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Chapter 14

Chapter 14. Corporate Social Responsibility. Corporate Social Responsibility. Recent developments globalization ‘green’ agenda stakeholder theory social responsibility Financial reporting responding ‘Attitude not techniques’ Seeks qualitative as well as quantitative expression

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Chapter 14

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  1. Chapter 14 Corporate Social Responsibility

  2. Corporate Social Responsibility • Recent developments • globalization • ‘green’ agenda • stakeholder theory • social responsibility • Financial reporting responding • ‘Attitude not techniques’ • Seeks qualitative as well as quantitative expression • Addresses issues such as environmental impact • Some pioneer companies, e.g., Body Shop, BT Financial Information Analysis

  3. CSR ctd. • Broader responsibilities of reporting function • The Corporate Report • e.g. wider range of users • investors • employees • community • customers, etc • Takes emphasis off numbers and puts it onto ‘qualitative’ information Financial Information Analysis

  4. CSR ctd. • Potent force for positive action • e.g. oil companies / political action • Resistance from some, e.g., some MNEs • Power struggle between business and others • Part of broader social agenda • Narrative disclosures likely to increase • Range of reports will expand Financial Information Analysis

  5. Triple Bottom Line (TBL) • TBL is one response to information demands of CSR • Measures performance under: • Financial; • Social; and • Environmental • OFR Financial Information Analysis

  6. Environmental Reporting and accounting for the environment • Sub-set of CSR • Area of greatest impact on accounting • Response to ‘green agenda’ • Environmental Reports now produced by many large companies • e.g., Shell • genuine or propaganda? • Increased disclosures: • contingent liabilities for environmental damage Financial Information Analysis

  7. Sustainability • Sustainability: ‘capacity to sustain service without diminishing critical capital’ • Central concept in overall approach • One accounting response distinguishes between: • Capital: Man-made / Natural • Natural: Critical / Non-critical • This imposes notion of ‘social costs’ on business • businesses ‘charged’ for use of critical resources • most businesses would be making losses if charged Financial Information Analysis

  8. What can accounting do? • Accounting theoretically ill-equipped to deal with many challenges of new agenda • Variety of options • do nothing • charge IS for cost of critical capital consumed • incorporate narrative report • include financial charge/provision • Important for accounting to take initiative Financial Information Analysis

  9. Summary • Accounting is a social science and can respond to social agenda • Social and environmental concerns are now of more concern to users of ARs • How should accounting respond? • do nothing • be more proactive and imaginative • Because it is a social issue it is also political • CSR also likely to be advanced in overall governance context Financial Information Analysis

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