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ETHICS AND THE PUBLIC INTEREST

Objectives/learning outcomes
Explain and distinguish between relativism and absolutism [2] Explain Kohlbergs stages of human moral development Describe and distinguish between deontological and teleological/consequentialist approaches to Ethics [2] Describe and evaluate the corporate and personal ethical stance [2] Describe and evaluate Gray, Owen & Adams seven positions on social Responsibility [2] Describe and analyse the variables determining the cultural context of ethics and CSR [2]
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Ethical theory
Ethics is about:
What is morally right or wrong, acceptable or not What conduct is morally good or bad Behaviour towards other people Ethics go beyond legal requirements & is about discretionary decisions Ethical values include trust, openness, respect and integrity

Ethics relate to:

Behaviour of individuals Behaviour of business organisations (business ethics)
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Ethical theory absolutism/cognitivism school of thought

View that some ethical beliefs & practices will always be adhered to & common to all societies (i.e. one set of moral rules that are always true) e.g.
Not killing children Inflicting unnecessary pain on sentient (feelings) being

Ethical truths in one culture may thus be imposed on other cultures e.g. western missionaries imposing western truth This ethical & moral belief system is dogmatic in nature This theory is supported by rules based approaches
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Ethical theory relativism/noncognitivism school of thought

View that ethical beliefs & practices will differ:
Over generations (time) e.g. public execution of convicts From on culture or society to another e.g. abortion & homosexuality

There is no universal moral truth This ethical & moral belief system is pragmatic in nature This theory is very significant to international business as business ethics may differ This theory is supported by principles based approaches
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Ethical theory approaches to ethical decision making deontological approach

Its a non-consequentialist theory Action is deemed right or wrong if the morals for taking action are known Right or wrong depends on the motivation or principle behind the action, not the outcome Based on theory of Immanuel Kant a German philosopher Introduces concept of categorical imperative - a framework for determining moral wrong or right that can be applied to every moral issue The rightness of an action is judged by its intrinsic virtue and thus morality is seen as absolute and not situational. An action is deemed morally upright if it satisfies all three maxims (tests, criteria or principles) below
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Ethical theory approaches to ethical decision making deontological approach

Maxim 1 Act only according to that maxim by which you can at the same time will that it should become a universal law
Action can only be morally right if everyone can follow same underlying principle e.g. murder & lying are immoral because if they were moral then human life and the concept of truth could not exist Business example is that EU managers would not support exploitation of third world labour because if this practice become universal law, then their own children could be subjected to it Also known as Principle of consistency 7

Ethical theory approaches to ethical decision making deontological approach

Maxim 2 Act so that you treat humanity, whether in your own person or in that of another, always as an end and never as a means only
Action can only be morally right if other people that may be employed are not seen as mere providers e.g. of goods & services. Their needs & expectations must be respected Action which reduces human dignity is immoral Business example is if child labour is not outlawed, then their right to a safe & accident-free upbringing may be ignored Also known as Principle of Human dignity 8

Ethical theory approaches to ethical decision making deontological approach

Maxim 3 Act so that the will through its maxims could regard itself at the same time as universally lawgiving
Action can only be morally right if other people view it as such, regardless of the views of the person undertaking the action Business example is that even if child labour was viewed to be suitable by a manager, it would be immoral if views of other people were different Also known as Principle of universality
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Ethical theory approaches to ethical decision making teleological approach

Its a consequentialist theory (end result is important) Greek word for end science Whether a decision or action is right or wrong depends on its consequences or outcome (benefit or harm) not the means or reason for the decision or action Consequentialist ethics are therefore situational and contingent, and not absolute.
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Ethical theory approaches to ethical decision making teleological approach

Teleological 1 Egoism (what is best for me) An action is morally right if the decision maker freely decides in order to pursue either short or long term interests, thereby benefiting society
E.g. production of poor quality goods is not beneficial to a manufacturer as it does not promote their interest. Therefore manufacturer will produce high quality goods to make a profit & society benefits from good quality Egoist may also do what is right in society because it makes them feel better e.g. making donations 11

