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 CHAPTER 1: INTRODUCTION 1.1 1.2 CSR in Vietnam 1.3 Problem Statement 1.4 Objectives and Scope of Research 10 1.5 Research question 10 1.6 Research Background 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 The importance of CSR on business activities 19 Social and Environmental Accounting 21 2.3.1 2.3.2 Definitions of Social and Environmental Accounting 21 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 3.5 Research instrument 32 3.6 Sampling 32 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 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 REFERENCES 55 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 – Part II 41 Figure 4.5: Description of Result – Question – Part II 42 Figure 4.6: Description of Result – Question – Part III 43 Figure 4.7: Description of Result – Question – Part III 45 Figure 4.8: Description of Result – Question – Part III 46 Figure 4.9: Description of Result – Question – 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 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 Figure 4.7: Description of Result – Question – Part III Following the annual report of Agribank and Baoviet Goup, Agribank forcus on assisting the poor, therefore most of Agribank's respondents chose answer “Providing charitable funds” and “Participating into gratitude events (for heroic mothers, dead and wounded soldiers)” Baoviet community activities focus on four major areas: youth projects, care for the aged, disaster recovery, and poverty alleviation So result the most their respondents are “Supporting people in flood areas” and “Participating into gratitude events (for heroic mothers, dead and wounded soldiers)” 45 Question 3: Figure 4.8: Description of Result – Question – Part III Question stated that “My Company has an accounting system to quantify the cost and benefit of social and environmental programs” There are 16 people or 14.8 %, chose the answer of “Neutral”, 86 people chose the answer of “Disagree” or 79.6 %, people respondents “Strongly disagree” equal 5.6 % and none of them chose “Strongly agree” or “Agree” The reason for this change is due to the changing customers‟ perceptions of eco-friendly products and major changes in societal conditions In Vietnam, the enterprise does not have cost/benefit calculation that considers the contributions to social and environmental solutions for reducing social and environmental impacts and improving social equity and environmental conservation developments The administration benefits take into account of the 46 economic benefits from enhancing the customers‟ understandings of the company‟s effort to reduce social and environmental impacts that has not been applied in Vietnam Question 4: In this question, respondents were asked “It is necessary to include the Social and Environmental report in the annual report or sustainability report” The result for this question is that 32 people or 29.6 %, chose the answer of “Strongly Agree”, 43 people chose the answer of “Agree” or 39.8 %, 22 people respondents “Neutral” equal 20.4 %, 11 people with the most answer is “Disagree” or 10.2% and none of people chose “Strongly disagree” Figure 4.9: Description of Result – Question – Part III 47 The results showed that most of Vietnamese managers questioned are aware quite clearly of the importance of CSR issues in the enterprise, as well as "Environmental and social accounting" that should be included in financial statements or annual report in the enterprise itself It is also the rules of business ethics, and they perceive their roles beside the profit in business, they are responsible for the environment and society where the enterprise is operating It is also found that they had become aware of long-term benefits and firm development of the enterprise in the future; there will be big contribution of SEA to accompany the products and services that the society recognizes that enterprise 48 CHAPTER 5: CONCLUSION Finally, in chapter 5, conclusion of the study, recommendation for selected companies, limitations, and suggestions for future research is stated The components of Chapter are as follows: 5.1 Conclusion 5.2 Recommendation 5.3 Limitation of study 5.4 Suggestion for future research 49 5.1 Conclusion Within the macro view, the environmental protection, business growth and social efficiency, is always in conflict Also for enterprise, growth pressure or business effect can transgress the environment protection, unless the authorities or consumers interfere Each product selected by consumers can be considered as a vote for the enterprise The more votes there are, the better it is for the growth of the enterprise The problem is whether the consumers are aware of and use selecting right effectively or not In general, Vietnamese enterprises are mainly medium and small enterprise; therefore, acknowledge and implementation of CSR of each enterprises in Vietnam are still limited Through a small survey, with managers, accountants, employees, and customers of two main enterprises, namely Agribank and Bao Viet Group, it can be found that the acknowledgement of CSR in general and SEA in particular is highly appreciated among those respondents Measurement of SEA is not nearly formed at Vietnamese enterprises, hence there is no specific evaluation approved and there is no numeric concretization At other role of the society, they appreciate the role of SEA, but they often remain neutral position According to the above data description and analysis, to some extent we find the awareness, benefit and insufficient problems concerning what measure environmental and social implements in Vietnamese enterprises For Agribank and BaoViet, although they have not