Readings – amazon.com/author/quizmaster

http://bookshop.europa.eu/en/copenhagen-european-green-capital-2014-pbKH0313305/?CatalogCategoryID=h2YKABstrXcAAAEjXJEY4e5L

http://www.un.org/apps/news/story.asp?NewsID=46937&Cr=climate+change&Cr1=#.Utjy31eMV8F

http://singer.rewi.hu-berlin.de/doc/rs/2014ws/china_masterstudiengang/Doppelmaster_Tongji_Humboldt.pdf

1. Alternative Financing

The principle form of self-financing this article examines is the Employee Stock Stock Ownership Plan (Aktienbelegschaften) in U.S. law.

1.1 Employee Stock Ownership Plans (Aktienbelegschaften)

Employee stock ownership plans (ESOPs) (Belegschaftsaktien)[1]are an instrument in the U.S. capital market which can and should be used to attain co-determination and to improve the corporation’s access to capital. ESOPs are a defined contribution plan (hereafter: pension plan) which invest primarily or exclusively in qualifying employer securities.[2]ESOPs provide advantages to the corporation both from a tax perspective and from a capital formation perspective. Employee ownership of the shares of the company may improve corporate governance through greater worker input about business practices, supervision, and feedback.[3]

A survey of employees found the most significant attractions of owning their employer’s stock through ESOPs are profit sharing and strengthening the link of employer and employee interest; employment retention (keeping one’s own job) was also very attractive reason for employees to want to invest in or be partially paid for by ESOP shares. Employees are less concerned about whether the ESOP might boost productivity and were unconcerned with the tax or retirement advantages. Those priorities are consistent with the usual employee’s honest but unsophisticated understanding of capital markets[4]and the tax system. Employees also had possibly rational or accurate, but certainly pessimistic views of the risks of ESOPs to their own savings and of their ability to participate in or profit from ESOPs.[5]Interestingly, employees felt themselves able to grasp the ESOP concept itself,[6]even though it seems evident from their assessment of their own potential and the market that employee understanding of capital markets generally is somewhat limited. Employee’s lack of concern about the tax advantages of ESOPs may be justified: while ESOPs do enjoy favorable tax treatement, the tax credit or deduction is generally small.[7]The most important tax advantage of ESOPs is deferred taxation, a concept which is generally too complex or remote for most workers to understand or care about.

To a German ordo-liberal or corporatist perspective the strength of ESOPs is that they overcome the worker-capital conflict, aligning the interests of capital and labor together to achieve the common business purpose of production and distribution of high quality low cost goods. ESOPs are thus thought to increase productivity, to empower workers, and to improve the economy.[8]

ESOPs definitely offer tax advantages of deferred taxation and tax deductions to the corporation (not the shareholder) on distribution. Furthermore, ESOPs do in fact link worker and management interests together.[9]However, the key motive for management to provide ESOPs has been the use of the ESOP to avoid hostile take-overs and entrench management.[10]To the U.S. perspective managerial entrenchment is bad, because it reduces the value of the corporation on the open market; entrenched management discourages takeovers, denying shareholders the potential takeover premium from proxy contests and tender offers. However, from a German point of view managerial entrenchment itself is not a problem. First, on the German market there are fewer hostile takeovers and shareholders are concentrated, not dispersed, alleviating the agency problem. In fact, from a German perspective, managerial entrenchment can be good because entrenchment enables management to focus on producing higher quality goods at lower prices and selling those products to a larger and larger client base rather than on transaction costs of take-over or be taken-over. ESOPs have been used in the U.S. as a successful anti-takeover defence.[11]ESOPs are also used as alternatives to pension plans,[12]and offer particular advantages for raising capital.

While workers do not regard the tax incentives as worthwhile, ESOPs in fact present real advantages to the corporation from a tax and corporate finance perspective. ESOPs are interesting as a method to defer employee compensation. ESOPs can be adopted as a pension plan (ERISA) which defers taxation until such time as the pension starts to pay out. ESOPs can also be used as security to obtain bank loans: leverage. Furthermore, a good argument can be made that ESOP distributions represent a (long term) capital gain: they are stock distributions, not interest (they may carry dividends, depending on the corporation). ESOPs are thus a true instance of human capital. Payments by the corporations into the ESOP pension plan are tax deductible by the corporation: “The firm may deduct contributions, up to twenty-five percent of all compensation paid to a plan’s participants, from its taxable income.^“[13]Moreover, income generated by the pension plan is tax deferred and is only taxed on distribution, and then only after realization – the sale of the stock, i.e. its liquidation into cash.

ESOP pension plans are also interesting from a corporate finance perspective. ESOP shares placed in a pension plan trust may then be used as security against which money may be borrowed from a bank.[14]Thereto, payments of interest on loans are considered an ordinary and necessary business expense and thus may be deducted from the corporation’s taxable income.

Thus, ESOP pension plans present real advantages in terms of taxation and corporate finance. ESOPs result in greater worker ownership of the corporation and increases the corporation’s access to capital.[15]This results in the desired conjunction of worker and management interests and potentially even co-determination.

Corporate buy-backs of ESOP stock may however face recharacterization by the tax authority as a hidden dividend. When the corporation buys back its shares from the employee that is clearly a realization of income to the employee who has sold their stock[16]and is a taxable event. However, the recharacterization of this realized income as a hidden dividend and thus as income instead of capital is questionable. Long term capital gains in U.S. enjoy a reduced tax rate under U.S. law. Thus, recharacterizing the stock-buy back as a hidden divident basically doubles the tax the employee must pay. Whether such a payment is a hidden dividend (ordinary income) or (long term) capital gain will depend on the actual facts of the case and even on the court one is in.

Payouts of corporation dividends into an ESOP may be deducted by the corporation under Internal Revenue Code (IRC) § 404(k); However, IRC § 162(k), disallows deductions for costs in connection with redemptions, and IRC 404(k)(5)(A), allows the Secretary of the Treasury to disallow deductions for dividends which are in substance, an avoidance or evasion of taxation.[17]Likely, the IRS is considering the case where the corporation pays dividends on its stock, and the ESOP then uses the dividend payment to purchase more stock from the corporation.

Although the ESOP is not the only type of pension plan which may hold employer securities it is the only plan which may borrow funds to do so and becomes thereby a leveraged ESOP.[18]Of course, if employees can be persuaded to co-sign loans, that is to be responsible for a surety (Burgschaft) on bank loans secured by the ESOP that may be advantageous for securing bank credit on the basis of the ESOP.

Despite their potential advantages to workers and management both from tax and corporate finance perspectives, ESOPs, especially leveraged pension plan ESOPs, are sometimes understandably criticized as risking the employee’s pension in a non-diversified investment.[19]The risk of investing into a leveraged ESOP pension plan is that the pension plan is not diversified.[20]Prudent stock market investors hold diversified portfolios – that is, they own several different types of stock in different businesses and markets. Diversification protects the investor if one of the stocks in which they are invested goes bad.

