Environmental Industrial Management
Corporate social responsibility (CSR) has been a hot topic in business circles for decades. The topic has gained even greater attention in the last few decades in the wake of increased attention to the impact of business activities on the environment, economy, and the society (Flammer, 2013; Schrempf-Stirling, Palazzo and Phillips, 2016). This paper discusses the principles of CSR; the integration of social, economic, and environmental aspects in the organisational agenda; the importance of transparency, accountability, and stakeholder engagement in CSR; and the notions of materiality in CSR and sustainability reporting as outlined in the Global Reporting Initiative (GRI) G4 guidelines.
Whereas there is no commonly agreed definition, CSR generally refers to the activities business organisations deliberately undertake with the aim of promoting social, economic, and environmental sustainability (Crowther and Aras, 2008). It denotes the pursuit of economic objectives while at the same time consciously pursuing social and environmental objectives (Foote, Gaffney and Evans, 2010). The need for business organisations to focus beyond profit objectives is informed by the fact that their activities affect, or are affected by, a wide array of stakeholders, including employees, customers, suppliers, the government, communities, and the public at large (Flammer, 2013). CRS, therefore, requires that business organisations ought to consider the needs, concerns, and interests of their stakeholders in their quest for profit maximisation.
In the UK, CSR has increasingly gained prominence in the recent past. Indeed, with the government playing a frontline role, CSR is now a fully-fledged industry in the UK (Idowu and Filho, 2009). With CSR efforts going back to as early as the 20th century, UK has been termed as a world leader in CSR (Schwartz, 2011). The government has even created a department specifically aimed at promoting CSR, exemplifying its commitment to CSR. With a supportive regulatory and political environment, most organisations in the UK have ever more paid greater attention to CSR, and CSR has become a norm.
CSR is based on four major principles. These include: legal compliance (adherence to the relevant local and international laws and regulations); fulfilment of stakeholder interests (acknowledgement and attention to stakeholder needs and concerns); transparency (clear and accurate disclosure of the organisation’s policies, decisions, activities, and impact on the society and environment); and respect for human rights (policies, practices, and processes must uphold basic human rights) (Social Security Investment Fund [SSIF], 2010). From these principles, it is clear that CSR is not just about minimising environmental pollution or participating in social causes as often thought. CSR also encompasses persistent conformity to the relevant laws, regulations, and ethical standards as well as consideration of stakeholder interests. As put by Idowu and Filho (2009), CSR is about organisations taking responsibility for their actions; or in other words, social accountability or corporate conscience.
In addition to the four principles, CSR has three broad dimensions: economic, social, and environmental (SSIF, 2010). The economic dimension within the context of CSR does not relate to profitability; it denotes aspects such as corporate governance, integrity, ethical investment, and consumer rights protection. In the UK, for instance, the Corporate Governance Code provides important guidelines for ensuring sound corporate governance in firms, while authorities such as the Office of Fair Trading and the Competition Commission provide guidelines for protecting the interests of consumers. The social dimension generally denotes the promotion of societal welfare (SSIF, 2010). This covers two aspects: equal and humane treatment of employees (occupational health and safety, good working conditions, reasonable compensation, respect for diversity, professional development opportunities, and so on) and involvement in the local community (charity work, social causes, environment protection, partnership with community organisations, and so forth). In the UK, legislations such as the Employment Rights Act and the Equal Pay Act recognise the importance of organisations respecting the rights and needs of their employees.
The environmental dimension entails commitment to environmental sustainability (SSIF, 2010). It includes aspects such as emission reduction, waste minimisation, energy efficiency, renewable energy, and water preservation. Environmental protection in the UK is a major subject of public, policy, and organisational agenda, particularly in recent decades. The government has championed a set of regulations and guidelines aimed at promoting environmental sustainability, including the Environment Protection Act, the Clean Air Act, the Hazardous Waste Regulations, and the National Air Quality Strategy. On the whole, the three dimensions of CSR highlight the social, economic, environmental, as well as the health and safety aspects that ought to be incorporated in the organisational agenda. Integrating these aspects is the core of CSR. Indeed, the GRI’s G4 sustainability reporting guidelines recognise the significance of business organisations disclosing the social, economic, and environmental impact of their activities (GRI, 2013).
