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Social and environmental accounting is concerned with those events that are not covered in conventional accounting practices and whose users are not much interested with the financial aspects of the business, but rather, they are interested in knowing at their social and environmental aspects of the business performance (Godfrey et al, 2006)  .
It is synonyms with terms such as corporate social reporting, corporate social responsibility, non-financial reporting and sustainability reporting (Wikipedia, 2009)  .
Social and environmental accounting and reporting is important because (Godfrey et al 2006)  :
We tend to know how a business is using the scarce resources to provide sustainable outcome by not just focusing on financial success but also the state of community and environment.
It implicitly helps to restricts any of the business activities that jeopardizes with the sustainability of resources that can later cause danger of environmental degradation or if its in conflict with the ethical values of the community.
Further on the explanation given on point (b) above, social and environmental accounting and reporting helps to direct organization "to act in a socially responsible manner" (Guthrie and Parker, 1990; as cited in Godfrey et al, 2006, pg 631).
We now know what is social and environmental accounting and reporting and how important it is, the question now one can ask is what are some of the things that can become a subset of social and environmental reports. According to Godfrey et al (2006, pg 632), some of the issue he has suggested that can come under social and environmental reports can be regarding "employees, occupational health and safety, minority and equity issues, community, indigenous peoples, environment, energy use and product". He also stated that those issues are some examples and more could be included in the list.
The problem in this contemporary accounting standard is that, social and environmental reporting is a voluntary disclosure and because of this reason people do not want to disclose such information because of lack of education (Gray (1994, 1995; Mathews 1997, 1998a, 1998b; as cited in Lodhia, 1999)  .
Another question is raised that is consistent with our research question, which is, what are the impacts of marginalizing social and environmental accounting and reporting and how can such reporting system be guided to business organization so that they instill such reports and disclose it together with financial reports during their annual reporting period.
This paper will focus on the impacts of marginalizing social and environmental reports by reporting entities and finding out some solutions of strengthening such reports. What has already been done is that, organizations such as AccountAbility (AA) (AccountAbility, 2007)  and Global Reporting Initiative (GRI) (Global Reporting Initiative, 2007)  has been formed to address this issue and "there is no conceptual framework for social and environmental reporting" (Deegan, 2007, pg 1267).
This paper will focus on some of the very important accounting theories like legitimacy theory, stakeholder theory, risk society theory and institutional theory.
These theories might help to explain the role of business reporting, users of business' information and the cause/effect actions of business operations, reporting, stakeholder's reactions and ultimate effect on community and environment.
Series of questionnaires and interviews was conducted to get insights if companies do disclose social and environmental reporting and what response I get when asked about how marginalizing social does and environmental reporting affects the community or environment. Suggestions were also given by them about how we can strengthen the current reporting system.
Our research was not limited from findings from local demography but also internationally so that we can have a thorough understanding of the topic in this contemporary period. Questionnaires, interviews and case study were conducted within Fiji's demography, but the journals and literature reviews were studied from both, from local and overseas writers.
A number of theories were used to explain why corporations use social and environmental reports. The reasons obtained were used to evaluate the question for what happens when corporations fail to report social and environmental impacts of their business operations. Some of these theories were legitimacy theory, stakeholder theory, institutional theory and risk society theory.
Legitimacy theory tries to explain that business organizations try to disclose social and environmental reports so that they are within the society's expectation boundary. From this perspective, social and environmental reporting can be used by companies to attempt to legitimize their actions to society and thus this may be a possible becomes a motivation for producing social and environmental reports and a implicit social contract is formed between the business organization and the society (Deegan, 2007)  .
In addition, Deegan (2007) also stated that since society's expectation changes and is not fixed, there is a need for business entities to continually produce social and environmental reports if they are to stay within the society's expectation or stay within the social contract otherwise they will be seemed to be breaching the social contract.
