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The Impact of Social and Environmental Issues

   

Added on  2020-04-01

16 Pages3786 Words98 Views
Running head: THE IMPACT OF SOCIAL AND ENVIRONMENTAL ISSUES INTO THE BUSINESSThe Impact of Social and Environmental Issues into the BusinessPage 1

THE IMPACT OF SOCIAL AND ENVIRONMENTAL ISSUES INTO THE BUSINESSTable of Contents1. Background............................................................................................................................32. Motivation and Justification...................................................................................................43. Research Aim.........................................................................................................................53.1 Research Questions..........................................................................................................54. Literature Review...................................................................................................................64.1. A Brief Description of Social and Environmental Issues...............................................64.2. Effects of Social and Environmental Issues on Businesses............................................64.3. Ways or Strategies to Mitigate Social and Environmental Issues...................................74.4. A Concise Understanding of Positive Accounting Theory.............................................84.5. Role of Corporate Governance and Ethics within a Company.......................................85. Research Design and Method.................................................................................................95.1. Research Methodology....................................................................................................96. Ethical Considerations.........................................................................................................107. Expectation on Findings.......................................................................................................11References................................................................................................................................12Bibliography.............................................................................................................................15Page 2

THE IMPACT OF SOCIAL AND ENVIRONMENTAL ISSUES INTO THE BUSINESS1. BackgroundEnvironmental and social (E&S) risks or issues are denoted as the potential pessimistic outcomes for a business that are generated from their impacts on the natural ecological settingor the surrounding societies. Natural environment generally consists of water, soil and air, whereas communities of people comprise customers, personnel and local residents. The financial, legal and the reputational aspects of a business are likely to be affected, if it fails to manage E&S risks in an efficient way. For instance, in terms of finance, E&S issues might generate economic pressures on the clients’ end that can decrease both business and customervalue at large. It is the legal owners of the assets of a specific business who are held legally responsible to damage the environment, property or the human health, which in turn decreases customer value and affects reputation. It is believed that a business involved in E&S issues may face negative stakeholders as well as media attention with decreased market value (EBRD, 2014).Factors including gaining momentum of globalization and the introduction of new along withinnovative technologies have brought all sorts of social and ecological issues or risks to the world’s attention. These issues can be identified as worldwide poverty, diseases and natural disasters among others that not only influence the human beings, but the natural environment and the businesses as well (Modesto City Schools, 2004). There are various theories that can be considered for this study in order to understand the effects of E&S risks or issues specifically on the businesses. In this regard, amongst all the available theories, positive accounting theory is deemed as relevant for this specific research. In general, positive accounting theory (PAT) can be explored to explain and predict the accounting practices. These include understanding the accounting issues and the events as well. An important Page 3

THE IMPACT OF SOCIAL AND ENVIRONMENTAL ISSUES INTO THE BUSINESSperspective of positive accounting is that it can be described alternatively with the support of opportunistic viewpoints, which focus on holding the perspective of the managers belonging to a business entity, who act based on their self-interests (Kabir, 2011). 2. Motivation and JustificationThe research intends to determine and analyze the effects of E&S issues or risks on the contemporary businesses that operate in distinct regions throughout the globe. In order to draw valid inferences for this proposed research, an initial attempt will be made to identify the actual E&S issues that have an impact on the businesses. Thereafter, strategies to be adopted to address these issues along with verifying its possible consequences will be explored in this specific study. Increased concern over various E&S issues by the businesses that affect their profitability, reputation and customer value has motivated to undertake this study so that favorable outcomes are generated in the future. These favorable outcomes can be duly measured in the forms of ensuring increased business along with customer value, long-term sustainability and improved operational productivity among others. The study on the identified research issue is deemed as necessary for the modern organizations in order to perform their respective operational activities in such a way so that their business viability is maintained for a longer period. Businesses operating in this contemporary financial world intend to attain higher level of comparative advantage in comparison with others and increase profits in terms of market share at large. However, the emergence of distinct E&S issues or risks may restrict the businesses to fulfill their desired targets. For instance, creating air pollution and compromising product quality can noted as crucial aspects, which can lead towards decreasedsatisfaction level of the customers, impose adverse impact on the overall performance and Page 4

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