Accountability and Responsibility of Companies with Financial Report

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Accountability is the willingness and openness in relating the decisions made to clearly defined and agreed objectives. The responsibility of companies is to comply with financial reporting and other disclosure requirements. These functions are coined together in company law under the "accountability through disclosure" system, which involves the responsibility of companies towards the stakeholders through information disclosure.

According to Gray et al. (1996), the first role for CSR is to develop means for moral responsibility for accountability in law to be satisfied. Natural and moral rights will always be of a changing and developing nature, and thus levels of accountability needed will be constantly changing.

Wright goes on to state that "Policy recommendations on corporate governance need to address both accountability and enterprise aspects of governance." (pp 23), while in Davis and Blomstron (1975), it is said that businessmen of today do not speak much of maximizing profits as much as of reasonable profits with increasing regards to the social. Therefore, we will have to look into ways which would help improve company accountability on a wider scale.

Waddock (2004) suggests that firms need to implement management systems reflecting their social responsibility so that they are seen as credible and are globally accepted as being responsible and accountable.

The European Commission (2001) states that behaving in a socially responsible way amounts to "going beyond compliance and investing 'more' into human capital, the environment and the realtions with stakeholders." (pp 8).

Gray et al. (1987) defined CSR reporting as "the process of providing information designed to discharge social accountability" and the medium may cover "annual reports, special publications/ reports or even socially oriented advertising".

There have been discussions on the apparent trade-off between accountability and enterprise; suggesting that too much accountability and responsibility suppresses enterprise activity. This is because mostly disclosure of a corporation would consider only financial aspects of the corporation whilst "Financial and fiscal accountability forms only part of a fully defined motion of accountability." (pp 29, Wright, 2005)

Friedman (1970) viewed the social responsibility of businesses as that of increasing profits. Social responsibility in itself was supposed to be the duty and responsibility of the government, leaving profit maximisation to owners of the company.

Levels of Accountability

There are four levels of accountability: Legal Accountability, Operational Accountability, Financial Accountability, and Fiscal Accountability.

Corporate Governance

In Fernando (2006), we get deeper insight on Corporate Governance itself. Corporate Governance focuses on internal structure and functioning of board, rules for disclosure of information to shareholders and creditors, control of management, transparency of operations, amongst others; and it is very important to promote good corporate governance at all levels. Corporate Governance is of interest to all societies and countries worldwide, as much for its benefits as for "the problems that result from separation of ownership and control" (pp 9).

Good corporate governance and corporate social responsibility are very closely linked to each other. It may be understood from the give-and-take aspect of it in the sense that the corporate receives from society in the form of labour and capital, and therefore it comes back to the duty of the company to respect a certain degree of responsibility it owes to that society.

Hillman and Daziel (2003) focus on Corporate Governance aspect of CSR in Management Systems, where they notice that pressure is increasingly being exerted on directors of companies to not only oversee their company activities, but also to guide and direct their executives for better resource management, which eventually may lead to better CSR strategies and participation as well as easier standard-setting. It is in fact due to this very strategic decision-making position that directors should control CSR performance and disclosure.

Corporate Social Responsibility

Lord Holme and Richard Watts used the following to define CSR in the World Business Council for Sustainable Developmetn publication: "Corporate Social Responsibility is the continuing commitment of businesses to behave ethically and contribute to economic development while improving the quality of life of the workforce and their families as well as of the local community or society at large." (pp 309).

Corporate Social Responsibility (CSR) is the engagement that corporations, abiding by the doctrine of self-enlightened interest, take to carry out their business in such a way as to be in the interest of internal as well as external parties to the business such as employees, their families, the community and society at large so that the business thrives and develops. (MCB, Annual Report 2007)

According to Sutantoputra (2008), the coverage of CSR is wide, ranging from issues such as child labour, inequality if employment opportunities, environmental impact, involvement in local communities, products' safety, company cultures, to brand image and reputation. In Mauritius, CSR activities are accentuated on social and economic development, health, education and training, leisure and sports, environment, catastrophic intervention and support.

