefit from the use of accounting
for sustainability?
71
{The purpose of this question is to know how the different accounting bodies impact
(positive or negative) Air France-KLM in creating practices that use accounting for
sustainability.}
I feel AF-KLM following the rules of the accounting bodies and accounting for
sustainability a both done due to the same thing. Corporate decision. Hence I dont
think that there are any negative implications on one due to the other. I see them
complimenting eachother.
1.4 GENERATING AND APPLYING REGULATIONS:
What are the main social compliances that Air France-KLM has today?
{This question aims to find out the current scenario revolving Air France with respect
to its social obligations. Points of one or more current social compliances are
required.}
There are quiet a few at AF-KLM like labour union related, humanitarian related and
controlling emerging issues with the environment.
When it comes to the rules and regulations of Air France-KLM, how does the
company ensure a strict application of their rules in every country? Especially those
rules that tend to overlap with a countrys particular rule?
{This question is made with the regulations of different countries in mind and aims to
find out how does Air France-KLM follow its rules in such countries with or without
altering them. Just a mention of whether the existing rules of Air France-KLM are
followed equally in every country would suffice.}
There are different groups in every branch of AF-KLM that are responsible for the
regulations of that branch. To put it into perspective, the finance disciplines
regulations for my jurisdiction are no the same as those in Europe.
Could you please explain the key steps that the company takes to ensure that it
follows these rules effectively?
{This question tries to find out howdoes Air France-KLM ensure that it is working
under such rigorous regulations throughout the year. An explanation of how the
company takes such decisions would be enough.}
Again, this is governed through the various disciplines. In addition to these there are
Letters of representation and other related docs that issued at various levels of the
company. It also, at certain times depend on the decisions taken at the superior level.
How do you generate and maintain the monetary unit (as per the definition of
accounting for sustainability) of different environmental factors in Air France-KLM?
{This question is made keeping in mind the difficulty that exists when it comes to
measuring the damages that environmental resources undergo from the release of
harmful gases and allotting a value for such damages in monetary terms. An answer
containing one or two such factors along with an explanation about their perceived
value would be enough.}
This question does not relate to my field. It is to do with our environmental board.
They are the ones who calculate these damages and report them. The rest of the group
uses that to create future objectives. For example if our carbon emission is high this
73
year, they would the damages and we would work to make sure that such situation
does not happen in the following years. This you can see from our past CSR reports.
How do you choose the different sustainability factors to fit into your CSR (corporate
social responsibility) reports?
{This question looks to find out the method that Air France-KLM follows in order to
classify the most important sustainability factors in order to fit them into its annual
reports. An explanation of how the company decides on such factors would suffice.}
We do not choose any sustainability factors but instead decide to focus on all the
existing problems in sustainability like the current carbon footprint issue and then try
to find out alternatives to avoid these issues using our innovation.
1.5 METHODS AND APPLICATION:
Which method does the financial reports of Air France-KLM follow? Is it the
revenue-expense method or the asset-liability method? Please explain why?
{This question tries to find out the method followed by Air France-KLM in its
financial reports and why it chose that method.}
At AF-KLM we always follow the asset-liability style of reporting. This is what
has been decided by the people at the highest level of our companys hierarchy. So
I am afraid I cannot explain why.
How does Air France-KLM manage to maintain the equilibrium between its profit, the
people and the environment (planet)?
{In order to understand how Air France-KLM tackles sustainability, this question
focuses upon the key factors that influence sustainability. An answer explaining the
how the company maintains each of these three factors would be enough. }
At AF-KLM, we do not try to manage an equilibrium between profit, the people and
the planet. All we are focused upon is to incorporate sustainability into our companys
DNA so that we can help benefit the environment. Our goal is to help protect the
environment and the people through our innovative products and services and that
always keeps us on top.
How does Air France-KLM represent purpose? The purpose of Air France-KLM
according to their mission statement is represented by factors like achieving its
corporate aims alongside the economic and social development. Could you please
explain in detail how are these goals being achieved?
