1. Corporate Social Responsibility
Chapter 14
Corporate Social Responsibility

2. Corporate social responsibility
Recent developments and contexts
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., Prudential, BT
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© Philip O’Regan 2016

3. CSR ctd. Broader responsibilities of reporting function
e.g. wider range of users (Shareholder/Stakeholder)
investors
employees
community
customers, etc.
Takes emphasis off numbers and puts it onto “qualitative” information
Companies as “corporate citizens”
Regulatory environment is critical
national/international (UN Global Compact)
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© Philip O’Regan 2016

4. CSR ctd. Potent force for positive action
e.g. oil companies / political action
Role of “citizen power”
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
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© Philip O’Regan 2016

5. Triple bottom line (TBL)
TBL is one response to information demands of CSR
Measures performance under:
financial;
social; and
environmental
Reflects limitations of traditional model
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© Philip O’Regan 2016

6. Sustainability & environmental accounting
Sub-set of CSR
Area of most significant 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
carbon emissions
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© Philip O’Regan 2016

7. “Sustainability”
Sustainability: “capacity to sustain service without diminishing critical capital”
Central and key concept
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
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© Philip O’Regan 2016

8. Supply chain management
Area of considerable focus
One point at which interests of developed and developing world may converge
Significant political pressure for change
Results in largest MNEs becoming proactive
Political roles:
UN/ILO
regulatory bodies
accountants
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© Philip O’Regan 2016

9. What can accounting do? Accounting challenged by new agenda
Variety of options
Do nothing
Show cost of critical capital consumed as an “expense”
Incorporate more narrative reports
Include financial charge/provision
Integrated Reporting (IR)
Principles-based framework
Could dramatically change reporting
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© Philip O’Regan 2016

10. Summary Because it is a social issue it is also political
Accounting is a social science and can respond to social/political agendas
Social and environmental concerns are now of central importance to users of ARs
How should accounting respond?
Do nothing
Be more proactive and imaginative
CSR also likely to be advanced in overall governance context
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© Philip O’Regan 2016