Social & Environmental Reporting in Australia

Topics: Melbourne, Companies based in Melbourne, Environment Pages: 9 (2359 words) Published: October 5, 2006
Part A
Using examples from SER research literature, explain the potential motivational factors behind such reporting.

The reporting requirements of organisations in the past were limited to only disclosing its financial performance and position to its stakeholders. However these objectives have been altered with an increasing number of entity's realising that there is a need to be socially and environmentally conscientious. This new responsibility has led to the need for social responsibility reporting. (Deegan, 2005, p.1100)

Social responsibility reporting is the disclosure of information regarding the performance of organisations dealings with its physical and social environment. Social responsibility reporting is required by organisations in order to provide disclosure to its stakeholders, communities, clients, governments and employees. The main purpose of social responsibility reporting is in order to highlight the social and environmental impacts that are the result of an organisations operations and practices. (Deegan 2005, p.1100)

Only a minimal level of disclosure in regards to social and environmental impacts of an organisation's operations is required by Australian accounting standards and corporations law. Therefore, any SER provided to stakeholders would exceed the legal requirements for the organisation. Therefore, with this in mind, why would companies wish to disclose SER at an additional unnecessary cost? In determining the answer, an examination of SER motivational factors is required. (Deegan 2005, p.1110)

Social environmental reporting literature suggests motivational factors as to why organisations may voluntarily disclose information about their social and environmental performance.

One reason why an organisation may decide on SER is due to the concept of legitimacy theory. Legitimacy theory provides that an organisation must comply with society's expectations if it is to continue to operate successfully. Society is becoming increasingly socially and environmentally mindful, and a failure to disclose such information may result in a company being unable to attract sufficient resources to continue its operations. (Garg 2006, p.497)

Another reason may be due to the concept of Economic interest theory. SER is important for an organisation as Economic interest theory determines that the managers are focus is on increasing personal wealth. The assumption which is made in regards to economic interest theory is that entities will voluntarily disclose social and environmental reports if it leads to maximisation of managers' personal wealth.. (Garg 2006, p.502)

Managing a particular class or group of shareholders may be another possible motivation for organisations to SER. The stakeholder theory provides that an organisation needs to satisfy its most powerful stakeholders, such as governments or banks. A failure to satisfy the powerful stakeholders may result in a bad publicity, fines or loss of capital. (Garg 2006, p.501)

Part B : Review of Social and Environmental Reporting of Companies

Retail industry company: Coles Myer Limited

Coles Myer Ltd is one of Australia's largest retailers with more than 2,600 stores throughout Australia and New Zealand.

Due to Coles Myer being such a power house organisation in the retail sector of Australia, it is vital that they maintain an untainted reputation and a friendly public image. Social and Environmental Reporting allows Coles Myer to demonstrate the positive attributes of the organisation. Through SER, Coles Myer Ltd is able to continue to portray a good public image, and therefore encouraging new customers, and the return of existing customers. An increased number of customers may increase profitability, financial position and shareholders wealth by increasing share prices.

Along with the disclosures which are required by the accounting standards and corporations law, Coles Myer produces a social and environmental...

Bibliography: Texts & Journals
Deegan, 2005, Australian Financial Accounting, 4th edition, McGraw-Hill, NSW, Australia
Dixon R. & Mousa G. & Woodhead A., 2005, ‘The Role of Environmental Initiatives in Encouraging Companies to Engage in Environmental Reporting, ' European Management Journal, vol. 23, issue 6, pp.702-716.
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