Category Archives: Corporate Sustainability and Responsibility

September 2, 2015 · 2:50 pm

Responsible tourism that creates shared value among stakeholders

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http://dx.doi.org/10.1080/21568316.2015.1074100

Abstract: This paper maintains that responsible tourism practices can be re-conceived strategically to confer competitive advantage. It looks at the extant literature surrounding the notions of “responsible tourism” and “shared value”. A qualitative research involved in-depth, semi-structured interview questions to discover the tourism and hospitality owner–managers’ ethos for responsible tourism. Secondly, telephone interviews were carried out with tourism regulatory officials. The findings have revealed that discretionary spending in socially and environmentally sound, responsible policies and initiatives can create shared value among tourism enterprises and their stakeholders. In a nutshell, this paper indicates that responsible tourism led to improved relationships with social and regulatory stakeholders, effective human resources management, better market standing, operational efficiencies and cost savings, along with other benefits.

To cite this article:

M. A. Camilleri (2015): Responsible tourism that creates shared value among stakeholders, Tourism Planning & Development, DOI: 10.1080/21568316.2015.1074100

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August 15, 2015 · 4:52 pm

Unleashing Corporate Social Responsibility through Digital Media

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Companies are increasingly focusing their attention on content and inbound marketing. In a nutshell, content marketing necessitates an integrated marketing communications approach involving different media (1). Content strategists and marketers who care about their online reputation are realising that they have to continuously come up with fresh, engaging content with a growing number of quality links. They have to make sure that their websites offer great content for different search engines. Consistent high quality content ought to be meaningful and purposeful for target audiences (2).

Successful marketers are capable of enhancing customer loyalty, particularly if their businesses are delivering ongoing value propositions to promising prospects (on their website). Such businesses are continuously coming up with informative yet interesting content through digital channels, including blogs, podcasts, social media networking and e-newsletters. Online content often include refreshing information which tell stakeholders how to connect the dots. It may appear that many companies are becoming quite knowledgeable in using social media channels to protect their reputation from bad publicity or misinformation.

Several online businesses often tell insightful stories to their customers or inspire them with sustainable ideas and innovations. Corporate web sites could even contain their latest news, elements of the marketing-mix endeavours as well as digital marketing fads.
Most social media networks are effective monitoring tools as they could feature early warning signals of trending topics (3). These networks may help business communicators and marketers identify and follow the latest sustainability issues. Notwithstanding, CSR influencers are easily identified on particular subject matters or expertise. For example, businesses and customers alike have also learned how to use the hashtag (#) to enhance the visibility of their shareable content (4). Some of the most popular hashtags comprise: #CSR #StrategicCSR, #sustainability, #susty, #CSRTalk, #Davos2015, #KyotoProtocol, #SharedValue et cetera. Hashtags could possibly result in financial support to charity, philanthropic or stewardship principles. They may even help to raise awareness of the overall CSR communications. Hence, there are numerous opportunities for businesses to leverage themselves through social networks as they engage with influencers and media.

  • The ubiquity of Facebook and Google Plus over the past years has made them familiar channels for many individuals around the globe. These networks have become very popular communication outlets for brands, companies and activists alike. These social media empower their users to engage with business on a myriad of issues. They also enable individual professionals or groups to promote themselves and their CSR credentials in different markets and segments.
  • Moreover, Linkedin is yet another effective tool, particularly for personal branding. However, this social network helps users identify and engage with influencers. Companies can use this site to create or join their favourite groups on LinkedIn (e.g. GRI, FSG, Shared Value Initiative among others). They may also use this channel for CSR communication as they promote key initiatives and share sustainability ideas. Therefore, LinkedIn connects individuals and groups as they engage in conversations with both academia and CSR practitioners.
  • In addition, Pinterest and Instagram enable their users to share images, ideas with their networks. These social media could also be relevant in the context of the sustainability agenda. Businesses could illustrate their CSR communication to stakeholders through visual content. Evidently, these innovative social networks provide sharable imagery, infographics or videos to groups who may be passionate on certain issues, including CSR.
  • Moreover, digital marketers are increasingly uploading short, fun videos which often turn viral on internet (5). Youtube, Vimeo and Vine seem to have positioned themselves as important social media channels for many consumers, particularly among millennials. These sites offer an excellent way to humanise or animate  SR communication through video content. These digital media also allow their users to share their video content across multiple networks. For instance, videos featuring university resources may comprise lectures, documentaries, case studies and the like.

CSR practices may provide a good opportunity for businesses to raise their profile in the communities around them.  Genuine businesses communicate their motives and rationales behind their CSR programmes. In this case, there are numerous media outlets where businesses can obtain decent coverage of their CSR initiatives, especially on the web (e.g. CSRwire and Triple Pundit among others). Although, there are instances  where consumers themselves, out of their own volition are becoming ambassadors of trustworthy businesses; at the same time certain stakeholders are becoming increasingly acquainted and skeptical on certain posturing behaviours and greenwashing (6).

Generally, digital communications will help to improve the corporate image of firms. Positive publicity can lead to reputational benefits and long lasting relationships with stakeholders (7). Online content and inbound marketing can be successfully employed for CSR communication1. Corporate sites should be as easy as possible, with user-centred design that enables interactive information sharing on CSR activities. Inter-operability and collaboration across different social media can help businesses to connect with stakeholders (1). 

