In recent years, the terms corporate social responsibility (CSR) and sustainability have become commonplace. There has been growing awareness of the impact of corporate behavior, not just on shareholders, but on other stakeholders. As the importance of CSR increases, initiatives such as the Integrative Financial Reporting and the Global Reporting Initiative (GRI), prescribe that developing an ongoing disclosure program with stakeholders is a necessary business deliverable. Some governments and regulators are also making CSR reporting part of their agenda. For example, the Saudi government came out publicly with its Saudi Green Initiative plan. In addition, the Capital Market Authority of Saudi Arabia is considering (in its research agenda) making arequirement for publicly listed companies in TADAWUL to disclose information on corporate social responsibility activities in their annual financial reports.

Required:

You are the Chief Financial Officer of a newly listed Saudicompany, DTOLD Limited. DTOLD is a chemical company requiring crude oil as the key raw materials. The manufacturing process is also both labour and water intensive and the manufacturing facilities are mainly located in Kingdom and middle east. Your Chief Executive Officer happened to read in Arab News about Saudi Governments most recent initiative called Saudi Green Initiative to realize its Vision 2030. He wonders whether DTOLD should also be more proactive with respect to CSR reporting and disclosures. Your CEO asked you to write up a report, analyzing the costs and benefits of adopting CSR reporting. In your report, you should consider some of the following issues:

1. What is CSR? What is CSR reporting?

2. What are some of the drivers behind various global initiatives on CSR reporting and how will such initiatives affect corporate reporting in general?

3. Why should CSR reporting interest investors and other external parties?

4. Are there any tangible benefits to DTOLD if CSR reporting is adopted?

5. What are some of the main obstacles and costs associated with the development of CSR reporting in DTOLD?

6. Would you recommend CSR reporting for DTOLD? Why?