The problem of an undiversified pension portfolio is most obviously illustrated with the Enron corporate fraud scandal. When Enron was exposed as fraudulent and collapsed in 2001, employees’ pension plans, which had been entirely or nearly entirely invested in Enron stock, were also wiped out.[21]ESOPs “concentrate an even larger portion of each participant’s retirement savings in employer stock. There are roughly six times as many 401(k) participants as ESOP participants, but the ESOP participants have about three times as much money invested in employer stock”.[22]Although ESOPs do increase worker ownership and potentially could be used to emulate co-determination ESOPs also create an agency problem where corporate insiders can “advance their own interests at the expense of the workers”.[23]

United Airlines is another example of a non-diversified employee pension plan collapsing. When United Airlines went bankrupt, 2 billion dollars of employee shareholder net present value invested in United shares of stock was lost.[24] Foster & Gallagher, Inc. is another example where an undiversified ESOP pension plan collapsed leaving the employees with no retirement benefits.[25]While ESOPs can be a tool to emulate co-determination and attain self-financing through equity or as security to debt financing these examples of pension fraud show that the ESOP does not immunize the U.S. corporation from the problem any prudent German investor in the U.S. capital market must consider. Caveat emptor!

1.2 Stock Options

Another possible way to obtain financing and compensate workers while aligning worker and managerial interests is the use of stock options.[26]An option is the right to purchase a given product at a given price during a given time. Stock options are often used by start-ups to incentivize highly talented but low-paid personnel to perform. Their advantage is deferral of taxation until the option is exercised and the stock thereafter sold. The granting of an option is not a realization of income and so is not taxable. The exercise of the option to purchase the corporations stock is a realization event to the issuing company, but is not a taxable event to the buyer. It is only when the employee both exercises their option and sells their stock that they realize income and are subject to taxation.

1.3 Taxation and Debt/Equity (loans versus stocks)

The U.S. tax structure somewhat distorts the U.S. capital market; European investors and managers need to know about these distortions. The U.S., like Germany and France, treats long term capital gains favorably in tax terms. The logic is that favorable taxation of long term capital gains encourages capital formation and longer term investment. The qualifying period for a “long term” capital gain in the U.S. is only 2 years. Furthermore, favoring passive income as “capital gains” over ordinary income of active labor (workers) is regressive taxation. Another effect of favoring capital gains is to cause businesses to seek to recharacterize gains from income as long term capital gains, which also distorts the market. The tax schedule is produced below and shows that long term capital gains enjoy significant but unfairly advantageous tax treatment:

Regular and capital gains tax rates for 2013

Single Taxpayer	Married Filing Jointly	Capital Gain Tax Rate
$0 – $36,250	$0 – $72,500	0%
$36,250 – $200,000	$72,500 – $250,000	15%
$200,000 – $400,000	$250,000 – $450,000	15%
$400,001+	$450,001+	20%

Source: Asset Preservation Incorporated, Capital Gains Tax Rate Increases in 2013, http://apiexchange.com/index_main.php?id=8&idz=236

Tax Rates on Unmarried Individuals:

$0 to $8,925

$8,926 to $36,250

$36,251 to $87,850

$87,851 to $183,250

$183,251 to $398,350

$398,351 to $400,000

>$400,000

10%

15%

25%

28%

33%

35%

39.6%

Isaac M. O’Bannon, 2013 Federal Income Tax Tables Released, CPA Practice Advisor (January 15, 2013). http://www.cpapracticeadvisor.com/news/10853734/2013-federal-income-tax-tables-released

Another significant distortion of the U.S. capital market is the fact that U.S. corporate dividends are subject to double taxation, first as income to the corporation and then as income to the taxpayer. President Bush introduced a law in 2003 to allow a tax credit for dividend payouts to cure the problem of double taxation. IRC § 243 provides that a corporation may apply a tax credit to offset dividend income to it from another corporation. 70% of the dividend is credited if the corporation owns less than 20% of the corporation paying out the dividend. 80% of the dividend is credited if the corporation owns 20 to 80% of the stock of the corporation paying the dividend. If the corporation owns more than 80% of the shares of the corporation paying the dividend then it is granted a 100% tax credit for the dividend.

Payments of dividends by corporations to individuals in the U.S. are currently taxed at the same rate as capital gains. The favorable tax treatment of dividend income is the result of a Bush era tax reform was set to expire in 2013 but was in fact extended (keyword: “fiscal cliff”).[27]

Add to this the fact that interest paid on loans is considered an ordinary and necessary business expense and thus deductible from gross income[28]and the result is that U.S. law strongly favors debt financing over equity financing and disfavors dividend distributions, which distorts the U.S. capital market.

1.4 Islamic Finance

Islamic finance in principle is organized around the idea that all money at interest (Riba) is usurious parasitism and thus illegal. However, Islamic law permits profit sharing by business partners (Mudarabha). Islamic law also mandates that 10% of enterprise profits should be devoted to charity (Zakat). Of course, most western law systems accord tax deductions and even tax credits for charitable contributions and thus Islamic Zakat is entirely coherent with Western foundations and similar charitable trusts. Profit participation certificates (Genussscheine) and rent-to-own are examples of financial instruments which are permitted under Islamic law.

Islamic finance also mandates that the enterprise be consistent with Islamic law. So, enterprises which invest in the alcohol trade are, for example, definitively permitted, likewise investments in gambling and food which is prohibited under Islamic law (notably, pork).

Islamic instruments of interest are:

Lease (Ijarah), rent-to-own (ijara wa iqtina/ ijara muntahia bitamleek), joint-venture (musharakah), interest free loan (qard hassan), insurance contracts (takaful) and profit participation certificates (saak – singular; sukuk -plural) and trusts (Waqf).

Microfinance is potentially consistent with Islamic law, but in practice remeains linked to money-at-interest and thus illegal under Islamic law. Microfinance works by securing several people other than the lender to repay the debt if the debtor cannot; the technical term for such pledges is “guarantor” or “surety”. However, the idea behing microfinance is to use the interest the loan generates to fund further microfinance projects. A possible way to make microfinance work in Islamic law is to use a joint-venture contract between the lender sharing profits, and linking the joint-venture to charitable zakat.

1.5 Green Investing

Green investment instruments seek to encourage persons to provide capital for socially responsible industry by tying the generally lower performing investment directly to a socially responsible production process. The most evident examples are investments in wind turbines, solar plants, or logging which promises reforestations. Usually such investments are in the form of a bond with a one time capital payment which is repaid with interest over several years.

2. Alternative Accounting: The Triple Bottom Line:[29] Corporate Social Reporting

A major factor in the U.S. stock market crashes of 2002 and 2008 was fraudulent accounting: “cooking the books”. We can thus justifiably consider whether alternatives or supplements to the usual generally accepted accounting principles (GAAP) are necessary or desirable. Attempts to develop a stakeholder approach to corporate accounting center on the idea of sustainable business measured by a “triple bottom line” accounting (“driefacher Bilanz”)[30]and sustainability reporting (“Nachhaltigkeitsberichterstattung”)[31]

The idea of sustainable development started as a U.N. initiative.[32]“Sustainable development seeks to attain environmental protection, economic growth and poverty reduction, as well as social development.”[33]These goals are to be attained by way of open, transparent, and participative governance. Sustainable development is also linked to the idea of intergenerational responsibility.[34]Sustainability, entails “meeting the needs of the present without compromising the ability of future generations to meet their own needs.”[35]

This seems to be the root of what has since emerged as the “triple bottom line” accounting, (“people, planet, profit”). The “triple bottom line” dates from 1994 and considers safety, health and the environment, including human rights and diversity.[36]“Triple bottom line reporting aims to highlight the view that a company’s consideration of only financial matters as an indicator of its success is inadequate”.[37]The corporation’s annual report should somehow account for intangibles in human resources (“people” i.e. workers and their communities) and the environment (“planet”)[38] as contributing to a more accurate understanding of the company’s market profile and providing context for the final bottom line, profitability.[39] The objective of triple-bottom line reporting “is to foster transparency and establish a baseline for future information sharing with stakeholders.”[40]

For example, a company with a terrible environmental record might look highly profitable on a balance sheet, yet face potential tort liability and clean-up costs making the enterprise unsustainable both economically and ecologically. Such a problem is intangible due to the uncertainty of liability and would not show up in the usual double-entry accounting. However, even though intangible and uncertain the environmental liability here is material because the consequence of the problem would be a monetary liability, whether in tort or for the clean-up costs. Complete disclosure[41]is the answer.