Marketers can create a forum where prospects or web visitors can engage with the business in real time. These days, marketing is all about keeping and maintaining a two-way relationship with consumers. Digital marketing is an effective tool for consumer engagement.

A growing number of businesses are learning how to collaborate with consumers about product development, service enhancement and promotion. These companies are increasingly involving customers in all aspects of marketing. They listen to and join online conversations as they value their stakeholders’ opinions and perceptions.

Today, pervasive social media networks are being used by millions of customers every day. In a sense, it may appear that digital marketing tools have reinforced the role of public relations. These promotional strategies complement well with CSR communication and sustainability reporting.

This contribution encourages businesses to use digital media to raise awareness of their societal engagement and environmentally sustainable practices. Further research may possibly identify how successful businesses are using digital channels to forge genuine relationships with their stakeholders.

References

  1. Camilleri, M.A. “Unleashing Shared Value Through Content Marketing.” Triple Pundit, 10th February 2014. http://www.triplepundit.com/2014/02/unleashing-shared-value-content-marketing/
  2. Camilleri, M.A. “A Search Engine Optimization Strategy for Content Marketing Success.” Social Media Today 28th May, 2014. http://www.socialmediatoday.com/content/search-engine-optimization-strategy-content-marketing-success
  3. Kietzmann, Jan H., Kristopher Hermkens, Ian P. McCarthy, and Bruno S. Silvestre. “Social media? Get serious! Understanding the functional building blocks of social media.” Business horizons 54, no. 3 (2011): 241-251.
  4. Small, Tamara A. “What the hashtag? A content analysis of Canadian politics on Twitter.” Information, Communication & Society 14, no. 6 (2011): 872-895.
  5. Guadagno, Rosanna E., Daniel M. Rempala, Shannon Murphy, and Bradley M. Okdie. “What makes a video go viral? An analysis of emotional contagion and Internet memes.” Computers in Human Behavior 29, no. 6 (2013): 2312-2319.
  6. Laufer, William S. “Social accountability and corporate greenwashing.” Journal of Business Ethics 43, no. 3 (2003): 253-261.
  7. Camilleri, M.A. “The Business Case for Corporate Social Responsibility” (paper presented at the American Marketing Association in collaboration with the University of Wyoming, Oklahoma State University and Villanova University: Marketing & Public Policy as a Force for Social Change Conference. Washington D.C., 5th June 2014): 8-14, Accessed June 26, 2015. https://www.ama.org/events-training/Conferences/Documents/2015-AMA-Marketing-Public-Policy-Proceedings.pdf

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June 26, 2015 · 10:42 am

CSR 2.0 – A Conceptual Framework For Corporate Sustainability and Responsibility

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Businesses are capable of implementing responsible behaviours as they pursue their profit-making activities. A thorough literature review suggests that many academic articles have dedicated their energies on organising and evaluating the evidence to establish a link, usually through regression analysis between corporate social responsibility (CSR) or corporate social performance (CSP) and financial performance. Other authors referred to similar concepts as corporate citizenship has evolved following the concepts of stakeholder engagement and business ethics. In the light of these past theoretical underpinnings, this article reports on the many facets of CSR. This contribution puts forward key constructs representing strategic CSR, creating shared value and systematic CSR. It sheds light on the corporate sustainability and responsibility (CSR2.0) notion. This latter perspective suggests that responsible behavioural practices may be strategically re-conceived to confer competitive advantage over rival firms. Therefore, article makes reference to specific examples of some the latest laudable investments that create shared value. It explains how CSR2.0 requires a focus on building adaptive approaches and directing resources towards the perceived demands of diverse stakeholders for the long term sustainability of business. In a pragmatic approach, this contribution indicates that societal demands are not viewed as constraints on the organisation, but more as challenging opportunities which can be leveraged for the benefit of the firm and its stakeholders.

The Business Case for Corporate Social Responsibility
CSR can help to build reputational benefits; it enhances the firms’ image among external stakeholders and could lead to a favourable climate of trust and cooperation within the company 1. It may lead to create value for both business and society 2 3 4. Several authors maintained that through strategic CSR engagement businesses may achieve a competitive advantage5 6. Empirical studies have shown that there is a correlation between CSR and financial performance 1 3 7. Yet, it may appear that to date there is no explicit, quantitative translation of socially responsible practices into specific results that affect the profit and loss account8. Nevertheless, many companies are defending the correlation between social practices and financial results. The working assumption revolving around the CSP research is that corporate social and financial performance are universally related3. Strategic CSR increases the financial performance; minimises costs through better operational efficiencies, boosts the employee morale and job satisfaction and reduces the staff turnover, along with other benefits3.

CSR can bring a competitive advantage only if there are ongoing communications and dialogue between all stakeholder groups9 10 (including the employees, customers, marketplace and societal groups). The stakeholder relationships are needed to bring external knowledge sources, which may in turn enhance organisational skills and performance. Acquiring new knowledge must be accompanied by mechanisms for dissemination. There is scope in sharing best practices, even with rival firms. It is necessary for responsible businesses to realise that they need to work in tandem with other organisations in order to move the CSR agenda forward3 4. A recent study has indicated that businesses were investing in environmental sustainability, as they minimised their waste by reducing, reusing and recycling resources11. Several others were becoming more conscientious about their environmental responsibilities, particularly in the areas that were in situated in close proximity to their business. They were increasingly protecting the environment as they reduced their pollution through carbon offsetting programmes and the like11. The researcher believes that there is still room for improvement. There are many business practitioners who ought to realise the business case for CSR. Their organisational culture and business ethos could become more attuned to embrace responsible behavioural practices.

