so now we're looking into corporate social disclosure This would sound quite familiar to you guys because we know it to be corporate social responsibility CSR but for companies we call it as your CSD because we're now disclosing these uh corporate social responsibilities Now companies are required by the corporations act and the ASX listing rules to produce annual reports on their performance in terms of prof profitability and liquidity So we know previously that all reporting entities in this country they are required to it is mandatory for them to produce annual reports These must be available to external users such as shareholders and it is mandatory for a company to produce these annual financial statements But for these companies they um can voluntarily uh include statements about their social responsibilities in annual reports Uh here's an example of Dominoes where they have um distributed uh an annual report and alongside with that the sustainability report Now companies report on three aspects of their performance Financial results impact on society and environmental impact Reporting on three aspects of these three has been described as the triple bottom line Now corporate social disclosure is common amongst companies listed on the stock exchange the ASX uh it is less common in smaller companies Now with regards to these uh corporate social disclosure uh it is actually quite difficult for companies producing these social and environmental information We first look into our financial reports which can be found in the annual report These vouch reports are based on clear requirements definitions and recognition criteria Uh so that an asset in the balance sheet uh in one year or one company will mean the same thing in another year or another company's balance sheet So in the financial report obviously you know there's mandated accounting uh standards that must be strictly followed uh so we can see consistency yeartoear On the other hand we have our corporate social disclosure which is quite the opposite With our corporate social disclosure they are voluntary and are not subject to accounting standards and a conceptual framework There are no clear definitions for terms such as sustainability social responsibility or social impact Social responsibility could mean uh different things and different meanings for different companies So companies will want to disclose information that is most useful to users and that can be compared with the information of other companies However this is quite difficult because there are no set guidelines uh there's no mandatory guidelines for this area of voluntary reporting Now the benefits of social environmental initiatives may not be seen for a long time and are very difficult to measure and predict and therefore the this is one of the uh difficulties for companies to um you know produce these uh corporate social disclosure in a consistent manner uh for the whole market Another difficulty that poses for companies uh with regards to producing social environmental information is that it is difficult to put a dollar value on a social or environmental initiative and to classify it as an asset or an expense Now if we think back into our asset recognition um or even our expense recognition they're quite difficult to apply in this case to the expenditure or to the cost on a social or environmental initiative Let's have a look into this example below A company spends money to provide free educational software to a community So they are you know taking on the cost themselves to provide a free software uh to give out to uh their local community Now this initiative may be seen to add value to the business through an improved public image But can this added value be measured reliably uh possibly But we aren't certain you know is it certain to occur in the future where there's an improved public image and as a result of that uh possibly it could uh lead to uh more sales and revenue to the business But is there certainty that it will actually occur uh we are not uh certain that it it will occur So how is corporate social disclosure used by report users and stakeholders let's first look into our external users Now there are investors that base their investment decisions on the level of social responsibility of companies In most cases uh investors do look into the annual report uh and focus more into the financial results But certainly nowadays there are more and more investors that look into the other aspects uh more so into the corporate social aspects um and how companies are presenting themselves and what kind of initiatives are they doing outside of the norm of their business Now there are specialized advisory businesses that evaluate investments options in terms of their social and environmental impact and rank them to help investors choose where to invest We also have governments They also use social disclosures uh in companies If companies in the industry are proactive in managing their impact on society governments are less likely to impose strict regulations and to compel companies to take these responsibilities themselves Now looking internally uh the corporate social disclosure uh do does actually uh help companies themselves Number one continuous improvement by planning and reporting on socially responsible activities A company can compare results and their impact from year to year if they have already begun to uh look into you know reducing emissions or achieving a certain level of local employment um year to year they're measuring that they should be able to compare that information uh and see if there's any improvement that has been made and therefore by reporting on these aspects of business activity a company can reliably measure their progress and identify by whether improvements need to be made in the future Secondly risk management By considering its social and environmental impact a company identifies the ways in which it is affected by social and environmental issues The issues that a company must be aware of does represent risks to its performance and reputation If you think about it if social and environmental issues are not managed well this can result in the company to incur fines and penalties from governments uh as well as extra costs And because of possibly a poor public perception or public image customers and investors may choose to use and invest in another company And lastly we have stakeholder engagement There's certainly no doubt that some companies will actually use these kind of corporate social disclosure as a marketing tool to create a good public image Companies will include information about their social and environmental initiatives in their annual report or in their sustainability report Please remember that with your corporate social disclosure they are voluntary uh and there's no strict guidelines into how to report them and therefore they can uh try to use this as a marketing to uh tool to uh showcase the good side of their their business So for example companies use social disclosure as glossy advertising to attract people who want to work in and investors who want to invest in a socially responsible company Companies demonstrate to governments the ways they are self-regulating in terms of waste management carbon emissions pollution and managing a diverse workforce And if governments believe that companies are being proactive in these areas then it is less likely that strict regulations will be imposed