Importance of Corporate Social Responsibility and Sustainability Reporting in Contemporary Accounting

This document discusses the importance of corporate social responsibility (CSR) and sustainability reporting in contemporary accounting. It highlights the role of CSR in improving brand image, retaining top talent, and saving operational costs. It also explores the holistic view of sustainability reporting and its theories. Additionally, it provides an overview of Nearmap Limited Company and its sustainability report.

Running head: CONTEMPORARY ACCOUNTING
Contemporary accounting
Nam of the student
Name of the university
Student ID
Author note

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Table of Contents
1. Executive summary.............................................................................................................2
2. Introduction.........................................................................................................................3
3. Part A..................................................................................................................................3
i. Importance of corporate social responsibility (CSR) for the firms operating with the
financial objectives.................................................................................................................3
ii. Sustainability reporting in contrast with relevant other reporting concepts represents a
holistic view of corporate social responsibility......................................................................4
iii. Theories on sustainability reporting............................................................................5
Part B..........................................................................................................................................7
iv. An overview of Nearmap Limited Company:.............................................................7
v. Sustainability report scoring index................................................................................10
vi. Sustainability report of Nearmap...............................................................................11
Conclusion................................................................................................................................13
4. Reference..........................................................................................................................14

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1. Executive summary
Establishment of CSR strategy is considered as crucial component for the
competitiveness of the entity and it plays an important role for improving brand image,
retaining top and saving operational costs. Sustainability report means a report that gives an
overview of economic conditions, environmental utility and social background of a country.
One of the most important aspects of the sustainability reporting is stakeholder theory
whereas Green economy theory plays a pivotal role in preparing sustainability report of the
organization.

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2. Introduction
Objective of the task is to state the importance of corporate social responsibility for
the entities in fulfilling their operating as well as financial objectives. The report will further
provide explanation regarding whether sustainability reporting against other concepts of
reporting offers holistic view. It will further recognise and provide 2 theories to explain the
spirit of sustainability reporting in better way. In the next part of the report it will focus on
the overview of ASX listed company Nearmap and sustainability reporting of the entity based
on the sustainability reporting scoring index (Deegan& Islam, 2012).
3. Part A
i. Importance of corporate social responsibility (CSR) for the firms operating
with the financial objectives
CSR has become the major standard in context of business practice and the entities
those are committed towards CSR can enhance their overall reputation. Establishment of
CSR strategy is considered as crucial component for the competitiveness of the entity. It
represents the procedures and policies are as per requirement that integrates the
environmental, social, ethical, consumer concerns or human rights into the core strategy and
business operations (Eizenberg & Jabareen, 2017). For the entities with financial objective,
CSR plays an important role for the below mentioned purposes –
 Improving brand image – being socially responsible the entity can boost its image and
build the brand. Through projecting positive image the entity can enhance its brand
value that will in turn not only make the company financially profitable but also
socially conscious (Tai & Chuang, 2014)

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 Retaining top talent – most of the employees prefer to feel that they are the part of
something big. CSR enhances the employee’s power to leverage corporate resource at
their disposal for doing well. Further, to be the part of any strategy that may help to
achieve big targets may lead to greater productivity
 Saving operational costs – through reducing the use of resources, emissions and
wastes, the entity may help environment as well as saving the money. Following some
simple steps, the entity will be able lowering the utility bills as well as achieving
savings in operational cost (Saeidi et al., 2015).
Apart from above, CSR also provides the following benefits –
 Access of finance – investors always prefer to come back to the reputable business
 Recognising opportunities for new business – CSR can help in developing new
service or products
 Reducing regulatory burden – good relations with the local authorities make business
operation easier.
 Attract positive attention in media while taking part in ant reputable business (Cheng,
Ioannou & Serafeim, 2014).
ii. Sustainability reporting in contrast with relevant other reporting concepts
represents a holistic view of corporate social responsibility.
Business is a part of society since it takes necessary resources and work forces from
the society. Therefore, there are certain responsibilities should be undertaken by the business
organizations. In the new age of business world, business organizations are held responsible
for affecting the environment and social aspects. According to European communities social
responsibility not only means fulfilling the legal aspects and but also integrate the business
activities with the society (Global Reporting Initiative, 2019). Being a part of society,

