Tag Archives: corporate social responsibility

The market for socially responsible investing

This is an excerpt from my latest paper, entitled: “The market for socially responsible investing: A review of the developments”. 

How to Cite: Camilleri, M.A. (2020). The market for socially responsible investing: A review of the developments. Social Responsibility Journal. DOI. 10.1108/SRJ-06-2019-0194.


There are various ratings and reference indices that are utilized by investors to evaluate financial and SRI portfolios (Scalet and Kelly, 2010). Typically, the SRI indices constitute a relevant proxy as they evaluate the ESG performance of listed businesses (Joliet and Titova, 2018; Le Sourd, 2011). A large number of SR contractors, analysts and research firms are increasingly specializing in the collection of ESG information as they perform ongoing analyses of corporate behaviors (Dumas and Louche, 2016). Many of them maintain a database and use it to provide their clients with a thorough ESG analysis (including proxy advice), benchmarks and engagement strategies of corporations. They publish directories of ethical and SRI funds, as they outline their investment strategies, screening criteria, and voting policies (Leite and Cortez, 2014). In a sense, these data providers support the responsible investors in their selection of funds.

 

SRI Indices, Ratings and Information Providers

KLD / Jantzi Global Environmental Index, Jantzi Research, Ethical Investment Research Service (Vigeo EIRIS) and Innovest (among others) analyze the corporations’ socially responsible and environmentally-sound behaviors as reported in Table 1. Some of their indices (to name a few) shed light about the impact of products (e.g. resource use, waste), the production processes (e.g. logging, pesticides), or proactive corporate activities (e.g. clean energy, recycling). Similarly, social issues are also a common category for these contractors. In the main, the SRI indices benchmark different types of firms hailing from diverse industries and sectors. They adjust their weighting for specific screening criteria as they choose which firms to include (or exclude) from their indices (Leite and Cortez, 2014; Scalet and Kelly, 2010). One of the oldest SRI indices for CSR and Sustainability ratings is the Dow Jones Sustainability Index. The companies that are featured in the Dow Jones Indices are analyzed by the Sustainable Asset Management (SAM) Group (i.e. a Swiss asset management company). Another popular SRI index is FTSE Russell’s KLD’s Domini 400 Social Index (also known as the KLD400) which partners with the Financial Times on a range of issues. Similarly, the Financial Times partners with an ESG research firm (i.e. EIRES) to construct its FTSE4 Good Index series. Smaller FTSE Responsible Investment Indices include the Catholic Values Index, the Calvert Social Index, the FTSE4Good indices, and the Dow Jones family of SRI Indices, among others. The KLD400 index screens the companies’ performance on a set of ESG criteria. It eliminates those companies that are involved in non-eligible industries. Impax, a specialist finance house (that focuses on the markets for cleaner or more efficient delivery of basic services of energy, water and waste) also maintain a group of FTSE Indices that are related to environmental technologies and business activities (FTSE Environment Technology and Environmental Opportunities). The Catholic Values Index uses the US Conference of Catholic Bishops’ Socially Responsible Investment Guidelines (i.e. positive screening approach) to scrutinize eligible companies (e.g., corporations with generous wage and benefit policies, or those who create environmentally beneficial technologies). This index could also exclude certain businesses trading in “irresponsible” activities. listed businesses according to their social audit of four criteria: the company’s products, their impact on the environment, labor relations, and community relations. The latter “community relations” variable includes issues such as the treatment of indigenous people, provision of local credit, operations of overseas subsidiaries, and the like. The responsible companies are then featured in the Index when and if they meet Calvert’s criteria. This index also maintains a target economic sector weighting scheme. Other smaller indices include; Ethibel Sustainability Index for Belgian (and other European) companies and OMX GES Ethical Index for Scandinavian companies, among others.

 

Table 1. Screenings of Responsible Investments

Positive Screens Negative Screens
Community Investment Alcohol
Employment / Equality Animal Testing
Environment Defence / Weapons
Human Rights Gambling
Labour Relations Tobacco
Proxy Voting

 

Generally, these SRI indices are considered as investment benchmarks. In a nutshell, SRI Indices have spawned a range of products, including index mutual funds, ETFs, and structured products (Riedl and Smeets, 2017). A wide array of SRI mutual funds regularly evaluate target companies and manage their investment portfolios. Therefore, they are expected to consider other important criteria such as risk and return targets (Trinks et al., 2018; Leite and Cortez, 2015; Humphrey and Lee, 2011). For instance, iShares lists two ETFs based on the KLD Index funds, and the Domini itself offers a number of actively managed mutual funds based on both ESG and community development issues (such as impact investments). In addition, there are research and ratings vendors who also manage a series of mutual funds, including Calvert and Domini (Scalet and Kelly, 2010).

 

Discussion

The SRI indices serve as a ‘seal of approval’ function for the responsible businesses that want to prove their positive impact investment credentials to their stakeholders. Currently, there are many factors that may be contributing for the growth of SRI:

 

Firstly, one of the most important factors for the proliferation of SRI is the access to information. Today’s investors are increasingly using technologies, including mobile devices and their related applications to keep them up to date on the most recent developments in business and society. Certain apps inform investors on the latest movements in the financial markets, in real-time. Notwithstanding, the SRI contractors are providing much higher quality data than ever before. As a result, all investors are in a position to take informed decisions that are based on evidence and research. Investors and analysts use “extra-financial information” to help them analyze investment decisions (GRI, 2019; Diouf and Boiral, 2017). This “extra-financial information” includes ESG disclosures on non-financial issues (Brooks and Oikonomou, 2018). These sources of information will encourage many businesses and enterprises to report on their responsible and sustainable practices (Diouf and Boiral, 2017). The companies’ integrated thinking could be a precursor for their integrated reporting (Camilleri, 2018; 2017b; GRI, 2019). Business can use integrated disclosures, where they provide details on their financial as well as on their non-financial information for the benefit of prospective investors and analysts, among other stakeholders.

 

Secondly, the gender equality issue has inevitably led to some of the most significant developments in the financial services industry. Nowadays, there are more emancipated women who are in employment, who are gainfully occupied as they are actively contributing in the labor market. Many women are completing higher educational programs and attaining relevant qualifications including MBA programs. Very often, these women move their way up the career ladder with large organizations. They may even become members on boards of directors and assume fiduciary duties and responsibilities. Other women are becoming entrepreneurs as they start their own business. During the last decades, an increased equality in the developed economies has led to SRI’s prolific growth. As a result, women are no longer the only the beneficiaries of social finance, as they are building a complete ecosystem of social investing (Maretick, 2015). “By 2020 women are expected to hold $72trn, 32% of the total. Most of the private wealth that changes hands in the coming decades is likely to go to women (The Economist, 2018). This wave of wealth is set to land in the laps of female investors who have shown positive attitudes toward social investing, when compared to their male counterparts. Maretick (2015) reported that half of the wealthiest women expressed an interest in social and environmental investing when compared to one-third of the wealthy men.

 

Thirdly, today’s investors are increasingly diversifying their portfolio of financial products. The default investment is the market portfolio, which is a value-weighted portfolio of all investable securities (Trinks and Scholtens, 2017). A growing body of evidence suggests that many investors do not necessarily have to sacrifice performance when they invest in socially responsible or environmentally sustainable assets. A relevant literature review denied the contention that social screening could result in corporate underperformance (Trinks and Scholtens, 2017; Lobe and Walkshäusl, 2011; Salaber 2013). Investors have realized that strategic corporate responsibility is congruent with prosperity (Porter and Kramer, 2011; Schueth, 2003). In fact, today’s major asset classes including global, international, domestic equity, balanced and fixed-income categories also comprise top-performing socially responsible mutual funds (Riedl and Smeets, 2017). Therefore, various financial products are reflecting the investors’ values and beliefs (Fritz and von Schnurbein, 2019). Consequentially, the broad range of competitive socially responsible investment options have resulted in diverse, well-balanced portfolios. In the U.S. and in other western economies, top-performing SRI funds can be found in all major asset classes. More and more investors are realizing that they can add value to their portfolios whilst supporting socially and environmental causes.

 

Fourthly, there are economic justifications for the existence of mutual funds in diversified portfolios. Although SRI funds are rated well above average performers no matter which ranking process one prefers to use (Scalet and Kelly, 2010; Schueth, 2003), other literature suggests that there are situations where the positive or negative screens did not add nor destroy the financial products’ portfolio value (Auer, 2016; Trinks and Scholtens, 2017; Hofmann et al., 2009). This matter can result in having mixed investments where there are SRI products that are marketed with other financial portfolios.

Currently, the financial industry is witnessing a consumer-driven phenomenon as there is a surge in demand for social investments. This paper mentioned a number of organizations that have developed indices to measure the organizational behaviors and their laudable practices. Very often, their metrics rely on positive or negative screens that are used to define socially responsible and sustainable investments (Leite and Cortez, 2014; Hofmann et al., 2009). However, despite these developments, the balanced investors are still investing their portfolio in different industries. As a result, they may be putting their money to support controversial businesses. Perhaps, in the future there could be alternative screening methods in addition to the extant inclusionary and exclusionary approaches. Several corporations are willingly disclosing their integrated reporting of financial and non-financial performance; as stakeholders including investors, demand a higher degree of accountability and transparency from them (Diouf and Boiral, 2017). As a result, a growing number of firms, are recognizing the business case for integrated thinking that incorporates financial and strategic corporate responsible behaviors. They can support the community through positive impact investments by allocating funds to reduce their externalities in society. Alternatively, they may facilitate shareholder activism and advocacy, among other actions (Viviers and Eccles, 2012). In sum, the responsible businesses’ stakeholder engagement as well as their sustainable investments can help them improve their bottom lines, whilst addressing their societal and community deficits.

 

References (This is a list of all the references that appeared in the full paper)

Aras, G. and Crowther, D. (2007), “What level of trust is needed for sustainability?”, Social Responsibility Journal, Vol. 3, No. 3, pp. 60-68.

Aras, G. and Crowther, D. (2009), “Corporate sustainability reporting: a study in disingenuity?”, Journal of Business Ethics, Vol. 87, No. 1, pp. 279-288.

Auer, B.R., (2016). “Do Socially Responsible Investment Policies Add or Destroy European Stock Portfolio Value?”, Journal of Business Ethics, Vol. 135, No. 2, pp. 381-397.

Barber, R. (1982), “Pension Funds in the United States Issues of Investment and Control”, Economic and Industrial Democracy, Vol. 3, No. 1, pp. 31-73.

Becchetti, L., Ciciretti, R., Dalò, A. and Herzel, S. (2015), “Socially responsible and conventional investment funds: performance comparison and the global financial crisis”, Applied Economics, Vol. 47 No. 25, pp. 2541-2562.

Bengtsson, E. (2008a), “Socially responsible investing in Scandinavia–a comparative analysis”, Sustainable Development, Vol. 16, No. 3, pp. 155-168.

Bengtsson, E. (2008b), “A history of Scandinavian socially responsible investing”, Journal of Business Ethics, Vol. 82, No. 4, pp. 969-983.

Benijts, T. (2010), “A framework for comparing socially responsible investment markets: an analysis of the Dutch and Belgian retail markets”, Business Ethics: A European Review, Vol. 19, no. 1, pp. 50-63.

Berger, A. N., Demsetz, R. S. and Strahan, P. E. (1999), “The consolidation of the financial services industry: Causes, consequences, and implications for the future”, Journal of Banking & Finance, Vol. 23, Nos. (2-4), pp. 135-194.

Berry, T. C. and Junkus, J. C. (2013), “Socially responsible investing: An investor perspective”, Journal of Business Ethics, Vol. 112, No. 4, pp. 707-720.

