Tag Archives: stakeholder engagement

April 18, 2015 · 2:52 pm

Environmental, Social and Governance Disclosures in Europe

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

 

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

 

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

 

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

 

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

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

 

References

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Albareda, L., Lozano, J. M., Tencati, A., Midttun, A., & Perrini, F. (2008). The changing role of governments in corporate social responsibility: drivers and responses. Business Ethics: A European Review, 17(4), 347-363.

ASB (2006). Reporting Statement: Operating and Financial Review. https://www.frc.org.uk/Our-Work/Publications/ASB/Reporting-Statement-Operating-and-Financial-Review-File.pdf Accessed 30th August, 2014.

Bansal, P., Jiang, G. F., & Jung, J. C. (2014). Managing responsibly in tough economic times: strategic and tactical CSR during the 2008–2009 global recession. Long Range Planning.

BSR (2012). Trends in ESG Integration In Investments https://www.bsr.org/reports/BSR_Trends_in_ESG_Integration.pdf Accessed on the 20th September 2014.

Camilleri, M.A. (2015). Valuing Stakeholder Engagement and Sustainability Reporting. Corporate Reputation Review (18) 2.

Carroll, A.B. (1991). The Pyramid of Corporate Social Responsibility: Toward the Moral Management of Organizational Stakeholders. Business Horizons 34 (4) 39-48.CBS (2013)
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Clark, G.L. & Knight, E.R. (2008). Implications of the UK Companies Act 2006 for institutional investors and the market for corporate social responsibility. Journal of International Law, 11, 259.

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Companies Act (2013) The Companies Act 2006 (Strategic Report and Directors’ Report) Regulations 2013 No. 1970
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Copenhagen Business School Public policy on CSR reporting: Danish experiences and other observations.https://www.globalreporting.org/SiteCollectionDocuments/Global-Conference-2013/slides/GRI-Academic-Public-Policy-TRJ-23May2013.pdf accessed on the 5th February, 2015.

Correa, C., & Larrinaga, C. (2015). Engagement research in social and environmental accounting. Sustainability Accounting, Management and Policy Journal, 6(1).

CSR Compass (2014). Responsible supply chain management.
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Danish Business Authority, Copenhagen. http://www.ohchr.org/Documents/Issues/Business/NationalPlans/Denmark_NationalPlanBHR.pdf Accessed 30th September 2014.

DCCA (2010). Corporate Social Responsibility and Reporting in Denmark. Danish Commerce and Companies Agency.
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DCGC (2014). Dutch Corporate Governance Code: Principles of good corporate governance and best practice provisions.
http://commissiecorporategovernance.nl/download/?id=606 Accessed on the 2nd October, 2014.

DECC (2014). UK National Energy Efficiency Action Plan. Department of Energy and Climate Change.
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ECCJ (2014). Assessment of the EU Directive on the disclosure of non-financial information by certain large companies. http://business-humanrights.org/sites/default/files/media/documents/eccj-assessment-eu-non-financial-reporting-may-2104.pdf Accesses on the 3rd January 2015.

EU (2002). Corporate Social Responsibility: A business contribution to Sustainable Development. COM(2002) 347 final. Commission of the European Communities, Brussels.

EU (2008). National Public Policies in the European Union. ec.europa.eu/social/BlobServlet?docId=6716&langId=en accessed on the 10th February 2014

EU (2011). A renewed EU strategy 2011-14 for Corporate Social Responsibility.
http://ec.europa.eu/enterprise/newsroom/cf/_getdocument.cfm?doc_id=701 Accessed 3rd February 2014.

EU (2012a). Sustainable and responsible business European Expert Group on corporate social responsibility (CSR) and SMEs.
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EU (2012b). Energy Efficient Directive. http://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX:32012L0027 Accessed on the 5th January 2015.

EU (2014a). Sustainable Development. http://ec.europa.eu/environment/eussd/
Accessed 14th June 2014.

EU (2014b). Non-Financial Reporting.
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EU (2014c). European Pollutant Release and Transfer Register (PRTR). http://europa.eu/legislation_summaries/environment/general_provisions/l28149_en.htm Accessed 29th August, 2014.

