Tài liệu A study on social and environmental accounting, the corporate social responsibility awareness, benefits and problems facing by vietnamese companies

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A STUDY ON SOCIAL AND ENVIRONMENTAL ACCOUNTING, THE CORPORATE SOCIAL RESPONSIBILITY: AWARENESS, BENEFITS AND PROBLEMS FACING BY VIETNAMESE COMPANIES BY LE THI HOA Graduation Project Submitted to the Department of Business Studies, HELP University College, in Partial Fulfilment of the Requirements for the Degree of Bachelor of Business (Accounting) Hons OCTOBER 2011 i DECLARATION OF ORIGINALITY AND WORD COUNT I declare that this graduation project is based on my original work except for quotations and citation which have been duly acknowledged. I also declare that it has not been previously or concurrently submitted for any other courses/degrees at HELP University College or other institutions. The word count is 9857 words. LE THI HOA. 17 October, 2011 ii ACKNOWLEDGEMENT I would like to express my gratitude to all those who gave me the possibility to complete this thesis. I would like to give my thankfulness to Ms. Sumathi and Ms. Shenba at Help University College, who initiated the project and give me instruction and support. My heartiest thanks to lecturers and my colleagues in Vietnam National University, International School for helping me broaden my view and knowledge. I am deeply indebted to my supervisor, Dr. Pham Duc Hieu from Viet Nam Commercial University whose always help, stimulate suggestions and encourage me in all the time of research for and writing of this thesis. My grateful thanks also go to both enterprise Agribank and Baoviet Group, their managers, employees and customers and other people who spend time to answer my questionnaire in helping me complete this thesis. Last but not least I would like to thank my friends especially those who stand side by side help me from the beginning until completing this thesis. iii A STUDY ON SOCIAL AND ENVIRONMENTAL ACCOUNTING, THE CORPORATE SOCIAL RESPONSIBILITY: AWARENESS, BENEFITS AND PROBLEMS FACING BY VIETNAMESE COMPANIES BY LE THI HOA OCTOBER 2011 Supervisor: Dr. PHAM DUC HIEU. ABSTRACT The social and environmental issues and the impact of them on the decision making process have been increasingly given attention to the financial reporting. Over time there are many studies about Social and Environmental Accounting that have different views and arguments on the importance to the corporate report. In developed countries, the social and environmental accounting has joined the financial report and annual report; however it is still a new concept to Vietnamese enterprises. The objective of this study is to assess the understanding of Vietnamese people on the social and environmental concept, their implementation on companies in Hanoi. In order to collect data for the research, questionnaire survey will be used as a helpful method. The finding uncovers that although most people understand the importance of social and environmental activities and having corporate social responsibility reports, few of Vietnamese companies is able to quantify the cost and benefits of social and environmental activities as in the financial report. iv TABLE OF CONTENTS DECLARATION OF ORIGINALITY AND WORD COUNT................................... ii ACKNOWLEDGEMENT .......................................................................................... iii ABSTRACT ................................................................................................................ iv TABLE OF CONTENTS ............................................................................................. v LIST OF FIGURES AND TABLES ......................................................................... viii LIST OF ABBREVIATION ....................................................................................... ix 1 2 CHAPTER 1: INTRODUCTION ........................................................................ 1 1.1 Research Background .................................................................................... 2 1.2 CSR in Vietnam............................................................................................. 4 1.3 Problem Statement ........................................................................................ 7 1.4 Objectives and Scope of Research .............................................................. 10 1.5 Research question ........................................................................................ 10 1.6 Structure of Research .................................................................................. 10 CHAPTER 2: LITERATURE REVIEW ........................................................... 12 2.1 Accounting theory ....................................................................................... 13 2.1.1 Definitions and objectives of accounting ............................................. 13 2.1.2 Stakeholder theory ............................................................................... 16 2.2 Corporate Social Responsibility .................................................................. 17 2.2.1 Definition of CSR ................................................................................ 17 2.2.2 The triple bottom line ........................................................................... 18 v 2.2.3 2.3 3 4 The importance of CSR on business activities ..................................... 19 Social and Environmental Accounting ........................................................ 21 2.3.1 Definitions of Social and Environmental Accounting ......................... 21 2.3.2 Social and Environmental Accounting Report ..................................... 23 CHAPTER 3: RESEARCH METHOD ............................................................. 28 3.1 Research Objectives .................................................................................... 29 3.2 Research methodology ................................................................................ 29 3.3 Data sources ................................................................................................ 31 3.3.1 Primary data ......................................................................................... 31 3.3.2 Secondary data ..................................................................................... 31 3.4 Sampling ...................................................................................................... 32 3.5 Research instrument .................................................................................... 