- An organization should recognize that its actions affect the external environment and therefore have to assume responsibility for the effects of its actions
- This implies for quantification of the effects of actions taken, both internal to the organization and externally and all the quantifications should be reports to all the parties affected by those actions
- This concept recognizes that the organization is part of a wider societal network and has responsibilities to all of that network rather than just to the owners of the organization
- Accountability therefore necessitates the development of appropriate measures of environmental performance and the reporting of the actions of the firm
- This leads to more costs to the organization in developing, recording and reporting such performance and to be of value the benefits must exceed the costs. Benefits must be determined by the usefulness of the measures selected to the decision-making process and by the way in which they facilitate resource allocation, both within the organization and between it and other stakeholders
- The characteristics of the reporting are as follows:
- Understandability to all parties concerned
- Relevance to the users of the information provided
- Reliability in terms of accuracy of measurement, representation of impact and freedom from bias
- Comparability, which implies consistency, both over time and between different organizations
- The report will also consists of qualitative facts which will inhibit comparability over time and will tend to mean that such impacts are assessed differently by different users of the information, reflecting their individual values and priorities.
- There is a lack of proper understanding of effects of the actions of the organization along with the judgmental nature of relative impacts and this leads to existence of only few standard measures for the accountability
- This also then restricts the inter-organization comparison of such reports.
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