Ethical theory approaches to ethical decision making teleological approach

Teleological 2 Utilitarianism (what is best for the greatest number) An action is morally right if it results in the greatest amount of good for the greatest number of people affected by the action or decision
It applies to society as a whole, not the individual Valuable in business decisions because it introduces concept of utility or economic value of actions Concept is accepted where good effects outweigh bad effects of decisions
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Ethical theory - lecture example

Explain the deontological and teleological views of the following actions:
Animal testing Murder of a serial killer Whistle-blowing Slavery Child labour
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What influences ethical decision making

1) Age & gender
There is no empirical evidence to suggest whether it is men or women or indeed the young or old people who are more moral Affects ethical beliefs Differences in beliefs depend on:
Degree of autonomy compared to communism Degree of unequal distribution of power in society e.g. between managers & subordinates, parents & children Extent to which money & possessions are valued compared to value of people & relationships
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2) National & cultural beliefs

What influences ethical decision making

3) Education & employment
There is evidence suggesting that ethical decision making differs depending on different educational & employment experiences Level of human moral development affects reasoning process behind moral judgements (see below) Individuals may make different decisions in different circumstances e.g. due to:
Reward mechanisms such as performance related bonus Degree of bureaucracy in the company Organisational culture
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4) Cognitive moral development (Kohlberg)

5) Situational factors

Kohlbergs stages of human moral development

1) Level 1 Rewards/punishment & self interest
Stage 1 Obedience & punishment - Right or wrong depends on expected rewards & or punishment Stage 2 instrumental purpose & exchange - Right or wrong also depends on whether colleagues will reciprocate favour (self interest) e.g. covering up for a late or absent colleague Stage 1 Interpersonal accord & conformity Morality depends on what is expected of individuals by their peers & those close to them e.g. misuse of company resources since its done by all Stage 2 Social accord & system maintenance - Morality depends on what is expected of individuals by society in general not just their peers e.g. raising wages above legal minimum
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2) Level 2 Conventional (normally formalised as law)

Kohlbergs stages of human moral development

3) Level 3 post conventional
Stage 1 Social contract & individual rights right or wrong determined by reference to basic rights, values & contracts of society e.g. food producer disclosing ingredients even if no law requires this Stage 2 Universal ethical principles decisions are based on self-chosen ethical principles considered universal e.g. stopping buying products tested on 17 animals

Kohlbergs stages of human moral development

Assumptions:
Individuals tend to move from level 1 to level 3 as they get older Movement is decided by how a decision is made, not what the decision is about Research indicates that most people, including business managers, tend to reason on level 2
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Stances on ethics
Ethical stance:
Relates to how an organisation views its responsibility to stakeholders, society & the environment Is the extent to which an organisation will exceed its minimum legal & regulatory obligations to stakeholders

An organisation can choose any of four stances in dealing with its ethical responsibilities as described below
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Corporate & personal ethical stances Johnston & Scholes

Short-term shareholder interests

Shaper of society

Stance Multiple stakeholder obligations

Long-term shareholder interests

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Corporate & personal ethical stances

Short-term shareholder interest:
Ethical stance limited to taking responsibility for short-term shareholder interests, mainly payment of dividends for corporations Fulfilling this interest may conflict with need to invest for the long term Stance justified because its govts responsibility to impose wider constraints on CG
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Corporate & personal ethical stances

Long-term shareholder interest:
Ethical stance takes into account short-term as well as long-term interests of shareholders, mainly payment of dividends and capital growth for corporations Fulfilling this interest may conflict with need to pay large dividends Stance justified because:
Wider ethical responsibilities enhances corporate image It may prevent social & political pressure for legal regulation
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Corporate & personal ethical stances

Multiple stakeholder obligations:
Ethical stance takes into account interests of stakeholders other than shareholders (e.g. spending on safety of employees) Fulfilling this interest may conflict with expectations of shareholders & even different stakeholders Stance justified because:
Without good relationships with stakeholders such as suppliers, customers & employees the organisation would not function well
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Corporate & personal ethical stances

