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Social and environmental reporting and the business case



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social and environmental reporting
and the business case
Social and environmental reporting and
the business case
Dr Crawford Spence
University of St Andrews
Professor Rob Gray
University of St Andrews
Certified Accountants Educational Trust, London, 2007
The Council of the Association of Chartered Certified Accountants consider this study to be a worthwhile
contribution to discussion but do not necessarily share the views expressed, which are those of the authors
alone. No responsibility for loss occasioned to any person acting or refraining from acting as a result of any
material in this publication can be accepted by the author or publisher. Published by Certified Accountants
Educational Trust for the Association of Chartered Certified Accountants, 29 Lincoln’s Inn Fields, London
© The Association of Chartered Certified Accountants, 2007
Executive summary 5
1. Introduction and outline 11
2. Literature review and explanations of corporate social and environmental reporting 21
3. Research design, sample and methods 29
4. Initial explorations: the pilot study 39
5. Why do corporations report on social and environmental issues? 43
6. The business case: beliefs and constraints 55
7. Conclusion, explorations and implications 63
Appendix 1: mind mappings the motivations for SER and CSR 73
Appendix 2: ecological footprinting 75
References 77
The research set out to shed light on the diverse
and complex reasons why organisations undertake
voluntary social and environmental reporting and
recommends a new approach to – or at least a
new mindset in – reporting.
The ACCA Awards for Sustainability Reporting
recognise and reward the continuing, substantial
progress made by an increasingly large number of
organisations in the field of social, environmental
and (more contentiously perhaps) sustainability
Such reporting has developed alongside the
greater adoption, by leading organisations, of
mechanisms such as environmental management
systems, coherent approaches to social
responsibility and attempts to integrate corporate
understanding of sustainability into the core
Guided by institutional structures like the ACCA
Awards for Sustainability Reporting, the Global
Reporting Initiative (GRI) and standards such as
AA1000, the leading edge of voluntary stand-alone
reporting continues to rise.
This steady incrementalism is an essential
element in any response to the growing demands
of sustainability. It may be necessary, but is it
The research suggests that corporate social
responsibility (CSR) and social and environmental
reporting (SER) motivations are all tightly
harnessed to a ‘business case’ and the authors
use this conclusion to ask two further questions.
First, can this incremental approach to addressing
the interactions between business and social/
environmental issues produce the required level
of change sufficiently quickly? Second, are there
essential elements in the social and environmental
agenda which lie beyond the business case;
beyond the capacity of business to deliver?
The authors call for more debate around the
need for twin-track approaches to addressing
sustainability and conclude that reporting can
play a critical role in our understanding of what
voluntary and business-led initiatives can – and
cannot – achieve as society faces up to the
immense challenges presented by the urgent need
to achieve sustainable development.
The research set out with the objective of
bringing clarity to the research literature which
has increasingly suggested that the reasons why
organisations undertake (voluntary) social and
environmental reporting are diverse and complex.
SER is the predominantly voluntary, self-reporting
of an organisation’s social and environmental
interactions. Such reporting is increasingly
undertaken in stand alone reports – some in hard
copy, many on the organisation’s website – and
represents an organisation’s understanding of
what it is to be environmentally and/or socially
responsible and (potentially at least) sustainable.
Clarity concerning the motivations for such
reporting is worthy of pursuit particularly due to
the range of apparent conflicts and contradictions
that seem to surround reporting and its
discussion, especially in commercial, professional
and political fora.
These tensions and contradictions – at least as
we see them – provide an important backdrop to
the research and are central to the way in which
the issues are perceived and responded to. Some
of these potential tensions and contradictions
• the very upbeat nature of the tone used in
reporting, as opposed to the selectivity of the
reporting and the relatively few organisations
that adopt it (see, for example, ACCA 2006; Kolk
2003; KPMG 2005)
Executive summary
Executive summary (continued)
• the immense progress made by industry in
adopting an incremental approach, versus
the trends in the global/planetary data, which
suggests a need for step changes (see, for
example, Meadows et al. 2004)1
• the progress and innovation in reporting (see, for
example, ACCA 2006) versus the almost
complete absence of evidence – as far as we
can assess – of a discharge of strict accountability
or that organisations are being held to account
• the voluntary nature of reporting and the
constraints of a business case: in other words,
whether corporations are capable of voluntarily
discharging an accountability that could
honestly expose their socio-environmental
impacts (Tinker et al. 1991)
• the very positive claims that are made about
the nature of (for example) sustainable
development and the almost complete absence
of any evidence to support such claims (see
Box 1 and, for more detail, Gray 2006(b) and
Erusalimsky et al. 2006)
• the apparent lack of any notion that there is any
conflict between economic pursuits and social
and environmental desiderata (see section 1.5,
page 15 of the full report).
