This report is based on the research and findings that are related to the financial sustainability practices by the institutes and organizations in the countries, however, in this global world companies are promoting sustainable finance so that there could be long-term success and benefits for the future generation. The paper focuses on the introduction and concepts related to the sustainable financial management as well as the sustainable financial growth. Moreover, there is the discussion regarding the financial sustainability issues with the focus on the aspects of key value drivers, capital budgeting, profitability, investment returns etc.
Regarding the findings of this research, it is known that corporate sustainability practices for the benefits and advantages of the new products and to provide and get benefit from stakeholders. Moreover, there is the discussion on the financial sustainability risks and opportunities, and then there is the analysis of the different financial system in the western financing model and Islamic financing. It is known that every country is focused on the efficient financial sustainability practices so that there could be advancement in the economic and social world.
“Explore the role of financial management in promoting sustainable business practices and development (Overall grade)”
Financial management is a key factor for business development. Process of dealing with money or investment is known as financial management. Financial management is one of the goals and objectives for sustainable business practices and development. Anything that is related to the money comes under financial management either it is related to funds or accounts. Almost all the organizations have separate departments for financial management consisting upon dedicated, professional and trustworthy team because financial management is sensitive department.
Taking right decisions in financial management at right time leads the sustainable practice in business and directs it towards development. Successful enterprises make financial management their priority because they know it is a key to success. Good Financial management requires proper financial planning and adequate knowledge of finance. Planning of investment, expenditure and funds management prompt sustainable business practices and development.
Financial management consists upon different bodies i.e. governing body, board members, financial manager and assistant, and admin manager and assistant. They work as a team to develop the business and bring sustainable growth in business. Financial management is heart of sustainable business practices and development. Overall management and department of organizations are affected by financial decisions so these decisions should be made very carefully.
In order to prompt sustainable business practice and development there is a need to develop financial goals first. Financial goals need to be set for the sustainable development (Hall, Daneke, & Lenox., 2010).
Conceptual Building of Sustainable Financial Management and Sustainable Financial Growth
In order to focus on the concepts related to the sustainable financial management and the sustainable financial growth, it could be said that the sustainable development need to be focused effectively so the needs can be meet in the present. There is focus on the needs in the present so that there could be no compromises in the future generations. Sustainable development in the finance is related to various dimensions, as there is the focus to balancing different policies in the dimensions, then the long time-frames as well as the intergenerational equity also needs to be managed. In the sustainable financial management there are also concepts related to the ecosystems, there is focus on the equal opportunities for the department (Moldan, Janoušková, & Hák, 2012).
The governance for sustainable development in the financial markets is also concerned. However, the sustainable development multidimensional and holistic perspective so that the organizations stay committed to environmental performance and there could be appropriate strategies for the effective building activities (Moldan, Janoušková, & Hák, 2012). The sustainable building approach related to the finance focus on the valuable contribution so that there could be enhancement of the quality of life and there could be the focus on the sustainable and healthy environment for the people through relating the resource in an efficient manner. Another aim is the reduction of the CO2 and GHG emission and the mitigation of noise.
The organizations focused on the sustainable financial management; also focus on the modest maintenance sustainability initiatives. There is the investigation into the assessment of the environmental challenges. Sustainable financial management requires the conceptual framework so that there could be balancing if the environmental protection in order to promote the economic development with the maximization of the financial profits (Christofi & Sisaye, 2012).
The one-dimensional goal of the financial sector is also to consider the financial sector rationale with the principles related to the SD perspective. For the management of the sustainable financial management, the industry is focused on the internalization of externalities and there is the calculation of an investment that how there could be prosperity through assigning long-term sustainability ratios for the environmental protection. The industry is maintaining the prospect so that there could be effective horizon to investments and there should be safeguarding for the financial as well as the progressive substitution.