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corporations whether large or small need to understand the social reasonability and the
concept of sustainability development.
Sustainability report means a report that gives an overview of economic conditions,
environmental utility and social background of a country. This report helps the corporation to
set the organizational goals based on a country’s economic and social conditions. Therefore,
it is more comprehensive and concise that other non-financial reports like corporate social
reports, triple bottom line reports. Thus, it is one of the most important parts of integrated
reporting. The sustainability report is prepared according to the standard mentioned in Global
Reporting Initiative (GRI) (Integratedreporting.org, 2019).Therefore, GRI aware the business
organizations to understand their impact on the environment. Using the GRI guidelines,
organizations disclose their activities that affect the environment positively or negatively. In
the year 2016, GRI has introduced revised and restructured guidelines in preparing the
sustainability reporting (Searcy & Buslovich, 2013). The new guideline is recognised as G4
sustainability reporting guidelines that replaced the previous GRI standard of sustainability
report. The G4 guidelines mainly focus on principles of reporting, objectives of the standards
and proper implementation of the reported principles. Therefore, sustainability report not
only provides a strong base in preparing corporate social responsibility but also it represents a
holistic picture of corporate social responsibility (Maas, Schaltegger & Crutzen, 2016).
iii. Theories on sustainability reporting
At the end of 1990, the importance sustainability reporting has be realised in the
world of business. Now it has become the most indispensable part of the business
organisations. During the research of past six decades, it has improvised the concepts and the
framework of sustainability report. As per the study the sustainability report is based on
various theories, such as legitimacy theory, institutional theory, stakeholder theory, positive
accounting theory (Morioka & de Carvalho, 2016).

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According to the study, the one of the most important aspect of the sustainability
reporting is stakeholder theory. Stakeholders refer to the employees, customers, suppliers,
creditors, shareholders, and government and the business organisations need to consider the
needs, demands and grievances. Sustainability reporting helps to protect the stakeholder’s
interest through transparency, creating strong brand images and maintain the rules and
regulations. As per the stakeholder theory, stakeholders are affected by the activities of the
activities of the related organisation. The theory also defines that there are two types of
stakeholders such as, primary stakeholders and secondary stakeholders. Primary stakeholders
are directly affected by the decisions and the activities of the organisation as compared to the
secondary stakeholders (Hörisch, Freeman & Schaltegger, 2014). From the view point of
stakeholder firm’s main objective is to maximization of profit, in long run they are mainly
focused on the perpetuity, growth and survival of the corporation. Therefore, stakeholders are
the key aspect of the organizational success, if they are satisfied shareholders help to attain
the goals and objectives of the organisation. On the other hand, they are antagonist when they
oppose the organisational decisions. Therefore, the innovative aspect of the Shareholder’s
theory plays an important role in holding the research on CSR. Therefore, the fundamental
aspect of this theory reveals that firms are influence by the various forces from the society
and they have to take reasonable steps to deal with the pressure to achieve the competitive
advantage (Fernando & Lawrence, 2014).
It is very difficult for an organisation to analyse the relation between sustainability
performance and sustainability disclosure. There are various theories that give an overview of
sustainability performance and disclosure. Among all other theories legitimacy theory states
sustainability disclosure helps to establish a framework of sustainability performance and it
creates a new perception among the public (Hummel & Schlick, 2016). Therefore,
Legitimacy theory explains that the organisation as a part of society it has to act as per social

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norms and bonds. Thus, in other words, a social contract exists in between the organisation
and the environment (Fernando & Lawrence, 2014). The concept of legitimacy theory defines
the importance of social and environmental disclosures and its proper implementation.
Therefore, if an organisation fails to take the social responsibility and ignores the value of
environment then the organisation cannot survive. According to legitimacy theory
organisations take society contributes resources, labour to form a business organisation, on
the other hand, the organisation has to produce its product for the benefit of the society.
However, the legitimacy theory also states that it is sometimes difficult for an organisation to
fulfil all the changing demand of the society or it is impossible to equate the organisational
objectives with social objectives. The consequence of this deficiency may give a rise of
legitimacy gap. It is to be noted that a company should maintain adequate level of legitimacy
to make parity with the organisational goal and social welfare. As per the study, the selected
company named Nearmap Ltd is involved in continuous improvement in environmental
development programme, public safety and health development. According to the goal and
objective of Nearmap Ltd, the company has taken certain policies regarding the welfare of
employees, consultants, contractors and other related parties. The main principles of this
policy highlight training and development of employees, safe working environment and
measures of environmental protection (nearmap.com, 2018). Therefore, it can be said that
legitimacy theory helps to develop and organisational behaviour in the society.
Part B
iv. An overview of Nearmap Limited Company:
Nearmap Limited is one of most renowned company in aerial imagery technology
business in Australia. The company was established in the year 2007 in Perth, West Australia
by Stuart Nixon. The company is now a listed as ASX200 technology company. The

