Finance

What does corporate accountability have to say about a company?

What is corporate responsibility?

A company will indeed prioritize its financial areas. However, some areas do not concern finances. For example, we have social responsibility and sustainability. How a publicly-traded company performs in the latter is called corporate accountability. It supports the idea that while a company should earn money, financial performance should not be the only goal, and shareholders are not the only people who should matter. They also need to consider their performance in other areas. They should be responsible and held accountable to other people like employees and community members aside from the stakeholders.

Fortunately, many publicly traded companies publish their corporate accountability along with the annual financial reports that the SEC requires them to produce. It does satisfy not only the demands of the shareholders but also the public. Private organizations that are not related to the government give out social and environmental responsibility standards that they want the public companies to be accountable for.

Corporate accountability keeps companies responsible for the impact that they have on society and the environment. Everyone wants to make money, but it should also consider these things and not focus on finances alone. Shareholders and investors see that corporate accountability is essential when it comes to ethical investing. 

How did everything start?

We all know that some companies sell products that are harmful to the environment or people. For example, tobacco products harm the lungs of humans, and they contribute to global warming. On the other hand, there were advertisements and marketing campaigns for them. The government cannot do anything about anything unless legislation is passed. However, this legislation is only possible if many people come together and convince politicians to regulate specific practices like those related to tobacco products. The Public Health Cigarette Smoking Act was done in 1969, and a campaign to ban tobacco advertisements and label tobacco as dangerous made it possible. After that, more campaigns were spearheaded regarding public health initiatives, business practices, and social justice issues like employee exploitation, bribery, and corruption. Many nonprofit organizations have plans to increase corporate responsibility for particular campaigns.

The effects of the movements and campaigns

Thanks to these movements and massive concern regarding responsible and ethical investing, many companies decided to produce annual corporate accountability reports. These reports do not follow a specific format. One industry may have a different report from another. So, private organizations give out guidelines that track a company’s corporate accountability. Some of them offer their services and judge practices.

What is inside a corporate accountability report?

Corporate accountability reports are indeed for social and environmental purposes, but we cannot deny that it also benefits the company. It’s good publicity. The report talks about how they treat employees, their actions to make goods or services more sustainably, their company culture, and their internal management. We will also learn about the quantitative estimates of the externalities regarding a particular company’s business practices in this report. And when we say this, we consider the good and the bad.

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