32 3.6 Limitation of the research............................................................................ 33 CHAPTER 4: RESULT AND DATA ANALYSIS ........................................... 34 4.1 Introduction of Agribank and BaoViet Group............................................. 35 4.1.1 Introduction of Agribank...................................................................... 35 4.1.2 Introduction of BaoViet Group. ........................................................... 36 4.2 Description of Respondents‟ information ................................................... 38 4.2.1 Description of respondents‟ age ........................................................... 38 4.2.2 Description of respondents‟ gender ..................................................... 39 4.3 Description and Analysis of respondents about the Awareness of Social and Environmental Accounting .................................................................................... 40 vi 4.4 Description and Analysis of respondents about the Implementation of Social and Environmental Accounting: ............................................................................ 43 5 CHAPTER 5: CONCLUSION ........................................................................... 49 5.1 Conclusion ................................................................................................... 50 5.2 Recommendation ......................................................................................... 51 5.3 Limitation of study ...................................................................................... 53 5.4 Suggestion for future research ..................................................................... 53 6 REFERENCES................................................................................................... 55 7 APPENDIX ........................................................................................................ 58 vii LIST OF FIGURES AND TABLES Figure 2.1: The theoretical framework of the research .............................................. 15 Figure 2.2: The triple bottom line (Source: Susan Patel, Triple bottom line and EcoEfficiency: Where to Start?)....................................................................................... 18 Figure 4.1: Age frequency of respondents ................................................................. 38 Figure 4.2: Gender frequency of respondents ............................................................ 39 Figure 4.3: Understanding the meaning of “Social and Environmental Accounting”40 Figure 4.4: Description of Result – Question 2 – Part II ........................................... 41 Figure 4.5: Description of Result – Question 3 – Part II ........................................... 42 Figure 4.6: Description of Result – Question 1 – Part III .......................................... 43 Figure 4.7: Description of Result – Question 2 – Part III .......................................... 45 Figure 4.8: Description of Result – Question 3 – Part III .......................................... 46 Figure 4.9: Description of Result – Question 4 – Part III .......................................... 47 Table 3.1: Quantitative, Mixed, and Qualitative Methods (Source: Creswell, 2009, p. 15) .............................................................................................................................. 30 Table 4.1: General information of Agribank.............................................................. 36 Table 4.2: General information of Baoviet Group ..................................................... 38 viii LIST OF ABBREVIATION CSR : Corporate Social Responsibility SEA : Social and Environmental Accounting TBL : Triple bottom line ix 1 CHAPTER 1: INTRODUCTION This chapter introduces the rationale of the research, which includes the aims, objectives and scope of the study. The method used for collecting data and structure of the research are also mentioned in this chapter. Overall, this chapter consists of six parts as follows: 1.1. Research Background 1.2. CSR in Vietnam 1.3. Problem Statement 1.4. Objectives and Scope of the Research 1.5. Research Questions 1.6. Structure of the Research 1 1.1 Research Background Environmental pollution and social equity are not only the issues of each country, but the general issues of the worldwide. In current period, countries which want to implement the sustainable development objectives must also implement the environmental protection and social welfare programs. Environmental and social protection is the urgent task of each enterprise, each level, each sector, and each country. For any economic sector, the development is always linked to the sustainability of environment and society. In the long term, the responsibilities of the enterprises to the environmental and social issues shall be an important factor to increase the profit of these enterprises. Thus, the enterprises are required to balance between the economic benefits and social and environmental contributions, implementing the responsibilities of the enterprises to the environment through particular actions such as: environmental impact assessment, paying environmental tax, classifying and treating solid waste, minimizing the costs on materials, fuel and reducing the costs for waste. Especially in the background of international economic integration and globalisation, the competition is fierce and fiercer, many enterprises only concern on their short-term benefits and have decisions and actions with negative impacts on the environment; as a result, they have to pay the penalty for their actions when the consumers and the society boycott their products. This fact forces the enterprises to consider the environmental and social accounting in the accounting tasks of the enterprises. 