Advanced Financial Reporting and Theory

Introduction

In the context of contemporary business practices, the success of organisation is significantly influenced by the brand value and goodwill of companies along with the quality of products and services. Therefore, the companies have to consider a wide range of social and environmental perspectives in the business planning and resource management while developing a variety of strategic planning and business reporting with reference to their vision (Boiral & Heras-Saizarbitoria, 2020). In this regard, the sustainability reporting is being termed as an important aspect of corporate accountability in which an organisation evaluates the implications a wide range of sustainability issues with reference to different business operations and managerial practices. This report covers different aspects of corporate accountability such as history, drivers, and perception of companies along with assessment of perspectives of different stakeholders. For students who are seeking business dissertation help, understanding all these nuances of corporate accountability is vital for conducting comprehensive research.

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History of Corporate Accountability

The concept of corporate accountability is mainly used as the approach that influences the corporate behaviour among companies. Du Rietz (2018) stated that the process of corporate accountability contains the usage of more confrontational or enforcement strategies to carry out sustainability reporting of different business operations. In this context, companies have to consider or enforce different types of social standards with reference to interest of different stakeholders. The incorporation of corporate accountability was being taken place in 1977 when different initiatives for boycotting the Nestle brand were identified because company aggressively marketed the powdered milk for infant that resulted that babies in Global South countries were getting sick and dying from the bottle feeding. During 1977, the approach of corporate accountability was borne when the four activists named Leah Margulies, Doug Johnson, Mark Ritchie, and Doug Clement were initiated the campaign against Nestle for boycotting campaign for Nestle infant formula (History: Challenging corporate power since 1977, 2021). Therefore, the importance of corporate accountability was being enhanced significant in 1990’s when several companies, social organisations and government agencies were pressuring companies to manage their behaviour in more social responsible along with the accountable manner (WHAT IS CORPORATE ACCOUNTABILITY?, 2021). In this context, companies have to consider the interest of different stakeholder for performing the corporate planning and resource management. Therefore, several new alliances and regimes have determined different business norms that have been found very effective for linking consumers, communities, workers, government agencies, social welfare societies along with manufacturing units.

Critically Evaluation of Key Drivers of Corporate Accountability in the Contemporary Business Operations

In the context of contemporary business environment, different factors influence companies towards the corporate accountability practises. In this regard, Mion & Loza Adaui (2019) stated the activist campaigns have played a critical role to transport the attention of companies towards different social issues along with business profitability. Therefore, different interest groups such as government agencies and trade unions are having a significant interest within the sustainable business operations along with corporate accountability. This thing influences companies to pay extra attention on the sustainable business operation. However, Bellucci, Manetti & Thorne (2018) paid extra focus on the collaborative stakeholder schemes in which the many initiatives have been created by establishing the partnership between companies, NGOs and others for bringing the sustainable changes in corporate behaviour that would be accord with the social and environmental standards affirmed by such campaigns. These kinds of approaches are being often built around the principles of voluntarism, dialogue along with the collaboration among different organisations and individuals (ACCA, 2021). In this scheme, mutual learning process has been established between the governments, companies to increase compliance via preventative and cooperative efforts. These activities influence companies for become more accountable.

Moreover, the investigation of Masud, Nurunnabi & Bae (2018) determined that government regulations have been found very effective for supporting the Multi-Stakeholder Initiatives in which different government regulations and legal norms have been strengthen at the national, international and regional level for enhancing the accountability of companies. The change in the legal to manage corporate accountable has been perceived as the hard regulatory approach that enhances the efficiency of activist-based approaches that would encourages companies for become more accountable to society and environment. As a result of new regulations, the sustainability reporting has been addressed as an important aspect of the corporate planning and business reporting in which an organisation has to examine the implications of different business operations over the society along with environment (Makarenko & Sirkovska, 2017).

Bellucci, Acuti & Manetti (2019) stated social alliances have been found very effective to promote the accountability because these alliances have gained a significant success in making appropriate pressure on the governments to regulate corporate behaviour in the formal manner that has been termed as the key driver of corporate accountability. Furthermore, the research of Nigri & Del Baldo (2018) determined that different social protection and environmental safety agencies carry out a variety of research on different social issues and present their report to government as well as public. These reports and outlooks are also playing an important role in influencing the sustainability reporting practices among companies that make them more accountable to society. However, Gnanaweera & Kunori (2018) argued that the increase in the market competition both in domestic and international markets influences companies for making distinct image of the brand so as the consideration of different social issues in the business planning and operations management markets the companies as a responsible organisation that may have direct impact on the perception of consumers along with the product preference. Therefore, the brand value and market position of an organisation has been emerged as an important sales driver. In the context of highly competitive market trends, the sustainability reporting has been emerged an effective marketing strategy that influences companies for becoming more accountable (La Torre & Dumay, 2018).