Triple bottom line reporting in practice[42]has resulted from increased government regulations requiring reporting as well as by marketing considerations which lead businesses to self-regulate.[43]The rise of ethical investing is also a factor which gives incentives to companies to provide corporate responsibility reports”.[44]

The problem with triple bottom line accounting is that there is little established accounting methodology to implement it.[45]One searches in vain for GAAP standards,[46]actual balance sheets,[47]or even sketches or outlines of proposed methodologies to take into account qualitative information which affects profitability but is not expressed or able to be expressed as monetized quanta in dollars or euros. One can however find social reports of at least some companies, although the reports[48]are definitely not following a GAAP or government mandated methodology. Most sustainable development tools are for macroeconomic policy analysis by political entities rather than for microeconomic actors such as businesses.[49]For example, social audits as practiced in India[50]are generally efforts by the government to track and verify distribution and impact of social programs[51](and are fairly well developed there) as part of the anti-corruption struggle[52]and to attain greater transparency.[53]In contrast, in Europe[54]and North America social audit may be thought to be an (intangible) audit of a company’s social policies (e.g. the company’s diversity/gender policies positions and actions). Still, some intangible accounting indicators are working their way into corporate annual reports[55]and as templates for use by businesses issued from government administrative agencies.[56]

Another problem with sustainable business practices is that they may be unprofitable and thus conflict with the duty of directors to maximize shareholder profit, even at the expense of other stakeholders such as workers, banks, suppliers, customers, the public, and the environment.[57]“Proponents of social responsibility claim that social responsibility signals increased ethical behavior by managers which, in turn, may have a positive influence on a firm’s reputation.”[58]However, it is uncertain whether in fact social responsibility influences economic value of the corporation’s shares of stock.[59]In the case of the Enron scandal, social responsibility did not mitigate the negative market returns to Arthur Anderson clients following the exposure of the fact that Arthur Anderson’s auditing practices did not expose the fraud committed by Enron’s managers.[60]However, despite this cautionary fact, there is an intuitively powerful idea that people are more committed to and work harder for organizations which align with their own internal values.[61]Yet that is an intangible factor which may not be able to be directly or even objectively measured.

2.1 Environmental Accounting and Disclosure

Environmental Accounting is thus an emerging discipline which seeks to account for all factors which effect the environment.[62]Environmental liabilities such as polluting activities may well be economically relevant due to the fact that governments regularly impose clean up costs on companies which pollute, as well as the potential liability in tort. U.S. Federal securities laws require publicly traded companies to disclose environmental and other regulatory compliance and liabilities publicly in registration statements and annual reports filed with the Securities and Exchange Commission (“SEC”).[63]This disclosure must be complete and accurate; otherwise it entails liability for the false or misleading statements of material fact.[64]

Environmental reporting ought to provide an ecological environmental impact statement, information about any recycling and renewable energy programs including a monetary accounting assessment of any economies in production, distribution, or sales as well as any synergies thereby obtained as to enterprise goodwill (tangible client list) intellectual property (patents, trade-marks, certifications) and networking with other market actors. The environmental report should indicate any environmental certifications[65]and the certifying agency or agencies. These are all tangible verfiable facts which have economic consequences and for which metrics and reporting standards could be developed. Extent of depletable resources, depletion thereof in the year accounted for, expenditures to make renew the depleted resource could also readily and justifiably figure into corporations reporting and disclosure. However, standardization of what to report, when, how, and to whom largely do not yet exist: there is as yet no GAAP standard for environmental reporting.

2.2 Social Audit (People: Workers, Community)

Social audits of the business’s activities and environment[66]“require a firm to evaluate the societal impact of its decisions on stakeholders and others”[67]including “an assessment of a firm’s social performance and how the firm makes responsible corporate governance decisions.”[68]Social Accountability 8000 (SA8000)[69]presents basic standards for enterprises in fields such as child labor and human trafficking.[70]As to social disclosure,[71]listing statements, proxy solicitations, and annual reports often require disclosure of materially relevant information, and voluntary disclosure of information must also be factually accurate. Facts are relevant which will influence investors’ investment decisions.[72]Disclosure and transparency are themes of contemporary corporate law.[73] Thus, the Sarbanes-Oxley Act of 2002 (the Act), requires, e.g., publically traded companies to disclose whether they have a code of good conduct to govern financial auditors.[74]

2.2.1 Diversity

In a globalized marketplace clients and employees will necessarily come from diverse racial, religious, ethnic, gender, and age groups. Any business wants good relations among its employees and in order to market products as widely as possible. Diversity may also be increasingly represented in the corporate board-room, though there is a de facto “glass ceiling”.[75]In any event, for reasons of employee relations and marketing diversity training regularly features in corporations and should be seen as part of the corporation’s social audit.

As far as the social audit goes, the company should report on its labor relations policies and standards: trainings offered and required to employees on safety, workplace accidents and rates of accidents, work schedules (hours and times of employment), availability of flex time, over-time pay, possibilities of telecommuting, child-care arrangements on or near work-site, and availability of health insurance and psychological counselling. Prudent businesses want healthy employees.

Compliance serves both as a preventive mechanism to prevent wrong-doing in the first place and as a defence by the corporation against wrong doing, as affirmative evidence that the corporation was not in fact tainted by a culture of corruption.

2.2.2 Marketing Social Responsibility

Socially responsible consumerism seeks to encourage people to purchase “fair trade” products; products certified as not produced with child labor, using environmental production processes (dolphin safe), non-intensive farming (free range), and with fair labor standards such as wages, working hours and conditions.

So, the social audit should also include information on customer relations and after sales service care, any fair trade[76]or organic[77]certifications and the certifying agency or agencies and compliance with anti-corruption standards.

