Accounting in

Organisations and Society

Module 4: Social and environmental accounting

Topic Notes

Module 4: Social and environmental accounting

By Craig Deegan

RMIT University
Accounting in Organisations and Society
Module 4: Social and environmental accounting
 Accounting in Organisations and Society

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March 2017

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Table of Contents
Lecture overview ..................................................................................................................... 1
The why/who/what/how?......................................................................................................... 1
Accountability .......................................................................................................................... 3
Social accounting .................................................................................................................... 3
Environmental accounting....................................................................................................... 6
Corporate social responsibility reporting ................................................................................. 8
Sustainability reporting............................................................................................................ 9
The global reporting initiative ................................................................................................ 10
Examples of innovative reporting .......................................................................................... 11
Corporate responsibilities: The cause of climate change ..................................................... 13
Management use of social and environmental information .................................................. 14
Personal social responsibility ................................................................................................ 15
References............................................................................................................................ 16

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Lecture overview
Understand and appreciate the various issues associated with social and environmental
accounting, including:
• Why we might report social and environmental information.
– The why question will be answered by considering alternative perceptions about the
role of ‘accounting’ and about the accountability and social responsibility of business.

• To whom shall we report social and environmental information?

– This will be dependent upon judgements about who are the ‘stakeholders’ of the
organisation, particularly as that assessment relates to the social and environmental
impacts of an organisation.

• What shall we report?

– We will consider different types of social information that might be disclosed.
– We will consider different types of environmental information that might be disclosed.

• How and where shall we report?

– We will explore examples of reporting, as well as briefly considering the reporting
framework provided by the organisation known as the Global Reporting Initiative
(GRI).
• The importance of climate change and the related accountability of organisations.
• The meaning and relevance of personal social responsibility.

Suggested Reading
Deegan Craig 2014, Chapter 9: Extended Systems of Accounting - the
Incorporation of Social and Environmental Factors within External
Reporting in Financial Accounting Theory (pp. 378-425). Sydney:
Mcgraw-Hill.

The why/who/what/how?
1. Why report social and environmental information?
As we have emphasised, there are various aspects of organisational performance which
might broadly be considered to be financial (or economic), social, and environmental.
Financial reporting, as covered in the previous Module, generally does not provide
insights into the social and environmental performance of an organisation. So we need
alternative frameworks.

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Being part of a broader social system, it is generally accepted that organisations do have
a responsibility (and associated accountability) for their social and environmental
performance.
A failure to report could undermine the ‘legitimacy’ of the organisation.
For internal management purposes, managers will need to have information about
various aspects of an organisation’s social and environmental performance.
Various stakeholders external to the organisation will also expect to receive information
about the social and environmental performance of an organisation. This might impact
various decisions they make, such as whether they will invest in the organisation, buy
the organisation’s products, work for the organisation, lobby government against the
organisation, and so forth.
In a sense, the reporting could be part of a process to ‘manage’ various stakeholders.
2. To whom are we reporting?
From the above we can see that there are many different stakeholders who might have
an interest in an organisation’s social and environmental performance – managers,
investors, employees, employee unions, customers, government, news media, social
and environmental groups, and so on. Some form of ‘stakeholder mapping’ exercise
would be required. Managers need to make judgements about to whom they owe a
responsibility/accountability to and whether it includes both those stakeholders who can
impact the organisation (those with power) as well as those that are impacted by the
organisation.
3. What are we reporting?
Because organisations can have a multitude of various social and environmental impacts,
some prioritisation needs to be given to identifying, managing, and reporting specific
aspects of the organisation’s social and environmental performance. Much of the
information being reported will be influenced by the responsibilities and accountabilities
that are accepted by managers. Stakeholder engagement exercises will also identify
some information that stakeholders need/expect.
For example, because water might be scarce we might report water use and water
saving initiatives (this would be environmental information).
Because of concerns about climate change, an energy intensive organisation might
disclose information about its carbon emissions and plans to reduce such emissions (this
would be environmental information).
Because of concerns about treatment of employees in our supply chain, we might
provide information derived from factory audits about the safety of the buildings, the
health and safety policies in place, or use of child labour (this would be social
information).
4. How/where are we reporting?
This form of reporting is largely voluntary and therefore there is much variation in
reporting by those organisations that elect to publicly report. There are a number of
reporting frameworks (most notably, that of the Global Reporting Initiative) available to
use and the reporting is typically made available on organisational websites.