The results suggest, in line with prior research,
that a variety of motivations underp in SER.
These motivations vary across organisations.
Notwithstanding this apparent diversity, the
different motivations appear to converge around
notions of conventional ‘business success’.
In other words, the reasons to report social
and environmental information are all tightly
harnessed to a ‘business case’.
1 In the face of increasingly persuasive – and
increasingly apocalyptical – data suggesting a relatively
imminent ‘end of days’, incremental change, however
intense or well intentioned, looks relatively ineffectual.
‘Our vision is that the principles of
sustainable development will become an
instinctive part of everyday business. We
must deliver fair value to shareholders based
on competence, vision, minimising risks and
maximising opportunities.’ Anglo-American,
Report to Society 2005: 7.
‘For BHP Billiton, sustainable development
is about ensuring our business remains
viable and contributes lasting benefits to
society through the consideration of social,
environmental, ethical and economic aspects
in all that we do.’ BHP Billiton, Summary
Report 2005: 3.
‘Sustainable development has increasingly
come to represent a new kind of world,
where economic growth delivers a more just
and inclusive society, at the same time as
preserving the natural environment and the
world’s non-renewable resources for future
generations.’ BT, Social and Environmental
Report: Summary and Highlights 2005: 19.
‘Growth needs to be sustainable if we
are to bring long-term value both to our
shareholders and others… For our business
to be sustainable, we must be profitable.’
National Grid Transco, Operating Responsibly
2004/05: 3.
‘Our approach: As an organisation,
we believe that sustainable growth in
shareholder value is best achieved through
sustainable business practices.’ United
Utilities plc, Our Company 05: Stakeholder
Report 2005: 4.
Executive summary (continued)
business efficiency
market drivers
reputation and risk management
stakeholder management
pressures from
benefits from
mimetic motivations
internal champions.
Despite the very significant incremental
changes in the interface between business and
sustainability, the study questions whether the
widely maintained view that business can deliver
responsibility and sustainability unaided is, in fact,
The research is based around interviews
conducted with managers in 36 UK firms.
The interviews were, initially, of a deliberately
open nature through which the rationales and
motivations underlying SER could be explored.
This led to two distinct stages in the research
Firstly, the pilot study explored various reporting
and reporting-related issues in an open-ended
manner. The intention here was to allow the
conversations between the researchers and the
managers to determine the way in which issues
unfolded while specifically recognising the
diversity shown by previous studies on the subject.
It was from this exploration that the apparently
unifying theme of the ‘business case’ emerged.
The results from the pilot interviews all indicate a
prevalence of commercial motivations for SER. A
majority of interviewees described this commercial
predominance as the ‘business case’ for SER. Also,
significantly, the results of the pilot study show
that it is often very difficult to separate SER from
corporate social responsibility.
Secondly, the main study explored the
pervasiveness of the business case; the diversity
and nature of the rationales offered; and the limits
and constraints that such rationales presented for
the development of SER.
Both SER and CSR were driven by a variety of
different pressures and perceived benefits.
Pressures included reputation risk
management, stakeholder management, the
need to satisfy pressures from the City and
from peers.
Benefits included reputational effects as well
as socio-environmental and business efficiency
The role of key individuals in initiating and
developing SER and CSR was often critical.
Interviewees commonly treated CSR and SER
as interchangeable and, despite there being
opportunities to talk about each separately,
seemed pre-disposed towards bundling the two
concepts and/or activities together.
Notwithstanding the variety of different
motivations and the various ways in which
they manifest themselves across firms, the
overwhelming majority are driven by business
reasons. The motivations form part of some
overall business case – even if the way in which
the business case manifests itself appears to
vary across firms.
Executive summary (continued)
mindset in) reporting and suggests that we might
move towards a reporting on organisational ‘un-
In the light of the increasingly convincing data
about the state of the planet and its inhabitants
and the claims by a growing number of businesses
to be ‘sustainable’, it is crucial that we develop
a clear and reliable understanding of the
relationship between organisational activity and
Interviewees held views that characterised their
organisation’s relationship with the natural
environment as largely harmonious, or at least
The business case, with its emphasis on win-win
situations, seems to preclude consideration of
situations where there may be conflict.