Bilbao-Terol, A., Arenas-Parra, M., Cañal-Fernández, V. and Bilbao-Terol, C. (2013), “Selection of socially responsible portfolios using hedonic prices”, Journal of Business Ethics, Vol. 115, No. 3, pp. 515-529.

Brooks, C. and Oikonomou, I. (2018), “The effects of environmental, social and governance disclosures and performance on firm value: A review of the literature in accounting and finance”, The British Accounting Review, Vol. 50, No. 1, pp. 1-15.

Brundtland, G. H. (1989), “Global change and our common future”, Environment: Science and Policy for Sustainable Development, Vol. 31, No. 5, pp. 16-43.

Bugg-Levine, A. and Emerson, J. (2011), “Impact investing: Transforming how we make money while making a difference”, Innovations: Technology, Governance, Globalization, Vol. 6, No. 3, pp. 9-18.

Busch, T., Bauer, R. and Orlitzky, M. (2016), “Sustainable development and financial markets: Old paths and new avenues”, Business and Society, Vol. 55, No. 3, pp. 303-329.

Camilleri, M. A. (2015a), “Valuing stakeholder engagement and sustainability reporting”, Corporate Reputation Review, Vol. 18, No. 3, pp. 210-222.

Camilleri, M. A. (2015b), “Environmental, social and governance disclosures in Europe”, Sustainability Accounting, Management and Policy Journal, Vol. 6, No. 2, pp. 224-242.

Camilleri, M. A. (2017a), “Measuring the corporate managers’ attitudes towards ISO’s social responsibility standard”, Total Quality Management & Business Excellence, pp. 1-13 https://www.tandfonline.com/doi/full/10.1080/14783363.2017.1413344 (Accessed 14 August 2019).

Camilleri, M.A. (2017b), “The integrated reporting of financial, social and sustainability capitals: a critical review and appraisal”,  International Journal of Sustainable Society, Vol. 9 No. 4, pp. 311 – 326

Camilleri, M. A. (2018), “Theoretical insights on integrated reporting: The inclusion of non-financial capitals in corporate disclosures”, Corporate Communications: An International Journal, Vol. 23, No. 4, pp. 567-581.

Camilleri, M. A. (2019), “The circular economy’s closed loop and product service systems for sustainable development: A review and appraisal”, Sustainable Development, Vol. 27, No. 3, pp. 530-536.

Capelle‐Blancard, G. and Monjon, S. (2012), “Trends in the literature on socially responsible investment: looking for the keys under the lamppost”, Business Ethics: A European Review, Vol. 21, No. 3, pp. 239-250.

Carroll, A. B. (1999), “Corporate social responsibility evolution of a definitional construct”, Business and Society, Vol. 38, No. 3, pp. 268-295.

CDFA (2005), “Inside Out: The State of Community Development Finance”, CDFA, London, UK.

Charmaz, K. and Belgrave, L. L. (2007), “Grounded theory”. The Blackwell Encyclopedia of Sociology. Wiley, Hoboken, New Jersey, USA.

Colgate, M. and Lang, B. (2001), “Switching barriers in consumer markets: an investigation of the financial services industry”, Journal of Consumer Marketing, Vol. 18, No. 4, pp. 332-347.

Crifo, P. and Mottis, N. (2016), “Socially responsible investment in France”, Business and Society, Vol. 55, no. 4, pp. 576-593.

Diouf, D. and Boiral, O. (2017), “The quality of sustainability reports and impression management: A stakeholder perspective”, Accounting, Auditing & Accountability Journal, Vol. 30, No. 3, pp. 643-667.

Dumas, C. and Louche, C. (2016), “Collective beliefs on responsible investment”, Business and Society, Vol. 55, No. 3, pp. 427-457.

Durand, R. B., Koh, S. and Limkriangkrai, M. (2013a), “Saints versus Sinners. Does morality matter? Journal of International Financial Markets”, Institutions and Money, Vol. 24, No. 4, pp. 166–183

Eichholtz, P., Kok N. and Quigley, J. M. (2010), “Doing well by doing good? Green office buildings”, American Economic Review, Vol. 100, No. 5, pp. 2492-2509.

Emmelhainz, M. A. and Adams, R. J. (1999), “The apparel industry response to “sweatshop” concerns: A review and analysis of codes of conduct”, Journal of Supply Chain Management, Vol. 35, No. 2, pp. 51-57.

Entine, J. (2003), “The myth of social investing: A critique of its practice and consequences for corporate social performance research”, Organization and Environment, Vol. 16, No. 3, pp. 352-368.

Epstein, M. J. (2018), “Making sustainability work: Best practices in managing and measuring corporate social, environmental and economic impacts”, Routledge, Oxford, UK.

EUROSIF (2019), “SDGs for SRI Investors”, http://www.eurosif.org/wp-content/uploads/2018/01/Eurosif-SDGs-brochure.pdf (Accessed 14 August 2019).

Fabozzi, F. J., Ma, K. C. and Oliphant, B. J. (2008), “Sin stock returns”, The Journal of Portfolio Management, Vol. 35, No. 1, pp. 82–94.

Freireich, J. and Fulton, K. (2009), “Investing for social and environmental impact: A design for catalyzing an emerging industry”, Monitor Institute, pp. 1-86.

Friedman, A. L. and Miles, S. (2001), “Socially responsible investment and corporate social and environmental reporting in the UK: An exploratory study”, The British Accounting Review, Vol. 33, No. 4, pp. 523-548.

Friedman, M. (2007), “The social responsibility of business is to increase its profits”, In Corporate ethics and corporate governance, (pp. 173-178), Springer, Berlin, Germany.

Fritz, T. M. and von Schnurbein, G. (2019), “Beyond Socially Responsible Investing: Effects of Mission-Driven Portfolio Selection”, Sustainability, Vol. 11, No. 23, pp. 6812-6827.

Garriga, E. and Melé, D. (2004), “Corporate social responsibility theories: Mapping the territory”, Journal of Business Ethics, Vol. 53, Nos. 1-2, pp. 51-71.

Giamporcaro, S. and Gond, J. P. (2016). “Calculability as politics in the construction of markets: The case of socially responsible investment in France”, Organization Studies, Vol. 37, No. 4, pp. 465-495.

Global Footprint Network (2019), “Do we fit on the planet?”, (http://www.footprintnetwork.org/en/index.php/GFN/page/world_footprint/ (Accessed 10 August 2019).

GRI (2019), “Linking GRI standards and the EU directive on non-financial and diversity disclosure”, https://www.globalreporting.org/standards/resource-download-center/linking-gri-standards-and-european-directive-on-non-financial-and-diversity-disclosure/ (Accessed 16 August 2019)

Ghoul, W. and Karam, P. (2007), “MRI and SRI mutual funds: A comparison of Christian, Islamic (morally responsible investing), and socially responsible investing (SRI) mutual funds”, Journal of Investing, Vol. 16, No. 2, pp. 96-102.

Gillan, S. L. and Starks, L. T. (2000), “Corporate governance proposals and shareholder activism: The role of institutional investors”, Journal of Financial Economics, Vol. 57, No. 2, pp. 275-305.

Glaser, B. and Strauss, A. (1967). “Grounded theory: The discovery of grounded theory”, Sociology: The Journal of the British Sociological Association, Vol. 12, No. 1, pp. 27-49.

Guay, T., Doh, J.P. and Sinclair, G. (2004), “Non-governmental organizations, shareholder activism, and socially responsible investments: Ethical, strategic, and governance implications”, Journal of Business Ethics, Vol. 52, No. 1, pp. 125-139.

Hellsten, S. and Mallin, C. (2006), “Are ‘ethical’or ‘socially responsible’investments socially responsible?”, Journal of Business Ethics, Vol. 66, No. 4, pp. 393-406.

Hofmann, E., Penz, E. and Kirchler, E. (2009), “The ‘Whys’ and ‘Hows’ of ethical investment: Understanding an early-stage market through an explorative approach”, Journal of Financial Services Marketing, Vol. 14, No. 2, pp. 102-117.

Hong, H. and Kacperczyk, M. (2009), “The price of sin: The effects of social norms on markets”, Journal of Financial Economics, Vol. 93, No. 1, pp. 15-36.

Hsieh, H.F. and Shannon, S.E. (2005), “Three approaches to qualitative content analysis”, Qualitative Health Research, Vol. 15, No. 9, pp. 1277-1288.

Humphrey, J.E. and Lee, D.D. (2011), “Australian socially responsible funds: Performance, risk and screening intensity”, Journal of Business Ethics, Vol. 102, No. 4, pp. 519-535.

Humphrey, J. E. and Tan, D. T. (2014), “Does it really hurt to be responsible?”, Journal of Business Ethics, Vol. 122, No. 3, pp. 375–386.

Humphrey, J. E., Warren, G. J. and Boon, J. (2016), “What is different about socially responsible funds? A holdings-based analysis”, Journal of Business Ethics, Vol. 138, No. 2, pp. 263-277.

Jackson, J. (2009), “How risky are sustainable real estate projects? An evaluation of LEED and ENERGY STAR development options”, Journal of Sustainable Real Estate, Vol. 1, No. 1, pp. 91-106.

Jackson, E. T. (2013), “Interrogating the theory of change: evaluating impact investing where it matters most”, Journal of Sustainable Finance and Investment, Vol. 3, No. 2, pp. 95-110.

Joliet, R. and Titova, Y. (2018), “Equity SRI funds vacillate between ethics and money: An analysis of the funds’ stock holding decisions”, Journal of Banking & Finance, Vol. 97, pp. 70-86.

Kempf, A. and Osthoff, P. (2007), “The effect of socially responsible investing on portfolio performance”, European Financial Management, Vol. 13, No 5, pp. 908-922.

Krumsiek, B. J. (1997), “The emergence of a new era in mutual fund investing: Socially responsible investing comes of age”, The Journal of Investing, Vol. 6, No. 4, pp. 25-30.

Lane, M.J. (2015), “The Mission-Driven Venture: Business Solutions to the World’s Most Vexing Social Problems”, Wiley, Hoboken New Jersey, USA.

Leite, P. and Cortez, M.C. (2014), “Style and performance of international socially responsible funds in Europe”, Research in International Business and Finance, Vol. 30, pp. 248-267.

Leite, P. and Cortez, M.C. (2015), “Performance of European socially responsible funds during market crises: Evidence from France”, International Review of Financial Analysis, Vol. 40, pp. 132-141

Le Sourd, V. (2011), “Performance of socially responsible investment funds against an efficient SRI index: The impact of benchmark choice when evaluating active managers”, EDHEC-Risk and Asset Management Research Centre, Nice, France.

Lincoln, Y.S. and Guba, E.A. (1985), “Naturalistic Inquiry”, Sage,  Beverly Hills, CA, USA.

Logue, A.C. (2009), “Socially Responsible Investing for Dummies”, John Wiley and Sons, Indianapolis, IN, USA.

Lydenberg, S. D. (2002), “Envisioning socially responsible investing”, Journal of Corporate Citizenship, Vol. 7, pp. 57-77.

Majoch, A. A., Hoepner, A. G., and Hebb, T. (2017), “Sources of stakeholder salience in the responsible investment movement: why do investors sign the principles for responsible investment?”, Journal of Business Ethics, Vol. 140, No. 4, pp. 723-741.

Mair J. and Milligan K. (2012), “Q and A roundtable on impact investing”, Stanford Social Innovation Review, http://ssir.org/articles/entry/qa_roundtable_on_impact_investing (Accessed 20 August, 2019).

Maretick, M. (2015), “Women Rule: Why the Future of Social, Sustainable and Impact Investing is in Female Hands”, TriplePundit. http://www.triplepundit.com/2015/04/womenrule-future-social-sustainable-impact-investing-female-hands/# (Accessed 02 September 2019)

Martí-Ballester, C. P. (2015), “Investor reactions to socially responsible investment”, Management Decision, Vol. 53, No. 3, pp. 571-604.

