Social and Environmental Accounting Theory: A Limb, not a Lens

By Dr Dale Tweedie, Senior Lecturer, Macquarie Business School 

Winner of the 2021 Reg Mathews Memorial Prize for the paper considered to have made the most significant contribution towards the social and environmental accounting literature published in Social and Environmental Accountability Journal. The paper is FREE to download here.

Is theory a ‘lens’ on social and environmental accounting issues (SEA)? And does it matter whether or not we imagine theory this way? My recent article, in a special issue of the Social and Environmental Accountability Journal on the future of SEA research, addresses these questions (spoiler: I answer no and yes, respectively). I then propose an alternative: That we think of theories less like lenses and more like limbs, set within bodies of research tradition.

The main idea is this: While we can pick up and put down a lens at will, a limb is part of us. Viewed as lenses, theories appear as interchangeable perspectives on SEA problems to which we need have no special attachment. Conceived as limbs, by contrast, theories give shape and form to how we understand the world and to principles to which we are committed. If we view a limb’s purpose as to reach towards an object, the limb metaphor also foregrounds how to theorise is to act. For example, whether we interpret forests as assets or ecosystems is not only an epistemic question but affects how we treat these environments. In this respect, viewing theories as limbs holds scholars more accountable for the ways of knowing we propose.

My full argument has three stages:

1. What does the ‘lens metaphor mean? In SEA scholarship, lens metaphors present theories akin to coloured glasses, which show our subjects in different shades. This metaphor implies a certain post-positivist playfulness towards theory, in which we can cycle through multiple theories without ascribing truth or objectivity to any. Lens metaphors also tend to privilege certain types of research over others: Generating novel perspectives on SEA issues, for example, over interrogating which theories are right.  

2. What’s wrong with lens metaphors? Lens metaphors can be misleading in two senses. First, lens metaphors can misrepresent our subjects’ beliefs or our own. Consider an accountant who views her professional ethics as an objective moral standard. If we label her moral system an ethical lens, we mispresent her own (objective) understanding. Lens metaphors might also misinterpret our own beliefs. For example, if we genuinely believe natural systems have intrinsic value, imagining a ‘deep ecological lens’ filters – and thereby truncates – both our real ontology and ethics. Second, lens metaphors can (mis)lead our research time by privileging theoretical novelty over extending or applying those theories we hold are true. 

3. An alternative? Imaging theories as limbs suggests theories are less ways of seeing than ways of inhabiting the world. This perspective is consistent with how SEA scholars have long interpreted accounting: As a mode of knowing that inherently (re)shapes the world it (nominally) records, and so is never simply technical or neutral. For example, to describe a person’s performance in numbers is a deeply theoretical exercise that gives a person’s actions some properties (e.g. comparable and transferable) and takes others away (e.g. specificity and social context). Representing theories as limb matches our metaphors to these maxims.

Imaging theories as limbs also helps clarify what is at stake in contests between ideas. As limbs, conflicting theories are not simply different vantage points on the same reality but conflicting injunctions about how to interact with our social and natural worlds. If we accept organisations should serve society rather than shareholders, for instance, we cannot be benignly indifferent to perspectives – like legitimacy theories – that privilege financial interests. 

I extend the metaphor one step by imaging theoretical limbs within bodies of research tradition rather than as discrete entities. Gadamer famously wrote that we understand a text only when we know the question to which it is an answer. Traditions provide the questions that theoretical texts answer, and thereby offer a fuller sense of theories’ meanings and possibilities. Understanding theories in traditions also reminds us that learning theory is not only memorising axioms or tools, but immersing ourselves in an historical conversation such that we intuitively grasp both the import and logic of the principles we apply. 

We can think of SEA research as itself a tradition. So conceived, SEA research is not simply a set of technical skills but a distinctive approach to accounting praxis. As such, the task of SEA scholarship is not only to cultivate novel perspectives on contemporary problems, but to assert ways of knowing we have learned collectively, and which our teaching and research preserve. This last metaphor foregrounds how to (re)produce knowledge is also to remember what has gone before. In my article’s closing words: 

As our politics sleepwalks our natural environment towards catastrophe, and as our economics bends once more towards inequality and injustice, one critical role for our tradition of SEA research is to remind each other, and the wider community, of what we already know.

Crowdsourcing Corporate Transparency through Social Accounting: Conceptualising the ‘Spotlight Account’

By Dr Stephanie Perkiss, Dr Bonnie Dean & Dr Belinda Gibbons, University of Wollongong, Australia 

Winners of the 2019 Reg Mathews Memorial Prize for the paper considered to have made the most significant contribution towards the social and environmental accounting literature published in Social and Environmental Accountability Journal. The paper is FREE to download here.

Image L-R: Stephanie Perkiss, Theresa Heithaus
(Program Manager, WikiRate), Belinda Gibbons, Bonnie Dean.

Organisations play a key role in addressing global economic, social and environmental challenges. Increasingly we are seeing organisations selecting to integrate sustainability activities into their Corporate Social Responsibility (CSR) efforts. Yet, these CSR reports are indispensably limited, privileging self-serving discourses. 

External accounts, such as alternative and counter accounts, offer opportunities to increase transparency and accountability in the areas of sustainable development. While external accounts challenge organisations’ social accounting, there remains a need to develop this further and investigate new models of social accounting that engage multiple viewpoints and stakeholders. With the evolution and public adoption of technology into our everyday lives, there is great potential for crowdsourced applications to enhance organisational accountability. 

