Importance Of Social Reporting

Introduction

Nowadays, as social and environmental issues are becoming increasingly important, social reporting is becoming a preferred vehicle for communication about corporate responsibility. Consumers are, now, more concerned about the ethical impact of their purchases whereas, shareholders are seeking to integrate risks relevant to environmental and social issues into their investment decisions. The number of reports has grown tremendously in the past years, and companies are devoting extensive time and resources to make their reports more useful both to external stakeholders and their own internal management systems.

What makes a social report a unique tool, is the combination of both the communication and performance management aspects.

Bowen (1953). Bowen expressed the following question; “What responsibilities to society are businessmen reasonably expected to assume?” (Bowen, 1953, pg xi) The answer to this question was that firms should keep in mind and take into consideration society on the way to success and on their effort to make profits. In the decade of 1960 there were many who tried to explain Social Responsibility and reporting. A great example is Davis (1960) who tried to explain Social Responsibility. According to Davis, Social Responsibility is a great idea but should be considered in a managerial context. The decade of 1960 was an important decade for Corporate Social Responsibility. Many attempts were made to formalize its meaning and to establish one, unique and accurate definition and many companies started publishing corporate social reports. People were motivated to take into consideration Corporate Social Responsibility and they pushed companies towards social

It was now obvious that free – trade strategies have failed to solve social problems.

There were many events that fuelled the awareness of corporate responsibility and the needs of proper corporate social reporting. The most characterized one was the collapse of Enron and Lehman Brothers and the increasing concern of climate change and product safety issues.

This period triggered shareholders to step up and adopt the concept of Corporate Social Responsibility and social reporting. At the same time, internet made it easier for people to gain access and acquire information about a company’s social and environmental performance, allowing, as well, different groups to communicate and interact.

Today, increasing number of shareholders bring proposal before annual meetings for corporations all over the world. There are number of standards and codes that have been developed to guide companies on the different aspects of social responsibility and reporting. One remarkable example is that of the new