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Download Monitoring financial and social conduct
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Monitoring financial and social conduct Wes, Frank, Mikael, Rod The case • Co-operative bank (UK) will not invest in: – – – – – Fossil fuels or unsustainable resources Unnatural chemicals Arms trade Thinks other banks have a responsibility to follow suit Believes that social/environmental reporting is as important as financial reporting • Questions… – – – – Is the Co-op bank acting ethically? Are the other banks unethical? Should financial accounts include social measures? Who should audit social/environmental behaviour? Hierarchy of obligations Fundamental Human rights Indisputable fundamentals of ethics Fundamental Legal aspects Indisputable fundamentals of (the host) society Fundamental Manage money well Indisputable fundamentals of business Desirable Fairness / taking into consideration the interests of (outside) stakeholders (Customers / employees / suppliers / community / …) Is the Co-op bank ethical or not • Co-op is acting ethically… – Respects fundamental moral obligations and seeks to fulfil desirable moral standards • it is reflecting the interests of customers and depositors • Has clear public position and acts accordingly • Is not a monopoly so has no universal obligation – Found market niche that respective customers / investors appreciate (differing ethical awareness) • …but other banks are not acting unethically – Respects fundamental moral obligations • Other banks are looking after the needs of shareholders and depositors • No difference between behaviour and public position Should accounts include social measures? • One argument – they already do Goods cash Assets liabilities Record keeping Balance sheet Plus costs of scarce resources Labour Tax / land Water / electricity Pension and redundancy Training & Health Resource costs added through society / Government actions Modern P&L Triple bottom line is a departure Plus of scarce resources P&L now CO2 / Air Auditing P&L future Accountants Waste / recycling Social impact …etc P&L now Triple bottom line reporting Qualitative social Qualitative environment Accountants Consultants Pressure groups NGOs Pros / Cons Triple line reporting Co-op worse off Pricing externalities Co-op better off •Pure financial figures remain most important measures •Desirable moral standards not measurably / objectively / comparably taken into account Supports sticking to fundamental obligations Stakeholder desirable values discretionary •Financial figures reflect how effects of firm’s behavior is valued by society Aligns individual / company incentives with society’s desirable values
