According to Lyenberg and Wood, the primary purpose of a CSR report is to:

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First, restating the question and options to ensure clarity: According to Lyenberg and Wood, the primary purpose of a CSR report is to:

Option 1: Replace financial reporting with sustainability metrics. This is an overreach; CSR reporting complements rather than replaces financial reporting, and it does not aim to substitute core financial disclosures with sustainability metrics.

Option 2: Fulfill legal requirements for corporate transparency. While CSR reports can support transparency, they are not universally mandated as legal requirements for all firms or contexts, and that constraint does not capture the stated primary purpose in Lyenberg and Wood.

Option 3: Communicate a company's social and environmental impacts to stakeholders. This aligns with the commonly cited aim of CSR reporting: to disclose how the organization affects society and the environment, thereby informing stakeholders such as investors, customers, employees, and the community.

Option 4: Increase shareholder value through public relations. Although CSR reporting can influence reputation and investor perceptions, portraying the primary purpose as a PR strategy misses the substantive informational objective about impacts and accountability to stakeholders.

Now, evaluating each option in turn with a bit more nuance:

Option 1 reasoning: The idea of replacing financial reporting with sustainability metrics conflates two distinct purposes. Financial reporting remains essential for economic decision-making, while CSR reporting provides supplementary insights into social and environmental performance. Saying it should replace financial reporting mischaracterizes both the content and the institutional role of CSR reports.

Option 2 reasoning: Legal transparency requirements do exist in some jurisdictions, but the scholarly framing by Lyenberg and Wood typically emphasizes communication of impacts rather than compliance-driven-only motives. Treating legal compliance as the primary purpose would ignore the broader stakeholder-information rationale.

Option 3 reasoning: This option captures the core intent of CSR reporting as described by Lyenberg and Wood: to inform stakeholders about what the company is doing in social and environmental domains, the outcomes, and associated risks or opportunities. It emphasizes accountability, stewardship, and external communication.

Option 4 reasoning: While CSR reporting can affect reputation and investor relations, reducing the purpose to a PR aim overlooks the substantive content about impacts. It risks conflating communication strategy with the fundamental informational objective of reporting on social and environmental performance.

In summary, the most consistent interpretation with Lyenberg and Wood is that CSR reporting serves to convey a firm’s social and environmental impacts to its stakeholders, rather than substituting financial reports, solely satisfying legal mandates, or serving merely as a PR tool. The surrounding distinctions highlight why the other options diverge from that primary purpose.

21214 Business and Social Impact - Spring 2025 Quiz 3

According to Lyenberg and Wood, the primary purpose of a CSR report is to:

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