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Additional costs 
such as those of environmental monitoring 
(b) 
Reduced revenues 
as a result of refusing to supply certain customers 
(c) 
Diversion of employee effort 
away from profitable activities 
(d) 
Diversion of funds 
into social projects 
However, it is possible to argue that being socially responsible is in shareholders' interests, possibly over 
the longer term. 
Corporate social responsibility
is examined in more detail in Chapter 7. 
3.8 Specific environmental responsibilities 
Businesses are widely regarded as having a duty to safeguard the 
natural environment
. There are six 
areas for action. 
(a) 
Environmental auditing 
to monitor such things as legal compliance, waste treatment, and 
emissions 
(b) 
Economic action
: charges for environmental damage should be made internally to give managers 
an incentive to avoid it 
(c) 
Accounting action
: a separate set of accounts incorporating 
shadow prices 
to represent 
environmental costs is prepared
(d) 
Ecological approach
: aspects of the business such as a product or a location are selected for 
examination to ascertain their environmental impact 
(e) 
Production 
is managed to minimise inputs of materials and energy 
(f) 
Quality 
management is applied using the principle of continuous improvement in environmental 
performance 
3.9 Examples of social and ethical objectives 
Companies are not passive in the social and ethical environment. Many organisations pursue a variety of 
social and ethical objectives. 
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PART F: PROFESSIONAL ETHICS IN ACCOUNTING AND BUSINESS