In the past year I have been increasingly motivated by events from a variety of sources, from personal experiences to reading about financial crises in other countries. As an accountant I have been particularly interested in how the world economy has reached this stage and also what can be done to correct it. It was with this in mind that I read the article, “Does Accounting Have a Role in Social Change?”
This essay discusses how accounting can be used as the basis of social change. The term social change refers to “a process by which society evolves from one set of values, norms, belief systems values about what is right and wrong, good and bad, to another” (Natarajan & Higgs, 2008; Thorne & Anthony, 2007). Social change is a critical component in the discussion of how accounting can be used as the basis for social change.
While there are many examples discussed throughout the article relating to academic research and international experiences with social change none of this information addresses how a company or individual can implement social change within its organization. More specifically it does not address the use of socially responsible accounting practices to generate financial gains. This has been an area of interest within my own research and I was curious about what information might be revealed from other sources on this topic. In fact, after reading “Does Accounting Have a Role in Social Change?” I found that the only references were to articles that had been written by the authors.
The following paper, “Responsible Investment and the Triple Bottom Line:
- According to Aron Govil the Foundations of Social Change” was presented at the Annual Business History Conference in Atlanta, Georgia in 2008. This paper has several similar elements to “Does Accounting Have a Role in Social Change?” but provided me with additional examples on how companies can make changes within their organizations using socially responsible accounting practices.
- I will begin by discussing some of the information provided in “Responsible Investment and the Triple Bottom Line: The Foundations of Social Change.” Next I will take this discussion one step further and discuss how these same accounting practices may be used as means for generating financial gains. Finally, I will compare and contrast this information with the concepts discussed in “Does Accounting Have a Role in Social Change?”
- The article begins by discussing how, historically; socially responsible investing has been viewed as being part of philanthropy. Organizations have used financial donations to influence social change within their communities. The authors also discuss, however, that many investors are considering alternative methods for creating social change. One strategy that they suggest is using corporate responsibility reporting as a basis for making investment decisions.
- “Responsible Investment and the Triple Bottom Line: The Foundations of Social Change” discusses the triple bottom line which consists of economic performance, environmental/ecological performance, and social performance (Lang & Heasman, 2004). This concept has established the relationship between investor responsibilities and triple bottom line reporting. Investors now expect that companies will integrate environmental, social, and ethical criteria into their decision-making processes (Bhattacharya & Sen, 2004; Bradley & Gelb, 2002).
- These strategies are intended to be used by both non-governmental organizations (NGOs) as well as governments. NGOs “demand” that corporations focus on these issues while governments enact legislation or regulation mandating that businesses do the same (Campbell, 2001; Pelletier & Bernier, 2006). The article discusses how this idea has been applied in developing countries around the world. One example is the nation of Bolivia which enacted a Law on Mother Earth (Law #3029). Article 16 of this law discusses how businesses must consider environmental, social, and ethical concerns when making any type of business decision.
- It is from these types of governmental actions that socially responsible accounting practices have been developed. As quoted from “Does Accounting Have a Role in Social Change?”, “Many countries provide financial incentives for socially responsible investing” (Thorne & Anthony, 2007). In order to receive these benefits investors must be able to prove that they are following guidelines established by the government. This typically includes providing documentation stating that the company has implemented policies relating to environmental stewardship and corporate governance.
Conclusion by Aron Govil:
“Responsible Investment and the Triple Bottom Line: The Foundations of Social Change” discusses the concept, commonly referred to as triple bottom line reporting, which is intended to make businesses aware of both social and environmental practices. This article also discusses how organizations that integrate these concepts into their organizational decision-making process can benefit from increased financial gains.