Shaper of society:
Ethical stance where organisation attempts to change society for the better e.g. Toyotas research into solar powered cars raises societys concern for the environment Organisations ethical responsibilities extend to improving the public interest (compare with McDonalds cheap, junk fast foods) This stance is mostly adopted by public sector organisations and charities
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Corporate social responsibility (CSR)

Approach to management of the social and environmental impacts of business operations Voluntary contribution to the wellbeing of the global and local communities in which the organisation operates Org cannot be genuinely responsible without an embedded and inherent culture that is based on ethical values
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Stances on social responsibility Gray, Owen & Adams

Gray, Owen & Adams (Accounting & accountability) a company can adopt any of seven stances regarding its social responsibility These authors believe organisations should have some social responsibility, with its accompanying social accountability Degree of CSR increases down the table below
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Stances on social responsibility Gray, Owen & Adams

` Position Explanation
Pristine capitalist Expedient Needs of shareholders are paramount hence no need for CSR Companies accept excesses of their acts on society hence accept some legislation & CSR Proponents of Company accepts its survival & prosperity
social contract depends on society, hence increased CSR

Social Ecologist

Companies recognise damage to environment hence need to clean up waste, pollution etc

Expedient - what is immediately advantageous without regard for ethics or consistent principles
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Stances on social responsibility Gray, Owen & Adams

Position Explanation
Socialist
Capital should not dominate social, economic & political activity; wealthy creation not primary; change required to decrease influence of capital
Current masculine concepts of aggression, conflict & competition not workable for CSR. Adopt feminine concepts of compassion, love & co-operation Economic activity should not cause harm to other species, but be sustainable. Human beings have no greater rights to resources or life than other species. CSR is ultimate

Radical feminists Deep Ecologists

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Variables determining cultural context of ethics & CSR

Economic focus on profitability
Philanthropic focus on doing what is desired Variable

Legal focus on compliance with law

Ethical focus on doing what is right

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Variables determining the cultural context of ethics & CSR stances

Legal responsibility: Concerned with complying with laws & regulations Non-compliance is socially irresponsible conduct and punishable Examples of non-compliance include:
Anti-competitive behaviour e.g. by Microsoft Price fixing by collusion e.g. oil industry & British Airways
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Variables determining the cultural context of ethics & CSR stances

Economic responsibility: Concerned with why org was formed Relate to ability of org to remain as a going concern Examples include:
Paying dividends & capital gain for investors Providing employees with safe & fairly paid jobs Providing good quality goods to customers
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Variables determining the cultural context of ethics & CSR stances

Ethical responsibility: Relate to doing what is expected by society compared to economic & legal requirements Examples include:
Limiting carbon dioxide emissions below legal minimum Shell disposing off an oil platform on land rather than at sea (which it could have legally done)
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Variables determining the cultural context of ethics & CSR stances

Philanthropic responsibility: Relate to doing what the org desires rather than what it is required to do (above economic, legal & ethical responsibilities) Doing what is humanitarian, benevolent or for benefit of the poor in society Examples include:
Making donations to charities Providing sports facilities to employees Sponsoring arts

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Conclusion ethics and the public interest

Main points
Relativism Vs absolutism Deontology Vs teleology The 4 personal and corporate stances on ethics GOAs 7 stances on social responsibility Kohlbergs 3 stages of human moral development
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11

ETHICS & PROFESSIONAL PRACTICE

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Objectives/learning outcomes
Explain and explore the nature of a profession and professionalism [2] Describe and assess what is meant by the public interest [2] Describe and critically evaluate issues surrounding accounting and acting against the public interest [3] Describe and explore the areas of behaviour covered by corporate codes of ethics [3] Describe and assess professional codes of ethics [3] Describe and evaluate issues associated with conflicts of interest and ethical conflict resolution [3] Explain and evaluate ethical threats and safeguards [3] Explain and explore how threats to independence can affect ethical behaviour [3] Apply the AAA and Tuckers 5-question model