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Accountability
As we learned in earlier Modules:
• An organisation’s perspective about its accountability will directly impact on what
information (accounts) it provides.
• If an organisation considers it only has a responsibility for its financial performance, then
it will tend to fixate on financial accounts/financial accounting.
• By contrast, if an organisation believes it has an accountability for its social and
environmental performance, then it will provide social and environmental
accounts/reports as well.
A return to our definition of ‘accountability’ would be useful at this point:

Accountability involves two responsibilities or duties, these being:

1. The responsibility to undertake certain actions (or to refrain from taking actions).
2. The responsibility to provide an account of those actions.

Reflection
So what do we think? If you were the manager of an organisation would
you accept responsibility for:
• Its social performance?
• Its environmental performance?
• Why?

PLEASE NOTE: Our perspectives on this will be based on our own system of values.
Within our group there will be differences of opinion.
If we accept that an organisation has a responsibility for its social and environmental
performance, then we would accept that it has an associated accountability.
If it has accountability, then it shall provide:
• Social accounts
• Environmental accounts
We will explore what these accounts might look like shortly.

Social accounting
Rana Plaza Garment Case
As illustrated in Module 1, Topic 2, Rana Plaza garment was a clothing factory in
Bangladesh that produced clothes for many western companies. On 24 April 2013, the
factory’s multi-story building collapsed, which led to 1,129 people dead and more than 2,000
people injured (Edward, 2013a). Survivors said that the visible cracks on the building were

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found in the morning prior to the working hours, and managers of factory forced staff to
return to the building and continue their production despite there being an evacuation order
from the local police (Edwards, 2013b). The tragedy could have been prevented if workers’
safety was considered seriously. Many western companies believed it was not their
responsibility to ensure the working condition of workers, as it is the responsibility of their
clothing suppliers. Six months after this tragedy, only one company, who sourced clothes
from this factory, paid compensation to the victims (Edward, 2013a).
Watch the YouTube video below for more facts about Bangladesh Factory Collapse:
https://www.youtube.com/watch?v=ISj8BECf40Q

Reflection
• Who is responsible for this disaster?
• Why are they responsible?
• What sort of monitoring should they perform?
• Following the Rana Plaza disaster what forms of disclosure/accounts
would you expect, and from whom?
• Who would be interested in these accounts?
• Is providing such ‘accounts’ actually ‘accounting’ as we might now
consider it?

Benetton was one company linked to Rana Plaza. The followings are disclosures on
Benetton’s website as accessed March 2017 (Benetton 2017)
http://assets.benettongroup.com/wp-
content/uploads/2015/04/CRONISTORIA_RANA_PLAZA_en.pdf

THE RANA PLAZA TRAGEDY: THE FACTS AND BENETTON’S COMMITMENT

The Facts:
Rana Plaza was a building on the outskirts of Dhaka. From 2007, the Rana Plaza building
housed a number of local garment factories manufacturing products for many international
brands.
On April 24th 2013, the day of the tragedy we all remember, the factories in Rana Plaza
should have been closed. The building had been declared unsafe 24 hours earlier during an
inspection by the Bangladesh Industrial Police, who had been called out by workers who had
seen cracks in the walls on multiple floors. But this did not happen. While the first and
second floors were evacuated, the owners of the factories on the 3rd to the 8th floors
ignored the inspectors’ recommendations and culpably decided to continue work.
Rana Plaza collapsed on April 24th 2013, resulting in the loss of over 1100 lives—the
greatest tragedy in the history of the textiles industry. Rana Plaza’s factories worked for 29
major companies, acting as a supplier to some on an uninterrupted basis and with
permanent organizations.
Benetton bought some products only for a few months and, on the day of the collapse, was
already no longer present. In fact, every relationship with Rana Plaza had been cut on April
3 2013. Therefore, the supplier was no longer on the register of suppliers.