In Britain, for instance, governments have taken an even dedicated interest "corporate responsibility" (as they prefer to call CSR) by implementing a requirement for public companies to report on social and environmental matters in the 2006 Companies Act.

The United Nations plays its part as well by promoting corporate responsibility throughout the globe via a New York based group called the Global Compact. (See: Sections 2.1.13 and 2.2.13).

Management Systems and Standards

There are several Management Systems Standards, the most widely used are: ISO 9001 on Quality Management, ISO 14001 on Environmental Management, ISO/IEC 27001 on Information Security Management, and SA 8000 on Social Accountability.

Standards that are currently in place are AA1000 and SA8000; those which are being developed or at the draft stage are: DR 03028 (Australian CSR Draft standard), SII 10000, and ISO CSR MSS (ISO CSR Management Systems Standard).

These different approaches do cover/ plan to cover the diverse aspects of CSR (labour conditions and labour rights, stakeholder involvement, social and ethical objectives, compliance with management standards).

ISO has a very important acceptance worldwide as a standard among businesses, whereby nearly all companies use these as management systems standards. In fact, this immense popularity might have a considerable effect upon the harmonisation of CSR standards. It is due to this very reason that the ":ISO Committee in CSR Policy" (ISO/COPOLCO) has been set up. (ISO Bulletin, 2002).

In defining the CSR MSS, the ISO/COPOLCO has advocated "measurement and regular reporting to the full range of stakeholders and the general public" as a key requirement of the framework.

Whilst Ledgard and Taylor (2002) pondered over the eventuality of CSR being managed independently and separately, Karapetrovic (2003) answered such a question with an opinion that CSR should be well integrated in the businesses' management systems in its entirety. But some years earlier, Bamber et al. (2000) had concluded that a single management system was far easier to control and even better in terms of communications - whereby CSR should be included in that management system.

Theories surrounding CSR

2.1.6.a. Legitimacy Theory

The societal approach, which is the broadest approach to social responsibility, holds good especially considering that the company is also part of the society. As advocated by the Committee for Economic Development in 1971, the companies need a "licence to operate" from the society. Proving their accountability and good faith to the society legitimates their activities. As per the Waddock (2004), this approach is adopted by companies who want to be seen as "good corporate citizens".

From various sources (Adams et al., 1998; Ljungdahl, 1999; Wilmhurst and Frost, 2000; Milne and Patten, 2002; O'Donnovan, 2002) we see that Legitimacy Theory justifies that companies respond to society's call for information by voluntarily disclosing what would satisfy the society's company for information in order to legitimate their existence, and demonstrate that the society needs them and their services.

Nau et al. (1998) have found that accounting researchers believe the disclosure of CSR activities in annual reports improves legitimacy of the companies. Legitimacy has prime importance since these disclosures are the main source of information for stakeholders. Nau et al. (1998) go even further to explain that shareholders are mostly concerned of the influence of the disclosure should the company be doing it, but different stakeholders have different requirements also in terms of disclosure.

The conservative view that what matters to companies is only their competitiveness, survival and profit, would perdure until all businesses have integrated CSR in their economic, encironmental and social operations. (Sutantoputra, 2008)

2.1.6.b. Stakeholder Theory

The European Commission agrees on the relationship between CSR to the stakeholder approach, whereby companies report on their social and environmental operations and interactions with stakeholders on a voluntary basis (EU Commission, 2001, p. 6).

The stakeholder perspective holds that companies are accountable to stakeholders as well. According to Freeman (1984), activities of the companies are influenced by or influence stakeholders. Therefore the company needs to be accountable to the stakeholders due to their influence held over the activities of the company.

