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