Normative and Positive Theories of Corporate Social Responsibility
The article has rendered focus on investigating the preference regarding regulatory and voluntary reporting in case of non-financial reporting. Companies generally prefer approaches that are voluntary to non-financial reporting. The recent upbringing in the time period of over 30 or more years is integrated reporting. This is required to widen environmental and social business influences. Much more effective and coherent approaches are promised to corporate reporting. Integrated reporting does that by taking together sustainability, financial information and operational data. It would provide necessary insight in relation to the topic.
As a normative theory, the theory of stakeholder can be viewed to recommend management of stakeholders in order to expand a rewarding business. As a positive theory, the main focus of classical economic theory is on profit maximization. Therefore, the main focus is not on CSR since it has been stated that erroneous assessment conducted by organisations has given rise to difficulties in maintenance of sustainability. Ensuring sustainability can provide the required support for maximisation of profit which tends to be the prime focus of economic theory. Finance theory permits little room as a business driver for dialogue with stakeholders (Ni and Van Wart, 2015). It can only provide this so that in long-term creation of value can be justified. As normative theories, both value-maximizing and profit-maximizing strategies of business can be pursued with reasonable economic behaviour. It has been stated that transparency regarding associated sustainability risks creates an impact on value creation for the business. CSR should also provide strength to the businesses in order to increase welfare of the society.
As stated by Stubbs and Higgins (2018), big companies like Nestle, HSBC, Microsoft and many more have effectively utilised the aspect of corporate social responsibility by incorporating both profit maximizing and value maximizing strategies. The features such as quality and quantity of environmental reporting as well as social reporting tend to be a critical factor. The details provided in the documents regarding the steps undertaken to address sustainability issues is considered vital in value creation for an organisation. It is a communication that is concise in dealing with the prospects, governance and performance that will lead to the creation of value over short-time long-term and medium-term time period. The opinions of Islam (2017) reflect that motivation of the management in relation to CSR reporting can be explained with the assistance of legitimacy theory. It is because the theory suggests that responsive actions of a management are determined by the predictions made regarding the aspects that pose to be threatening to the perceived legitimacy of the organisation. In response to the identified threats, legitimisation strategies are developed such as disclosure related strategies. It has also been suggested that in accordance with the legitimacy theory, organisations are expected to be responsive regarding the changing expectations of the community. Due to corporate social responsibility, sustainability is acquiring more eminence in the world. The relation between a company and its stakeholders depicts the value of the company in terms of quality, efficiency. According to Stubbs and Higgins (2018), some companies that choose to undertake sustainability reports, integrated reporting helps them to view that. Influence of business can be made in more than 30 years of attempts by widening organisational accountability and non-financial reporting that will contain the broader environmental and social impacts. Starbucks is such a company.
Companies’ Utilisation of Corporate Social Responsibility
I think that in the present years, larger number of companies has started the promotion of corporate social responsibility to boost the market presence which can result in profit maximisation. However, in my opinions the bottom line is not only profit; value creation also poses to be a vital aspect. It is my perspective that customers, shareholders want the companies to act sustainably since the present generation is highly concerned about their social and environmental responsibilities. Apart from focusing on profit, I think companies need to fulfil their corporate social responsibilities towards the society in order to portray a sustainable approach. Moreover, I feel that not only labour, human rights standards and social security come under corporate social responsibility but also to fight against different climatic conditions, consumer protection and sustainable management of resources. It is my opinion that the society and the environment need a lot to be supported by the companies because the present day scenario is somewhat in an alarming position. In my opinion, the environment has become unsuitable to sustain the exertion. I think that growing industries and the production of their different products are becoming harmful day by day for the society to sustain freely. It is due to this reason; I think different countries are facing severe problems for the industries. I think the companies must adopt corporate social responsibility not only to make it suitable for the society to sustain but also to maintain its well position in the society. My opinion is that with the help of integrated reporting more efficient and cohesive approach can be provided to financial reporting of corporations. I feel that it can be done by collective use of operational data, sustainability and financial information. This would also help in focusing on different material issues so that long-term sustainability can be ensured. It is my opinions that nowadays while screening a company, investors demand non financial data. Hence, I think that companies should adopt integrated reporting to keep their shareholders convinced.
