Corporate Social Reporting. How linked are corporate social policies and rhetoric to social performance ?

Authors Avatar by sounia33 (student)

Seminar 3 : Social movements, CSR motives and corporate social reporting

QUESTION 4 : « How linked are corporate social policies and rhetoric to social performance ? »

        « In October 2011, the Commission issued a Communication as the first step towards a renewed EU strategy on Corporate Social Responsibility. This article explores one of the most feasible options for legal reform: enhanced reporting requirements on social, environmental and governance issues. »[1]The Commission's concerns about transparency is one of the major issue raised after the Financial and economical crisis. With regard to Corporate social responsibility (CSR), question about the transparency of companies social performance is the new focus of attention in civil society.

        CSR implies a particular concept, developed by Carroll and Woods, the Corporate Social Performance. It describes, from an objective point of view, the firm's performance with respect to stakeholders. It is composed by three components : social responsibility, social issues and social responsiveness. So, we can say that it refers to how well a company has translated its social goals into practices.

         Stakeholder theory regarding CSR implies that stakeholders need to evaluate how far a company has performed its roles. As a consequence, reports have to provide objective information that allows stakeholders to make a real estimate of the organization’s social and environmental performance. Since the mid-1990s there has been a general increase in the stakeholders' demand for greater corporate accountability and transparency. According to 2008 study by KPMG, 80% of the 250 largest companies worldwide now report on their social and ecological behavior. « Those disclosure practices have been proposed by social accounting scholars as a mechanism by which accountability duties may be discharged because they can inform a wide variety of stakeholders regarding companies’ social and environmental impacts. »[2] Companies are meeting those expectations and they developed an voluntary behavior  in the area of reporting. A significant number of global firms report publicly about social, environmental in addition to their required financial reports.

        However, to discharge accountability, these disclosures need to be real. It must have correspondence between reporting and actual performance. « According to Adams this acceptance can be demonstrated through a clear statement of values with corresponding objectives and quantified targets with expected achievement dates against which the company must report their progress. »[3] The main issue is that Corporate social reports reflect companies way to discuss corporate social responsibility, developing them is a way to search to comply with community expectations and they can embody a strategic approach. Indeed, although companies are producing many reports it is questionable whether they satisfied the demand for accountability and more precisely whether whether corporate social reporting can be regarded as a mechanism through which accountability duties are discharged. So, how linked are corporate social policies and rhetoric to social performance? More precisely, whether they accurately reflect companies' social performance ?

        Corporate Social reports do not truly reflect corporate social and environmental behavior (I). So, Corporate Social responsibility  faces a new challenge : find ways to improve the transparency (II)

1. The failure of Corporate Social Reports as true indicator of companies' social performance

        A. Green washing & Rhetoric : a way for companies to change and hide real social performance

       

         One major issue is the fact that the concept of corporate social reporting is almost as flexible as the concept of corporate social responsibility itself. As a consequence, a company can choose how to communicate its CSR progress in whatever way it finds suitable. This is an issue  because stakeholders who wants to have information have rights to such an account, and the report must provide objective and complete information.

        Indeed, as many reports are voluntary and the role of government is limited, companies can choose what information they want to report, they can underline only the positive actions. Recently, Hopwood[4] showed  his impression that “companies report much more on aims and intentions than on actual actions and performance.” More precisely, companies predominantly provide narrative CSR information and they mainly focus on the positive aspect only. Adams[5] for instance, argues that managers often disclose narrative information because such disclosures can be tailored to manage public impressions. If companies are to be held to account for their actions, then transparency in reporting is clearly crucial whereby being transparent does not necessarily mean revealing everything as this can be counterproductive to the communication of the key message[6]. Consequently, companies must decide how much information to disclose, balancing different stakeholders’ needs whereby it is sometimes necessary to disclose information that puts the company in a bad light. The ample room for manoeuvre in identifying significant impacts and prioritizing them has been partly blamed for the little significance behind achieving formal public endorsement for CSR disclosure . CSSR clearly entails more than relating only positive stories[7].

Join now!

        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 ...

This is a preview of the whole essay