From Maltby (1997) and Nau et al. (1998), we see that different stakeholders have different requirements in terms of disclosure. Maltby (1997), as well as Donaldson and Preston (1995), also pointed out that "according to stakeholder theory, firms due to unethical reasons will respond to interest groups' demand for environmental information. Consequently, regulations will be unnecessary." (pp 476, Fallan and Fallan, 2009)

Neimark (1992) believed that the decision to disclose CSR information may be driven by the same factors as for financial performance disclosure (that is, shareholders) whereby the aim is to maintain the company's relations with stakeholders.

It is generally known that corporation law in most countries controls companies in such way that they do not cause shareholders to incur inappropriate or unnecessary costs. Friedman (1970) argues that firms are supposed to maximise shareholders'' interests, but social responsibility would add on to the costs to shareholders as expenses on social activities would be made out of profits by the company (profits which are supposed to go to shareholders, but which now causes a lesser amount to be paid to them. - agency costs theory )

2.1.6.c. Slack Resources Theory

2.1.6.d. Positive Accounting Theory

Triple Bottom Line

"Ethical business" is generally defined as the ability to satisfy the three bottom lines (economical, environmental, and social) according to a consensus reached on the matter. (Costka et al.). CSR, CG, CS, corporate citizenship, TBL are all portraying this evolving endeavour to define "Ethical businesses".

Harrison and Freeman (1999) agree that there are multifarious theories and models on stakeholders' management and CSR. However, it is pointed out by the Academy of Management (2003) that concerns relating to CSR frameworks, measurements and empirical evidences are yet to be developed.

Evolution of Corporate Social Responsibility

The evolution of CSR can be summarised as follows:

1950s The obligation of business to society

1960s What business owes to society: Responsible not only for economic and Legal obligations but goes beyond these obligations

1970s Marked more empirical contribution to the concept: Social contract between the business and society was changing

1980s CSR viewed as "Turn a social problem into a social opportunity'

1990s Carrol (1991): "Four responsibilities to constitute total CSR, The Pyramid of CSR. (Philanthropic, Ethical, Legal and Economic Responsibilities.

2000s Disclosure on CSR to meet society's expectations.

Baker et al. (2005) affirm that the 1950s were the times when businesses', firms' and managers' needs in terms of social responsibility were first considered. However, more than five decades down the line, there still has not been a consensus reached on what exactly is the CSR concept.

Social/Environmental Accounting and Social/Environmental Audit

Social/Environmental Accounting (SEA) analyzes impact of the business on society in general from two points of views: that of the company itself (objectives, misstatements) and of external parties (comparisons with other organizations). The SEA is done to quantify the success and efforts of companies in respecting CSR.

The unstable and undeveloped state of social auditing is noted by Davis and Blomstrom (1975), "…the present state of the art with Social Audits is so imprecise that public disclosure might do more harm than good." (pp 512), as well as the as yet undeveloped standards for it "…there is no standards procedure [for Social/Environmental Audits] that will compare with the rather definite standards of accounting audits." (pp 515)

In the times where firms are developing enterprise level strategies and corporate public policies, the potential for social and ethical audits remains high. Social/Environmental Audits do not determine the extent of the impact of the business on society; instead, it focuses only on what the business is doing. (Davis and Blomstrom, 1975).

According to Davies (1997), it is expected that in the near future, companies will issue their annual social and audit report along with their annual reports.

Eventually, six areas of audit has been developed: Consumerism, Community service, Environment, Social importance of regulating activities, Equal employment, and Fixing responsibility within firms for social performance

CSR Disclosure

2.1.10.a. Disclosure Requirements, Global Reporting Initiative (GRI) and the UN Global Compact

"Full disclosure is one of these responsibilities [of directors in relation to corporate governance]. Disclosure should be made at regular intervals and should contain information that might affect the investment decisions of shareholders." (pp 585-586, Bucchholtz, 2002). Such information might include the nature and activities of the business, financial and policy matters, tender offers and special problems and opportunities in near future and longer term.

