ACCT209, Semester 2: Sustainability Accounting and CSR Report

This report delves into sustainability accounting and corporate social responsibility, providing a historical overview and defining key concepts. It addresses specific issues, including the application of two ASX corporate governance principles and their impact on business performance. The report argues that the ASX principles are rooted in system-based theories, not solely positive accounting theories, and supports this claim with research on the positive correlation between corporate governance and financial results. It also discusses challenges in corporate responsibility reporting, such as high investment costs and the complexities of aligning business values. The report concludes that corporate responsibility reporting benefits businesses and stakeholders by promoting ethical practices and transparency. The report utilizes examples, research, and analysis to provide a comprehensive understanding of the topic.

Sustainability Accounting and Corporate Social Responsibility
Topic: Sustainability Accounting and Corporate Social Responsibility
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Sustainability Accounting and Corporate Social Responsibility
EXECUTIVE SUMMARY
This report includes the brief history and concept of sustainability accounting and corporate
social responsibility. After this it included the 5 issues. Issue 1 is about any two corporate
governance policies among the 8 principle of ASX. Issue 2 discuss the how the chosen 2
principle will lead to improvement of the business. Issue 3 is about justify the claim that
corporate governance is derived from accounting theories not the system based theories. Issue 4
is discussed about the research on how corporate governance improves the financial result. Issue
5 has discussed about some challenges faced in corporate responsibility reporting.

Sustainability Accounting and Corporate Social Responsibility
Table of Contents
INTRODUCTION...........................................................................................................................3
DISCUSSION..................................................................................................................................3
A brief history of Sustainability accounting and Corporate Social Responsibility.....................3
Concept of Sustainability accounting and corporate social responsibility..................................4
Answer to issue 1.........................................................................................................................4
Answer to issue 2.........................................................................................................................5
Answer to issue 3.........................................................................................................................6
Answer to issue 4.........................................................................................................................7
Answer to issue 5.........................................................................................................................7
CONCLUSION................................................................................................................................9
REFERENCE LIST.........................................................................................................................9

Sustainability Accounting and Corporate Social Responsibility
INTRODUCTION
This report starts with a brief overview and the concept of the sustainability accounting
and corporate social responsibility and then it discusses about 5 issues. Issue 1 explains the two
corporate governance principles and describes with the use of relevant examples. Issue 2
discusses about whether choosing the two principles will lead to improvement in the
performance of business. Issue 3 discusses and claims that ASX corporate principles are based
upon the positive accounting and not the system based theories. Issue 4 discusses about showing
researches, which states that improvement of corporate responsibility leads to improvement of
financial result. Issue 5 discussed about the challenges faced in preparing the corporate
responsibility report.
DISCUSSION
A brief history of Sustainability accounting and Corporate Social Responsibility
Gray has come up with the concept of sustainability accounting and the three different
methods: Cost for sustainable, Pure Inventory Capital accounting and Input and Output Analysis.
Sustainability cost is the cost for the organization to spend in the financial year to bring
back the sustainability of the company to its original condition (Bouten et al. 2015). Pure
Inventory capital is the accounting of the natural stock which change in the level. Input and
Output Analysis is the accounting of the materials (input) and the product (output).

Sustainability Accounting and Corporate Social Responsibility
The evolution of corporate social responsibility is as old as the concept business for any
organization came. The first company to come up with CSR was Shell in 1988. The father of
modern CSR is Drucker.
Concept of Sustainability accounting and corporate social responsibility
Sustainability accounting is an accounting practice by company to be more sustainable. It
follow the subcategory of accounting which states the discloser of non-financial information to
stakeholders. It is consider in taking decision and implementing new policies that will affect the
performance of the company.
Corporate social responsibility is a thing which is beyond charities, its concept based
upon the company to act beyond its legal obligation to look over the social and ethical
environment considering not only business process but for the benefit of society. CSR concept
pressurizes the company to be more transparent to their employees, customers, creditors,
suppliers and other stakeholders. The concept of CSR is undertaken so that the company
performs their activities in an ethical manner.
Answer to issue 1.
The two principle of 8 Australian Security Exchange ‘corporate governance principles’ are:
1. Acting ethically and responsibly – For any listed organization it is one of the most
valuable asset and also most difficult to rebuild. Any listed company investors and other
stakeholder will expect to act ethically and responsibly. Following this principle is wider
than legal related matter as it involves acting honestly and fairly, considering
environment in process of business, working with same clients who follow this