Creating Shared Value – Seeking Win-Win Outcomes
In the past, the stakeholder theory has demonstrated how stakeholders could develop long-term mutual relationships, rather than simply focusing on immediate profits. Of course, this does not imply that profit and economic survival are unimportant. On the contrary, this argument is that it is in the businesses’ interest to engage with a variety of stakeholders, upon whom dependence is vital3 4. The businesses’ closer interactions with stakeholders are based on relational and process-oriented views9. Many corporations are already forging strategic alliances in their value chain in order to run their businesses profitably. Some successful businesses are also promoting the right conditions of employment in their supply chains. At the same time, they are instrumental in improving the lives of their suppliers. They do this as they want to enhance the quality and attributes of their products, which are ultimately delivered to customers and end consumers12.
Nestlé, Google, IBM, Intel, Johnson & Johnson, Unilever, and Wal-Mart are some of the multinationals who have somewhat embraced Porter and Kramer’s ‘shared value’ approach. In many cases they are building partnership and collaborative agreements with external stakeholders (including suppliers) hailing from different markets. The notion of shared value is opening up new opportunities for sustainability, particularly with its innovative approach to re-configure the value chain4. Yet, there are academics who argued that this concept ignores the tensions that are inherent in responsible business activity13. “Shared value” cannot cure all of society’s ills as not all businesses are good for society nor would the pursuit of shared value eliminate all injustice. However, the profit motive and the tools of corporate strategy will help to address societal problems14. As a matter of fact, many businesses are reconceiving their products as they take a broad view of their purchasing, procurement and production activities4.
Several multi-national organisations are looking beyond their short-term profits for shareholders. They are also looking after their marketplace stakeholders including suppliers who source their products. Many multinational organisations are redefining productivity in the value chain and enabling local cluster developments to mitigate risks, boost productivity and competitiveness. For instance, Nestlé’s business principles incorporated 10 United Nations Global Compact Principles on human rights, labour, the environment and corruption12. Nestlé is an active member of the Compact’s Working Groups and Initiatives. Nestlé maintains that it complies with international regulatory laws and acceptable codes of conduct, as it improves its company’s operations. Yet, at the same time it helps those suppliers hailing from the least in poorer rural regions of the world. Nestlé has revisited its numerous processes and its value chain activities. Each stage of the production process, from the supply chain to transforming resources adds value to the overall end product. This benefits the company itself. Nestlé sources its materials from thousands of farms from developing countries. The company maintains that it provides training to farmers in order to encourage sustainable production while protecting their procurement, standards and quality of their raw materials. This brings positive, long-term impacts on the local economy. At the same time, these suppliers are running profitable farms, as they are offering their children a better education. Moreover, both Nestlé and its suppliers are committed to protecting their natural environmental resources for their long term sustainability.
Corporate sustainability occurs when a company adds a social dimension to its value proposition, making social impact integral to its overall strategy. The rationale behind the corporate responsibility lies in creating value and finding win-win outcomes by seeking out and connecting stakeholders’ varied interests. Creating shared value (CSV) is about embedding sustainability and strategic corporate social responsibility into a brand’s portfolio. As firms reap profits and grow, they can generate virtuous circles of positive multiplier effects11.

 

Conclusion
This article provides the foundation of the conceptual theory and empirical enquiry of the discourse surrounding the corporate sustainability and responsibility (CSR2.0) agenda. A thorough literature review reveals that many authors have often investigated the relationship between corporate social responsibility (corporate social performance or corporate citizenship) and financial performance. This contribution maintains that CSR 2.0 initiatives can be re-conceived strategically to confer competitive advantage in the long term. The business case for CSR 2.0 focuses on building adaptive approaches and directing resources towards the perceived demands of stakeholders (Camilleri, 2015). Stakeholder demands are not viewed as constraints on the organisation, but more as challenging opportunities which can be leveraged for the benefit of the firm. This contribution looks at different aspects of CSR2.0, as it makes specific reference to responsible human resources management, environmental sustainability, forging relationships with marketplace stakeholders and strategic philanthropy towards the community. Engagement in these activities will ultimately create shared value for both the business and the society. CSR2.0 unlocks value, as the business and the community become mutually reinforcing. The value creation arguments focus on exploiting opportunities that reconcile differing stakeholder demands. Businesses ought to realise that laudable investments in CSR2.0 can lead to better organisational performance in the long run. This contribution indicates that there are future avenues for further research in this promising area of strategic management. Empirical studies may focus on how socially responsible behaviour, environmental sustainable practices, stakeholder engagement and regulatory interventions may create value for all.

