Social Reporting

Social reporting is a new challenge to the corporations today. It is an outcome of the acceptance of social responsibility by business establishments. Social responsibility is now being used as an important parameter for judging a company’s performance. There is a growing tendency to consider a company which causes social injury or pollutes environment an investment risk. The central and state government’s inIndiagenerally insist on environmental clearance for new ventures. More and more investors are joining what may be called the “ethical investors’ club” and do not only abstain from investment in corporations which are considered “irresponsible’ but also try up persuade others, through various ways, to do the same.

Social reporting is directly associated with social responsibility. Therefore any disclosure on social concern must highlight the multiple effects of business activities on society. The basic need for social information arises because social groups and business share an accountability relationship.

 Users of Corporate Social Reporting

  Primary need              Discharging of Corporate Social Accountability Function

 Secondary need                      Providing Useful Data and Information for Different

 Users

                                    (a) Management                                            (a) Shareholders

                                    (b) Trade unions                                             (b) Local community

                                    (c) Consumers                                               (c) Regulators

                                    (d) Employees                                                (d) Potential investors

                                    (e) Business associates

SEAAR

SEAAR implies Social and Ethical Accounting, Auditing and Reporting and involves accounting for, reporting on, and auditing an organization’s policies, procedures and impacts with respect to employees, communities (local and global), suppliers, customers and the environment. This can involve disclosure regarding, inter alia, commitments to workplace conditions, fairness and honesty in dealing with suppliers, customer service standards, community and charitable involvement, and non-exploitative business practices in developing countries. The resurgence in this form of accounting and reporting in theUK is reflected in the number of mainstream commercial organizations from a range of industrial sectors who have begun to engage extensively, and in some cases consistently, in SEAAR. Prominent amongst these are the oil giants Shell and BP Amoco, BT, Diageo, Camelot, British Airways, United Utilities etc. The initiatives of these companies have largely   drawn on those of a number of avowedly ‘values driven’ organizations such as Tradecraft, Body Shop and the Co-operative Bank etc. 

One of the many issues the major players in the SEAAR emphasize is the need to ensure that what is reported has substance. Many stakeholders may on reading these reports dismiss them as typical examples of corporate spin or public relations polish. For example, several commentators have argued that specious gloss as  opposed to democratic accountability  could be a term  fairly applied to many social  reporting initiatives given that many do not yet subscribe to the rigorous  procedures advocated by ISEA in their AA1000 standard. This creates a definite credibility problem for companies issuing social reports.

This concern with credibility has led to the development of a market for external social audits whereby the contents of social reports along with the systems and methods used to collect the information included therein are subject to external review and reporting.

 Stages in the AA1000 SEAAR Process Model⁴

Triple Bottom Line (TBL Approach)

Within the broader concept of corporate social responsibility, the concept of Triple Bottom Line (TBL) in gaining significance and is becoming popular amongst corporates. Coined in 1997 by John Ellington, noted management consultant, the concept of TBL is based on the premise that business entities have more to do than make just profits for the owners of the capital, only bottomline people understand. Hence there is a need to add two more bottom lines-environmental and social. Thus, it refers to the process of identifying, assessing and reporting business activities in terms of their impact on the environment, society and profitability.

                                                           ENVIRONMENTAL

                                                                    SOCIAL

                                                             CORPORATE

                                                          RESPONSIBILITIES

            PROFITS                                                                                  SOCIAL

The need to apply the concept of TBL is caused due to -

a)         Increased consumer sensitivity to corporate social behavior

b)         Growing demands for transparency from shareholders/ stakeholders

c)         Increased environmental regulation 

d)         Legal costs of compliances and defaults

e)         Concerns over global warming

f)          Increased social awareness

g)         Awareness about and willingness for respecting human right.

h)         Media’s attention to social issues.

i)          Growing corporate participation in social upliftment

While profitability is a pure economic bottomline, social and environmental bottom lines are semi or non-economic in nature so far as revenue generation is concerned but it has certainly a positive impact on long term value that an enterprise commands.

= = = = = = ==