Matten, D. and Moon, J. (2008). “Implicit and explicit CSR: a conceptual framework for a comparative understanding of corporate social responsibility”, Academy of Management Review, Vol. 33, No. 2, pp. 404-424.

McCann, L., Solomon, A. and Solomon, J. (2003), “Explaining the growth in UK socially responsible investment”, Journal of General Management, Vol. 28, No. 4, pp. 15-36.

McLaren, D. (2004), “Global stakeholders: Corporate accountability and investor engagement”, Corporate Governance: An International Review, Vol. 12, No. 2, pp. 191-201.

Miller, A. (1992), “Green Investment”, In Owen, D. (ed.), Green Reporting: Accountancy and the Challenge of the Nineties. Chapman and Hall, London, UK, pp. 242–255.

Nilsson, J. (2009), “Segmenting socially responsible mutual fund investors: The influence of financial return and social responsibility”, International Journal of Bank Marketing, Vol. 27, No. 1, pp. 5-31.

Ogrizek, M. (2002), “The effect of corporate social responsibility on the branding of financial services”, Journal of Financial Services Marketing, Vol. 6, No. 3, pp. 215-228.

Oikonomou, I., Platanakis, E. and Sutcliffe, C. (2018), “Socially responsible investment portfolios: does the optimization process matter?”, The British Accounting Review, Vol. 50, No. 4, pp. 379-401.

Ooi, E. and Lajbcygier, P. (2013), “Virtue remains after removing sin: Finding skill amongst socially responsible investment managers”, Journal of Business Ethics, Vol. 113, No. 2, pp. 199-224.

Paul, K. (2017), “The effect of business cycle, market return and momentum on financial performance of socially responsible investing mutual funds”, Social Responsibility Journal, Vol. 13, No. 3, pp. 513-528.

Pienitz, R. and Vincent, W. F. (2000), “Effect of climate change relative to ozone depletion on UV exposure in subarctic lakes”, Nature, Vol. 404, No. 6777, pp. 484-487.

Porter, M. E. and Kramer, M. R. (2011), “The big idea: Creating shared value”, Harvard Business Review, Vol. 89, No. 1, pp. 1-12.

Rendtorff, J.D. (2009), “Responsibility, Ethics and Legitimacy of Corporations”, Society and Business Review, Vol. 4 No. 3, pp. 266-268.

Renneboog, L., Ter Horst, J. and Zhang, C. (2008), “Socially responsible investments: Institutional aspects, performance, and investor behaviour”, Journal of Banking and Finance, Vol. 32, No. 9, pp. 1723-1742.

Rhodes, M. J. (2010), “Information asymmetry and socially responsible investment”, Journal of Business Ethics, Vol. 95, No. 1, pp. 145-150.

Richardson, B.J. (2008), “Socially Responsible Investment Law: Regulating the Unseen Polluters”, Oxford University Press, Oxford, UK.

Richardson, B. J. (2009), “Keeping ethical investment ethical: Regulatory issues for investing for sustainability”, Journal of Business Ethics, Vol. 87, No. 4, pp. 555-572.

Riedl, A. and Smeets, P. (2017), “Why do investors hold socially responsible mutual funds?”, The Journal of Finance, Vol. 72, No. 6, pp. 2505-2550.

Rojas, M., M’zali, B., Turcotte, M. and Merrigan, P. (2009), “Bringing about changes to corporate social policy through shareholder activism: Filers, issues, targets, and success”, Business and Society Review, Vol. 114, No. 2, pp. 217-252.

Salaber, J. (2013), “Religion and returns in Europe”, European Journal of Political Economy, Vol. 32, No. 1, pp. 149–160.

Sandberg, J. (2011), “Socially responsible investment and fiduciary duty: Putting the freshfields report into perspective”, Journal of Business Ethics, Vol. 101, No. 1, pp. 143-162.

Sandberg, J. (2013), “(Re‐) interpreting fiduciary duty to justify socially responsible investment for pension funds?”, Corporate Governance: An International Review, Vol. 21, No. 5, pp. 436-446.

Scalet, S. and Kelly, T.F. (2010), “CSR rating agencies: what is their global impact?”, Journal of Business Ethics, Vol. 94, No. 1, pp. 69-88.

Schepers, D. H. and Prakash Sethi, S. (2003), “Bridging the Gap Between the Promise and Performance of Socially Responsible Funds”, Business and Society Review, Vol. 108, No. 1, pp. 11-32.

Scholtens, B. and Sievänen, R. (2013), “Drivers of socially responsible investing: A case study of four Nordic countries”, Journal of Business Ethics, Vol. 115, No. 3, pp. 605-616.

Schueth, S. (2003), “Socially responsible investing in the United States”, Journal of Business Ethics, Vol.  43, No. 3, pp. 189-194.

Silva, F. and Cortez, M.C. (2016), “The performance of US and European green funds in different market conditions”, Journal of Cleaner Production, Vol. 135, pp. 558-566.

Smith, M. P. (1996), “Shareholder activism by institutional investors: Evidence from CalPERS”. The Journal of Finance, Vol. 51, No. 1, pp. 227-252.

Sparkes, R. (2001), “Ethical investment: whose ethics, which investment?”, Business Ethics: A European Review, Vol. 10, No. 3, pp. 194-205.

Sparkes, R. and Cowton, C. J. (2004), “The maturing of socially responsible investment: A review of the developing link with corporate social responsibility”, Journal of Business Ethics, Vol. 52, No. 1, pp. 45-57.

Sparkes, R. (2017), “A historical perspective on the growth of socially responsible investment”, In Responsible investment  Routledge, Oxford, UK, (pp. 39-54).

Starr, M.A. (2008), “Socially responsible investment and pro-social change”, Journal of Economic Issues, Vol. 42, No. 1, pp. 51-73.

The Economist (2018), “Women’s wealth is rising”, https://www.economist.com/graphic-detail/2018/03/08/womens-wealth-is-rising (Accessed 7 August 2019).

Thornley, B., Wood, D., Grace, K. and Sullivant, S. (2011), “Impact Investing a Framework for Policy Design and Analysis”, InSight at Pacific Community Ventures and The Initiative for Responsible Investment at Harvard University, Cambridge (MA), USA.

Trinks, P. J. and Scholtens, B. (2017), “The opportunity cost of negative screening in socially responsible investing”, Journal of Business Ethics, Vol. 140, No. 2, pp. 193-208.

Trinks, A., Scholtens, B., Mulder, M. and Dam, L. (2018), “Fossil fuel divestment and portfolio performance”, Ecological economics, 146, pp. 740-748.

Viviers, S. and Eccles, N.S. (2012), “35 years of socially responsible investing (SRI) research-general trends over time”, South African Journal of Business Management, Vol. 43, No. 4, pp. 1-16.

Willis, A. (2003), “The role of the global reporting initiative’s sustainability reporting guidelines in the social screening of investments”, Journal of Business Ethics, Vol. 43, No. 3, pp. 233-237.

Walker, H. and Brammer, S. (2009), “Sustainable procurement in the United Kingdom public sector”, Supply Chain Management: An International Journal, Vol. 14, No. 2, pp. 128-137.

 

Leave a comment

Filed under Corporate Social Responsibility, Impact Investing, Marketing, Socially Responsible Investment, SRI

What is Corporate Citizenship?

The corporate citizenship term was typically used to describe the corporations that can contribute to the ethical, philanthropic and societal goals. Therefore, this notion is rooted in political science as it directs corporations to respond to non-market pressures.

Throughout the years, the corporate citizenship agenda has been wrought from distinctive corporate social responsibility (CSR) theories and approaches. Its conceptual foundations can be found in the CSR literature (e.g., Carroll, 1979), corporate social responsiveness (e.g., Clarkson, 1995), corporate social performance (e.g., Albinger & Freeman, 2000), the theory of the firm” (McWilliams & Siegel, 2001), stakeholder engagement (Strand & Freeman, 2013); and other enlightened ‘self-interest’ theories; as corporate citizenship can be a source of opportunity, innovation and competitive advantage (Camilleri, 2017a, 2017b; Porter & Kramer, 2006). For this reason, this concept continues to receive specific attention, particularly by those responsible businesses that are differentiating themselves through responsible and sustainable behaviours.

 

Literature Review

The multinational corporations (MNCs) have been (and still are) under pressure to exhibit “good corporate citizenship” in every country or market from where they run their business. MNCs are continuously monitored by their stakeholders, including regulatory authorities, creditors, investors, customers and the community at large. They are also being scrutinised by academic researchers. Several empirical studies have explored the individuals’ attitudes and perceptions toward corporate citizenship. Very often, their measurement involved quantitative analyses that investigated the corporations’ responsible behaviours (Camilleri, 2017a; 2017b). Other research has focused on the managerial perceptions about corporate citizenship (e.g., Basu & Palazzo, 2008). A number of similar studies have gauged corporate citizenship by adopting Fortune’s reputation index (Flanagan, O’Shaughnessy, & Palmer, 2011; Melo & Garrido‐Morgado, 2012), the KLD index (Dupire & M’Zali, 2018; Fombrun, 1998; Griffin & Mahon, 1997) or Van Riel and Fombrun’s (2007) Reptrak. Such measures expected the surveyed executives to assess the extent to which their company behaves responsibly toward the environment and the community (Fryxell and Wang, 1994).

Despite the wide usage of such measures in past research, the appropriateness of these indices still remains doubtful. For instance, Fortune’s reputation index failed to account for the multidimensionality of the corporate citizenship construct; as it is suspected to be more significant of management quality than of corporate citizenship (Waddock & Graves, 1997). Fortune’s past index suffered from the fact that its items were not based on theoretical arguments as they did not appropriately represent the economic, legal, ethical, and discretionary dimensions of the corporate citizenship construct.

Pinkston and Carroll (1994) identified four dimensions of corporate citizenship, including; orientations, stakeholders, issues and decision-making autonomy. They argued that by observing orientations, one may better understand the inclinations or the posturing behaviours of organisations with respect to corporate citizenship. Pinkston and Carroll (1994) sought to identify the stakeholder groups that are benefiting from the businesses’ corporate citizenship practices. They argued that the businesses’ decision-making autonomy determined at what organisational level they engaged in corporate citizenship. In a similar vein, Griffin and Mahon (1997) combined four estimates of corporate citizenship: Fortune’s reputation index, the KLD index, the Toxic Release Inventory (TRI), and the rankings that are provided in the Directory of Corporate Philanthropy.

Singh, De los Salmones Sanchez and Rodriguez del Bosque (2007) adopted a multidimensional perspective on three domains, including; commercial responsibility, ethical responsibility and social responsibility. Firstly, they proposed that the commercial responsibility construct relates to the businesses’ responsibility to develop high quality products and truthful marketing communications of their products’ attributes and features among customers. Secondly, they maintained that ethical responsibility is concerned with the businesses fulfilling their obligations toward their shareholders, suppliers, distributors and other agents with whom they make their dealings. Singh et al. (2007) argued that ethical responsibility involves the respect for the human rights and norms that are defined in the law when carrying out business activities. They hinted that respecting ethical principles in business relationships has more priority than achieving superior economic performance. Their other domain, social responsibility is concerned about with corporate citizenship initiatives that are characterised by the businesses’ laudable behaviors (Camilleri, 2017c). The authors suggest that the big businesses could allocate part of their budget to the natural environment, philanthropy, or toward social works that supported the most vulnerable groups in society. This perspective supports the development of financing social and/or cultural activities and is also concerned with improving societal well-being (Singh et al., 2007).