For example, British American Tobacco (BAT) produces sustainability reports (British American Tobacco, 2009)  that tells the public that their organization is doing harm to the environment, but also telling people how they are combating with the environment problems (British American Tobacco, 2009)  . Thus in this way, they are actually legitimizing their actions to people so that later on when the problems becomes too obvious, people cannot finger point at them for their detrimental business operations and also hard to litigate them because they are within the bounds of the society's laws and regulations; strong presence of a social contract with the community.
Stakeholder theory states that in order for a particular business to operate indefinitely and successfully, they must provide all the demands that any stakeholder would want from that particular business (Deegan, 2007)  . This is as stakeholders hold all the resources that is needed by the business entities to operate such as human resources, finance, business licenses authorization and the like. Stakeholders include shareholders, employees, customers, lenders, suppliers, local charities, various interest groups and government (Deegan, 2007)  .
As can be seen from the above diagram, the organization is responsible to all the stakeholders who provide resources in one way or the other, thus "the organization is part
of the wider social system"(Deegan, 2007, pg 120).
There are two branches of this theory, which are, ethical branch and managerial branch (Deegan, 2007)  .
The ethical branch of stakeholder theory states that all stakeholders, whether they want information or not and even whether they can affect the organization's ongoing operation or not, has the right to be given all the information about the business's financial, social or environmental reports (Deegan, 2007)  .
However, in contrast to managerial branch of stakeholder theory, it focuses on specific stakeholders, by only providing information to those user groups that can help the business in doing its on-going operations (Deegan, 2007)  .
According to Deegan (2007, pg 126), he states that institutional theory tries to explain "why organizations within particular 'organizational fields' tend to take on similar characteristics and forms". From his view point, we learn that this theory helps to understand why business organizations have some similarity among each other (businesses) so that it is within a society, which he calls 'organizational fields' (Deegan, 2007, pg 126).
The question then arises is how? Well, this theory "...links organizational practices (such as accounting and corporate reporting) to, among other things, the values of the society in which the organization operates and the need to maintain organizational legitimacy" (Deegan, 2007, pg 127).
So we learn that organizations tries to stay within a broader institution, which is the society, according to its norms and thus in order to stay within the norms, business organizations tries to tell society through making a voluntary disclosure which is social and environmental reporting.
Risk Society Theory
The risk society theory states that the risk exposed now is actually shaping the business environment (Wikipedia, 2009)  . The external risks are those risks that are beyond the control of humans such as natural disasters (Wikipedia, 2009)  . The manufactured risks are those risks which are caused and can be prevented by human beings themselves and such risk could be different types of pollution cased by business industries, diseases caused by manufacture of chemicals, social risk like criminal activities and the like which are all due to modern science and technology (Wikipedia, 2009)  . From the notion of risk society theory, it can be said that a possible motivation why businesses produce social and environmental reports is to distribute knowledge about how their businesses produce and mitigates possible risks (Wikipedia, 2009)  . For example, in this modern era where the use of chemicals and automation is very common, possible risk borne out from it could be loss of jobs leading to poverty and finally settling for indulging in criminal activities. In addition, another risks could be exposed when chemicals are used, which can be rationally be reasoned that using chemicals to help grow fruits and vegetables can cause diseases that are risk to humans. Due to risks borne out from business activities, social and environmental reports are produced to aware humans of potential risk and they also tells people some preventive measures of avoiding such risks (Wikipedia, 2009)  .
There is a lot of demand from various stakeholders for the provision of social and environmental reports from business industry and the trend is increasing (Godfrey et al 2006)  .
According to Crowther (2000; as cited in Wikipedia: The Free Encyclopedia accessed on 10 October, 2009)  , he defines social accounting and thus reporting, as "an approach to reporting a firm's activities which stresses the need for the identification of socially relevant behaviour, the determination of those to whom the company is accountable for its social performance and the development of appropriate measures and reporting techniques."
This means that social accounting and reporting is anything which a firm could identify, measure and report their actions that affects the social community. He also states that this will make accountable for their social performance. The question then one can ask, what actually makes a good or bad social performance and how significant is social accounting and reporting.
