Tag Archive | Corporate Social Responsibility

Environmental costs – Chevron in Ecuador.

(Photo from Economist.com/AP)

In one of the modules I teach at university, I try to introduce undergraduate accounting students to several important issues facing businesses. On issue is sustainable business.  And what has that got to do with accounting who might ask? Quite a bit actually. For one things accountants are good at collecting and reporting on information – these skills can be applied to monitoring waste, energy, water usage as well as evaluating sustainable investments.  But maybe a more important point is that a sustainable business is one which is likely to be around in the longer term – it is thinking about how environmental issues might affect its costs and revenues.

On major cost for firms that night not be that good on environmental issues is legal fines and other litigation costs. A piece in this weeks Economist (see here) tells of a $9 billion fine levied against US oil firm Chevron by a court in Ecuador. There seems to be a bit of a background story about corruption and so on, but the sheer size of the fine would put  a big dent in any firm’s profits.

(In-)Corporate(d) Social Responsibility

Corporate social responsibility (CSR) is a term used to describe how a business sees its responsibilities towards things like its workers, the environment, the community, customers and so on. If you look on the website of most large businesses, or in their annual reports, you’ll find something about the how the business operates in a responsible manner. Many such businesses have a separate CSR manager who reports directly to the board of directors. Mike Brooks writes in the June (2010) edition of Financial Management how some companies don’t adopt this approach, but instead have CSR embedded throughout the company. A big advantage of having CSR embedded throughout a business is that projects or plans need not be evaluated separately from a CSR perspective. Instead,  being a socially responsible organisation is embedded in all roles and business processes.  This method, according to Brooks, moves CSR away from a once a year mention in the annual report to something that’s hard-wired into the organisation.
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