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Corporate accountability in the context of sustainability – a conceptual framework

Corporate accountability in the context of sustainability – a conceptual framework Purpose – The purpose of this paper is to integrate the context of sustainability in a framework for greater corporate accountability. Design/methodology/approach – Applied conceptual research. Findings – This literature review shows that current corporate accountability frameworks forces companies to focus on a narrow source for value creation based on imperfect economic theories inadequate response to societal issues and misleading measurement systems. The current conceptual accountability frameworks are dramatically inadequate in the context of escalating sustainability issues and needs of both society and business. The business responses, through corporate social responsibility (CSR) initiatives, voluntary sustainability reports and industry standards are only a poor attempt to address the fundamental sustainable development challenges. Economic theory has defined externalities as residual to the market and as market failure requiring government intervention. Practical implications – This paper proposes a direct valuation and formal accounting of externalities on the corporate balance sheet, with an offsetting appraisal of the social licence to operate for the corporation, thus creating a meaningful and integrated basis for accountability. Originality/value – The current definition and understanding of corporate accountability is challenged. The paper presents a broad grounding in relevant literature for change to the current corporate accountability framework. The main contribution of this paper towards theory development is that meaningful corporate accountability framework in the context of sustainability can connect social progress to the economic value of the firm's strategy. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png EuroMed Journal of Business Emerald Publishing

Corporate accountability in the context of sustainability – a conceptual framework

EuroMed Journal of Business , Volume 8 (3): 12 – Sep 13, 2013

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Publisher
Emerald Publishing
Copyright
Copyright © 2013 Emerald Group Publishing Limited. All rights reserved.
ISSN
1450-2194
DOI
10.1108/EMJB-05-2013-0026
Publisher site
See Article on Publisher Site

Abstract

Purpose – The purpose of this paper is to integrate the context of sustainability in a framework for greater corporate accountability. Design/methodology/approach – Applied conceptual research. Findings – This literature review shows that current corporate accountability frameworks forces companies to focus on a narrow source for value creation based on imperfect economic theories inadequate response to societal issues and misleading measurement systems. The current conceptual accountability frameworks are dramatically inadequate in the context of escalating sustainability issues and needs of both society and business. The business responses, through corporate social responsibility (CSR) initiatives, voluntary sustainability reports and industry standards are only a poor attempt to address the fundamental sustainable development challenges. Economic theory has defined externalities as residual to the market and as market failure requiring government intervention. Practical implications – This paper proposes a direct valuation and formal accounting of externalities on the corporate balance sheet, with an offsetting appraisal of the social licence to operate for the corporation, thus creating a meaningful and integrated basis for accountability. Originality/value – The current definition and understanding of corporate accountability is challenged. The paper presents a broad grounding in relevant literature for change to the current corporate accountability framework. The main contribution of this paper towards theory development is that meaningful corporate accountability framework in the context of sustainability can connect social progress to the economic value of the firm's strategy.

Journal

EuroMed Journal of BusinessEmerald Publishing

Published: Sep 13, 2013

Keywords: Corporate social responsibility; Sustainability; Balance sheet; Corporate accountability; Creating shared value; Externalities

References