Corporate Social Responsibility Reports - Essay Example

? CORPORATE SOCIAL RESPONSIBILITY REPORTS Discussion Introduction Corporate social responsibility is a commonnotion adopted in business models that alludes to some form of self-regulation by corporate systems. It is a system which is built in and self regulating through which businesses ensures frequent evaluation to ensure that it fully complies with the law, international norms as well as ethical standards (Moir, 2001, pp. 1-4). Nevertheless, though guided by the CSR, business firms are profit driven and as such would overlook the self-regulation by CSR for the sake of profit maximisation (Friedman,1970, para 1-10). Business enterprises and business proprietors are engaged in trading activities with the motive of maximizing profits or gains. Besides, they are expected to uphold integrity and business ethics in transacting their businesses for rightfully gaining. However, in understanding profit maximization as the traditional maxim upon which organisations ran, the modern day maxims dictates that organisations must be concerned of environmental as well as other social issues that surrounds them as dictated by social contract. They are expected to abide in laws governing the trade activities and as such avoid malpractices such as tax evasion, manipulation as well as dishonesty. These are all common practices that business entities or individuals in businesses engage in for maximizing personal or corporate gains. Dishonesty and tax evasion are equally very deliberate acts that persons or businesses engage in order to avoid sharing on the profits realized (‘corporate watch report’, 2006, p. 3). However, it is worth noting that legal frameworks exist and are meant to enforce ethics and morality in trading practices although records show increasing trends in malpractices as discussed. Moreover, it is the responsibility of the CSR reports to inform shareholders as well as the other stakeholders such as the public on the environmental performance as well as corporate social performance of a business organisation (O’Riordan and Fairbrass, 2008, p. 746-748). In fact, there are many similarities between the stakeholder’s theory and the legitimacy theories concerning CSR reporting. They are all meant to ensure that organisations run in respect to social norms as well as rules and that the stakeholders are treated distinctly from the organisation itself. Besides, all stakeholders are to receive similar treatments within the organisation and that management is expected to run the organisation to the benefit of all stakeholders. However, it is not obvious that these reports effectively serve on this purposes and this informs the reason of this report. This paper intends to evaluate the effectiveness of these reports in serving the above purpose as against as just mere ‘vehicles’ adopted for public relations among trading organisations. CSR from the Perspective of Accounting Theories Positive theories are adopted with a motive of explaining or predicting the behaviors of corporate as against prescribing the manner in which such organisations ought to behave. The theories revolve around the common notion that the society and corporate have mutual influences where the society influences the corporate performance while the corporate equally influences on the society (Rodriguez and LeMaster, 2007, pp. 370-385). It implies that organisations are distinct constituents of the larger social systems within which we live in. analyzing economic issues as is done within the CSR brings on board the political theories because the social, political as well as institutional frameworks defines environment in which economic activities by corporations take place. This therefore revolves around integrative theories such as legitimacy theorem as well as stakeholder’s theorem. The legitimacy theorem constitutes the formal and informal constraints to which accounting procedures must adhere. The formal constraints comprise of legal frameworks, accounting standards as well as professionalism, which instigates mandatory disclosures. On the other hand, the informal legitimacy theorem represents self-imposed frameworks of behavior and conventions governing the societies within which organisations run. This is because organisations strive to operate within the predefined rules and regulation governing the societies within which they operate. The foregoing theoretical frameworks dictate that organisations behaviors are influenced by such theories while undertaking accounting and reporting procedures. Account users who rely on accounting records value environmental information as basic in organisational management. However, a report from a study to investigate whether the Australian companies embrace reporting environment information objectively found a shocking revelation. According to the report, the last decade has found Australia increase environmental legislations majority of which requires that companies in trade to disclose environmental information in financial reporting. However, the disclosing of environmental information by the companies in Australia remains voluntary. Nevertheless, an UIG legislation in1995 is the only legislation that is known to have been specific in requiring some environmental information by trading organisations. This therefore implies that within such a framework, companies have the liberty of choosing which information on environment to disclose within the reports and as such, they are likely to reveal only the favorable information (Deegan and Rankin, 1996, pp. 50-51). In the US, firms increasingly provide CSR report on voluntary basis though little of their inspiration is known. Mahoney and team undertook a study to understand the motivation through green washing and or signaling within corporate within the US. Concerning signaling, the report found out that many of the firms produce CSR reports to signal on their commitment to corporate social responsibility. This therefore reveals that many such companies as having great commitment to environmental as well as social records would be more willing to issues outs such reports of CSR. The green washing strategy is however used in disguise where firms intend to pose as good ‘citizens’ when they have or do not have such environmental records. The study found out that majority of such firms which issues the voluntary CSR records often have higher responsibility when analyzed about environment. They therefore adopt the mechanism of voluntary reporting in order to provide information to the corporate as well as the shareholders to such organisations (Mahoney et al, 2013, p. 350). This is however against the provisions of ethical theories, which supports fair and rightful treatment