The business case seems to limit what
organisations can do in the first instance, and it
appears to preclude discussion about the limits
of the business case itself.
The report concludes with an initial exploration
of what this ‘limit to the business case’ might
mean for industry, society, social responsibility
and sustainability. Despite the very significant
incremental changes that have been wrought in
the interface between business and sustainability,
the report suggests that there are important
and unexplo red areas ‘beyond the business
case’. That is, in the face of widespread evidence
(on matters as diverse as the low incidence of
voluntary reporting, the quality of reporting
and the increasing urgency of sustainable
development), the study questions whether the
widely maintained view that business can deliver
responsibility and sustainability unaided is, in fact,
plausible. This is not to suggest that businesses
are necessarily irresponsible or that that they can
or should seek to go beyond a business case. It
is, rather, to request that more clarity be brought
to the debate and that the limits to businesses’
contribution to society and the environment be
explicitly and forcibly recognised. The report calls
for further debate on this issue and, recognising
explicitly that voluntarism must have its limits,
recommends a new approach to (or at least a new
‘I think that we start this stuff [SER and
CSR] from a commercial point of view: if
it doesn’t make business sense, then you
are not going to do it. You have to have a
bottom line benefit, otherwise you have no
compelling argument for your shareholders,
you have no compelling argument within
the business. If it doesn’t deliver tangible
reputational benefits, tangible business
benefits, then it is impossible to justify. We
are not a registered charity.’ (Interviewee)
‘[Our action was taken] for environmental
reasons but to sell it [we needed to
show] financial benefit to the company.’
‘There has to be added value in doing
what we are doing. We couldn’t just go and
do something for the environment or the
community just because we wanted to.’
Executive summary (continued)
Such understanding, as it currently exists, is
scarce and where it does exist it is often contested,
lacks clear data to support claims and relies upon
poor communication.
The report therefore recommends four strands of
Organisational reporting should ultimately
directly address sustainability through the
production of
‘un-sustainability reports’ comprising:
ecologically, a mass balance (see Danish
Steel Works 1991 and Ricoh Group 2005);
and an estimated ecological footprint (see
Best Foot Forward Ltd, 2004)
socially, a detailed and honestly addressed
stakeholder map (see Traidcraft plc and
Exchange and Cooperative Financial
Services) and full reporting of the
information relating to that map (ie
descriptive; legal and quasi legal; company
orientated; plus stakeholder requested;
reporting for each relationship); and an
explicit attempt to address issues of social
an honest confrontation of the organisation’s
own un-sustainability.
Attestation of sustainability and/or
sustainability reports must challenge all
claims to this state that are not supported by
convincing and reliable evidence.
Voluntary initiatives are valuable but not
sufficient. Government must either ensure that
the business case aligns with full sustainability
reporting and accountability or regulate to
ensure this outcome.
The accounting profession should actively
support the government in this.
The limits of the business case must be
publicly, carefully and regularly, re-examined.
There is no high moral ground here but an
urgent need for understanding.
Claims to win-win outcomes must be supported
by data or fiercely challenged.
Details of the business case, how it is developed
and where its limits lie.
An examination of the limits of the win-win.
Developing further exemplars of how the
un-sustainability report might be implemented.
Examining the impediments to wider debate,
wider accountability and wider acceptance of
the necessities of sustainability.
More specific examination of how reporting has
developed that may provide guidance on what
is not being reported: where the major failures
are in completeness and why.
Executive summary (continued)
Although voluntary disclosure by organisations
has probably existed as long as there have been
organisations, it is really since about 1990 that
we have witnessed the triumphal progress of
voluntary stand-alone reporting. As an increasingly
large number of significant companies become
regular producers of substantial and informative
social and environmental reports, so has the
innovation embodied in the leading edge of
reporting continued to embrace ever-richer
conceptions of the interactions between the
corporation, society and the natural environment.
Nearly two decades of such voluntary initiatives
have spoken lucidly of the possibilities of
voluntary disclosure and very properly attracted
unqualified admiration for the champions within
the organisations who have been the architects of
this progress. Institutional innovation has sprung
up around the development of reporting and
the influence of, for example, ACCA’s Reporting
Awards Scheme, the Global Reporting Initiative’s
Sustainability Reporting Guidelines and the
Institute for Social and Ethical Accountability’s
production of the AA series of standards has
ensured a supportive and innovative environment
within which both new and established reporters
can make progress.
