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Companies are too soft on themselves when divulging information in their social reports, an academic study has found.
Carol Adams, head of the School of Accounting at Deakin University in Australia, says that despite progress over the past decade there is still a ‘reporting-performance portrayal gap’ between what companies report and what happens on the ground.
Adams, whose approach was to compare what companies report on their social and environmental performance with what other sources reveal about their activities, says that businesses habitually present a highly partial view of their impacts and often ignore what their stakeholders are saying.
In a detailed study of a chemicals multinational that has been reporting since 1993, Adams found little coverage of its negative impacts over a ten-year period. The company, which is not named, took a ‘one-sided’ view and regularly failed to mention large pollution fines, price-fixing allegations, and accusations of excessive executive pay and human rights violations, although these had been widely reported in the media, she said.
Her paper, published in Accounting auditing and accountability journal, argues that the gap between a company’s portrayal of its performance and how others report what it has done ‘is a key measure of the extent to which an organization is accountable to its stakeholders’.
She concludes that radical measures are needed to improve accountability, among them mandatory reporting guidelines and audits for multinationals, and tighter guidelines for auditors.
Carol Adams, head of the School of Accounting at Deakin University in Australia, says that despite progress over the past decade there is still a ‘reporting-performance portrayal gap’ between what companies report and what happens on the ground.
Adams, whose approach was to compare what companies report on their social and environmental performance with what other sources reveal about their activities, says that businesses habitually present a highly partial view of their impacts and often ignore what their stakeholders are saying.
In a detailed study of a chemicals multinational that has been reporting since 1993, Adams found little coverage of its negative impacts over a ten-year period. The company, which is not named, took a ‘one-sided’ view and regularly failed to mention large pollution fines, price-fixing allegations, and accusations of excessive executive pay and human rights violations, although these had been widely reported in the media, she said.
Her paper, published in Accounting auditing and accountability journal, argues that the gap between a company’s portrayal of its performance and how others report what it has done ‘is a key measure of the extent to which an organization is accountable to its stakeholders’.
She concludes that radical measures are needed to improve accountability, among them mandatory reporting guidelines and audits for multinationals, and tighter guidelines for auditors.
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