We can talk about disinformation. But, sometimes companies not just hide negative aspects but exaggerate positive ones. More especially it exists a precise concept concerning environment : « corporate green washing ». It is defined as "selective disclosure of positive information about a company’s environmental or social performance, without full disclosure of negative information on these dimensions, so as to create an overly positive corporate image"[8]. This lies at the heart of the disclosure performance gap in CSR. “It is a form of disinformation from companies seeking to repair public reputations and further shape public images”.[9] Companies engage in complex strategies in order to shift the focus away from the firm, create confusion, criticize viable alternative and « deceptively posture firm objectives, commitments, and accomplishments ». We can take as example a multinational and its project « sustainable forest development ». The title of the project did not correspond to the real action of the company. It was just the use of an expression with a high meaning for an action who did not look to « sustainable ». Corporate social reports manipulate public by the use of sustainability language .
Moreover, corporations employ textual strategies when they communicate in their reports, and they succeed in exaggerate and modify reality. Reports use a specific language, specific words to ensure that these letters convey their firms image and the main message to be put across. All « truths » and « objective facts » can be transformed by the company thanks to the words, the metaphors, the sensitive image they use. With salient themes, metaphors, modes of expression, and argument structures companies can hide the truth, exaggerate it. The use of sustainability language and posturing helps the corporation create an external, and to a large extent also internal, image of what the company wants to be seen . They use evocative symbols which are known to the population, civil society. As a consequence corporations have gained a significant form of power: the power to define and frame. ExxonMobil for example used this method to define social responsibility in economic terms, and to frame the appropriate response in terms of management, discipline, and control by using evocative symbol and precise expressions.
B. Corporate Social reports : a new tool to improve companies' legitimacy and reputation
Developing corporate social reports is an essential act for a company insofar as it is a way to search to comply with community expectation and over all, it is a strategic approach because it is linked to reputation. Legitimacy, which is a key point for a company, can be managed and directly influenced by the Corporation. « Some proponents of legitimacy theory argue that social and environmental disclosures are generally made for strategic reasons having little or nothing to do with perceived responsibilities or obligations ». They try to gain or extend their legitimacy, their level of current legitimacy.
The strategic approach treats legitimacy as an operational resource which can be managed and directly influenced by the corporation[10] . Legitimacy resides in the ‘‘organization’s ability to instrumentally manipulate and deploy evocative symbols in order to gain societal support’’[11] We can argue that discourse is one of the strategic forms companies use to legitimize their actions. The study of corporate written discourses provides us with tangible accounts to analyze legitimacy strategies.
Companies are treating CSR reporting as opportunities to shape and control the debate over their conduct—and bringing sophisticated communication strategies to bear in doing so. Rather than redressing the power imbalance between corporations and civil society, these processes may be reinforcing it in subtle but effective ways.
1. A real need to close the gap between Corporate Social Reports and companies' social performance
A. Imposing reporting standards : toward the end of voluntary reporting ?
The solution seems to be standards and guidelines imposed by governments, organizations in reporting. Indeed, to ensure the relevance and reliability of the CSR report, companies need to have a reporting standard which can be used as a guideline in making a CSR report. The quality of the report is also questionable as companies may make reports as their wish with the use of very limited resources. To further the correspondence between reporting and actual performance, several prior studies have suggested a form of CSR reporting, which we will call “comprehensive reporting”. As Hopwood underlined, companies report much on aims and intentions than on actual actions and performance. By giving them standards and guidelines, reporting can be more real and to close this gap, some scholars suggest that “companies should report comprehensively by providing information on their (i) aims and intentions, (ii) actions and (iii) subsequent performance concerning different CSR issues[12]”. In other words, by interventionism corporate social reports reflect all the aspect of companies' social performance. However, governments through guidelines has to take into account quality and not quantity; Trying to improve transparency of reports by investigation in the volume of information is misleading when it is the quality of the disclosure which is important.