EU ETS (2014). EU Emission Trading Scheme. http://ec.europa.eu/clima/policies/ets/index_en.htm Accessed on the 10th January 2015.
Eurofound (2003). Towards a sustainable corporate social responsibility. European Foundation for the improvement of Living and Working Conditions. Office for Official Publications of the European Communities, Luxembourg.

FRC (2012). The UK Corporate Governance Code. Financial Reporting Council. https://www.frc.org.uk/Our-Work/Publications/Corporate-Governance/UK-Corporate-Governance-Code-September-2012.aspx Accessed 3rd October, 2014.

Gov.UK, “The UK is the first country to make it compulsory for companies to include emissions data for their entire organisation in their annual reports,” June 20, 2012, https://www.gov.uk/government/news/leading-businesses-to-disclose-greenhouse-gas-emissions.

Hąbek, P. & Wolniak, R. (2013). European Union regulatory requirements relating to Sustainability Reporting: The case of Sweden. Scientific Journals Maritime University of Szczecin, Zeszyty Naukowe Akademia Morska w Szczecinie.

Hartmann, F., Perego, P., & Young, A. (2013). Carbon Accounting: Challenges for Research in Management Control and Performance Measurement. Abacus, 49(4), 539-563.

Ioannou, I. & Serafeim, G. (2014). The consequences of mandatory corporate sustainability reporting. Harvard Business School Research Working Paper 11-100.

IPPC (2013) Integrated pollution prevention and control (until 2013).http://europa.eu/legislation_summaries/environment/waste_management/l28045_en.htm Accessed on the 10th January 2015.
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Kessler, A. & Cuerpo, C. (2011). Macroeconomic Impact of the Sustainable Economy Law. Documentos de Trabajo, 03.

Knopf, J., Kahlenborn, W., Hajduk, T., Weiss, D., Feil, M., Fiedler, R. & Klein, J. (2010). Corporate Social Responsibility National Public Policies in the European Union. EU Commission, Brussels.

Kolk, A., Levy, D., & Pinkse, J. (2008). Corporate responses in an emerging climate regime: the institutionalization and commensuration of carbon disclosure. European Accounting Review, 17(4), 719-745.

Kotler, P. (2011). Reinventing marketing to manage the environmental imperative. Journal of Marketing, 75(4), 132-135.

KPMG (2010). Carrots and Sticks – Promoting Transparency and Sustainability. An update on trends in Voluntary and Mandatory Approaches to Sustainability Reporting.

KPMG in collaboration with United Nations Environment Programme and Global Reporting Initiative in Africa. https://www.globalreporting.org/resourcelibrary/Carrots-And-Sticks-Promoting-Transparency-And-Sustainbability.pdf Accessed 01st October, 2014.

Lund-Thomsen, P. & Lindgreen, A. (2013). Corporate Social Responsibility in Global Value Chains: Where Are We Now and Where Are We Going?”. Journal of Business Ethics, 1-12.

Martinuzzi, A., Krumay, B. & Pisano, U. (2011). Focus CSR: The New Communication of the EU Commission on CSR and National CSR Strategies and Action Plans. European Sustainable Development Network (ESDN), Quarterly Report No, 23.

Mullerat, R. (2013). Corporate social responsibility: a European perspective. Jean Monnet/Robert Schuman Paper Series Vol. 13 No. 6, June 2013.

Nidasio, C. (2004). Implementing CSR on a large scale: The role of government. In 3rd Annual Colloquium of the European Academy of Business in Society, Ghent.

Porter, M.E. & Kramer, M.R. (2011). Creating Shared Value. Harvard Business Review (89) 1-2.

Progress Report (2008). For a Sustainable Germany. German Strategy for Sustainable Development. http://www.nachhaltigkeitsrat.de/fileadmin/user_upload/English/strategy/2008/German_Govt_NSDS_progress_report_08_E.pdf Accessed 10th October, 2014.

Rasche, A. (2009). Toward a model to compare and analyze accountability standards – the case of the UN Global Compact. Corporate Social Responsibility and Environmental Management 16 (4) 192–205.

