Corporate social responsibility is a process of managing business processes to create a positive effect on society (Carroll, 2015). It encompasses areas like health, environmental effects, human rights, safety, corporate governance, economic development and working conditions. The purpose of CSR in any organization is to initiate change towards sustainability (Deegan & Samkin, 2013 p. 1147).
Unilever is an example of such a company that incorporated a comprehensive strategy relating to CSR under which they started an initiative called ‘sustainable tea' (Unilever, n.d.). The company only allows tea bags from farms that are certified by the Rainforest Alliance, a certification that differentiates products on the basis of their sustainability (Unilever, 2012). Most companies take CSR into account for better bonding and relationships with their stakeholders’.
B.
GRI or Global Reporting Initiative is an international organization that has been working independently since 1997 for sustainable development (Global Reporting Org, n.d.). This was formed by Tellus Institute and Non-profit CEREs (Coalition for Environmentally Responsible Economies) of the United States (Global reporting org, n.d.) It helps the governments and organizations in understanding the impact of their business or actions on sustainability issues such as corruption, and climate change. It also helps the network of stakeholders to take appropriate actions towards a better sustainable economy. GRI framework works as a relevant sustainability cycle for CSR reporting that includes data collection on a daily basis, responses, and communications (Fernandez-Feijoo, Romero & Ruiz, 2014). Thus it benefits CSR reporting both externally and internally.
Using GRI benefits the company both internally and externally. The internal benefits of GRI are to increase the understanding of the risks and opportunities that are associated with the company. It also helps in emphasizing the links between the performance of financial and non-financial information of the company. Long-term management strategies and business plans also get benefits from the use of GRI. On the other hand, the external benefit of using GRI is mitigating the impact of negative environment and rigid governance. It also helps to understand the true value of external stakeholders of the company.
C.
Integrated reporting (IR) is an upgraded development in reporting innovations. It works to improve the utilization of corporate reporting (Deegan & Samkin, 2013 p. 1210). According to Michelon, Pilonato & Ricceri, (2015), the International Integrated Reporting Council launched IR in 2013 to deal with the drawbacks of previous reporting initiatives in engaging with stakeholders, organizations, and regulators. IR is a strong global coalition of companies, investors and standard setters. The aim of IR is to deliver more holistic reporting by keeping financial resources and non-financial resources like social, human and intellectual capital in mind (De Villiers, Rinaldi & Unerman, 2014).
The six capitals proposed by the IIRC are financial capital, manufacturing capital, intellectual capital, human capital, social and relationship capital and natural capital. According to Dumay, (2016), financial capital is the available funds of a company. Finance capital can be oriented from any source of capital which can be raised by the company. The internal source of financial capital is the amount which is raised by the internal shareholders and stakeholders of the company. On the other hand, the external source of financial capital is the amount which is raised from loans from a bank or the issue of debentures and shares and others. Manufacturing capital is the product-oriented tools and equipment’s that are created by humans. This is the capital which is mainly used in the process of manufacturing and also helps in increasing the overall productivity of the firm. Intellectual capital helps the company to create competitive advantage by delivering issues related to value creation. It also helps the company to think and create new ideas that are relevant to the nature and industry of the business. Human capital covers the capabilities, skills, and knowledge of the employees. This helps the company to increase the rate of production with less human errors as skilled employees are involved in the process. Social and relationship capital denotes networks with shared values and norms. It also helps the company to maintain good relationships with the people and became reputed in the eyes of common people. Natural capital is natural resources and assets that deliver useful products which help the company for the better production of goods and services (Baumgartner, 2014).
D.
Five stakeholders who are interested in information about a business are customers, employees, suppliers and business partners, local community, national government and regulatory authorities (Deegan & Samkin, 2013 p. 1205). The information that customers require from an organization is product standards, company's reputation in the market, reasonability of prices and customer service because it helps them to gather knowledge about the company and helps in deciding whether they should continue using the company’s products or services. Employees need information such as career opportunities, availability of a human resource, reasonability of salary and what kind of work the organization delivers because it helps them to maintain a level of trust and faith in the company. Suppliers and business partners need to be aware of the company's relation with other suppliers and business partners, the company's market value, market shares and sales graph because they want to be sure they will be paid for their work and will continue to be the company’s main suppliers or business partners. The local community is interested in the relevance of the businesses in their locality and it's environmental sustainability issues because as they are living within the environment they will want to know the impact the company’s operations will have on their environment. The national government and regulatory authorities require information regarding the legality of the company's position. The government looks to see if the organization follows business policies, acts, regulations and prosecutions properly or not. The internal and external stakeholders which also include the shareholders or the security holders of the company have more or less an equal share on the success rate of a company. All the employees and staff or the people those who are associated with the company have an effect on the evolution or breakdown of a company. So the information that these stakeholders need is what the company needs to provide in order to retain and increase its position in the competitive market.
E.
Reporting on corporate social responsibility has become increasingly important in recent years. The tool of reporting helps the organization in identifying risks, material issues, and opportunities. It also helps the company to maintain relationships with other stakeholders of the company. An organization can engage with its stakeholders and retain a meaningful interaction for the development of the business by reporting on its social and economic impact on the local community and on the world. CSR reports are helpful in keeping a positive image of the organization. Reporting strengthens the company's credibility with its stakeholders and the common people. This, in turn, aids the company to gain a competitive advantage in the competitive market outside. On the other hand, CSR reporting enhances the sustainability policies of a company and as a result, the company focuses minutely on its faults such as expired products, pollutions caused by factories, waste released by the organization and many more. It is the utmost responsibility of the company to satisfy all of its stakeholders but in a way that the environment, and both external and internal parties, are not affected negatively.