Question

Identify and name a company that you have an interest in either because you work for the company, you buy its products, or use its services. What type of social and environmental information do you think that company should disclose? Why do you think it should disclose that information? Do you think it should be mandatory for companies to report social and environmental information? Justify your responses.

Answer 1

Social and environmental reporting issues are often referred to as sustainability reporting or Corporate Social Responsibility (CSR) reporting. This reporting is based on the social, environmental and governance information. Sustainability reporting has traditionally been voluntary; however, governments and stock exchanges around the world are increasingly imposing mandatory reporting requirements.

Reporting is an important communication tool which can ensure greater corporate transparency and enable better engagement with stakeholders. Social and environmental reports currently issued by listed companies depict information on additional dimensions of corporate performance that are not accounted for within financial data (Bassen and Kovacs, 2008).

In recent years, many organizations have embraced corporate social responsibility (CSR), a philosophy in which the company’s expected actions include not only producing a reliable product, charging a fair price with fair profit margins, and paying a fair wage to employees, but also caring for the environment and acting on other social concerns. Many corporations work on prosocial endeavors and share that information with their customers and the communities where they do business. CSR, when conducted in good faith, is beneficial to corporations and their stakeholders. This is especially true for stakeholders that have typically been given low priority and little voice, such as the natural environment and community members who live near corporate sites and manufacturing facilities.

CSR in its ideal form focuses managers on demonstrating the social good of their new products and endeavors. It can be framed as a response to the backlash corporations face for a long track record of harming environments and communities in their efforts to be more efficient and profitable.

There is a growing awareness that human actions can, and do, harm the environment. Destruction of the environment can ultimately lead to reduction of resources, declining business opportunities, and lowered quality of life. Enlightened business stakeholders realize that profit is only one positive effect of business operations. In addition to safeguarding the environment, other ethical contributions that stakeholders could lobby corporate management to make include establishing schools and health clinics in impoverished neighborhoods and endowing worthwhile philanthropies in the communities where companies have a presence.

Other stakeholders, such as state governments, NGOs, citizen groups, and political action committees in the United States apply social and legal pressure on businesses to improve their environmental practices. For example, the state of California in 2015 enacted a set of laws, referred to as the California Transparency in Supply Chains Act, which requires firms to report on the working conditions of the employees of their suppliers.

Social and environmental disclosure can typically be thought of as comprising information relating to a corporation's activities, aspirations and public image with regard to environmental, community, employee and consumer issues. Within these headings will be subsumed other, more detailed, matters such as energy usage, equal opportunities, fair trade, corporate governance and the like.