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The perception of social accounting is going up in credit & erudition. It is now one of the basics of high-quality exercise in corporate social responsibility. Corporate Social Responsibility is also known as CSR. A growing trend towards CSR amongst the corporate can be felt. The main aspect of this accounting is, t accounting is basically a concept but the principles of social accounting are a frame work methodology, into which impact evaluation can fit.
Social accounting is also known in various names. These are social and environmental accounting, corporate social reporting, corporate social responsibility reporting, non-financial reporting or sustainability accounting. This is actually a procedure of communicating in which the social and environmental belongings of organisations (NGO, Charities, may be Government agencies etc.) are included. This is a way by which an organisation can express the level to which it meets its societal or ethical goals.
Social accounting in respect of Harvard University:-
Any business accountant of an enterprise or any organisation can describe the conditions of that organisation. Social accounting is that kind of movement by which everyone can analyze the same thing as like a business accountant. The main aim of social accounting is to produce data, indices and other information to help everyone about an organisation.
There are some key factors in social accounting by which everyone can understand the difference between social accounting and conventional accounting. Main focus of social accounting is mainly on issues which can develop a correlation in between society and organisation. In maximum aspects social accounting is not focussing on financial data but sometimes it needs financial data for making a report. The purpose of social accounting is to be liable to a large number of stakeholders. With the help of these reasons social accounting may be described as-
"Social accounting is the voluntary process concerned with assessing and communicating organizational activities and impacts on social, ethical, and environmental issues relevant to stakeholders". (Crane and Matten Material on Social Accounting- Page195)
With the help of social accounting it is clearly understandable that organizations or companies manipulate their outer environment during their performance and should consequently account for these belongings as part of their standard accounting practices. The intelligence of the accounting is nearly closed to economic concept of externality. It offers a substitute explanation of important economic bodies. It has a prospective to disclose the apprehension between following economic profit and chase of environmental and social objectives.
Reasons for taking over social accounting by organizations:-
The principle of social accounting for accountability is intended to sustain the search of society's aim. These objectives can be defined in the term of social and environmental desirability and sustainability. The society is seen profit in various ways with the help of the implementations of social and environmental approach to accounting. Such as, it honours stakeholders' rights of information, it balances corporate power with corporate responsibility; it increases transparency of corporate activity; it identifies social and environmental costs of economic successes.
To sustain and make easy the success of an organization's own idea, social accounting is considered mostly for the standard of management control, because this is concerned with self reporting on a systematic way which is considerable. But all the individual reports are frequently referred and those are known as societal audits. After implementing this kind of social accounting the organizations also benefitted in various aspects. It increases information for making a decision; it is more exact product; it is enhancing illustration supervision as well as public relations; it is identifying social responsibilities; and also it is identifying market development opportunities.
For these given reasons everyone can understand that after taking over the social accounting the corporate world or the organizations can reach to a profitable condition. So anyone can suggest to a corporation to take over an improved social accounting.
Qualities of social accounting:-
The qualities of social accounting depend on its initial purpose and perspective. There are eight issues which are projected by "three most important figures in social accounting as the key principles of quality of social accounting. The eight issues are 1) inclusivity, 2) comparability, 3) completeness, 4) evolution, 5) management policies and systems, 6) disclosure, 7) external verification, 8) continuous improvement" (Crane and Matten Material on Social Accounting- Page199).
If the social accounting is good then all the views and accounts of all main stakeholders will be reflected. In good social accounting the communication is mainly two way communications with the main stakeholders. Good social accounting compares different period's data with other organizations and makes relation with external standards. In good social accounting all the various areas of organizations are shown. In good social accounting changes is also happened due to changing of stakeholders expectations. Actually good social accounting has a tendency to make over the good aspects of stakeholders. A good social accounting always makes correlations in between system and procedures to control and estimate the effective institutionalization carefully. With the help of good social accounting all stakeholders can get a brief description about all the accounts and reports. They can get all these reports in the basis of their needs. In all characteristics of good social accounting one of the most important characteristics of social accounting is to support the continuous improvement. That means a good social accounting always encourages an organisation to develop and increase its improvement continuously and it also helps an organization to enlarge its area of assessment.
There are main three standards which are established or prepared for making social and environmental report. These are 1) Global Reporting Initiative (GRI), 2) SA8000 and 3) AA1000S.
1) Global reporting initiative is actually famous as GRI. It was started in the year 1997. It was tying up with United Nations Environment Programme (UNEP) to work on social accounting for various organizations. The main aim of GRI was to prepare the report about all the steps which are related with economic, social and environmental sides of an organization. In one word the main motto of GRI was to make a sustainable report of organizations. GRI reaches to a success in making of sustainable reports.