The problem with sustainability is a question of economics: its answer will also be market-based. Customers may well be socially irresponsible. “As long as customers continued to care more about cost, brightness, and strength of their paper than about the pulp mills’ chlorinated organic numbers, most mills used regulatory requirements as their chief guide to environmental performance”.[78]While companies wish to maintain goodwill, an intangible asset reflected in client lists and repeat business, protection of “reputational capital” is generally seen defensively, as a matter of maintaining market share.[79]If entrepreneurs are unable to take advantage of a diverse marketplace interested in fair-trade, sustainable products, let alone economize on energy efficiency and recycling to reduce waste costs then other entrepreneurs will displace those “dinosaurs”. That is, we can adapt the Boston Consulting Group company matrix to sustainability:

Adapting the BCG Matrix to Sustainability:

Sustainable Unsustainable

Adaptable Apples(star) Sunflowers (question mark)

Inadaptable Amish (cash cow) Dinosaur (dog)

Source: Author

Applying the SWOT Matrix to sustainability in the petroleum industry:

Strengths Existing infrastructure, Developed Technology

Weaknesses Non-Renewable

Opportunities Synthetic oil, Solar, Wind, Fracking, Tar Sands
Threats Alternative Energy, Nuclear, Terrorism, War

Source: Author

2.3 How to Implement the Triple Bottom Line

The methodology of triple bottom line reporting and accounting is as yet undeveloped. Strategies to implement a triple bottom line methodology have centered on corporate social responsibility, rankings and check-lists, shareholder activism, social audits, social investment funds, and voluntary codes of conduct.[80]Here we briefly examine some of the existing methods for implementation of the sensible idea that employees, customers, the community, and the environment are all relevant business considerations and to be cared for by a prudent sustainable business.

2.3.1 Setting Learning Goals

One difficulty with implementing triple-bottom-line accounting is that the task will be unfamiliar, frequently difficult to measure, and may be uncomfortable to those who are not adaptive.[81] Management’s imposition of (vague? attainable?) goals from above may result in change – but also may lead to resistance.[82]While profit is tangible, gender diversity awareness in employee relations and marketing is difficult to measure, for a concrete example. Being forced to undertake complex tasks such as gender diversity awareness reduce goal commitment. Likewise, being tasked with goals which are vague or even unattainable also reduces commitment.[83]

Thus, top-down imposition of sustainability may not be the best method to make the business more profitable through improved employee relations, ecological economization, innovation, and marketing opportunities. Instead, setting learning goals as opposed to performance goals is much more effective: “Empirical research in both education and organizational behavior has found that mastery/learning goals are usually superior to performance goals in complex tasks.”[84]Goals such as “Make the business more energy efficient and report how you did that” are better than “Reduce expenditures by 5%” because they enable the employee to act creatively and do not compel the employee to lie.

2.3.2 “Gearing” a Sustainable-Business Plan

Another way to implement sustainability is to “gear” the business plan. In a first stage, the company confirms its compliance with legal standards for labor and environmental practices imposed by the state. This obtained, the business then moves on to improve its practices to become more ecologically efficient (less waste, more recycling). Having complied with the law and reduced expenditures by economizing ecologically, in the next phase the business seeks to partner with government as well as private actors to innovate new sustainable solutions. The business then seeks to integrate sustainability principles into strategy and processes to obtain competitive advantage and to create value for its stakeholders.[85]For an example in practice, Nike “explicitly follows the gearing-up framework”.[86]

2.3.3 Check Boxes

One of the problems of triple-bottom line accounting is that the measured goods are intangibles, which makes setting goals and measuring performance difficult. One solution to this problem is to use a “check-box” approach to auditing with lists of tasks and performance measures. This is however only a partial solution.[87]

2.3.4 Amnesty Box

Another innovative method is to provide employees an “amnesty box” where they can deposit contraband, complaints, or any other thing they wish to anonymously express. The understanding is that amnestied items will not result in employer sanctions of the person who submits them. Amnesties seek to expose and solve the problem rather than to punish or blame.

2.3.5 Fundamental Analysis: Ratios

When examining a company to see if it is a “buy” you should learn to read its balance sheet from its annual report (profits and losses). You should look to see what the company’s turn-over is (net sales), whether it is in fact turning a profit, and if so at what rate. You should then look at whether the company pays dividends, and if so at what rate in comparison to its share price. You ought also to look at the ratio of debt to equity to see whether the corporation can or cannot borrow. Assuming the business is publically traded, you must also look at the ratio of its share price to the earnings per share. You should also compare the share price of the business to its book value per share. Book value is the “break up” value of the business: if the business were broken up and all its parts sold off, how much would that be worth, per share? Compare that to the price of the share to see if the business is over valued by the stock market or under valued. You ought also compare the price per share to the earnings per share (price earnings ratio). Finally ask yourself whether the business itself is sustainable broadly speaking: is the business well managed or badly managed? Is the business pursuing something ethical or something unethical? Is the business one with a future, such as biotechnology, or instead is it something with no future, such as horse drawn carts? Finally you may consider the market itself, whether the economy generally is doing well, or doing badly, and whether it will do better or will do worse in the near future. One invests in corporations, not in markets. Triple bottom line accounting has to be related back to hard data about the company both to be effective as a managerial tool and to be taken seriously whether marketing goods or seeking capital investments.

2.3.6 The Right Mix

A mix of learning goals, non-balance methods (surveys, check boxes, training feedback), and SA-8000 can be used together to implement the triple bottom line and “can lead to increased goal commitment and affective organizational commitment”[88]resulting in greater “customer satisfaction, productivity, profit, employee retention, and employee safety”[89]Although many social and environmental factors are intangible and/or indirect they nevertheless can have market consequences for the businesses either as opportunities for economization (e.g., recycling, renewables) or in marketing (e.g., diversity). The challenge is to develop methods and rules which are objective and able to be implemented to improve business practices.

Conclusion

Due to systematic corruption the U.S. federal budget and U.S. capital markets were devastated in 2008 by the worst recession since 1929. Restructuring a global economy on a firmer foundation requires innovations in corporate governance and corporate reporting requirements as well as in corporate financing. Employee Stock Option Plans enable self-financing (capital) and obtaining outside-financing (loans). Efficiencies in employee relations, economies in production, as well as investment and sales opportunities can all be discovered through diligent corporate accounting. Developing standards and methods for corporate social reporting is in corporation’s self-interest. Technological innovation and globalization will inevitably lift the planet out of cyclical recession. Capitalism is a process of “creative destruction”. The question is how to restructure corporate and financial relations so as to prevent another recession – as well as how to take advantage of the opportunities the recession created. This work has suggested some ideas thereto.

[1] “Die Vergabe von Belegschaftsaktien istdie traditionelle Methode der Mitarbeiterbeteiligung. Dabei erwirbt das Unternehmen eigene Aktien über die Börse/im Freiverkehr, schafft genehmigtes Kapital oder erhöht sein Kapital bedingt und bietet denMitarbeitern an, Aktien des eigenen Unternehmens zu Sonderkonditionen zu erwerben.

Dabei werden in der Regel Rabattezwischen 20 % und 40 % gewährt, wobei ab dem Jahr 2002 bis zu 154 Euro Rabatt jährlich steuer- und sozialversicherungsfrei sind, § 19 a Abs. 1 EStG (bis dahin DM 300.-). Zumeist werden bestimmte Zeiträume oder Stichtage zum Verkauf der Belegschaftsaktien vorgesehen.”

Svenja Deich, Aktienoptionen, page 3 (2004). http://web.archive.org/web/20050115170156/http://www.aus-innovativ.de/media/Aktienoptionen.pdf

[2] Steven J. Arsenault, Aesop and the Esop: A New Fable about Dividends and Redemptions, 31 Virginia Tax Review 545, 548 (2012).

