Social Environment Accounting Essays

Social Environment Accounting Essays Social Environment Accounting Paper Social Environment Accounting Paper In particular, contributions have attempted to explore the notion that counting discourse is a medium through which relationships between business and society can be created, nurtured and developed. In our 2000 issue, we expressed our guiding aim through the lens provided by the late Professor Ray Chambers. We repeat it for this issue: What accounting needs is its own Copernican revolution. Too long have accountants been enamored of the products of undisciplined imagination and umbilical contemplation. Too long have they failed to lift their sights to the observables of real world affairs the substance of which it is their business to capture. Accounting is ideal depicted as essentially historical. Hence the use of past prices, in presenting presently dated financial statements. More recently attention has shifted to future, hypothetical, prices. But what about present prices in presently dated statements? Accountants seem to have settled for the rule of the White Queen in Through the Looking Glass: The rule is jam tomorrow and jam yesterday-but never jam today. (Chambers, 1 Bibb: 250-251 Recent research in the area of environmental, financial and management accounting shows that accounting and accountants can participate in these areas of search. This issue attempts to explore these research questions some of which are. ; ; ; ; ; ; ; ; ; What do key organizational decision-makers understand by environmental sustainability? To what extent, if any, do senior managers in a corporatio n address environmental issues? Why are these issues addressed and how do they relate to democratic accountability? How are environmental issues integrated into organizational strategy? What environmental strategies are developed and implemented? What are the driving forces behind corporate policies toward environmental issues? What do key members of stakeholder groups understand by environmental sustainability? How do companies and their stakeholders assess environmental performance? 0155-9982/$ see front matter 0 2004 Elsevier Ltd. All rights reserved. 0. 1 016/j. Cofactor. 004. 04. 004 2 Introduction / Accounting Forum 28 (2004) 1-5 A starting point was that provided by Gray, Jar, Power and Sinclair (2001) who observed that they were unable to find, during an 8 year sample, any unique and/or stable relationship between any measure of disclosure and any corporate characteristic (Gray et al. , 2001 , p. 349). In this issue, extending the Dundee Perspective, Lorraine, Collision and Power add to the growing body of statistical work on the relationship between environmental performance and disclosure characteristics. Their research begins to appraise the bottom line and explores the extent to which corporations are acting in the public interest. Specifically, they analyses publicity surrounding fines for environmental pollution and the commendations related to good environmental achievements to determine whether these information events influence share prices (Lorraine et al. , 2004). In this article, they explore whether good or bad publicity about environmental performance affects companies share prices. To date, they explain that a lot Of the research in this area has been conducted in a US setting and has arrived at inconclusive results. This investigation examines the topic in a UK context to consider publicity about fines for environmental pollution as well as commendations about good environmental achievements to see whether such information influences share prices. The results indicate that there is a stock market response to such news especially for details on fines-?typically up to 1 week after news is published. A cross-sectional analysis indicates that the share price response is mainly a function of the relative fine imposed on the firm; other explanatory variables such as environmental performance news or sector membership were unsuccessful in explaining variations in the market responses they observed. Equally, Accounting Forum has been interested in the interdependencies between social and environmental accounting which extend to the nexus between accounting and information to employees and other relevant parties. In this issue of Accounting Forum, R. G. Day presents evidence concerning the evolution of reporting about employees in the last entry and its relationship with mandatory disclosure rules (Day, 2004). This is an interesting phenomenon, given that the current conceptual framework for corporate environmental reporting has only recently begun to analyses the relationship between voluntary and regulated disclosure. For example, accounting research is only just beginning to examine the relationships between the role that International Standards such as ISO 14001 have had on the reporting function. In Days article, however, he focuses on evidence from the ELK and finds that there is an apparent disregard for Statutory disclosures. Implicit in much of the Corporate Environmental and Social Reporting (CE) literature is the supposition that the existing CUFF framework offers a pragmatic justification for the wider implementation of CE making the task easier and cost-effective. These studies point toward a need for a better understanding of the relationships between reporting practice, democratic theory and the common goods that bring societies together. From another United Kingdom perspective, Hammond and Miles (2004) examine different evaluation systems of UK corporate environmental and social reporting systems. They add to the literature by adopting a qualitative perspective on CSS through an examination of the Kiss Environmental Reporting Assessment (ERA), Business in the Environment (Bib), Oxford Economic Research Associates (EXERT), and Environmental Limited. One research theme that emerges from this strand of the literature is a hypothesis that the voluntary nature of social reporting is a strategic force designed to legitimate corporate activities in the eyes of the community. Consequently, it might be argued that 3 management considers annual reports to be a publicity device to reduce the adverse perceptions that some sections of the community have toward modern