Standing in the shadows of accountability : silent and shadow reporting: a New Zealand case

Abstract

Public awareness of important global issues such as third world poverty, inequitable working conditions, deforestation, declining biodiversity and global warming is rising. Matching this increase in awareness and concern is the growing popularity of reporting social, environmental and ethical information. With this increase in reporting, it becomes increasingly important to assess the nature and effectiveness of this type of disclosure. Their effectiveness can be measured in multiple ways. Using stakeholder-accountability as an evaluative framework, effective social disclosure is that which discharges accountability to the reporting organisation's stakeholders by providing complete and transparent social information (Gray, 2000; Gray, Owen, & Adams, 1996). Where an entity provides information that is not complete and transparent, accountability is not discharged to its stakeholders, and therefore its reporting is not effective. Social reporting that is devoid of accountability discharge merely represents a form of window dressing where an entity can accentuate its investor benign aspects and smokescreen its real social and environmental impacts (Dey, 2007; Spence, In Press). This type of reporting in the face of such important social and environmental issues can thus deceitfully perpetuate the destruction and inequity that it alleges to represent and address. Through using a relatively new and developing social accounting research method (silent and shadow accounting), the effectiveness of social reporting from a New Zealand case company is assessed through a lens of the stakeholder-accountability framework. This type of critical engagement responds to calls made by Dey (2003) and Gray, Dillard and Spence (2007). Silent and shadow accounting allows for the specific examination and comparison of the views of performance held by an organisation and its stakeholders, as well as highlighting the organisation's ability to discharge accountability. Research of a similar vein has shown instances where social reporting has: avoided concerning itself with issues that reflect poorly upon the reporting entity, been misleading, incomplete, applied questionable or unclear methodology, and most importantly, failed to discharge accountability (even when following a reporting framework such as the Global Reporting Initiative) (Adams, 2004; Ruffing, 2007). Not only do silent and shadow reports identify weaknesses in social reporting through identifying reporting 'gaps', they also provide a medium through which researcher, research subject and stakeholders can engage to improve social communication through active dialogue (Cooper & Owen, 2007; Dey, 2003). The shadow report can amplify stakeholder voices and provide a counter point which can be used to negotiate with reporting entities. Furthermore, there is opportunity for researcher-research subject dialogue whereby the social reporting can be discussed and potentially improved. As well as attending to the calls for increased critical engagement in social accounting research, silent and shadow reports are further tested in this thesis and are developed to assist future research of this nature. In making this contribution, serious flaws in the research subject's, Sanford Limited, reporting are identified. This adds weight to similar research in the social accounting literature. Incomplete, misleading, and misinformed disclosure successfully describes these flaws. A gap identified in Sanford Limited's reporting includes their presentation of the Benthic Protection Accord, a proposal to close 30% of New Zealand's Exclusive Economic Zone to bottom trawling. Sanford was a major player (which it does not disclose) in the construction of this accord and labelled it as an "unprecedented proposal" whose restrictions on bottom trawling opportunities are "worth the cost". What Sanford fails to mention is that, inter alia, the closed areas cannot be economically fished, fishing prohibitions would be undermined, trawling activities would not be decreased, the Fisheries Act would be changed, stakeholder involvement was poor, and it pre-empts further Marine Protection Areas from being developed. Another example of reporting gaps occurred over the issue of MSC sustainable fishery certification in the hoki fishery. In discussing the certification, Sanford briefly present two of the objections raised against the fishery certification - declining fish stocks and by-catch issues. Again, Sanford fails to mention several other significant objections of the many raised by stakeholders. For example, Sanford did not mention the questionable nature in which a number of criteria scores were increased, allowing the fishery to only just reach the minimum benchmark score required for certification. Nor does it discuss the industry's failure to reduce impact on the benthic environment (ocean floor), and the illegal dumping of small hoki (high grading). These and the other findings gained from using silent and shadow accounting are analysed using the stakeholder-accountability evaluative framework. In applying this framework, the flaws identified suggest ineffective social reporting whereupon accountability has failed to be discharged. Contributions are made to the social accounting literature through providing further evidence of corporate failure in social reporting with another empirical subject. As well as adding to the significant amount of literature illustrating the self-interested nature of this type of reporting, this research also contributes to the development of silent and shadow accounting. Through building on previous research, silent and shadow reports are further refined, and other ideas are proposed to see additional improvements in this research method.