We are independent & ad-supported. We may earn a commission for purchases made through our links.
Advertiser Disclosure
Our website is an independent, advertising-supported platform. We provide our content free of charge to our readers, and to keep it that way, we rely on revenue generated through advertisements and affiliate partnerships. This means that when you click on certain links on our site and make a purchase, we may earn a commission. Learn more.
How We Make Money
We sustain our operations through affiliate commissions and advertising. If you click on an affiliate link and make a purchase, we may receive a commission from the merchant at no additional cost to you. We also display advertisements on our website, which help generate revenue to support our work and keep our content free for readers. Our editorial team operates independently of our advertising and affiliate partnerships to ensure that our content remains unbiased and focused on providing you with the best information and recommendations based on thorough research and honest evaluations. To remain transparent, we’ve provided a list of our current affiliate partners here.

What is Social Accounting?

By Michael Ugulini
Updated May 16, 2024
Our promise to you
SmartCapitalMind is dedicated to creating trustworthy, high-quality content that always prioritizes transparency, integrity, and inclusivity above all else. Our ensure that our content creation and review process includes rigorous fact-checking, evidence-based, and continual updates to ensure accuracy and reliability.

Our Promise to you

Founded in 2002, our company has been a trusted resource for readers seeking informative and engaging content. Our dedication to quality remains unwavering—and will never change. We follow a strict editorial policy, ensuring that our content is authored by highly qualified professionals and edited by subject matter experts. This guarantees that everything we publish is objective, accurate, and trustworthy.

Over the years, we've refined our approach to cover a wide range of topics, providing readers with reliable and practical advice to enhance their knowledge and skills. That's why millions of readers turn to us each year. Join us in celebrating the joy of learning, guided by standards you can trust.

Editorial Standards

At SmartCapitalMind, we are committed to creating content that you can trust. Our editorial process is designed to ensure that every piece of content we publish is accurate, reliable, and informative.

Our team of experienced writers and editors follows a strict set of guidelines to ensure the highest quality content. We conduct thorough research, fact-check all information, and rely on credible sources to back up our claims. Our content is reviewed by subject-matter experts to ensure accuracy and clarity.

We believe in transparency and maintain editorial independence from our advertisers. Our team does not receive direct compensation from advertisers, allowing us to create unbiased content that prioritizes your interests.

Social accounting is a type of accounting that a business performs to place a value on the influence its operations have on society. It requires that enterprises look closely at all that it does and what kind of impact its activities have on people, places, and the environment. This sort of accounting doesn't deal with the type of assets that financial accounting does; rather, it focuses on business behaviors and what kind of impact that behavior has. Any business can undergo this type of evaluation, regardless of its size.

Understanding Social Assets

The term “social assets” can be somewhat confusing, but it encompasses any of the many ways that consumers view a company. A lot of this is connected to how the company conducts itself in the marketplace. Actions that business leaders take, everything from how they treat their employees and the sorts of benefits provided to how careful they are to avoid pollution and environmental damage, can play in.

Most of the key components are things that a company is doing without really thinking about how they are impacting consumers, which is to say they are policies that are chosen for some other reason and consumer impression is more of a side effect. In these instances the accounting process can be very valuable because it can force leaders to think about the broader implications of their choices. Social accounting also encompasses the views of the public that are shaped by things like advertising, online presence, and media coverage — areas that are more traditionally associated with consumer impressions.

Main Goals of the Accounting Process

Unlike financial accounting, which focuses on money going in and out and the profit implications of certain choices, this practice looks to understand the contributions or lack thereof that businesses make to society and to the everyday lives of consumers. The overall impression the brand or business name leaves on people also plays in. The practice concerns itself with business behavior that contributes to the wellbeing of people and the planet. Consequently, this type of accounting often also goes by the names “social and environmental accounting,” “corporate social reporting,” or “corporate social responsibility reporting.”

The act of social accounting attempts to put a figure on the costs and benefits of an enterprise's operations in relation to society and the environment. An enterprise may measure the impact of its smokestack emissions on a surrounding region, for instance, or a business may measure the impact of its community involvement and charitable contributions in the city or town in which it operates. It could measure the effectiveness of its hiring program and whether the program influences a region's unemployment rate, and could calculate how many of its packaging and advertising materials are recyclable.

How the Phenomenon Arose

This process was an accounting phenomenon of the later portion of the 20th century. Its growth as an accounting discipline stems from the pressures the environmental movement placed on large corporations. Also, it stems from the demand from governments and the public that businesses be more transparent concerning activities and the implications of those activities.

Importance of Sustainability

The practice also allows businesses to analyze whether they are sustainable as an entity from a social, environmental, cultural, and financial perspective. In the course of the project, they can usually also ascertain whether they will be able to sustain their commitment to conducting activities in a way that benefits society and, if not, to make positive changes.

Outside of Business

Social accounting is a process that any kind of entity can perform, not just businesses that are focused on growth and profitability. This includes governmental agencies, not-for-profit businesses, and charitable organizations. In essence, the practice deals with accountability more broadly — it demands that organizations put in place practices that contribute to the planet's sustainability and to the overall well being of humanity.

SmartCapitalMind is dedicated to providing accurate and trustworthy information. We carefully select reputable sources and employ a rigorous fact-checking process to maintain the highest standards. To learn more about our commitment to accuracy, read our editorial process.
Discussion Comments
By MmeSasha — On Apr 30, 2011

People shop with emotion, so social accounting is a very powerful concept! I will show this article to my boss. Our company needs this.

By kaifish — On Apr 29, 2011

The bottom line is a company is in business to make money. I think this shows a great shift in corporate culture, I didn't realize social accounting was a concept. This restores my faith in big companies.

By ReallyWillie — On Apr 26, 2011

Hopefully social accounting isn't a spin on public relations. For example, a company that employs child laborers might focus on a children's charity so it appears that they are doing good for a community.

By subway11 — On Apr 21, 2011

I think that social companies that work to enhance the community as a whole always do well financially. People develop goodwill towards these companies and become loyal to them as a result.

SmartCapitalMind, in your inbox

Our latest articles, guides, and more, delivered daily.

SmartCapitalMind, in your inbox

Our latest articles, guides, and more, delivered daily.