Social and Environmental Auditing Should be Compulsory for all Businesses
The two concepts of social and environmental audits have become highly significant due to various developments in the modern business environment,. Debates on the issues have become a common occurrence, with the clarity lacking on the exact role that corporates should play in ensuring that their activities are both socially and environmentally responsible. This paper argues that the two aspects should be made mandatory due to the impact that corporate activity has to the wider community.
Social auditing refers to the process of evaluating the operations of an enterprise to determine the effect of those activities to the society. In conventional settings, social audits are often initiated by businesses which have the desire and plan to improve their image in the society (Gray, 2000, p. 2). In most of these cases, the results are only shared with the public if established to be positive. The negative results are often swept under the rug and audits engineered to focus on the positive aspects. Consequently, businesses have no incentive to be socially responsible since they are not accountable to anyone as they will only give the various stakeholders filtered information and sometime half truths. Therefore, there is need for businesses to mandated to conduct independent social audit that are guided with structured rules and procedures.
Environmental audits, on the other hand, are management tools that are used to establish whether an organization, in its operations and equipment, are complying with the certain environmental regulations and policies. Conventionally, the environmental audits can be conducted through two mechanisms. First, a firm may enlist the services of a third party, which would be responsible for the evaluation of whether a firm conforms to the locally set environmental laws and regulations (Gray, 2000, p. 2). The most common form of environmental auditing that businesses engage involves the analysis of the financial gains that an institution stands to gain by adopting environmentally friendly policies. The implication here is that when gains are not out rightly expected from adopting green policies, businesses may be unwilling to conduct environmental audits. The audits, therefore, should be made mandatory, whether the firms benefit or not.
The aspect of inter-generational responsibility is one that drives the calls for mandatory environmental and social audits. This is an approach to development or business that acknowledges the importance of considering a broad range of aspects when conducting business. This concept encourages business owners to consider the effect that their businesses have to the wider community. The focus should not be exclusively for financial gains, but on the results of doing business in a given society (Morimoto, Ash, & Hope, 2005, p. 8). Some of the essential components of this concept of inter-generational responsibility in business are; environmental protection, ensuring social equality and achieving economic development. By putting in place mandatory auditing policies for businesses, it is possible for businesses to integrate the three concepts safely.
Another important aspect of the inter-generational development theory that especially touches on the environment is the argument that the current generation should meet its development needs, but do so in such a way that the ability of future generations to satisfy their developmental needs is not compromised. Businesses, therefore, should not engage in practices that decimate the environment to a level where the generations to come will have nothing left to conduct their businesses. By implementing mandatory environmental audits, businesses will be forced to maintain this balance, and therefore, achieve the goals of the inter-generational development concept.
In most places, there is the lack of clear methodologies that show how businesses evaluate whether they are socially responsible. This is a problem that could be easily solved through the institutionalization of mandatory social audits. Guided by the concept of social sustainability, businesses need to come up with ways through which their activities are directed in such a way that they achieve sustainable development (Morimoto, Ash, & Hope, 2005, p. 9). Using mandatory social audits can be one of the means through which this is achieved, by first enlisting the support of a variety of stakeholders. The multiplicity of stakeholders would ensure that a more comprehensive tool for evaluation is formed.
Developments in the modern day businesses make it necessary to have mandatory environmental audits. Industrial activity such as the production of pesticides, explosives, and cement make use of ingredients or materials hazardous to the environment. When these activities go unchecked, the environment will be heavily polluted. The operations in the energy and mineral resource industries are others which necessitate the establishment of mandatory environmental audits (Adams, 2004, p. 735). This is because such industries in activities such as oil and gas processing and transportation have the potential of having vast negative implications for the environment. Technological advancements in warfare have introduced the increased use of nuclear material. It is common knowledge that such material is hazardous to the environment, and without proper controls can lead to many ill effects.
The push for mandatory environmental audits is further supported by the universal aspect of waste. All businesses have some form of waste that comes as a result of business activities. Waste is identified as one of the leading causes of environmental pollution and, therefore, requires clear policies on how every kind of waste is dealt with (Adams, 2004, p.736).
In conclusion, the 21st century has seen the quality of businesses being socially responsible heavily questioned. Many scandals have rocked many corporations, with many observers noting that the firms tend to place more emphasis on business outcomes as opposed to the effect that their companies have to the society. By putting in place mandatory social and environmental audits, two benefits can be achieved; social responsibility and environmental sustainability.
Bibliography
Adams, C. (2004). "The ethical, social and environmental reporting-performance portrayal gap.". Accounting, Auditing & Accountability Journa l17.5, 731-757.
Gray, R. (2000). "Current developments and trends in social and environmental auditing, reporting and attestation: a review and comment." . International Journal of Auditing 4.3, 247-268.
Morimoto, R., Ash, J., & Hope, C. (2005). "Corporate social responsibility audit: From theory to practice.". Journal of Business Ethics 62.4, 315-325.
Social Audit Network. (2016, March 10). Social Accounting and Audit. Retrieved from http://www.socialauditnetwork.org.uk: http://www.socialauditnetwork.org.uk/getting-started/what-is-social-accounting-and-audit/