The aspect of disclosure brings to the fore an important aspect of CSR — transparency and accountability. The notion of transparency means that business organisations ought to truthfully reveal their strategy, practices, policies, governance measures, and ethical standards (GRI, 2013). Also, business organisations must disclose the ways in which their operations affect the society, economy, and the environment, whether negative or positive. Indeed, transparency and CSR cannot be separated. Complete transparency, however, is yet to be achieved. It is common for organisations to hide negative aspects of their operations in an attempt to guard their reputation (Idowu and Filho, 2009; Schrempf-Stirling, Palazzo and Phillips, 2016). Transparency is important because organisations are accountable not only to themselves, but also their stakeholders (Schrempf-Stirling, Palazzo and Phillips, 2016). They are accountable to customers, employees, suppliers, shareholders, regulatory authorities, communities, and the society. The primary objective of CSR is fulfilling the interests of these stakeholders. Fulfilling stakeholder interests means that stakeholder engagement is crucial for CSR. For organisations to comprehensively understand the interests of their stakeholders, they must involve them in their decision-making processes (GRI, 2013).
CSR is not just about participating in CSR activities and processes; it also entails reporting those activities and processes (Crowther and Aras, 2008). CSR reporting is now a major trend, particularly in the UK. GRI provides important guidelines in terms of sustainability and CSR reporting. An important consideration as per the guidelines relates to materiality. The notion of materiality implies that organisations must pay attention to aspects that are material to their stakeholders when reporting their CSR and/or sustainability initiatives (GRI, 2013). Generally, organisations tend to be inclined to report aspects they feel comfortable with. Materiality, however, requires that an organisation reports not only positive aspects, but also aspects have that have a significant impact of their stakeholders, whether positive or negative. This is important for ensuring transparency in CSR and sustainability reporting.
Overall, the importance of CSR in today’s world cannot be overemphasised. Business organisations do not exist in an island. Their operations affect employees, consumers, the government, the environment, communities, and other stakeholders. They are accountable to these stakeholders, and must truthfully and materially disclose the impact of their operations on the society, economy, and the environment.
Question 2
CSR reporting has increasingly become a norm in the UK. Firms in diverse sectors and industries, large and small, regularly release their CSR reports, keen on demonstrating their social and environmental performance. Two UK firms that have been at the forefront in term of CSR reporting include Barclays PLC (Barclays) and Tullow Oil (Tullow). This section analyses and compares the two firm’s recent CSR reports in accordance to GRI G4 sustainability reporting guidelines, specifically focusing on social, environmental, as well as health and safety issues.
Barclays operates in the financial services industry and is one of the largest banks in the UK. The organisation’s 2013 Citizen Report, whose presentation evidently shows adherence to GRI G4 guidelines, demonstrates its robust commitment to CSR. In 2013, the organisation invested £72 million in disadvantaged communities in the UK and around the world, with more than 1.2 million youths (aged 10 to 35 years) benefiting from its CSR initiatives (Barclays, 2013). In collaboration with non-government organisations (NGOs) and charities, the organisation focused on developing the employability, enterprise, and financial skills of the youth. In the UK, for instance, the Street League programme (which aims to impact the lives of the youth through football) equipped participants with communication, teamwork, and goal-setting skills with a view to enhancing their employability skills (Barclays, 2013).
Besides NGOs and charities, the organisation’s employees were also instrumental in implementing its CSR initiatives aimed at empowering the youth. Collectively, the firm provided approximately 447,000 volunteer hours (Barclays, 2013). Barclays also donated £35 million to charities in the UK and around the world through its fundraising and giving programmes (Barclays, 2013). The social impact the organisation generated is evidently material. The social impact of the organisation’s CSR commitment is further evidenced by its commitment to the welfare of employees. The report documents commendable aspects of employee wellbeing such as competitive remuneration and employee engagement (Barclays, 2013).
