Social
Accounting
Understanding the Broader Impact of Business
Activities
Table of contents
Introduction & Key Components
01 Objective 02 & Purpose
Benefit &
Framework & Challenges
03 Techniques 04
Introduction to Social
Accounting
Social Accounting is the process of measuring and reporting a
company's social, environmental, and economic impacts in a systematic
way.
Objective & Importance
for Managers
It seeks to provide transparency about a company's non-financial
performance, focusing on how its activities affect society and the
environment.
Helps managers understand the wider implications of their business
activities beyond financial performance.
Key Components of Social
Accounting
Environmental
Impact Social Impact Economic Impact
• Reporting on resource • Employee welfare and • Contribution to local and
usage (water, energy, diversity national economies
materials) • Community involvement • Job creation and employee
• Environmental policies and development compensation
and practices • Product safety and ethical • Fair pricing practices and
(sustainability) sourcing transparency
• Carbon footprint and
waste management
Purpose of Social Accounting
Transparency and Informed Stakeholder
Accountability Decision-Making Communication
Companies show their Managers use social Social accounting improves
stakeholders how they are accounting to make better communication with
addressing social and decisions, balancing investors, customers,
environmental concerns. financial goals with employees, and regulators.
sustainable practices.
Frameworks for Social Accounting
Triple Bottom Global Reporting Integrated
Line (TBL) Initiative (GRI) Reporting (IR)
• People Social
responsibility (human A global standard for Combines financial and non-
resources, community sustainability reporting, financial information,
impact) focused on transparency in providing a holistic view of
• Planet Environmental environmental, social, and an organization’s strategy,
responsibility governance (ESG) factors governance, performance,
(sustainability, carbon and prospects.
reduction)
• Profit Financial
performance and growth
Social Accounting Techniques
Social Audits Sustainability Life Cycle
Reports Analysis (LCA)
A systematic evaluation of Publicly available reports A technique used to assess
the social and environmental that detail a company's the environmental impact of
impact of a company's efforts in environmental a product or service over its
activities conservation, social entire lifecycle, from raw
responsibility, and material extraction to
governance (ESG) disposal
Benefits of Social Accounting
Helps mitigate Ethical business
potential legal, practices improve
regulatory, or employee morale
reputational and attract top
damages talent.
Enhanced
Risk Employee
Corporate Access to
Managem Satisfactio
Reputatio Capital
ent n
n
Companies that Investors and
demonstrate financial
strong social and institutions
environmental increasingly prefer
responsibility can companies with
improve their strong
brand image and sustainability
customer loyalty practices.
Challenges of Social Accounting
Standardization Cost of
Data Complexity Issues Implementation
Collecting reliable and Lack of universal standards Developing social
relevant social and for social accounting can accounting systems
environmental data can be make it difficult to compare can require significant
difficult. companies' social and investment, especially
environmental impacts. for small and medium-
sized enterprises
(SMEs).
Case Study
Environmental
sustainability initiatives
(using recycled
Patagonia
materials, reducing
waste, and carbon
neutrality)
Transparent reporting of
environmental and
social impacts
Thank You!