[3] “The first type of argument, once common but currently rare, asserts that ESOPs promote ‘democratic capitalism’ by turning the great mass of workers into owners of capital and reducing wealth and income disparities. The second, more current argument is that ESOPs empower worker-participants with a greater sense of ownership and commitment with respect to their employers and their work. In turn, the argument goes, this changed attitude leads to increases in worker satisfaction and productivity, which enable employers to keep workers employed for longer and to compensate them better.” Sean M. Anderson, Risky Retirement Business: How ESOPsHarm the Workers they are Supposed to Help, 41 Loyola University Chicago Law Journal 1, 5 (Fall 2009).

[4] “Ninety seven per cent of respondents either agreed or strongly agreed that the company sought to show its employees that they were valued by the company. Other common objectives were: sharing financial success with employees (95.5%); aligning employee interests with shareholders interests (94.9%); retaining employees (92%); and attracting employees (81.8%). The seventh most popular objective was encouraging increased productivity (76%). The four least common objectives for having the employee share plan were: utilising the tax concession advantage (32.6%); facilitating additional savings by employees for retirement (31.1%); raising capital (6.7%); and inhibiting takeovers (2.2%).” page 4 Michelle Brown, Rowan Minson, Ann O’Connell , Ian Ramsay, Employee Participation in Employee Share Ownership Plans: The Law, Company Objectives and Employee Motives 25 Australian Journal of Labour Law, 1-22, 4 (2012).

[5] “In relation to commonly perceived disadvantages of employee share ownership, respondents most frequently agreed with the statement ‘if your company does badly, [ESOPs] put your savings at risk’ (48.2%), followed by ‘hard work cannot affect share price’ (41.3%), ‘it takes too long before gaining from [participation]’ (29.4%) and ‘it’s too hard to find the money to participate’ (24.0%) …Only a minority felt that ESOPs ‘are very difficult to understand’ (19.3%), ‘give a better deal to the company than the workers’ (16.8%), ‘tie you down to one employer’ (9.7%) and ‘weaken trade unions in the company’ (5.6%).” Michelle Brown, Rowan Minson, Ann O’Connell , Ian Ramsay, Employee Participation in Employee Share Ownership Plans: The Law, Company Objectives and Employee Motives 25 Australian Journal of Labour Law, 1-22, 13 (2012).

[6] Id.

[7] Michelle Brown, Rowan Minson, Ann O’Connell , Ian Ramsay, Employee Participation in Employee Share Ownership Plans: The Law, Company Objectives and Employee Motives 25 Australian Journal of Labour Law, 1-22, 8 (2012) .

[8] “There is a large body of literature which has proposed rationales for employee share ownership. Some of these rationales include improving workplace productivity (as a result of employees feeling that they have a direct interest in the performance of the company and/or through lowering monitoring costs by aligning employee interests with those of the company); promoting workplace cooperation and harmony through reducing the ‘them’ and ‘us’ mentality between employers and employees; enhancing industrial democracy through bringing employees into corporate governance; increasing employees’ understanding of how the economy is run; providing employers and employees with greater flexibility in determining the nature and mix of remuneration packages; contributing to national savings through providing employees with an additional avenue for savings and investment; promoting innovation, particularly in small and medium unlisted companies and sunrise industries; and facilitating succession planning in small businesses through enabling employee buyouts.” Michelle Brown, Rowan Minson, Ann O’Connell , Ian Ramsay, Employee Participation in Employee Share Ownership Plans: The Law, Company Objectives and Employee Motives 25 Australian Journal of Labour Law, 1-22, 20 (2012).

[9] Myron S. Scholes Mark A. Wolfson Employee Stock Ownership Plans and Corporate Restructuring: Myths and Realities, Working Paper No. 3094, NATIONAL BUREAU OF ECONOMIC RESEARCH, 11 (1989) http://ideas.repec.org/p/nbr/nberwo/3094.html http://www.nber.org/papers/w3094.pdf

[10] “the case is very weak for taxes being the primary motivation to establish an ESOP. The case is also weak for employee incentives being the driving force behind their establishment. We conclude that the main motivation for the growth of ESOPs is their anti-takeover characteristics.” Myron S. Scholes Mark A. Wolfson Employee Stock Ownership Plans and Corporate Restructuring: Myths and Realities, Working Paper No. 3094, NATIONAL BUREAU OF ECONOMIC RESEARCH, 1 (1989) http://ideas.repec.org/p/nbr/nberwo/3094.html http://www.nber.org/papers/w3094.pdf

[11] “Polaroid won an important decision in the Delaware Chancery Court, which upheld Polaroid’s issuance of 14% of its stock to an ESOP. Prior to the initiation of a hostile tender offer by Shamrock Holdings. The ESOP helped Polaroid’s management defeat Shamrock’s bid for its stock because employees voted their Polaroid shares with management. Delaware law requires that a firm wait three years after it acquires a 15% interest in a target before it can merge with the target unless it can secure an 85% vote of the target’s shareholders. The waiting period can impose substantial costs on the acquiring firm if it had plans to use the assets of the target as collateral for interim or longer-term loans to finance a leveraged buyout. Firm management might establish an ESOP because they believe that employee shareholders are more likely to vote with them than are outside shareholders. As a result, Polaroid’s use of an ESOP as a successful takeover defense stimulated considerable interest in ESOPs.”

Myron S. Scholes Mark A. Wolfson Employee Stock Ownership Plans and Corporate Restructuring: Myths and Realities, Working Paper No. 3094, NATIONAL BUREAU OF ECONOMIC RESEARCH, 3 (1989) http://ideas.repec.org/p/nbr/nberwo/3094.html http://www.nber.org/papers/w3094.pdf

[12] Myron S. Scholes Mark A. Wolfson Employee Stock Ownership Plans and Corporate Restructuring: Myths and Realities, Working Paper No. 3094, NATIONAL BUREAU OF ECONOMIC RESEARCH, 3 (1989) http://ideas.repec.org/p/nbr/nberwo/3094.html http://www.nber.org/papers/w3094.pdf

[13] Robert Hockett, Why (Only) ESOPs? 12 Stanford Journal of Law, Business & Finance 84, 92-93 (Fall, 2006).

[14] “the employing firm adopts an ESOP as a sponsored ERISA plan — a defined contribution plan. Like other ERISA plans, the ESOP takes the legal form of a trust. …the trust borrows funds from a bank or some other commercial lender. It uses those funds to purchase stock issued by the sponsoring/employing firm at fair market value. The loan proceeds accordingly pass through the ESOP to the sponsoring/employing firm itself — they finance it, we shall see — and the stock is then held in trust on behalf of the employees. The firm guarantees repayment of the loan by the ESOP to the lender, and the stock held in the ESOP is itself pledged as security. Now over time, the sponsoring/employing firm makes cash contributions to the ESOP, just as it would do in connection with any defined contribution plan. In this case the contributions are used by the ESOP to amortize the loan originally used to purchase the sponsoring/employing firm’s shares.As the loan is paid down, stock held by the trust is gradually released from its loan-securing role to individual accounts maintained severally on behalf of the employee/beneficiaries.” Robert Hockett, Why (Only) ESOPs? 12 Stanford Journal of Law, Business & Finance 84, 88-89 (Fall, 2006).

[15] Robert Hockett, Why (Only) ESOPs? 12 Stanford Journal of Law, Business & Finance 84, 91 (Fall, 2006).

