SOCIAL AND ENVIRONMENTAL REPORTING



Social and Environmental Reporting

Introduction

Recent writings have demonstrated how 'institutional theory' helps to illuminate accounting practice in organisations and society (see [Covaleski et al.? 1993? Covaleski et al.? 1996? Hoque and Alam? 1999 and Scapens? 1994]). These studies have mainly focused on managerial accounting? broadly defined? and have argued that for organisations to survive they must interact with their wider environment in ways perceived as acceptable to the various constituents in that environment. Accounting practices from such a perspective are represented as tools for documenting institutional compliance or as means for seeking external legitimation (see? e.g. [Ansari and Euske? 1987 and Covaleski and Dirsmith? 1988]). Yet few studies have explicitly drawn upon institutional theory to examine external reporting practices of organisations.

This paper reports evidence of institutional compliance in the area of social and environmental reporting within an organisational context. It provides evidence of and reasons for disclosure by a Ghanaian public sector organisation? the Volta River Authority1 (VRA)? which claims to be at the leading edge of social and environmental reporting. In the case of the VRA a major influence on environmental reporting is the constant pressure to comply with the requirements of funding agencies? such as the World Bank? in order to provide institutional legitimation. The findings show that highly visible damage control projects? necessitated by the construction of the largest man-made lake in the world? are reported in detail. What is not reported? however? is the less visible social and economic impact on large parts of the rural Ghanaian communities arising from the pressure to perform as a commercial organisation and earn a return on assets. The same sources of pressure which encourage the reporting of physical environmental impacts? lead to prices beyond the reach of local people and work against the original developmental goal of the VRA project. Such effects are invisible masked by accounting systems designed to meet the requirements of international institutional legitimisation. In order to examine the failure of the VRA to respond to the interests of Ghanaian communities? the case is further analysed at a socio-cultural and political level. The framework employed for this second level of analysis is that of [Habermas? 1976] legitimation theory.

The paper is organised as follows: after a background discussion of the case study site? we review the literature on motivations for social and environmental reporting. We then present the argument for an institutional perspective? followed by a discussion of legitimation from the Habermasian perspective. The case study is then presented beginning with the methods for data collection? the evidence at the VRA interpreted through institutional theory? legitimation theory? and a conclusion.

Background to the case study

The Volta River Authority is a public corporation established in 1961 by the Government of Ghana in collaboration with the British Government? the American Government? the World Bank and two American-based multinational aluminium corporations (Kaiser Aluminium and Chemicals Corporation? and Reynolds Metals Company). These parties provided funding for the Volta River Project? the precursor of VRA? after a series of negotiations before ...