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Profession & Professionalism

Profession = a body of theory & knowledge which is used to support the public interest For the accounting profession:
The body of theory includes ethical standards, auditing standards & an exam system Knowledge which guides its practice & commitment to the public interest includes guidance on how to apply ethical standards & experience built up regarding acceptable actions of accountants
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Profession & Professionalism

Professionalism means:
Taking action that contributes to the public interest (overall well-being of society) Avoiding action which brings discredit to the profession e.g. advertising

Actions may be:

Reactive e.g. post Enron legislation Proactive (more common) e.g. guidance on sustainability reporting & environmental audits
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The public interest

Definition:
Has no legal or universally agreed definition Normally refers to common well-being or general welfare of society Debatable whether all members of society or only some benefit for an action to be considered in the public interest

Public interest Vs human rights (freedom of individuals to act):

Acting in public interest may injure human rights Individuals may be free to act if they do not harm others Public interest & human rights clash where action of an individual or the state adversely affects some or 39 all members of society

The public interest

Public interest & companies adverse effects:
Actions of majority shareholders may adversely affect minority interests Actions of the company e.g. pollution & poor treatment of labour force is harmful to public interest Governments normally take action to limit actions of companies for the greater good of society as a whole e.g. protection of minority rights, employment & environmental 40 legislation

Approaches to ethical codes & resolution of ethical dilemmas

Rules based approach
Ethical behaviour is regulated by detailed rules in Codes of conduct stipulating expected conduct in each situation There is no scope for individual discretion hence consistent application What is ethical or unethical behaviour is clearly defined However, rules fail to deal with new situations & it is difficult to anticipate all ethical situations faced by accountants

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Approaches to ethical codes & resolution of ethical dilemmas

Principles based approach
Ethical codes define the fundamental values and qualities that members should embody (e.g. integrity, objectivity, competence) Codes give best practice behaviour as principles or framework Principles are important because no detailed guidance can cover every situation where there is a potential threat
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Approaches to ethical codes & resolution of ethical dilemmas

Principles based approach advantages:
Encourages accountants to consider the spirit of the law, not just checklists of dos & donts, hence encourages compliance Allows for variations found in every situation Principles can cope with rapidly changing environment Principles based codes can include prohibitions & examples to illustrate application to practical situations
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Approaches to ethical codes & resolution of ethical dilemmas

Principles based approach disadvantages:
Requires accountants to have thorough understanding of ethical principles International codes such as IFAC code ill-equipped to deal with variations in regional beliefs & practices Illustrative examples may be misinterpreted as rules to follow in all circumstances Principles based codes have no legal force, hence less effective as compliance is voluntary

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Corporate ethical codes

Corporate ethics: Relates to application of ethical values to business behaviour Are beyond legal requirements, hence discretionary Approach normally contained in companys CSR report Corporate ethical code sets out: Organisations values Responsibilities towards stakeholders

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Corporate ethical codes key areas covered

Purpose & values of the business Employees
Customer relations Supplier relations

Shareholders/financiers Society or wider community

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Corporate ethical codes - effectiveness

Effective if:
Commitment from top Carrot and stick approach Rationale understood Code should include principles and detailed guidance Accessibility to code improved
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Ethics education
International Accounting Education Standards Board (IAESB) gives Ethics Education Framework (EEF):
Ethical knowledge (fundamental theories & principles of ethics) Ethical sensitivity (ethical threats) Ethical judgement (make ethical sound decisions; apply decision models) Ethical behaviour (act ethically in all situations)
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Professional codes of ethics

Examples include:
ACCAs Code of Ethics and Conduct IFACs Code of Ethics for Professional Accountants

Issued by all professional bodies:

To ensure members & students observe proper standards of professional conduct Help the profession act in the public interest To discipline erring members & students
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Professional codes of ethics - contents