References

  1. Camilleri, M.A. “Unlocking shared value through strategic social marketing” (paper presented at the American Marketing Association and the University of Massachusetts Amherst: Marketing & Public Policy Conference, Boston, 6th June 2014): 60-66 Accessed June 26, 2015. https://www.ama.org/events-training/Conferences/Documents/MPP14BO_Proceedings.pdf
  2. Sen, Sankar, Chitra Bhanu Bhattacharya, and Daniel Korschun. “The role of corporate social responsibility in strengthening multiple stakeholder relationships: A field experiment.” Journal of the Academy of Marketing science 34, no. 2 (2006): 158-166.
  3. Camilleri, M.A. “Creating Shared Value through Strategic CSR in Tourism” Saarbrucken: Lambert Academic Publishing, 2013 – ISBN 978-3-659-43106-7.
  4. Porter, Michael E., and Mark R. Kramer. “Creating shared value.” Harvard business review 89, no. 1/2 (2011): 62-77.
  5. Crane, Andrew, Abagail McWilliams, Dirk Matten, Jeremy Moon, and Donald S. Siegel, eds. The Oxford handbook of corporate social responsibility. Oxford University Press, (2008).
  6. Porter, Michael E., and Mark R. Kramer. “The link between competitive advantage and corporate social responsibility.” Harvard business review 84, no. 12 (2006): 78-92.
  7. Orlitzky, Marc, Frank L. Schmidt, and Sara L. Rynes. “Corporate social and financial performance: A meta-analysis.” Organization studies 24, no. 3 (2003): 403-441.
  8. Murillo, David, and Josep M. Lozano. “SMEs and CSR: An approach to CSR in their own words.” Journal of Business Ethics 67, no. 3 (2006): 227-240.
  9. Morsing, Mette, and Majken Schultz. “Corporate social responsibility communication: stakeholder information, response and involvement strategies.” Business Ethics: A European Review 15, no. 4 (2006): 323-338.
  10. European Union. “A renewed EU strategy 2011-14 for Corporate Social Responsibility” last modified December 10, 2014 http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=COM:2011:0681:FIN:EN:PDF European Commission Publications (2011).
  11. Camilleri, M.A. “The Business Case for Corporate Social Responsibility” (paper presented at the American Marketing Association in collaboration with the University of Wyoming, Oklahoma State University and Villanova University: Marketing & Public Policy as a Force for Social Change Conference. Washington D.C., 5th June 2014): 8-14, Accessed June 26, 2015. https://www.ama.org/events-training/Conferences/Documents/2015-AMA-Marketing-Public-Policy-Proceedings.pdf
  12. Camilleri, M.A. “Leveraging Organizational Performance through ‘Shared Value’ Propositions” Triple Pundit last modified November 22, 2013 http://www.triplepundit.com/2013/11/leveraging-organisational-performance-shared-value-propositions/
  13. Andrew Crane, Guido Palazzo, Laura J. Spence, and Dirk Matten. “Contesting the value of “creating shared value”.” California management review 56, no. 2 (2014): 130-153.
  14. A response to Andrew Crane13 article by Porter, Michael E., and Mark R. Kramer (2014) http://www.dirkmatten.com/Papers/C/Crane%20et%20al%202014%20in%20CMR.pdf

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June 9, 2015 · 8:57 am

CSR and Educational Leadership

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Adapted from my chapter, entitled; “Reconceiving CSR  programmes in Education” in Academic Insights and Impacts (Springer, Germany).

CSR and sustainability issues are increasingly becoming ubiquitous practices in different contexts, particularly among the youngest work force. This contribution suggests that there is a business case for responsible behaviours. Besides, minimising staff turnover, CSR may lead to strategic benefits including employee productivity, corporate reputation and operational efficiencies. Therefore, CSR can be the antecedent of financial performance (towards achieving profitability, increasing sales, return on investment et cetera).

Notwithstanding, the businesses’ involvement in setting curricula may also help to improve the effectiveness of education systems across many contexts. Businesses can become key stakeholders in this regard. Their CSR programmes can reconnect their economic success with societal progress. They could move away from seeking incremental gains from the market . Proactive companies who engage in CSR behaviours may possibly take fundamentally different positions with their stakeholders – as they uncover new business opportunities. This contribution showed how businesses could inspire their employees, build their reputations in the market and most importantly create value in education. This movement toward these positive outcomes may represent a leap forward in the right direction for global education.

This chapter has given specific examples of how different organisations were engaging in responsible behaviours with varying degrees of intensity and success. It has identified cost effective and efficient operations. It reported measures which were enhancing the human resources productivity. Other practices sought to engage in philanthropic practices and stewardship principles. At the same time, it was recognised that it was in the businesses’ interest to maintain good relations with different stakeholders, including the regulatory ones. Evidently, there is more to CSR than public relations and greenwashing among all stakeholder groups (including the employees, customers, marketplace and societal groups). Businesses ought to engage themselves in societal relationships and sustainable environmental practices. Responsible behaviours can bring reputational benefits, enhance the firms’ image among external stakeholders and often lead to a favourable climate of trust and cooperation within the company itself
(Herzberg et al., 2011). This chapter reported that participative leadership will boost the employees’ morale and job satisfaction which may often lead to lower staff turnover and greater productivity in workplace environments. However, it also indicates that there are many businesses that still need to realise the business case for responsible behaviours. Their organisational culture and business ethos will inevitably have to become attuned to embrace responsible behavioural practices.

