Accounting in Social and Environmental Fields - Essay Example

SOCIAL AND ENVIRONMENTAL ACCOUNTING By Name Course Instructor Institution Location Date Introduction In a dialogue between Ruth D Hines and a colleague, we see her trying to explain the meaning of an organization from the perspective of social and environmental accounting. According to Hines, (1998), an organization is not just designated by the fence or what is enclosed inside by the fence, rather, what comprises an organization cannot just be found within the fence alone. In her quote, “The fence does not designate the organization. We do that…” we find her trying to explain the concept of a pollutant in a nearby river of an organization enclosed by fence as part of the organization despite the fact that the river is not enclosed inside the fence (Hines 1988). The concept she tries to bring out here is on how organizations should take care of the society through its involvement in corporate social responsibility as well as taking care of the environment. For instance, in the quote, she gives an example of a murky brown substance in a nearby river, which she describes as a pollutant to the river. What I understand from her quote is that the river forms part of the organization and it is the responsibility of the organization to recognize this and take care of it. Water for manufacturing purposes is obtained from the river and for the organization to ensure that the river continues to provide water, it has to be recognized as part of the organization and then taken care of. For instance through avoiding transferring industrial pollutants to the river as well as ensuring that all the pollutants are removed from the river (Hines 1988; Flammer2013).This papers highlights the actual meaning of Hine’s quote and uses the concept to help define an organization from the perspective of social and environmental accounting. I will address the issue of accounting organizations and the society by comprehensively basing my arguments of Hine’s work on how she defines an organization in social and environmental accounting. Thesis statement An organization is not defined based on the basis of what is just enclosed in the fence, rather it is defined by people and can even involve things far from the fence. For instance, pollution of the environment or rather corporate social responsibility is also part of the organization. This paper tries to support Hine’s (1998) concept that the fence does not designate the organization, rather people do it. The picture of an organization is created amongst ourselves but how one views or perceives an organization defines the consequences there after. For instance, from her quote, “The fence does not designate the organization. We do that…,” Hines (1998) tries to explain the rationale of the consequences of the murky brown in the river. What I understand is that the way in which the organization perceives the pollutant will determine the future of the organization. If the organization decides to appreciate the river as part of the organization, then cases of polluting the river will be minimized and will help secure the water for future use by the same organization or similar organizations in the locality (Hines 1988). Caring for the society and the environment commonly known as corporate social responsibility in the corporate world is one major aspect of an organization. In reality, organizations that are defined on the basis of what they do to the environment and the society at large are more profitable that those which ignore the society. In the current corporate world, the society ranks companies and organizations based on how well they support projects in the society as well as taking part in corporate social responsibilities such as reducing pollution in the environment. Organizations across the corporate world have recognized the benefits that come along with SCR as a factors that creates organizational sustainability as well as business success. It is common for organizations to leave a trail of negative impacts of some of their operations such as allowing emissions into nearby rivers and hence creating a negative impact on the community in which they exists. According to Hines (1998), an organization that recognizes the environment and the society as part of them can help compensate for the negative impacts. CSR is an initiative by which organizations embrace responsibilities for their actions and inspire positive effects through initiatives and activities that benefit the society and the environment. According to the works by Hines (1998), most people would see pollution as part of the organization (Hines 1988). Initially, most organizations did not consider taking care of the environment as part of them but since the corporate world is changing and organizations are pushing for competitive advantage on their respective industries, it makes sense to recognize the environment as part of the organization. Initially, people were not aware of the importance of recognizing pollution as part of the organization (Munilla& Miles 2005). But die to the many changes that have occurred, for instance, increased competition, organizations are taking it as their responsibility to take care of the environment. This has gone to an extent that CSR activities are being recognized in the financials as part of the ‘recognition’ and ‘measurement’ of financial statements. An organization that recognizes the society and environment as part of them set aside a given measure of money in every financial year for purposes of SCR (Zhang & Swanson 2014). You must not think of an organization as ending at the end of the fence. Initially, people used to picture an organization as what is contained within the fence and that once a person or anything is out of the gate, it becomes a different entity from the organization. According to the quote by Ruth D Hines, people are responsible for designing and constructing reality and they designate the organization. What this means is that the definition of an organization may vary from person to person as the definition lies on one’s view or perception. People decide the things that will comprise or designate the organization. In her works, Hines gives an example of a pollutant in a nearby river and then tries to ask her colleague whether he thinks of it as part of the organization. If such a question is presented to more than one person, chances are that some will say that the pollutant does not form part of the organization whereas others will say that the pollutant in indeed part of the organization (Lehman 2001). The answer to such a question depends on one’s perception of the society and environment as far as an organization is concerned. It is the people in the organization especially the shareholders or the top management who will decide if such a pollutant is part of the organization or not. It will depend on an organization’s culture as some organizations perceive CSR as an asset whereas others just perceive it as a by the way and that they can decide whether to participate in CRS or not (Bebbington, Unerman&O'Dwyer 2014). In the current corporate world, organizations are not just concerned about financial profitability, but their rating in