2 CSR links the responsibilities of the enterprises with the society and links the activities of the enterprises to the strict environmental and social standards, and support the community in different manners. Accordingly, besides the criteria on using advanced, clean, environmentally friendly technologies, reducing carbon gas and toxic substances which may cause bad impacts on the ozone layer, and climate change, enterprises are also required to be transparent in their production and business activities and the leaders of the enterprises should be responsible for explanations to relevant competent authorities. To implement CSR, first of all, it is required to have high agreement within the enterprise, the conformity to the regulations of the state and local regulations of the enterprises on enterprise administration, local rules on control and audit activities and business ethnic. Thus, CSR is not the thing that the enterprise can have immediately. This requires a long run for both constructing and learning experience from mistakes in the past to direct to the sustainable future. Then, besides financial statements, report on business results, report on social responsibilities implementation of the enterprises, Corporate Responsibility Report and Sustainability Development Report are the indispensable documents in the annual report. For enterprises posted on the security exchange, this requirement is more demanding. Then the value of trademark of the enterprises depends much on the contents of such report. Profit is the purpose of business, but social responsibility execution is the foundation for sustainable development of not only each enterprises but the whole country. Companies with responsibilities for the society normally create breaking achievements in business and gain the honourable criteria in profit and market while 3 do not destroy the environment and consume much natural resources. Investment and development for business and production with social responsibility is the most proper selection which normally brings about high economic effectiveness in long run because the consumers always select products and services from the enterprises with respects to the natural resources, environment and society. 1.2 CSR in Vietnam Executing the social responsibility is a job which cannot be ignored in the integration route of Vietnamese enterprises because this job will bring about the benefits for both enterprises and the social benefits, especially to increase the competitiveness of the enterprises and country and support better the implementation of labour law in Vietnam. For Vietnamese enterprises, this job is merely at starting phase, but is a long-term job. Thus, right at this period, we should have directive actions and create conditions for the enterprises to fulfil their social responsibility. With the developing economy in Vietnam, most enterprises are small and mediumsized enterprises so the application and execution of social responsibility have not yet paid due attention. However, some enterprises have already applied CSR in their business strategies. Typically, such social programs as “6 million glasses of milk for Vietnamese children”, the study encouragement fund of “fire-fly lamp” by famous trademarks such as Vinamilk, Dutch Lady have concerned and supported by the consumers. Or HUB Café, a medium and small-sized enterprise is also implementing CRS by creating a community library with more than 100,000 books serving for customers. HUB Café is being constructed to become a place for sharing knowledge 4 and documents which is very useful for students and the research community to organize exchanges and conferences on issues relating to study, working experience and career. However, in Vietnam, it should be admitted that after what happened to Vedan, Tung Kuang, Vinamit we should remind about the construction and execution of social responsibility of the enterprises. Because, only after the cases became on public, the management agencies tried to find out the solutions while the consumers and the society had to suffer from consequences. With information about the impacts on the environment, ecology and social life of most of people, the view about dividend distributed from the profit that the enterprises gain from avoiding wastewater treatment should be reviewed, this will have direct ratio to the ratio of consumers who refuse to use the products and services provided by these enterprises. This fact is unavoidable. The Vietnamese enterprise community has not yet paid attention to the implementation of CSR with typical examples such as: wastewater treatment, failing to conform to the obligations of the enterprises to the state budget, commercial fraud, production of counterfeit goods, and circulation of goods with poor quality. Another example is that the enterprises waste, lose or use ineffectively the investment capital from state budget which is actually the tax payments from the people and enterprises. Regarding to the environmental pollution in Vietnam, in order to complete in the global economy, the enterprises are required to ensure that their operations will not cause any negative impacts on the ecological environment; it means that their production procedures must be environmentally friendly. This is an important criterion for the consumers because the fact of environmental pollution caused by the enterprises has become an urgent and hot issue of the society such as the case of 5 Vedan Vietnam Company which discharged the untreated wastewater to Thi Vai River as well as other actions causing environmental pollution of many other companies. Thus, for the case of Vedan, their business activities are lack of ethnic and responsibility to the environment, labour and the whole society which are nursing the company. According to Ms. Nguyen Hong Ha, Deputy Director of Vietnam Chamber of Commerce and Industry (VCCI) in Ho Chi Minh City, CSR should be placed in the business strategy of each enterprise. This has been a decisive and necessary part of the success of the enterprises. Examples about CSR above show that CSR is not only a voluntary job but the enterprises should invest to make this become an activity of mutual benefits. Ms Ha explained “An enterprise has created a more stable business environment and higher productivity after applying CSR”. Furthermore, they also receive the support from the consumers and society for the general benefits of the enterprises for the community. In the background of Vietnam joining WTO, besides removing fences relating to tax, the laws on environment, labour safety are also issued and amended which require the enterprises to strictly and sufficiently conform to these regulations, then “it is the most suitable time for enterprises to implement CSR” added Ms. Ha. To be successful in applying CSR in Vietnam, firstly, the enterprises should implement CSR on their own labour such as conforming to laws on salary, social insurance, labour contract to construct the relation basing on the trust and goodwill between the labour and the enterprise. Ms. Ha also judged that the biggest difficulty 6 of the Vietnamese enterprises at the present is information which leads to the situation that the enterprises do not know where to start jobs relating to CSR. To promote the implementation of social responsibility of the enterprises, the best solution is to establish an association or organization in charge of monitoring and