Sustainability Accounting and Corporate Social Responsibility
principles, respecting its employees and strict regulation on child labour. Acting ethically
and responsible will enhance the image of the listed company in market which will
benefit the company in long run. The board of listed company should come up with
management team taking care of company acting ethically and responsibly.
2. Fair and reasonable remuneration – A listed entity must pay fair remuneration to retain
and attract directors and high level executive, to make them feel motivated and highly
efficient.
Steps that listed company need to take for complying these 2 principle are:
 Increasing of Diversity.
 Competent Board Member should be appointed.
 Ensure of information timely.
 Risk Management should be priorities .
 Performance of Board should be evaluate.
Answer to issue 2.
The two selected principles will lead to improvement of business performance as
corporate policies can only be effective if it has proper implementation. If an organization is
acting ethically it will improve the discipline of the organization (Cheng, Ioannou and Serafeim
2014). Fairness is also important in case of improving the performance of the business. For
example as manager push employees to give their best which lead to high pressure and fall in
morale, in such situation it becomes important for manager to be fair and responsive.
Remuneration is also important in leading the performance of the company as if employees are
remunerated well for their given job which will improve the efficiency of employees. For

Sustainability Accounting and Corporate Social Responsibility
example if a listed company has well structure business but lacks in payment to its employee,
there will be high level of employee turnover which will harm the performance of the company
in long run (Duff 2016). So it’s become important to have fair and reasonable remuneration in a
listed company.
Answer to issue 3.
ASX corporate governance theory are derived from System based theories not all from
positive accounting theories as the framework adopted to explain the ASX principle for
corporate governance is based on System based theories (Epstein 2018). All listed company has
their values and guide to practice the business process along with the change in internal and
external environment. In such the changes which are required by listed company is been explain
in system based theories (Fifka 2013). As system based theories explain the adaption process
which a listed company adopt in external practices in the process of operation. The main concern
of system based theory is how organization relates to the external environment, how an
organization get affected by social factor, and how the organization adapts and make changes. So
it can be said the organization will change as per the external environment expectation to gain
legitimacy. System based theorist has claim that this theory have a strong impact on the
improvement of the organization’s structure. The aim of this theory is the explanation of the
behavior on how to adopt new changes which reshape their organization. It is evidently proven
that system based theory is relevant to the business operations (Golob and Bartlett 2017).
Answer to issue 4.

Sustainability Accounting and Corporate Social Responsibility
Yes, there are lot of research which suggest that improved corporate responsibility
reporting have improved the financial result. The recent study on this by Cristina Manescu,
“Economic Implication of Corporate Social Responsibility and Responsible Investment” at the
university of Gothenburg’s school that states corporate responsibility reporting does not have any
bad impact on profit, but in some cases it have positive impact in the financial result (Grougiou,
Dedoulis and Leventis 2016).
Another research on this “The Economic and Politics of Corporate Social Performance” which
states that greater corporate responsibility have a better result on the financial performance of the
company.
Summing up the research it can be concluded corporate social performance have a high
correlation to with accounting base measure that is corporate financial performance. The analysis
suggest a great relationship between the corporate social responsibility and the financial
performance of the company (Leipziger 2017). So it does not matter how an organization looks
to corporate social responsibility, it does bring benefit to the company. In the point of executive
believe that CSR can improve the profit possibly. And today every limited company is engaged
in CSR and link it to the profit.
Answer to issue 5.
The biggest challenges in implementation of the corporate responsibility report is the
high investment cost of the economic demand. As considering the three aspect of the corporate
responsibility: social, economic and environment while ensuring the limited company to be not