[16] “Under [Internal Revenue] Code Sections 162(k) and 404(k)(5) D. When a participant or beneficiary receives plan benefits in the form of a distribution of employer stock under an ESOP, the employer corporation often repurchases the shares of stock distributed to the participant from the ESOP. From a tax perspective, this repurchase of shares is treated as a redemption of stock, which has significant tax consequences to the participant. When a corporation redeems its own stock, the transaction is treated one of two ways for federal income tax purposes. If the transaction meets the requirements of one of four situations specified in Code section 302(b), then the redemption would be treated a sale or exchange of the stock, resulting in capital gains tax treatment for the selling participant. However, if none of the four Code section 302(b) situations apply, then the redemption is treated for tax purposes as a dividend, which does not receive preferential tax treatment, but instead is taxed as part of the taxpayer’s gross income under Code section 301(c)(1).”

Steven J. Arsenault, Aesop and the Esop: A New Fable about Dividends and Redemptions, 31 Virginia Tax Review 545, 554 (2012)

[17] Steven J. Arsenault, Aesop and the Esop: A New Fable about Dividends and Redemptions, 31 Virginia Tax Review 545,547 (2012).

[18] “In a leveraged ESOP, the ESOP may borrow the funds to acquire employer securities directly from the lender (normally with a guarantee from the employer), or the employer may borrow the funds from the lender followed by a loan from the employer to the ESOP. This latter structure is typically known as a “mirror loan” because the terms of the loan between the ESOP and the employer mirror the terms of the loan between the lender and the employer.”

Steven J. Arsenault, Aesop and the Esop: A New Fable about Dividends and Redemptions, 31 Virginia Tax Review 545, 549-550 (2012).

[19] Sean M. Anderson, Risky Retirement Business: How ESOPs Harm the Workers they are Supposed to Help, 41 Loyola University Chicago Law Journal 1, 6 (Fall 2009)

[20] Sean M. Anderson, Risky Retirement Business: How ESOPs Harm the Workers they are Supposed to Help, 41 Loyola University Chicago Law Journal 1, 3 (Fall 2009).

[21] Sean M. Anderson, Risky Retirement Business: How ESOPs Harm the Workers they are Supposed to Help, 41 Loyola University Chicago Law Journal 1, 3 (Fall 2009).

[22] Sean M. Anderson, Risky Retirement Business: How ESOPs Harm the Workers they are Supposed to Help, 41 Loyola University Chicago Law Journal 1, 3 (Fall 2009).

[23] Sean M. Anderson, Risky Retirement Business: How ESOPs Harm the Workers they are Supposed to Help, 41 Loyola University Chicago Law Journal 1, 4 (Fall 2009)

[24] Sean M. Anderson, Risky Retirement Business: How ESOPs Harm the Workers they are Supposed to Help, 41 Loyola University Chicago Law Journal 1, 6 (Fall 2009).

[25] Sean M. Anderson, Risky Retirement Business: How ESOPs Harm the Workers they are Supposed to Help, 41 Loyola University Chicago Law Journal 1, 6 (Fall 2009).

[26] Anstelle einer vollständigen Auszahlung des Gehalts als Fixvergütung kann der Arbeitgeber Aktienoptionen – also das Recht, Aktien zum Ausübungs- oder Basispreis zu erwerben – als variablen Bestandteil gewähren. Ziel solcher Aktienoptionen ist es, die Bindung des Mitarbeiters an das Unternehmen zu stärken und eine langfristige Anreizwirkung zu erzielen. Wesentliche Rahmenbedingungen werden dabei von § 192 Abs. 2 Nr. 3 und 4 AktG vorgeschrieben page 1 Svenja Deich Aktienoptionen Arbeits und Sozialrecht Innovativ 2004 http://web.archive.org/web/20050115170156/http://www.aus-innovativ.de/media/Aktienoptionen.pdf

[27] The American Taxpayer Relief Act of 2012 Pub.L. 112–240, H.R. 8, 126 Stat. 2313, (January 2, 2013) .

[28] IRC § 163.

[29] Lothar Kuhn,Was ist …Triple Bottom Line?

http://www.harvardbusinessmanager.de/heft/artikel/a-622721.html

[30]See, e.g., Ronald Kröker, Ansätze zur Implementierung von RSE (CSR) in einem lateinamerikanischen Entwicklungsland, 60 (2010).

[31]Silvia Schein, Die Nachhaltigkeitsberichterstattung (Sustainability Reporting)

(2008).

[32] TGeneral Assembly Resolution 38/161 “Process of preparation of the Environmental Perspective to the Year 2000 and Beyond”; The Norms on the Responsibilities of Transnational Corporations and Other Business Enterprises with regard to Human Right UN Doc. E/CN.4/Sub.2/2003/38/Rev.2 (2003). http:// www1.umn.edu/humanrts/links/commnetary-Aug2003.html; United Nations Sustainable Development Web page on Voluntary Initiatives at <www.un.org/esa/sustdev/viaprofiles/OECD_Guidelines.html> for the Guidelines and further information see < www.oecd.org/daf/investment/guidelines/mnetext.htm>.

[33] Luke Danielson, Patricio Leyton, Mining and Oil and Gas Development in Latin America, Rocky Mountain Mineral Law Special Institute 2001C Special Institute 2001c Rmmlf-Inst 9 (2001).

[34] Risako Morimoto, John Ash, and Christopher Hope, Corporate Social Responsibility Audit: From Theory to Practice, University of Cambridge, Judge Institute of Management Working Paper No. 14/2004, page 8. Available at SSRN: http://ssrn.com/abstract=670144 or http://dx.doi.org/10.2139/ssrn.670144

[35] Judd F. Sneirson, Green Is Good: Sustainability, Profitability, and a New Paradigm for Corporate Governance, 94 Iowa Law Review 987, 991 (2009) http://www.uiowa.edu/~ilr/issues/ILR_94-3_Sneirson.pdf

[36] Ramon Mullerat O.B.E., Corporate Social Responsibility: New Trends, Rocky Mountain Mineral Law Foundation International Mining and Oil and Gas Law, Development, and Investment Book 1 April 16-18, 2007 No. 2 Rmmlf-Inst Paper No. 3A (2007).

[37] Material Issues for Disclosure (March 20, 2007). UNSW Law Research Paper No. 2007-15, page 2. Available at SSRN: http://ssrn.com/abstract=975414 or http://dx.doi.org/10.2139/ssrn.975414

[38]

The triple-bottom-line approach to sustainable business views corporate performance and success in three separate dimensions: “economic prosperity, environmental quality, and social justice.”

Judd F. Sneirson, Green Is Good: Sustainability, Profitability, and a New Paradigm for Corporate Governance, 94 Iowa Law Review 987, 991 (2009) http://www.uiowa.edu/~ilr/issues/ILR_94-3_Sneirson.pdf

[39] Hasan Fauzi, Goran Svensson, and Abdul Rahman, Azhar, ‘Triple Bottom Line’ as ‘Sustainable Corporate Performance’: A Proposition for the Future, 2 Sustainability, 1345-1360, 1354 (2010). Available at SSRN: http://ssrn.com/abstract=1492934

[40] Justine Nolan, Corporate Accountability and Triple Bottom Line Reporting: Determining the Material Issues for Disclosure (March 20, 2007). UNSW Law Research Paper No. 2007-15, page 2. Available at SSRN: http://ssrn.com/abstract=975414 or http://dx.doi.org/10.2139/ssrn.975414

[41] The issues in disclosure are what is to be disclosed and to whom. Justine Nolan, Corporate Accountability and Triple Bottom Line Reporting: Determining the Material Issues for Material Issues for Disclosure (March 20, 2007). UNSW Law Research Paper No. 2007-15, page 5. Available at SSRN: http://ssrn.com/abstract=975414 or http://dx.doi.org/10.2139/ssrn.975414;

TSC Industries 426 US 438.