corporation (Nee et al. , 1998). From a US perspective, Marty Freedman and Dennis Patten examine the Toxins Release Inventory (TRIG) which was passed into law in 1986 (Freedman Patten, 2004). The Act, they explain, focused on using information as a tool for reducing pollution. They develop the argument of Sonar and Cohen (1997, p. 09) that if investors cared enough about the pollution performance information required under the enactment to punish bad performers, firms would have a market-based incentive to reduce toxic emissions. They then argue that legitimacy theorists suggest that corporations may use largely voluntary financial report environmental disclosures to offset or mitigate the negative aspects of other information or actions. Accordingly, these disclosures could reduce the market eff ect of the TRIG program. In the light of President George Bushs unexpected June 1989 proposal to revise the Clean Air Act, Freedman and Patten identify whether TRIG information and 10-K report environmental disclosures had an impact. Using a sample of 112 firms they offer the conclusion that companies with worse pollution performance (higher levels of size-adjusted toxic releases into the air) suffered more negative market reactions than companies with better performance. However, companies with less extensive environmental disclosures in their 10-K reports suffered more negative market reactions than companies with more extensive disclosure. These results suggest that, while the TRIG information may be inducing market effects that could in turn work as a quasi-regulatory device, financial report environmental disclosure actually reduces its impact. The conclusion is that if concern about the environment is important then environmental disclosure ender the auspices of voluntary regime is clearly inadequate. This issue, then, examines and provides evidence concerning the efficacy of voluntary environmental regimes, further evidence that limitations exist within liberal paradigms is examined in terms of current business and corporate environmental regimes. Juxtaposing the liberal justifications for environmental protection with different conceptions of democratic discourse begins a re-alignment of humanitys attitude toward the natural environment; namely, to begin a discourse through which natures intrinsic value might be revealed. A broader social and environmental audit, arguably, can be developed in conjunction with a theory of language that reconnects humanity with the natural environment. Thus, an aim of this issue has been to consider the democratic role of environmental and social accounting in a transnational age. Another am of the journal has been to explore how humanity might re- connect with nature and how this might be reported to relevant publics. In the communitarian tradition Of Rousseau, who is not fully credited with this insight, a face-to-face community is characterized by greater transparency Han is the typical liberal state, allowing members of communities to be informed about wasteful and damaging resource consumption and the ecological burdens to be borne by all. Recent environmental and social accounting literature suggests that accounting can contribute to environmental discourse through a critical framework committed to investigating the truthfulness and authenticity of the data reported. One area of particular interest that emerges from critical accounting discourse involves the processes through which peoples attitudes are changed and how reform is created. Toward this end, the authors in this volume contribute to an exploration that more governmental 4 regulation might be needed to counter the hegemonic forces of global capitalism. Moreover, recent work on social and environmental accounting exposes future trends which are now becoming evident through globalization. It poses new dilemmas for management and increases pressure on accountants to report to communities on corporate social and environmental issues. The globalization of the commons is never seen is zero-sum terms, but always as unambiguous improvements in the efficiency Of the economic system. Future research must explore the structural and social causes of environmental problems which the current selection of articles have begun to address. In addition, we are concerned with social and environmental impacts on the relationship between management accounting and management information systems. Future directions for social and environmental accounting must explore the links between accounting and information systems as a means to report to relevant publics. Some future directions might take: ; The future role for managers in a changing accounting world where communication to relevant publics becomes more important. Explorations into the communicative relationships between accounting and the moral and physical structures which govern modern advanced communities. ; Critical explorations into the processes of globalization and transnational capitalism as they impact local and regional communities and environments. ; The relationships between critical accounting and reform accounting proposals in a deregulated and internationally harmonious world business environment. Differentiating and exploring the motivations for corporate performance in terms of environmental saints and others environmental sinner (Chain Milne, 1999). Moreover, we canvas the ecological consequences of the dominant accounting framework, which is based on procedural liberal principles and has a tendency to displace investigation into more substantive relationships between humanity and nature. Yet, these developments in accounting, however welcome, have been slow in coming and may reflect a diminished role of accounting with other disciplines areas like law taking over these areas. Further, the failure to keep pace with overseas developments may mean that the information used by policy makers will not express the same intelligence as that used by our mediators further eroding competition. Through a consideration of humanitys anthropocentric stance it is possible to rethink the maxim that nature has intrinsic value, which should be respected. Our guiding theme has been to argue that the natural environment is a necessary condition for humanitys being in the world.