According to Lodhia (1999, pg 325), he states that:
"â€¦..environmental disclosures primarily as public relations exercise designed to enhance the image / esteem of the organizations."
Therefore it becomes rational enough to think that businesses will disclose those information that they want to disclose so that it could enhance its reputation. For example, giving rations to flood victims or donating money to non-government organizations (NGOs) that focuses on helping needy people will be highly regarded by them (FundraiserInsight, 2009)  . These sorts of things helps business's image and so, there becomes a highly likely chances of having increases in revenue and thus more profit. In addition, the media also plays an important role in delivering the message to the whole community (Green Marketing, 2009)  .
For example, a business helping needy people by giving out millions of dollars, media speculates this in their online, audio or printed media and thus business gets marketed.
In contrast to businesses that marginalize social reporting, they do not get those benefits because, as from Lodhia's point of view, the community does not get a chance to know about their social performance since they do not have social reporting. Another questioned is raised on what disclosures business usually make so that ultimately it benefits them.
According to Guthrie and Parker (1990, p. 165; as cited in Deegan, 2007, pg 1303), they said that corporations make this voluntary disclosure to show good social relationships and avoid "harmful effects on various elements of society".
In their paper, they state:
"Such a disclosure strategy may include emphasizing the corporation's positive contributions to social welfare and highlighting its attempts to minimize harmful effects on various elements of society" - Guthrie and Parker (1990, p. 165; as cited in Deegan, 2007, pg 1303).
So we know now that business community discloses social reports either to improve their image or reduce litigation for their actions by way of legitimizing their actions in social reporting.
Looking on the other hand, marginalizing social and environmental reporting does not help in the same way as does to those business organizations that do incorporate social and environmental reports in their annual reports (Deegan, 2007)  . Opposite to those businesses that do disclose social and environmental reporting, businesses that marginalize those types of report are in risk of increasing their contingent liabilities that can lead to actual financial losses, from relevant authorities such as dumping toxic chemicals on land or sea can affect people and later on when the detrimental effects becomes substantial, the society can litigate for their harmful business activity causing financial losses to the business / shareholders (Deegan, 2007)  .
Another question that can arise on this issue is that, if having social reporting is that beneficial when compared to that of not reporting it, then why business community do marginalize it.
According to Mathews (1997; as cited in Lodhia, 1999)  , he said that social accounting and reporting is not new and has been a topic since 1970. Gray (1994, 1995; Mathews 1997, 1998a, 1998b; as cited in Lodhia, 1999)  have reasoned why businesses have probably been marginalizing social and environmental reporting and they stated that:
It is a voluntary disclosure and not mandatory and;
Lack of education and awareness about its values and importance towards the organization
Environmental accounting is where business organizations accounts all its business activities that is subject to and in relation to environmental impacts due to their operation and has to report it in their annual reports (Environmental Agency, 2009)  .
The main aim is to extend the conventional accounting practices by encouraging business communities to include environmental reports in their annual reports because business is not only accountable to stakeholders who has financial interest in the firm, but to various stakeholders including future generations (Bartolomeo et al., 2000)  .
When discussing the issue of whether to include environmental reports or not, we need to see the impacts of disclosing it towards the firms daily operations and see whether it hinders the operations or enhances it.
According to Lodhia (1999, pg 325), he says that "â€¦..environmental disclosures primarily as public relations exercise designed to enhance the image / esteem of the organizations".
This means that disclosing environmental reports helps a business enhance its reputation and because of the increased reputation it becomes easier to recruit good employees (ICAI, 2009)  . These employees might in turn stay longer because of the good reputation and so, it reduces employee turnover and ultimately, the employees' competency increases resulting in increase in productivity and thus increases profit (ICAI, 2009)  .