Governments may also have an important role to play. The governments can take an active leading role in triggering corporate responsible behaviours in the realms of education. Greater efforts are required by governments, the private sector and other stakeholders to translate responsible behaviours into policies, strategies and regulations. Governments may give incentives (through financial resources in the form of grants or tax relief) and enforce regulation in certain areas where responsible behaviour is necessary. The governments ought to maintain two-way communication systems with stakeholders. The countries’ educational outcomes and curriculum programmes should be aligned with the employers’ requirements (Walker and Black, 2000). Therefore, adequate and sufficient schooling could instil students with relevant knowledge and skills that are required by business and industry (Allen and De Weert, 2007). The governments should come up with new solutions to help underprivileged populations and subgroups. New solutions could better address the diverse needs of learners. This chapter indicated that there is scope for governments to work in collaboration with corporations in order to nurture tomorrow’s human resources.

It must be recognised that there are various business operations, hailing from diverse sectors and industries. In addition, there are many stakeholder influences, which can possibly affect the firms’ level of social responsibility toward education. It is necessary for governments to realise that it needs to work alongside with the business practitioners in order to reconceive education and life-long learning. The majority of employers that were mentioned here in this chapter; were representative of a few businesses that hailed from the developed economies. There can be diverse practices across different contexts. Future studies could investigate the methods how big businesses are supporting education. Future research on this subject could consider different samples, methodologies and analyses which may obviously be more focused and will probably yield different outcomes. However, this contribution has puts forward the shared value’ approach. It is believed that since this relatively ‘new’ concept is relatively straightforward and uncomplicated, it may be more easily understood by business practitioners themselves. In a nutshell, this synergistic value proposition requires particular focus on the human resources’ educational requirements, at the same time it also looks after stakeholders’ needs (Camilleri, 2015). This notion could contribute towards long term sustainability by addressing economic and societal deficits in education. A longitudinal study in this area of research could possibly investigate the long term effects of involving the business and industry in setting curriculum programmes in education. Presumably, shared value can be sustained only if there is a genuine commitment to organisational learning for corporate sustainability and responsibility, and if there is a willingness to forge genuine relationships with key stakeholders.

Recommendations
This contribution contends that the notion of shared value is opening up new opportunities for education and professional development. Evidently, there are competitive advantages that may arise from nurturing human resources. As firms reap profits and grow, they can generate virtuous circles of positive multiplier effects. Many successful organisations are increasingly engaging themselves in socially responsible practices. There are businesses that are already training and sponsoring individuals to pursue further studies for their career advancement (McKenzie and Woodruff, 2013; Kehoe and Wright, 2013; Hunt and Michael, 1983). It may appear that they are creating value for themselves as well as for society by delivering relevant courses for prospective employees. In conclusion, this chapter puts forward the following key recommendations to foster an environment where businesses become key stakeholders in education.

  • Promotion of business processes that bring economic, social and environmental value;
  • Encouragement of innovative and creative approaches in continuous professional development and training in sustainable and responsible practices;
  • Enhancement of collaborations and partnership agreements with governments, trade unions and society in general, including the educational leaders;
  • Ensuring that there are adequate levels of performance in areas such as employee health and safety, suitable working conditions and sustainable environmental practices among business and industry;
  • Increased CSR awareness, continuous dialogue, constructive communication and trust between all stakeholders;
  • National governments ought to create regulatory frameworks which encourage and enable the businesses’ participation in the formulation of educational programmes and their curricula.

References

Allen, J., & De Weert, E. (2007). What Do Educational Mismatches Tell Us About Skill Mismatches? A Cross‐country Analysis. European Journal of Education, 42(1), 59-73.

Camilleri, M.A. (2015) The Synergistic Value Notion in Idowu, S.O.; Capaldi, N.; Fifka, M.; Zu, L.; Schmidpeter, R. (Eds). Dictionary of Corporate Social Responsibility. Springer http://www.springer.com/new+%26+forthcoming+titles+%28default%29/book/978-3-319-10535-2

Herzberg, F., Mausner, B., & Snyderman, B. B. (2011). The motivation to work (Vol. 1). Transaction Publishers.

Hunt, D. M., & Michael, C. (1983). Mentorship: A career training and development tool. Academy of management Review, 8(3), 475-485.

McKenzie, D., & Woodruff, C. (2013). What are we learning from business training and entrepreneurship evaluations around the developing world?. The World Bank Research Observer, lkt007.

Walker, K. B., & Black, E. L. (2000). Reengineering the undergraduate business core curriculum: Aligning business schools with business for improved performance. Business Process Management Journal, 6(3), 194-213.

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May 11, 2015 · 3:52 pm

Creating Shared Value: Doing well by doing good!

Relevant research has shown that those companies that had undertaken social and environmental responsibility did prosper in the long run (McWilliams and Siegel, 2001; Orlitzky, 2003). However, other research has indicated that it is also possible to over-spend on strategic CSR — as this is true of all discretionary marketing expenditures (Lantos, 2001). It may appear that there is an optimal level of spending on strategic CSR (Orlitzky et al. 2010). The factors contributing towards creating value are often qualitative and may prove very difficult to measure and quantify, such as; employee morale, corporate image, reputation, public relations, goodwill, and popular opinion (Miller and Ahrens, 1993). Lantos (2001) advocated the need to identify CSR activities that will yield the highest payback. Of course, every stakeholder group has its own needs and wants. Therefore is is important to continuously balance conflicting stakeholder interests and measure the returns from strategic CSR investments (McWilliams and Siegel, 2011; Freeman, 1984).