Barclays has also been committed to environmental sustainability. In 2013, the organisation was awarded an ‘A’ rating for its commendable carbon performance (Barclays, 2013). The organisation achieved significant reduction in greenhouse gas emissions. A major shortcoming with the reporting of the environmental dimension is that it is not clear what the organisation did to achieve the carbon performance rating it did. Disclosing this aspect would have made the reporting more material.
Tullow, on the other hand, operates in the oil and gas industry. With operations in the UK and worldwide, the organisation is particularly involved in oil and gas exploration. CSR is a particularly important topic in the oil and gas industry given its significant contribution to environmental pollution and environmental degradation. This, in large part, explains why Tullow has been robustly committed to CSR. The organisation’s CSR initiatives are guided by the slogan, “Creating shared prosperity” (Tullow Oil, 2014).
Tullow’s 2014 CSR report, also authored in accordance to GRI’s G4 guidelines, demonstrates its strong commitment to social and environmental sustainability. Indeed, the report unambiguously identifies the organisation’s attention to minimising social and environmental impacts as well as achieving the highest health and safety standards possible (Tullow Oil, 2014). The report specifically embodies the organisation’s dedication to water preservation, minimising oil spills, waste management, climate change, road safety, as well as community engagement.
In 2014, for instance, Tullow rolled out an initiative aimed at improving occupational health and safety in its East African operations. The initiative was motivated by safety performance issues identified in the beginning of 2014. The initiative improved the organisation’s occupational health and safety performance (as measured by lost time injury frequency) by 28% (Tullow Oil, 2014). In the same year, in response to land transport issues in its Kenyan operations, the organisation initiated a plan aimed at improving driver behaviour as well as vehicle monitoring. These are material impacts by any measure, especially from a social and health perspective.
From an environmental perspective, the organisation drilled groundwater sources in Kenya in an effort to enhance water preservation (Tullow Oil, 2014). A particularly impressive aspect of how Tullow reports its impact on the environment is its transparency. For instance, the organisation recognises its failure to reduce oil spills in Kenya by its set target. It also acknowledges that its greenhouse gas emissions in Ghana increased by 11%. This is what CSR is all about — transparency. Even more impressively, the organisation stipulates its plan for achieving the missed targets in the succeeding years. Compared to Barclays, Tullow appears more transparent in reporting its environmental dimension of CSR.
On the whole, Barclays and Tulllow provide important lessons as far as CSR reporting is concerned. With business activities increasingly impacting on the society and the environment, organisations can no longer afford to ignore CSR reporting. They must continually furnish the public with information about their commitment to creating a better society and environment.
References
Barclays, 2013. Citizenship Report 2013. [online] Available at: [Accessed 9 December 2016]
Crowther, D. and Aras, G., 2008. Corporate social responsibility. New York: Ventus Publishing.
Flammer, C., 2013. Does corporate social responsibility lead to superior performance? A regression discontinuity approach. Management Science, 61(11), 1-27.
Foote, J., Gaffney, N. and Evans, J., 2010. Corporate social responsibility: implications for performance excellence. Total Quality Management, 21(8), 799-812.
Global Reporting Initiative (GRI), 2013. G4 sustainability reporting guidelines. [online] Available at: [Accessed 9 December 2016]
Idowu, S. and Filho, W., 2009. Global practices of corporate social responsibility. Berlin: Springer.
Schrempf-Stirling, J., Palazzo, G. and Phillips, R., 2016. Historic corporate social responsibility. Academy of Management Review, 41(4), 700-719.
Schwartz, M., 2011. Corporate social responsibility: an ethical approach. New York: Broadview Press.
Social Security Investment Fund (SSIF), 2010. Corporate social responsibility (CSR) principles, dimensions and requirements. [online] Available at: [Accessed 9 December 2016]
Tullow Oil, 2014. 2014 Corporate Responsibility Report. [online] Available at: [Accessed 9 December 2016]
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