[42] E.g. Ben & Jerry’s Inc. “Social and Environmental Assessment Report” (2010) . http://www.benjerry.com/company/sear-reports/

[43] Justine Nolan, Corporate Accountability and Triple Bottom Line Reporting: Determining the Material Issues for Disclosure (March 20, 2007). UNSW Law Research Paper No. 2007-15, page 2. Available at SSRN: http://ssrn.com/abstract=975414 or http://dx.doi.org/10.2139/ssrn.975414

[44] Justine Nolan, Corporate Accountability and Triple Bottom Line Reporting: Determining the Material Issues for Disclosure (March 20, 2007). UNSW Law Research Paper No. 2007-15, page 2. Available at SSRN: http://ssrn.com/abstract=975414 or http://dx.doi.org/10.2139/ssrn.975414

[45] Timothy F. Slaper, Ph.D., Tanya J. Hall, The Triple Bottom Line: What Is It and How Does It Work? 86 Indiana Business Review (Spring 2011) http://www.ibrc.indiana.edu/ibr/2011/spring/article2.html

[46] Poorna Hegde, Robert Bloom and Jayne Fuglister, Social Financial Reporting in India: A Case 32 The International Journal of Accounting 157 (1997). http://wyvw.archive.org/stream/internationaljou32univ/internationaljou32univ_djvu.txt

[47] One exceptional early example is the balance sheets of the Steel Authority of India Limited (SAIL). See Poorna Hegde, Robert Bloom and Jayne Fuglister, Social Financial Reporting in India: A Case 32 The International Journal of Accounting 157 (1997).

[48] The Social Audit Network, “Social Reports”, (UK) (2013). http://www.socialauditnetwork.org.uk/getting-started/social-reports/

[49] Herman E. Daly, John B. Cobb and Clifford W. Cobb, For the Common Good: Redirecting the Economy towards Community, the Environment, and a Sustainable Future(Boston: Beacon Press, 1989) and John Talberth, Clifford Cobb and Noah Slattery, “The Genuine Progress Indicator 2006: A Tool for Sustainable Development,” www.environmental-expert.com/Files/24200/articles/12128/GPI202006.pdf.

[50] "Social disclosures in Indian company annual reports are largely derived from the country's socialistic philosophy of economic development. The public sector undertaking,  SAIL [Steel Authority of India Limited], espouses social gain rather than profit maximization, and in conformity with this  objective, publishes social balance sheets and income statements, value added statements,  and human resources accounts. However, since these reports are not audited, their verifiability can be questioned. Positive social disclosures act as favorable public relations for  the government." Poorna Hegde, Robert Bloom and Jayne Fuglister, Social Financial Reporting in India: A Case 32 The International Journal of Accounting 157, 165 (1997).

[51] Department of Rural Development, Government of the State of Andhra Pradesh, Society for Social Audit, Accountability, and Transparencyhttp://125.22.8.66/SocialAudit/FrontServlet?requestType=SAMonitoringReportsRH&actionVal=AllRep&page=RepCenter

[52] Lydia Polgreen (with reporting from Hari Kumar), “Indian State Empowers Poor to Fight Corruption”, New York Times (December 2, 2010). http://www.nytimes.com/2010/12/03/world/asia/03india.html?pagewanted=1&_r=1&hp

[53] Indian Federation, Right to Information Act (21 June 2005) Gazetteer of India, Extraordinary, Part II, Section 1. Available at: http://125.22.8.66/SocialAudit/wages/Rti.jsp?type=RTI

The Society for Social Audit, Accountability and Transparancy also provides general training materials, links to Indian state legislation, and an online CSR library at: http://125.22.8.66/SocialAudit/

[54] E.g., Social Audit Network, “What is Social Accounting and Audit” (2013) http://www.socialauditnetwork.org.uk/getting-started/what-is-social-accounting-and-audit/

[55] Cascade Engineering, Triple Bottom Line Report: Cascade Engineering Fiscal Year 2009 (Social Environmental Economic) (2009) http://www.cascadeng.com/sites/default/files/TBL_2009.pdf

[56] The Sustainable Business Network and the Ministry for the Environment, New Zealand, Enterprise3– Your Business and the Triple Bottom Line: Economic, Environmental, Social Performance (2003) http://www.mfe.govt.nz/publications/sus-dev/enterprise3-triple-bottom-line-guide-jun03.pdf

[57] Judd F. Sneirson, Green Is Good: Sustainability, Profitability, and a New Paradigm for Corporate Governance, 94 Iowa Law Review 987, 989, 995 (2009) http://www.uiowa.edu/~ilr/issues/ILR_94-3_Sneirson.pdf

[58] Austin L. Reitenga, Cheryl L. Linthicum, and Sanchez, Juan Manuel,Social Responsibility and Corporate Reputation: The Case of the Arthur Andersen Enron Audit Failure 29 Journal of Accounting and Public Policy, page 1 (2010). Available at SSRN: http://ssrn.com/abstract=1348037

[59] For example, “Prior social responsibility research finds mixed results regarding the influence of social responsibility on firm value” Austin L. Reitenga, Cheryl L. Linthicum, and Sanchez, Juan Manuel, Social Responsibility and Corporate Reputation: The Case of the Arthur Andersen Enron Audit Failure29 Journal of Accounting and Public Policy, page 2 (2010). Available at SSRN: http://ssrn.com/abstract=1348037

[60] “Our results suggest that social responsibility did not burnish firms’ reputation in a time of crises, as proponents of social responsibility claim” Austin L. Reitenga, Cheryl L. Linthicum, and Sanchez, Juan Manuel, Social Responsibility and Corporate Reputation: The Case of the Arthur Andersen Enron Audit Failure 29 Journal of Accounting and Public Policy, page 3 (2010). Available at SSRN: http://ssrn.com/abstract=1348037

[61] “It is a human universal to want to be respected, admired, and socially desirable. …most people would rather work for a ‘good’ organization than a ‘less good’ organization. The degree to which a person believes their organization is good, admirable, or even virtuous is likely to influence their work motivation- including the direction, intensity, and persistence of their effort. To the extent that a person believes their organization is good, they will identify with the organization and believe the organization’s goals are aligned with their personal goals (thus having a positive effect on the person’s direction of effort), they will feel fewer emotional obstacles to working hard on behalf of the organization (increasing the intensity of effort), and feel more committed to the organization (increasing persistence of effort).” Stace, Roger, Triple-Bottom-Line Goals in a Management Control System: Experimental Effects on Commitment and Trust,AAA 2013 Management Accounting Section (MAS) Meeting Paper, page 5-6 (2012). Available at SSRN: http://ssrn.com/abstract=2133135 or http://dx.doi.org/10.2139/ssrn.2133135

[62] Australian Institute of Environmental Accounting, “Environmental Accounting” (2013) http://environmentalaccounting.org/environmental-accounting/

[63] David W. Case, Corporate Environmental Reporting as Informational Regulation: A Law and Economics Perspective, 76 University of Colorado Law Review 379, 392 (2005)

[64] David W. Case, Corporate Environmental Reporting as Informational Regulation: A Law and Economics Perspective, 76 University of Colorado Law Review 379, 392-393 (2005) .