Porter and Kramer (2006) believed that organisations can set an affirmative CSR agenda that produce maximum social benefits and gains for the businesses themself, rather than merely acting on well intentioned impulses or by reacting on outside pressures. They referred to the value chain (Porter, 1986) as an appropriate tool to chart all the social consequences of business activities. Figure 1 illustrates inside-out linkages that range from hiring and layoff policies to green house gas emissions, as follows.

Figure 1. Porter’s Value Chain
value chain
(Source: Porter, 1985, reproduced in Tsai et al. 2010)

This value chain model presents operational issues which have an effect on the companies’ performance. It depicts some of the activities a company engages in while doing business. This model can be used as a framework to identify the positive and negative social impacts of those activities. Porter and Kramer (2006) held that through strategic CSR the company will make a significant impact in the community.They suggested that companies may be triggered to doing things differently from competitors, in a way where they could lower their costs. The authors went on to say that strategic CSR involve both inside-out and outside-in dimensions, working in tandem. Interestingly, the authors indicated that there are ‘shared value’ opportunities through strategic CSR (Porter and Kramer, 2006, 2011). They argued that the companies’ may strengthen their competitiveness by investing in social and environmental aspects, as featured in Figure 2.

Figure 2. Corporate Involvement: A Strategic Approach
Figure 2
(Source: Porter and Kramer, 2006)

The success of the company and of the community may become mutually reinforcing (Porter and Kramer, 2006). They maintained that the more closely tied a social issue is to the companies’ business, the greater the opportunity to leverage the firms’ resources and capabilities and will in turn benefit society at large. Falck and Heblich (2007) related the notion of strategic CSR to the shareholder value theory. This approach implied a long term view of wealth maximisation. As it was also the case for the agency theory. These authors suggested that proper incentives may encourage managers ‘to do well by doing good’.

“…as the company’s goal was to survive and prosper, it can do nothing better than to take a long term view and understand that if it treats society well, society will return the favour” (Falck and Heblich, 2007).

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April 18, 2015 · 2:52 pm

Environmental, Social and Governance Disclosures in Europe

Excerpt from: Camilleri, M. (2015). Environmental, social and governance disclosures in Europe. Sustainability Accounting, Management and Policy Journal, 6(2). http://www.emeraldinsight.com/doi/abs/10.1108/SAMPJ-10-2014-0065

 

Last year, the European Union (EU) announced its new guidelines on non-financial reporting that will only apply to some large entities with more than 500 employees. This includes listed companies as well as some unlisted companies; such as banks, insurance companies and other companies that are so designated by member states; because of their activities, size or number of employees. There are approximately 6,000 large companies and groups within the EU bloc (EU, 2014).  The most prevalent reporting schemes in the EU were often drawn from; the G3 Guidelines of the Global Reporting Initiative (GRI) and the United Nations Global Compact (UNGC). In addition, several platforms and organisations that promote corporate sustainability reporting have developed partnerships with AccountAbility, OECD, UNEP, Carbon Disclosure Project and with many governments and sector organisations (Van Wensen et al., 2011; Kolk, Levy & Pinkse, 2008).

 

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When one explores the key topics that companies reported on, it transpired that carbon emission disclosures have become quite a common practice (Kolk et al., 2008). Moreover, recently there was an increased awareness on the subject of human rights and the conditions of employment (Lund-Thomsen & Lindgreen, 2013). Curiously, online reporting has offered an opportunity for accountability and transparency as information is easily disseminated to different stakeholders (Zadek, Evans & Pruzan, 2013). This has inevitably led to increased stakeholder engagement, integrated reporting and enhanced external verification systems. This subject has also been reported by Simnett and Huggins (2015), who have also presented a number of interesting research questions which could possibly be addressed through engagement research. At this point in time, stakeholders are considering reporting schemes as a valuable tool that can improve the quality of their reporting, particularly as it enables them to benchmark themselves with other companies (Adams, Muir & Hoque, 2014). The GRI is often regarded as ‘a good starting point’ for this purpose. Moreover, the provision of a UNGC communication on progress is a new global trend that has become quite popular among business and non-profit organisations. Some of the European organisations are gradually disclosing environmental information or certain other key performance indicators that are of a non-financial nature in their reporting (Zadek et al., 2013). Generally, public policies are often viewed as part of the regular framework for social and employment practices. Therefore, a considerable commitment is made by local governments who act as drivers for stakeholder engagement (Albareda, Lozano, Tencati, Middtun & Perrini, 2008).

 

One way to establish a CSR-supporting policy framework is to adopt relevant strategies and actions in this regard. Such frameworks may be relevant for those countries that may not have a long CSR tradition or whose institutions lack accountability and transparency credentials (Zadek et al., 2013). It may appear that EU countries are opting for a mix of voluntary and mandatory measures to improve their ESG disclosure. While all member states have implemented the EU Modernisation Directive, they have done so in different ways. While the Modernisation Directive ensured a minimum level of disclosure, it was in many cases accompanied by intelligent substantive legislation. National governments ought to give guidance or other instruments that support improvements in sustainability reporting. Lately, there was a trend towards the development of regulations that integrate existing international reporting frameworks such as the GRI or the UNGC Communication on Progress. These frameworks require the engagement of relevant stakeholders in order to foster a constructive environment that brings continuous improvements in ESG disclosures. Regular stakeholder engagement as well as strategic communications can bring more responsible organisational behaviours (Camilleri, 2015). Many corporate businesses use non-governmental organisations’ regulatory tools, processes and performance-oriented standards with a focus on issues such as labour standards, human rights, environmental protection, corporate governance and the like. Nowadays, stakeholders, particularly customers expect greater disclosures, accountability and transparency in corporate reports.