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A few hours after the event, and following an initial check, Benetton erroneously affirmed
that it did not have any supplier relationship – either direct or indirect - with the factories
based in Rana Plaza: that supplier did not, in fact, appear on any corporate list.
Benetton’s supply chain is complex: the company operates in multiple countries and works
with hundreds of suppliers who, when necessary, may also outsource their work.
Reconstructing an accurate timeline of the facts, and clarifying the company’s position, took
a number of days.
On completing all the checks, Benetton then immediately corrected its position and
confirmed the existence of previous orders that a particular Indian supplier had, in turn,
subcontracted to Rana Plaza.
The amount produced for Benetton represented 1.8% of the total production at Rana Plaza
during the last 12 months, with 98.2% of production being carried out for other brands, some
of which had a fixed presence at Rana Plaza. In total, Benetton represents less than 0.4% of
Bangladesh’s textiles sector.

Reflection
• Is the above disclosure a social disclosure?
• ‘Why’ do you think the company made the above disclosure?

Disclosure 2:
BENETTON’S COMMITMENT
Benetton quickly moved into action in the immediate aftermath of the Rana Plaza tragedy by
promoting the Bangladesh Accord On Fire and Building Safety, of which we were one of the
first five signatories. This is an initiative to contribute to the improvement of overall safety
conditions for workers in the Bangladesh. Benetton has since unilaterally decided—in what
is probably a world first—to progressively apply the same principles to producers in other
world markets.
Furthermore, in May 2013 - with no multi-stakeholder initiative as yet in place - Benetton
launched its own programme, donating USD 500,000 to support 280 Rana Plaza victims and
their families. The program was carried out in partnership with BRAC, the primary NGO
based in Bangladesh.
In January 2014 the Rana Plaza Trust Fund was established, with the goal of raising $30
million as part of a programme of compensation for the victims of the collapse. Benetton
always supported this initiative and repeatedly requested sufficient clarity over the
mechanisms that regulate contributions and determine the indemnity to the victims, as well
as transparency concerning the contributions provided.
In the absence of such elements, Benetton entrusted one of the world's most important,
independent auditors (PwC) to quantify the level of contributions, and also asked WRAP (an
NGO specialising in human rights within supply chains) to apply their ethical principles to the
report. On receipt of the evaluation, Benetton decided to double the recommended
contribution amount, thus donating USD 1.1 million to the Rana Plaza Trust Fund, and

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bringing the total amount set aside to support the victims and their families to USD 1.6
million. If all the other brands involved had applied the criteria adopted by Benetton, the fund
would have raised USD $60 million.

Reflection
• Is the above a form of social accounting?
• As a stakeholder in the clothing industry (you buy clothes) are you
satisfied with this disclosure?
• What other disclosures would you want Benetton to make?

• We have already considered aspects of ‘social reporting’ in the previous slides.

• Social reporting provides information about an organisation’s impacts upon particular
people/societies.
• It could include information about:
– Training of employees.
– Diversity and equal opportunity policies as they relate to our employees.
– Health and safety aspects associated with our products.
– Support of community projects.
– Treatment of employees within our supply chain.
– Actions taken to respect indigenous cultures/values.
– Customer privacy policies.
– Compliance with OH&S requirements.
– Compliance with various social codes of conduct.
Note: this is ‘accounting’ despite the absence of measurements in financial terms.

Environmental accounting
The Deepwater Horizon oil spill (also known as BP oil spill) Case
As illustrated in Module 1 Topic 2, on 20 April 2010, while drilling an uncontrollable blowout
caused an explosion on the rig that killed 11 crewmen and ignited a fireball visible from
64 km away. The fire was inextinguishable and, two days later, on 22 April, the Horizon sank,
leaving the well gushing oil on the seabed and causing the largest ever oil spill in US waters.
It was reported by BBC news (2011) that the influence on the benthos, such as corals, sea
fans were destructive, and the majority of them were essentially killed. The more critical
issue is that no alive detrital feeders, such as sea cucumber and brittle starts, were found.