Davis and Blomstrom (1975) argued that when confidential and sensitive information about entities are disclosed, it should be assessed whether the information is voluntary or the information is necessary for the general public interest. "The philosophy of an open system suggests that the public interest is best served with public reporting…" (pp512)

It is worth considering the disclosure rule by T.K. Das (1992), "If the full glare of examination by associates, friends, family, newspapers, television, etc. were to focus on your decision, would you remain comfortable with it? If you think you would, it probably is the right decision."

The GRI are not codes of conduct. They constitute a framework for reporting on an organization's economic, social and environmental performance. The guidelines present reporting principles and specific content to guide the preparation of organizational-level sustainability reports, help organizations to present a judicious picture of their economic, social and environmental performance and function as an instrument to facilitate stakeholder involvement. The guidelines provide a complete outline that addresses full performance - economic, social and environmental - as to how an organization reports to stakeholders. (Global Reporting Initiative,

GRI is used extensively around the globe as a generally accepted reporting structure and thus provides a method for better comparability. However, their main focus is 'sustainability' for example, reporting external impact but not necessarily focusing on positive outcomes or impacts.

Gray et al. (2003) have defined CSR disclosure as communications by companies on the performance and repercussions of their SEA activities on society and environment, to stakeholders (including the society).

2.1.10.b. CSR related standards

A leading standard for CSR reporting, AA1000, focuses on the process of reporting on how businesses must link the principles of accountability and sustainability. Gobbels and Jonker (2003) believe that AA1000 may be used to develop a proper reporting mechanism so as to guide firms to set their targets and priorities, to monitor their progress, to achieve those targets and to enable audit prior to their reported performance.

2.1.10.c. How and Where to report/disclose CSR

In Alnajjar (2000) Generally, disclosure should be made in annual reports. However, we are told that CSR reporting is done through several mediums, which are separate stand-alone reports (such as sustainability reports and corporate governance report), in annual reports (which happen to be the main medium) or in online versions of the reports on the companies' websites. The choice of medium is influenced by availability if resources and strategic intentions of the companies to influence the stakeholders.

Zéghal and Ahmed (1990) studied three disclosure media for CSR - annual reports, advertisements, brochures.

Gray et al. (1995) have noted that some authors consider annual reports to be the most important disclosure media from the company's capability of projecting an image of high CSR fulfilment to its stakeholders.

Along the same line, Neu et al. (1998) consider the annual report to be the most credible amongst the other corporate communications media. This is apparently due to the fact that a large part of the annual report is audited before publication, which increase the reliability of the annual reports' contents, which other disclosure media types will not have.

Despite annual reports being the most widely used disclosure media as well as the most "credible" one; Roberts (1991) criticises the hype of this CSR communications medium. He mentions the advertisement and brochures methods of disclosure already investigated in by Zéghal and Ahmed (1990). The latters understand that determining which disclosure media to use will depend immensely on the target audience, as well as on the financial ability of the companies to disclose.

2.1.10.d. Voluntary v/s Regulatory Disclosure

In Fallan and Fallan (2009), voluntary disclosure is said to "make the likelihood of opportunistic behaviour greater than under regulated information requirements." (pp 475).

"According to the standard theory of disclosure, any seller with important private information would find it in their interest to disclose the information. If you weren't willing to disclose it, it must be bad news." Fishman and Haggerty (2003).

According to Verrecchia (1983) and Dye (1985), voluntary disclosure theory would cause companies to disclose because they would want stakeholders to make the difference between them and the less responsible organisations and be seen as the "good" companies, by reporting on their performance.

Countering Voluntary Disclosure, Deegan and Rankin (1996) think that reporting such activities is a form of window dressing, whereby only positive information is disclosed in voluntary disclosure. It is also a form of publicity for the company when they highlight the good points.

