CSR Accounting and Accountability Flashcards
CSR Accounting and Externalities
CSR accounting and reporting are an attempt to provide additional accounts which will capture some of the externalities
CSR accounting as a part of CSR
Given that normal accounting communicates to shareholders, CSR accounting communicates to stakeholders.
-There has been a rise in reporting non-financial activities regarding social and environmental activities
What is CSR accounting?
The VOLUNTARY process concerned with assessing and communicating organisational activities and impacts on social, ethical and environmental issues RELEVANT TO STAKEHOLDERS
Features of CSR reporting
- Internally produced
- Communicated to shareholders and (internal and external stakeholders)
- Formal rather than informal
- About social and environmental areas of organisational activity, for example: environment, employees, consumers and products
- Externally verified
How does CSR accounting differ from financial accounting?
- Similarities: objectivity and accuracy as the ultimate achievable goals
- Voluntary rather than mandatory
- No single set of widely accepted standards (GRI dominates)
- Content has social rather than economic orientation
- Different techniques and measures employed
- Principal is the stakeholder, not shareholder
Is CSR more like financial accounting or social science?
- Measures complex social phenomena
- Hard to quantify (use of proxies, e.g. CO2 emissions)
- Use of hard and soft metrics: hard are measurable but may be not real e.g. absenteeism and work morale; soft metrics may be real but not exact (e.g. 3/5 on job satisfaction)
- Who is qualified to undertake such accounting?
Approaches to CSR reporting: business case
- fits with narrow approach
- “managing” stakeholders
- CSR reporting as a management tool
- assumes shareholder primacy
- market-driven rationale
- benefits include creating shareholder value, risk management, improved reputation, motivating and aligning staff
- preference for no or low regulation
Approaches to CSR reporting: stakeholder accountability
- fits with broad approach
- method of accountability and transparency
- assumes stakeholders interests are important and (potentially) different to the organisation
- stakeholders have a right to know
- regulation is needed to avoid greenwashing (PR side of CSR reporting
Problems with reporting
- Is the report (data) accurate and reliable?
- Are the reporting real? Do they reporting what they say they are reporting?
- Importance of standards and assurance (soft regulation)
Global Reporting Initiative (GRI)
- Most widely accepted framework for reporting
- Used by 82% of G250 in 2013
- Most importantly, gives guidance on not just WHAT to report, but HOW
Judging criteria for social reporting: Completeness
- Scope and meaningfulness of the report: is the content what stakeholders need?
- Materiality: key impacts (+ve and -ve) across the org and rationale for choice of impacts
- Stakeholder inclusion: identification of audience
- Strategy: level of integration of reporting process
- Organisational context: general info and context
Judging criteria for social reporting: Credibiity
- Does the report accurately provide info on the organisation’s impacts?
- reporting and management process
- stakeholder inclusion: how feedback is used and how it influences the org
- governance: management involvement
- performance: data trends over time
- assurance: internal and external process statements
Judging criteria for social reporting: Communication
Communication of info to stakeholders:
- has the report been well communicated?
- presentation: readability, graphs, illustrations
- stakeholder inclusion: accessibility and feedback
- structure: use of summaries, navigation tools, internet
Issues with CSR reporting
- Just producing CSR reports is not enough, it has to have reliability and validity
- CSR accounting is mainly voluntary, but is subject to international principles and standards
- CSR reporting does not equal CSR performance