Contents include:
Introduction background, who is affected, enforcement of code & disciplinary proceedings Fundamental principles key principles to be followed by all e.g. integrity, competence Conceptual framework explains how principles are to be applied i.e. spirit of the law Detailed application examples of specific situations illustrating how principles are applied
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The Fundamental Ethical Principles

These are obligations placed on professional accountants Definition of professional accountants
Professional accountant member of accountancy body e.g. IFAC member bodies Professional Accountants in Public Practice professional accountants in audit firm Employed Professional Accountants professional accountant outside audit firm
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The Fundamental Ethical Principles

Fundamental principles
Integrity straightforward & honest Objectivity no bias, no conflict of interest Competence update skills & knowledge Professional behaviour comply with laws Confidentiality do not use or disclose info

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Ethical threats
Ethical threats are events/situations which threaten an accountants ability to comply with fundamental principles resulting in say, loss of objectivity or confidentiality Self interest

Advocacy

Threats

Self review

Intimidation

Familiarity

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Specific ethical threats to compliance with Fundamental Ethical Principles

Undue dependence on an audit client (recurring fee income not to exceed 10% - plc & 15% Ltd coy) Overdue fees Actual or threatened litigation Family and other personal relationships Beneficial interests in shares and other investments Low balling Valuation services 54

Specific ethical threats to compliance with Fundamental Ethical Principles

Goods and services: hospitality should be modest Loans on commercial terms, if normal business Provision of other services to audit clients Employment with assurance client Long association with assurance client Second opinions Legal services & corporate finance e.g. due diligence review on behalf of client 55

Ethical safeguards
a. b. c. d. e. f. g. h. i. j. Training & CPD CG regulations (e.g. on cross directorships & remuneration) Professional standards & disciplinary procedures Chinese walls (use separate teams) Rotation of senior audit staff Regular review e.g. second partner review Inclusion of senior staff in audit team e.g. to counter intimidation Auditor rotation by client Advise client to seek additional independent advice (e.g. in a due diligence assignment) Decline engagement (only as last resort) 56

Conflicts of interest
Conflicts between Conflicts between interests of different members and clients clients (e.g. in hostile interests (e.g. contingent takeover bid & as fees & underwriting auditor for both) share issue) Should not If conflict identified disclose accept/continue if Safeguards: significant conflicts exist - different partners/teams Financial gain (except - prevent leaks of fees and commission) is confidential information always a significant - regular review conflict
- advise clients to seek 57 independent advice

Resolution of ethical conflicts - models

IFAC model - consider:
The facts The ethical issues involved Related fundamental principles Established internal procedures Alternative courses of action, considering the consequences of each

Illustrate using a situation where auditor has been offered to buy goods at massive discount during the inventory count
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Resolution of ethical conflicts - models

American Accounting Association model consider:
What are the facts of the case? (to remove ambiguity about what is under consideration) What are the ethical issues in the case? (e.g. integrity) What are the norms, principles and values related to the case? (e.g. professional codes of ethics or the social expectations of the profession) What are the alternative courses of action? (to ensure that each outcome is considered, however appropriate or inappropriate that outcome might be.
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Resolution of ethical conflicts - models

American Accounting Association model consider:
What is the best course of action that is consistent with the norms, principles and values identified? (to see which options accord with the norms and which do not) What are the consequences of each course of action? (to make the implications of each outcome unambiguous) What is the decision? 60

Resolution of ethical conflicts - models

Tuckers 5-question model consider whether decision is:
Profitable? (compared to alternatives) Legal? Fair and equitable? (to different stakeholders) Right? (from teleological or deontological view) Sustainable or environmentally sound?