"Companies that pay attention to environmental and corporate social responsibility can reap benefits when it comes to employee recruitment and retention" (ICAI, 2009) 
Therefore, it also becomes rational enough to come to the point that if we contrast with businesses that marginalize environmental reports, their reputation and brand marketing, is not that beneficial compared to those businesses that do discloses either one or both of environmental and social reporting.
Thus, the benefits leading from one stage to another is negated and, from environmental point of view, businesses that marginalize environmental reports tend to increase more pollution and damage to the environment when contrasted with business organizations that do disclose environmental reports (business organization that disclose environmental reports "helps improve our environment, health and safety performance and ensures better relationships and partnerships with our host communities"(WMC, 2002; as cited in Godfrey et al, 2006, pg 633) .
Speaking of benefits of having environmental reports, Belkaoui (1976; as cited in Deegan, 2007, pg 1325) studied the reaction between entities having some pollution control system incorporating within their operations and disclosure of such information. He found out that the results were in favour of the entities disclosing environmental reports as they tend to get positive responses from "ethical investors" as their share prices increased.
This means that those business entities who do not disclose any kind of social and environmental reports will not enjoy as much benefits than those entities that did disclose social and environmental reports.
Strengthening Social and Environmental Reports
By now we now know that social and environmental reporting is a voluntary disclosure. In addition, we also came to know that due to the reason of having social and environmental a voluntary disclosure, businesses are not disclosing social and environmental reporting and so they are not getting the benefits that they would otherwise get if they do disclose it.
In Fiji, Lodhia (1999) has implicitly suggested ways to strengthen such reporting system, not only which is limited to this geographical area, but also universal wide. He stated:
"The research finds accountants in Fiji largely unaware of their role in promoting environmental sensitivity within organizations" - Lodhia (1999, pg 323);
"..accountants are primary player in business activities, it is hoped that they will be leaders in the environmental accounting revolutionâ€¦â€¦" - Lodhia (1999, pg 324).
From the above two quotation (a) and (b), this means that if the accountants in Fiji and also in other countries are made aware about their role in promoting social and environmental reporting, then the pressure from these accountants might help influence business owners to know its importance and might consider disclosing it.
Accountants should not be only focus on the financial aspects of the business, but also need to consider and discuss the firms' operations towards community and environment.
"â€¦environmental accounting requires organizations to forecast the potential impacts of their activities on the environment (through mechanisms such as environmental audits) and accordingly, to estimate contingent liabilities and create provisions for environmental risks" - Lodhia (1999, pg 325).
This encourages entities to perform environmental audits on their operations where external auditors checks to see if they have complied with environmental regulations and laws (Leung et al, 2009)  . Having environmental audits allows firms to be on track with environmental laws as they will be under the watchful eyes of the environmental auditors and thus this encourages entities to produce social and environmental reports (Leung et al, 2009)  .
Conventional accounting reports place more emphasis on the financial performance of reporting entities compared to their social and environmental performance. Guidance on social and environmental reporting is currently provided by organizations outside the accounting profession, such as AccountAbility (AA) and the Global Reporting Initiative (GRI).
The main objectives of this research are as follows:
Finding out the implications of having social and environmental reports;
Finding out what are the implications of marginalizing social and environmental reporting;
Find what people have to say about social and environmental reporting and;
Finding out some of the ways to strengthen such reporting system;
We used the following method(s) to conduct our analysis and findings:
Questionnaires and Interviews
20 questionnaires was given to various organizations, but actually received 13 answered questionnaires. The questionnaires were given to public and corporate accountants, academics, small, medium and large enterprises and also given to people to get their views on the impacts of marginalizing social and environmental reporting and how can we strengthen such reporting. While they were answering, we also shared views on each question and discussed issues in relation to real world. Views were raised and a lot of discussion was done with the interviewees.
Analysis and Findings
Do you think social and environmental reporting, along with financial reporting is a good thing to do? â-¡Yes â-¡ No
The responses received from the thirteen questionnaires given to various corporate accountants, public accountants, academics, and business personnel where 92% (12) of the respondents responded yes. This showed consistency with ethical branch of stakeholder theory that all users have the right to know about how a particular business is doing financially, in terms of how much they are considering for the environment and community.