consulting the enterprises. The state should issue policies supporting for enterprises to implement CSR. 1.3 Problem Statement Recently the public is watching closely to pressing cases of violating business ethics and destroying the environment and health at serious level such as milk with melamine in China or discharging untreated wastewater directly to Thi Vai River by Vedan Company in Vietnam. The wrong-or right of the above cases are clear. However, for the society and thousands of operating enterprises, the issue of Cooperate Social Responsibility (CSR) is set up and requires to be discussed seriously in terms of policy argument and practice. What should a company do to be evaluated by the society as a good company with sustainable development? What are the responsibilities of the state management agencies? Which level should the law regulate about the corporate social responsibility? Whether or not the consumers in developing countries have fewer rights and or they are vulnerable or they are not provided with sufficient rights and means or fail to use sufficiently the rights and means given to them to protect their legitimate benefits? Instead of some enterprises which have applied CSR policy and ethnic rules, we normally base on top-down approach while the suppliers apply the 7 ethnic rules when they are required from the customers other than they develop CSR themselves to expand their market share. This may require the enterprises to apply many different ethnic rules, depending on the number of customers that they are having transactions, sometimes this is a contradiction. Furthermore, the understanding of the term of CSR in Vietnam has considerable changes at national scope and at the enterprises. This will made the application of CSR in Vietnam is more passive. The issue is that how we can rely on the voluntary investment of the enterprises when there is lack of legal framework, regulations and necessary monitoring of the society and the community. Lessons show that the power of profit can make the enterprises blind and irresponsible by hiding their legal actions and the voluntary investment of the enterprises is very limited. The system of laws has been innovated and reconstructed deeply from the constitution, laws to decrees however they are not synchronous. There are many overlapping and contradictory issues between laws prepared by different ministries, issued at different periods. The implementation of the laws requires many amendments and the distance between the laws on documents and the laws on the practice is still large. The knowledge on laws and conformity to the laws of the small-sized enterprises are still limited, the corporate social responsibility issue has been highly concerned at the large-scale enterprises but at small-sized and medium-sized enterprises, households and farmers, the conformity to labour law, regulations on food sanitation and hygiene is still limited. Meanwhile, in Vietnam, there is lack of legal framework and instructions for the enterprises to prepare the report on social accounting, social auditing and social reports to inform the community for monitoring. Because in the annual reports, financial statements, 8 there is no CSR or a very simple and general CSR report and there is no item about the social and environmental accounting in figures on how damages or profits are changed on CSR in profit of each enterprise. In effect, Vietnamese companies are doing business in a period that the country is joining to the global economy. Vietnam has been participating into many international organisations such as WTO, ASEAN, etc. This circumstance causes radical changes of the business‟s perception of most companies that they have to consider both internal and external environments. Therefore, the concept of traditional accounting, which the accountants deal with only the issues that take place within the organisation itself or between it and its suppliers or customers, has to change to the modern view, in which they have to adapt to a new social climate of community accountability to all stakeholders. Vietnam nowadays has been facing with financial difficulties such as the high rate of inflation. Many companies are striving to reduce their expenses by actions to infringe legal rights of employees and pollute the environment. They are not aware of the consequence to the whole economy and the negative impacts to their business‟s performance in the long term. Some companies consider the implementation of social contribution and environmental preservation as a part of their advertisement strategy or charity activities. Consequently, their business reports mainly focus on the financial issues and the cost of CSR activities is taken from their profits rather than considered as an initial expense. 9 1.4 Objectives and Scope of Research Objectives of Research: - To investigate the understanding of people about CSR and Environmental and Social Accounting in Vietnamese companies; - To understand the current implementation of CSR and Environmental and Social Accounting in Vietnamese companies. Scope of Research: - Research conducting place: Agribank and Bao Viet Group, Ha Noi, Viet Nam. - Object of the research: managers, employees and customers. - Time duration of conducting the research: from July 25, 2011 to October 10, 2011. 1.5 Research question - What is CSR? - What is environmental and social accounting? - Why are they important to the business activities? - What are Vietnamese companies aware of the importance of social and environmental issues in their business activities? - How do they implement CSR and social and environmental accounting in reality? 1.6 Structure of Research This project is divided into five following chapters:  Chapter I: Introduction 10  Chapter II: Literature Review  Chapter III: Research Method  Chapter IV: Description and Data Analysis  Chapter V: Conclusion and Recommendation The first chapter introduce the rationale of the research. Chapter two includes the literature review of Accounting theory, CSR, SEA, and their theories related. Chapter three introduces the research methodology used to conduct this study. The research objectives, research method, research instruments, research data will be stated. Chapter four describes and analyses collected data through primary and secondary data source. Chapter five gives the conclusion for this study and suggestion for future research is gave out. Besides, each chapter is divided into sub-sections in order to make it easier to follow. These sub-sections are listed in the beginning of each chapter. 11
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