terms of social and environmental responsibility matters a lot. The top companies across the world in one way or another recognize the importance of corporate social and environmental responsibility and this forms the basis as to why they continue to hold competitive advantage in their respective industries. They do not just designate the organization on the basis of what is contained within the fence and the gates, rather they go ahead and accept responsibility of the society and the environment as theirs. Highly reputable companies like Google Inc., Microsoft, and BMW among others are best known for their participation in corporate social and environmental responsibility. At Microsoft, for example, their policies and business practices reflect on their efforts towards making the planet a better place through their responsibility to address social, economic and environmental issues in the current world (Microsoft 2016). For the case of Google Inc., they have one project known as the Google Green which is a corporate effort by the organization on the efficient use of resources as well as supporting renewable power (Google Company 2016)’ These organizations are among the world’s largest and most profitable but they do are not just confined to only this. They have integrated measures that promote good corporate citizenship into their vision and mission statements as well as in the day to day business practices and models. The aspect of considering pollution as part of an organization is termed as social responsibility. Social responsibility is an ethical framework that states that an entity, either an individual or an organization has an obligation to act for the benefit of the society. For instance, in the quote given by Hines (1998), the murky brown content in the river is a pollutant that the nearby organization should wary of and then go ahead and deal with the issue. The organization uses ware from the river in its industrial department, an indication that the organization depends on the river for its upkeep(Hines 1988). By this concept, the people in the organization should thus consider the river as part of the organization. Similarly, taking care of the same river is also a social responsibility of the organization. If I benefit from something, I should also payback and this means that the organization should ensure that is does not dispose of pollutants to the river. Likewise, it should also take action and remove all pollutants in the river as a way of taking care of the environment and the society in general. This is not the only way such an organization should be involved in social responsibility, other ways include: giving financial support to relevant bodies, minimizing pollution, use of renewable sources of energy, minimize carbon pollution among other strategies (Orlitzky Schmidt &Reynes 2003). Ruth D Hines and her colleague are standing somewhere and are looking down into a valley. They see buildings enclosed in a fence and people inside the fence and outside the fence, there are trees, hills and a river. In such a scenario, one may think of the people and the building enclosed in the fence as the only components of the organization as this depends on people’s perception. In reality, the tress, hills and the river passing outside the fence are also very crucial components of the organization, but this depends on the culture of the people inside the building. When I talk of people, I mean the owners of the organization and the top management. In the past, most organizations were only worried of what was enclosed inside the fence, such as tress in the compound as they could make the organization beautiful and more attractive. However, things changed based on changes on business models and customer needs as the consumer nowadays looks at complex issues when rating an organization (Jacobsen 2016). One of these issues are organization’s level of social and environmental responsibility. For example, a customer who finds a lot of wastes pollution outside the gate of an organization may term such an organization as socially and environmentally irresponsible and this may affect its profitability. This has forced organizations to change their culture and value corporate social responsibility as part of their mission. Thus, today’s organizations would consider the trees, rivers and hills outside the fence as part of them and would take care of them at all costs (Juholin 2004). The top management of an organization in conjunction with the board are responsible for deciding the things that will form part of the organization. Gone are the days when the fence used to define an organization as a lot has changed on the corporate world (Daily, Dalton &Cannella2003). For example, how an organization takes care of the surrounding environment determined its long-term profitability. Customer tastes, preferences and needs are changing and thus has forced organizations to consider defining and designating the organization. In the quote by Hines (1998), “The fence does not designate the organization. We do that…” it is very clear that an organization is a very complex term to define as its definition may vary from one person to another. Some may define it based on what is enclosed inside the fence and inside the buildings, whereas, others may define it based on its involvement in social and environmental responsibility(Hines 1988). The picture in people has been changed gradually by the changes in the corporate market and this has forced almost all organizations to be involved in corporate social responsibility in one way or another. What is believe is that the nature of today’s consumer is very complex and will not just consider prices or quality of products or services offered, rather, their rating of the organization will go beyond what is contained inside the fence (Kolk&Perego 2012). Conclusion In conclusion, I support Hines (1998), “The fence does not designate the organization. We do that…” in that the organization of today is not just defined on the basis of what is contained inside the fence, rather what happens in the society forms part of the organization. This paper has described deeply the meaning of an organization from the perspective of social and environmental accounting. It has been found out that an organization is not just defined on the basis of internal models and components, rather other external factors form part of the organization socially in today’s corporate world. In the past, organizations did not recognize the impact of corporate social responsibility, but in the current world, CSR has become part and parcel of what organizations do to an extent that CSR activities are included in the financial statements. Examples of organizations well known for social and environmental responsibility are; Google Inc., BMW and Microsoft Inc. based on the benefits that come up with recognizing the environment and the society as part of an organization, I hereby support Hines (1998), argument and my thesis that an organization is not just designated by the fence. Bibliography Bebbington, J., Unerman, J. &O'Dwyer, B., 2014, Sustainability accounting and accountability, Routledge, Abingdon-On-Thames. 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