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Accounting Standards for Social and Environmental Issues

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As more companies responds to calls to report on social and environmental issues an accounting standard covering this is urgently required. Critically discuss this statement, concluding with whether or not you agree with it.

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It is true that a greater number of companies in recent years have initiated social and environmental programs. This results from several different reasons, which include activism, corporate pressure and investor relations. There are even a certain percentage of investors that will not invest large sums of money with companies that do not show solid sustainability efforts. Because this has become a central issue in recent years, the Global Reporting Initiative has been developed. This initiative, which is referred to as GRI, is an organization that has published standards in the field of social and environmental issue reporting for corporations. While this is not required by federal law or mandatory through any agency, the GRI acts as a set of compliance for companies that wish to utilize the standards offered.

We can critically analyze the need for accounting standards in the area of social and environmental issues, which include both the advantages and disadvantages.

If an accounting standard were enacted for the reporting of social and environmental issues, it would increase corporate governance because it is an act of sustainability. This would be a benefit to current investors, potential investors and creditors alike. Companies that show high performance from an accounting standpoint would be viewed more favorably, in the majority of cases. The accounting ...

Solution Summary

This solution provides an extensive discussion regarding accounting standards in relation to social and environmental issues.

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