Accounting Reporting
gayngs
lec3.pptxRecap
Stakeholders and Stakeholder theory
Stakeholder management
Stakeholder engagement
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Overview
Accountability
Theories of Sustainability Accounting
Managerialist
Middle of the Road
Critical
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Accountability
Some definitions
“...the duty to provide an account (by no means a financial account) or reckoning of those actions for which one is held responsible”
(Gray et al.,1996, p. 38)
“an emancipatory concept helping to expose, enhance, and develop social relationships through re-examination and expansion of established rights to information”
(Gray, 1992, p. 413)
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Accountability
Accountability involves responsibility to undertake actions and to provide an account of these actions
Involves an account-giver, recipient and a relationship between these parties
Cooper and Owen (2007) argue that in addition to providing an account, organisations need to be held to account
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Accountability
Accountability places society at the heart of the analysis and questions the legitimacy of an organisation’s actions, or perhaps even its right to exist. (Gray, 2001, p. 11)
Accountability provides a foundation for CSR and provides justification for the involvement of the accounting process in social and environmental issues
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AA1000
Encourages a stakeholder based approach to corporate accountability
Organizations (account-givers) should engage with stakeholders (recipients) and involve them in decision making processes, a concept referred to as “inclusivity”
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AA1000 Standards
AccountAbility Principles (AA1000APS)
Assurance (AA1000AS)
Stakeholder Engagement (AA1000SES)
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AA1000 Focus
Assurance
Governance and Risk management
Integration of accountability processes with existing management and accounting systems
Measuring and communicating stakeholder engagement
Accountability in small and medium sized organisations
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Theories of Sustainability Accounting
Theories provide explanations for current phenomena
So how do we theorise Sustainability Accounting?
Theories of Sustainability Accounting classified into:
Managerialist
Middle of the road
Critical
Each theoretical paradigm has associated with it specific theories
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‘Managerialist’
Has a shareholder value focus
Based on neoclassical economics
Decision usefulness is critical
Focus is on effect of the environmental agenda on accounting numbers
Capital market studies which associate social and environmental performance with financial performance contribute to the managerialist agenda
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‘Critical’
Critical of current CSR practices
Concerned about “capture”
Based on philosophical reasoning with the work of Marx and Habermas being prominent
Can also include eco-feminism and deep green ecology
Political Economy perspective underlies most research in this area
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‘Middle of the Road’
Lies between the extremes of managerialist (shareholder) and critical (radical) approaches
Focus is on engagement
Need to work with the system in order to change it
Stakeholder and Legitimacy theory have often been utilised for such research
However, a need arises for expanding these theoretical insights – see Adams and Larinaga Gonzalez (2007)
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Stakeholder theory
As discussed in last lecture
Notion of stakeholder
Ullmann’s stakeholder framework focuses on economic factors, stakeholder power and strategic posture as potential explanations for CSR. He further argues that disclosure is merely a strategy and this has to be matched with actual performance
Stakeholder theory has limited recognition in the CSR (social and environmental accounting) literature
Legitimacy theory has dominated much research on social and environmental accounting
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Legitimacy theory
Legitimacy critical for corporate survival
Based on the notion of the social contract
Organizations undertake CSR activities to legitimise their existence to stakeholders
Maintain, gain or repair legitimacy
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Legitimacy Strategies
Lindblom (1993) identifies four broad legitimation strategies that firms may use to secure organisational legitimacy:
informing stakeholders about intended improvements in performance
seeking to change stakeholders’ perceptions of an event
distracting attention away from an issue
changing external expectations about its performance
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New Theoretical Insights
New Institutional Theory – Coercive, Mimetic and Normative Influences
Reputation Risk Management – Bebbington et al (2008)
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Summary
Accountability provides a basis for Sustainability Accounting
Descriptive theories include managerialist, middle of the road and critical theoretical paradigms
Can we have a general theory for Sustainability Accounting?
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Next
Trends in CSR with a case study of the Australian Minerals Industry
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