Definition Of Social And Environmental Accounting Sea Accounting Essay

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Introduction:

During the recent years, social and environmental accounting is becoming more and more important in our society. Since that the social and environmental responsibility does not solely lie in the hands of governments, they are stressing on the fact that corporate should become socially and environmentally responsible throughout their activities and cultures.

Today's business' world is not only about producing and making profit but also about what are the consequences of those businesses' activities and what could be the remedy to these. More and more companies like Barclays or the MCB banks are engaging themselves in this way through the CSR concept or/and the Social and Environmental Accounting Reporting.

These companies are reaping significant benefits such as an enhanced reputation, attracting and retaining staff and a competitive advantage with customers and suppliers, which of course all add to their social and environmental accounts.

The implementation of a social and environmental accounting has been done in some Mauritian companies. But is it really working? Or are those firms facing constraints and challenges? Our study will enable us to find answers to those questions and more.

Objectives and Aims of Study:

How the implementation process going in firms. Are the employees aware of those challenges taken by their company or does it concern the upper management.

How do they measure their social or/and environmental action, decisions and consequences.

How the firm has changed since it implemented this concept ( taking into account a special case)

What are the constraints and challenges faced by the Mauritian Companies

The legislation

How Government helps the companies to implement this concept or is they an idle actor.

What are the conclusions found from this study?

LITERATURE REVIEW

The Literature review aims at explaining more about topic by reviewing the past theories, sayings, approaches and methodologies of the Social and Environmental Accounting in all its aspects.

Definition of Social and Environmental Accounting (SEA)

Social Accounting

"The ability to show that a social enterprise is meeting both its financial and social bottom lines - reconciling its mission and its money - will be increasingly important if social enterprises are to play an expanding role in the delivery of public services. There is also a need for social enterprise to 'prove' itself to build confidence."

DTI Strategy for Social Enterprise, 2005

Social Accounting can also be defined as Corporate Social Reporting, CSR reporting, Non-financial reporting or sustainability accounting. It is a method by which a business seeks to place a value on the impact on society of its operations. It also includes the effect on the local community who might have to live in the shadow of its premises, and how it engages with the community, its customers and workforce.

The concept of Social accounting has initially been developed in the 1970's. And based on its success, it received serious consideration from professional and academic accounting bodies, from big firms and also from governments.

Environmental Accounting

Environmental Accounting also known as green accounting or resource accounting is a crucial tool for understanding the role played by the natural environment in the economy. Environment accounts provide information which highlights both the contribution of natural resources to economic well-being and the costs imposed by pollution or resource degradation.

Social Audit and Environmental Audit

Social Audit is a regular and objective accounting procedure that enables companies to establish social values and criteria against which they can review their external and internal performance and their social plans.

Environmental Audit is one of the first steps that an organization might take in moving towards embedding environmental issues in organizational practices and a regular crucial element in managing and reporting on environmental issue.

Different aspects of SEA

Corporate Social Responsibility (CSR)

Triple Bottom Line (TBL OR 3BL)

Corporate Social Responsibility (CSR)

Corporate Social Responsibility involves being prepared to be responsible for and willing to justify its environmental and social actions. It will also consider the impact of its actions on a variety of individuals and groups, both inside and outside the organization. Due to its significance importance, being socially responsible is not only the management concern but the whole business including staff; managers and directors should get involved in it, therefore CSR is being more and more integrated in companies' culture and ethics nowadays. Furthermore, business would promote the public interest by encouraging community growth and development, and voluntarily eliminating practices that harm the public sphere, regardless of legality.

Governments around the world make sure that businesses adopt the concept of CSR through the creation of legislation which business should adhere to. For example, in Germany all retailers and manufacturers are required to recycle 80 per cent of their packaging.

A business accepting greater corporate responsibility might have to change some of the following to take into account the effects of its actions;

The aims and objectives, culture and ethics of the corporate.

The relationship with employees. This might involve changing work practices.

Providing helps to bodies and organizations outside the business.

Relationship with other stakeholders like suppliers and people in the local community.

The practice of CSR is subject to much debate and criticism. Proponents argue that companies adopting CSR benefit in various ways such as a good reputation for the business. Critics argue that CSR distracts from the fundamental economic role of businesses. But however, it essentially is titled to aid to an organization's mission as well as a guide to what the company stands for and will uphold to its consumers.

Triple Bottom Line (TBL or 3BL)

The triple bottom line is made up of "social, economic and environmental" the "people, planet, profit". In 1994, John Elkington coined the term triple bottom line. It was later expanded and articulated in his 1998 book Cannibals with Forks: the Triple Bottom Line of 21st Century Business. The concept of TBL is to make the company concentrates more on its stakeholders interest (either indirectly or directly) rather than on shareholders solely.

Why there is a need for SEA?

Social Contract Theory (CST)

This Theory was originally discussed by Hobbes (Leviathan, 1651). He found out that command, consent and duty were the important roles of CST. Through contemporary approach, CST was reviewed by John Rawls in A Theory of justice in 1995 where he wanted to demonstrate that individual and social group rights and liberties are founded on mutually advantageous agreements which are made between members of society. And this creates a theoretical basis to explain the current practice of CSR.

Legitimacy Theory

In general:

"Legitimacy is a generalized perception or assumption that the actions of an entity are desirable, proper or appropriate within some socially constructed system of norms, values, beliefs and definitions "

(Suchman, 1995, p574, emphasis in original)

For Organizations:

"Organizations continually seek to ensure that they operate within the bounds and norms of their respective societies, that is they attempt to ensure that their activities perceived by outside parties as 'legitimate' "

(Deegan Craig, 2000, p253)

This is the most cited theory within SEA area. Legitimacy Theory is describe as a positive theory as it seeks to describe or explain corporate behavior (in term of efforts made to appear legitimate) rather than prescribing how organization should behave.

