Magazine article CMA - the Management Accounting Magazine

Business Accountability: To Whom?

Magazine article CMA - the Management Accounting Magazine

Business Accountability: To Whom?

Article excerpt

Is the responsibility of a business, its CEO, executives, and directors, limited only to its shareholders? Or, does a corporation have a responsibility to a broader constituency - a constituency that includes, but is not limited to, the shareholders?

The idea that business has a responsibility to a broader constituency is often characterized as "social responsibility." Business has long insisted on playing a role in key public policy issues, from free trade, to government deficits, to interest rates. All of this has been done to serve the interests of the individual business, or to generally improve the climate for doing business in this country. I do believe, however, that with such influence goes a responsibility.

I fall into the school of thought that targets the creation of wealth in the broadest sense. And there is a striking difference between just making money and creating wealth. My fundamental hypothesis is that if the Canadian business community can come together in a commitment to making a difference in building the society of the next millennium, then Canadian corporations will be able to make a meaningful difference in shaping a society that is better for all of us - business, employees, the environment, our communities.

I want to emphasize that, in defining social responsibility, we start with the need to be competitive on a global basis. Without that essential competitiveness, a business is not in a position to make any meaningful contribution to society.

So how does our business start to positively impact society? I think we have to ask ourselves where our society is heading and what the responsibility of business is.

We are increasingly becoming a society of haves and havenots. We have a country where 52 per cent of individuals and 13 per cent of families earn less than $20,000 per year. A country where, despite our apparent economic success, unemployment rates remain stubbornly high, with unemployment for youth particularly troubling - twice the level of the general population. Our social safety net, designed for another economic era, no longer works, and it is being cut apart every day. Is this our vision of the society we want to develop?

If business accepts that it has a multi-stakeholder responsibility, a responsibility to create social capital, what sort of things can business do to create that capital? I believe there are at least three areas of potential focus: employees, the environment and the community.

First, employees. We must invest in them as individuals, in their development. …

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