 

At the moment, we are witnessing regulatory pressures for mandatory changes in CSR reporting. Of course, firms may respond differently to reporting regulations as there are diverse contexts and realities. In a sense, this paper reiterates Adams et al.’s (2014) arguments as it indicated that ESG disclosures are a function of the level of congruence between the government departments’ regulatory environment and the use of voluntary performance measures. Somehow, EU regulatory pressures are responding to energy crises, human rights matters and are addressing the contentious issues such as resource deficiencies including water shortages. Notwithstanding, big entities are also tackling social and economic issues (e.g. anti-corruption and bribery) as they are implementing certain environmental initiatives (e.g. waste reduction, alternative energy generation, energy and water conservation, environmental protection, sustainable transport et cetera). In this light, there are implications for practitioners and assurance providers of integrated reports, standard setters and regulators (Simnett & Huggins, 2015). Future engagement research can possibly consider how report content and reporting formats, might impact on organisations’ decision making (Correa and Larrinaga, 2015). This paper indicated that practice and policy issues would benefit from additional empirical evidence which analyse how the European disclosure regulations may positively or adversely affect the corporations’ stakeholders.

http://www.emeraldinsight.com/doi/abs/10.1108/SAMPJ-10-2014-0065

 

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January 10, 2015 · 6:54 pm

Europe’s Energy Efficiency Targets

euThe European Union’s (EU) Member States are required to draft National Energy Efficiency Plans (NEEAPs) that report on adopted measures (or planned to be adopted) to implement the main elements of the Energy Efficiency Directive (EED, 2012/27/EU). All EU countries are required to achieve a certain amount of final energy savings over the period (01 January 2014 – 31 December 2020) by using energy efficiency obligations schemes or other targeted policy measures to drive energy efficiency improvements in households, industries and transport sectors. The Energy Efficiency Directive (EED) entered into force on the 4th December 2012 in order to establish a common framework of measures for energy efficiency within the EU. EED laid down specific rules to remove barriers in the energy market and to overcome certain market failures that impede energy efficiency. It also provides for the establishment of indicative national energy efficiency targets for 2020. All the EU-28 countries are urged to use energy more efficiently at all stages of the energy chain – from the transformation of energy, through its distribution until its final consumption.

EED measures may also translate to significant energy savings for consumers. For instance, this directive proposed that consumers ought to access easy and free-of-charge data on their real-time (and historical) energy consumption to enable them to monitor their energy consumption patterns. Moreover, this directive also recommended that large enterprises should carry out an energy audit at least every four years, with the first energy assessment should be held before the 5th December 2015. It also suggested that SMEs could be incentivised to undergo energy audits to help them identify the potential for reduced energy consumption. As from the 1st January 2014, the directive advised the public sector to lead by example by renovating 3% of the buildings owned and occupied by the central governments and by including energy efficiency considerations in public procurement. EED has even set realistic deadlines for further improvements in energy efficiencies in energy generation, the monitoring of efficiency levels of new energy generation capacities, national assessments for co-generation and district heating potential and measures.

It goes without saying that the requirements laid down in the EED directive are minimum requirements that do not prevent any Member State from maintaining or introducing more stringent measures. As from 2013, every member state have to report on the progress achieved towards national energy efficiency targets in accordance with Part 1 of Annex XIV.

Links:

EU (2012) DIRECTIVE on energy efficiency, amending Directives 2009/125/EC and 2010/30/EU and repealing Directives 2004/8/EC and 2006/32/EC

http://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX:32012L0027

 

 

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January 10, 2015 · 5:18 pm

The EU’s directive on the disclosure of non-financial information

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On the 29th September 2014, the European Council has introduced amendments to Accounting Directive (2013/34/EU) that mandates corporate business to disclose their non-financial performance. The EU Commission proposed non-binding guidelines on the details of what non-financial information ought to be disclosed by big businesses operating from by EU countries. This legislation respects environmental, human rights, anti-corruption and bribery matters as expressed in the UN Guiding Principles on Business and Human Rights (the “Ruggie Principles”) and OECD’s Guidelines for Multinational Enterprises (ECCJ, 2014).

This recent EU directive has marked a step forward towards the hardening of human rights obligations for large “public interest entities” with more than 500 employees. At the moment there are approximately 6,000 large undertakings and groups across the EU. Public interest entities include all the undertakings that are listed on an EU stock exchange, as well as some credit institutions, insurance undertakings and other businesses so designated by Member States.

In a nutshell, these non-financial disclosures should shed light on the corporate businesses’ social and environmentally responsible policies and practices. They will feature a brief description of the undertaking’s business model, including their due diligence processes resulting from their impact of their operations. This EU directive encourages corporates to use relevant non-financial key performance indicators on environmental matters including; greenhouse gas emissions, water and air pollution, the use of (non) renewable energy and on health and safety.

