Social and Environmental Auditing
The centrality of social and environmental auditing in today’s businesses cannot be gainsaid. Social auditing describes the commitment of a business entity to its shared values and goals. Every business or an organization has fundamental goals and objectives which it seeks to achieve throughout its life. While achieving these goals, a business entity may need to assess its social commitment to the goals (Bebbinton et al., 2014). Social auditing helps in achieving this goal since it examines the performance of an organization’s non-monetary goals and the perception of its stakeholders towards the goals. On the other hand, environmental audit explores the nature and level of damage that a business poses to the environment. This type of audit recognizes the types of environmental pollution and assesses the level of risk that a business entity may present to the environment. Both social and environmental audit enable business owners to understand their position in the market regarding their commitment to social and environmental values (Barrientos, 2012). This paper supports the entrenchment of social and environmental audit in the management of today’s businesses.
Studies have revealed that social audit must involve the stakeholders of the business. The stakeholders may include employees, sponsors, suppliers, contractors, local residents, and volunteers (Evan et al., 2010). These groups of people have interest in the business and must take part in carrying out social audit. Social audit ensures that the business stakeholders act responsibly in regard to the code of conduct that govern the operation of a business entity. These codes relate to various labour practices.
Businesses use environmental auditing to determine the condition of business sites and suitability. For example, a hotel business may use this type of auditing to assess the suitability of the location. For example, a site near a dumpsite may attract little interest compared to a clean site. Environmental auditing also advise business owners on the requirements of a good business site. The location of a business is an important factor that is of central concern to business owners (Evans et al., 2010). Most businesses desire strategic locations that are within the reach of target market. Environmental audits provide authoritative, independent and reliable advice on the viability of a site. This advice encompasses measures that can be taken to minimize the risks.
Environmental auditing determines the role of a particular site. In a town setting, environmental auditing would determine the location of the major highways, bus stops, supermarkets, dumpsites, metal works, hospitals and schools (Barton & Bruder, 2014). For example, a businessman who wishes to venture into healthcare relies on environmental auditing to determine a suitable place where he can set up a healthcare facility. This individual cannot be set up a facility near the bus park because of the frequent noise that is characteristic of bus parks. Businesses rely on this type of auditing to determine the parts of the major highway that are ideal of particular businesses. Most global businesses underscore the centrality of environmental auditing. The implementation of this audit system should be made compulsory for businesses in all countries (Rongbing, 2011). This can be achieved through enactment of relevant legislations that can make environmental auditing obligatory.
On the other hand, social audit improves the ethical and social conduct of an organization. Most businesses around the world often confront various moral and ethical concerns. In some cases, it is not possible to know when a business entity involves in unethical conduct. In this regard, a social audit can help in discovering the gaps that the business should fill to make it comply with its ethical and social obligations. Against this backdrop, the centrality of social auditing in the life of a business cannot be gainsaid. A case in point is when Coca-Cola, the global leader in the manufacture of carbonated drinks, involved in an ethical case. The company identified this challenge by engaging social auditors to identify the extent of ethical damage.
Businesses rely on social audits to bridge the gaps between their goal and reality. It also measures the efficiency of a business against its effectiveness. In this regard, it helps businesses to their effectiveness and overall performance. Social auditing acts as a third eye to the business and helps it connect with the target market. Studies by Ezezika et al. (2009) revealed that businesses that embrace social auditing have a close relationship with stakeholders and customers. The study also revealed a disconnection between businesses that fail to embrace social auditing with their customers. In this regard, social auditing keeps businesses updated on their obligations.
Social auditing controls and monitors the supply the supply chain in the business. The need of control is important because businesses have various supply chains. In the case of manufacturers, the supply chains include the production, distribution, wholesaling and retailing chains. Managing such a large supply chain requires a comprehensive social audit to ensure that there controls in the supply chain. Social auditing fosters a good relationship between the buyer and the seller. In most cases, social auditors reveal frosty relations between the suppliers and buyers. McKinnon (2010) observed that the uneasy relations can be restored when businesses embrace social audit which would discover the origin of sour relations.
According to Zadeck et al. (2013) social auditing encourages the participation of the community in the business. It investigates the extent by which a business entity engages the community in various aspects of its operation. Participation can be perceived in the context of corporate social responsibilities. Social auditing answers questions relating to the role off the business in promoting community programs while utilizing its resources for maximum gains. It explores the perception of the members of a particular community towards an existing business.
Environmental auditing provides an impetus for businesses to evaluate and control the changes that take place in the environments they operate in. It inspires businesses to take part in activities that can promote the restoration of the environment. This role enable business owners to anticipate risk and threats, and prepare for the best ways to mitigate them (Rika, 2009). This type of auditing provides a basis for assessing the performance of environmental management systems. Businesses that wishes to embrace green technology can rely on this audit for insights into the dangers of unsustainable practices. Environmental audit passes approaches that are environmentally friendly in the supply chain. These audits deal with effects of industrial processes.
Conclusion
In light of the aforementioned, it is indubitable that businesses rely on social and environmental audits to strategically position in order to gain competitive advantage. These audits require businesses to operate in an ethical and sustainable manner to secure the planet from the problems of unsustainability. In this regard, businesses should make these audit systems compulsory to ensure compliance with social, ethical and sustainable practices.
Reference List
Barrientos, S. (Ed.). 2012. Ethical sourcing in the global food system. Taylor & Francis.
Barton, H., & Bruder, N. 2014. A guide to local environmental auditing. Routledge.
Bebbington, J., Unerman, J., & O'Dwyer, B. 2014. Sustainability accounting and
accountability. Routledge.
Evans, M. F., Liu, L., & Stafford, S. (2010). A facility-level analysis of the long-term
consequences of environmental auditing among hazardous waste generators.
Ezezika, O., Thomas, F., Lavery, J., Daar, A., & Singer, P. 2009. A social audit model for
agro-biotechnology initiatives in developing countries: accounting for ethical, social,
cultural, and commercialization issues. Journal of technology management &
innovation, 4(3), 24-33.
McKinnon, A. C. 2010. Product-level carbon auditing of supply chains: Environmental
imperative or wasteful distraction?. International Journal of Physical Distribution &
Logistics Management, 40(1/2), 42-60.
Rika, N. 2009. What motivates environmental auditing? A public sector perspective. Pacific
Accounting Review, 21(3), 304-318.
Rongbing, H. U. A. N. G. 2011. Environmental Auditing: An Informationized Regulatory
Tool of Carbon Emission Reduction. Energy Procedia, 5, 6-14.
Zadek, S., Evans, R., & Pruzan, P. 2013. Building corporate accountability: Emerging
practice in social and ethical accounting and auditing. Routledge.
