ACCT3321 Lecture Notes - Lecture 11: Price Signal, Organizational Learning, Deepwater Horizon Oil Spill
CHAPTER 22
Sustainability and Corporate Social Responsibility (CSR) reporting
- is the social and environmental performance of an entity, referring to the aspects of
an organisation’s operations
- CSR focuses on organisations’ impacts on society
oWhile companies may primarily be focussed on making profits, they also
influence, and responsibility to, society
oEssentially is a social contract, referring to an expectation(rather than a
formal agreement) that organisations act in ways acceptable to societies
oIncludes acting within the law, but also extends to areas which may not be
specifically governed by legislation in all countries
Ensuring fair work conditions, providing a safe workplace for
employees, and minimising environmental pollution
-CSR = environmental, sustainability is broader, encompassing both social and
environmental issues.
Sustainability
- Organisations’ operations effect
oEconomic development
oEnvironmental development
oSocial development
- Hence, organisations have a responsibility not only to the financial interests of
shareholders, but also to the broader interests of all stakeholders – both current and
future generations
-Intergenerational equity = long term focus and recognises that consumption of
resources should not affect the quality of life of future generations
-Intragenerational equity = the ability to meet the needs of current generations
-Eco-justice
-Eco-efficiency = a focus on the efficient use of resources to minimise the impact on
the environment
-Sustainability – there is a general agreement that it involves preservation and
maintenance of the environment and involves some duty of social justice
CSR
- They have a responsibility to consider how their operations affect society, and to act
in an appropriate (socially acceptable) manner
- It is essential for the private sector organisations to make profits in order to continue
operations, but they also need to consider their effects on the environment and
society for current and future generations
Reasons for adopting sustainable and corporate social responsibility practises
- Compliance with mandatory obligations
oSuch as complying with environmental and social regulations (e.g. controlling
pollution in accordance with the Environment Protection Act and meeting
product safety standards for customers) is essential for operations, so they
do not incur penalties or suffer decrease profits through loss of market share
due to poor reputation.
oRisk management approach to sustainability
- Voluntary activity, guided by an organisation’s ethical or moral position
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oE.g. recycling initiatives, or doing it because you think it’s the right thing to do
oAltruistic approach to CSR
oThose beyond the scope of the law, but they may benefit from enhancing
their reputation and increased market share, resulting in increased profits
- Strategic activity, which benefits the environment, society and the organisation
oStrategic approach to CSR or sustainability
oIt involves such activities, like a mining company in a remote area training
unemployed people, who may work later in the organisation
oThis is a shared value for the organisation
-costs for not adopting these
practises
oloss of market share
odecreased profits
osustainability- related
expenses are views as long-
term investments for an organisation
ohowever, their practises remain discretionary
oorganisations can choose whether and what type of sustainability or CSR
practise they want to adopt
osuch activities are rather encouraged, not legally enforceable
oencouragement may take the form of tax deductions, such as donations to
charities.
STAKEHOLDER INFLUENCES
- traditionally shareholders were seen as the primary stakeholders and organisations’
primary objective was to maximise profits and shareholder value
- now we must consider a large range of stakeholders such as individuals and
organisations affected by a company’s’ operations in their decision making
othese include: employees, customers, suppliers, the media, government,
superannuation funds and other institutional investors, lenders and
community groups
obusinesses as a part of their operations, identify and engage with
stakeholders as a means of reducing risk and managing reputation
- stakeholders are increasingly concerned with issues of sustainability – the growing
recognition of social and environmental issues has contributed to this
ohuman rights child labour, exploitive working conditions
oemployee rights remuneration, safe workplace standards
ophilanthropy and charitable giving
oethical and transparent business practices appropriate and transparent
polices
opollution and environmental harm logging, inappropriate use of non-
renewable resources
oenvironmental protection, and environmental sustainable business operation
oproduct and process quality safety of products, use of animal testing
ounethical products socially irresponsible products, weapons
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Document Summary
Sustainability and corporate social responsibility (csr) reporting is the social and environmental performance of an entity, referring to the aspects of an organisation"s operations. Ensuring fair work conditions, providing a safe workplace for employees, and minimising environmental pollution. Csr = environmental, sustainability is broader, encompassing both social and environmental issues. Organisations" operations effect: economic development, environmental development, social development. Hence, organisations have a responsibility not only to the financial interests of. Csr shareholders, but also to the broader interests of all stakeholders both current and future generations. Intergenerational equity = long term focus and recognises that consumption of resources should not affect the quality of life of future generations. Intragenerational equity = the ability to meet the needs of current generations. Eco-efficiency = a focus on the efficient use of resources to minimise the impact on the environment. Sustainability there is a general agreement that it involves preservation and maintenance of the environment and involves some duty of social justice.
