Social audit

In India, Tata Steel (formerly TISCO) was the first company to set up a social audit committee in 1979 for measuring its social performance. The social audit committee was asked to “examine and report whether and the extent to which the Tata Steel has fulfilled the objectives contained in its Articles of Association regarding its social and moral responsibilities to the consumers, employees, shareholders, society and the local community.” The committee reported that the social performance of the company has been of a high order and, in its magnitude, is perhaps unequalled in India.

Social audit concept is gaining increasing attention in India. The use of an effective social audit is likely to encourage a careful cost-benefit analysis of corporate programs for the benefit of society. It could also provide a means for measuring the result of a social programme. Both investors and social activists may then better evaluate the overall record of a firm’s social involvement.

Developing an effective social audit is however difficult. No clear standards exist as to the activities to be included and there are no uniform standards for measuring results. Data collection about the effects of social problems may also be a problem.

A few organizations have attempted to measure the costs and benefits of their social activities in formats similar to those used in financial reporting. The results of social involvement may be included in the company’s annual as well as social reports.

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