2016-01-28
Social Auditing 3
Environmental Auditing 3
II. The necessity of social and environmental auditing for all businesses 4
Conclusion 5
Key Features of Social and Environmental Auditing
Social Auditing
As we know, it needs to determine the form of cooperation between all partners of this relationship: the employee, the employer, the state for effective functioning and development of social and labor relations. In this case, the social auditing is considered as a tool to implement the main principles of social partnership.
Integrated social audit aims to solve such tasks as determination the characteristics of social relations in the enterprise, identification the factors and potential risks that could destabilize the internal social environment, making a diagnosis of social relations at various levels of development, establishment a violation of international law and national legislation in the sphere of social relations, identification the social situation in various sectors of the national economy and in the whole country, involvement the business community in charitable activities, development practical recommendations tactical, operational and strategic management of human resources.
The implementation of the above mentioned tasks converts social audit in the most important factor to improve the system of social partnership as a whole.
Environmental Auditing
Nowadays, “more investors and stakeholders want to know about an organization’s environmental footprint in addition to its economic performance” (Accaglobal.com, 2016). Environmental audit is defined as “a management tool, that comprises a systematic, documented, periodic and objective evaluation of how well organizations, management and equipment are performing with the aim of contributing to safeguarding the environment” (Opentuition.com, 2015). The companies should do that through facilitating the management control of environmental practices and assessing compliance with entity policies.
Environmental audit is considered as a crucial part of the Environmental Management System. For example, American companies, which operates in oil, steel, automobile and paper industry came under severe pressure from the Environmental Protection Agency.
The necessity of social and environmental auditing for all businesses
It should be noted, that the development of social and environmental auditing started in the middle of the 1980s. It was more important for companies, which were involved in the manufacturing, mining, chemical operations. An increased number of environmental disasters taken place due to the activities of many companies, causes the growing requirement of the environmental and social auditing. From the 1990s environmental audits were considered as a valuable source of management information. There were accepted several environmental certification methods: British standard in the UK; Europe’s Eco management and audit scheme in Europe; ISO 14001 in the UK and the US.
Thus, one can say, that the majority of modern companies are interested in environmental and social reporting. The following areas are covered in each reporting category: environmental category includes energy and water consumption, carbon emission, recycling activities, biodiversity, using alternative energy sources and some others; the social category includes the working condition of the organization, human rights conditions, health and nutrition, community investments made by the organization.
More specialists discuss about corporate social responsibility (CSR), that can be a kind of the social and environmental audit. According to the expert Mobus (2012), “the CSR reporting relies on careful contextualization and definition in this industry because of: the ecologically unsustainable nature of its base in non-renewable natural resource extraction; the negative impact on climate change resulting from the production and final use of its end products”.
Generally, “as businesses have grown larger and more powerful, their attendant duty to be responsible wherever they operate has also grown” (Waddock, 2012, 1). In this case, social and environmental audit must be obligatory for all business in modern times. The high interest in this of investors and stakeholders can facilitate to increase the number of companies which will provide regular social and environmental reports. But some problems still remain unresolved. It can be bad work conditions at factories South-East Asia, the accumulation of debris and lack of recycling companies in India. It should be noted, that failure to comply with standards by manufacturers can lead to the problems with drinking water, the spread of diseases and poisoning animals. Even such well-known companies as Apple and Smasung have important issues concerning compliance with labor laws, especially in the factories in China. For example, specialists Gough and Chen wrote that Apple does not control work conditions at the factories in China, where its products are made: “employees were forced to work as many as 100 hours of overtime a month and failed to receive the social insurance payments required under Chinese law” (Gough and Chen, 2014). Given this fact, manufacturing of any products should not adversely affect the health of workers and the environment. From this perspective, social and environmental auditing should be compulsory for the company from any industries, but above all manufacturing companies.
Conclusion
In conclusion one can say, that nowadays social and environmental auditing become at the same level with the financial one. The active position of the majority of investors/stakeholders within that issue forces to disclose appropriate information by the companies. But it is not enough. The next stage should be the inclusion of social and environmental reports in the list of compulsory reporting of companies.
References
Accaglobal.com, A. 2016. Risk and Environmental Auditing | ACCA Qualification | Students | ACCA Global. [online] Accaglobal.com. Available at: http://www.accaglobal.com/uk/en/student/exam-support-resources/professional-exams-study-resources/p1/technical-articles/risk-and-environmental-auditing.html [Accessed 28 Jan. 2016].
Cramer, B. 2011. Freedom of Environmental Information. El Paso: LFB Scholarly Pub. LLC.
Gough, N. and Chen, B. (2014). Groups Accuse Apple Supplier of Violations ; Workers in China Handled Chemicals with No Protection, They Say. International New York Times.
Mobus, J. 2012. Corporate Social Responsibility (Csr) Reporting by Bp: Revealing or Obscuring Risks?. Journal of Legal, Ethical and Regulatory Issues, 15(2).
Opentuition.com, 2015. Social and Environmental Audits. [online] Available at: http://opentuition.com/acca/p7/chapter-16-social-and-environmental-audits/ [Accessed 28 Jan. 2016].
Waddock, S. and Rasche, A. 2012. Building the responsible enterprise. Stanford, Calif.: Stanford Business Books, an imprint of Stanford University Press.
