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Keywords Management accountability, Financial reporting, Ethical investment, Social responsibility
Abstract The purpose of this article is twofold. First, it assesses in detail the extent to which corporate reporting on ethical, social and environmental issues reflects corporate performance in case study company Alpha. This "reporting-performance" portrayal gap is a key measure of the extent to which an organisation is accountable to its stakeholders. Alpha's disclosures concerning its ethical, social and environmental performance for the years 1993 and 1999 were compared with information obtained on Alpha's performance from other sources. Two different pictures of performance emerged leading to the conclusion that, in the case of Alpha, reports do not demonstrate a high level of accountability to key stakeholder groups on ethical, social and environmental issues. Of particular concern is the lack of "completeness" of reporting. Second, the article assesses the potential of recent standards or guidelines developed by the Global Reporting Initiative (GRI) and the Institute of Social and Ethical AccountAbility (AccountAbility) as well as the industry's own "responsible care" initiative to reduce this "reporting-performance" portrayal gap and improve corporate accountability. The conclusions point to the need for other measures to improve accountability including mandatory reporting guidelines, better developed audit guidelines, a mandatory audit requirement for MNCs and a radical overhaul of corporate governance systems.
Introduction
Ethical reporting by companies has become increasingly prevalent since the mid-1980s and there is a comprehensive body of academic literature charting the extent to which multinational companies (MNCs) in particular report on ethical, social and environmental issues. The term "ethical reporting" encompasses reporting on all:
... those factors which are used by ethical investment funds to form an opinion on the appropriateness of an organisation's business practices (see, for example, Harte et al., 1991; Rockness and Williams, 1998). This may not include much of the information on employees that is generally considered to fall within the definition of "social reporting", but may include other issues which are not generally considered as "social reporting". "Environmental reporting" is clearly a subset of ethical reporting and generally also considered a subset of social reporting, but as the most common type of social and ethical reporting, warrants a separate label (Adams, 2002, p. 247).
Some attention has also been paid to analysing what and...