Conclusion

There are several actors within a society, including the government and policy makers, businesses, marketplace stakeholders and civil society organisations among others (Camilleri, 2015). It is within this context that a relationship framework is required to foster corporate citizenship practices in order to enhance the businesses’ legitimacy amongst stakeholders (Camilleri, 2017; Camilleri, 2018). The corporate citizenship practices including socially responsible and environmentally sustainable practices may be triggered by the institutional and/or stakeholder pressures.

 

References

Albinger, H.S. & Freeman, S.J. (2000). Corporate social performance and attractiveness as an employer to different job seeking populations. Journal of Business Ethics, 28(3), 243-253.

Basu, K. & Palazzo, G. (2008). Corporate social responsibility: A process model of sensemaking, Academy of Management Review, 33(1), 122-136.

Camilleri, M. A. (2015). Valuing stakeholder engagement and sustainability reporting. Corporate Reputation Review18(3), 210-222.

Camilleri, M. A. (2017a). Corporate citizenship and social responsibility policies in the United States of America. Sustainability Accounting, Management and Policy Journal, 8(1), 77-93.

Camilleri, M. A. (2017b). Corporate Social Responsibility Policy in the United States of America. In Corporate Social Responsibility in Times of Crisis (pp. 129-143). Springer, Cham.

Camilleri, M. A. (2017c). Corporate sustainability and responsibility: creating value for business, society and the environment. Asian Journal of Sustainability and Social Responsibility2(1), 59-74.

Camilleri, M. A. (2018). Theoretical insights on integrated reporting: The inclusion of non-financial capitals in corporate disclosures. Corporate Communications: An International Journal. 23(4) 567-581.

Carroll, A.B. (1979). A three-dimensional conceptual model of corporate performance. Academy of Management Review, 4(4), 497-505.

Dupire, M., & M’Zali, B. (2018). CSR strategies in response to competitive pressures. Journal of Business Ethics148(3), 603-623.

Flanagan, D. J., O’shaughnessy, K. C., & Palmer, T. B. (2011). Re-assessing the relationship between the Fortune reputation data and financial performance: overwhelming influence or just a part of the puzzle?. Corporate Reputation Review14(1), 3-14.

Fombrun, C.J. (1998). Indices of corporate reputation: An analysis of media rankings and social monitors’ ratings. Corporate Reputation Review, 1(4), 327-340.

Griffin J.J. & Mahon, J.F. (1997). The corporate social performance and corporate financial performance debate twenty-five years of incomparable research. Business & Society, 36(1), 5-31.

McWilliams, A. & Siegel, D. (2001). Corporate social responsibility: A theory of the firm perspective, Academy of Management Review, 26(1), 117-127.

Melo, T., & Garrido‐Morgado, A. (2012). Corporate reputation: A combination of social responsibility and industry. Corporate social responsibility and environmental management19(1), 11-31.

Pinkston, T.S. & Carroll, A.B. (1994). Corporate citizenship perspectives and foreign direct investment in the US. Journal of Business Ethics, 13(3), 157-169.

Porter, M. E., & Kramer, M. R. (2006). The link between competitive advantage and corporate social responsibility. Harvard business review84(12), 78-92.

Strand, R. & Freeman, R.E. (2013). Scandinavian cooperative advantage: The theory and practice of stakeholder engagement in Scandinavia, Journal of Business Ethics, 127(1), 65-85.

Singh, J. & Del Bosque, I.R. (2008). Understanding corporate social responsibility and product perceptions in consumer markets: A cross-cultural evaluation. Journal of Business Ethics, 80(3), 597-611.

Van Riel, C.B. & Fombrun, C.J. (2007). Essentials of corporate communication: Implementing practices for effective reputation management, Routledge, Oxford, UK and New York, USA.

Waddock, S.A. & Graves, S.B. (1997). The corporate social performance-financial performance link, Strategic Management Journal, 18(4), 303-319.


This is an excerpt from one of my contributions that will appear in Springer’s Encyclopedia of Sustainable Management.

Leave a comment

Filed under corporate citizenship, Corporate Social Responsibility, Corporate Sustainability and Responsibility, CSR, Marketing

Promoting strategic corporate social responsibility among practitioners

What is Strategic Corporate Social Responsibility?

Organisations engage in Strategic Corporate Social Responsibility (Strategic CSR) when they integrate responsible behaviours in their corporate practices (Camilleri, 2018; Porter & Kramer, 2011). Therefore, Strategic CSR is often evidenced by the businesses’ engagement with key stakeholders, including customers, employees, shareholders, regulatory authorities and communities as their non-financial activities can have an effect on society and the natural environment (Camilleri, 2017a). The ultimate goal of strategic CSR is to create both economic and social value (Carroll & Shabana, 2010; Falck & Heblich, 2007).


Introduction

The businesses’ CSR practices may result in a sustained competitive advantage if they are willing to forge strong relationships with their stakeholders (Camilleri, 2015a; Freeman,  & McVea, 2001). Therefore, businesses ought to communicate with employees, customers, suppliers, regulatory stakeholders as well as with their surrounding community (EU, 2016; Bhattacharya, Korschun & Sen, 2009). Positive stakeholder relationships can lead to an improved organizational performance, in the long run (Camilleri, 2015a).

The most successful businesses are increasingly promoting the right conditions of employment for their employees, within their supply chains (Camilleri, 2017b). They are also instrumental in improving the lives of their suppliers (Camilleri, 2017c; Porter & Kramer, 2011). They do so as they would like to enhance the quality and attributes of their products or services; which are ultimately delivered to customers and consumers. Hence, their long-term investments on strategic CSR activities are likely to yield financial returns for them. At the same time they will add value to society (McWilliams et al., 2006; Falck & Heblich, 2007). Therefore, the strategic CSR involves the promotion of socially and environmentally responsible practices they are re-aligned with the businesses’ profit motives (Camilleri, 2017b,c).


Key Theoretical Underpinnings

The Strategic CSR perspective resonates well with the agency theory. In the past, scholars argued that the companies’ only responsibility was to maximise their owners’ and shareholders’ wealth (Levitt, 1958; Friedman, 1970). Hence, companies were often encouraged to undertake CSR strategies which can bring value to their businesses and to disregard those activities which are fruitless. However, at times, the fulfilment of philanthropic responsibilities can also  benefit the bottom line (Lantos, 2001).

Although, it could be difficult to quantify the returns of responsible behaviours, relevant research has shown that those companies that practiced social and environmental responsibility did well by doing good (Falck & Heblich, 2007, Porter & Kramer, 2011).Some of the contributions on this topic suggest that corporate philanthropy should be deeply rooted in the firms’ competences and linked to their business environment (Camilleri, 2015; Porter & Kramer, 2002; Godfrey, 2005). Many authors often referred to the CSR’s core domains (economic, legal and ethical responsibilities) that were compatible and consistent with the relentless call for the business case of CSR (Camilleri, 2015b; Carroll & Shabana, 2010, Vogel, 2005).

Many commentators argued that the strategic CSR practices may result in a new wave of social benefits as well as gains for the businesses themselves (Fombrun et al., 2000; Porter & Kramer, 2011) rather than merely acting on well-intentioned impulses or by reacting to outside pressures (Van Marrewijk, 2003). Lozano (2015) indicated that the business case is the most important driver for CSR engagement. Thus, proper incentives may encourage managers ‘to do well by doing good’ (Falck & Heblich, 2007). If it is a company’s goal 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. Companies could direct their discretionary investments to areas (and cost centres) that are relevant to them (Gupta & Sharma, 2009). The reconciliation of shareholder and other stakeholders addresses the perpetual relationship between business and society, as companies are expected to balance the conflicting stakeholder interests for long term sustainability (Orlitzky et al., 2011; Camilleri, 2017c; Camilleri 2019).

 

Conclusion
Many companies are increasingly recognising the business case for CSR as they allocate adequate and sufficient resources to financial and non-financial activities that will ultimately benefit their stakeholders. Their motivation behind their engagement in strategic CSR practices is to increase their profits and to create shareholder value. At the same time, they strengthen their competitive advantage through stakeholder management.

References

Bhattacharya CB, Korschun D, Sen S (2009). Strengthening stakeholder–company relationships through mutually beneficial corporate social responsibility initiatives. J Bus Ethics 85(2):257–272.

Camilleri, M.A. (2015a). Valuing Stakeholder Engagement and Sustainability Reporting. Corporate Reputation Review, 18 (3), 210-222.

Camilleri, M.A. (2015b) The Business Case for Corporate Social Responsibility. In Menzel Baker, S. & Mason, M.(Eds.) Marketing & Public Policy as a Force for Social Change Conference. (Washington D.C., 4th June). Proceedings, pp. 8-14, American Marketing Association.

Camilleri M.A. (2017a) Corporate sustainability, social responsibility and environmental management: an introduction to theory and practice with case studies. Springer, Cham, Switzerland.

Camilleri, M.A. (2017b). Corporate Citizenship and Social Responsibility Policies in the United States of America. Sustainability Accounting, Management and Policy Journal. 8 (1), 77-93.

Camilleri, M.A. (2017c). The Rationale for Responsible Supply Chain Management and Stakeholder Engagement. Journal of Global Responsibility. 8 (1), 111-126.

Camilleri, M.A. (2018). The SMEs’ Technology Acceptance of Digital Media for Stakeholder Engagement. Journal of Small Business and Enterprise Development.  26(4), 504-521.

Camilleri, M.A. (2019). Measuring the corporate managers’ attitudes toward ISO’s social responsibility standard. Total Quality Management & Business Excellence. 30(14), 1549-1561.

Carroll AB, Shabana KM (2010). The business case for corporate social responsibility: a review of concepts, research and practice. Int J Manag Rev 12(1):85–105.

European Union (2016). Corporate social responsibility (CSR) in the EU. European Commission Publications, Brussels, Belgium http://ec.europa.eu/social/main.jsp?catId=331.

Falck O, Heblich S (2007). Corporate social responsibility: doing well by doing good. Business Horizons 50(3):247–254.

Freeman, R. E., & McVea, J. (2001). A stakeholder approach to strategic management. The Blackwell handbook of strategic management, 189-207.

Friedman M (1970). The social responsibility of business is to increase its profits. New York Times Magazine 13:32–33.

Godfrey PC (2005). The relationship between corporate philanthropy and shareholder wealth: a risk management perspective. Acad Manag Rev 30(4):777–798.

Gupta S, Sharma N (2009). CSR-A business opportunity. Indian Journal of Industrial Relations:396–401.

Lantos GP (2001). The boundaries of strategic corporate social responsibility. J Consum Mark 18(7):595–632.

Levitt T (1958). The dangers of social-responsibility. Harv Bus Rev 36(5):41–50.

Lozano R (2015). A holistic perspective on corporate sustainability drivers. Corp Soc Responsib Environ Manag 22(1): 32–44.

Orlitzky M, Siegel DS, Waldman DA (2011). Strategic corporate social responsibility and environmental sustainability. Business & society 50(1):6–27.

Porter ME, Kramer MR (2011). Creating shared value. Harv Bus Rev 89(1/2):62–77.

Van Marrewijk M (2003). Concepts and definitions of CSR and corporate sustainability: between agency and communion. J Bus Ethics 44(2):95–105.

Vogel DJ (2005). Is there a market for virtue? The business case for corporate social responsibility. Calif Manag Rev 47(4):19–45.