MISSION (KLM): With Air France, KLM is at the forefront of the European airline
industry. Offering reliability and a healthy dose of Dutch pragmatism, 32,000 KLM
employees work to provide innovative products for our customers and a safe,
efficient, service-oriented operation with a proactive focus on sustainability. KLM
strives to achieve profitable growth that contributes to both its own corporate aims
and to economic and social development.
KLM works to create sustainable growth at Schiphol, to gain access to any market
that will increase the quality its network and to maintain a level playing field for all
74
industry players. It also works to ensure a balance between the companys interests
and those of the people living and working close to the airport.
{In this question, the word purpose is used as a stimulant of passion. Hence the
answer should be in terms of what is Air France-KLM more passionate about and
what drives it?}
I dont think I am permitted to answer this question in detail. It is to do more with
our policies. Although I cant say how we achieve our goals, I can respond to the
first part of your question. We aim to create first of all a good experience for our
clients and use our resources to help our surroundings.
THANK YOU
Samir Dabaghi | Finance Controller Gulf Saudi Arabia Iran & Pakistan | AIR FRANCE
Phone: +971 (04) 6025375 | Telefax: +971 (04) 6025383 | Mobile: +971 (055) 5372090
INTERVIEW FOUR
OBJECTIVE: The purpose of this interview is to gather information that shall be
analyzed to answer the main research question that is;
How does a company in the aviation industry benefit from the use of accounting
for sustainability?
What is accounting for sustainability?
75
76
{The purpose of this question is to know how the different accounting bodies impact
(positive or negative) Air France-KLM in creating practices that use accounting for
sustainability.}
To both of them are supported by legislation. The point that needs to be understood
here is that it all depends upon the direction that the company decides to take with
regards to its managerial decisions to act on the subjects. So it always adds to
accounting for sustainability.
77
How do you choose the different sustainability factors to fit into your CSR (corporate
social responsibility) reports?
{This question looks to find out the method that Air France-KLM follows in order to
classify the most important sustainability factors in order to fit them into its annual
reports. An explanation of how the company decides on such factors would suffice.}
Unlike other companies, at AF-KLM, we focus on sustainability as a whole. Meaning
we have an objective under every division of it. We would also give more importance
to the parts of it that have growing importance and try to achieve them at the earliest.
1.5 METHODS AND APPLICATION:
Which method does the financial reports of Air France-KLM follow? Is it the
revenue-expense method or the asset-liability method? Please explain why?
{This question tries to find out the method followed by Air France-KLM in its
financial reports and why it chose that method.}
We only use the asset-liability method to create our financial reports. There are
two reasons for this, one it is feasible to use and two because it is a corporate
decision and we are bound to follow it.
How does Air France-KLM manage to maintain the equilibrium between its profit, the
people and the environment (planet)?
{In order to understand how Air France-KLM tackles sustainability, this question
focuses upon the key factors that influence sustainability. An answer explaining the
how the company maintains each of these three factors would be enough. }
We plan to achieve this through our Corporate Strategy. But I cannot explain on
its details.
How does Air France-KLM represent purpose? The purpose of Air France-KLM
according to their mission statement is represented by factors like achieving its
corporate aims alongside the economic and social development. Could you please
explain in detail how are these goals being achieved?
MISSION (KLM): With Air France, KLM is at the forefront of the European airline
industry. Offering reliability and a healthy dose of Dutch pragmatism, 32,000 KLM
employees work to provide innovative products for our customers and a safe,
efficient, service-oriented operation with a proactive focus on sustainability. KLM
strives to achieve profitable growth that contributes to both its own corporate aims
and to economic and social development.
KLM works to create sustainable growth at Schiphol, to gain access to any market
that will increase the quality its network and to maintain a level playing field for all
industry players. It also works to ensure a balance between the companys interests
and those of the people living and working close to the airport.
{In this question, the word purpose is used as a stimulant of passion. Hence the
answer should be in terms of what is Air France-KLM more passionate about and
what drives it?}
78
Our purpose is to keep innovating within the aviation field while having respect for
the environment at the same time. I cannot go into the details of how we plan to
achieve this since it is company secret.