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Watch the video below for more information about the impact of Deepwater Horizon Oil Spill.
https://www.youtube.com/watch?v=FizAf88Py-Q
https://www.youtube.com/watch?v=BEWMqK5H4Z0

Reflection
• Who is responsible for this disaster?
• Why are they responsible?
• Does this mean they are ‘accountable’?
• Following the disaster what forms of disclosure/accounts would you
expect from BP?
• Who would be interested in these accounts?

Review BP’s 2010 Sustainability Report (BP 2010) The first 13 pages provide an
overview on BP’s accountability and its actions in regards to Deepwater.
http://www.bp.com/content/dam/bp/pdf/sustainability/group-
reports/bp_sustainability_review_2010.pdf

In that report we can find a variety of quotes, for example:

We recognize that the events of 2010 have impacted many people, from local communities
and businesses in the Gulf Coast region to our customers, colleagues, partners and
shareholders around the world. We feel a deep sense of responsibility to everyone affected
by what we do and how we do it – not just in the Gulf of Mexico, but wherever we operate.
And not just this year, but every year. In this Sustainability Review, we look at what that
sense of responsibility means in practice. We discuss how the accident and oil spill are
shaping how we do business, and the changes we are making to our portfolio and
organization. Our website plays an integral part in our sustainability reporting, covering a
wider set of issues and reporting on them in more depth. The website includes detailed
information about our environmental and safety performance, as well as case studies
that demonstrate our sustainability efforts in action. (BP 2010, p1)
How BP is changing Re-earning and keeping the trust of society by operating safely and
responsibly is the only way we can fulfil our purpose of creating sustainable shareholder
value The tragic events of 2010 severely impacted trust in BP. This followed a period when
we had made progress in response to two other events – the Texas City explosion and the
pipeline leak in Alaska. The causes and character of these three events were quite different,
but all have affected levels of confidence in our company. In response, we are developing
and implementing a comprehensive programme to strengthen safety, risk management and
compliance across BP. Much of this is covered in our sustainability reporting; we summarize
some of the key changes here. (BP 2010, p4)
• What this quote and the BP Sustainability Report itself show, is that the organisation is
publicly stating that it needs to demonstrate greater responsibility, and accountability,
and their report is one vehicle through which they can do this.
• It also shows that the ‘success’ of the organisation is at risk when various stakeholders
within the community believe the organisation is acting irresponsibly.

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Discussion
Why do you think the company made such disclosures?

Environmental reporting provides information about an organisation impacts upon living and
non-living natural systems, including land, air, water and ecosystems.
• It could include information about:
– Materials used.
– Effluents and waste generated.
– Energy consumed.
– Emissions (including CO2) generated.
– Water consumed.
– Waste water generated and impacts of this waste water.
– Impacts (positive and negative) upon biodiversity.
– Compliance with environmental regulations.

Corporate social responsibility reporting

• We often hear the terms ‘corporate social responsibility’ and ‘corporate social
responsibility reporting’. What we have been discussing so far in this lecture could also
be referred to as CSR reporting.
• Corporate social responsibility (CSR) has no fixed meaning but generally refers to the
responsibilities an organisation accepts over and above the law and the way in which it
focuses its attention on the well being of various stakeholders and the environment.
• CSR extends organisational responsibility beyond maximising the interests (wealth) of
shareholders, and beyond the usual activities associated with the provision of goods and
services.
Ideally an organisation should clearly inform its stakeholders about the extent/breadth of its
accepted responsibilities. As one example, it might note on its website that it accepts a
responsibility for the treatment of employees within its supply chain (consider the previous
example of Rana Plaza).

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YouTube Resource:
Alex Edmans, Professor of Finance in London Business School talks
about the long-term impacts of social responsibility and challenges the
idea that caring for society is at the expense of profit.
He argues that better social and environmental performance indeed can
bring more profit to organisation. Profit is actually a by-product of an
organisation.
https://www.youtube.com/watch?v=Z5KZhm19EO0

• CSR reporting provides information about how an organisation has addressed its social
responsibilities.
Again, this makes more sense if the organisation has identified the extent of
responsibilities it has accepted. Reporting would then indicate how these responsibilities
have been addressed (which, as we know, is the cornerstone of ‘accountability’).
• Therefore, social reporting and environmental reporting would be considered to be
components of CSR reporting.

