It has the "potential to expose the tension between pursuing economic profit and the pursuit of social and environmental objectives".
[13] In most countries, existing legislation only regulates a fraction of accounting for socially relevant corporate activity.
In consequence, most available social, environmental and sustainability reports are produced voluntarily by organisations and in that sense often resemble financial statements.
An alternative phenomenon is the creation of external social audits by groups or individuals independent of the accountable organisation and typically without its encouragement.
[14]: 10 It is in this sense that external audits part with attempts to establish social accounting as an intrinsic feature of organisational behaviour.
It is generally agreed that social accounting will cover an organisation's relationship with the natural environment, its employees, and ethical issues concentrating upon consumers and products, as well as local and international communities.
[15] Social accounting supersedes the traditional audit audience, which is mainly composed of a company's shareholders and the financial community, by providing information to all of the organisation's stakeholders.
This often includes, but is not limited to, suppliers of inputs, employees and trade unions, consumers, members of local communities, society at large and governments.
It principally describes the preparation, presentation, and communication of information related to an organisation's interaction with the natural environment.
Whilst companies can often demonstrate great success in eco-efficiency, their ecological footprint, that is an estimate of total environmental impact, may move independently following changes in output.
Legislation for compulsory environmental reporting exists in some form e.g. in Denmark, Netherlands, Australia, the UK and Korea.
Deputy Prime Minister Nick Clegg confirmed that emission reporting rules would come into effect from April 2013 in his piece for The Guardian.
Royal Dutch Shell, BP, British Telecom, The Co-operative Bank, The Body Shop, and United Utilities all publish independently audited social and sustainability accounts.
Traidcraft plc, the fair trade organisation, claims to be the first public limited company to publish audited social accounts in the UK, starting in 1993.
[29] Modern forms of social accounting first produced widespread interest in the 1970s, as the practice emerged in North America in the particular case of environmental reporting.
In The Netherlands social reporting referred more to the provision of information on the relations between an organization and its employees: many Dutch corporations published such reports [37] Abt Associates, the American consultancy firm, is one of the most cited early examples of businesses that experimented with social accounting.
[39] Other examples of early applications include Laventhol and Horwath, then a reputable accounting firm, and the First National Bank of Minneapolis (now U.S.
[41][42] Interest in social accounting cooled off in the 1980s and was only resurrected in the mid-1990s, partly nurtured by growing ecological and environmental awareness.
[44] The directives provide for "a certain minimum legal requirement as regards the extent of the information that should be made available to the public and authorities by undertakings across the Union" and require "undertakings subject to this Directive" to give "a fair and comprehensive view of their policies, outcomes, and risks".