Sustainability Accounting and Corporate Social Responsibility
on unsustainable line of map that meet the demand and the cost is the main challenge in
corporate responsibility report (Peters and Romi 2014). Moreover the limited company provide
funding to different trust as of its transparency and services. It is also to be noted that limited
company have limitation on spending money as it there should be balance between economic,
social and environment. In CSR implementation challenges of the change in the mindset for the
market is not the problem as it can be solved. For such purpose limited company have to work as
per the guidelines and keep themselves updated. However there is some challenges faced by
limited company when it comes accomplish big goals.
And the challenge faced by business in living up to the principle outlined in report as
business founder should have the same business values and principal because if founders have
different principal than there will be difficulty in making company goals and securing funding.
And so it is common that business partner come together has having the same vision (Watson
2015). Though the difference can be arise as business move forward and make long term plan.
There is also one most common challenge faced by business in implementing the principle is that
many times companies consider wrong definition in ethics and compliance (Searcy, Dixon and
Neumann 2016). As ethics refer to the manner in which the stakeholder of the company should
behave and compliance on the other hand mean conducting business as per the rules and
regulation (De Villiers, Rouse and Kerr 2016). For example if a company compliance officer
handles all rules and regulation work of the company so that person should not be managing the
finance part of company, as this can hamper implementation of principle.

Sustainability Accounting and Corporate Social Responsibility
CONCLUSION
However it is to be concluded that corporate responsibility report encourages business
performance to a wide range including all stakeholders. As CRR has a variety of the policies like
providing the investor about how the company manages all three aspect of business whether it’s
economic, social and environment. So it can be said that corporate responsibility report is the
best thing into the businesses both large and small. In this way it enables to provide the
information to all stakeholders how company give importance to ethics, service to consumer.
And it can be said that CCR is something which benefit the whole society.

Sustainability Accounting and Corporate Social Responsibility
REFERENCE LIST
Bouten, L., Everaert, P., Van Liedekerke, L., De Moor, L. and Christiaens, J., 2015, September.
Corporate social responsibility reporting: A comprehensive picture?. In Accounting Forum (Vol.
35, No. 3, pp. 187-204). Taylor & Francis.
Cheng, B., Ioannou, I. and Serafeim, G., 2014. Corporate social responsibility and access to
finance. Strategic management journal, 35(1), pp.1-23.
Duff, A., 2016. Corporate social responsibility reporting in professional accounting firms. The
British Accounting Review, 48(1), pp.74-86.
Epstein, M.J., 2018. Making sustainability work: Best practices in managing and measuring
corporate social, environmental and economic impacts. Routledge.
Fifka, M.S., 2013. Corporate responsibility reporting and its determinants in comparative
perspective–a review of the empirical literature and a meta‐analysis. Business strategy and the
environment, 22(1), pp.1-35.
Golob, U. and Bartlett, J.L., 2017. Communicating about corporate social responsibility: A
comparative study of CSR reporting in Australia and Slovenia. Public Relations Review, 33(1),
pp.1-9.

Sustainability Accounting and Corporate Social Responsibility
Grougiou, V., Dedoulis, E. and Leventis, S., 2016. Corporate social responsibility reporting and
organizational stigma: The case of “sin” industries. Journal of Business Research, 69(2), pp.905-
914.
Leipziger, D., 2017. The corporate responsibility code book. Routledge.
Peters, G.F. and Romi, A.M., 2014. The association between sustainability governance
characteristics and the assurance of corporate sustainability reports. Auditing: A Journal of
Practice & Theory, 34(1), pp.163-198.
Searcy, C., Dixon, S.M. and Neumann, W.P., 2016. The use of work environment performance
indicators in corporate social responsibility reporting. Journal of Cleaner Production, 112,
pp.2907-2921.
Watson, L., 2015. Corporate social responsibility research in accounting. Journal of Accounting
Literature, 34, pp.1-16.
De Villiers, C., Rouse, P. and Kerr, J., 2016. A new conceptual model of influences driving sustainability
based on case evidence of the integration of corporate sustainability management control and
reporting. Journal of Cleaner Production, 136, pp.78-85.