This paper explores the role of accounting in the context of social and environmental change agendas and introduces a new framework for social accounting, the ‘Spotlight Account’. What is significant about the Spotlight Account is the use of the crowd and technology as a way of creating new visibilities and channels for participation. Unlike shadow or silent external accounts, the Spotlight Account seeks to illuminate and transform global organisational transparency and disclosure practices by centrally locating and recording comparable, aggregated and independently sought organisational information. 

The paper conceptualises the Spotlight Account through the exploration of a new technological platform, WikiRate. WikiRate is a collective awareness platform for sustainability that organises corporate narratives, disclosures and accountings relating to the United Nation’s Sustainable Development Goals (SDGs) and other frameworks such as the GRI, into a peer-produced, crowdsourced database. While crowdsourced platforms are not new - think about websites such as TripAdvisor - WikiRate is unique to the CSR field as a free platform that engages stakeholders through information sharing. 

Image: sample of a 'metric' on Wikirate

This conceptual paper highlights a new social accounting framework, empowering anyone to assume the role as a social accountant through participation in the platform and leveraging technology to facilitate transparent and comparative organisational data. In naming this new account, we wanted our readers to think about a spotlight – how it gives centre stage to a space, a number, a metric – each light coming from a member of the crowd to brighten sustainability information for decision-making or, to brighten a lack of corporate sustainability information that may drive better disclosure. 

Spotlight Accounting has the potential to address (some) issues of contemporary CSR practice as it focuses on the process through which accountability information is created. It represents an accounting theory or practice (process, method) and an effective form of social change. We conclude that the exploration of new social accountings can bring about emancipatory change. It opens up the possibilities for social accounting to achieve greater accountability and communication between companies and their stakeholders. We invite accounting scholars to consider the implications of Spotlight Accounting, and consider how advances in technology and increased participation from stakeholders can drive organisational SDGs. 

You can check out WikiRate at: wikirate.org or contact the WikiRate team via info@wikirate.org to discuss setting up your own WikiRate higher education program. 

Editor’s note: As part of the award, Stephanie Perkiss, Bonnie Dean & Belinda Gibbons’ original paper published in Social and Environmental Accountability Journal is available FREE to download via the publishers' website, via this link.

Can you quantify social outcomes? A critical look at the Social Return on Investment (SROI)

by Dr Pål Vik, University of Salford, UK

It is hard to compete with the allure of precision and quantitative measures to guide investment and management efforts. On the face of it, quantitative metrics offer a comparable, intuitive, and seemingly robust and objective measure of how well an organisation or company is performing.

The not-for-profit and social enterprise sector has not been immune to this allure. In fact, there has been a distinct shift towards quantitative approaches in proving their social value added in the last few years. Social Return on Investment, or SROI for short, has been among one of the more popular quantitative approaches used by the sector. SROI generates a monetary value of social impact for each pound or dollar invested net of costs. Its' appeal is reinforced by the similarity to conventional cost benefit analysis, making it easily understandable. An important aspect of SROI is that it links the services and products of an organisation with the social outcomes for individuals and groups external to that organisation, generally by comparing the users of a service with a benchmark or control group.

In my recent paper (Vik 2017) I critically assess the viability of calculating a monetary return for social outcomes drawing on over 20 large-scale microfinance impact studies spanning over two decades. There are important lessons from microfinance as the sector has used increasingly sophisticated quantitative approaches to prove social impacts to investors and funders. The chief difficulty has been to link client outcomes to the services provided by microfinance organisations (implicit in the SROI methodology).

It all boils down to one question: How can you find a control group or benchmark that is similar in all aspects save the intervention? Turns out, this is much more difficult than one might think because of two biases. Firstly, those that decide to take out a loan with a microfinance provider are inherently different from non-clients, including in ways that are not easily observable (such as risk aversion and entrepreneurial acumen). Secondly, the clients that these organisations serve have been selected through a careful screening process. In a sense, the likelihood of success may be a precondition to rather than an outcome of the access to microfinance services. These biases are likely to lead to overestimates of social return on investment especially where interventions require a high level of initiative on behalf of the beneficiary and access is subject to a careful screening or selection process.

In my paper, I conclude that rather than striving to apply increasingly sophisticated quantitative methods to quantifying and attributing social outcomes, there should be greater recognition of the limitations of SROI and similar methods. The value of these tools lies in highlighting the value of activities with no obvious monetary value rather than calculating an accurate social return on investment. To paraphrase the British philosopher Carveth Read, it is better to be roughly right than exactly wrong.


Editor's note: This blog post is based on Pål Vik's article "What's so Social about Social Return on Investment? A Critique of Quantitative Social Accounting Approaches Drawing on Experiences of International Microfinance", for which he was awarded the Reg Mathews Memorial Prize in 2017. The Reg Mathews Memorial Prize is an annual award for the paper considered to have made the most significant contribution towards the social and environmental accounting literature published in Social and Environmental Accountability Journal (SEAJ). The paper is selected by the editorial board of SEAJ and is named in memory of Professor Reg Mathews, a leading figure in the development of social and environmental accounting.

As part of the award, Pål Vik's original paper published in Social and Environmental Accountability Journal will be available with free access until February 2019.


References:

Vik, Pål (2017). What's so Social about Social Return on Investment? A Critique of Quantitative Social Accounting Approaches Drawing on Experiences of International Microfinance. Social and Environmental Accountability Journal, 37(1), 6-17.