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A companys decision to report particular issues that form an opinion on how appropriate its practices are and its

quality is highly analyzed given the fact that the fields of ethical, environmental and social [ESE] reporting have continued to develop rapidly in an international scale. It has become highly significant for stakeholders that companies give an account towards its actions, demanding organizations to demonstrate its acceptance of its ethical, social and environmental responsibility. This giving of an account encompasses accountability the main reason why stakeholders push to receive ESE disclosures. Such acceptance of environmental, social and ethical should be demonstrated by providing hard copy reports that are transparent, includes quantified goals and achievements and giving a balanced opinion on the issues the firm is facing. Current developments in the field of ESE reporting can be observed through the standards and guidelines that have been created by organizations such as the Global Reporting Initiatives (GRI) and the Institute of Social and Ethical Accountability (AccountAbility.) These organizations developed guidelines containing directions pertaining to the process of reporting and what to include in the report. A prominent problem that needs to be addressed with voluntary disclosures is its lack of completeness and this is the main concern of the journal The Ethical, Social and Environmental Reporting Performance Portrayal Gap. A reporting- performance portrayal gap is the difference between what the company has actually done with what the company has claimed theyve done in their reports. This gap represents the lack of accountability, the larger the gap, the less the company feel that theyre responsible. An analysis of this was done in the journal, focusing on Alpha, a company in an industry that considers health and safety issues as significant. The analysis of the performance-portrayal gap in Alpha was done by comparing the Year 1993 and 1999 ESE report of Alpha with the external disclosures from a variety of sources relating to Alphas activities during those years and determining if whether Alpha have reported important issues that have occurred. It is duly noted that Alpha does not claim to have accountability with all of their corporate impacts. In fact, it has been observed that the positive achievements in the ESE disclosures were exaggerated while negative issues, if included at all, were only briefly noted. In the year 1993, Alpha was frequently prosecuted and fined due to what they claim an accidental breach of environmental regulations. An example would be when Greenpeace accused Alpha of discharging wastes into them sea, suing them on the grounds of the Water Resources Act 1991. This case was discharged after a failure to gain evidence to correlate Alpha with the illegal act. This was not mentioned in Alphas ESE reports despite the numerous media coverage surrounding it. An implication of the objection of accountability. In addition, Alpha was infamously fined more than 6,000 due to breaches concerning the endangerment of human health. This again was not discussed in the disclosures, even though the fines were hefty enough for shareholders to be concerned. Overall, Alpha only included 11 prosecutions against them from breaking the environmental law with only brief outlines of the reasons. The overall impression of the 1993 report is that Alpha is trying hard to do better while also expressing their regrets on their mistakes. In addition, there is no mention of

embedded governance structures, there is a lack of quantification of future goals and limited information of negative impacts that were disclosed reported. In Alphas 1999 report, though much longer than the 1993 report with additional quantification of targets, is more or less similar in nature. Both reports on the acknowledgement that the company needs to do more and perform better. A new management system is introduced in the 1999 disclosures including explanations regarding its compliance with US and UK responsible care requirements. Despite these improvements, Alpha has caused more protuberant disruptions to the environment and society, having less regard to its ethical engagements. In its ESE 1999 report, the firm states that it is working to resolve a condition concerning a chemical X (a substance dug by Alpha) that may cause harm to health. It appears that the chemical is relatively unhazardous, but such is not the case. The chemical X is truly poisonous, capable of causing liver and kidney cancers, decreasing lifespan and reducing fertility in humans. This understatement and belittling of important and vital issues affecting life is extremely alarming. In addition to Alphas environmental disruptions, the firm can be criticized to have little ethical reputes with its employment treatment and disregard for human rights. What stands out in the analysis of the journal research is that the more prominent problem in voluntary environmental, social and ethical reporting is not the omission of significant events but the difference of portrayal between reporting entities of similar happenings. This difference or gap constitutes to the low perceived accountability of Alpha, and this incompleteness would not be tolerated in financial reporting. The difference in coverage from external parties raises a question about the degree in which stakeholders are included in the reporting process. This raises concern on how indispensible existing legislations and standards pertaining to social corporate responsibility are, giving an impression that it only acts as a legitimating tool. Consistent progress should hence be made in working towards establishing standards to guide management to a more detail-specific, fairly balanced and complete disclosures of corporate environmental, social and ethical responsibilities. The basis for an improved practical demonstration of ethical and environmental concerns lies on the social contract with the society it operates in. The source of power held by institutions is never undeviating thus it must profess its legitimacy by demonstrating that the consumers are given services they require and at the same time persuade them that the assemblies benefiting gain the approval of society. Matthews (1995, p.667) states that the future survival also are based on: delivering of some socially anticipated culminations to society in general; and the distribution of advantages whether it be economic, social or political from where the power derives. In addition, one motivation that induces a firms management to undertake additional voluntary disclosures is to enhance the legitimacy of the organization, as suggested by Dowling and Pfeffer (1975, p 122): Organizations seek to establish congruence between the social values associated with or implied by their activities and the norms acceptable