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

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Van Wensen, K., Broer, W., Klein, J. & Knopf, J. (2011). The State of Play in Sustainability Reporting in the European Union. European Commission, Brussels. http://ec.europa.eu/social/BlobServlet?docId=6727&langId=en Accessed 7th June 2014.

Whiteside, K. H., Boy, D., & Bourg, D. (2010). France’s ‘Grenelle de l’environnement’: openings and closures in ecological democracy. Environmental politics, 19(3), 449-467.

Zadek, S., Evans, R., & Pruzan, P. (Eds.). (2013). Building Corporate Accountability: Emerging Practice in Social and Ethical Accounting and Auditing. Routledge.

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October 23, 2014 · 10:44 am

National Governments’ Regulatory Roles in Corporate Sustainability and Responsibility

The governments are usually considered as the main drivers of CSR policy. However, there are other actors within society, such as civil organisations and industry. It is within this context that a relationship framework has been suggested by Mendoza (1996) and Midttun (2005). Inevitably, it seems that there was a need for a deeper understanding of the governments’ role and function in promoting CSR. Societal governance is intrinsically based on a set of increasingly complex and interdependent relationships. There are different expectations and perceptions within each stakeholder relationship, which have to be addressed to develop an appropriate CSR policy. Essentially, this relational approach is based on the idea that recent changes and patterns affecting the economic and political structure may transform the roles and capacities of various social agents (Albareda et al., 2009). The exchange relationships among different actors and drivers which are shaping CSR policy and communications are featured hereunder in Figure 1.

Figure 1

According to Golob et al. (2013) CSR communication is concerned with the context / environment within which CSR communication practices take place. The authors went on to say that it is necessary to observe CSR communication processes between organisations, (new) media and stakeholders. Apparently, several governments have chosen to draw business further into governance issues without strictly mandating behaviour and specifying penalties for non compliance. For example, the UK government’s Department Innovation and Skills, DBIS website states: “The government can also provide a policy and institutional framework that stimulates companies to raise their performance beyond minimum legal standards. Our approach is to encourage and incentivise the adoption of CSR, through best practice guidance, and where appropriate, intelligent (soft) regulation and fiscal incentives”, (DBIS, 2013).

Similarly, in the context of high unemployment levels and social exclusion in Denmark, Ms Karen Jesperson, the Minister of Social Affairs (2003) had unveiled the campaign entitled, “It concerns us all”, which drew attention to the ways in which CSR could assist in addressing public policy problems (Boll, 2005). In a similar vein, the Swedish governments’ CSR initiative had called on the companies’ commitment in upholding relevant international standards. In Australia, the former prime minister, John Howard had formed the Business Leaders’ Roundtable as a means of encouraging business leaders to think about how they could assist government in solving the social problems (Crane et al., 2009). Arguably, the governments can facilitate CSR implementation by setting clear frameworks which guide business behaviour, establishing non-binding codes and systems, and providing information about CSR to firms and industries. For instance, the UK and Australian governments came up with the notion of CSR as a response to mass unemployment. They set public policies which have encouraged companies to engage in CSR practices by providing relevant work experience and training opportunities to job seekers (see Moon and Richardson 1985, Moon and Sochacki, 1996). Similarly, the EU institutions have frequently offered trainee subsidies and grants for education, including vocational training for the companies’ human resources development (EU, 2007). Governments’ role is to give guidance on best practice. Japan is a case in point, where there are close relationships between government ministries and corporations. The firms in Japan report their CSR practices as they are required to follow the suggested framework of the Ministry of Environment (Fukukawa and Moon, 2004). Apparently, there is scope for the respective governments to bring their organisational, fiscal and authoritative resources to form collaborative partnerships for CSR engagement. National governments may act as a catalyst in fostering responsible behaviours.