Sustainability reporting
• Sustainability reporting is really just another form of CSR reporting, but relates to the
idea of ‘sustainable development’
Sustainable development is commonly defined as the development that meets the needs
of the present world without compromising the ability of future generations to meet
their own needs (World Commission on Environment and Development – The Brundtland
Report, 1987).
• ‘Sustainability reporting’ provides insights into how organisations are performing in
relation to the goal of ‘sustainable development’.
• There is much variation in the nature of ‘sustainability reporting’ and again it needs to be
appreciated that (arguably wrongly) the term sustainability reporting is often used
interchangeably with the term CSR reporting. According to the Global Reporting Initiative
(www.globalreporting.org):
Sustainability reporting can help organisations to measure, understand and communicate
their economic, environmental, social and governance performance, and then set goals, and
manage more effectively. A sustainability report is the key platform for communicating
sustainability performance and impacts – whether positive or negative. Sustainability
reporting can be considered as synonymous with other terms for non-financial reporting;
triple bottom line reporting, corporate social responsibility reporting, and more.

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Discussion
• How would we identify organisations we think would actually be
‘sustainable’?
• With current business models do we think ‘sustainable development’
is realistically possible?

Web Resources
The KPMG Survey of Corporate Responsibility Reporting 2015, which
shows the trends and some of the challenge of CSR reporting.
https://home.kpmg.com/au/en/home/insights/2015/11/corporate-
responsibility-reporting-survey-2015.html
This video introduces the challenge of sustainability.
https://www.youtube.com/watch?v=ePeYRg8x-4w

Example
The KPMG Survey of Corporate Responsibility Reporting 2015, which
shows the trends and some of the challenge of CSR reporting.
https://www.ikea.com/ms/en_US/img/ad_content/2015_IKEA_sustainabili
ty_report.PDF

The global reporting initiative

The Global Reporting Initiative (GRI) is an organisation located in Amsterdam but was
founded in Boston in 1997. According to its website its mission is:
“To empower decision makers everywhere, through our sustainability standards and
multi-stakeholder network, to take action towards a more sustainable economy and
world”

• A major source of guidance in relation to social and environmental (and sustainability)

reporting is the GRI’s Sustainability Reporting Guidelines.
• Many companies throughout the world note compliance with the GRI guidelines.
• For example, within Australia, many Australian organisations use the GRI Guidelines:
– The ANZ Bank Sustainability report 2016 states:

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ANZ is a GOLD Community member of the Global Reporting Initiative (GRI). We

have been reporting using the GRI framework for more than a decade, and since
2014 we have been preparing our report in accordance with the GRI G4 Guidelines.
This is our second year of reporting to the ‘comprehensive’ level. This report also
contains material disclosures required by the G4 Financial Services Sector
Supplement. A complete GRI Index can be found on our website at anz.com/cs.

– The BHP Billiton Sustainability Report 2016 states:

The content of this Sustainability Report is shaped by our annual materiality
assessment, which satisfies the Global Reporting Initiative (GRI) principles for
defining report content, sustainability context, materiality, completeness and
stakeholder inclusiveness through a cycle of identification, prioritisation, validation
and review.
• The first version of the GRI Guidelines was released in 2000. Several versions have
followed and now a new version –the GRI Sustainability Reporting Standards - is
available for use from 2019 (or earlier if an organisation wishes).
Students should visit the website of the GRI and review the types of social and
environmental disclosures that are recommended for organisations. You are not
expected to know these voluntary guidelines in any depth but it would be good if you
could get an idea of the types of disclosures that are suggested.

https://www.globalreporting.org/standards

Web Resources
This is the video to introduce what is the GRI Sustainability Reporting
Standards.
The GRI Sustainability Reporting Standards: The Future of Reporting:
https://www.youtube.com/watch?v=AGqE4OO0_7g

This is the video to introduce the 5 step process to prepare sustainability

reporting
Global Reporting Initiative: The 5 step process:
https://www.youtube.com/watch?v=I4uauUAMLBY

Examples of innovative reporting

• Unlike financial reporting, which is heavily regulated by accounting standards and other
associated requirements (meaning that the financial statements of larger organisations
generally take on the same form), there is a general absence of regulation requiring
organisations to publicly produce CSR/Sustainability Reports.
• As such, there is much variation, and some level of experimentation with different
reporting approaches.