With regards to social and employee related matters, the corporate firms ought to implement ILO conventions that promote fair working conditions for employees. The corporate disclosure of non-financial information can include topics such as; social dialogue with stakeholders, information and consultation rights, trade union rights, health and safety and gender equality among other issues. Businesses should also explain how they are preventing human rights abuses and/or fighting corruption and bribery.

Through this directive the EU commission emphasises materiality and transparency in non financial reporting. It also brought up the subject of diversity at the corporate board levels. It has outlined specific reference criteria that may foster wider diversity in the composition of boards (e.g. age, gender, educational and professional background). The EU Commission has even suggested that this transparency requirement complements the draft directive about women on boards.

This new directive still allows a certain degree of flexibility in the disclosures’ requirements. As a matter of fact, it does not require undertakings to have policies covering all CSR matters. Yet, businesses need to provide a clear and reasoned explanation for not complying with this directive. Therefore, non-financial disclosures do not necessarily require comprehensive reporting on CSR matters (although this is encouraged by the Commission), but only the disclosure of information on policies, outcomes and risks (ECCJ, 2014). Moreover, this directive gives undertakings the option to rely on international, European or national frameworks (eg. the UN Global Compact, ISO 26000) in the light of the undertaking’s characteristics and business environment.

It is envisaged that the first CSR reports will be published in financial year 2017 (ECCJ, 2014).

Links:

http://ec.europa.eu/finance/accounting/non-financial_reporting/index_en.htm

Click to access eccj-assessment-eu-non-financial-reporting-may-2104.pdf

http://europa.eu/rapid/press-release_MEMO-14-301_en.htm?locale=en
 

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November 6, 2014 · 6:20 pm

Re-conceiving Corporate Sustainability and Responsibility for Education

employees

(This contribution also appeared on CSRwire)

During their learning journey, individuals acquire knowledge and skills that ought to be relevant for their prospective employment. The provision of their education is the responsibility of national governments. Yet, business and industry seldom offer continuous professional development and training to their human resources that supplement formal education (although they are rarely involved in setting outcomes of curriculum programmes). Very often, companies have to respond to challenging issues such as skill mismatches where candidates lack certain competencies that may be too deep to bridge through corporate training courses. Perhaps, global businesses may compensate to a certain extent as they can shift their operations elsewhere to tap more qualified employees. However, the constraints on their growth can be halted by the broad impact of inadequate education and training in some industries or regions. Therefore, corporations may possibly become a key player in addressing unmet needs in education. Several companies have the resources and the political influence to help improve educational outcomes which will in turn help them to nurture local talent. Leading businesses are already devising Corporate Sustainability and Responsibility (CSR) programmes that are actively supporting education across many contexts:

For instance; Cisco (a provider of networking equipment), has created more than 10,000 networking academies in 165 countries. 4.75 million individuals have improved their employment prospects as they attended training to become network administrators. At the same time, these individuals have increased the demand for Cisco’s equipment. Similarly, SAP and Verizon have often partnered with local universities and education institutions in order to deliver courses, career coaching and customised degrees on site for employees. The companies have discovered that employees that pursue such programmes are more likely to remain loyal to their company. Naturally, it is in the interest of employees to attend educational programmes that may ultimately lead to their career progression and better prospects. Moreover, continuous professional development and training may considerably reduce high employee turnover. Interestingly, SAP employs people with autism in technology-focused roles. In doing so, SAP concentrates on these individuals’ unique strengths. This way, the company can gain access to a wider pool of untapped talent that will help to foster a climate of creativity and innovation. In a similar vein, Intel has also invested in training programmes and partnerships that strengthen education. The company has recognised that its business growth is constrained by a chronic shortage of talent in science, technology, engineering, and maths (STEM) disciplines. Through programmes like Intel Math and Intel Teach, the global multinational has delivered instructional materials, online resources, and professional development tools for hundreds of thousands of educators across the United States. The students’ have acquired STEM and other 21st century skills, including critical thinking with data as well as scientific inquiry. This is a relevant example of a corporate business that has successfully addressed its workforce needs. Intel has recognised specific skill gaps in its central areas like technology and engineering. Accordingly, the company has committed itself for further investment in education. The company has created higher education curricula in demand areas like microelectronics, nanotechnology, security systems and entrepreneurship. Undoubtedly, Intel’s efforts affected millions of US students. At the same time, the company has increased its productivity and competitiveness. In addition, there are many big businesses that contribute in stewardship, charitable and philanthropic causes. In the past, the GE Foundation has supported systemic improvements in urban school districts that were close to GE’s business. These investments have surely helped to close the interplay between corporate sustainability and responsibility (CSR) and corporate philanthropy, while strengthening GE’s long-term talent pipeline.

In a nutshell, this contribution redefines the private sector’s role in the realms of education. It posits that there are win-win opportunities for companies and national governments as they cultivate human capital. Indeed, companies can create synergistic value for both business and society. In the main, such a strategic approach can result in new business models and cross-sector collaborations that will inevitably lead to operational efficiencies, cost savings and significant improvements to the firms’ bottom lines. Notwithstanding, the businesses’ involvement in setting curricula may also help to improve the effectiveness of education systems in many contexts. Businesses can become key stakeholders in this regard. Their CSR programmes can reconnect their economic success with societal progress.

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