INTERVIEW FIVE
OBJECTIVE: The purpose of this interview is to gather information that shall be
analyzed to answer the main research question that is;
How does a company in the aviation industry benefit from the use of accounting
for sustainability?
79
We are currently following the French and Dutch version of GAAP for our local
reports. The type of accounting body would change with respect to the location of our
branches.
How does following the rules of these accounting bodies help Air France-KLM with
respect to adding or altering their practices related to accounting for sustainability?
{The purpose of this question is to know how the different accounting bodies impact
(positive or negative) Air France-KLM in creating practices that use accounting for
sustainability.}
To me sustainability and accounting for CSR is may be supported by legislation.
Hence I dont think that our practices involving accounting for sustainability are
affected by the rules of the bodies that we have to oblige.
1.4 GENERATING AND APPLYING REGULATIONS:
What are the main social compliances that Air France-KLM has today?
{This question aims to find out the current scenario revolving Air France with respect
to its social obligations. Points of one or more current social compliances are
required.}
We are focusing on many compliances. Some of them include controlling the
pollution, CLA related and also, of course environmental related.
When it comes to the rules and regulations of Air France-KLM, how does the
company ensure a strict application of their rules in every country? Especially those
rules that tend to overlap with a countrys particular rule?
{This question is made with the regulations of different countries in mind and aims to
find out how does Air France-KLM follow its rules in such countries with or without
altering them. Just a mention of whether the existing rules of Air France-KLM are
followed equally in every country would suffice.}
This is governed through the respective disciplines. Since the rules keep changing
from country to country depending on each countrys regulations and conditions we
have designated different teams in each country to control such happenings.
Could you please explain the key steps that the company takes to ensure that it
follows these rules effectively?
{This question tries to find out howdoes Air France-KLM ensure that it is working
under such rigorous regulations throughout the year. An explanation of how the
company takes such decisions would be enough.}
I think the response to this would be the same as the previous question, this is
governed through the different initiatives along with certain extra input from the
members of the board.
How do you generate and maintain the monetary unit (as per the definition of
accounting for sustainability) of different environmental factors in Air France-KLM?
{This question is made keeping in mind the difficulty that exists when it comes to
measuring the damages that environmental resources undergo from the release of
harmful gases and allotting a value for such damages in monetary terms. An answer
81
containing one or two such factors along with an explanation about their perceived
value would be enough.}
Im sorry but I am not involved in this function. It is to do with a completely different
department.
How do you choose the different sustainability factors to fit into your CSR (corporate
social responsibility) reports?
{This question looks to find out the method that Air France-KLM follows in order to
classify the most important sustainability factors in order to fit them into its annual
reports. An explanation of how the company decides on such factors would suffice.}
We have never restrained ourselves to focusing on a particular set of sustainability
factors but instead focus on every single factor that exists under sustainability. The
only difference is that we focus on some factors that are more current in contrast to
the always existing ones in our CSR reports.
1.5 METHODS AND APPLICATION:
Which method does the financial reports of Air France-KLM follow? Is it the
revenue-expense method or the asset-liability method? Please explain why?
{This question tries to find out the method followed by Air France-KLM in its
financial reports and why it chose that method.}
We only follow the asset-liability method. We follow this method mainly because
this is what has been decided at a corporate level.
How does Air France-KLM manage to maintain the equilibrium between its profit, the
people and the environment (planet)?
{In order to understand how Air France-KLM tackles sustainability, this question
focuses upon the key factors that influence sustainability. An answer explaining the
how the company maintains each of these three factors would be enough. }
We manage to achieve this since it is part of our corporate strategy. I am not
authorized to explain it in detail.
How does Air France-KLM represent purpose? The purpose of Air France-KLM
according to their mission statement is represented by factors like achieving its
corporate aims alongside the economic and social development. Could you please
explain in detail how are these goals being achieved?