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• The examples below are some different approaches to reporting.

– The innovative strategy can be the way to measure social and environmental impacts.
For example, Puma and Kering report environmental profit and loss by placing a
monetary value on their environmental impacts.
– The innovative strategy can be the format of reporting. For example, CVS Health and
Cisco provide their corporate social responsibility report in a video. Moreover, Cisco
uses YouTube rather than its own website to publish their CSR report video.
– The innovative strategy can be how to make the report more attractive and more
easily understood by the readers. For example, Hang Lung Properties report its
social and environmental impact in a way that an animation tells a story about the
company. In this way, the report looks more interesting and is easy to follow.
• You are not required to necessarily understand the different types of reporting we will
now consider. Rather, we would just like you to consider how different organisations
address their accountability in relation to their social and environmental performance.

Example
Puma’s (sportswear company) Environmental Profit & Loss:
http://about.puma.com/en/sustainability/environment/environmental-
profit-and-loss-account

Kering’s (A global Luxury group) Environmental Profit and Loss:

http://www.kering.com/sites/default/files/kering_group_2015_environmen
talpl_0.pdf

Cisco’s (a worldwide leader in IT and networking) Corporate Social

Responsibility:
https://www.youtube.com/watch?v=CuQ7f-tP0uc

CVS Health Corporate Social Responsibility Report:

https://cvshealth.com/social-responsibility/corporate-social-
responsibility/annual-corporate-social-responsibility-reports

Hang Lung Properties Sustainability Report:

http://www.hanglung.com/CMSPages/GetAzureFile.aspx?path=~\hanglu
ngcorporatesite\media\hanglung_media\publications\files\hanglungsr201
5en.pdf&hash=662dc51c521816bb2d72e70c56cdf9996bb5ddf31cbe761
a05595fdaba363577&ext=.pdf

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Corporate responsibilities: The cause of

climate change
• One specific issue of great relevance to current and future generations – and all our
various ecosystems and inhabitants thereof – is climate change. Because of its central
importance to all of us, it is worthwhile spending some time considering it.
• The Australian Academy of Science has an easy to follow explanation of climate change:
https://www.science.org.au/files/userfiles/learning/documents/climate-change-r.pdf
Climate change is a change in the pattern of weather, and related changes in oceans, land
surfaces and ice sheets, occurring over time scales of decades or longer (The Australian
Academy of Science 2015)

• We would expect energy intensive organisations to produce information about such

things as their carbon emissions and their actions to reduce their emissions.
– Consider the role of the Carbon Disclosure Project (www.cdp.net/en)
– Consider the role of the Greenhouse Gas Protocol (www.ghgprotocol.org)
Again, this is all part of ‘accounting’!

Web resource
The Sustainable Business Toolkit provides step-by-step method how to
measure your carbon emissions.
https://www.sustainablebusinesstoolkit.com/how-to-measure-a-carbon-
footprint/

YouTube resources
The YouTube videos below are the explanation of climate change.
https://www.youtube.com/watch?v=Sv7OHfpIRfU
https://www.youtube.com/watch?v=ifrHogDujXw

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Management use of social and environmental

information
• Much of our discussion so far in this module has been about reporting information about
social and environmental performance to stakeholders external to the organisation.
• Management will also need to collect and review information about social and
environmental performance to ensure it is operating in the manner it should be (perhaps
as publicly reflected in corporate mission statements, goals, targets etc.).
• A better management base on what and how it has been measured. Module 2 of this
course discussed a number of approaches management might use to account for its
social and environmental impacts.
• In determining what information to collect internally – and as with external reporting - the
organisation will need to identify which social and environmental impacts are of most
importance and then concentrate on measuring and managing those impacts.

