Transcript Monitoring financial and social conduct

Monitoring financial and social
conduct
Wes, Frank, Mikael, Rod
The case
• Co-operative bank (UK) will not invest in:
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Fossil fuels or unsustainable resources
Unnatural chemicals
Arms trade
Thinks other banks have a responsibility to follow suit
Believes that social/environmental reporting is as important as
financial reporting
• Questions…
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Is the Co-op bank acting ethically?
Are the other banks unethical?
Should financial accounts include social measures?
Who should audit social/environmental behaviour?
Hierarchy of obligations
Fundamental
Human rights
Indisputable
fundamentals of ethics
Fundamental
Legal aspects
Indisputable
fundamentals of (the
host) society
Fundamental
Manage money well
Indisputable
fundamentals of
business
Desirable
Fairness / taking into
consideration the interests of
(outside) stakeholders
(Customers / employees /
suppliers / community / …)
Is the Co-op bank ethical or not
• Co-op is acting ethically…
– Respects fundamental moral obligations and seeks to fulfil
desirable moral standards
• it is reflecting the interests of customers and depositors
• Has clear public position and acts accordingly
• Is not a monopoly so has no universal obligation
– Found market niche that respective customers / investors
appreciate (differing ethical awareness)
• …but other banks are not acting unethically
– Respects fundamental moral obligations
• Other banks are looking after the needs of shareholders and
depositors
• No difference between behaviour and public position
Should accounts include social measures?
• One argument – they already do
Goods
cash
Assets
liabilities
Record
keeping
Balance
sheet
Plus costs of
scarce resources
Labour
Tax / land
Water / electricity
Pension and
redundancy
Training & Health
Resource
costs added
through
society /
Government
actions
Modern
P&L
Triple bottom line is a departure
Plus of scarce
resources
P&L now
CO2 / Air
Auditing
P&L future
Accountants
Waste / recycling
Social impact
…etc
P&L now
Triple bottom
line reporting
Qualitative
social
Qualitative
environment
Accountants
Consultants
Pressure groups
NGOs
Pros / Cons
Triple line reporting
 Co-op worse off
Pricing externalities
 Co-op better off
•Pure financial figures
remain most important
measures
•Desirable moral standards
not measurably / objectively
/ comparably taken into
account
Supports sticking to
fundamental obligations
Stakeholder desirable
values discretionary
•Financial figures reflect how
effects of firm’s behavior is
valued by society
 Aligns individual /
company incentives with
society’s desirable values