Walden and Schwartz (1997) also believe that when companies disclose on their own will for their own interest, voluntary disclosure may allow anything to pass as CSR activity at any time, without control. To justify this, they say that "environmental disclosure is mostly a legitimacy device and not an accountability mechanism."

Back in 1996, UK companies Annual Reports required employment data, charitable donations and pension funds, etc to be disclosed; voluntary disclosure included product safety, environment protection, energy saving, community involvement, etc. (Estes, 1976).

In fact though, companies have responded differently to this increasing demand for environmental information (Adams et al., 1998). Some have responded positively, that is, they are willingly accepting the regulatory disclosure requirements, while some believe the regulation would imply higher costs to them (Porter and van der Linde, 1995)

Due to the nature and ambiguity if CSR reporting and performance at the moment, companies may decide on whether they want to report and what they want to report. However, Sutantoputra (2008) argues that this poses a problem to users of reports to whom it becomes difficult to gauge the value of the reports and make comparisons.

Jeffe et al. (1995) and Porter and Van der Linde (1995) support the claim that in debating whether voluntarism overrides regulation for disclosure or vice-versa, the aspect of costs is important. This can be translated in the fact that in instances of voluntarism, the companies disclose information whenever their budget permits them to. In contrast, whether they can afford or not, mandatory CSR disclosure forces companies to report their activities.

Elkington et al (1998) explain that for there to be an efficient market, there needs to be enough appropriate and required information. Therefore, if mandatory disclosure has to be better than voluntary disclosure, the volume and content in the financial statements and reports have to be significantly greater in times of statutory disclosure requirements than when it was in times of voluntarism.

2.1.10.e. Motivations for CSR disclosure

The Iron Law of Responsibility focuses on what happens to the corporations who try to avoid responsibility. This law states that "in the long run, those who do not use power in a manner which society considers responsible will tend to lose it." (pp 50). The law goes further to explain that those who would shirk responsibility may find themselves replaced by others who would willingly take the responsibility.

CSR will hence help companies to hold on to the survival of the fittest principle, if not to thrive among the fittest. Due to the pressure from society (as well as from the media), companies nowadays use CSR to gain a competitive advantage so as to show themselves to not be causing externalities as opposed to their counterparts. (Bettratti, 2005)

Competitive advantage


Economic reasons

Good corporate governance

Long term survival

Environemental costs reduction



Increased customer interest

Ethics/moral concern

Increased media coverage

Empirical Review

Accountability and Responsibility of Companies

In Mauritius, the enforcement of the Code (of Corporate Governance) is not really effective. Many companies with turnover exceeding Rs250M, especially state-owned enterprises, do not comply with the Code since it is not legally binding.

A study by Deloitte in 2008 had discovered interesting facts on CSR implementation in Mauritius and Rodrigues, especially concerning the problems and challenges faced by organisations trying to practice CSR. The issues are mostly around lack of information on CSR, absence of synergy between the Government, NGOs, and the private sector; and the lack of proper audit which would have enhanced the accountability of these companies with respect to their CSR activities. Emphasis is laid on the fact that companies would have liked to make further contributions to the CSR field but do not do so because of insufficient information pertaining to this.

It is also worth noting that, according to the same survey, over 50% declared that they would further increase their CSR policies and activities while 40% claimed that they would bring no change to their CSR practices.

The companies being analysed mentioned that what would drive them to increase their participation in CSR would be the assurance that the groups they are supporting are actually reaping the benefits of the activities; as well as more transparent dissemination of information on the operations of NGOs.

Levels of Accountability

Corporate Governance

Corporate Social Responsibility

Davis and Blomstrom (1975), "At the end of the year, departmental managers who made their economic targets but failed to perform in the social area, were rewarded as usual. All departmental managers got the message and subsequently devoted little attention to social issues." (pp 92). This statement shows how companies then used to give more importance to economic results than social performance.