But as it is said earlier, just giving standards is not enough. If these guidelines are not compulsory companies could choose just specific ones. We can take the example of the Global reporting Initiative which failed to require more than mere corporate representations of social responsibility because these standards are only proposal. That is why by the mean of mandatory reports in which governments impose standards, the gap between companies social performance and reports will be close. The key point is not imposing reporting but overall imposing standards and points that companies have to follow. One the major debate concerning corporate social accountability and reporting are questions of regulation. What we need to improve ? Should social and environmental disclosure be voluntary ? Many scholars, organizations raise the problem with an interventionist stance. It seems that mandatory reporting regimes create better disclosure, which, when incorporating key sustainability performance indicators, can lead to better performance in those areas very crucial. Indeed, by forcing companies to disclose their social performance, governments can introduce guidelines and standards which make reports more effective. Mandatory reporting presents several advantages such as the creation of standardized and comparable measures that enable benchmarking and best practices. We can take the example of Danemark. In 2008, a law was adopted requiring the 1100 largest companies in the country to report on their corporate responsibility effort, and the government give instructions about what is disclosed.
But some question the nature of CSR and ask : Should CSR be regulated through state regulation, code of conduct, or self-regulation? Should it be regulated in a voluntary way or an obligation to corporations? There has been no consensus but as the case of Indonesia shows « assigning CSR a mandatory nature, while having partly resolved the problems related to diversity of standards and providing a greater degree of certainty than the practice of voluntary initiatives[13] ». We can argue that CSR is still voluntary and it is up to the companies themselves to decide how to engage, but if a company has not succeed in its social performance this information must be stated explicitly..
B. A trust in Stakeholder governance and external audits : a better solution?
« The presence of a CSR reporting standard, however, does not guarantee the improvement
in the quality of CSR reporting. Since a company wants to create a good self-image, it tends to
report only positive aspects about the company’s activities. As a result the report may not show
the real picture, and thus it has lost its value as a report.[14] » Indeed, as in many fields of activity, regulation need to exist overall downstream, after the writing of the reports. It is difficult to judge how significant the disconnect is between reports and a firm's genuine efforts without external, third party verification and monitoring. Corporate Social Reports, sustainability reports require audits, verification and validation. However, some claim there is an issue which is « that this not go far enough to protect the independence of social auditors form management influence ». O'Dywer poses a critical question: « can we expect anything different if financial accountants move into the realm of social auditing, particularly as social accounting consulting services are being promoted along side social audit services as part of packages aimed at reputation assurance and risk management? » Indeed, audit need to be made by independent party. Some scholars have argued[15]for « Tripartism » which implies the integration of a third party into the regulatory process occupied by a regulator and an organization. In theory, « Tripartism insures against regulatory capture, enhance communications and allows for independent third party monitoring ». Indeed, the fact that an independent external assurance service control CSR reports may convince stakeholders that the report is made according to the reporting standard. As the report is audited by an independent external party, the report should state the reality (both positive and negative) of the company’s CSR activities. To conduct the audit well, an auditor needs a CSR auditing standard. The standard is nothing like the auditing standard of financial report since CSR report covers wider aspects and the report is more qualitative than the financial report.
Maybe external audit could be done on voluntary reports. Indeed, an other mechanism to ensure that the CSR report describes the real condition of a company is the demand from the financial markets and other CSR actors. Companies act under social pressure and they adapt their behavior to the social expectations. As a consequence, they can improve their reports only under the pressure of some actors, above all market actors as the Socially Responsible Investing sphere. More precisely one mechanism emerges : governance practice of the company. The governance of a company determines the direction of the company’s policy, including CSR activities and their reporting. We are led to think that « stakeholders and other elements of civil society are beginning to play a role in ensuring the integrity of corporate social disclosures. ». Taken to a logical extreme, the future of social accounting may one day tun on stakeholder governance.[16] All these actors put pressure on companies and we are led to think that they can play a huge role in transparency of reporting. Theory predicts that in countries such as the USA where markets for corporate control, legal regulation and contractual incentives are key governance mechanisms, social and environmental disclosure should emerge from market-oriented forces in a more voluntary manner. Because voluntary reporting emerges mostly from normative pressures, it is posited to respond more quickly to social obligation – especially when in an environment with a strong normative pillar – providing timely, relevant and reliable information. Combining this role with external audits to check if companies have produced transparent reports could be a solution.
