Volume 1, 1990
Proceedings of the First Annual Meeting
Karen Paul, Steven D. Lydenberg
Corporate Social Monitoring
Types, Methods, and Goals
Corporate social monitoring has evolved in the past twenty years. This paper discusses several types of monitoring currently practiced, the methods used in various approaches, and the goals of social monitoring.
Public auditing is done for the benefit of external constituencies, with the results often being used to guide action aimed at influencing the corporation from the outside, through consumer, investor, or possibly government action. Private auditing is done by corporations themselves to enable them to make internal adjustments in areas perceived as being of high potential significance.
Corporate social monitoring may be relative or absolute. Relative scales evaluate corporations on the basis of their performance with respect to other corporations, as with the Sullivan Principles, and may differentiate by various-gradations, again exemplified by the Sullivan scale. Absolute measures include awards naming companies as outstanding in some area of social performance, or as a member of a group having some desired characteristic, as with the listing that comprises "America's 100 Best Companies to Work For."
Methodological issues include the following: focus on a single dimension or focus on multiple dimensions; the extent of independence or dependence of auditors on company or industry sources; and the degree of advocacy or neutrality presented by auditing personnel.
Goals of corporate social monitoring aim at influencing action, sometimes promoted from within the corporation itself but often in response to external constituencies, especially investors and consumers. The general impact of corporate social monitoring is that moral sanctions may be applied in a systematic and publicly visible way to companies on the basis of ethical considerations that have not yet become formalized in law.
Corporate social monitoring acts to supplement legal and regulatory systems. Social monitoring has the potential of being applied when political circumstances make legal standards difficult to enact, as in issues of international significance. This type of monitoring can give voice to organized groups which may be relatively small in numbers but have specifically defined pragmatic or ideological concerns, and may serve to institutionalize and legitimate emerging social issues.