Leave a comment

Filed under Business, Corporate Social Responsibility, Corporate Sustainability and Responsibility, CSR, Shared Value, Small Business, SMEs, Stakeholder Engagement, Sustainability, sustainable development

Announcing a Call for Chapters (for Springer)

Strategic Corporate Communication and Stakeholder Engagement in the Digital Age

 

Abstract submission deadline: 30th September 2019
Full chapters due: 31st December 2019

 

Background

The latest advances in technologies and networks have been central to the expansion of electronic content across different contexts. Contemporary communication approaches are crossing boundaries as new media are offering both challenges and opportunities. The democratisation of the production and dissemination of information via the online technologies has inevitably led individuals and organisations to share content (including images, photos, news items, videos and podcasts) via the digital and social media. Interactive technologies are allowing individuals and organisations to co-create and manipulate electronic content. At the same time, they enable them to engage in free-flowing conversations with other online users, groups or virtual communities (Camilleri, 2017). Innovative technologies have empowered the organisations’ stakeholders, including; employees, investors, customers, local communities, government agencies, non-governmental organisations (NGOs), as well as the news media, among others. Both internal and external stakeholders are in a better position to scrutinise the organisations’ decisions and actions. For this reason, there is scope for the practitioners to align their corporate communication goals and activities with the societal expectations (Camilleri, 2015; Gardberg & Fombrun, 2006). Therefore, organisations are encouraged to listen to their stakeholders. Several public interest organisations, including listed businesses, banks and insurance companies are already sharing information about their financial and non-financial performance in an accountable and transparent manner. The rationale behind their corporate disclosures is to develop and maintain strong and favourable reputations among stakeholders (Camilleri, 2018; Cornelissen, 2008). The corporate reputation is “a perceptual representation of a company’s past actions and future prospects that describe the firm’s overall appeal to all of its key constituents when compared to other leading rivals” (Fombrun, 1996).

Business and media practitioners ought to be cognisant about the strategic role of corporate communication in leveraging the organisations’ image and reputation among stakeholders (Van Riel & Fombrun, 2007). They are expected to possess corporation communication skills as they need to forge relationships with different stakeholder groups (including employees, customers, suppliers, investors, media, regulatory authorities and the community at large). They have to be proficient in specialist areas, including; issues management, crises communication as well as in corporate social responsibility reporting, among other topics. At the same time, they should be aware about the possible uses of different technologies, including; artificial intelligence, augmented and virtual reality, big data analytics, blockchain and internet of things, among others; as these innovative tools are disrupting today’s corporate communication processes.

 

Objective

This title shall explain how strategic communication and media management can affect various political, economic, societal and technological realities. Theoretical and empirical contributions can shed more light on the existing structures, institutions and cultures that are firmly founded on the communication technologies, infrastructures and practices. The rapid proliferation of the digital media has led both academics and practitioners to increase their interactive engagement with a multitude of stakeholders. Very often, they are influencing regulators, industries, civil society organisations and activist groups, among other interested parties. Therefore, this book’s valued contributions may include, but are not restricted to, the following topics:

 

Artificial Intelligence and Corporate Communication

Augmented and Virtual Reality in Corporate Communication

Blockchain and Corporate Communication

Big Data and Analytics in Corporate Communication

Branding and Corporate Reputation

Corporate Communication via Social Media

Corporate Communication Policy

Corporate Culture

Corporate Identity

Corporate Social Responsibility Communications

Crisis, Risk and Change Management

Digital Media and Corporate Communication

Employee Communications

Fake News and Corporate Communication

Government Relationships

Integrated Communication

Integrated Reporting of Financial and Non-Financial Performance

Internet Technologies and Corporate Communication

Internet of Things and Corporate Communication

Investor Relationships

Issues Management and Public Relations

Leadership and Change Communication

Marketing Communications

Measuring the Effectiveness of Corporate Communications

Metrics for Corporate Communication Practice

Press and Media Relationships

Stakeholder Management and Communication

Strategic Planning and Communication Management

 

This publication shall present the academics’ conceptual discussions that cover the contemporary topic of corporate communication in a concise yet accessible way. Covering both theory and practice, this publication shall introduce its readers to the key issues of strategic corporate communication as well as stakeholder management in the digital age. This will allow prospective practitioners to critically analyse future, real-life situations. All chapters will provide a background to specific topics as the academic contributors should feature their critical perspectives on issues, controversies and problems relating to corporate communication.

This authoritative book will provide relevant knowledge and skills in corporate communication that is unsurpassed in readability, depth and breadth. At the start of each chapter, the authors will prepare a short abstract that summarises the content of their contribution. They are encouraged to include descriptive case studies to illustrate real situations, conceptual, theoretical or empirical contributions that are meant to help aspiring managers and executives in their future employment. In conclusion, each chapter shall also contain a succinct summary that should outline key implications (of the findings) to academia and / or practitioners, in a condensed form. This will enable the readers to retain key information.

 

Target Audience

This textbook introduces aspiring practitioners as well as under-graduate and post-graduate students to the subject of corporate communication – in a structured manner. More importantly, it will also be relevant to those course instructors who are teaching media, marketing communications and business-related subjects in higher education institutions, including; universities and colleges. It is hoped that course conveners will use this edited textbook as a basis for class discussions.

 

Submission Procedure

Senior and junior academic researchers are invited to submit a 300-word abstract on or before the 30th June 2019. Submissions should be sent to Mark.A.Camilleri@um.edu.mt. Authors will be notified about the editorial decision during July 2019. The length of the chapters should be between 6,000- 8,000 words (including references, figures and tables). These contributions will be accepted on or before the 31st December 2019. The references should be presented in APA style (Version 6). All submitted chapters will be critically reviewed on a double-blind review basis. The authors’ and the reviewers’ identities will remain anonymous. All authors will be requested to serve as reviewers for this book. They will receive a notification of acceptance, rejection or suggested modifications – on or before the 15th February 2020.

Note: There are no submission or acceptance fees for the publication of this book. All abstracts / proposals should be submitted via the editor’s email.

 

Editor

Mark Anthony Camilleri (Ph.D. Edinburgh)
Department of Corporate Communication,
Faculty of Media and Knowledge Sciences,
University of Malta, MALTA.
Email: mark.a.camilleri@um.edu.mt

 

Publisher

Following the double-blind peer review process, the full chapters will be submitted to Springer Nature for final review. For additional information regarding the publisher, please visit https://www.springer.com/gp. This prospective publication will be released in 2020.

Leave a comment

Filed under Business, Corporate Governance, Corporate Social Responsibility, Corporate Sustainability and Responsibility, CSR, digital media, ESG Reporting, Integrated Reporting, internet technologies, internet technologies and society, Marketing, online, Shared Value, Stakeholder Engagement, Sustainability

The Way Forward: Corporate Sustainability and Responsibility

An Excerpt from: Camilleri, M.A. (2017). Corporate Sustainability and Responsibility: Creating Value for Business, Society and the Environment. Asian Journal of Sustainability and Social Responsibility 2(1) 59-74. https://link.springer.com/article/10.1186/s41180-017-0016-5

In the past, CSR may have been more associated with corporate philanthropy, stewardship principles, contributions-in-kind toward social and environmental causes, environmental protection, employees’ engagement in community works, volunteerism and pro-bono service among other responsible initiatives. Very often, such altruistic CSR activities may have not resulted in financial performance to the business per se. On the contrary, certain discretionary
expenses in corporate philanthropy could have usurped the businesses’ slack resources (including financial assets, labour and time) without adding much value (in terms of corporate reputation and goodwill) to the businesses. Nevertheless, this research reported that the contemporary discourses on corporate social responsibility are opening new opportunities for the businesses themselves. The academic discourse about CSR is moving away from ‘nice-to
do’ to ‘doing-well-by-doing-good’ mantra. Evidently, the value-based approaches that were discussed in this paper could be considered as guiding principles that will lead tomorrow’s businesses to long term sustainability (in social and economic terms). Debatably, the profit motive (the business case or corporate sustainability concepts) could be linked with the corporate responsibility agenda. This way, the multinational corporations could be better prepared to address their societal and environmental deficits across the globe, whilst adding value to their business.

This review paper has built on the previous theoretical underpinnings of the corporate social responsibility agenda including Stakeholder Management, Corporate Citizenship and Creating Shared Value as it presents the latest Corporate Sustainability and Responsibility perspective. This value-based model reconciles strategic CSR and environmental management with a stakeholder approach to bring long term corporate sustainability, in terms of economic performance for the business, as well as corporate responsibility’s social outcomes. Recently, some international conferences including Humboldt University’s gatherings in 2014 and 2016 have also raised awareness on this proposition. The corporate sustainability and responsibility concept is linked to improvements to the companies’ internal processes including environmental management, human resource management, operations management and marketing (i.e. Corporate Sustainability). At the same time, it raises awareness on the
businesses’ responsible behaviours (i.e. Corporate Responsibility) toward stakeholders including the government, suppliers, customers and the community, among others. The fundamental motivation behind this approach is the view that creating connections between stakeholders in the value chain will open-up unseen opportunities for the competitive advantage of responsible businesses, as illustrated in Figure 1.

cs model

Multinational organizations are under increased pressures from stakeholders (particularly customers and consumer associations) to revisit their numerous processes in their value chain activities. Each stage of the company’s production process, from the supply chain to the transformation of resources could add value to their businesses’ operational costs as they produce end-products. However, the businesses are always expected to be responsible in their internal processes toward their employees or toward their suppliers’ labour force. Therefore, this corporate sustainability and responsibility perspective demands that businesses create economic and societal value by re-aligning their corporate objectives with stakeholder management and environmental responsibility. In sum, corporate sustainability and responsibility may only happen when companies demonstrate their genuine willingness to add corporate responsible dimensions and stakeholder engagement to their value propositions. This occurs when businesses opt for responsible managerial practices that are integral to their overall corporate strategy. These strategic behaviours create opportunities for them to improve the well-being of stakeholders as they reduce negative externalities on the environment. The negative externalities can be eliminated by developing integrated approaches that are driven by ethical and sustainability principles. Very often, multinational businesses are in a position to mitigate risk and to avoid inconveniences to third parties. For instance, major accidents including BP’s Deep Horizon oil spill in 2010, or the collapse of Primark’s Rana Plaza factory in Bangladesh, back in 2013, could have been prevented if the big businesses were responsible beforehand.

In conclusion, the corporate sustainability and responsibility construct is about embedding sustainability and responsibility by seeking out and connecting with the stakeholders’ varied interests. As firms reap profits and grow, there is a possibility that they generate virtuous circlesof positive multiplier effects (Camilleri, 2017). Therefore, corporate sustainability and responsibility can be considered as strategic in its intents and purposes. Indeed, the businesses are capable of being socially and environmentally responsible ‘citizens’ as they are doing well, economically. This theoretical paper has contributed to academic knowledge as it explained the foundations for corporate sustainability and responsibility. Although this concept is still evolving, the debate among academic commentators is slowly but surely raising awareness on responsible managerial practices and on the skills and competences that are needed to deliver strategic results that create value for businesses, society and the environment.

Leave a comment

Filed under Corporate Social Responsibility, Corporate Sustainability and Responsibility, CSR, Marketing, Shared Value, Stakeholder Engagement, Sustainability

RESEARCH: The Small Business Owner-Managers’ Attitudes toward Digital Media

An Excerpt from my latest paper: Camilleri, M.A. (2018). The SMEs’ Technology Acceptance of Digital Media for Stakeholder Engagement. Journal of Small Business and Enterprise Development (Forthcoming).


small-businesses-social-media

This contribution sheds light on the SME owner-managers’ attitudes toward the pace of technological innovation, perceived use and ease of use of digital media; as they communicate and interact with interested stakeholders online. It also explored their stance on responsible entrepreneurship, specifically on commercial, ethical and social responsibilities, as well as on their willingness to support other responsible stakeholders.

This empirical study and its theoretical underpinnings contribute to an improved understanding as to why today’s SMEs are expected to communicate with stakeholders through digital media. At the same time, it raises awareness of responsible entrepreneurial initiatives that could be promoted through digital media, including; corporate websites, social media and blogs, among others.

