Corporate's Social Responsibility Accounting Beetween Theory and Reality

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Presented by: Srihadi W.Zarkasyi


The growth in environmental accounting research and intersest in the last few years has been little short of phenomenal.For those of us with a long-standing interest in such issues, it is easy to get swept along in the euphoria of seeing environmental issues brought to centre stage in business and accounting debates. Little more than decade ago, any scholar wishing to review the literature concerned with accounting and the natural environment would have been faced with relatively straightforward task. Beyond the new significant and seminal papers (see, for example Dierkes and Preston 1977, Ullman, 1976) environmental issues tended only to surface as one of the themes within the Social Accounting and Reporting literature (Gray et all 1996, Mathews 1997 for summaries). The change in the last ten years has been little short of phenomenal. Consequently, it would be easy - especially for those of us who have been involved in the area for some years - to get swept along on a tide of enthusiasm now that environmental (and, latterly, social) accounting appears to be occupying an increasingly central place in accounting debate. For years accounting scholars have bemoaned the fact that Accounting (and Finance) teaching and research have largerly ignored environmental matters. Now this has changed and there are few aspect of accounting in which environmental concern is not explicitly recognized as important. Most research in corporate environmental management and environmental accounting indicate a substantial gap between the espoused environmental attitudes of business leaders and the actual practices of their companies. The primary purpose in writing this paper is to investigate problems and prospects concerning Corporate Social Responsibility, and discuss: (1) Business Interaction with Society, (2) Accountability and Transparency, (3) Environmental Issues and Financial Statements, (4) Financial Markets and Social or Environmental Disclosure, (5) Accounting, the Environment and Sustainability, (6) Environmental issues and Auditing, (7) Social and Environmental Reporting, (8) “Greening Influences” on Companies, Managers and Accountants, (9) Accounting Education, (10) Conclusions

1.Business Interaction with Society

The nature of relationship between business and society is an over-arching question and it is important to note that interpretations of social behavior will depend upon the perspective adopted. A strong view is that business carries out the economic functions of society (Wartick and Wood, 1998) and that, in free market economies, in carrying out these economic functions, business has some forms of responsibility to society. There are, however, competing perspectives and views that conflict with this dominant perspective. The liberal economist would say that the only forms of responsibility are “economic”, whereas some critical theorist would state that any form of what might be termed “social responsibility” is there to maintain the legitimacy of system. Whether or not business should undertake activities that may be regarded as pro social and the forms that responsibility should take depend upon the perspective adopted. Those who adopt “neoclassical” view of the firm would believe that the only social responsibilities to be adopted by business are the provision of employment and payment of taxes. This view is most famously taken to the extremes of maximizing shareholder value and reflected in the views of Milton Friedman. The need for companies to undertake activity that might be regarded as socially responsible has been discussed in the literature and has been a topic of academic study for decades (Ullman, 1985).

Cannon (1992) discusses the development of corporate social responsibility via the historical development of business involvement leading to a post war re-examination of the nature of the relationship between business, society and government. He...
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