Corporate Social Disclosure

Question 1

Corporate social disclosure

Answer 1

The process of communicating the social and environmental effects of an organisation’s economic actions to particular interest groups within society and to society at large.

Question 2

The groups interested in corporate social disclosure…

Answer 2

Employees, shareholders, customers, suppliers.

Question 3

A corporate social disclosure report may include information on:

Answer 3

recycling policy of the company, number of accidents that occur each year, total energy usage, total water usage, number of environmental incidents and the ratio of men and women in senior management positions.

Question 4

Benefits of corporate social disclosure to a company

Answer 4

May:
- improve the reputation of the company in the minds of the general public, environmental groups and employees.
- increase employee satisfaction with the company resulting in improved work performance.
- result in more talented people wanting to work for a company that has strong social conscious.
- encourage investment in the company from people wanting to invest in companies that act in a socially responsible manner.
- deter government from imposing compulsory social disclosure rules.

Question 5

Benefits of CSD to company stakeholders

Answer 5

• Allows environmental and other community groups to better assess the company performance.
• Assists consumers who want to make sure that they purchase the products of companies that minimise their impact on the environment or that do not exploit workers.
• May improve the morale of employees who are likely to be happy to work for a company that has strong social conscience
• Assists investors who only want to put their money in companies that have a strong social conscious.

Question 6

Limitations of corporate social disclosure

Answer 6

• Mainly voluntary except for some mining company activities. Company may only disclose positive corporate social info.
• Difficult to compare corporate social disclosure between different companies as there are few rules about what must be disclosed.
• Impact of company’s actions on environment may be difficult to measure.
• Contents of a CSD report are not independently verified.

Question 7

Difficulties in preparing CSD reports

Answer 7

• Accountants may lack the knowledge required to prepare CSD reports and may need further training.
• Many of the items likely to be included in CSD reports may not be able to be accurately measured.
• There is little guidance for accountants on what should be included in a CSD report.

Question 8

Key performance indicators

Answer 8

Return on equity, return on assets, earnings per share, inventory turnover, staff turnover.