Generally, the results reported that there were high mean scores and low standard deviations, particularly when the participants were expected to indicate their attitudes on their commercial and ethical responsibilities. The nature of the SMEs’ CSR activities is usually integrated into their company culture, often implicitly in habits and routines that are inspired by highly motivated owner-managers; rather than explicitly in job descriptions or formalized procedures (Jenkins, 2006). The factor analysis indicated that the SME owner-managers were increasingly perceiving the usefulness of digital media to engage with marketplace stakeholders, including; consumers, suppliers and other businesses, as they promoted their responsible entrepreneurship behaviors.

The communications on their businesses’ social responsibility and environmentally-sound practices also served them well to engage with other interested groups; including; human resources, shareholders and investors, among others. This finding mirrors Baumann Pauly et al.’s (2013) argumentation as these authors remarked that each business decision on economic, social, and environmental aspects must take into account all stakeholders. Notwithstanding, the businesses and their marketers need to possess relevant knowledge on their stakeholders, as this will impact on the effectiveness of their CSR communication (Morsing and Schultz, 2006; Vorvoreanu, 2009).

The value of their communications lies in their ability to open-up lines of dialogue through stories and ideas that reflect their stakeholders’ interests (Fieseler and Fleck, 2013; Moreno and Capriotti, 2009). For these reasons, companies cannot afford to overstate or misrepresent their CSR communications. Their online communication with stakeholders could foster positive behaviors or compel remedial actions, and will pay off in terms of corporate reputation, customer loyalty and market standing (Tantalo and Priem, 2016; Du et al, 2010).

This study suggests that the SME owner-managers were recognizing that they had to keep up with the pace of technological innovation. Yet there were a few participants, particularly the older ones, who were still apprehensive toward the use of digital media. Eventually, these respondents should realize that it is in their interest to forge relationships with key stakeholders (Lamberton and Stephen, 2016; Taiminen and Karjaluoto, 2015; Rauniar et al., 2014; Uhlaner et al., 2004). This research posits that the owner-managers or their members of staff should possess relevant digital skills and competences to communicate online with interested parties.

Likewise, Baumann Pauly et al., (2013) also recommended that the managers must be trained, and that their CSR activities must be evaluated. These findings are in line with other contributions (Spence and Perrini, 2011; Perrini et al., 2007) that have theoretically or anecdotally challenged the business case perspective for societal engagement (Penwar et al., 2017; Baden and Harwood 2013; Brammer et al. 2012).

The regression analysis has identified and analyzed the determinants which explain the rationale behind the SME owner-managers’ utilization of digital media for stakeholder engagement and for the promotion of responsible entrepreneurship. It reported that the respondents’ technology acceptance depended on their perceived “use” and “ease of use” of digital media; and on their willingness to communicate online on their commercial, ethical and social responsibilities.

The results from the regression analysis reported positive and significant relationships between the SMEs’ online stakeholder engagement and the pace of technological innovation; and between the SMEs’ online engagement and the owner-managers’ perceived usefulness of digital media. This study indicated that the pace of technological innovation, the owner-managers’ perceived ease of use of the digital media, as well as their commercial responsibility were significant antecedents for their businesses’ online communication of their responsible behaviors. Arguably, the use of technology is facilitated when individuals will perceive its usefulness and its ease of use (Davis, 1989).

In fact, the findings from this research have specified that the owner-managers’ intention was to use digital media to communicate about their responsible entrepreneurship. They also indicated their desire to use this innovation to engage with stakeholders on other topics, including commercial and ethical issues. This is in stark contrast with Penwar et al.’s (2017) findings, as the authors contended that the SME owner-managers’ perceptions on social engagement did not hold the same virility when compared to the context of their larger counterparts. These authors argued that the tangible benefits of CSR engagement had no effect on SMEs. In a similar vein, Baumann Pauly et al.’s (2013) study reported that the larger businesses were more effective than SMEs in their CSR communications.

However, the findings from this study’s second, third and fourth regression
equations indicated that the small and micro businesses were using digital media to improve their stakeholder engagement and to communicate about their responsible entrepreneurship issues.

Implications and Conclusions

SME managers and executives are in a position to enhance the effectiveness of their businesses’ communication efforts. This study has identified and analyzed the SME owner-managers’ attitudes toward the utilization of digital media for the communication of commercial, ethical and social responsibility issues.

Previous academic research has paid limited attention to the technology acceptance of digital media among small businesses, albeit a few exceptions (Taiminen and Karjaluoto, 2015; Baumann Pauly, Wickert, Spence and Scherer, 2013; Durkin et al., 2013; Taylor and Murphy, 2004). In this case, the research findings indicated that digital technologies and applications were perceived as useful by the SME owner-managers. This implies that the utilization of digital media can be viewed as a critical success factor that may lead to an improved engagement with stakeholders.

Several SMEs are already communicating about their responsible entrepreneurship through conventional and interactive media, including; social media, review sites, blogs, et cetera. These savvy businesses are leveraging their communications as they utilize digital media outlets (e.g., The Guardian Sustainability Blog, CSRwire, Triple Pundit and The CSR Blog in Forbes among others) to improve their reach, frequency and impact of their message.

In addition, there are instances where consumers themselves, out of their own volition are becoming ambassadors of trustworthy businesses on digital media (Du et al., 2010). Whilst other stakeholders may perceive these businesses’ posturing behaviors and greenwashing (Camilleri, 2017; Vorvoreanu, 2009).

A thorough literature review suggested that the positive word-of-mouth publicity through digital media may lead to strategic and financial benefits (Camilleri, 2017; Taiminen and Karjaluoto, 2015; Durkin et al., 2013). Therefore, businesses, including SMEs, are increasingly joining conversations in social media networks and online review sites. These sites are being used by millions of users every day. Indeed, there is potential for SMEs to engage with their prospects and web visitors in real-time.

Leave a comment

Filed under Business, Corporate Social Responsibility, digital media, Marketing, Small Business, SMEs, Stakeholder Engagement

The Corporations’ Non-Financial Disclosures

susty.png

The American Institute of Certified Public Accountants’ Jenkins Report may be considered as one of the major documents that has provided the foundations for non-financial disclosures. Notwithstanding, there were other guidelines that were developed by other non-governmental organizations (NGOs), including; the Global Reporting Initiative, AccountAbility, Accounting for Sustainability (A4S), the World Intellectual Capital Initiative (WICI), the Enhanced Business Reporting Consortium, the CDP (formerly known as the Carbon Disclosure Project), the International Corporate Governance Network, the Sustainability Reporting Standards Board and the Climate Disclosure Standards Board, among others. The International Standards Organization (ISO), Forest Stewardship Council (FSC), Greenpeace, Rainforest Alliance and Home Depot Certifiable, Fair Trade and the US Department of Agriculture’s USDA Organic Labelling, among others, have formulated uncertifiable, multi-stakeholder standards and instruments to support organizations in their CSR communication. In addition, certain listed corporations are adopting Fortune’s reputation index, the KLD Social index or RepTrak (Camilleri, 2017). Such measures require corporate executives to assess the extent to which their organization behaves responsibly towards the environment and the community. Despite the development of these guiding principles and indices, their appropriateness remains doubtful (Camilleri, 2015).

In 2010, the development of ISO 26000 had represented a significant milestone in integrating socially and environmentally responsible behaviors into management processes. ISO 26000 was developed through a participatory multi-stakeholder process as the International Labor Organization (ILO) had established a Memorandum of Understanding (MoU) to ensure that ISO’s social responsibility standard is consistent with its own labor standards. In fact, ISO 26000’s core subject on ‘Labor Practices’ is based on ILOs’ conventions on labor practices, including; Human Resources Development Convention, Occupational Health and Safety Guidelines, Forced Labor Convention, Freedom of Association, Minimum Wage Fixing Recommendation and the Worst Forms of Child Labor Recommendation, among others. Moreover, ISO’s core subject on ‘human rights’ is based on the Universal Declaration of Human Rights (that was adopted by the UN General Assembly in 1948). On the other hand, many academic commentators argue that ISO 26000 has never been considered as a management standard (Camilleri, 2017). The certification requirements have not been incorporated into ISO 26000’s development and reinforcement process, unlike other standards, including ISO 9000 and ISO 14001. Notwithstanding, ISO 14001 belongs to a larger set of ISO 14000 certifications that conform with the European Union’s Eco-Management and Audit Scheme (EMAS).

The European Union (EU) has developed its non-binding guidelines for the non-financial disclosures of large, public-interest entities that engage more than 500 employees (Stubbs and Higgins, 2015; EU, 2014). The European Parliament mandated Directive 2014/95/EU on non-financial reporting; that was subsequently ratified by the European member states. Therefore, large undertakings are expected to disclose material information on their ESG behaviors. These entities are required to explain any deviations from their directive’s recommendations in their annual declaration of conformity, as per the EU’s “Comply or Explain” principle (Camilleri, 2015; EU, 2014). Their non-financial disclosures include topics, such as; social dialogue with stakeholders, information and consultation rights, trade union rights, health and safety and gender equality, among other issues. Moreover, the organizations’ environmental reporting could cover; material disclosures on energy efficiencies, the monitoring of efficiency levels their energy generation capacities, assessments on the co-generation of heating facilities, the use of renewable energy, greenhouse gas emissions, water and air pollution prevention and control from the production and processing of metals, mineral industry, chemical industry, waste management, livestock farming, etc. (Camilleri, 2015). Therefore, large undertakings are expected to bear responsibility for the prevention and reduction of pollution. The EU recommends that the large organizations implement ILO’s Tri-partite Declaration of Principles on Multinational Enterprises and Social Policy, as well as other conventions that promote the fair working conditions of employees. It also makes reference to the OECD Guidelines for Multinational Enterprises, the 10 principles of the UN Global Compact, the UN Guiding Principles on Business and Human Rights, and mentions ISO 26000 Guidance Standard on Social Responsibility (EU, 2014). Following, the EU’s mandate for non-financial reporting, it is expected that 6,000 European public interest entities will be publishing their sustainability reports in 2018, covering financial year 2017-2018 (GRI, 2017).

 


Additional Reading:

Camilleri, M.A (2015). Environmental, Social and Governance Disclosures in Europe. Sustainability Accounting, Management and Policy Journal. 6 (2), 224 – 242. Emerald.  http://www.emeraldinsight.com/doi/abs/10.1108/SAMPJ-10-2014-0065 Download this paper

Camilleri, M.A. (2015). Valuing Stakeholder Engagement and Sustainability Reporting. Corporate Reputation Review, 18 (3), 210-222. Palgrave Macmillan DOI:10.1057/crr.2015.9 http://www.palgrave-journals.com/crr/journal/v18/n3/full/crr20159a.html Download this paper

Camilleri, M.A. (2017). Measuring the corporate managers’ attitudes toward ISO’s social responsibility standard. Total Quality Management & Business Excellence. (forthcoming). http://dx.doi.org/10.1080/14783363.2017.1413344 http://www.tandfonline.com/doi/full/10.1080/14783363.2017.1413344 Download this paper

Camilleri, M.A. (2017). Corporate Sustainability, Social Responsibility and Environmental Management: An Introduction to Theory and Practice with Case Studies. Springer, Heidelberg, Germany. ISBN 978-3-319-46849-5 http://www.springer.com/us/book/9783319468488

CSRWire (2015). Environmental, Social and Governance Reporting in Europe. http://www.csrwire.com/blog/posts/1574-environmental-social-and-governance-disclosures-in-europe

 

 

Leave a comment

Filed under Corporate Governance, Corporate Social Responsibility, CSR, ESG Reporting, Integrated Reporting, Marketing, Socially Responsible Investment, SRI, Stakeholder Engagement, Sustainability, sustainable development

Closing the loop for resource efficiency, sustainable consumption and production: a critical review of the circular economy

Abstract: The circular economy proposition is not a novel concept. However, it has recently stimulated sustainable consumption and production ideas on remanufacturing, refurbishing and recycling of materials. A thorough literature review suggests that the circular economys regenerative systems are intended to minimise industrial waste, emissions, and energy leakages through the creation of long-lasting designs that improve resource efficiencies. In this light, this research critically analyses the circular economys closed loop systems. The findings suggest that this sustainable development model could unleash a new wave of operational improvements and enhanced productivity levels through waste management and the responsible use and reuse of materials in business and industry. In conclusion, this research implies that closed loop and product service systems could result in significant efficiencies in sustainable consumption and production of resources

How to Cite: Camilleri, M.A. (2018). Closing the Loop for Resource Efficiency, Sustainable Consumption and Production: A Critical Review of the Circular Economy. International Journal of Sustainable Development (forthcoming). DOI: 10.1504/IJSD.2018.10012310

Keywords: circular economy; resource efficiency; corporate sustainability; creating shared value; corporate social responsibility; strategic CSR; stakeholder engagement; social responsibility; recycling resources; reusing resources; restoring resources; reducing resources.