2) SA8000 is a social accountability standard. It was also established in the year of 1997. It covers a number of key labour rights. Working time; strained work; unfairness etc are some examples of key labour rights. With the help of these key labour rights SA8000 could make a report and all the examination, making facilities can be authorized as SA8000 compliant. SA8000 was developed through consultation with a large number of stakeholders including workers, employers, NGOs and unions. In the year of 2006 it had authorized approximately 900 facilities in 50 countries.
3) In the year of 2002 there was another standard established. This was the first attempt to give a logical and healthy source for assuring a public report. It was making reports with the help of the principles of accountability and stakeholder engagement. The standard was specially intended to be reliable with the GRI sustainable reports.
Approaches and contrast to Social Accounting between two Companies.
We are comparing Social Accounting approach between TATA Motors and KIA Motors.
TATA MOTORS LIMITED (TML)
TML is a well established and well running company in India. TML was founded by J.R.D TATA in the year 1945. TML is biggest automobile company in India. It is the leader in commercial vehicles in each sector. In 2008 revenue of TML was USD 16 billion after acquirement of British automobile brand Land Rover and Jaguar. TML is also the designer and manufacturer of the iconic Tata Nano, which at INR 100,000 or approximately USD 2300, is the cheapest car in the world.
KIA MOTORS (KMs)
KMs is recognised as a second largest automobile company in South Korea. It is a South Korea's oldest car company; in the year of 1944 KMs had started their business in manufacturing steel tubing & bicycles. KMs also expanded business in international market. In 1992, KMs America was incorporated in the United States. KMs have also shown an interest in European market and currently it is one of the fastest growing companies in UK.
The question arise here, how these two companies following these aspects as a part of Global Reporting Initiative. How actively and accurately they are meeting the requirement of Social Accounting.
Environmental Responsibility followed by TATA Motors & KIA Motors.
Most of the reputed companies' worldwide concern about the climate changes as a global. And the survey shows considerable part of climate changes is due to industrial expansion as they are the most significant source of emitting CO2 in the environment.
As Tata Motors is also running a massive automobile business, reducing CO2 emissions and increasing fuel efficiency, is the most important and robust challenge for the TATA Motors management. Another big issue is to make an Eco-friendly product which produce less amount of CO2 emission. As a part of that TML is taking reliable steps. Most of the TML engines are uses diesel as a fuel, which produces 40% less CO2 compare to gasoline engines. As TML committed to produce environmental friendly products, as a part of it, on 29th of March 2005 Company has announced the bio-diesel programme jointly with Indian Oil Corporation, considering the idea of making bio-diesel project, which involves Hybrid Electric Car, Hybrid bus, Electric Bus, Fuel cell Bus, Bio- diesel Engine and many more. TML has also upgraded quality of range by four and six cylinder engines to meet the International Emission Standard, with the help of popular engines consultant like Ricardo and AVL. Also the green planate project is being conducted by TML after planting the trees in the villages around the industrial areas and less pouring industrial wastage in the river or sea. Recycling is also the wide and should consider factor for environment aspect. TML follows the End of Life Vehicle Treatment and Recycling policy, under the End-of-Life Vehicle (ELV) regulations in the UK, contract with cartakeback.com Ltd, who is providing facility to customer to return their car back to TML after end of the life of the vehicle ensuring responsible disposal of ELV's.
KMs carries out its due responsibility as a member of the planet we all share.
As said by KIA MOTORS:
"More often than not, we only appreciate what we no longer have. For the past century, human beings have lived only for ourselves and only for the present. We now know, however, that the Earth does not belong to us alone. It is the one and only habitat we have to leave behind for our children and grandchildren". (http://www.kiamotors.com/motorsdown/kiaengdown/pdf/2009%20SR(English).pdf Page no. 11)
As mentioned, at the rank of second largest automobile company in South Korea. KMs is also concern about the climate changes as global and taking considerable and improving part in reducing CO2 emission through different activities.
Like KMs believes in Economical and Ecological driving strategy. KMs Knows that up to 15-20% of CO2 emission in the environment because of cars worldwide. In respect of it KMs tends to introduce Economical but more importantly an Ecological cars in near future. The next project of KMs is to make zero CO2 emits cars called fuel cell electric vehicles (FCEVs) and Hybrid electric vehicles (HEVs), in near about 2012. KMs is using eco-friendly recyclable materials by more use of non-toxic material than toxic material for increasing eco-efficiency, and also using many recyclable materials during manufacturing process. End-of -life vehicle policy is also conducted by KMs. In November 2008, KMs was accorded the Prime Minister Award for Corporate Leadership in Resource Recycling. And also The Corporate Leadership in Resource Recycling Awards (sponsored by the Ministry of Environment and the Korea Environment & Resource Corporation [ENVICO]). There are too many other programmes is being conducted by KMs. Like raw material input in which KMs tends to lesser the uses of steel materials, figures shows a considerable reduction from 2003 to 2008, from 240kg to 180kg respectively. For the process of painting and thinning, KMs has introduced automotive rob bells to reduce the wastage. Wastage figures also show the remarkable reduction stars from 2003 to 2008, 231 tonnes to 208 tonnes respectively. Another last but more interesting step taken by KMs is Environmental impact of employee commuting to work and business travel. The main object of this system is, KMs encouraging their employee to use public transport instead of private vehicles for day to day transportation and also for the business travel. In Korea 28% of employee said they use the commuter shuttle bus service, while 21% said they commute by public transportation or by foot. Even though KMs expected to increase the volume of the way employees commute for the work, through encouraging their employee by different ways.