According to a survey carried out by the Economist Intelligence Unit in Nov-Dec 2007 (based on periods of "three years before the period", "the period", and "three years from the period onwards"), corporate responsibility is growing sharply in global executives' priorities, specially in terms of its awareness and importance. (The Economist, Jan 19th 2008, Special report on Corporate Social Responsibility, Page 3-4.). In fact, few big global companies can actually now afford to ignore CSR because of its mandatory nature. Ditto for Mauritian companies, since a portion of the company's profits is directly deposited on the NEF funds.

Management Systems and Standards

(ISO/COPOLCO) had concluded, from a feasibility study, that setting up management systems standards (largely deriving their sources from ISO 9001 and ISO 14001) would be both "desirable and feasible".

Empirical Evidence on Theories surrounding CSR

2.2.6.a. Legitimacy Theory

2.2.6.b. Stakeholder Theory

Both Deegan and Rankin (1996) and Niskanen and Nieminen (2001) have shown that positive information seemed to dominate the reports. That is, it is a form of window dressing, whereby only positive information is disclosed in voluntary disclosure predominantly. It is also a form of advertising for the companies when they highlight their good points.

Freeman (1984) is in favour of fulfilling CSR using a stakeholder framework, that is, the company fulfilling its duty towards the parties directly/indirectly affected but the companies' actions and decisions - because the companies definitely require the support of its stakeholders to exist.

2.2.6.c. Slack Resources Theory

2.2.6.d. Positive Accounting Theory

Triple Bottom Line

Evolution of Corporate Social Responsibility

According to a survey by Deloitte in 2008, CSR was not yet fully developed in the corporate culture of Mauritius, but definitely emerging as a priority for Mauritian companies. The study has shown that CSR is being more and more popular amongst Mauritian companies as well as for companies in Rodrigues, despite both of them not being in a defined systematic manner.

Most of the respondents to the survey do actually estimate that the Government should be more involved in CSR policy-making, instead of keeping to the passive role it played at that time - it could act as "a facilitator, intermediary and regulator, and provide tax incentives" to improve the state of CSR in the country.

The 3 major areas of intervention identified were Health & Safety, Education, and Sports.

It is worth mentioning that companies partnering with NGOs as a CSR collaboration have been satisfied of the results, that is, the companies preferred engaging and contributing to CSR in areas they chose to, which is twice as much as those willing to leave it to the Government to decide by contributing to the NEF.

From the study itself though, a high percentage of respondents (80%) were of the opinion that CSR policy-making should be a joint NGO/Private Sector/Government concern. This is a very progressive and promising issue which could be considered.

Social/Environmental Accounting and Social/Environmental Audit

CSR Disclosure

2.2.10.a. Disclosure Requirements, Global Reporting Initiative (GRI) and the UN Global Compact

The GRI 2002 guidelines have shown its global acceptance as a standard for reporting CSR practices given the fact that it helps companies to decide on what to report and how to report that information.

In the GRI 2002 guidelines- based environmental disclosure rating system study; Clarkson et al. (2006) pointed out that firms which would be called "Green Companies" were even more eager to disclose those environmental information which would not easily be imitated by other companies.

Sutantoputra (2008) had devised a social disclosure rating system in his paper, which incorporates the comprehensive GRI 2002 reporting framework as the benchmark for measuring firm's social performance. The study aimed at creating such a system so as to add on to standardised content analysis measures for CSR reports, and to capture social issues themes of CSR.

"GRI guidelines already includes measures of CSR performance in their framework" - Sutantoputra, (2008), whereby it is easy for companies to apply these to their context. However, the companies must specify what are the indicators that they are using in order to report.

Actually, Nau et al. (1998) have revealed that media tended to cover occasions where it happened that companies did not disclose properly, and thus were fined; and this led to increased environmental information disclosed. Conversely, critics from environmentalists on the mode of operation of companies and what they have disclosed, tend to discourage disclosure.