[65] See, e.g., U.S. Green Building Council, “Leadership in Energy and Environmental Design” (LEED) (2013) http://www.usgbc.org/leed

[66] Risako Morimoto, John Ash, and Christopher Hope, Corporate Social Responsibility Audit: From Theory to Practice, University of Cambridge, Judge Institute of Management Working Paper No. 14/2004, page 6. Available at SSRN: http://ssrn.com/abstract=670144 or http://dx.doi.org/10.2139/ssrn.670144

[67] Z. Jill Barclift, Too Big to Fail, too Big Not to Know: Financial Firms and Corporate Social Responsibility, 25 Journal of Civil Rights & Economic Development 449, 479 (2011)

[68] Z. Jill Barclift, Too Big to Fail, too Big Not to Know: Financial Firms and Corporate Social Responsibility, 25 Journal of Civil Rights & Economic Development 449, 479 (2011)

[69] Social Accountability International (SAI), Social Accountability International – News (2013).

http://www.sa-intl.org/index.cfm?fuseaction=Page.ViewPage&PageID=937 For the SA 8000 norms see: SAI, Social Accountability 8000 (2008) http://www.sa-intl.org/_data/n_0001/resources/live/2008StdEnglishFinal.pdf

[70] Luke Danielson, Patricio Leyton, Mining and Oil and Gas Development in Latin America, Rocky Mountain Mineral Law Special Institute 2001C Special Institute 2001c Rmmlf-Inst 9 (2001).

[71] Z. Jill Barclift, Too Big to Fail, too Big Not to Know: Financial Firms and Corporate Social Responsibility, 25 Journal of Civil Rights & Economic Development 449, 479 (2011)

[72] Material Issues for Disclosure (March 20, 2007). UNSW Law Research Paper No. 2007-15, page 3. Available at SSRN: http://ssrn.com/abstract=975414 or http://dx.doi.org/10.2139/ssrn.975414

[73] Material Issues for Disclosure (March 20, 2007). UNSW Law Research Paper No. 2007-15, page 4. Available at SSRN: http://ssrn.com/abstract=975414 or http://dx.doi.org/10.2139/ssrn.975414

[74] Joshua A. Newberg Corporate Codes of Ethics, Mandatory Disclosure, and the Market for Ethical Conduct, 29 Vermont Law Review Winter 253, 253 2005

[75] Paul L. Davies, Klaus J. Hopt, Corporate Boards in Europe–Accountability and Convergence 61 American Journal of Comparative Law 301, 326-327 (2013)

[76] See, e.g., Fair Trade USA, “Certification and Your Business” (2013). http://www.fairtradeusa.org/certification

[77] US Dept. of Agriculture, “Organic Certification” (2013). http://www.usda.gov/wps/portal/usda/usdahome?navid=ORGANIC_CERTIFICATIO

[78] Hope M. Babcock, Corporate Environmental Social Responsibility: Corporate “Greenwashing” or a Corporate Culture Game Changer? 21 Fordham Environmental Law Review Symposium 1, 13 (2010)

[79] Hope M. Babcock, Corporate Environmental Social Responsibility: Corporate “Greenwashing” or a Corporate Culture Game Changer? 21 Fordham Environmental Law Review Symposium 1, 14 (2010)

[80] Roda Mushkat, Corporate Social Responsibility, International Law, and Business Economics: Convergences And Divergences 12 Oregon Review of International Law 55, 67 (2010)

[81] Stace, Roger, Triple-Bottom-Line Goals in a Management Control System: Experimental Effects on Commitment and Trust, AAA 2013 Management Accounting Section (MAS) Meeting Paper, page 1 (2012). Available at SSRN: http://ssrn.com/abstract=2133135 or http://dx.doi.org/10.2139/ssrn.2133135

[82] Stace, Roger, Triple-Bottom-Line Goals in a Management Control System: Experimental Effects on Commitment and Trust, AAA 2013 Management Accounting Section (MAS) Meeting Paper, page 3-4 (2012). Available at SSRN: http://ssrn.com/abstract=2133135 or http://dx.doi.org/10.2139/ssrn.2133135

[83] Stace, Roger, Triple-Bottom-Line Goals in a Management Control System: Experimental Effects on Commitment and Trust, AAA 2013 Management Accounting Section (MAS) Meeting Paper, page 4 (2012). Available at SSRN: http://ssrn.com/abstract=2133135 or http://dx.doi.org/10.2139/ssrn.2133135

[84] Stace, Roger, Triple-Bottom-Line Goals in a Management Control System: Experimental Effects on Commitment and Trust, AAA 2013 Management Accounting Section (MAS) Meeting Paper, page 4 (2012). Available at SSRN: http://ssrn.com/abstract=2133135 or http://dx.doi.org/10.2139/ssrn.2133135 Moreover, task complexity is thereby reduced.

“[T]he explicit message of learning goals is ‘learn new processes, even if they don’t all work’, whereas the implicit message of a 5 performance goal is ‘use your existing knowledge to somehow get results”. Id, pages 4-5.

[85] Judd F. Sneirson, Green Is Good: Sustainability, Profitability, and a New Paradigm for Corporate Governance, 94 Iowa Law Review 987, 993 (2009) http://www.uiowa.edu/~ilr/issues/ILR_94-3_Sneirson.pdf

[86] Judd F. Sneirson, Green Is Good: Sustainability, Profitability, and a New Paradigm for Corporate Governance, 94 Iowa Law Review 987, 994 (2009) http://www.uiowa.edu/~ilr/issues/ILR_94-3_Sneirson.pdf

[87] “The ‘tick-box’ approach to auditing attracted several criticisms during the interviews. Specific comments included the lack of explanatory power inherent in such a system. Some interviewees favored an assessment incorporating a mixture of quantitative and qualitative methods page” Risako Morimoto, John Ash, and Christopher Hope, Corporate Social Responsibility Audit: From Theory to Practice, University of Cambridge, Judge Institute of Management Working Paper No. 14/2004, page 10. Available at SSRN: http://ssrn.com/abstract=670144 or http://dx.doi.org/10.2139/ssrn.670144

[88] Stace, Roger, Triple-Bottom-Line Goals in a Management Control System: Experimental Effects on Commitment and Trust, AAA 2013 Management Accounting Section (MAS) Meeting Paper, page 12 (2012). Available at SSRN: http://ssrn.com/abstract=2133135 or http://dx.doi.org/10.2139/ssrn.2133135

[89] Stace, Roger, Triple-Bottom-Line Goals in a Management Control System: Experimental Effects on Commitment and Trust, AAA 2013 Management Accounting Section (MAS) Meeting Paper, page 12 (2012). Available at SSRN: http://ssrn.com/abstract=2133135 or http://dx.doi.org/10.2139/ssrn.2133135