Sustainable financial management also focuses on the social justice so that through the consideration of economic aspects as well as the environmental, and social aspects, the process of development could be focused, the sustainable financial management has own terms and concepts for the aspects related to the sustainable development. The industry also focused on the resources and risks that could be there in the sustainable financial management and which the current generation has to face, thus, policy-making is focused, in order to fulfill the aspect of sustainable financial management (Christofi & Sisaye, 2012).
Financial Decision Making and Sustainability Issues
Financial decision making and sustainability issues could be described as the issues or problems that could be there in the financial institution regarding the sustainability, as there could be issues with banks and there are other insurance companies or other financial institutions that are facing the issues while making the commitment to sustainability. However, the issues are there in the sustainability reporting because companies are not feeling responsible for the economic growth. The financial institute is not effectively focused on the effective services sector; as there is need to create jobs so that there could be sustainability practices in the financial services and so that companies could able to save them from the major financial crisis (Bergsteiner & Avery, 2011).
There is some systemic financial crisis that the companies have to face in the management practices, the financial institution needs to improve the financial performance so that there could be sustainability from every aspect as the companies also need to focus on the financial innovation so that there could be benefits and the environmental issues could be concerned by the financial institutions. The companies need to engage themselves in the environmentally responsible practices as they need to create the green credit cards and green products so that there could be sustainability in the financial services sector.
Financial institutions need to reduce the energy utilization and consumption in buildings so that there could be green gestures. There should be a true commitment from the financial department as for the sustainability the companies and the buildings need to be focused for the energy efficiency and the companies need to manage the unacceptable risks through the efficient mortgages system and through innovation in the environmentally-friendly products. The industry needs to be concerned with the green securitization products so that there could be no financial decision making that related to the sustainability issues.
Key Value Drivers
The efficient financial decision making is required in the organizations or financial institutions, however, the companies are focused on the analytical evidence so that there could be effective sustainability performance. Key values driver for the sustainability practices requires focusing and fulfilling the ethical investment for the accelerated improvements.
However, companies require focusing on the sustainable practices so that there could be better decisions on the financing and investment for the management if the corporate supply chain. Other key values driver for the sustainability practices also requires the proper corporate financial reporting so that the sustainability reports help the financial institutions to be sustainability strong. For the better financial services, the industry is getting the awareness of climate change so that there could be better sustainability practices (Bergsteiner & Avery, 2011).
Capital budgeting could be defined as the financial decision making in the organizations or financial institutions. In order to notice the sustainability issues, the companies are the focus on the capital investment decisions so that there could be formal sustainability program which can be impacted through the human activities that are in the global environment. Moreover, the companies need to focus on the green-houses gases as in the industry there is already focus on the sustainability practices so that the solution for implementing sustainability programs can be effectively done.
For the efficient sustainability practices; the capital investment decisions and the capital budgeting decisions are effectively focused so that there could be the betterment in the investments and there could be effective and sustainable technologies that sustainability in investment decisions (Liu, Kasturiratne, & Moizer, 2012).
The Cost of Capital
The companies for the sustainability and green compatibility need to focus on the financial decisions that are required in the industry related to the cost of the capital. For the efficiency of investment, there is the need to invest in the fiduciary responsibility so that there could be the development of the successful financial systems in the market economies. In the industry, for the sustainable development, the financial intermediation requires the trust and confidence so that there could be the focus on the core business requirement and so that there could be sustainability in the financial markets.
The sustainable financial management considering the cost of capital can result in the better, modest continuance of the sustainability initiatives so that implementation for the broader framework could be noticed for the financial innovation or financial intermediaries in the financial systems.
For the profitability in the businesses and financial institutions, the effective sustainable practices are required, as there is the need to concern about the ethical foundation in the financial systems so that right decision in financial management could be taken and the profitability could be through the sustainable practice. For the development, the companies need to be concerned and they need to do the planning of investment so that there could be effective business practices and development. The companies also need to manage the future generations so that there must be better results in the sustainable financial management sustainable and there could be better building approach related to the finance that focuses on the valuable contribution of finance for the profitability.
