Corporate environmental reporting should be regulated. Discuss Early documents (EC, 2001, p. 8) describe CSR as: a concept whereby companies integrate social and environmental concerns in their business operations and in their interaction with their stakeholders on a voluntary basis. There are some companies which currently publicly disclose their environmental performance information, comparable to financial performance information which is mandatory and required by accounting standards around the world.
The point has been made that unlike financial performance, environmental performance reporting is a voluntary compliance rather than a mandatory one and that the authenticity of a company’s true social impact is establishing itself……. and that these companies will employ socially responsible activity without any regulatory requirements. (Aras & Crowther, 2008, p. 0) It will be discussed whether companies will have to become more responsible for their affect on the external environment with mandatory compliance and regulation or whether it simply will make no difference. There is a belief which stands behind the assumption that having a regulatory body for mandatory environmental reporting may not actually be favourable to companies, stakeholders and/or the environment.
Established regulation will not increase company’s accountability for the external environmental impact they are currently causing, as it has been documented that even if the information is provided, very little action was taken upon stakeholders & the readers of the environmental reporting for the companies to feel the effects, as these parties did not request the information now available nor did they bother to read the green accounts from the sole opinion that they had very little confidence in the information provided to them. Holgaard and JOrgensen, 2005, p. 363) Even if this voluntary reporting of social and environmental information via the OFR proposals was made mandatory and regulated, little change would be expected with this alteration of information in terms of facilitating action on the part of organisational stakeholders. (Cooper & Owen, 2007 p. 664) Combined with the fact that the effect of regulated disclosure of corporate environmental reporting could only ever have a restricted effect (Williamson, 1997 in Cooper & Owen, 2007 p. 64) because “[t]he likelihood of it leading to action depends on the ability of others to use information in forums in which they have legitimate voice” (Williamson, 1997 in Cooper & Owen, 2007 p. 664), suggests little motivation for it to be regulated. Although the initial workings of regulations may not have produced the results required, there is other work being done to provide for a regulatory environment suitable to that of corporate environmental reporting.
It is suggested by Parkinson (2003) that a motion for civil regulation would prove beneficial as it provides a forum for the public to put pressure on companies to become for socially responsible for their behaviour. This type of regulation would benefit the environment as it would slow some of the consequences companies are having on the environment through “[t]he grain of profit motive, by penalising companies for socially disapproved, and rewarding them for exemplary, conduct. (Parkinson, 2003, p. 25) The fact that firms, through their actions, affect their external environment and this should be accounted for (Aras and Crowther, 2007c) just like the effects of their financial performance are reported and regulated, their external environmental impacts should fall into the same category of reporting and regulation Initial workings of corporate environmental regulation have shown a lack of action by those it would seem are required for this regulation to work.
It is currently believed that the effects of those regulation systems in place do not have a significant effect nor do they in anyway accomplish accountability for companies and their external environmental impact. It seems until a proven system obtains some form of results and proven benefits, perhaps the civil regulation theory provided by Parkinson, should corporate environmental reporting be regulated.