Dimensions, importance, methodology, organisations

1. Social responsibility Accounting
By-
Muskan Chopra

2. CONTENTS
1. INTRODUCTION
2. INFORMATION REPORTEDUNDER SOCIAL
RESPONSIBILITYACCOUNTING
3. IMPORTANCE
4. TRIPLE BOTTOM LINE
5. DIMENSIONSOF SUSTAINABILITY ACCOUNTING
6. BENEFITS
7. METHODOLOGY
8. ORGANISATIONS AND INITIATIVES FOR FINDING OUT
RIGHT PATH TO SOCIAL ACCOUNTING

3. Introduction
Social Responsibility Accounting also known as sustainability accounting, social
accounting, corporate social responsibility reporting and non financial accounting is a
branch of accounting that aims to define the results of an institution or organization and
its financial position from a social perspective since companies are relevant and affect
societies as a whole.
This is used for internal decision making and creation of new policies that will affect
organization’s economic, social and environmental performance.
According to the American Institute of CPAs, sustainability accounting involves
reporting a "triple bottom-line" of a company's economic vitality, social responsibility
and environmental responsibility.
In today’s dynamic business world, individuals and institutions are concerned more
with how business operations affect employees, customers, the community and the
natural environment than only business’s financial performance. Social responsibility
accounting seeks to quantify and report on this information.
Information Reported Under Social Responsibility
Accounting
Companies that follow social responsibility accounting may report on some or all of the
following issues:
 Statistics regarding employee health and job-related accidents.
 Emission rates, spills and volume of hazardous waste generated.
 Use of scarce resources such as water or lumber.
 Information about ethical initiatives within the company, such as labor practices,
education, philanthropic efforts, human rights and diversity.

4.  Importance
Social responsibility enhances solidarity amongst the
different segments of a society, and creates a high sense of
belonging in individuals with special needs such as the
disabled, unskilled individuals, minorities, women, youth and
others. It also enhances social stability as a result of social
justice and the supremacy of equal opportunities which is at
the core of the social responsibility of business corporations.
It also improves the quality of life in a society both in terms
of infrastructure and culture. It also enhances political
development and social awareness, which in turn will lead to
political stability and a sense of social justice since all
stakeholders are concerned with social responsibility, where it is a company’s
responsibility to preserve the environment and achieve a better quality of life for its
employees and community.
Triple Bottom Line
Triple Bottom Line (abbreviated as TBL or 3BL) is an accounting framework with three
parts: social, environmental (ecological) and finance (economical).
These three divisions are also called the Three Ps –people, planet and profit, or the “three
pillars of sustainability”.
Triple bottom line accounting means expanding the traditional company reporting
framework to take into account not just financial outcomes but also environmental and
social outcomes. Thus, it is based on economic, environmental and social measures of
performance.
Some key links between sustainability and business
performance are suggested by the International Finance
Corporation focusing on the “triple bottom line”

5. Dimensions of sustainability accounting
Financial accounting traditionally records the financially related stocks and flows of
organization in the form of the profit and loss account and the balance sheet.
Sustainability accounting tries to provide extra information that can be thought of in three
different dimensions:
 Timing - In this dimension the information can
provide a snapshot in time of the state of the
stock of goods and services or over a period of
time, the flow of goods and services arising
from the stock.
 Location of impact - This dimension is
concerned with where the impact is located in
the accounts. Is it internal or is it external.
 Type of impact - This dimension identifies the
impact as environmental, social or economic.
Benefits
Organizations committed to sustainability look beyond immediate profits to returns and
value, which can be achieved over many years and in way that have consideration of
environmental and social issues. The sustainability accounts can be used to:
 Collect information on environmental and socially related expenditure and link
them to financial benefits.
 Show how environmental and social external costs can decline over time with
commitment to sustainability.
 Highlight the social and environmental risks associated with current financial
performance and aid risk management.
 Identify which stakeholder relationships present sustainability risks and benefits.
 Encourage partnerships between stakeholder organizations.

6. Methodology
Reporting formats
The concept of social responsibility accounting is being carried out in an international
setting with a vast and growing level of experience in the measurement of sustainable
development. It recognises the role of financial information and shows how this can be
extended to the social and environmental level. Although there isn't an established
framework of reporting the content of a company's report can be largely determined by
factors and reporting standards, guidelines and regulations. This trend offers companies a
greater flexibility than financial statements, but an effective report needs to deliver
information aligned to the company's overall objectives and engage with the audience in
a manner that promotes the exchange of ideas and communication. Nowadays, there are
several ways and mechanisms of reporting, such as assurance statements, environmental,
social and economic performance reports that have been noted. Some of these reports
include shorter and more concise reports. Some examples can be found at the GRI, which
is the most popular framework for companies that are looking for help and assistance in
how to create their accounts.
Frameworks
Social responsibility accounting continues to develop. It is therefore of importance that
companies understand the need of reporting frameworks, standards and guidelines that
may affect the form and content of their reports. There are several organizations that offer
services to companies that want to change the traditional financial statement disclosure
for sustainability reporting.
Analytical framework Analytical frameworks are important for linking information
from different areas. Some examples of analytical frameworks are: Pressure – State –
Response (PSR) model which is based on one of its variants Driving Force – Pressure –
State – Impact – Response used by the European Environment Agency (EEA) or the
Driving Force – State – Response.
Accounting framework On the other hand, the accounting frameworks seek to
quantify information in the three dimensions of sustainability accounting. The System of
National Accounts (SNA) has proven that measuring sustainable development with the
conventional system of financial reporting is inadequate. The OECD offers two different
approaches to the accounting framework for sustainability accounting:
1. measuring environmental-economic-social interrelationships
2. Wealth-based approaches

7. Organizations and initiatives in finding right path to social
responsibility accounting