(Corporate Social Responsibility and the impact it has on society at a global level is studied (discussed/investigated) as we look at whether current regulations are sufficient or mandatory regulations are required in order to sustain our environment in the future.)
Since the 1990’s there has been an increasing trend for companies to provide information regarding the environmental implications of their operations (Gozali et al., 2002). This has arisen due to the increasing importance of environmental issues worldwide, and as such there is increased discussion on whether environmental reporting should become regulated internationally or continue to remain voluntary. The environment disclosures are generally through a sustainability report, which may also include the social and economic performance of an organisation. This is commonly referred to as triple bottom–line reporting, and is tied together closely with the term Corporate Social Responsibility.
What is Corporate Social Responsibility?
While sustainable development is most commonly defined as ‘development that meets the needs of the present world without compromising the ability of future generations to meet their own needs’ (World Commission on Environment and Development – Brundtland Report, 1987), Corporate Social Responsibility focuses on the mission and values of an organisation and its obligations and impacts on a wider range of stakeholders. (CSR (promotes) principles are for sustainability, accountability and transparency regarding the information required to promote positive corporate social responsibility which can be acknowledged (around the world) internationally.) It is argued that organisations have more than just a responsibility to their shareholders, their responsibilities branch out to employees, consumers, the environment and the communities in which they operate. Demand for companies to be responsible and accountable for their actions whether environmental or social in nature is increasing every year, therefore increasing the demand for this information to be disclosed. Users of this information varies from prospective investors (determining future risks of investments to environmental agencies) to determine the risk of investing in a company with potential future risk, while environmental agencies, the local community and government want to ensure organisations are acting responsibly in how their business operations directly or indirectly affect the environment.
An increasing number of Australian organisations are voluntarily disclosing information since the introduction of Section 299(1)(f) Corporations Act as of 1st July 1998 which states company directors are now required to report on their company’s environmental performance. The provision requires that Australian companies that ‘are subject to any particular and significant environmental regulation under a law of the Commonwealth or of a State or Territory’ should disclose ‘details of the entity’s performance in relation to environmental regulation’. This regulation though appears to be quite vague and unclear as organisations views on what is significant would differ. It allows companies to not disclose information on their own interpretation of what is significant and was is not.
This leads us to question why Australia is reasonably unregulated in terms of disclosure, and is not following the lead of other Countries such as France, Denmark and Norway, where there are certain regulations that enforce companies to disclose particular environmental performance measures and environmental issues. Australia has more of an ‘enlightened self-interest approach’ where it is expected companies that do the right thing will boost their reputation, therefore increasing the likelihood of future profits and shareholder wealth. While unregulated, there is some concern as to the reliability of the information organisations are currently voluntarily disclosing. Organisations...