What are the impacts of disclosing social and environmental reporting to:
As we can see in the above diagram, it can be concluded that, there is more focus on increasing reputation than other outcome. Implicitly, when thinking about why on reputation, then our group figured out that increasing reputation eventually leads to grab other outcomes as a sequence. Increased reputation attracting more customers + reducing pollution more profit.
In consistent with legitimacy theory, many of the respondents said that, they are better able to stay within the exceptional boundary of the people. They make sure that their operations are intact of what the society expects from them, so that litigation crises or any other such problems do not arise. In addition, businesses tend to do positive things to people such as no to racial discrimination, gender discrimination and favoritism toward majority groups because if that happens, then there will be society unhappiness and thus new regulations will be on making.
As can be seen from the above diagram, more respondents opt for reducing environmental risk. When social and environmental reports are disclosed, businesses tends to become more environmental conscious because their performance will be looked at by various stakeholders and so, to get a positive from them, they would actually try to reduce risk borne out through environment such as global warming.
What are the impacts of excluding social and environmental reporting to:
From our analysis, we concluded that when social and environmental reports are marginalized, there are a lot of problems borne out as a result these are, firstly, there is no chance of improving public relations as compared to those businesses that do incorporate social and environmental reports. Another issue raised was of financial loss. Businesses that marginalize social and environmental reports are in risk of litigation from society or authorities as they had not legitimized their work prior to litigation. For example, dumping to toxic chemicals in rivers and if society knows whose doing it and can litigate if someone living near the river place get affected as a result. And finally, profit does not tell everything such as number of people laid-off or amount of pollution created and dumped to sea or land.
Marginalizing social and environmental reports had an impact towards socially as well. If businesses do not disclose social and environmental reports, then social issues such as their perception towards racial, gender and inequality discrimination will be unknown to people and so there could be chances that businesses could be doing this since their practices are hidden. Such issue was highly pointed out by the respondents.
Many respondents said that when social and environmental reports are marginalized, businesses increases more pollution as there is nothing that people can say about it as they do not know how much consideration they are putting towards environment. Simply, businesses continue as usual as had been happening conventionally and when this reports is not there, people do not know how much harm businesses are doing to environment and thus the issue of pollution continues. Another issue was raised regarding the unawareness of the impending risks exposed due to environmental degradation. When businesses marginalize social and environmental reports, they tend to increase more pollution according to th respondents and thus when more pollution there are risks associated with it. The question then is, what are those risks and when will we be facing it. Marginalizing social and environmental reports leaves us with this dilemma. If it had been disclosed, then at least some prediction can be made.
4) Are you prepared to adopt the social and environmental reporting? â-¡Yes â-¡No
From our analysis, about 85% (11) said 'yes' that they are prepared to adopt social and environmental reports using the guidelines set by Global Reporting Initiative or disclosing it according to how it suits them as long as it gives the true picture of how their organizations are considerate towards environment and community. However, the reason some of them are not disclosing it was because it is a voluntary disclosure and they do not want to focus on that reporting since it is time consuming and costly.
5) What is the main reason why accountants in Fiji are not disclosing social and environmental reports together with financial reports of a business?
Accountants in Fiji do not disclose social and environmental reports, main reason being, is that it is a voluntary disclosure. Another reason we got was that, accounting for all activities that had impacted socially and environmentally is time consuming and costly as it becomes difficult to as to which ones to include or exclude.
6) How can we enforce accountants in Fiji to make a mandatory incorporation of social and environmental reports with financial reports in annual reports of businesses?
â-¡ Strict mandatory mechanism such as mandatory standards
â-¡ Strict environmental legislations
â-¡ Stock exchange listing requirements
â-¡ Education and training in this topic area
â-¡ Other, please specify?
