CIMA BA4 Syllabus B. CORPORATE GOVERNANCE - Arguments For and Against CSR - Notes ^{3 / 3}

Arguments for CSR

To adopt ethics and CSR into strategy, the ethical tone comes from the senior management at the top of the organisation. 

Management accountants have a responsibility to promote an ethical corporate culture.

Arguments for adopting a CSR strategy include:

• Meeting customer expectations

• Improving staff retention and attracting ethical employees

• Differentiating a brand name

• Compliance

• Reputitional Risk

• Cost-cutting (e.g.) less costs for disposal of waste, because less waste would be produced and less cost of electricity and power as less will be used.

• Higher dividends paid to shareholders because overall increase in profitability

Arguments against adopting a CSR Strategy

• Decreased profitability due to less short term cost reductions

• Slower strategic decision making

• Prices paid to suppliers may increase

Environmental Audits - CSR

An environmental audit is an evaluation of how well the organisation, the management and equipment are performing with the aim of contributing to safeguarding the environment by focussing on management control of environmental practices and assessing compliance with company policies. 

Reasons to carry out an environmental audit can be:

• To provide additional evidence to back up the company's claims to be "environmentally friendly".

• To avoid a situation where an environmental problem gives rise to poor publicity and possible legal liability for the purchasing company.

• To ensure that the products which the company buys meet the standards applied within the company.