And yet, this potentially triumphal account is
not the whole story. Academic research has
not offered entirely convincing explanations of
why organisations would undertake voluntarily
such a potentially onerous duty as social and
environmental reporting. More pressing than this,
however, is the growing recognition that if we do
know a little about why organisations report, we
actually know relatively little about why some do
report while many do not. Equally of concern
(as we shall argue later) is why so very few
organisations report either completely or reliably.2
This brings us to the key theme of this report: a
concern about the consonance (or dissonance)
between corporate profit seeking and wider
notions of social and environmental responsibility
and accountability. It is this that we seek to explore
and why, as we will come to explain, we have
found the notion of the ‘business case’ so helpful
in clarifying the attendant issues.
We will introduce the primary concerns in this
chapter, which is organised as follows. The next
section provides a brief discussion of social and
environmental reporting (SER). This is followed
by an introduction to the tensions that underlie
the present report and which, inevitably, may
prove to be a source of some contention. Section
1.4 then provides a description of the academic
background to the research that provided the
motivation for this study. The tensions and the
background are then teased out in section 1.5,
where we introduce the tautology that we believe
currently lies at the heart of CSR, SER and ‘the
business case’. Finally, the chapter concludes by
outlining the structure of the report itself.
What we will call social and environmental
reporting (SER, hereafter) refers to the self-
reporting of organisational socio-environmental
interactions. SER is used here to cover attempts
at accounting for environmental and social issues,
and sustainable development. Thus SER is what
is variously referred to as social accounting/
reporting; environmental accounting/reporting;
2 As a recent report in Accountancy, ‘How Green is My
Company’ (January 2007: 52–3) explores.
1. Introduction and outline
1. Introduction and outline (continued)
corporate social reporting; sustainability/
sustainable development reporting. There are
overlaps between all these different types of
reporting but marked distinctions can also be
made between them. SER is the term used in
this study to cover all these attempts at the self-
reporting of organisational socio-environmental
The different elements of SER may be confused.
The individuals interviewed did not share (as we
shall see) a coherent vision of SER, and they did
not seem to be clear as to how reporting and
responsibility are linked/de-coupled, if at all.
That is, what is the relationship between SER and
corporate social responsibility (CSR, hereafter)?
The interviewees readily talked about one in
the context of the other, or even conflated them
entirely. In order to make it apparent that we do
not argue that CSR and SER need necessarily be
conflated, we offer one simple clarification in
Box 1.1.3
The study of SER has grown steadily in the last 30
years. Overall, however, SER remains a peripheral
activity in the world of accounting research.
The practice of corporate SER, in contrast, has
existed to varying degrees for as long as there
have been corporations. However trivial or partial,
corporations have always produced some sort
of information on their socio-environmental
interactions. Maltby (2004), for example, studied
a set of the chairman’s pronouncements at
the annual general meeting of one firm in the
early 20th century, for social information. She
shows that even then there was dissemination
of apparently non-economic information. This
3 Other forms of corporate reporting have also been
undertaken by parties external to the corporation in
question. See Gray et al. (1996) for a discussion of these
external social audits.
raises the question of what counts as socio-
environmental information. SER could conceivably,
and quite legitimately, be thought to include
areas as diverse as product advertising, product
labelling, press releases, public speeches and
conference presentations.
The majority of academic work on SER has,
until recently, focused on disclosures through
the annual report, on the assumption that
this is where companies provide the most
comprehensive information and where they
formalise their position on socio-environmental
issues. While this is a reasonable assumption to
Box 1.1: Social responsibility and
There is an extensive and diverse literature
that has sought to define corporate social
responsibility (CSR) over the years. For
convenience we would adopt the statement
made by Walters (1977: 45) and quoted in
Mintzberg (1983: 13): ‘social responsibility
is not telling society what is good for society
but responding to what society tells the firm
that society wants and expects from it’. While
recognising the optimism, even naivety,
of this approach, it manages to embrace
the diversity and complexity of social
responsibilities and the probable impossibility
that any organisation will meet all those
responsibilities. By contrast, we see social and
environmental (and sustainability) reporting
as having merit to society only in so far as
it discharges accountability. Accountability
arises from responsibility and, at a basic level,
becomes a statement of the extent to which
society’s expectations of responsibility have
not been (and possibly could not be) met by
any single organisation.