behavior in the larger social system of which they are a part. In so far as these value systems are congruent we can speak of organizational legitimacy. When an actual or potential disparity exists between the two value systems, there will exist a threat to organizational legitimacy. In perspective, organizational legitimacy causes an increase in disclosures not because it is the right thing to do morally but because it is part of their mission to raise other parties interests on behalf of the stakeholders. In order to satisfy shareholders and serve them, it is significant that management maintain legitimacy for their organizations by preparing environmental, social and ethical accounting disclosures in order to establish accountability. It is important that we examine political voluntarism as well given that it is an inherent part of the modern accountability frameworks. A study from Francis Aristotelian states that: The exercise of virtue requires a capacity to judge, to do the right thing in the right place at the right time in the right way. The exercise of judgment then is not merely the routine application of rules or laws. Hence judgment has an indispensible role in the life of the virtuous person, which it does not and could not have in the life of the merely law-abiding or rule-abiding person. (Francis 1991, p.13) Consequently, accountability innately comprises of the idea of fairness, which straightforwardly means doing the right thing for society. Accountability does not only provide the involvement of organizations in complying with legal requirements and moral relationships, but also strives to create a frame of accountability in which political participation creates a better environment for political participation and construct a harmonized community (Wilson, 1993.) The understanding that accountability to stakeholders is the main drive of the preparation of environmental, social and ethical disclosures, it is rational to propose that in order to have a better accuracy and complete scope, stakeholders should be engaged in the process of reporting preparation. This is crucial in ESE dialogue, a guide in which management learns the priorities held by stakeholders and the aspirations they wish to see be reported. The issue of improving ESE reports not only consents to what the society demands and what the stakeholder expect, but it also address the situational barriers that halts the much needed improvement of voluntary reporting. The ethical codes of professional accounting should be enlarged in order to accommodate a growing encompassment of accounting and ethical behavior. The Generally Accepted Accounting Principle (GAAP) define the underlying values of modern accounting that are also supported by conceptual frameworks, limiting the adoption of a system much more acquainted with the overall impact of the business towards the environment and society. Corporate Social Responsibility (Gray et al., 1987) describes the inclusion of information about employee interests, community services, environmental impact and more of the sort as an extension of accounting reports. The lack of standards however creates an ambiguity on what should be disclosed and how the process should be done. The

conflict between financial criteria and matters involving the environment should be considered; an example would be Greys perspective (1993, p.53): A company may consider that employee protection is a good long-term financial investment or that accidents and injuries to employees are simply unacceptable to any reasonable, responsible and ethical organization. Either way, some basis which social, human and/or ethical matters can transcend immediate financial criteria has been established. So it is with environmental issues. It is clear from all the organizations with which we has dealings that until environmental matters are embedded into the performance system environmental matters will nearly always lose out to financial criteria. Additionally to provide guidance as how ethical treatment will be aided: We are simply convinced that change is essential because any system as accounting which reflect an economic theory which is so fundamentally socially and environmentally malign cannot itself lay legitimate claim to being environmentally benign. It is prevalent that the development of regulations pertaining to the preparation of ESE report will be slow and gradual, overcoming the barriers of improvement one by one along the way. Carol Adams journal on the ethical, social and environmental reporting-performance portrayal gap have exhibited the gap between actual performance and the case study company Alphas self-disclosed portrayal, revealing the significant amount of difference that consequently led to the realization that current guidelines are not sufficiently adept to increase accountability to stakeholders. It seems that guidelines and legislations of voluntary disclosures act only as a legitimating tool that a firm inhabit providing symbolic disclosures to appease the society. In addition, because stakeholders are significant partners of a business, they have a privilege to demand more disclosures from the firm. Obstacles such as current accounting principles, however, restrict the advancement and establishment of voluntary ESE guidelines and regulations. Unless environmental, social and ethical issues are embedded in the companys governance structure, it would be difficult to mandate firms to accept its social responsibilities. What is necessary in our opinion is the formation of a legislation that would make environmental, social and ethical reports mandatory for firms. We believe this to be the most effective way due to the fact that voluntary laws would be ignored or neglected by firms if there are no concrete specifications on what exactly is to be done and if there are no penalties, enforcements and punishment expected if they fail to oblige by the voluntary rule. Environmental, social and ethical issues are no doubt important and significant in all standpoints and companies with power to affect it have to be held accountable.