Working Capital Management
For the financial decision, the organizations are focused to manage the working capital management so that there could be no further sustainability issues economic uncertainty and there may not be rising debt levels. However, companies are focused on the increased scrutiny so that there could be effective management for the shareholders and analysts. The companies need to maximize the issues and need to focus on the cash flow management so that there could be better focused on the financial decision making and sustainability issues and there could be the management of the liquidity to fund and better strategic initiatives.
Thus, the companies need to manage the debt reduction so that there could be better services in the financial industry and there should be the better focus on the product development or capital management etc. However, for the working capital management the financial decision-making need to be effectively done so that there could be the better focus on the sustainability issues and the best practices, through maximizing cash flow and also the business best practices. Working capital management requires the better focus on the sustainability end-to-end processes and there should be influence effective in the cash flow management (Christofi, Christofi, & Sisaye, 2012).
For the future generations, the sustainable corporation needs to create profit as there is the need to do investment on the sustainability practices for its shareholders so that the environment could be protected and so that there could be the effort for combining financial analysis. The company for the investment return needs to do the analysis of ESG issues because the investment is done for the purely economic reasons. The companies need to take steps for the climate change so that there could be practices towards the alternative energy and so that companies focus on the capacity to innovate the management quality (Luo, Wang, Raithel, & Zhen, 2015).
In the industry, there is focus on the investment return through the sustainability analysis and through using the sustainability benchmarks. The sustainable investing can be known as the long-term phenomenon in which the knowledge grows and departments better able to understand about the implementation towards the sustainable corporate policies as well as the investment philosophies that are focused through the institutional investors. Moreover, the investment is done and need to be done to focus on the practices for the low-carbon future and so that there could be innovation in the clean energy. It is the environmental responsibility of the companies to focus on the investment return through considering the water conservation and energy efficiency.
Corporate Sustainability Risks and Opportunities/ Mitigate risks
In order to promote the sustainable business practices, there is need to focus on the risks that are associated with the sustainable businesses. Financial management needs to focus on the management of the operation transactions so that there could be the management of the environmental and social risks. However, the risks need to be focused on the management of the commercial operation and for the management of the finance and specific aspect regarding the operation.
There could be risks and issues related to the sustainable business practices, an example includes sales and purchase of equipment, the renovation or the expansion of the operation. There are also the commercial operations that need to be focused on the exchange of shares, the company needs to consider the corporate transaction so that there could be managed in the operation’s industry sector. The companies need to manage the environmental, economic as well as the social risks so that there could be benefits in the retail operations and so that there could be the focus on the labor standards.
The risks regarding the life and fire safety or other social risks also need to be considered the example, the labor and working conditions. The companies need to also focus on the supply chain so that there could be benefits to the financial institution considering the social issues.
There are several opportunities in sustainability, however, the organizations focused on the new sustainable opportunities need to be focused on the stakeholder engagement so that there could be effective societal approach and so that the human capital can focus through understanding the sustainability framework. For the opportunities in the sustainable business practices, there are different ambition levels in the corporate sustainability, which offers multi-disciplinary approaches in the framework. Consequently, the business operations need to be addressed effectively in the economic, environmental as well as in the social dimensions so that there could be the success (Hahn, Pinkse, Preuss, & Figge, 2015).
Interactions between sustainability practices and sustainable financial growth
The sustainable practices in the business like a practice of reuse and recycle and using the environment-friendly products is not only good for the society but also the business of the company. It is obvious that company has to work in the society and the environment and it is not separate from the society. In the present era, there is the need to adopt such practices for the business that is good for the environment. It is also the matter of concern that the public is also the very concern with the environmentally friendly and socially responsible business and also prefer to buy from that company. There are many of the companies in the market that are adopting the practice of environment-friendly practices and promote their business by being responsible towards the society (Rafindadi & Ozturk, 2016).