Reference to profit means this model is more useful for examining corporate rather than professional or individual situations.
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AAA model Vs Tucker - differences

The AAA model can be used to arrive at a decision while Tuckers model is used to evaluate decisions made The AAA model is applicable to all situations, but Tuckers model is only useful for evaluating business decisions (profit & green issues) Tuckers model requires more thought & is more subjective e.g. in determining fairness & right

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Ethics and the public interest - conclusion

Main points:
Profession and the public interest Principles Vs rules based approaches to ethical codes Corporate Vs professional ethical codes Fundamental ethical principles Ethical threats and safeguards Models for resolving ethical dilemmas (AAA Vs Tucker's 5 question model)
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12

Social and environmental issues

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Objectives/learning outcomes
Describe and assess the social and environmental effects that economic activity can have (in terms of social and environmental footprints) [3] Explain and assess the concept of sustainability and evaluate the issues concerning accounting for sustainability (including the contribution of full cost accounting) [3] Describe the main features of internal management systems for underpinning environmental accounting such as EMAS and ISO 14000 [1] Explain the nature of social and environmental audit and evaluate the contribution it can make to the development of environmental accounting [3]
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Social and environmental issues arising from economic activity

Social issues

Environmental issues
CO2 emissions

Child labour
Slave wages Discrimination Dangerous working conditions

Environmental degradation/pollution Global warming Climate change

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Environmental issues Reasons for the increase in profile

of green issues: Increased consumption rate due to increase in world population Heavy industrialisation hence faster rate of pollution Increased knowledge about impact of damage Improvements in forecasting technology, hence knowledge of consequences

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Social and environmental effects of business activity

Environmental footprint - impact of businesss activities on the environment Footprint can be seen in terms of:
Resource consumption e.g. water, energy, land use Harm to environment e.g. pollution emissions

Social footprint - impact of businesss activities on society Businesses may incur:

Significant costs Damage to their reputation if concerns over their actions are reported in the media.
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Examples of environmental footprint

Examples of factors used to determine a firms environmental footprint include:
Depletion of natural resources Noise and aesthetic (sensori-emotional) impacts Residual air and water emissions Long-term waste disposal (exacerbated by excessive product packaging) Uncompensated health effects Change in the local quality of life (through for example, the impact of tourism)
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Environmental costs due to environmental footprint

Direct and indirect environmental cost

Waste management Remediation costs Compliance costs Permit fees (e.g. carbon trading) Environmental training, research and development and related maintenance Legal costs Fines for non-compliance Environmental certification Record keeping and reporting
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Environmental costs due to environmental footprint

Contingent and intangible environmental costs
Compensation costs Risk posed by future regulatory changes Employee health and safety, with potential litigation Risk of impaired assets, in terms of business value Sustainability of raw material inputs Public perception and the impact on reputation, brand value, market share, etc.
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Sustainability
Definition
Meeting current developmental needs without compromising attainment of future needs intergenerational equity Limiting resource use to what can be replenished Ensuring continuity of economic, social & environmental aspects of human & non-human activity

Approaches to sustainability
Weak sustainability focuses on sustaining human species, environment is a resource Strong sustainability sustain all species 72

Assessing sustainability
Sustainable by whom Sustainable for whom

Sustainable at what cost

Sustainability issues

Sustainable in what way

Sustainable for how long

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Examples of unsustainable activities/industries

Paying bribes Forming cartels e.g. in oil industry Underpayment of taxes Creative accounting Copper mining Oil Air travel
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Examples of activities which promote sustainability

Optical fibre wires, switches & computers, eliminates need for metal Equipment & cables made from non-oil derived plastics eliminates need for metals Using renewable energy sources e.g. solar & wind to power equipment, reducing pollution Creating inclusive society where services are accessible to all e.g. aim of the MDGs Introducing and maintaining democratic values thereby promoting freedom of expression
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Sustainability reporting Annual report

Externality difference between market & social costs or benefits of an activity Include report on sustainability in annual report:
Method incomplete as it only shows direct costs Most costs of social & environmental foot prints are intangible
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Sustainability reporting Full cost accounting

Full cost accounting (FCA) incorporation of economic, social & environmental externalities (actual & contingent) into accounting systems: Usual costs - basic capital and revenue costs Hidden costs - overheads e.g. costs of magt systems and safety Liability costs - contingent liability costs e.g. fines Less tangible costs - loss of goodwill, reputation risk Environment focused costs - Costs that ensure project has zero environmental effect

