Corporate Social Responsibility and Value Creation. A Practical Guide for Accountants in Public Practice.
The following is a summary of Mathieu Aimlon’s dissertation as published in French:
Reading the press and listening to experts and researchers in corporate social responsibility and sustainable development, one gets the feeling that businesses are responsible for the ills plaguing planet Earth. Indeed, they are held accountable for various actions on environmental, social, and economic levels.
From an environmental perspective , their activities contribute, on the one hand, to the thinning of the ozone layer, resulting in various consequences, including climate change : increased heat during the summer months, milder winters, and a heightened risk of hurricanes. For example, Hurricane Katrina, which struck the southeastern United States in August 2005, caused $75 billion in material damage and 1,836 deaths. On the other hand, these same activities are responsible for industrial and environmental disasters with dramatic consequences in terms of human and animal life, infrastructure destruction, and environmental damage . In France , the 2001 explosion at the AZF chemical plant resulted in approximately thirty deaths and thousands of injuries.
The sea is also the scene of serious pollution: 13 tons of waste are dumped into the sea every minute by ships worldwide. Large oil companies are considered the main culprits. The Exxon Valdez and the Erika are examples.
On the social front , it is clear that the economic transformation that has occurred in developed countries since the 1980s has created a genuine employment crisis . Because they are laying off workers en masse while making profits, companies are being held responsible for unemployment and social exclusion. The press regularly reports on such announcements. For example, in September 2005, the American computer manufacturer Hewlett Packard launched a major restructuring plan. This came after announcing substantial profits for the third quarter of 2005: operating cash flow of $2.2 billion. In France, more than 1,200 people were reportedly affected.
From an economic standpoint, companies are criticized for sacrificing social responsibility on the altar of short-term profitability. This pursuit of short-term profitability is often reflected in corporate communications as the imperative to create economic value for shareholders. Among the strategic maneuvers they employ are divestment, restructuring plans, and cuts to research and development investments.
Faced with these behaviors, many voices are calling on companies to address their social responsibilities. Corporate social responsibility (CSR) is the application of sustainable development principles to businesses. For example, on both economic and societal levels, the tyranny of the stock market has led to a crisis of corporate governance: the spectacular bankruptcies of giants like WorldCom and Enron are stark examples. Similarly, some individual and institutional investors, such as the Caisse des Dépôts et Consignations (CDC), refuse to finance companies they consider socially irresponsible.
The pursuit of purely financial performance, as it was yesterday, is giving way to the quest for overall performance. This latter approach rests on the idea that companies must certainly create economic value for their investors. But they must also strive to create value for their employees, societal value, customer value, supplier value, and reputational value. These are all aspects of value creation that have been neglected by companies until now, but which contribute to increasing the company’s overall intangible value. For example, in 2003, CalPERS, the largest US pension fund, demanded that GlaxoSmithKline (GSK) lower the price of therapies for AIDS patients in Africa. This demand from CalPERS takes into account the long-term interests of shareholders, including the pension fund, and is part of GSK’s corporate social responsibility strategy. It is based on the observation that GSK faces specific reputational risks, and these risks are likely to be damaging to the company. Hence the need to adopt a CSR approach.
Indeed, a CSR approach can be a lever for improving a company’s overall performance. When used effectively, it is an innovative management tool available to business leaders . This innovation essentially consists of providing a tailored response to the challenges faced by companies. The chartered accountant, their trusted advisor, must help them formulate, implement, and sustain a CSR approach that creates value for all their stakeholders.
Background
This is a doctoral thesis that Mathieu Aimlon prepared as part of the French Diploma of accounting expertise (DEC), French CPA. The French CPA is a degree administered by the French Ministry of Education. It is approved as the highest level of academic qualification you can achieve in the European Union higher education systems: a doctorate, PhD level of education. The French CPA candidate must:
• Determines a research project.
• Write a research proposal to get approval to carry on his or her research.
• Conduct original research and collect the results.
• Write up his or her thesis and submit it as a dissertation.
• Defend his or her thesis in an oral viva voce exam.
The candidate may choose a research project on any business, public administration, nonprofit organization, or other organizations’ management questions. The research project must be original and or significant and add to, develop, or challenge existing literature in the field.
The dissertation final defense committee members determine after each session of the French CPA exam the dissertations that make a significant new contribution to knowledge in the management field and should be published. In coordination with the French Ministry of Education, a copy of those dissertations is provided to the French national accounting profession library, Bibliotique. They’re available for download at www.bibliobaseonline.com. Bibliobaseonline is the online knowledge center of Bibliotics.
The French CPA dissertation final defense committee members have determined that Mathieu Aimlon’s dissertation makes a significant new contribution to knowledge in the field of corporate social responsibility (CSR) and corporate governance (economic, social, governance, ESG). Copy of a full set of the thesis is on sale at la Bibliotique .