concretized in number, however SEA was 50 introduced into annual report In company with deployment of business activities, Agribank and Baoviet Group are also active in environment protection activities, community protection activities such as financing green activity protecting the environment, constructing the infrastructure in order to limit losses, reducing possible damages, risks, and other numerous activities financing charity such as children caring and children in difficult circumstances in regions The research was provided from awareness, benefit to SEA problems in Vietnamese enterprises The conceptions on CSR and SEA are also analyzed more clearly with theoretical point of the research From data on the internet, press, books, as well as analysis investigation on related subjects of Agribank and Baoviet Group, it shows partly the importance of SEA to the long-term and firm development of each enterprise Agribank and Baoviet Group is aware that it shall not receive and concretize immediately benefit SEA brings to, it will be showed gradually in the business result including cost savings and income increase, reputation improvement and stability of personnel 5.2 Recommendation “We should not consider SEA of the enterprise as a burden, instead of that, we should consider it as opportunity, self-aim, experience in order for the enterprise to operate better, other than a burden of costs, pressure from the State Hence, find solutions to develop more the place we live” - affirmed Mr Martin Neureiter, advanced expert, Department manager of deployment ISO 26000 51 “We are witnessing the change of consumers all over the world, SEA of enterprises is more and more important and it affirms the operating capacity of enterprises themselves locally and internationally Community development cannot be apparted from the development of enterprises; however, most of Vietnamese enterprises are not competent enough, especially medium and small enterprise, hence, they have not utilized the FDI resources” - Mr Patrick Gilabert, Head representative in Vietnam evaluated For Vietnamese enterprises in general, Agribank and Baoviet Group in particular, when implementing SEA, enterprises shall have opportunities such as improving their prestige and image among the community and with partners; contribute to enterprises‟ sound culture, thence improve the confidence and attachment of the personnel to the enterprises Concurrently, the personnel of the enterprises shall feel proud of and respective with leaders and shall attach with enterprises more However, beside above opportunities, when applying SEA, enterprise shall also meet difficulties, threats The first is the costs to perform social responsibility Because high costs for social responsibility shall affect directly business and producing costs, benefit shall be reduced in short-term and even medium-term, but in long-term those costs shall be compensated by benefit brought by SEA Therefore, through research with representative enterprises namely Agribank and Baoviet Group, enterprises should strengthen activities to improve awareness of long-term benefit from applying SEA well in the aim of developing enterprises firmly through workshops sharing experience of big international enterprises and lessons from cases happening in Vietnam so far Moreover, mechanisms, regulations 52 are necessary to encourage enterprises through allowing costs for social responsibility enter business and producing costs Simultaneously, applying SEA is one of the evaluating criteria which enable enterprises enjoy preferential treatment on investing and using national resources Awareness of SEA can be considered as an index of advantage rate for success of such company on the development way And leaders need to change their thought to trust in the importance of SEA, it is necessary to contribute a specific strategy to perform other than only PR for enterprise‟s image 5.3 Limitation of study In this research, some limits can affect the accurate and sufficient result for a project Firstly, it can be mentioned that selecting enterprise must be limited because of limited actual capacity and time for research Secondly, number of survey participants only equal to one per million compared with population in Hanoi In addition, answers were only selected impulsively other than practical nature Or answers are to help, other than taking time for each situation All above matters affect the survey result, small or big Questionnaires were written bilingually, due to the actual needs of survey participants with different knowledge levels Therefore, with those basic limitation and difficulties during researching, the research can give the best result in aspect of small research 5.4 Suggestion for future research With above research topic, if it is carried out better in the future, there will be some more specific experiences as well as plans to improve and give more satisfactory 53 result Firstly, this research shall be widened more to enterprises, there will be more time to collect survey data, and there will be more approaching methods such as direct interview In addition, questionnaire will be given more suitably for each subject, and it can be divided each question for each different knowledge level to related problems Questioning manner shall be simpler, more understandable, and questioning way for each participant shall be paid more attention 54 REFERENCES Collision, D., Lorraine, N and Power, D (2004) 'An Analysis of the Stock Market Impact of Environmental Performance Information', Accounting Forum, 28(1) pp Creswell, J W (2009) Research Design: Qualitative, Quantitative, and Mixed Methods Approaches Thousand Oaks, California: The Sage Publications Deegan, C & Rankin, M (1997), “The materially of environmental information to users of accounting reports”, Accounting, Auditing and Accountability Journal, 10(4) Gray, R., Bebbington J and Walters, D (1993) Accounting and the Environment: Greening of Accountancy II London: Paul Chapman Publishing Freedman, M and Patten, D (2004) 'Evidence on the pernicious effect of financial report environmental disclosure', Accounting Forum, 28 (1), pp.27-41 Fink, A (2003) How to design survey studies 2nd edn Thousand Oaks, California: The Sage Publications Gray, R., R Kouhy, et al (1995) 'Corporate Social and Environmental Reporting: A Review of the Literature and a Longitudinal Study of UKD disclosure', Accounting, Auditing & Accountability Journal, 8(2), pp 47-77 Gray, R.H., Owen, D and Adams, C (1996) Accounting and Accountability London: Prentice Hall Gray, R., C Dey, et al (1997) 'Struggling with the praxis of social accounting: Stakeholders, accountability, audits and procedures', Accounting, Auditing & Accountability Journal, 10(3), pp 325-364 Gray, P.S., Williamson, J.B., Karp D.A and Dalphin, J (2007) The Research Imagination: An introduction to qualitative and quantitative methods New York: Cambridge University Press Igalens, J (2006) 'Institutional Acceptance of Corporate Social Responsibility', In Allouche, J (Ed.), Corporate Social Responsibility Volume 1: Concepts, Accountability and Reporting, New York: Palgrave Macmillan, pp.317–332 Jawahar, I M and G L Mclaughlin (2001) 'Toward a Descriptive Stakeholder Theory: An Organizational Life Cycle Approach', Academy of Management Review, 26(3), pp 397-414 Mathews, M.R and Perera, M.H.B (1996) Accounting Theory and Development 3rd edn Melbourne: Thomas Nelson Australia 55 Medley, P (1997) 'Environmental Accounting – What Does It Mean to Professional Accountants?', Accounting, Auditing and Accountability, Vol 10, No 4, pp 594– 600 Matthews, B and Ross, L (2010) Research Methods: A practical guide for the social sciences Essex: Pearson Education Limited Neu, D., H Warsame, et al (1998) 'Managing Public Impressions: Environmental Disclosures in Annual Reports', Accounting, Organizations and Society, 23(3), pp 265-282 Saunders, M., Lewis, P and Thornhill, A (2007) Research Methods for Business Students 4th edn Essex: Prentice Hall Shaltegger, S., Muller, K and Hindrichsen, H (1996) Corporate Environmental Accounting Chichester: Wiley & Sons, Inc Schutt, R K (2006) Investing the Social World: The process and practice of research 5th edn Thousand Oaks, California: The Sage Publications Tashakkori, A and Teddlie, C (2003) Handbook of Mixed Methods in Social and Behavioural Research Thousand Oaks, California: The Sage Publications Veal, A J (2005) Business Research Methods: A managerial approach 2nd edn Frenchs Forest NSW: Pearson Education Australia http://agribank.com.vn/ [Accessed: 25 September 2011] http://www.baovietnhantho.com.vn/ [Accessed: 25 September 2011] http://europa.eu/index_en.htm [Accessed: 1st October 2011] http://www.ecogreenhotel.com/ecogreen-newsletter/EGH_Feb/eco-feature-tbl.html [Accessed: 1st October 2011] http://www.minerals.csiro.au/sd/pubs/Vanclay_Final.pdf [Accessed: 3rd October 2011] http://www.mmbgims.com/docs/full_paper/46_Pratik_%20Dharamshi_pp.pdf [Accessed: 1st October 2011] http://www.ace.coop/portals/0/institute/03/quarter.pdf [Accessed: 1st October 2011] http://www.egyankosh.ac.in/bitstream/123456789/35012/1/Unit2.pdf [Accessed: 5th October 2011] 56 57 APPENDIX Questionnaire sample The survey of the awareness and implementation of Social and Environmental Accounting in your company Please tick or fill in the most appropriate box: I, Information of Respondent 1, Name: 2, Age: _ 3, Gender: Female □ Male □ II, Questions to ask for the understanding about social and environmental accounting: Question 1: I understand the meaning of “Social and Environmental Accounting” Strongly agree □ Agree □ Neutral □ Disagree □ Strongly disagree □ Question 2: I am aware of the link between social and environmental accounting and Sustainable Development Strongly agree □ Agree □ Neutral □ Disagree □ Strongly disagree □ Question 3: The cost and benefit of social and environmental issues should be quantified in the Social and Environmental report? Strongly agree □ Agree □ Neutral □ Disagree □ Strongly disagree □ III, Questions to ask for the implementation social and environmental accounting in your company: Question 1: Implementing social and environmental accounting is important to the sustainable development of company Strongly agree □ Agree □ Neutral □ Disagree □ Strongly disagree □ Question 2: My Company voluntarily involves in developing or supporting environmental and social programs as follows: 58 □ □ Providing charitable funds Supporting people in flood areas Participating into gratitude events (for heroic □ mothers, dead and wounded soldiers) Educating the awareness of environmental protection □ Preventing air pollution/ water pollution □ Collecting, recycling, reuse, and proper disposal of □ products Others (please specify: ) □ Question 3: My Company has an accounting system to quantify the cost and benefit of social and environmental programs? Strongly agree □ Agree □ Neutral □ Disagree □ Strongly disagree □ Question 4: It is necessary to include the Social and Environmental report in the annual report or sustainability report? Strongly agree □ Agree □ Neutral □ Disagree □ Strongly disagree □ 59 ... Description and Analysis of Respondents about the Awareness of Social and Environmental Accounting 4.4 Description and Analysis of Respondents about the Implementation of Social and Environmental Accounting... 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. .. 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