MISSION (KLM): With Air France, KLM is at the forefront of the European airline
industry. Offering reliability and a healthy dose of Dutch pragmatism, 32,000 KLM
employees work to provide innovative products for our customers and a safe,
efficient, service-oriented operation with a proactive focus on sustainability. KLM
strives to achieve profitable growth that contributes to both its own corporate aims
and to economic and social development.
KLM works to create sustainable growth at Schiphol, to gain access to any market
that will increase the quality its network and to maintain a level playing field for all
industry players. It also works to ensure a balance between the companys interests
and those of the people living and working close to the airport.
{In this question, the word purpose is used as a stimulant of passion. Hence the
answer should be in terms of what is Air France-KLM more passionate about and
what drives it?}
82
As mentioned in the previous question, the reason cannot be disclosed due to our
corporate confidentiality.
THANK YOU
Ajay Kumar
Financial Controller
Boodai Aviation Group
Kuwait
Local Sponsor for Air France KLM Group
**********
INTERVIEW SIX
OBJECTIVE: The purpose of this interview is to gather information that shall be
analyzed to answer the main research question that is;
How does a company in the aviation industry benefit from the use of accounting
for sustainability?
83
1.1 INTRODUCTION:
Could you please introduce yourself?
SINGARAVELOU Balasspoupramanien Cargo Manager, Air France - KLM Group,
Kuwait, Iraq, Oman & Qatar. More than 24 years of professional experience, highest
education: Post Graduate in Finance & Commerce.
What is your position in AF-KLM along with your tenure and function in AF-KLM?
- 1990 - 1996 Cargo Officer in Air France Cargo, Abu Dhabi, United
Arab Emirates
- 1997 2003 Deputy Cargo Manager for Air France, Abu Dhabi, United
Arab Emirates
- 2003 2007 Cargo-cum Station Manager for Air France Cargo in Kuwait
- 2007 2011 Cargo Sales Manager for Air France-KLM Group, Kuwait &
Iraq
- since 2011 Cargo Sales Manager for Air France-KLM- Martinair Group
for
Kuwait, Iraq, Oman and Qatar.
1.2 FACTORS AND PRACTICES:
Could you please talk about the accounting for sustainability practices in AF-KLM?
{Along with an explanation about the role of these practices, their importance and
how they are carried out in AF-KLM?}
CSR related reporting is performed at corporate, based on input from the businesses.
In the local reporting this is populated mainly through the Risk sheets, Safety
reporting and HRM related reporting (incidents, sick leave, etc).
What are the key sustainability factors that currently exist in the reports of Air FranceKLM?
{This question tries to find out which are the most important sustainability factors
according to Air France. The mention of such factors would be enough.}
Right now I think the most important for us is water and fuel conservation. We keep
innovating in these lines to make our group as eco friendly as possible.
1.3 ACCOUNTING BODIES AND IMPLICATIONS:
What are the different types of accounting bodies that you have to follow each year?
84
{The purpose of this question is to get an idea about the different types of accounting
bodies for example IFRS, IPSASB, AcSB, ANC, etc. that Air France-KLM has to take
into consideration each year for making its reports. Just a mention of the names of the
accounting bodies would suffice.}
We only use the Dutch and French GAAP for the local statutory reports. Foreign
establishments are usually followed by the local legislators to perform reporting
according to local GAAP. These scenarios change depending on the location of our
branch.
How does following the rules of these accounting bodies help Air France-KLM with
respect to adding or altering their practices related to accounting for sustainability?
{The purpose of this question is to know how the different accounting bodies impact
(positive or negative) Air France-KLM in creating practices that use accounting for
sustainability.}
According to me our group is complying to both the accounting bodies and
accounting for sustainability due to directorial decisions. Since these decisions are
usually made together, they would not result in a negative impact.
1.4 GENERATING AND APPLYING REGULATIONS:
What are the main social compliances that Air France-KLM has today?
{This question aims to find out the current scenario revolving Air France with respect
to its social obligations. Points of one or more current social compliances are
required.}
AF-KLM is currently focusing more on the humanitarian side and the environmental
side as there are more objectives to be achieved under these domains.