Stakeholder Theory

According to R. Edwards Freeman in the book Strategic Management: A Stakeholder approach; Stakeholder Theory is about organizational management and business ethics that's addresses morals and values in managing an organization. According to the Stakeholder theory, the business entity should be used as a vehicle for coordinating stakeholder interests, instead of maximizing shareholder (owner) profit.

Slack Resources Theory

Slack Resources play a crucial role in allowing organizations to innovate by permitting them to experiment with new strategies and innovative project that might not be approved in a more resource-constrained environment. (Cyert & March 1963)

Accountability

Accountability can be described as an "umbrella term" defining the concept in ethics and governance with several meanings. It is the obligation to bear the consequences/responsibility of any actions, decisions or policies and implementation within the scope of the role or employment position and encompassing the obligation to report.

Ethical accountability: Ethical accountability is the practice of improving overall personal and organizational performance by developing and promoting responsible tools and professional expertise, and by advocating an effective enabling environment for people and organizations to embrace a culture of sustainable development. Ethical accounting might include individual but also all types of business from non-profit making one to big corporate.

AA1000 Accountability Principles Standard

The AA1000 Assurance Standard (2008) was developed following a comprehensive multi-stakeholder revision of the 2003 standard. It provides a comprehensive method of holding an organization to account for its management performance and reporting on sustainability issues by evaluating the adherence of an organization to the Accountability Principles and the reliability of associated performance information.

A Case Study from the Corporate Social responsibility Report 2003 of the Barclays Bank showing how the bank is fulfilling its social and environmental duty:

'Green' credit cards

In 2003, Barclaycard worked with suppliers to develop an environmentally-preferred credit card for use by the government's Environment Agency. The cards were made from polyester (PET-G) resin instead of the usual PVC which can be harmful to the environment during production and final disposal. This development has provided Barclaycard with the opportunity to test PET-G cards. The early results of the six-month trial indicated the durability of the cards is comparable to those made from PVC. The evaluation continues into 2004.

Motivations and Benefits for SEA

Competitive advantage

Moral Concern

Create or Reinforcement of the business' image

Good corporate governance

Good relationship with stakeholders both internal and external

Comply with legislation

RESEARCH METHODOLOGY

"Research is in fact the world's biggest industry" Booth, Colomb, Williams

Research is an organized and systematic way of finding answers to questions by collecting, identifying, analyzing and interpreting data. To be able to be done properly, Research must be correctly planned, following the process like required. The Research process is:

Define the problem

Development of an Approach to the Problem

Research Design Formulation

Field Work or Data Collection

Data Preparation and Analysis

Report Preparation and Presentation

Table 1: The Research Process

Objectives of the Research are to:

Determine whether the concept of a social and environmental accounting is a success in Mauritius.

Collect maximum qualitative as well as quantitative data from companies.

Learn more on how companies manage their environmental and social accounts.

Learn more on how companies comply with government legislation and accounting standards and ethics concerning the SEA concept.

Type of Research

Quantitative Research involves the collection of data that can be measured. In practice, this is usually means the collection of statistical data such as profit and market share.

Qualitative Research involves the collection of data about attitudes, beliefs and intentions.

Data Collection Methods

Primary Data

Primary data also known as field data is collected directly by the researcher in the targeted field of research i.e. in companies.

Secondary Data

Secondary data also known as desk data is information which already exists in some form e.g. annual reports, previous study on this subject.

Sample Design

Define the population - The population for the study carried out was consists of Mauritian Companies

Selecting sampling method - For this study, simple random sampling was used. A list of all the Companies in different field of the sector of the economy will be selected.

Survey Method

Personal interview

This involves an interviewer obtaining information from one person face-to-face. The main advantage is that it allows the interviewees to give detailed response. And disadvantage is that it's time consuming and tends to rely of skill of interviewer.

Online Interview

This method allows having information from different companies all through the country. . The main advantage of this method is that a response is received on delivery of the mail. This method is less time consuming and less costly.

Questionnaires

Document containing a series of questions (about 25 questions) to be put to respondents with the aim of gathering data useful to the research.

Advantages:

Detailed qualitative information can be gathered.

Opinions can be obtained directly from companies

Disadvantages:

If questions are not clearly set, answers will not be accurate.

Carrying out questionnaires can take lot of time and money. And some companies might be reluctant to answer to these questions.

Type of questions to be set

Close ended Questions

The participants are allowed to choose their answers among already set ones.

Open ended Questions:

Open-ended questions do not give respondents answers to choose from, but rather are phrased so that the respondents are encouraged to explain their answers and reactions to the question with a sentence, a paragraph, or even a page or more, depending on the survey.

Limitation of Survey

Constraints encountered might be the non- cooperation of companies, reluctant to answer to questions due to lack of time or they do not want to give confidential information.

ANALYSIS

Data to be analyzed will be those obtained from the questionnaires. Quantitative but as well as qualitative answers will be taken into account. Data will be analyzed by comparing figures, making use of graphs, bar charts and pie charts. Those charts will be clearly explained in order to find answers to the specific questions. And therefore, helping in finding an appropriate conclusion to the study.

TIME FRAME

Task

Time

Aug 10

Sept 10

Oct 10

Nov 10

Dec 10

Jan 11

Feb 11

Mar 11

Literature Search

Fieldwork Survey

Analysis and Conclusion

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