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Advantages of full cost accounting

Knowledge of full extent of environmental footprint Reducing environmental footprint Assisting decision-making as more complete information is available Favourable publicity if firms demonstrate that products or processes do not have significant environmental impacts.
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Disadvantages of FCA
Information-gathering costs high Deciding whether to use costs of correction or costs of prevention gives different results Translating activities into impacts is difficult Impression given may become unduly alarmist and lead to dysfunctional knee jerk reactions of the importance of environmental reporting The need to include subjective social externalities
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Sustainability reporting - Global Reporting Initiative (GRI)

GRI - large multi-stakeholder network aimed at developing a common sustainability-reporting framework. Vision - sustainability reporting to become as routine and comparable as financial reporting. Main contents of report as per GRI guide:
Sustainability vision & strategy Reporting structure & scope of report Governance structure & management systems Sustainability performance indicators
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Environmental Management Systems (EMS)

Environmental management (reducing environmental footprint) has become a core business issue for many entities. Examples of environmental management include:
Minimising the amount of waste that is produced Reducing energy consumption Making more efficient use of resources
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Environmental Management Systems (EMS)

Benefits of environmental management & accreditation to ISO 14001 & EMAS include:
Reduced cost of waste management Savings in consumption of energy & materials Lower distribution costs Improved corporate image (signaling effect) among regulators, customers & the public
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Environmental management systems ISO 14000 (International Organisation for Standardisation 14000)
What is ISO 14000?
Series of international standards on environmental management. Provides framework to develop an EMS & supporting audit programme. Arose from 1992 Rio Summit on environment

What is ISO 14001?

Corner stone standard of the ISO 14000 series. Specifies a framework of control for an EMS against which an organization can be certified by a third 83 party.

Environmental management systems (ISO 14000)

Other ISO 14000 Series Standards include ISO 14004 - development and implementation of EMS ISO 19011 - principles of environmental auditing & qualification of environmental auditors ISO 14013/5 provides audit program review and assessment material. ISO 14030+ - performance targets and monitoring within an EMS
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Environmental management systems (ISO 14000)

ISO 14001 accreditation requirements include: An environmental policy statement Assessment of environmental aspects and legal and voluntary obligations. A management system ensuring effective monitoring and reporting on environmental compliance. Internal audits and reports to senior management. A public declaration that ISO 14001 is being complied with.
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Eco-Management and Audit Scheme (EMAS)

Is a voluntary EU initiative designed to improve companies environmental performance. Its aim is to recognise and reward those organisations that go beyond minimum legal compliance and continuously improve their environmental performance

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EMAS accreditation
EMAS accreditation requirements include:
An environmental policy An on-site environmental review An EMS that meets requirements of ISO 14001 Environmental audits at sites at least every three years Audit results to form the basis of setting environmental objectives and the revision of the environmental policy to achieve those objectives A public environmental statement validated by accredited environmental verifiers
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Social audits
Social Audit:
Checking whether an entity has achieved set targets in respect of its CSR External verification of truth & fairness of social report or report to society

General social audits will involve:

Establishing whether the organisation has a rationale for engaging in socially responsible activity Establishing whether entity is achieving its mission Assessing objectives and priorities in its mission
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Environmental audit
Environmental audit:
Establishing how well an entity is helping to safeguard the environment & assessing compliance with entity policies and external regulations External verification of truth & fairness of environmental report

Environmental audits may cover:

Environmental Impact Assessments & surveys Environmental SWOT analysis Environmental Quality Management (EQM) Eco-audits (compliance with EUs voluntary community auditing scheme - the eco-audit scheme for registered entities) Eco-labeling (certification as to whether products meet high environmental standards) Compliance with ISO 14001
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Social and environmental issues conclusion

Main points:
Social and environmental foot prints Sustainability reporting (FCA and GRI) EMS (EMAS Vs ISO 14000) Social and environmental audits

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