Conclusion :
In a nutshell, corporate social reports cannot be regarded as a mechanism through which accountability duties are discharged and they do not reflect the companies' social performance in most cases. Governments, organizations face a new challenge : to find how improve transparency in reports and the most question stays : whether or not reports should be mandatory ? But, Like voluntary reporting, however, mandatory reporting is not without its critics. Maybe civil society, the real sens of the stakeholder governance can give solution. But maybe the main issue remains that companies might have a right to keep several information secret and governments cannot ask total transparency, just the truth.
Bibliography :
*Aiyegbayo and Villiers, ‘The Enhanced Business Review: Has It Made Corporate Governance More Effective?’ (2011) 7 Journal of Business Law 699- 724
* Bouten, Everaert, Van Liedekerke, De Moor, and Christiaens, ‘Corporate Social Responsibility Reporting: A Comprehensive Picture’ (2011) 35 Accounting Forum 187-204
* Conley and Williams, ‘Engage, embed, and embellish: theory versus practice in the corporate social responsibility movement’ (2005) 31 Journal of Corporation Law 1-38
*Gray, Dillard and Spence, ‘Social accounting as if the world matters: towards absurdia and a new postalgia’ (2009) 11(5) Public Management Review 545-573
*Osuji, ‘Transnational corporations and the protection of human rights: Nonfinancial reporting as an option’ in Nault and England (eds.), Globalization and Human Rights in the Developing World (Basingstoke, Palgrave MacMillan, 2011), 83-117
1. * Friedman and Miles, ‘Socially responsible investment and corporate social and environmental reporting in the UK: An exploratory study’ (2001) 33(4) British Accounting Review 523-548
1. * Itziar Castello´ Josep M. Lozano - Searching for New Forms of Legitimacy Through Corporate Responsibility Rhetoric
1. * Laufer, ‘Social accountability and corporate greenwashing’ (2003) 43(3) Journal of Business Ethics 253-261
*Rahman and Post, ‘Measurement issues in environmental corporate social responsibility (ECSR): Toward a transparent, reliable’ and construct valid instrument’ (2012) 105 Journal of Business Ethics 307-319
1. * Regulation to Enhance Accountable Corporate Social Responsibility - Reporting Sidharta Utama Faculty of Economics University of Indonesia
* Rhetoric and Argument in Corporate Social Responsibility Communications: the Dirty Laundry Case
1. * Waagstein, ‘The Mandatory Corporate Social Responsibility in Indonesia: Problems and Implications’ (2011) 98 Journal of Business Ethics 455-466
*Walmsley, Cogotti, McCombes and Häusler - Corporate social responsibility: the disclosure-performance gap Occasional Paper 23 Font, February 2012
________________
[1]. Corporate Social Responsibility Reporting in the European Union: Towards a More Univocal Framework. 2011 - Ruben Zandvliet
[2]Adams 2004, Unerman and Hession 2005
[3]Corporate social reporting : a comprehensive picture ? Bouten, Evereart, Liedekerke, De moor- 2011
[4]Hopwood, A. G. (2009). Accounting and the environment. Accounting, Organizations and Society
[5] Adams, C. A., Hill, W. Y., & Roberts, C. B. (1995). Environmental, employee and ethical reporting in Europe.
[6]Milne, M., & Gray, R. (2007). Future prospects for corporate sustainability reporting. In J. Unerman, J. Bebbington, & B. O’Dwyer
[7] Kaptein, 2007
[8] Lyon and Maxwell
[9] Beder, Bruno
[10]- Asforth and Gibbs
[11]- Suchman°.Hardy
[12]- Adams and Harte 2000; Staden and Hooks 2007
[13]- The Mandatory Corporate Social Responsibility in Indonesia : problems and implications – Waagstein 2011
[14]- Regulation to Enhance Accountable Corporate Social Responsibility Reporting - Sidharta Utama
[15]Ayres and Braithwaite - 1991/1992
[16]Henriques