Choices were given to respondents to choose which suggestion is the best way of allowing business organizations to incorporate social and environmental reports with annual reports. In addition, the choices were not only limited to that, but also asked if there are other ways of strengthening such reporting system. After doing the analysis, we concluded that many respondents (about 31%) suggested that education and training in this topic area is the most appropriate way, followed by having strict environmental legislations, then strict mandatory mechanisms such as mandatory standards and finally, but not the least, is having some stock exchange listing requirement. None of the respondents gave any other suggestions apart from the choices we gave them.
The following points some of the limitations of our research assignment. If these limitations had been tackled, our research would have been more credible and enhanced.
Number of people and companies interviewed
Many people and companies interviewed and given questionnaires were not answered. The reason they said was that, they are too busy to answer be interviewed or answer the questionnaires.
The interviews were mainly based from people and companies from Suva and Nadi. We were not able to interview relevant personnels from other districts in Fiji. However, we tried to get their responses via email, but it was unsuccessful saying that they are too busy with their work.
Studies from other countries
Our analysis and findings were from Fiji, a developing country. The limitation here is that our conclusion is mainly based from analysis and findings from Fiji. If the same questionnaires and interviews were to be conducted in overseas countries such as those developed countries in each continent, the conclusion would have been more universally acceptable.
Our group recommends that:
If the accounting regulators and standard setters such as Fiji Institute of Accountants (FIA) and International Accounting Standard Board (IASB) (or even South Pacific Stock Exchange (SPSE)) makes one of the requirement for business organization to make mandatory disclosure of social and environmental reporting, then that will help reduce further degradation of our environment such as pollution and might bring happiness in the society (fair treatment for all, irrespective of race, gender and minority groups).
Consistent with what Lodhia (1999) said that accountants have important role in promoting social and environmental reporting, we recommend that graduate accountants and accountants who are already in the workforce to be continually be informed about their role. In addition, they need to be trained and encourage them to influence business owners to disclose social and environmental reports despite being a voluntary disclosure requirement.
Consistent with the ethical branch of stakeholder theory, we recommend media organizations to inform people about what practices businesses are considering to ensure their operations are environmentally friendly or even what measures they are taking in reducing environmental degradation. Not only limited to environment, but also their contribution towards community. This will pressure business organizations to report social and environmental reports and thus the perceived benefits might be fulfilled.
In conclusion, we can say that at present not much emphasis has been placed on social and environmental reporting.
With the current rate of detonating environment, it is becoming more necessary for firms to disclose the damage to the environment. There needs to be more firm specific disclosure requirements in international and local standard such as International Accounting Standards Board (IASB) and Fiji Accounting Standards (FAS) so that impacts could be identified and impending risk is thus avoided as much as possible.
From our literature review, we have seen many writings about the positive impacts of disclosing social and environmental reports and so if we marginalize this type of reporting, the opposite is likely to happen, which is the detrimental effects such as more pollution financial loss and exposure to risks. In Fiji, till date, there are no compulsory requirements for disclosure of environmental impacts in the financial reports. Hence, all firms that disclose are normally the ones that do it voluntarily.
Moving on, our analysis and findings show that when we compare businesses that disclose and those that marginalize social and environmental reports, we came to conclusion that there are more detrimental effect of marginalizing such reports and businesses that do disclose it, they get many benefits such as increase in profits and reputation according to respondents. Such detrimental effects were litigation crisis, exposure to unknown risks in future and more pollution.
In addition, many firms are willing to act positively towards disclosure of social and environmental reporting. However, due to lack of guidelines and no mandatory disclosure requirements, many firms become unenthusiastic. Furthermore, measuring harm or benefit to the environment becomes quite unquantifiable and therefore standards and guidelines in this area are quite low.
Finally, we suggest that more specific disclosure requirements are put in place, education and training in this issue should be tremendously and continuously be given to accountants who play an important role for the business and the community at large. In addition, public awareness is very important about how much a business impacts towards the community and environment so that they could stand for their right on deciding what is right and what is wrong.