With the number of unethical practices in the corporate world, there is an increase in the arguments that business should be held responsible and accountable to the public who seek to improve the financial growth of these organizations. The law stipulates that all business organizations must strive to achieve environmental and social ethical standards as they seek to meet the expectations of the stakeholders and shareholders. Stakeholders often make their decisions based on these social and environmental audits (Wong 2011: 14). In essence, a number of organizations have made the effort to comply with the regulations and the laws that demands that businesses develop social responsibility that goes beyond the initial concept of functioning as an economic unit in the society. These organizations have an ethical responsibility to make the public aware of their actions and intentions and therefore it is important that social and environmental auditing should be compulsory for all business.
Carol Adams suggests that “ethical reporting by companies has become increasingly prevalent since the mid-1980s” (Adams 2004:731) as companies are now being asked to report on the social, ethical, and environmental issues that “are used by ethical investment funds to form an opinion on the appropriateness of an organization’s business practices” (Adams 2004: 731). Accountability, according to Adams, is defined as providing an account of the way that these organizations are operated (Adams 2004: 731). Accountability allows for success and entry into the larger markets as the process helps to create opportunities for new partners or stakeholders to make informed decisions about a prospective venture.
Corporate Social Responsibility reflects the continued commitment of business organizations to maintain an ethical and framework that allows these organizations to contribute to the economy while maintaining ethical principles. At the heart of every organization, persons have great expectations and the primary expectation for organizations in the modern society lies in transparency. Auditing these companies will help the stakeholders to hold business leaders responsible for their actions. The truth is that persons invest heavily in many organizations and therefore, these persons should respect the efforts of the investors. Additionally, invest their time into these organizations and are unable to enjoy positive working conditions. Social and environmental auditing will allow for positive improvements in the quality of life within the workforce and even improve the conditions for the families of these employees and the wider society.
The emergence and integration of social and environmental auditing started as early as the middle of the 1980s because of the growing need for accountability and moral explanations for businesses. Furthermore, the move became important as more stakeholders’ became concerned with the way their funds were manipulated within these organizations and accounts of these actions on the natural and social environments. The calls for accountability is not new as business have always been required to give accounts for the financial aspects of their business, but were not necessarily required to provide details of the social ramification of their actions on the environment. Companies make unethical moves such as the purchasing of goods and services that negatively impact the environment. Of course there is financial reward, but if the rewards comes from harm or damage to the environment or persons, then the organization violates the laws of the society. Arguably, the need to understand that the financial gains do not violate ethical standards is important as investors need to ensure that no environmental or social law was broken.
Any violations of social and environmental laws will reduce the number and quality of investors as consumers are mindful of doing business with companies that violated the ethical laws of the society. The fact is that persons make their decisions based on the resources products of the company. If a company harms animals to make a particular product, then many consumers will not support the company. The lack of support from the consumers leads to a decline in revenue and a loss for investors. As such the need for social and environmental audits is important as this allows for transparency in the actions of the organization and helps environmentalists to “implement strategies to deal with the violations of environmental laws” (Grey et al 1998: 3).
The harsh reality is that the ethical and environmental degenerations that exist in countries around the world have continued to draw attention to the problems that arises from these cases (Özbirecikli 2007: 2). These problems continue to cause material damage to the nature and the economies “of these countries and future of the world for years” (Özbirecikli 2007: 2). Nonetheless, some companies have chosen to report on the social and environmental aspects their operations because they want to show the public that there is transparency in their operations. Such a move is important as it helps to provide a broader scope of the performance of the company and the impact that they make on the environment and social policies (Sustainability Reporting: Concepts, Frameworks and the Role of Supreme 2013: 7).
In concluding, audit allows stakeholders to become reassured of their investments as the procedure goes beyond the conventional financial auditing of the company. Social and environmental auditing have become common place in the society as it increases the confidence of the stakeholder and allows for ease of response to the demands of the organization. In many cases accountability provides the opportunities for establishing direct relationships within the organizations and this improve social improvements in the company. The standards that companies follow are integral to the ethical standards that one expects from their place of work or the places that they invested their money. Therefore, it is imperative that all businesses are audited from a social and environmental perspective and not simply from a financial perspective.
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