When it comes to the rules and regulations of Air France-KLM, how does the
company ensure a strict application of their rules in every country? Especially those
rules that tend to overlap with a countrys particular rule?
{This question is made with the regulations of different countries in mind and aims to
find out how does Air France-KLM follow its rules in such countries with or without
altering them. Just a mention of whether the existing rules of Air France-KLM are
followed equally in every country would suffice.}
You must understand that the company is not the same in all of its geographical
locations. Each location has a different set of rules to be followed that is designed by
the group of the location and approved by the board. So there is no overlapping as
you think there are.
Could you please explain the key steps that the company takes to ensure that it
follows these rules effectively?
{This question tries to find out howdoes Air France-KLM ensure that it is working
under such rigorous regulations throughout the year. An explanation of how the
company takes such decisions would be enough.}
As I mentioned earlier, these are not the function of one company as a whole but
involves the different divisions that exist under the companys umbrella. These rules
are sent to the higher authority for acceptance only.
85
How do you generate and maintain the monetary unit (as per the definition of
accounting for sustainability) of different environmental factors in Air France-KLM?
{This question is made keeping in mind the difficulty that exists when it comes to
measuring the damages that environmental resources undergo from the release of
harmful gases and allotting a value for such damages in monetary terms. An answer
containing one or two such factors along with an explanation about their perceived
value would be enough.}
Im sorry but I am not in this division. I am not sure how it functions exactly.
How do you choose the different sustainability factors to fit into your CSR (corporate
social responsibility) reports?
{This question looks to find out the method that Air France-KLM follows in order to
classify the most important sustainability factors in order to fit them into its annual
reports. An explanation of how the company decides on such factors would suffice.}
Our companys CSR reports focus on almost every sustainability related factors there
is in the aviation field. This is because we have incorporated sustainability into every
single operation that we carry out. So to answer your question we do not cherry pick
these factors.
1.5 METHODS AND APPLICATION:
Which method does the financial reports of Air France-KLM follow? Is it the
revenue-expense method or the asset-liability method? Please explain why?
{This question tries to find out the method followed by Air France-KLM in its
financial reports and why it chose that method.}
Our corporate decision dictates us to follow the asset liability method. We are
supposed to follow it.
How does Air France-KLM manage to maintain the equilibrium between its profit, the
people and the environment (planet)?
{In order to understand how Air France-KLM tackles sustainability, this question
focuses upon the key factors that influence sustainability. An answer explaining the
how the company maintains each of these three factors would be enough. }
Our Corporate Strategy enables us to strike this balance and we try to keep it as
updated and confidential as possible. So I am sorry, but I cannot state its working.
How does Air France-KLM represent purpose? The purpose of Air France-KLM
according to their mission statement is represented by factors like achieving its
corporate aims alongside the economic and social development. Could you please
explain in detail how are these goals being achieved?
MISSION (KLM): With Air France, KLM is at the forefront of the European airline
industry. Offering reliability and a healthy dose of Dutch pragmatism, 32,000 KLM
employees work to provide innovative products for our customers and a safe,
efficient, service-oriented operation with a proactive focus on sustainability. KLM
strives to achieve profitable growth that contributes to both its own corporate aims
and to economic and social development.
KLM works to create sustainable growth at Schiphol, to gain access to any market
that will increase the quality its network and to maintain a level playing field for all
86
industry players. It also works to ensure a balance between the companys interests
and those of the people living and working close to the airport.
{In this question, the word purpose is used as a stimulant of passion. Hence the
answer should be in terms of what is Air France-KLM more passionate about and
what drives it?}
You need an interview with the board if you really need to know how.
THANK YOU
Balaji Singaravelou
Sales Manager - Kuwait, Iraq, Oman & Qatar
Tel: +965 24748036 / 24756942 Mob: +965 97210883
Fax: +965 24335928. E-mail: basingaravelou@airfrance.fr
For bookings mail adr - customerservice.kwi@afklmpcargo.com
**********
87