For instance, India has taken a proactive stance in regulating CSR as it enforced corporate spending on social welfare (India Companies Act, 2013). With its new Companies Bill, India is pushing big businesses to fork out at least two per cent of their three year annual average net profit for CSR purposes. Clause 135 of this bill casts a duty on the Board of Directors to specify reasons for not spending the specified amount on CSR (EY, 2013). It mandates companies to form a CSR committee at the board level. The composition of the CSR committee has to be disclosed in the annual board of directors’ report. The board will also be responsible for ensuring implementation of CSR action plan. The annual Director’s Report has to specify reasons in case the specific amount (2% of the Profit after Tax) has not been utilised adequately. IB (2014) has recently estimated that around 8,000 companies in India will be shortly accounting for CSR-related provisions in their financial statements. These provisions would closely translate to an estimated discretionary expenditure between $1.95 billion to $2.44 billion for CSR activities. In a similar vein, the European Parliament passed a vote to require mandatory disclosure of non-financial and diversity information by certain large companies and groups on a ‘report or explain’ basis. This vote amended Directive 2013/34/EU and affects all European-based ‘Public Interest Entities’ (PIEs) of 500 employees or more as well as parent companies (EU, 2014).

 

This is an extract of a paper that will appear in the Corporate Reputation Review, Vol. 18 (2).

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July 10, 2014 · 2:44 pm

Generating Synergistic Value for Business and Society

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Synergistic value integrates insights from the stakeholder theory [1] [2] [3] and the resource based view theory [4] [5].

The stakeholder theory [1] provides opportunities to align business practices with societal expectations and sustainable environmental needs. Businesses ought to reconcile disparate stakeholders’ wants and needs (e.g. employees, customers, investors, government, suppliers etc.). Firms can create synergistic value opportunities by forging alliances with internal and external stakeholders.  This may lead to an improvement in mutual trust and understanding. As a result, there are also benefits for corporate reputation, brand image, customer loyalty and investor confidence. This societal engagement also responds to third party pressures, it lowers criticisms from the public and minimises regulatory problems by anticipating legal compliance.

The synergistic value model [6] as featured in Figure 1. presents the potential effect of the government’s relationship on the organisation’s slack resources. Moreover, scarce resources are a facilitator for quality and innovation. Therefore, discretionary expenditures in laudable practices may result in strategic CSR [7] outcomes  including; effective human resources management, employee motivation, operational efficiencies and cost savings (which often translate in healthier financial results) [6]. business-comment_05_temp-1359037349-510143a5-620x348(source: Camilleri, 2012)

This promising notion suggests that there is scope for governments in their capacity as regulators to take a more proactive stance in promoting responsible behaviours. They can possibly raise awareness of social and sustainable practices through dissemination of information; the provision of training programmes and continuous professional development for entrepreneurs [6]. They may assist businesses by fostering the right type of environment for responsible behaviours; through various incentives (e.g. grants, tax relief, sustainable reporting guidelines, frequent audits et cetera) [6].

 

Synergistic value implies that socially responsible and environmentally-sound behaviours will ultimately bring financial results – as organisational capabilities are positively linked to organisational performance. Synergistic value is based on the availability of slack resources, stakeholder engagement and regulatory intervention which transcend strategic CSR benefits for both business and society.

References:

[1] Freeman, E.E. (1994). The Politics of Stakeholder Theory: Some Future Directions Business Ethics Quarterly, 4(4), 409

[2] Jones, T. M. (1995). Instrumental stakeholder theory: A synthesis of ethics and economics. Academy of Management Review, 20(2), 404–437.

[3] Donaldson, T., and Preston, L. E. (1995). The stakeholder theory of the corporation: Concepts, Evidence and implications. Academy of Management Review, 20(1), 65–91.

[4] Orlitzky, M., Siegel, D. S. and Waldman, D. A. (2011). Strategic Corporate Social Responsibility and Environmental Sustainability. Business & Society, 50(1), 6-27.

[5]McWilliams, A. and Siegel, D. 2011. Creating and capturing value: Strategic corporate social responsibility, resource-based theory and sustainable competitive advantage. Journal of Management, 37(5), 1480-1495.

[6] Camilleri, M. A. (2012). Creating shared value through strategic CSR in tourism.. University of Edinburgh. https://www.era.lib.ed.ac.uk/handle/1842/6564 accessed 10th July 2014.

[7] Werther, W. and Chandler, D. (2006). Strategic Corporate Social Responsibility: Stakeholders in a Global Environment. London: Sage Publications.

