This essay is going to address corporate social reporting and its present reporting practices along with the problems that occur with the lack of standardized regulations for CSR. It will also discuss some real-world examples of CSR and how this information can be used by stakeholders. Corporate social reporting is information included in the corporation's reports that show additional information regarding the “organization's social and environmental performance” (Bouten et al., 2011). Companies report CSR in their corporate reports to “provide objective information that allows stakeholders to make a reliable estimate of the organization's social and environmental performance” (Bouten et al., 2011). The shortcomings of present corporate social reporting practices are mainly the lack of a universal regulation conducting the sections that should be reported and the format that the report should be in (Fernandez - Feijoo, Romero and Ruiz, 2014). Additionally, “CSR reporting is typically vague,” so it may not address all the issues that the stakeholder is interested in from the report (Bouten et al., 2011). It is important to overcome these shortcomings in order to make sure each company is reporting the necessary information that is beneficial to the stakeholders in the company. According to Hou and Reber, 2011, “standardizing the CSR … would improve the quality of the reports and make them easier to compare between companies.” Having universal regulations and formats would make this comparison easier and less time consuming for the stakeholders of the company. The next section will discuss some additional research and studies on CSR that demonstrate the the comprehensiveness of reports, the impact of the media, and Global Reporting Initiative reporting.
Prior Research on Corporate Social Reporting
The article titled, Corporate Social Responsibility Reporting: A Comprehensive Picture? by Bouten et al., discusses how in depth current CSR reports are and how in depth these reports should be in order to provide accurate evidence to the stakeholders. The study tested 2005 annual reports of publicly traded Belgian companies and used content analysis to evaluate the quality and completeness of the reports. This study claims that “companies should show their aims and intentions, actions, and subsequent performance concerning different CSR issues” (Bouten et al., 2011). The authors also claim that is is doubtful that the CSR report is accurately describing the current state of the company, as it is in the company's best interest to make the company look as positive as possible. The study measured the level of comprehensive reporting to show how much the annual report discusses VG (vision and goals), MA (management approach), and PI (performance indicators). Some companies had a comprehensive reporting level of 0, since they failed to report on any of these topics (Bouten et al., 2011). The authors stated that “only studying comprehensiveness without studying completeness could lead to misleading conclusions concerning the underlying reporting quality” (Bouten et al., 2011). This means that the CSR report could be lengthy and cover multiple topics, but may not cover each topic with as much detail as it necessary to fully understand the company and their corporate social reporting practices. Overall, the report showed that Belgian companies focus most on their labor, as that was highly discussed in their CSR, and that “Belgian companies do not report completely on their CSR behavior” (Bouten et al., 2011).
The article titled, Dimensions of Disclosures: Corporate Social Responsibility (CSR) Reporting by Media Companies, by Hou and Reber, discusses the media's impact on their comprehensiveness of CSR and what is reported. In general, CSR strengthens relationships with stakeholders, as it gives them a more in-depth view into the business and a personal connection to the business's values. The study analyzed the top ten media companies in the United States based on their annual net U.S. media revenue in 2008. 9 of the 10 companies researched had complete reports which were available on the company's website or the parent company's website. Among the policies discussed were environmental policies implemented to “reduce [the company's] impact on the environment,” and News Corporation was even going to the length of trying to get their viewers to reduce their energy consumption (Hou and Reber, 2011). This allows the company to publish a more uplifting CSR that will possibly gain the attention of the media. 8 of the 9 companies discussed community relations and generally discussed the “importance of being a responsible and good corporate citizen to the communities they serve” (Hou and Reber, 2011). 7 of 9 companies discussed diversity in terms of their workforce, content, suppliers, and educational influences. Fewer companies discussed improving employee relations, protecting human rights, and media specific CSR activities. The report concluded that the larger the company, the more “mature and complete in their reporting” for CSR. Additionally, “standardizing the CSR to include environment, diversity, community, and employee relations categories would improve the [overall] quality of the reports” and make them more usable and beneficial to stakeholders within the company (Hou and Reber, 2011).
The article titled, Commitment to Corporate Social Responsibility Measured Through Global Reporting Initiative Reporting: Factors Affecting the Behavior of Companies, by Fernandez-Feijoo, Romero and Ruiz discusses the requirements of the global reporting initiative and how its framework has impacted sustainability reports and CSR as a whole. Sustainability reports present the company's economic, environmental, and social impact. The authors describe sustainability reports as a “way to connect with stakeholders, to show what and how companies are doing, and even to be a positive example to others” (Fernandez-Feijoo, Romero and Ruiz, 2014). Sustainability reports became recognized as a way to communicate CSR with others and stressed the need for standardization. As of the published date, the Global Reporting Initiative, is the current standard for CSR reporting. The GRI requires discussion of the following categories: economic, environmental, social performance/labor practices, social performance/human rights, social performance/society, and social performance/product responsibility. The most recent guidelines, G4, were released in 2013. The study found that factors such as poor economic conditions and an imbalance of competition will not motivate the company to perform socially responsible behaviors. On the other hand, factors such as legal regulation, self-regulation, stockholder pressure, internally promoting responsible behavior, and an external association requirement will encourage companies to act in socially responsible ways. CSR is generally “not a real managerial commitment but a marketing strategy by offering an artificial positive image of the firm” (Fernandez-Feijoo, Romero and Ruiz, 2014). Overall, the authors recommend that large companies place more value on their sustainability reports, because it is how they communicate with stakeholders and can show the company in a positive light (Fernandez-Feijoo, Romero and Ruiz, 2014).
Evaluation of Present Reporting Practices on Corporate Social Performance
Information included in the report is not sufficient for stakeholders accountability. The reports identify global community problems and help to link the importance of the society as a whole to the business world. This information has the chance to be a positive reputation for the company, as they are stating their responsibilities in the community and what they can do to improve their local and international communities. These reports also allow consumers and investors to gain the trust of the company and strengthen their business relationship.
However there are some limitations within present practice. Some limitations include wanting to have a positive reputation, and therefore not being completely truthful in all statements. Additionally, the lack of a standardized CSR means that not every company reports on the same topics and includes the same information. Walmart discusses its focus on employee opportunity, reducing their economic impact, improving sustainability, and supporting their local communities. They also address wanting to improve workplace safety for their employees as well as employee relationships (Walmart, Inc. 2018).
Additionally, Facebook discusses the environment, community relationships, efficient data centers, creating sustainable workplaces, expanding their data centers with the Open Compute Project (OCP), and reducing their carbon footprint as well as that of their users. They have a goal of converting the company to 100% renewable clean energy sources. They are also using their resources to benefit their communities. The OCP allows Facebook to share their technological resources with global engineers with a goal of promoting further technological innovation (Facebook, Inc., 2017). This information for both companies was found on each company's primary website, but not in the annual report. While both reports provide important information for the stakeholders, it is difficult to compare the two companies in terms of CSR, since the information is scattered and each company discusses slightly different information.
Overall, corporate social reporting would benefit from more regulations and standardization. It is difficult for the CSR to show a comprehensive view of the company, since it varies on which information is presented to the public. Companies can also use media to their advantage, by getting media attention for topics discussed in their CSR, which can impact the company's reputation either positively or negatively. Although the GRI has some published standards for CSR, they are not doing enough to make reports fair and comprehensive of the same topics between companies. This would make it easier for stakeholders in various companies to be able to compare companies on an even playing field.
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