1. Introduction and outline (continued)
make, it has also been recognised that focusing
only on company disclosures through formal
reports will lead to an incomplete picture of
company reporting (Buhr 1998; Unerman 2000;
Zeghal and Ahmed 1990). A wide variety of
other media, such as employment brochures,
advertisements and product labelling, are
employed by companies in order to disclose
socio-environmental information. Partly for
the sake of practicality, however, this study
focuses only on the formal socio-environmental
disclosures made by companies. In particular,
the study concentrates on stand-alone SERs,
rather than instances where socio-environmental
information is reported in the annual report.
Although this does not offer a complete picture of
company reporting, stand-alone reporting may be
presumed to offer the single most substantive and
comprehensive manifestation of a company’s SER
(KPMG 2005).
A number of SER developments since the mid
1990s are worthy of note. Kolk (2003) observes
a continued and significant rise in the number
of large firms that are now reporting socio-
environmental information. Gray (2005) reports
that 52% of the companies in the Global Fortune
250 now produce an SER of some sort. The nature
of the information reported is changing in some
respects. There is now a much higher incidence of
allegedly ‘Triple Bottom Line’ (rather than simple
environmental or social) reporting (for example,
Elkington 1997). SustainAbility/UNEP (2004:
8) report that in the ten years since they first
launched their annual SER survey, ‘the number
of reporting companies has exploded, the overall
quality of reporting has improved considerably
and the range of issues addressed has broadened
spectacularly’. Nonetheless, there has been much
evidence in the academic literature that casts
doubt on the extent to which a ‘transparency
revolution’ is really occurring (UNEP/SustainAbility
2004: 11).4 For example, SER practice has been
criticised for resisting the inclusion of overall
ecological impact analysis, ignoring key impacts
and engaging with a very limited notion of
sustainability (see, for example, Gray and Milne
2002, 2004; ACCA/Corporate Register 2004).
Whether or not the quality of SER should, or
indeed could, be improved to take account of
these (and other) factors is a key concern of this
The area of SER seems to be more than usually
fissured with potential tensions and contradictions.
These tensions and contradictions – at least as
we see them – provide an important backdrop to
the research and are central to the way in which
the issues are perceived and responded to. Some
of these potential tensions and contradictions
the very upbeat nature of the tone used in
reporting, as opposed to the selectivity of the
reporting and the relatively few organisations
that adopt it (see, for example, ACCA 2006;
Kolk 2003; KPMG 2005)
• the immense progress made by industry in
adopting an incremental approach, versus
the trends in the global/planetary data, which
suggests a need for step changes (see, for
example, Meadows et al. 2004)5
4 For further support of this claim see, for example,
Adams (2004); Erusalimsky et al. (2006); Gray (2006,
2006b); Kolk (2003).
5 In the face of increasingly persuasive – and
increasingly apocalyptical – data suggesting a relatively
imminent `end of days’, incremental change, however
intense or wellintentioned, looks relatively ineffectual.
1. Introduction and outline (continued)
• the progress and innovation in reporting (see,
for example, ACCA 2006) versus the almost
complete absence of evidence - as far as we can
assess - of a discharge of strict accountability or
that organisations are being held to account
• the voluntary nature of reporting and the
constraints of a business case: in other words,
whether corporations are capable of voluntarily
discharging an accountability that could
honestly expose their socio-environmental
impacts (Tinker et al. 1991).
• the very positive claims that are made about
the nature of (for example) sustainable
development and the almost complete absence
of any evidence to support such claims (see
box 1.2 and, for more detail, Gray 2006(b) and
Erusalimsky et al. 2006).
• the apparent lack of any notion that there is any
conflict between economic pursuits and social
and environmental desiderata (see section 1.5).
There are many potential quotations such as
those listed in Box 1.2 and the purpose here is
not to make a case one way or other but rather
to illustrate that such a case (for tension and
contradiction) could exist. Exploring the substance
of that case is a central purpose of the rest of
this report. Suffice it to say at this stage that the
assertive confidence of these quotations deserves
attention when, as far as we can assess, there is
absolutely no evidence to support such claims.