Leave a comment

Filed under Circular Economy, Corporate Social Responsibility, Corporate Sustainability and Responsibility, Shared Value, Sustainability, sustainable development

An Authoritative Textbook on Responsible Management for Business Students

Springer Nature’s “Corporate Sustainability, Social Responsibility and Environmental Management” was one of the top 25% most downloaded eBooks in 2017.

This book can be ordered/downloaded directly from its home pa ge.Alternatively,  it is available in the following online shop(s):


This publication provides a concise and authoritative guide on corporate social responsibility (CSR) and related paradigms, including environmental responsibility, corporate sustainability and responsibility, creating shared value, strategic CSR, stakeholder engagement, corporate citizenship, business ethics and corporate governance, among others. It is primarily intended for advanced undergraduate and / or graduate students. Moreover, it is highly relevant for future entrepreneurs, small business owners, non-profit organisations and charitable foundations, as it addresses the core aspects of contemporary strategies, public policies and practices. It also features case studies on international policies and principles, exploring corporate businesses’ environmental, social and governance reporting.

“Mark Camilleri’s new book provides an excellent overview of the eclectic academic literature in this area, and presents a lucid description of how savvy companies can embed themselves in circular systems that reduce system-wide externalities, increase economic value, and build reputation. A valuable contribution.”
Charles J. Fombrun, Founder of Reputation Institute and a former Professor of Management at New York University and The Wharton School, University of Pennsylvania, USA

“I am pleased to recommend Dr. Camilleri’s latest book, Corporate Sustainability, Social Responsibility, and Environmental Management. The book is a rich source of thought for everyone who wants to get deeper insights into this important topic. The accompanying five detailed case studies on a wide array of corporate sustainable and responsible initiatives are helpful in demonstrating how theoretical frameworks have been implemented into practical initiatives. This book is a critical companion for academics, students, and practitioners.”
Adam Lindgreen, Professor and Head of Department of Marketing, Copenhagen Business School, Denmark

“This book is an essential resource for students, practitioners, and scholars. Dr. Mark Camilleri skillfully delivers a robust summary of research on the business and society relationship and insightfully points to new understandings of and opportunities for responsible business conduct. I highly recommend Corporate Sustainability, Social Responsibility, and Environmental Management: An Introduction to Theory and Practice with Case Studies.”
Diane L. Swanson, Professor and Chair of Distinction in Business Administration and Ethics Education at Kansas State University, KS, USA

“Mark’s latest book is lucid, insightful, and highly useful in the classroom. I strongly recommend it.”
Donald Siegel, Dean of the School of Business and Professor of Management at the University at Albany, State University of New York, NY, USA

“The theory and practice of corporate sustainability, social responsibility and environmental management is complex and dynamic. This book will help scholars to navigate through the maze. Dr Camilleri builds on the foundations of leading academics, and shows how the subject continues to evolve. The book also acknowledges the importance of CSR 2.0 – or transformative corporate sustainability and responsibility – as a necessary vision of the future.”
Wayne Visser, Senior Associate at Cambridge University, UK. He is the author of CSR 2.0: Transforming Corporate Sustainability & Responsibility and Sustainable Frontiers: Unlocking Change Through Business, Leadership and Innovation

“Corporate Sustainability, Social Responsibility and Environmental Management: An Introduction to Theory and Practice with Case Studies” provides a useful theoretical and practical overview of CSR and the importance of practicing corporate sustainability.”
Geoffrey P. Lantos, Professor of Business Administration, Stonehill College. Easton, Massachusetts, USA

“This book offers a truly comprehensive guide to current concepts and debates in the area of corporate responsibility and sustainability. It gives helpful guidance to all those committed to mainstreaming responsible business practices in an academically reflected, yet practically relevant, way.”
Andreas Rasche, Professor of Business in Society, Copenhagen Business School, Denmark

“A very useful resource with helpful insights and supported by an enriching set of case studies.”
Albert Caruana, Professor of Marketing at the University of Malta, Malta and at the University of Bologna, Italy

“A good overview of the latest thinking about Corporate Social Responsibility and Sustainable Management based on a sound literature review as well as useful case studies. Another step forward in establishing a new business paradigm.”
René Schmidpeter, Professor of International Business Ethics and CSR at Cologne Business School (CBS), Germany

“Dr. Camilleri’s book is a testimony to the continuous need around the inquiry and advocacy of the kind of responsibility that firms have towards societal tenets. Understanding how CSR can become a modern manifestation of deep engagement into socio-economic undercurrents of our firms, is the book’s leading contribution to an important debate, that is more relevant today than ever before.”
Mark Esposito, Professor of Business and Economics at Harvard University, MA, USA

“Mark’s book is a great addition to the literature on CSR and EM; it will fill one of the gaps that have continued to exist in business and management schools, since there are insufficient cases for teaching and learning in CSR and Environmental Management in Business Schools around the globe.”
Samuel O. Idowu, Senior Lecturer in Accounting at London Metropolitan University, UK; Professor of CSR at Nanjing University of Finance and Economics, China and a Deputy CEO, Global Corporate Governance Institute, USA

“Corporate Social Responsibility has grown from ‘nice to have’ for big companies to a necessity for all companies. Dr Mark Camilleri sketches with this excellent book the current debate in CSR and CSR communication and with his cases adds valuable insights in the ongoing development and institutionalization of CSR in nowadays business.”
Wim J.L. Elving, Professor at the University of Amsterdam, Netherlands

Leave a comment

Filed under Circular Economy, Corporate Governance, Corporate Social Responsibility, Corporate Sustainability and Responsibility, CSR, ESG Reporting, Impact Investing, Integrated Reporting, Shared Value, Social Cohesion, Socially Responsible Investment, SRI, Stakeholder Engagement, sustainable development

The Integrated Reporting of Financial, Social and Sustainability Capitals

An excerpt from my latest paper, entitled, “The Integrated Reporting of Financial, Social and Sustainability Capitals: A Critical Review and Appraisal” that will be published by the International Journal of Sustainable Society (this journal is indexed in Scopus).

 

A thorough literature review suggests that the integrated report is more than just a summary of financial, social, sustainability and governance information in corporate disclosures (Adams, 2015). The integrated disclosures constitute a full picture of a company’s overall business performance. Organisations are looking at all aspects of their value-creating capitals, including; financial; manufactured; intellectual; human; social (and relationship); as well as natural capitals (IR, 2013). These capitals complement and compete against each other. Therefore, the practitioners who would like to comply with IIRC’s <IR> framework will probably experience a dynamic process of adaptation, learning and action to redesign their disclosures. They may have to change their internal management systems, processes and strategies to incorporate ESG issues into their core business model (Camilleri, 2015b, Adams, 2015, Churet & Eccles, 2014; Eccles & Krzus, 2010).

Relevant academic literature has yielded many recommendations, ideas and concepts that have surely improved corporate reporting (Crowther, 2016). This contribution also reported how “integrated thinking” in corporate reporting involves the inclusion of material information on financial and non-financial matters (Adams & Simnett, 2011). Moreover, it linked the organisations’ integrated reporting with the conceptual developments that were conspicuous in the stewardship, institutional and legitimacy theories, among others. This paper has indicated that these theoretical insights have focused on the rationale for the inclusion of non-financial information in corporate disclosures (Adams et al., 2016; Eccles & Krzus, 2010). Although, there are reasonable arguments in favour and against integrated reporting; in sum, the researcher believes that the IIRC’s framework has proved to be a useful instrument for those responsible organisations who are communicating about their financial and non-financial capitals (IIRC, 2017). The framework contains guiding principles and content elements that will enable organisations to disclose a true and fair view of their holistic activities. Conversely, the avoidance of ESG disclosures from their corporate reports can result in a highly-distorted picture of current and future business activities (Camilleri, 2017).

This research has evidenced how the theoretical insights from academic literature have led to the development of integrated reporting. It explained that the organisations’ stewardship behaviours, including their ‘integrated thinking’ can help them improve their legitimacy among stakeholders and institutions. The researcher contended that IIRC’s <IR> framework supports organisations in their holistic reporting approaches as it takes into account material information on financial, manufactured, intellectual, human, social and natural capitals.

Indeed, the IIRC’s <IR> framework was a recent development in corporate reporting. This framework has its inherent limitations that were duly pointed out in this paper. However, this contribution maintains that integrated reporting provides a road map for those organisations who would like to pursue the sustainability path (Dacin et al., 2007). The framework is based on the general notion that integrated accounting considers both financial and non-financial information to give a true and fair view of the company’s overall business performance. When practitioners embed ESG disclosures and “integrated thinking” they help to catalyse positive behavioural change within their respective organisation (Adams & Simnett, 2011). This integrated thinking influences the practitioners’ ethical behaviours and their stance on financial and non-financial performance (Camilleri, 2015b). The researcher believes that the framework’s strategic focus calls for both internalisation and externalisation processes. Internalisation is a process through which the organisation’s human resources adopt the framework’s external ideas, opinions, views or concepts, as their own. This process starts with learning about the reporting framework, and why its development makes sense to the organisation, as a whole. The internal stakeholders will probably experience a process of adaptation until they finally accept that their organisation’s integrated reporting of financial and non-financial capitals creates value over time. Thus, the internalisation process can be understood as a process of acceptance of a new set of norms and working practices that will improve the organisation’s performance, in the long term.

The organisations’ internal transformation may lead to significant changes in terms of the embeddedness of ESG performance in their operational processes. The non-financial disclosures will shed light on the externalities that affect stakeholders and other unrelated parties. In other words, through integrated reporting; the internal effects of integrated reporting are finally externalised outside the organisations’ boundaries. At times, organisations may intentionally or unintentionally conceal ESG information from stakeholders. Certain unethical practices may result from conscious or unconscious organisational behaviours or simply from misconduct when dealing with extensive information outputs.

In conclusion, this contribution suggests that the <IR> framework is a step in the right direction as integrated reporting leads to the re-evaluation of the organisations’ legitimacy (Beck et al., 2015; Dacin et al., 2007; Brown & Deegan, 1998). Hence, IIRC’s framework encourages organisations to report both positive and negative behaviours that substantively affect their ability to create value over the short, medium and long term. Practitioners are also expected to provide an adequate and sufficient context about their strategy, governance and prospects in a balanced way (Camilleri, 2017).

 

References

Adams, C. A. & Larrinaga-González, C. (2007). Engaging with organisations in pursuit of improved sustainability accounting and performance. Accounting, Auditing & Accountability Journal, 20(3), 333-355.

Adams, C. A. & Frost, G. R. (2008). Integrating sustainability reporting into management practices. Accounting Forum. 32, (4), 288-302.

