Question

In: Accounting

Sustainability and corporate social responsibility reporting are still largely voluntary. That means it is up to...

Sustainability and corporate social responsibility reporting are still largely voluntary. That means it is up to entities to determine whether to report; and if so, the nature and level of information to report.

Required:

  1. Explain why do entities decide to report sustainability and corporate social reporting if they are not legally required to do so.
  2. Discuss issues relating to the voluntary reporting from the perspective of the usefulness of information to the users.

Solutions

Expert Solution

Sustainability and corporate social responsibility us now a days of great natter to each and every industry. Almost all the sectors are focussing on showing their sustainability and CSR reporting in the year end reports.

Though reporting CSR and sustainability has not been made mandatory but as the society has turned environment cautious and wants its own growth, it appreciates the companies who are investing in CSR and sustainability reporting.

Comoanies are also benefitted from this as this CSR and sustainability adds goodwill to the name of the company as well as it brings recognition in the society and people here attracted towards the company and prefer that particular company or brand over others.

As we know it's not legally important but by doing so company is getting a chance to build it's reputayion in minimum costs incurred. This also proves that the company cadres for society and environment. Thus, people would usually appreciate the initiative rajen by any company.

So, thus its clear that investing a little and getting the maximum profit is always beneficial for the organization thus, companies though not legally bound to perform such CSR and sustainability reporting are doing so in a regular basis.

This voluntarily reporting of CSR and sustainability has some issues from the perspective of usefulness of information to the users-

  • There are certain companies who are not aware of the benefits and significance of CSR reporting and sustainability reporting. Thus these companies do not actively participate in such reporting. And thus no information is reflected in reports which make the reader create a perspective of its own and may be the customer refuse to use that brand as the company is not doing anything for the betterment of the society.
  • Companies not participating for such reporting, leads to hinderence or less development of the society and the country. Also this leads to fall in the reputation of the company if it is found that company is not taking steps to bring changes to society .
  • As the reporting is not done properly, the users are greatly affected from this. They are unable to decide which company is able to make society grow and care about the issues emerging forward.
  • Also the voluntarily action leads to not setting a proper comparison basis amoung different companies so that an user can easily guess which company is most profitable to invest on or carry business with. If proper differentiation is done among companies, the users can taken more wise decisions. But as the it's not mandatory, there comes sohe issues while evaluating.
  • Many companies have management which are very lazy at performing aht extra work and for them this additional reporting would be time consuminh and cost consuming as well. Therefore most of the companies do not go for doing such which again leave the users with ambiguity.

These are some of the issues relating to the voluntarily representations of CSR ands sustainability reporting in year end reports.


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