Question
It is now common for companies to regularly report their corporate social responsibility performance. Such CSR eports include information on emvironmental performance (eg. emissions, water
It is now common for companies to regularly report their corporate social responsibility performance. Such CSR eports include information on emvironmental performance (eg. emissions, water consumption, recycling initiatinves, ue of preen suppliers, ete) and social performance (e g, workplace safety training, diversity hiring practices, imohvement wich local charities, tc This trend i generaly considered to be a very positive change relatiive to a sole focus on financial perlormance. Howener, critics have sgeted that some ironmentally responble than they companies are engaging in "preemwashing" whereby they are using CSR reports to appear more em actually are, or bto eaggerate claims about the extent of their social responsibility. These concerns have merit, because unlike financial reporting CSR reporting is not regulated by law or suhject to mandatory audits by a thind party. Required: 1. What incentives do companies have to engage in greenwashing or to overstate their claims about being socially responsible 2 What controls could management put in place to increase the likelihood that the company actually engages in emironmentally and socially responsible activities?
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