CORPORATE SOCIAL REPORTING: AN ETHICAL PRACTICE?

INTRODUCTION The requirement for companies to provide an account of their financial performance is accepted and firmly set out in law. The legal framework of the Companies Act is predicated on the need for directors to account to shareholders for their stewardship of the shareholders' assets and for companies to provide an account to their creditors of the security provided against their debt. Yet a company's activities do not affect only those who have a financial investment in it. Other groups are either directly involved with the company (for example, employees and suppliers) or indirectly involved (for example, consumers and the localities in which the company operates) and so it may be argued that the company should also be accountable to these stakeholders. Indeed, annual reports quite often recognise a broader non-financial or social accountability and provide information on how the company's social responsibilities have been discharged. The term used in this chapter to describe the practice of reporting on the company's social responsibilities is corporate social reporting (CSR) which has been defined as 'the process of communicating the social and environmental effects of organisation's economic actions to particular interest groups within society and to society at large' (Gray et al. 1987: ix).