Due to the bushfires in the beginning of 2020, firms are under pressure to take actions to deal with climate change concerns. CFO discussed this issue with managers in the manufacturing and sales departments. The manufacturing manager proposes to use more expensive materials to reduce the amount of polluted air and water in the production process. The sales manager is not sure whether that is a good idea because expensive materials mean that the price has to be increased. CFO is also not sure how to convince banks to lend more money to finance manufacturing manager's proposal. CFO would like you to provide a brief memo on how to integrate social and environmental impact into the costing system to assist senior management in making operational and investment decisions and building a long-term relationship with the company's stakeholders.

Outline the feature of the costing system and how could the Co. use it to evaluate and improve social and environmental performance. In addition, identify where you see the challenges are for implementation.

Address specific concerns raised by different parties.