Social Responsibility followed by TATA Motors & KIA Motors.
As a tradition of the Tata Groups, Tata Motors understand and committed to give significant participation in Corporate Social Responsibility.
As said by J.R.D. Tata
"No success or achievement is material terms in worthwhile unless it serves the needs or interests of the country and its people and is achieved by fair and honest means." (http://www.tatamotors.com/CSR-09/pdf/tata-dna.pdf).
TML is investing money in different Corporate Social Responsible projects which deals with improvement in quality of life of people. The key parts of these projects are health, education, employability and environment.
During the year 2008-09 TML has done various developments as well as arranged activities for better health as a social responsibility. TML has worked on curative and preventive health services. The community service division of TML works via different entities for improving the condition of nearby villages. It supports economic independence with the help of self initiated cottage industries. There are various ways by which TML contributes the society. Such as Road construction, Rural health, Education, Water supply, Family planning etc.
TML performs actively for better health as a social responsibility. TML has arranged health checkups and health awareness talk for their employees as well as for their family members. It provides full medical coverage which includes medical dispensary, in-house medical consultant, free medical consultant and subsidies for hospitalisation and treatment by private consultants or specialists. It helps rural community by providing medical care by company doctors and company trained village health workers. TML have been providing information and consultation on family planning which has resulted in stabilised populations. They are also constructing sanitary facilities to promote sanitations.
As a social responsible company TML also provides support in the area of education. TML helps in the constructions of schools. Except this the employees of TML are working as an advisor to the school students for providing them an overall development. They are introducing many scholarship schemes which offer financial support to bright young students including from tribal communities. Including simple financial support TML also helps by moral and emotion to the needed students.
As Social responsibility TML also organises various programmes to create employment among society. TML supports employment of youth and women through many programmes. The motto of the company is to provide opportunities to beneficiary to earn income on their own according to their respective backgrounds. TML also provides the technical tuitions to young generation with the help of their plant division. It also collaborates with some technical institutes to provide the industrial understanding and employment skills to train the students. TML also performs entrepreneurship programmes and appropriate training for both males and females. As a result of this activity TML has produced many entrepreneurs who are running their business successfully.
KMs supports the Millennium Development Goals described by United Nations development Programme. As a socially responsible company KMs supports in many social works. Like reducing poverty and hunger, try to give a universal primary education, gender equal opportunities, making women independent, control on child mortality rates, recovering maternal health, and fight with heave deceases such as HIV Aids, Malaria etc. and global partnership for overall development of the society.
Employees of KMs are taking part in different local community service actively, such as they are involving as volunteers at farming communities, charity work, socially benefit facilities, outing with disable persons as well as they are also doing cleaning and environment protection work.
KMs has arranged various programmes to remove poverty, reducing child mortality and for improvement in maternal health. KMs also taking care on Nutrition program to safeguard children's health. Every year KMs provides US$60000 to POMA foundation. It carries out food assistance programme as well as they are aiming to prevent deceases in children who are five year or under. Also runs an educational programme for the mother to improve the healthy eating habits preparing nutritionally balanced meals to safeguard the children's health. Another remarkable social activity conducted by KMs along with the rest of the Hyundai-Kia Automotive was Relief fund for regions hit by the 2008 Sichuan earthquake. KMs delivered 16.22 million Yuan and relief vehicles to those areas hit by the Sichuan earthquake. As a part of Global Partnership for Development, in November 2008 KMs Middle East & Africa Regional Headquarters has organised a ceremony for Kia Charity & Care, including Saudi Arabia, Syria and Morocco. The main object of this programme is to set up a joint scholarship funds for illiterate students, and also try to help the charity organisations by supplying relief vehicles.
Hence, at the end of the report, it is clear that both companies (i.e. TML & KMs) are taking reasonable steps and continuously improving themselves to maintain Social Accounting aspects as a sustainability of the business. There are many similar policies and procedures which are being conducted by both companies. For example, End of Life vehicle policy as an environmental responsibility. And as a part of social responsibility, both companies have done remarkable work, for example, helping people through different charitable trusts, caring children health, performing green planet policies. While on the other hand there are few contrast as well between two companies. Like TML seems more concern about manufacturing eco friendly product which is good but somehow they are slightly overcoming or not controlling an environmental affects in the way of production procedures. Probably, apart from this both companies showing sustainable over view in respect of maintaining Social Accounting as global standard.