The recent trend of corporate social responsibility serving to the surrounding society, environment and economy has reportedly taken various levels. Even though there is a growing trend towards sustainability reporting which is of voluntary nature, not much attention is given to the credibility of such information through external assurance. Mining companies opt for different measures of sustainability. Top listed 100 ASX companies in the mining sector in Australia for 2013-2014 were examined (Alonso-Almeida et al. 2015). It was found that 18% of companies had a sustainability report. Accountants or independent assurance providers audited only 44% of the sustainability reports. Accountants assured majority of the companies which constituted around 62.5% of all the companies (Heenetigala and Armstrong, 2017). Criteria used for assurance varied. It resulted in providing minimum assurance, by majority of the assurance providers. Through this study, it is found that sustainability reports have variability in assurance practices. Various assurance standards were also used by companies because no accepted standards of assurance for non-financial reporting were present universally. There are some limitations of this variability. One major limitation is the lack of standardized indicators. From this study it can be understood that there is a need for developing general criteria of acceptance for the assurance of non-financial reporting that will be in the reports of sustainability. As stated by Heenetigala and Armstrong (2017), assurance providers use another criterion which can be a significant contribution to independent providers and in the auditing profession. It can also be a good contribution for standard setters. It can provide them with important information. Sustainability reports are created by 95% of world’s biggest organizations. Some extent of reporting on facts of sustainability is provided in Australia by 85% 200 ASX companies (Heenetigala and Armstrong, 2017). Reporting of sustainability is a necessary transmission among the important stakeholders and the company.
Personal reflection for me on this topic is for sustainability reports of mining sectors. Sustainability in order to be sustainable environmentally should be conducted in a way that will reduce their effect on the surrounding environment. This will not only make the mining sites admissible but also environment friendly. Mining has negative impacts on the environment. It can be controlled through the implementation of the principles and concept of sustainability to mining activities. Promotion of comprehensive growth needs sustainable mining. Metals and mining companies will need to adopt a fresh perspective. Companies will need to examine a full range of environmental, financial and social factors that will have an influence on the trade in the long run. Sustainability has always been and will be an important aspect in mining today and even tomorrow. Actions in the mining industry are crucial to the present life with the commodities and minerals that we get. The gradual increase in mining activities put stress on the nature which is affecting the whole environment. Mining from the past fifty centuries has been with us. However the negative impacts can be minimized. For example in Canada, reducing the usage of water has highly resulted effectively. Energy consumption can also be reduced to mitigate the negative impacts of mining. Mining of resources cannot be stopped but the organizations can definitely opt for the techniques that will reduce negative impact of mining and increase sustainability.
Reference list
Carroll, A.B. (2015). Corporate social responsibility. Organizational dynamics, 44(2), pp.87-96.
del Mar Alonso-Almeida, M., Marimon, F., Casani, F. and Rodriguez-Pomeda, J. (2015). Diffusion of sustainability reporting in universities: current situation and future perspectives. Journal of cleaner production, 106, pp.144-154.
Heenetigala, K. and Armstrong, A.F. (2017). Credibility of sustainability reports of mining sector companies in Australia: an investigation of external assurance. Economic and Social Development: Book of Proceedings, 10th February, pp.347-362.
Islam, M.A. (2017). CSR Reporting and Legitimacy Theory: Some Thoughts on Future Research Agenda. In M. Aluchna, S.O. Idowu (eds.), The Dynamics of Corporate Social Responsibility: A Critical Approach to Theory and Practice, 28th December, pp.323-339.
Ni, A. and Van Wart, M. (2015). Corporate Social Responsibility: Doing Well and Doing Good. In Building Business-Government Relations (pp. 175-196). Abingdon: Routledge.
Stubbs, W. and Higgins, C. (2018). Stakeholders’ perspectives on the role of regulatory reform in integrated reporting. Journal of Business Ethics, 147(3), pp.489-508.
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