of all stakeholders. The ethical theories come into play within CSR reporting through upholding socially acceptable behavior while reporting to the stakeholders and the public. Hooghiemstra (2000, p. 55) on the other hand evaluates the adoption of corporate social reporting as a toll that is being used by organisations for management of impressions. In his study as to why organisations adopt CSR, he adopts the analysis of legitimacy theory as is currently adopted and utilized by trading organisations. This therefore revolves around legitimacy theories, which requires corporations to exercise powers, granted rightfully. According to analyses of the theory, the organisations adopting the CSR are often influenced by public pressure through media especially as result of major incidences involving the social environment. For instance, he points out that many organisations would adopt the CSR for the purpose of altering negative perceptions by the public because of prior social incidences. The legendary oil spill ‘Exxon Valdez’ is sighted in this regard where many organisations would therefore embrace the CSR defensively(Lopez, 2009, para 1-4; ‘Environmental disasters’ 1998-2013, para 6). Some firms, for management of corporate impressions, also adopt corporate reporting as found out by Merkl-Davies and Brennan. In an investigative study on the adoption of CSR for management of rationality of the managerial impression as adopted by trading organisations, the corporate reporting is revealed to be used for creation of public image. Impression management has been in use by many organisations with the intention of presenting themselves towards the public differently against what they actually are. Accounting researchers have been shown to adopt the impression management strategy in corporate reporting for reasons of distorting the readers’ perceptions on achievements of the organisations on environmental as well as social relations (Merkl-Davies and Brennan, 2011, pp. 415-416). Conflicts between the companies, the societies living around as well as law enforcement agencies are common scenes due to the malpractices by trading companies. Ethics require that these companies go beyond the confines of law as provided for within the structures of governance within a nation to stop such malpractices and in the process improve on social, human rights as well as environmental well being. Besides, the individual organisation players in an industry has a social responsibility of ensuring that risk management as well as organisational learning are brought into attention, a fact that increasingly troubles many (Harjoto and Jo, 2011, p. 45-54). It is of great importance to have the companies involved in different capacities understand their role in management of the environment, which besides having the above discussed implications, has direct implication on social lives. Transnational activism as well as civil society organisations’ efforts has been greatly influential in shaping the corporate social responsibility of the firms through direct involvement and formulation of such principles as the Valdez principles. These principles have been effective in guiding policy makers in decision making regarding regulatory mechanism towards the unethical behavior exhibited by such companies (Utting and Ives, nd, p. 11-13). The implications here are that any company or such player within an industry must comply with some regulatory framework in order to function effectively and efficiently. In yet another report on deceptive corporate reporting, impression management through corporate reporting has been shown to be adopted by organisations with a motive of manipulating shareholders as well as the public on matters of financial performance by an organisation as well as the environmental performance. This is line with wealth maximisation maxims as they guide corporate management as examples to instrumental theories. Discretionary accounting reporting has therefore the capacity to undermine the quality of reported financial records and hence have an overall impact of rendering such reports untrustworthy or unreliable. The deceptive nature of such information as reported by the organisations would result to unwarranted support by public or donors as a result of the wrong impressions created through the corporate reports developed. This therefore shows that corporate reporting forms a major attribute to accounting research and has great power in persuasion in impression creation (Brennan and Merkl-Davies, 2013, p. 110). In conclusion therefore, the above discussion points to the proposition that the corporate reporting fails to effectively serve as reliable to be used for corporate analysis on environmental as well as the social reporting of an organisation. Through multi-dimensional analysis, different researches have been done to ascertain the reliability of the corporate social reports that majority of firms produce and found that many such reports fail to be authentic and are produced with a particular motive; often to paint a different picture to the public or shareholders concerning the organisation (Claydon, 2011, pp. 405-406). The image often forms the basis on which many such reports are prepared and hence the outcome of the reports is deception in regard to environmental performance of the organisation. It is however to be noted that not all organisations produce corporate reports with such motives and thus corporate social responsibility reports should be encouraged within trading organisations. Bibliography Brennan, N. M. and Merkl-Davies, D. M. 2013. “Accounting Narratives and Impression management”, In: Jackson, L., Davison, J., and Craig, R. (eds.), Routledge Companion to Communication in Accounting. Routledge, 109-132. 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A. and Jo H., 2011.Corporate Governance and CSR Nexus.Journal of Business Ethics 100:45–67 Hooghiemstra, R. 2000. “Corporate communication and impression management – New perspectives why companies engage in corporate social reporting”,Journal of Business Ethics, 27(1-2): 55-68. Lopez A., 2009. 20 years on from Exxon Valdez: what progress for corporate responsibility? Available at:< http://www.ethicalcorp.com/communications-reporting/20-years-exxon-valdez-what-progress-corporate-responsibility>(Accessed on 10 December 2013) Mahoney, L.S., Thorne, L., Cecil, L., and LaGore, W. 2013. “A research note on standalone corporate social responsibility reports: Signaling or greenwashing?”,Critical Perspectives on Accounting, 24(4-5): pp. 350-359. Moir, L. 2001. “What do we mean by corporate social responsibility?”,Corporate Governance, 1(2): 16-22. Merkl-Davies, D. M. and Brennan, N. 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