Question

You are the chief financial officer of Superior Paint Company, a company that manufactures paint and paint products in a large township. Chemicals used in the production process are disposed off in compliance with environmental regulations but some of the components of the products such as solvents, monomers and softening agents still present serious ecological risks. The company provides regional employment. The chief executive officer has asked you to prepare a report on whether the company should engage in social and environmental reporting.

REQUIRED:

Write a report that covers the following:

1. Explain what social and environmental reporting is, why it is important, why it is different from traditional financial reporting and how the information is disseminated to the various stakeholders;
2. Identify and explain the potential costs and benefits for the company to produce a social and environmental report; and
3. Recommend to the chief executive officer whether Superior Paint Company should engage in social and environmental reporting and provide two supporting reasons with reference to the GRI Framework.

Include your references

Answer 1

Introduction

Social and environment reporting refers to the recognition of social and environment effects and organisation has and not just focusing on the financial performance of the company. Companies need to portray that they are in compliance with regulatory requirements especially revolving around social and environmental responsibility. Organisations need to disclose the carbon emissions they have had in a given financial year, the source of energy being used whether renewable or non renewable, their commitment to adopting a recycling culture and employee sensitization about being environmental and social conscious.

Superior paint company is a paint manufacturer and discharges a large number of toxic waste products in compliance with the environmental regulations. But there would be some ecological risks whether the regulations are followed or not due to the nature of the product and the materials used in the production.

Therefore, it is vital for the company to generate social and environmental reports in order to present the information about the environmental regulations followed and the prevention techniques that the company used for reducing the harmful effects of the disposal of chemicals.

Explanation:

Social and environmental reporting is the process through which the organization represents the social and environmental results of its operations and functions. The social and environmental reporting is vital for organizations because it enables organizations to mitigate the negative impacts of social and environmental governance.

Social and environmental reporting is different from the traditional financial reporting because it reports and represents the social and environmental results of operations and the traditional financial reporting represents the financial outcomes of the operations and functions of the organization.

The information on social and environmental reporting is presented to the various shareholders in the form of reports indicating the effects and awareness of the organization about its responsibilities related to society and the environment. It helps the organizations in showcasing a better image in front of the shareholders and users.

Superior paint company should publish a social and environmental report in order to improve its relations with the shareholders. The benefit of social and environmental reporting is that the shareholders and customers view the organization as a socially accountable and responsible organization when the organization adequately presents its social and environmental issues and activities.

The company would have to incur some costs on the analysis and the environmental preserving activities but these costs are worth the benefits of preparing the social and environmental reports.

Conclusively, it is advised to Superior paint company that the company should prepare and present the reports on its social and environmental activities and results because the company is involved in the disposal of harmful chemicals and it should be accountable for the threats posed by these chemicals to the environment and it would also enhance the image and relationship of the company with the outside members.