Discussion
Assume that you are a senior manager in a clothing company that
sources clothes from suppliers that are located in a developing country.
You realise that an important issue of concern is the health, safety and
equitable treatment of people working in factories in developing countries.
• What information do you think the manager should collect?
• Is the information in financial nature?
• How would the information be measured and used?
• Would you consider this information ‘accounting’ information? Why?
• Should the information about the measurements and its related
management strategy be reported to external stakeholders?

• Whilst an organisation would typically want to generate financial profits, it also has to
consider the ‘other’ costs and benefits it creates that are not captured in measures such
as financial profits.
• For example, the organisation might be in an environment that has little water, and
hence it might take various measurements of:
– Fresh water used
– Amount of water that is recycled
– Amount of waste water generated
• It can then use this information to set targets for future improvement, to benchmark its
performance against other organisations and to provide information to external users so
as to demonstrate accountability for its water use.
• If you don’t manage the use of certain scarce resources (such as water), and if local
communities need such resources as well then obvious problems will arise for local
communities and ultimately for an organisation.

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Accounting in Organisations and Society
Module 4: Social and environmental accounting
 Accounting in Organisations and Society

– For example, in 2014 Coca-Cola is forced to close its bottling plant in northen India.
The local communities protested that it extracting too much groundwater, which
cause water shortage and polluting the environment with toxic effluents. As a result,
Coca-Cola has been ordered to stop operating (Theguardian, 2014).
• It can be seen that manage social and environmental performance is a very important
part of corporate governance.

Web Resources
Why sustainability reporting is moving its way to the forefront of the ASX?
http://www.businessreviewaustralia.com/leadership/1953/Why-
sustainability-reporting-is-moving-its-way-to-the-forefront-of-the-ASX

Indian officials order Coca-Cola plant to close for using too much water.
https://www.theguardian.com/environment/2014/jun/18/indian-officals-
coca-cola-plant-water-mehdiganj

Personal social responsibility

• As a last thought, let us not be too lazy and think that corporations should be the only
ones that should take the position of being ‘socially responsible’. What about our own
responsibilities?
• As individual consumers, or as members of an organisation, we can all make choices
that will either increase, or decrease, our own contribution to various social and
environmental outcomes.
• Rather than relying solely on CSR and/or the government, we must also consider
Personal Social Responsibility (PSR), which would require ongoing judgements, such as
the necessity for particular travel and the mode of travel being used, how much energy
we consume, how much waste our activities are generating, how social and
environmental responsibilities were embraced by the suppliers of our clothing and so
forth.
• The emphasis here is that tackling important issues such as climate change and poverty
alleviation requires ‘the community’ – that is, us - also to embrace the need for change
and not simply to rely upon (or blame) organisations for all of the necessary
improvements.
• One can also argue for PSR on the grounds that asking for or demanding CSR becomes
a way of ‘passing the buck’—of evading our own personal responsibility for ‘doing good’.
• As future business leaders it seems very important, in the face of problems like climate
change, large scale poverty, food and water shortages for some societies, and so forth
that we (you students) embrace some responsibility for actions that can alleviate such
problems and we should try to ensure that we take such values across into our business
lives

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Accounting in Organisations and Society
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• PLEASE don’t simply accept assumptions that all behaviour can be explained through
the lens of the ‘rational economic person’ (a person that places wealth creation above
everything else and one of the cornerstones of much economic theory). If we accept that
everybody is simply driven by wealth maximisation (as many of our economics and
finance lecturers might try to convince us), then any thoughts that the planet can be
sustainable can only logically become an illusion.
• Just as we might say that businesses have accountability to their stakeholders we could
also perhaps say that we should be accountable to ourselves for our own actions.
• That is, we must accept an accountability for our own actions and test ourselves in terms
of whether our actions are actually consistent with our own values or ‘ethics’
– What do we think about this idea?
• So, are our own actions (and related impacts both positive and negative) consistent with
the ‘values’ we have embraced both privately and publicly?
– E.g., if we are worried about overuse of plastics and the fact that many turn up in
landfill, or the ocean, why do we continue to buy water in bottles? Stop it!!