A study by Douglas et al. (2004) on a sample of Irish firms concluded that corporate governance and human resources aspects were most reported as CSR disclosure in annual reports while community involvement was the least reported. The same study made on international companies noted, in contrast, community involvement to be widely reported.

2.2.10.b. CSR related standards

2.2.10.c. How and where to report/disclose CSR

Clarkson et al. (2006) created an environmental disclosure rating system to assess firms' environmental disclosures, while Sutantoputra (2008) contributed to CSR reporting by creating a social disclosure rating system (based on Clarkson's model) which can be used together.

An analysis by Adam and Frost (2006) tells us that the use of internet to disseminate information about society and environmental performance of companies to stakeholders is not very useful so far. However, Mauritian companies do publish a lot of such information on their websites. In fact, most people would prefer to check out the websites, as it is either too difficult or too costly to obtain printed annual reports.

Deloitte carried out a survey, published by the ECNL in 2008, which showed that the good signs concerning CSR in Mauritius are that the profit-making companies set aside a budget for CSR activities. The majority of organisations communicate about their CSR activities in annual reports and a few of them through social reports.

Blanco and Rodrigues (2006) introduce their paper by mentioning that a number of empirical studies have seen CSR disclosure as being concentrated in annual reports - being "considered as the most important tool used by companies to communicate with their stakeholders", but they further tell us that the internet is much used and as informative for disclosure.

2.2.10.c. Voluntary v/s Regulatory Disclosure

Tietenberg (1198) claims that firms can be responsible (even if there are no statutory requirements to disclose) if they are given correct information and strategies on how being involved in social and environmental activities can benefit them. Tietenberg (1998) has also verified this through empirical findings.

In Fallan and Fallan (2009), they analyse the development of disclosure during periods of voluntarism v/s periods of regulation (statutory) with respect to environmental activities disclosure. The paper's aim was to find out how disclosure has increased in quantity and in quality as well as in presentation and variety.

To come to their conclusion that mandatory disclosure has really increased volume and content of environmental disclosure, the study has analysed a large number of companies' financial statements and annual reports during different periods of pre- and post-mandatory disclosure of such activities.

The data collected from the reports and financial statements have been used to test effects of statutory changes on companies' policies. The effects would be what happen after the laws, acts and statutes make disclosure of social and environmental activities mandatory. The changes on companies' policies is mostly to see that does making publishing such activities to the public in their annual reports make them truly responsible and accountable or do they only disclose it as a formality.

Voluntarism would mean that if stakeholders require the company to disclose all such information pertaining to environment, the company would willingly agree to publish such information as they require. Even with statutory changes, this study has found that even if disclosure being mandatory immediately causes companies to abide by it, they do not sustainably comply with the regulations through the longer term. Campbell et al. (2003) thought that voluntary environmental disclosure in annual reports could be viewed as an innovation.

2.2.10.d. Motivations for CSR disclosure

The Deloitte study (2008) shows, that even if the companies do not abide by a formal code of CSR conduct vis-à-vis personnel, they are conscious of the fact that adopting "good people management" will be highly beneficial to their company. The survey carried out in 2008, showed that a considerable portion of Mauritian companies (69%) acknowledged having benefitted from CSR.

Porter and Kramer (2006) have also pointed out that CSR could also be carried out for competitive advantage, to seize an opportunity or innovate.

According to Prof. Dr Mustaffa Mohamed Zain of UiTM, in 2009, companies are participating in CSR activities for two reasons. Firstly, top management realizes that companies are intertwined with society, otherwise they cannot operate. In other words, they have come to realize that they have to do it or they cannot survive. The second reason is because others are participating in CSR activities, so if they do not do so, they will be losing out. That is, they are performing CSR on an accountability as well to face competition. And to legitimize their business.

The two systems devised by Clarkson et al. (2006) and Sutantoputra (2008) will help comparisons between companies and across industries.