Adams, S., & Simnett, R. (2011). Integrated Reporting: An opportunity for Australia’s not‐for‐profit sector. Australian Accounting Review, 21(3), 292-301.

Adams, C. A. (2015). The international integrated reporting council: a call to action. Critical Perspectives on Accounting, 27, 23-28.

Adams CA, Potter B, Singh PJ and York J (2016). Exploring the implications of integrated reporting for social investment (disclosures) British Accounting Review, 48(3), 283-296.

Beck, C., Dumay, J., & Frost, G. (2015). In pursuit of a ‘single source of truth’: from threatened legitimacy to integrated reporting. Journal of Business Ethics, 1-15.

Bhimani, A., & Langfield-Smith, K. (2007). Structure, formality and the importance of financial and non-financial information in strategy development and implementation. Management Accounting Research, 18(1), 3-31.

Brammer, S., Jackson, G., & Matten, D. (2012). Corporate social responsibility and institutional theory: New perspectives on private governance. Socio-economic review, 10(1), 3-28.

Brown, N., & Deegan, C. (1998). The public disclosure of environmental performance information—a dual test of media agenda setting theory and legitimacy theory. Accounting and business research, 29(1), 21-41.

Brown, J., & Dillard, J. (2014). Integrated reporting: On the need for broadening out and opening up. Accounting, Auditing & Accountability Journal, 27(7), 1120-1156.

Burritt, R. L., & Schaltegger, S. (2010). Sustainability accounting and reporting: fad or trend?. Accounting, Auditing & Accountability Journal, 23(7), 829-846.

Camilleri, M. A. (2015a). Valuing stakeholder engagement and sustainability reporting. Corporate Reputation Review, 18(3), 210-222.

Camilleri, M. A. (2015b). Environmental, social and governance disclosures in Europe. Sustainability Accounting, Management and Policy Journal, 6(2), 224-242.

Camilleri, M. A. (2017). Corporate sustainability, social responsibility and environmental management: an introduction to theory and practice with case studies. Springer, Heidelberg, Germany.

Camodeca, R., & Almici, A. (2017). Implementing Integrated Reporting: Case Studies from the Italian Listed Companies. Accounting and Finance Research, 6(2), 121-135.

Campbell, D., & Cornelia Beck, A. (2004). Answering allegations: The use of the corporate website for restorative ethical and social disclosure. Business Ethics: A European Review, 13(2‐3), 100-116.

Cheng, M., Green, W., Conradie, P., Konishi, N., & Romi, A. (2014). The international integrated reporting framework: key issues and future research opportunities. Journal of International Financial Management & Accounting, 25(1), 90-119.

Churet, C., & Eccles, R. G. (2014). Integrated reporting, quality of management, and financial performance. Journal of Applied Corporate Finance, 26(1), 56-64.

Crowther, D. (2016). A social critique of corporate reporting: Semiotics and web-based integrated reporting. Routledge. Abington, Oxford, UK.

Dacin, M. T. (1997). Isomorphism in context: The power and prescription of institutional norms. Academy of management journal, 40(1), 46-81.

Dacin, M. T., Oliver, C., & Roy, J. P. (2007). The legitimacy of strategic alliances: An institutional perspective. Strategic Management Journal, 28(2), 169-187.

Davis, J. H., Schoorman, F. D., & Donaldson, L. (1997). Toward a stewardship theory of management. Academy of Management review, 22(1), 20-47.

Deegan, C. (2002). Introduction: The legitimising effect of social and environmental disclosures–a theoretical foundation. Accounting, Auditing & Accountability Journal, 15(3), 282-311.

Deegan, C 2007, ‘Organisational legitimacy as a motive for sustainability reporting’ in J. Unerman, J. Bebbington, B. O’Dwyer (ed.) Sustainability accounting and accountability, Routledge, London, United Kingdom, pp. 127-149.

Deephouse, D. L. (1996). Does isomorphism legitimate?. Academy of management journal, 39(4), 1024-1039.

de Villiers, C., Rinaldi, L., & Unerman, J. (2014). Integrated Reporting: Insights, gaps and an agenda for future research. Accounting, Auditing & Accountability Journal, 27(7), 1042-1067.

DiMaggio, P. J., & Powell, W. W. (Eds.). (1991). The new institutionalism in organizational analysis (Vol. 17). Chicago, IL: University of Chicago Press.

Donaldson, L., & Davis, J. H. (1991). Stewardship theory or agency theory: CEO governance and shareholder returns. Australian Journal of management, 16(1), 49-64.

Dumay, J., Bernardi, C., Guthrie, J., & Demartini, P. (2016). Integrated reporting: a structured literature review. In Accounting Forum. 40(3), 166-185.

Eccles, R. G., & Krzus, M. P. (2010). One report: Integrated reporting for a sustainable strategy. John Wiley & Sons, Hoboken, New Jersey, USA.

Eccles, R. G., Serafeim, G. & Krzus, M. P. (2011). Market interest in nonfinancial information. Journal of Applied Corporate Finance, 23(4), 113-127.

Eisenhardt, K. M. (1988). Agency-and institutional-theory explanations: The case of retail sales compensation. Academy of Management journal, 31(3), 488-511.

Eisenhardt, K. M. (1989). Agency theory: An assessment and review. Academy of management review, 14(1), 57-74.

Erlingsdóttir, G. & Lindberg, K. (2005). Isomorphism, Isopraxism and Isonymism-Complementary or Competing Processes? (No. 2005/4). http://www.lri.lu.se/pdf/wp/2005-4.pdf (accessed 19 April, 2017).

EU (2014). Non-financial reporting. http://ec.europa.eu/internal_market/accounting/non-financial_reporting/index_en.htm (accessed 15 November 2015).

EU (2015). Implementing the UN Guiding Principles on Business and Human Rights – State of Play. Commission Staff Working Document SWD(2015)144 final.. European Commission, Brussels, Belgium. http://ec.europa.eu/DocsRoom/documents/11621/attachments/1/translations/ (accessed 15 November 2015).

EU (2017) Corporate Social Responsibility. European Commission, Internal Market, Industry, Entrepreneurship and SMEs. Brussels, Belgium.

http://ec.europa.eu/growth/industry/corporate-social-responsibility_en (accessed 15 November 2015).

Fernandez-Feijoo, B., Romero, S., & Ruiz, S. (2014). Effect of stakeholders’ pressure on transparency of sustainability reports within the GRI framework. Journal of Business Ethics, 122(1), 53-63.

Flower, J. (2015). The international integrated reporting council: a story of failure. Critical Perspectives on Accounting, 27, 1-17.

Hahn, R., & Lülfs, R. (2014). Legitimizing negative aspects in GRI-oriented sustainability reporting: A qualitative analysis of corporate disclosure strategies. Journal of Business Ethics, 123(3), 401-420.

Harding, T. (2012). How to establish a study association: Isomorphic pressures on new CSOs entering a neo-corporative adult education field in Sweden. Voluntas: International Journal of Voluntary and Nonprofit Organizations, 23(1), 182-203.

Hedberg, C. J. & Von Malmborg, F. (2003). The global reporting initiative and corporate sustainability reporting in Swedish companies. Corporate social responsibility and environmental management, 10(3), 153-164.

Higgins, C., Stubbs, W., & Love, T. (2014). Walking the talk (s): Organisational narratives of integrated reporting. Accounting, Auditing & Accountability Journal, 27(7), 1090-1119.

Hopwood, A. G. (2009). Accounting and the environment. Accounting, Organizations and Society, 34(3), 433-439.

Idowu, S. O., Capaldi, N. & Zu, L. (2013). Encyclopedia of corporate social responsibility. Springer, Heidelberg, Germany.

Ioannou, I. & Serafeim, G. (2012). What drives corporate social performance? The role of nation-level institutions. Journal of International Business Studies, 43(9), 834-864.

Ioannou, I. & Serafeim, G. (2016). The consequences of mandatory corporate sustainability reporting: evidence from four countries. Harvard Business School Research Working Paper No. 11-100 https://papers.ssrn.com/soL3/papers.cfm?abstract_id=1799589 (accessed 14 April, 2017

IR (2013). International IR Framework, International Integrated Reporting Council. available at: http://integratedreporting.org/wp-content/uploads/2013/12/13-12-08-THE-INTERNATIONAL-IR-FRAMEWORK-2-1.pdf (accessed 16 May, 2017).

IR (2017). Integrated Reporting. International Integrated Reporting Council https://integratedreporting.org/the-iirc-2/ (accessed 19 May, 2017).

Lozano, R. & Huisingh, D. (2011). Inter-linking issues and dimensions in sustainability reporting. Journal of Cleaner Production, 19(2), 99-107.

Maniora, J. (2015). Is integrated reporting really the superior mechanism for the integration of ethics into the core business model? An empirical analysis. Journal of Business Ethics, 140(4), 755-786.

Maniora, J. (2017). Is integrated reporting really the superior mechanism for the integration of ethics into the core business model? An empirical analysis. Journal of Business Ethics, 140(4), 755-786.

Meyer, J. W., Boli, J., Thomas, G. M. & Ramirez, F. O. (1997). World society and the nation-state. American Journal of sociology, 103(1), 144-181.

Muth, M. & Donaldson, L. (1998). Stewardship theory and board structure: A contingency approach. Corporate Governance: An International Review, 6(1), 5-28.

Ness, K. E. & Mirza, A. M. (1991). Corporate social disclosure: A note on a test of agency theory. The British Accounting Review, 23(3), 211-217.

Neu, D., Warsame, H. & Pedwell, K. (1998). Managing public impressions: environmental disclosures in annual reports. Account. Org. Soc., 23, 265–282

O’Dwyer, B. (2003). Conceptions of corporate social responsibility: the nature of managerial capture. Accounting, Auditing & Accountability Journal, 16(4), 523-557.

Parent, M. M. & Deephouse, D. L. (2007). A case study of stakeholder identification and prioritization by managers. Journal of Business Ethics, 75(1), 1-23.

Perego, P., Kennedy, S., & Whiteman, G. (2016). A lot of icing but little cake? Taking integrated reporting forward. Journal of Cleaner Production, 136, 53-64.

Rensburg, R. & Botha, E. (2014). Is integrated reporting the silver bullet of financial communication? A stakeholder perspective from South Africa. Public Relations Review, 40, 44-152. https://doi.org/10.1016/j.pubrev.2013.11.016

Scott, W. R. (1995). Institutions and organizations (Vol. 2). Thousand Oaks, CA: Sage.

Simnett, R., & Huggins, A. L. (2015). Integrated reporting and assurance: where can research add value?. Sustainability Accounting, Management and Policy Journal, 6(1), 29-53.

Stacchezzini, R., Melloni, G. & Lai, A. (2016). Sustainability management and reporting: the role of integrated reporting for communicating corporate sustainability management. Journal of Cleaner Production, 136, 102-110.

Stubbs, W. & Higgins, C. (2014). Integrated reporting and internal mechanisms of change. Accounting, Auditing & Accountability Journal, 27(7), 1068-1089.

Suchman, M. C. (1995). Managing legitimacy: Strategic and institutional approaches. Academy of management review, 20(3), 571-610.

Thomson, I. (2015). But does sustainability need capitalism or an integrated report: S commentary on ‘The International Integrated Reporting Council: A story of failure’ by Flower. Critical Perspectives on Accounting, 27, 18-22. https://doi.org/10.1016/j.cpa.2014.07.003

Trevino, L. K. (1986). Ethical decision making in organizations: A person-situation interactionist model. Academy of management Review, 11(3), 601-617.

Leave a comment

Filed under Corporate Governance, Corporate Social Responsibility, Corporate Sustainability and Responsibility, CSR, ESG Reporting, Integrated Reporting