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governments and the large companies only accessed initially aerial images. The process of
collecting digital image takes a long time and expensive too since a survey company had to
be arranged to take the pictures of a particular area and then the images should be assembled
to create a the map. Since 2007, Nearmap has changed the overall scenario with its new
innovative ideas and high quality images in the world of aerial imagery technology
(nearmap.com, 2018). The company aim to help the users by providing an opportunity to visit
the site virtually to get the deep, computerised vision of the interested area. It helps the users
to take important decisions, streamlined operation at a lower cost and within time. The main
objective of Nearmap Limited is to accredit all the business organizations whether it is small
or large with its reliable, high quality image and detailed information of the interested
location. It aims to create a new perception among the entrepreneurs to see the world
(nearmap.com, 2018) (Annual report 2018, Pg no.3)
The company follows strong governance within the organisation to avoid confliction
and to achieve competitive advantage for further growth and development. As per the
governance of Nearmap, it has established a concrete code of conduct to protect the
shareholder’s interest and helps them to understand the business ethics of the business. This
code of conduct is created not only for the shareholders but also it is applied to all the
employees, top level officers, directors, agents and other stakeholders of the company. The
objective of the code of conduct is to guide the employees and the staffs to follow the
organisational ethics and the principles. If the employees fail in adhering the code of conduct,
they will be penalised for breach of code. Therefore, it is the responsibility of the employees
to enhance the reputation of Nearmap Limited. According to this company, the principles of
Corporate Code of Conduct are mainly highlighting the performance, simplicity, leadership
quality and commercial aspect. The principle of performance states an employee’s
willingness and passion to work as a team, individual responsibility to take the responsibility

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to take the risk to achieve success. On the other hand, simplicity aspect refers a non-
bureaucratic environment within the organization and it ensures clear communication system
among the staffs (nearmap.com, 2018). As per the principle, a true leader shows the way of
success, thus it is important to provide proper direction. As a leader, the person should be
innovative in nature and take proper steps to motivate the employees. He should take the
decision in a strategic way for the welfare of the employees and the business. According the
commercial aspect, the management should take proper responsibility while taking the
financial decisions. It shall possess proper knowledge regarding the market and engage them
in exploring new markets (Annual report 2018, Pg no.31). One of the most important aspects
of this guideline is honesty. The shareholders, employees and the directors of the organisation
should respect each other and maintain favourable work environment in the organisation. The
code of conduct of Nearmap strictly prohibits the employees to discriminate the associates or
the colleagues as per their religion, gender, nationality and colour (nearmap.com, 2018). The
company also declared certain policies regarding the code of conduct where, directors should
follow the standard of Corporations Act and they should not take the personal advantage of
confidential information. Nearmap has created a strong framework on corporate governance
based on the principles of ASX Corporate Governance Council. As per the regulations of
corporate governance the board should take the necessary responsibility on proper
implementation of the decisions, policies and practices of the management. They help the
organisation to build its own mission, vision and values without affecting the public interest.
The board have to formulate strategies to attain predetermined goals and objectives without
wasting the available resources. The organisation should clearly disclose the terms and
conditions of appointing and reappointing the managing directors and top- level executives
(nearmap.com, 2018). They should monitor the overall performance of the organisation and
take decisions accordingly. In order to maintain the corporate governance properly Nearmap

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is focused on the activities of audit and risk management committee and the decisions of the
committee of remuneration. The company needs to inform all the decisions and changes to
the ASX immediately (nearmap.com, 2018) (Annual report 2018, Pg no.103). Therefore, it
can be assumed that if a company follows the rules and regulation properly it will reflect a
fair picture of financial statement.
According to the financial report of 2017-18 and 2016-17 there is a sharp increase in
Annual Contact value which reflects active subscription value of particular year. In the
financial year 2016-17, the value of Annualised Contract was $7,832m which has been
increased by 41% in the financial year 2017-18 therefore, increase in ACV determines the
revenue growth. The statement of consolidate statutory profit and loss also reflects an
increase in revenue of 32% as compared to financial year 2017-18.As per the statement the
company earns interest income and t rebate earned from paying tax on payroll(nearmap.com,
2018). The financial report of Nearmap states a reduction in tax expense in comparison with
the financial year 2016-17, $2.8m as the rate of US income tax has reduced. The total asset of
the company in the year 2016-17 shows $74,415m and $82,487m in the year 2017-18. As
compared to 2016-17, the cash position has decreased to $17.5m due to shortage of cash
balance. Therefore, these balances shows an improvement in program and the new product
launched in the market has successfully occupied a remarkable position. Since the company
has, favourable cash flow statement, adequate asset balance in the statement thus, it can be
said Nearmap is strong enough to meet all the debts and liabilities (nearmap.com, 2018)
(Annual report 2018, Pg no.62 to 65).
v. Sustainability report scoring index
Fundamental principle for soft and hard disclosures applied for environmental index
and expands for covering and integrating environmental, economic and social dimension for
sustainability (Ching, Gerab & Toste, 2014). Scoring index for sustainability report includes

