Counting the Cost of Responsible Business 

Be in no doubt: corporate social responsibility (CSR) as a concept has been
acquired by the accountancy fraternity. Organisations increasingly seek to
place a value on the impact of their CSR activities on communities, the
environment, customers and suppliers, as well as employees and shareholders.

It's a complex business. But while moves towards common standards of
evaluation are in their infancy, the Institute of Chartered Accountants in
England and Wales (ICAEW) was declaring CSR as the 'natural territory' of
accountants as far back as 2005. That has implications for growing
businesses.

Someone else's concern?

It's a mistake to think CSR is the preserve of multinationals. Nor should
the absence of current statutory requirements to report on CSR activity give
comfort to those who'd rather leave it to the blue chips.

In fact, the Association of Chartered Certified Accountants (ACCA) has
already suggested a task force be established to 'explore the potential for
limited scope forms of CSR reporting for the unlisted SME community'.

And entrepreneurial consultancies across the UK have been nipping smartly in
to fill a gap in the market for advising SMEs on implementing and reporting
on CSR strategies.

CSR by numbers

A common perception is that CSR is costly. Advocates of CSR say socially
responsible companies are successful - at least in the long run. And
certainly, many smaller organisations have passionate, socially conscious
proprietors who have converted virtue into profit through shrewd promotion
of CSR credentials. But lack of a universally accepted way to measure this
makes the premise tricky to validate.

However, development of such a reporting mechanism is the challenge laid
down to the accounting profession by HRH the Prince of Wales, as part of his
Accounting for Sustainability project. So watch this space - both the ICAEW
and ACCA have welcomed HRH's intervention.

The Global Reporting Initiative, a not-for-profit foundation set up to
develop a framework specifically for sustainability reporting, also has a
sizeable programme for SMEs. It acknowledges smaller businesses may find the
thought of reporting 'daunting' - but is ploughing on regardless. It would
therefore be in the interests of all those (finance or otherwise)
responsible for reporting and governance issues to pay close attention.

Why bother finance?

The ICAEW is keen that accountants take the lead on CSR, particularly as
more chartered accountants now play leading roles in business, in the
boardrooms of FTSE 100 companies and at the helm of thriving OMBs (Owner Managed Businesses).  And CSR is regarded by all the UK's accounting bodies as an ideal subject for continuous professional development (CPD) - the mandatory learning activity their members must undertake annually.

Technical and policy teams within all the accounting bodies are hurriedly
researching all the issues around reporting. Exactly how does one measure
the financial impact CSR has on the bottom line? And on the wider community?
What about the value CSR adds to a brand?

Much heated debate and complex consultation are anticipated before answers
are arrived at. But one thing is certain: finance will be at the heart of
CSR reporting - so even the smallest business must be prepared.

Further reading

ICAEW:
http://www.icaew.com/index.cfm?route=127637

ACCA:
http://www.accaglobal.com/publicinterest/activities/subjects/sustainability/

Global Reporting Initiative:
http://www.globalreporting.org/WhoAreYou/SME/

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