Corporate accountability

Corporate accountability refers to a publicly traded company's performance in non-financial areas such as social responsibility and sustainability. Corporate accountability espouses that financial performance should not be a company's only important goal and that shareholders are not the only people to whom a company must be responsible; stakeholders such as employees and community members also require accountability.

In conjunction with the annual financial reports that the Securities and Exchange Commission (SEC) requires corporations to produce, many publicly traded companies publish their own corporate accountability reports to satisfy demands from their shareholders and the public. Private organizations, not part of a government body, set standards for social and environmental responsibility that they expect public companies to meet and be accountable for.

Corporate accountability maintains that businesses should be held responsible for the impact of their actions on society and the environment. Corporate accountability is also an important concept for investors and shareholders concerned with ethical investing.

Governments do not have broad authority to regulate corporations except when specific legislation has been passed. Historically, passing such legislation has required a concerted public effort to convince politicians to regulate particular practices.

One of these early efforts was the campaign to ban tobacco smoking advertisements and to label tobacco products as dangerous, which resulted in the 1969 passing of the Public Health Cigarette Smoking Act. This prompted both public outcry at television and radio advertisements for luring in new smokers without giving equal weight to the views that smoking is dangerous, as well as an exhaustive Office of the Surgeon General report that outlined the specific health hazards of smoking.

Subsequent campaigns have lobbied for other public health initiatives, environmentally sound or sustainable business practices, and social justice issues such as employee exploitation and bribery and corruption. Sometimes initiatives are triggered by specific incidents like periodic campaigns to regulate oil industry practices after greatly publicized oil spills. Many nonprofit organizations—like Corporate Accountability International and Friends of the Earth—have directives to lobby for increased corporate accountability for specific campaigns.

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