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3 major parts – (i) profile disclosures (ii) performance indicators and (iii) disclosures on the
management approach. Different steps are involved in integration of sustainability report
index. 1st step is integrating the part 1 into new scoring where items under index are matched
with the items disclosed as per the list of GRI (Ong, Trireksani & Djajadikerta, 2016).
Scoring index for sustainability report will be as follows –
Category Items
Maximum
scores
Hard disclosures items: A1 - A4
A1 Governance structure and management systems 9 9
A2 Creditability 5 5
A3 Economic performance indicators (ECP) 3 18
Environmental performance indicators (ENP) 11 66
Social performance indicators – labour (LAP) 6 36
Social performance indicators – human rights (HRP 9 54
Social performance indicators – society (SOP) 5 30
Social performance indicators – product responsibility (
PRP) 5 30
A4 Spending related to sustainability 2 2
Total hard disclosure items 55 250
Soft disclosure items: A5 - A7
A5 Vision and strategy claims 7 7
A6 Sustainability initiative 3 3
A7 Disclosures on management approach - economic 3 3
Disclosures on management approach - environmental 9 9
Disclosures on management approach - labour 6 6
Disclosures on management approach - human rights 9 9
Disclosures on management approach - society 5 5
Disclosures on management approach - product 5 5
Total soft disclosure items 47 47
Total disclosures 102 297
vi. Sustainability report of Nearmap
It is identified that Nearmap does not prepare any sustainability report. Analysing its
annual report for the year closed in 2018 it can be identified that Moreton Bay Koala Rescue

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(MBKR) which is a voluntary non-profit organisation involved in care and recue of sick or
injured koalas using Nearmap since 2015 for tracking development that may disturb the
habits of natural koalas and searching best place for them. Apart from that Auric solar that
provides full service to commercial as well as residential solar power has been introduced by
Nearmap in context of its sales, estimation and designing of the workflows through
integrating the imaginary cloud based areal with the help of design software from Aurora.
With the superior clarity and detail the organisation is expected to identify the obstruction
confidently and generate accurate quotes. This is expected to result into less amount of
cancellation and changes in orders and in turn more accurate designs will enhance the
experience of the customers (nearmap.com, 2018). In addition, the entity manages the issues
related to stormwater efficiently through using the services of NEORSD (Northeast Ohio
Regional Sewer District). NEORSD provides the treatment facilities for waste water and
intercept the sewers in the area of Cleveland metropolitan area and owns as well operates 3
treatment plants for wastewater. Nearmap is used by NEORSD as the critical tool for
assessing changes in the impervious roofs, surfaces that can be used for creating storm water
run-off (nearmap.com, 2018). Another social responsibility that is carried out by Nearmap is
that it actively participates in searching as well as rescuing the missing persons including
mentally ill, elderly persons, children, murder victims and persons charged with criminal
matters. Accuracy and speed is crucial while locating the missing persons owing to some
reasons like providing them best chance for survival, making sure that they don’t need to
travel far from the point last known and assure that evidences found are in best condition for
the purpose of forensic analysis. The company does this with the help of Queensland police
and this helps to improve the social image of the entity. Further, its historical library in
context of its images aids in investigation of the cases those are years old (nearmap.com,
2018) (Annual report 2018, Pg no.24-28).

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Hence, if the social responsibility of the entity is compared with the above presented
table for sustainability report scoring index it can be stated that under hard disclosures, the
entity is following the disclosures for environmental performance, social performance
towards human rights and society (nearmap.com, 2018). Apart from that it mentions
regarding its management and governance structure under the annual report in separate
section. Further, under soft disclosures, it discloses the management’s approach towards
society, environment and human rights. Hence, even if the entity does not prepare separate
sustainability report, under its annual report is discloses all the items included under scoring
index table except the product responsibility for society (nearmap.com, 2018).
Conclusion
From above it is concluded that Nearmap follows strong governance within the
organisation to avoid confliction and to achieve competitive advantage for further growth and
development. Further, it has established a concrete code of conduct to protect the
shareholder’s interest and helps them to understand the business ethics of the business.
Scoring index for sustainability report includes 3 major parts – (i) profile disclosures (ii)
performance indicators and (iii) disclosures on the management approach. However, as
nothing is mentioned regarding Nearmap’s social responsibility in their annual reports, the
same cannot be compared sustainability report scoring index.

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