What if policies and practices – on everything from labour contracts and greenhouse gas emissions to the number of workplace accidents and women holding senior leadership positions – had to be reported?
In a world increasingly concerned with ethical business behaviour, the emerging field of Spotlight Accounting is foreshadowing a new era of transparency and corporate accountability, according to Associate Professor Leopold Bayerlein, from the University of New England.
Although he's normally concerned with accounting of the financial kind, Assoc Prof Bayerlein recently turned his attention to the non-financial details not traditionally included in a company's "white-washed" annual report.
"I have a sense that there are a growing number of citizen accountants out there; people who are looking for more detailed information about corporate behaviour to guide their decision-making," Assoc Prof Bayerlein says.
"For instance, if you want to know if the shirt you are considering buying relied on child labour in Pakistan, then you need information about labour contracts along the company's supply chain and whether sustainability policies are applied. But this can be buried in the fine print of page 655 of some report."
Enter Spotlight Accounting
Spotlight Accounting is an accounting theory that places the locus of control over the financial reporting process with society, rather than corporations.
In a cross-institutional collaboration between the University of New England and the University of Wollongong, Assoc Prof Bayerlein partnered with Dr Stephanie Perkiss and Dr Bonnie Dean to test whether Spotlight Accounting could be successfully applied by a group of citizen accountants through the global digital platform WikiRate.
They used WikiRate to pose questions and collect data (from publicly available sources like reports, media releases and media stories) on 30 international companies that are signatories to the United Nations Global Compact's corporate action group.
"These are supposedly the best of the best in reporting on environmental and sustainability issues," Assoc Prof Bayerlein says. "But even among them, we found there is still a lot of information missing."
Still, improving reporting to consumers, investors and would-be employees is not impossible. It may not yet be a legal requirement, but Assoc Prof Bayerlein says it is fast becoming a societal expectation.
"If, as a company, I want to demonstrate to the public that I am doing my best to make the world a better place, then I need to know what information the public wants and provide it," he says. "Good corporate citizenship is becoming more and more important. Spotlight Accounting asks, ‘What is the real story?’ It gives the power back to society and individuals and creates a dialogue between those who report and those who use the reports."
Spotlight on the future
Spotlight Accounting envisages a future where anyone can access company data, or ask their own questions and add to the data available.
"Corporations are moving towards greater transparency and we would like to see them go a step further, by engaging with the public about what they would like to know," Assoc Prof Bayerlein says. "People make consumer and employment decisions based on how organisations behave. Many companies are committing to reporting against the United Nations' Sustainable Development Goals (which showcase environmental, social, ethical behaviour) but are they really delivering on those goals?"
Spotlight Accounting could provide the framework for improved corporate behaviour and reporting.
"We are thinking of accounting in a different way, and how and why we do it, to achieve outcomes that are currently out of reach," Assoc Prof Bayerlein says.
"It's new accounting to meet the needs of the future."
The results of the Spotlight Accounting study have been published in the Accounting Auditing & Accountability Journal.