Intentions of Companies about the Corporate Accountability

In the context of contemporary business environment, companies are having different interests in the context of corporate accountability. In this context, some companies consider the sustainable reporting as a voluntary behaviour in which CSR practices have been addressed as important elements of the strategic planning and resource management operations. In this, companies publish appropriate reports voluntary to show their contribution in dealing with a variety of social and environment issues (Ngu & Amran, 2018). However, Hassan & Sobhan (2020) argued that all firms are not maintaining the positive behaviour to society or to consider corporate accountability because the management of these companies feel the business reporting for social and environmental issues as a time-consuming process and it also requires a significant investment in the sustainability reporting that could hamper the profitability of companies along with corporate accountability. In addition to that, the research of Bellucci, Acuti & Manetti (2019) determined that the companies that pay extra attention on the profits rather than corporate goodwill pays less attention over the corporate accountability and these firms avoids the consideration of different reporting practices which are not associated with profit management (La Torre & Dumay, 2018). As per the research of Nigri & Del Baldo (2018), it addressed that some companies adopt the sustainability reporting practices only to meet legal guidelines and regulations. This is because some countries have made the sustainability reporting as the legal liability to companies. In this regard, the government agencies have adopted the hard execution in which organisations have been forced for enhancing their corporate accountability. Therefore, companies publish its sustainability report to fill legal guidelines.

Importance of the shareholder perspective or the wider stakeholder perspective when reporting environmental and sustainability issues

For enhancing the efficiency of the business operations, companies have to consider perspective of different stakeholders during the strategic planning and resource management. In the context of shareholder perspectives, firms have to consider both profit and brand value related elements because the high profit margin increases the earnings of shareholders and market value of an organisation influences the capital gains (Gnanaweera & Kunori, 2018). However, the consideration of different environmental and sustainability issues within the sustainability reporting could enhance the business expenditures but it would enhance the brand value that could offer the better business opportunities along with the capital gain in the stock markets. Therefore, an organisation has to meet different needs and expectations of shareholders. Furthermore, a firm has to consider the wider perspectives of stakeholders in which employees, suppliers and business partners are having a significant interest on the fair business policies, efficient business operations and others (Kinderman, 2020). However, stakeholders include consumers, society, environmental agencies, government agencies and others are having a significant interest in the sustainable business operations in which an organisation has to consideration different initiatives such as fair wages, reduction in carbon emission, high quality and safety products, sustainable sourcing, application of green initiatives and others that are playing a critical role for making an organisation more accountable (Bellucci, Manetti & Thorne, 2018). Therefore, the companies have to consider different social and environmental issues for enhancing its social acceptance within highly competitive market trends. Continue your exploration of Financial Struggles of Low-Income Customers with our related content.

Conclusion

As per the above assessment, this report concludes that different aspects of corporate accountability influence companies for consideration of a variety of environmental and social issues in the strategic planning and decision making along with optimum reporting of the business procedures. In the context of corporate accountability, the sustainability reporting has been addressed as an important element that supports companies in consideration of perspectives different stakeholders.

Reference

ACCA (2021). Investor pressure is driving change, Accounting and Business, Leading the Change Special Edition. Available at: https://abmagazine.accaglobal.com/global/articles/2021/specials/leading-the-change/in-business/investor-pressure-is-driving-change.html

Bellucci, M., Manetti, G., & Thorne, L. (2018). Stakeholder engagement and sustainability reporting. Routledge.

Bellucci, M., Simoni, L., Acuti, D., & Manetti, G. (2019). Stakeholder engagement and dialogic accounting: Empirical evidence in sustainability reporting. Accounting, Auditing & Accountability Journal.

Boiral, O., & Heras-Saizarbitoria, I. (2020). Sustainability reporting assurance: Creating stakeholder accountability through hyperreality?. Journal of Cleaner Production, 243, 118596.

Du Rietz, S. (2018). Information vs knowledge: Corporate accountability in environmental, social, and governance issues. Accounting, Auditing & Accountability Journal.

Gnanaweera, K. A. K., & Kunori, N. (2018). Corporate sustainability reporting: Linkage of corporate disclosure information and performance indicators. Cogent Business & Management, 5(1), 1423872.

Hassan, A., Elamer, A. A., Fletcher, M., & Sobhan, N. (2020). Voluntary assurance of sustainability reporting: Evidence from an emerging economy. Accounting Research Journal.

History: Challenging corporate power since 1977. (2021). Available at: https://www.corporateaccountability.org/who-we-are/history/

Kinderman, D. (2020). The challenges of upward regulatory harmonization: The case of sustainability reporting in the European Union. Regulation & Governance, 14(4), 674-697.

La Torre, M., Sabelfeld, S., Blomkvist, M., Tarquinio, L., & Dumay, J. (2018). Harmonising non-financial reporting regulation in Europe: Practical forces and projections for future research. Meditari Accountancy Research.

Makarenko, I. O., & Sirkovska, N. (2017). Transition to sustainability reporting: evidence from EU and Ukraine.

Masud, M. A. K., Nurunnabi, M., & Bae, S. M. (2018). The effects of corporate governance on environmental sustainability reporting: Empirical evidence from South Asian countries. Asian Journal of Sustainability and Social Responsibility, 3(1), 1-26.

Mion, G., & Loza Adaui, C. R. (2019). Mandatory nonfinancial disclosure and its consequences on the sustainability reporting quality of Italian and German companies. Sustainability, 11(17), 4612.

Ngu, S. B., & Amran, A. (2018). Materiality disclosure in sustainability reporting: fostering stakeholder engagement. Strategic Direction.

Nigri, G., & Del Baldo, M. (2018). Sustainability reporting and performance measurement systems: How do small-and medium-sized benefit corporations manage integration?. Sustainability, 10(12), 4499.

WHAT IS CORPORATE ACCOUNTABILITY?. (2021). Available at: https://static1.squarespace.com/static/57e140116a4963b5a1ad9780/t/57e2394ab3db2bac8b5d7d65/1474443595696/What-is-corporate-accountability.pdf

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