Corporate Accountability, Performance, and Legislation: A Report

This report examines the rationale behind government legislation requiring corporations to disclose social and environmental impacts, analyzing it through public interest, capture, and economic interest group theories. It explores the meaning of corporate accountability, detailing various aspects of corporate performance, including social, environmental, and financial aspects, that businesses should be accountable for. The report provides a comprehensive analysis of corporate accountability in relation to environmental, social, and market performance. It further explains the importance of profitability, customer satisfaction, employee satisfaction, and corporate governance. The report also highlights the significance of environmental auditing and its role in ensuring corporate compliance and sustainability.

Part A
Explain from a ‘public interest theory perspective' the rationale for the Government introducing
the legislation and how the government will ultimately assess whether any proposed legislation
should be introduced. (Marks =5)
Based on the public interest theory perspective, the government has introduced the
legislation because they have got the belief that the forecasted benefits to the society will higher
than the predicted costs of the projects (Ihlen and Fredriksson, 2018, p.21). The determination of
both the benefits and costs involves an exercise that is considered subjective. The evaluation
exercise is also necessary because it will imply that certain parties are likely to gain as others
bear costs due to the introduction of the legislation. Thus it is an act of balancing the two aspects
that is the benefits and costs (Stiglitz and Rosengard, 2015, p.5).
Predict form a ‘capture theory perspective’ the types of constituents that will benefit in the long
run from any social and environmental disclosure legislation. (Marks =5)
According to the capture theory, the party that is likely to be regulated is the one that will
capture the process of regulation with the intent to make sure a particular subsequent regulation
will serve its interests best (Beckett and Dalrymple, 2017, p.10). The disclosure by organizations
that obtain a variety of crucial social as well as environmental impacts will result in certain
implications for such organizations. Therefore, different actions will be taken by a variety of
industry associations so that they can impact the regulations that is by obtaining the support of
the individuals on the regulatory bodies (Gans and Ryall, 2017, p.30). Also, they could gain
support by use of membership of the body.

Predict from an ‘economic interest group perspective’ whether any potential legislation to be
introduced will lead to an increase in the accountability of corporations in relation to their social
and environmental performance despite any implications that this increased corporate
accountability might have for the financial success of large but heavily polluting organizations.
(Marks =5)
According to the economic interest group theory of regulation, everyone including the
regulators and politicians is often driven by self-interest. Based on the mentioned view, it is only
the regulators who can support the disclosure regulation, and this is especially when such
regulation is beneficial to them (Hefeker, 2018, p.10). Most of the bug organizations usually
have much higher levels of political power that is generally through financial support by either
the government or regulator. They could also get such a political power via control over a large
number of voters. Due to such strong political powers, it is often difficult to question on whether
there would require the enactment of a strong regulation that would adversely affect big
companies (McFarland, 2018, p.65).
Part B (Marks =20)
Using the various theories that you have learnt so far, please explain in your own words:
What does ‘accountability’ mean? (Marks =5)
Accountability is the assurance that one particular individual will be assessed based on
their behavior as well as performance in regards to something that they are responsible for. In the
corporate world, it entails being answerable to all the actions as well as the results of an
organization by different stakeholders.

What aspects of corporate performance do you believe that a business organization should be
accountable for? (Marks =15)
Several aspects of the corporate performance that I believe that a business organization
should be accountable for include, social performance, market value performance, profitability
performance, customer satisfaction, and growth performance. The other aspects of the corporate
performance that I also believe that an organization should be accountable for are, environmental
audit performance, environmental performance, employee satisfaction and corporate governance
performance. The corporate governance affects the functioning and development of capital
markets; thus it acts as a strong influence on the allocation of resources, an organization should,
therefore, be accountable for it.
A business organization is also accountable for environmental performance because its
performance environmental wise enables it to develop a positive image in the surrounding
society. Without a good public image, an organization will lose many of its customers; thus it
should be accountable for the environmental performance. Additionally, a business organization
should also be accountable for the satisfaction of the customers because they form a major
stakeholder in most of the enterprises across the globe. Without the customers, an organization is
likely to perform dismally. Apart from the mentioned aspects of the corporation, the other
element that an organization should be accountable for is the satisfaction of the employees
especially with the way that particular organization is managed in relation to issues of the
workers.
The employees form an essential part of every organization because they are the ones
involved with the management as well as the administration of the organization, thus without
them, the functions of an organization will automatically come to a halt. The market value

performance is another aspect that an organization should be accountable for. The mentioned
aspect is critical because it helps in the evaluation of the economic status of the other publicly
traded organizations.It also helps in the pricing of various items of a particular organization. The
growth performance is the other aspect that a business organization should be accounted for.
Every particular firm must ensure that its operations are growing towards a positive direction to
expand as well as grow in all the aspects of its operations.
The businesses that do not grow tend to incur losses because of maybe they lose many of
their customers who move to use the products of other companies offering similar products.
Another essential aspect that a business organization should be accounted for is the profitability
performance. The level of profitability in an organization helps to determine its liquidity level.
Often institutions offering loans always take into consideration the profitability level as well as
performance when giving out loans to them. A company with low profits has minimal chances of
securing a loan from a financial institution compared to the one with high profitability level.
Most of the customers may also look at the profitability performance of an organization while
buying their items.
It is believed that a firm whose profitability index is high tend to provide high quality
products and services; thus a lot of customers would prefer to purchase items from them. Based
on the mentioned concept on profitability performance, organizations should be made
accountable for their level of performance in regards to profitability Additionally, an
organization should be accountable for the social performance that entails ensuring that an
organization’s social mission is made a reality, irrespective of the kind of mission it is. Through
social performances, most of the organizations can effectively attain and grow to become
sustainable businesses that deliver value to their customers.

Also, the social performances of an organization will enable it to create benefits for most
of their clients as well as enhance social responsibility. By delivering value to the customers,
there will be much attraction of new customers as well as the retainment resulting in the
generation of huge profits. It is therefore crucial that an organization is made accountable for its
social performances. Another aspect is the environmental audit performance of an organization
that entails a process of reflecting on different categories of assessments to acknowledge the
management system implementation and environmental compliance gaps, together with the
corrective actions (Belle, 2016, p.335). Such action is often related to the functions of a financial
audit. Several reasons are attributed to environmental auditing. For instance, most of the business
organizations tend to carry out such audits due to significant concerns in regards to the impacts
of environment generally, previous accidents relating to the environment, insurance costs and
environmental liabilities, corporate image and marketing opportunities and the pressures from
environmental legislation.
Moreover, a lot of benefits are often generated by business organizations that carry out
environmental audit performance. One key benefit is the identification of the effects of activities
of an organization to the environment to help determine whether such a firm is operating within
the environmental laws that is critical for its survival as well as growth. The other benefit is that
through environmental audit performance, an organization can execute measures and procedures
with the intent to attain certain vital objectives and targets. Also, through the environmental audit
performance, organizations will be in a position to evaluate its performance environmentally as
well as its effectiveness measurement to attain the targets and goals set out by the management
team.

The business organizations that are involved in the environmental auditing tend, and this
helps them to comply with the environmental laws that are critical for their operations. Based on
the key benefits that are obtained from the environmental audit performances, it is important to
note that the environmental audit is a crucial aspect that an organization should be made
accountable for. Conclusively, the above mentioned aspects of corporate performance are
critical; thus any particular organization should be made accountable for to ensure that there is
smooth running and administration of organizations.

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