The sustainability practices have the very deep relationship with the financial growth of the company’s business in the marketplace. Let us take the example of Starbucks, it is a coffee company but the innovation of the company is that they are using the environmentally friendly products in their business that is not only good for the health of the company but also good for the environment. The people like it because of its good reputation in the market for being the environmental friendly company. On the other hand, the financial growth of the company is also very stable because of innovation and positive attitude in the society.
The stable financial growth of the business is depending on the demand for the product in the market and loyalty of the customers towards the product of the company. by using the sustainable practice for the business the company may able to increase the demand for the product and make more loyal customers that eventually result in a financial growth of the company.
Analyzing Different Financial Systems
Western Financing Model
It is analyzed that the sustainable business practices are also focused on the shadow banking system. The companies and institutions as the US borrowers for the European banks are focused on the private label securities and there are different stages related to the financial crisis. However, companies and institute are also continuing the profit and loss sharing practices at the financial system so that there could be a promotion of the sustainable practices and so that the companies could focus on the legitimate profit, in order to get the benefits in the financial flow and productivity (Shin, 2012).
In order to promote the sustainable business practices; there is focus on the literature linking, as companies in the Islamic world are considering the global financial crisis that is based on the Islamic finance model. However, institutes are learning from the financial crises because they want the real economy to develop the sustainable financial practices effectively in the field. Moreover, the companies are focused on the financial system based so that the risk related to the practices can be shared and then the risk can be handled more carefully. Islamic finance principles are helping financing businesses to grow towards the sustainability. However, the companies and institute are understandings the international finance in the better way and designing the effective solutions to respond to the current global financial crisis (Ahmed, 2010).
Analyzing and prediction of corporate bankruptcy and sustainable growth
It is noticed that finances of the company is one of the very sensitive parts of the business and because they are very unpredictable. Nevertheless, for the sustainable growth of the business, it is also very important for the company to predict the corporate bankruptcy of the company. The financial bankruptcy prediction helps the company to know about the varies financial distress of the company that can harm the sustainable growth of the company business in the market. The bankruptcy prediction is very important to deal with the financial issues of the company. This prediction also helps the company to make the long-term goals about the business and what is likely to be the good investments for the business in the long run (Andekina & Rakhmetova, 2013).
If the company may able to efficiently predict the bankruptcy of the business it can sustain its growth in the market. Estimating about the business and predicting about the bankruptcy concerning all of the financial ratios is said to be the normally used multivariate distinguish examination approach. Because of the data accessibility and development of econometric method the figure of study dedicated to the models of the bankruptcy prediction has developed extremely because of its credibility in handling the financials of the business.
So there is no doubt that the bankruptcy prediction is essential for the growth of any business in the Markey and it is also necessary for the sustainable financial condition of the company. This practice saves the business form any kind of financial disaster. The bankruptcy prediction also helps the company to expand its business with a very low risk of uncertainty in the market (Lianga, Lu, Tsai, & Shih, 2016).
Results and Discussions
It is analyzed through the research and studies that organizations are focused on the sustainable financial management so that there could be the modest maintenance of sustainability initiatives. However, sustainable financial management is focused on the conceptual framework in the financial institution because there are mission and vision to make the commitment towards the sustainable practices. Consequently, financing and investment are focused on the long-term phenomenon because companies are noticing the global environment and through assessments focused on the investment return so that companies could be free from the risks or social risks. There are institutional investors, which are also investing much for the sustainable growth through analysis.
Moreover, countries and companies in the industry are considering the sustainable development practices in the financial world so that there could be a development of the effective building activities in the environmental protection and there could be better commitments towards the sustainability.
Regarding conclusion, it could be analyzed that in the modern world there are institutions in the industry, which are focused to bring the sustainability practices in order to promote the financial practices for the future. Institutes are focused on the practices related to financial management and in this way; there is the development of the professional and trustworthy team. However, sustainability practices is a key to success because its overall management and department are considering the financial goals so that there could be effective in sustainable business practice and development for the better future of the financial businesses through considering the multidimensional and holistic perspective.
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