References
References

AFP 2014, Indian officials order Coca-Cola plant to close for using too much
water, theguardian, 19 Jun, viewed on 22 April 2017,
<https://www.theguardian.com/environment/2014/jun/18/indian-officals-coca-
cola-plant-water-mehdiganj>

Australian Academy of Science 2015, The science of climate change,

viewed on 22 April 2017,
<https://www.science.org.au/files/userfiles/learning/documents/climate-
change-r.pdf>

Benetton 2017, The Rana Plaza Tragedy: the facts and Benetton’s
commitment, viewed on 27 March 2017,
<http://assets.benettongroup.com/wp-
content/uploads/2015/04/CRONISTORIA_RANA_PLAZA_en.pdf>

BP 2010, Sustainability Review 2010, BP, viewed on 22 April 2017,

<http://www.bp.com/content/dam/bp/pdf/sustainability/group-
reports/bp_sustainability_review_2010.pdf>

CDP 2017, Carbon Disclosure Project Website, viewed on 22 April 2017,

<www.cdp.net/en >

Cisco 2016, Cisco’s Corporate Social Responsibility, YouTube video, 20

Jan, viewed on 22 April 2017, <https://www.youtube.com/watch?v=CuQ7f-
tP0uc>

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 Accounting in Organisations and Society

CrnaLisica 2010, BP Oil Spill Gulf OF Mexico 2010 Footage and Images, 6
June, YouTube video, viewed on 22 April 2017,
<https://www.youtube.com/watch?v=BEWMqK5H4Z0>

CVS Health 2016, CVS Health Corporate Social Responsibility, YouTube

video, 19 May, viewed on 22 April 2017,
<https://www.youtube.com/watch?v=D57t_cOR53g>

Edwards, M 2013a, Bangladesh's Rana Plaza factory collapse victims still

awaiting compensation: survey, ABC news, 25 Oct, viewed on 24 Nov 2016,
<http://www.abc.net.au/news/2013-10-25/bangladesh-factory-collapse-
victims-wait-for-compensation/5044732>

Edwards, M 2013b, Up to 1,000 feared dead after Bangladesh factory

collapse, ABC news, 26 April, viewed on 24 Nov 2016,
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bangladesh-factory-collapse/4652206>

GHG 2017, Greenhouse Gas Protocol Website, viewed on 22 April 2017,

<www.ghgprotocol.org>

GRI 2017, GRI Website, viewed on 22 April 2017,

<www.globalreporting.org>

GRI Secretariat 2016, The GRI Sustainability Reporting Standards: The

Future of Reporting, YouTube video, 14 Oct, viewed on 22 April 2017,
<https://www.youtube.com/watch?v=AGqE4OO0_7g>

GRI 2017, GRI Standards, viewed on 22 April 2017,

<https://www.globalreporting.org/standards>

Gupta, S 2016, Deepwater Horizon oil spill, YouTube video, 2 May, viewed
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Hang Lung Properties 2015, Hang Lung Properties Sustainability Report

2015, viewed on 22 April 2017,
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IKEA 2015, IKEA Group FY15 Sustainability Report, IKEA, viewed on 22

April 2017,
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Kering 2015, Environmental Profit and Loss 2015 Group Results, viewed on
22 April 2017,
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pl_0.pdf>

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KPMG 2015, Corporate Responsibility Reporting Survey 2015, viewed on 22

April 2017,
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Ministry of MEDIA 2011, Global Reporting Initiative: The sustainability

challenge, YouTube video, 16 Dec, viewed on 22 April 2017,
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Ministry of MEDIA 2011, Global Reporting Initiative: The 5 step process,

YouTube video, 16 Dec, viewed on 22 April 2017,
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The National 2013, Bangladesh Factory Collapse, YouTube video, 25 April,

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Pierce, F 2016, Why sustainability reporting is moving its way to the forefront
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2017, <http://about.puma.com/en/sustainability/environment/environmental-
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on 22 April 2017, <https://www.youtube.com/watch?v=Sv7OHfpIRfU>

Sustainable Business Toolkit 2016, How to calculate your carbon footprint?

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