[8] Porter, M. E. and Kramer, M.R. (2011) Creating shared value. Harvard business review 89.1/2 (2011): 62-77.

 

Links:

http://www.timesofmalta.com/articles/view/20131010/business-comment/Unleashing-shared-value-through-content-marketing.489766

http://www.timesofmalta.com/articles/view/20130523/business-comment/Leveraging-organisational-performance-through-shared-value-propositions.470940

http://www.timesofmalta.com/articles/view/20130124/business-comment/Creating-shared-value-for-long-term-sustainability.454548

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July 5, 2013 · 7:50 pm

Developing Social Marketing Plans

Corporate Social Marketing differs from other marketing activities as it focuses on responsible behaviours that help society and the environment. This contribution suggests that there are many benefits for businesses who carry out laudable initiatives. Social marketing raises the businesses’ profile as it strengthens the brands’ positioning relative to others. It improves the financial performance of firms, especially if it supports the firms’ marketing goals and objectives.

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Of course there may be many cynics among stakeholders (including customers) who view social marketing campaigns as none of your business. Therefore, developing and supporting social marketing campaigns will surely involve more than writing a cheque.

Businesses ought to pick an issue which is closely related to their individual organisation’s core business. The organisation’s resources and the corporate marketing strategies should focus on initiatives that have the potential for long-term sustainability. In addition, every member of staff should be encouraged to engage in socially and environmentally responsible behaviours. Perhaps, there is also scope in forging alliances with the public sector and non-profit organisations. Such external stakeholders can possibly provide relevant expertise, credibility and extended reach into promising customers. For instance, non-governmental organisations can easily identify the needs and wants of the communities around businesses. Finally, strategic marketing entails sequential planning processes which will involve consumer and competitive research as well as the effective utilisation of marketing mix tools.

A cohesive approach is necessary to ensure successful results. Therefore, the following steps and principles are highly commendable for the successful implementation of social marketing plans which will eventually reap fruit in the long term:

  1. Determine a vision for social behaviour: Who is the main sponsor of this concerted effort? What is the purpose of doing this? What social and environmental issue(s) will the plan address and why?
  2. Conduct a situation analysis, which triggers a SWOT analysis: What are the internal strengths and weaknesses? What are the external opportunities and threats?
  3. Segmenting target audiences: Which individuals and/or organisations in the community have the greatest need? Are these potential segments readily accessible?
  4. Set behavioural objectives and change management goals: A key success factor is the setting of specific, measureable, achievable, realistic and timely (SMART) objectives that become the core of campaign effort.
  5. Determine potential pitfalls to behaviour change: Perform a cost-benefit analysis of the desired behaviour. At this stage that it is also necessary to look at the competitors’ behaviours. The target audiences can also change their attitudes and perceptions about products and services over time.
  6. Draft a positioning statement: Are the businesses’ target audiences valuing socially and environmentally responsible behaviour?
  7. Develop the marketing mix, marketing strategies and tactics: Businesses need to respond to the barriers (and motivations) that target audiences may have. Some customers may be sceptical of the businesses real intentions. A few issues to consider in each of the 4Ps include: (i) Product – provide tangible products or services in the social marketing campaign, ones that will add value to the brand. (ii) Price – non-monetary forms of recognition can add value to the exchange transaction.(iii) Place – look for ways to enhance the distribution of the product (or service) by reaching out to the desired target market in a convenient way.    (iv) Promotion – develop marketing communication messages prior to selecting media channels. Messages have to be clear, understandable and relevant to particular target audiences .
  8. Develop a plan for evaluation and monitoring: Evaluation of target segments. Where there any behavioural changes in customers? Is the social marketing campaign successful?
  9. Allocate budgets and find additional funding sources: There may be scope in corporate partnerships (for philanthropy) with all sectors in society: e.g. public agencies, non-profit organisations, foundations and special interest groups.
  10. Complete an implementation plan: A three to five year plan may be required to educate staff, dedicate financial resources for infrastructures, change attitudes and perceptions to support behavioural change.

Also Published by the Times of Malta (18th July 2013)

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