Environmental and Social Accounting for China Business (Part 1)

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Have you read our earlier piece entitled “Management Accounting for China Business Supremacy”? We find that accounting can do more than tote up the numbers. It all depends on how the figures are presented. Leaving out some aspects of an enterprise can also make a business look different. Environmental and Social Accounting can help China business work improve. The first results can be frightening! Perhaps there are groups of people who get hurt. A Kaizen approach helps us take a positive view of matters. No one is perfect. Everyone can take small steps towards doing things better. Environmental and social accounts next year can be better than they are now.

Separating Facts and Fiction of China Business

It works both ways. It is easy to criticize China business for ignoring environmental and social costs. But do people who throw stones at Beijing have all the facts? China business functions in a milieu all of its own. It is strongly critical of its own shortcomings. How can we tally conflicting accounts of how China business truly fares? Is air pollution exclusive to Beijing? Will improvements before the Olympics continue after the games are over? Would rural communities have fared better if the miracle of Shanghai had never taken place? The most important aspect relates to the future. How can coming generations benefit more from China business evolution?

How China Business Can Help Itself

There are many answers to that question! Let us think only of Environmental and Social Accounting for now. China business can take a lead in the matter. Units that raise equity from the United States should start the change. Ask economists to prepare accounts including environmental and social costs. Let the numbers differ from the tax and stock market numbers. Use every opportunity to tell investors how you fare in environmental and social terms. People will back you as long as you have convincing plans for improvement. It pays to put all the facts front and center!

The Stakeholder Concept for China Business Evolution

We make too much of the stock market. You can be part of an enterprise without owning shares! Customers, suppliers, government, and society at large are stakeholders that no management should forget. China business can gain by talking to all stakeholders. Investors and governments generally get lion’s shares of all communication. However, real powers lie with common people everywhere. China business will be strong as long as the public has the facts. How does an enterprise benefit us? Does the management have plans to protect us from harm? Are there lessons being learnt from past mistakes? Does China business compare well with other countries?

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