More constructively, however, we would anticipate
a theme which will feature throughout this
work: that of the simultaneous maintenance
of an apparent contradiction. That is, we need
to recognise, on the one hand, that marginal,
incremental change is essential and important but
unlikely to be sufficient to address the exigencies
of sustainability. On the other hand, we must
be conscious of the fact that a concern for only
drastic, fundamental change will fail to address
what can be done and the art of the possible: such
an approach risks becoming a charter for inaction
and despair. It is essential, we believe, to work at
the incremental while recognising the need for
step change; and to work for radical change while
exploiting and supporting incremental change.6
At a broad level, the study is set in the context
of a concern with the social and environmental
effects of corporate activity and the discharging
of a related corporate accountability. This
concern reflects an abiding interest within
social accounting in the very important role that
SER could potentially fulfil in the increasingly
important democratic debate over the role that
corporations can or cannot play in a sustainable
world. In particular, formal and complete social
accountability would, ideally, demonstrate
whether or not corporations are genuinely
capable of contributing to social responsibility
and sustainable development. More particularly,
the study is implicitly motivated from the outset
by the question of whether corporations are
themselves capable of voluntarily discharging an
accountability that could honestly expose their
socio-environmental impacts (Tinker et al. 1991).
One relatively consistent theme in the social
accounting literature has been the attempt to
6 A colleague coined the term ‘bipolar’ for this
need to maintain, simultaneously, two completely
opposing notions. Although, medically, this is an
inaccurate coining, it does capture the sense. The sense,
incidentally, is also caught by the poet John Keats’ notion
of ‘negative capability’, which might be articulated as
‘believing wholly in X while accepting without reservation
that not-X may be the case’.
1. Introduction and outline (continued)
Box 1.2: Potential tensions and contradictions: examples of quotations
‘Our vision is that the principles of sustainable development will become an instinctive part of everyday
business. We must deliver fair value to shareholders based on competence, vision, minimising risks and
maximising opportunities.’ Anglo-American, Report to Society 2005: 7.
‘For BHP Billiton, sustainable development is about ensuring our business remains viable and
contributes lasting benefits to society through the consideration of social, environmental, ethical and
economic aspects in all that we do.’ BHP Billiton, Summary Report, 2005: 3.
‘Sustainable development has increasingly come to represent a new kind of world, where economic
growth delivers a more just and inclusive society, at the same time as preserving the natural
environment and the world’s non-renewable resources for future generations.’ BT Social and
Environmental Report: Summary and Highlights 2005: 19.
‘Growth needs to be sustainable if we are to bring long-term value both to our shareholders and
others… For our business to be sustainable, we must be profitable.’ National Grid Transco, Operating
Responsibly 2004/05: 3.
‘Our approach: As an organisation, we believe that sustainable growth in shareholder value is best
achieved through sustainable business practices.’ United Utilities plc, Our Company 05: Stakeholder
Report 2005: 4.
‘At Centrica, corporate social responsibility means… making a positive contribution to future
sustainability.’ Centrica, Responsibility: Corporate Responsibility Report 2004: 1.
‘Sustainability promises both reduced environmental impacts and real cash savings for any
organization… [and] once people understand sustainability, they are often surprised to find how many
untapped sustainable practices make good bottom-line business sense.’ Hitchcock, D. and Willard, M.
(2006), The Business Guide To Sustainability: Practical Strategies and Tools for Organisations (London:
Earthscan), cover and p. xix.
‘Overall, the study confirms that there are compelling commercial reasons for emerging markets to
take action on sustainability...[and]…the research shows clear links between improved sustainability
performance…and a company’s financial results.’ Thorpe, J. and Prakash-Mani, K. (2003), ‘Developing
Value: The Business Case for Sustainability in Emerging Markets’, Greener Management International
(Special Issue on Sustainability Performance and Business Competitiveness), Issue 44, Winter: 17 and 18).
‘Outlining the long-term corporate benefits of sustainability, [the book] examines the changes
required in organisations to achieve true sustainability.’ Dunphy, D., Griffiths, A. and Benn, S. (2003),
Organizational Change for Corporate Sustainability, back cover (London: Routledge).
1. Introduction and outline (continued)
explain the existence of SER from viewpoints other
than accountability (see, for example, Gray et al.
1995a, 1996); such viewpoints have included
the use of legitimacy, stakeholder management
and political economy as theoretical frameworks
within which SER practice might be understood.
Rather than being used as a means by which
organisations render themselves socially and
environmentally transparent, SER has generally
been understood as: a means of securing the
legitimacy of organisations; a tool by which
stakeholder relationships can be managed; or
a process through which good impressions can
be constructed and/or through which conflicts
can potentially be obscured. For example, Patten
(1992) describes how oil companies used socio-
environmental disclosures to create an impression
of environmental responsibility in the wake of
the Exxon Valdez oil spill. Such examples could
be seen as serving to deflect attention away
from more fundamental challenges to modern,
international, financial capitalism.7
Although attempts to interpret SER as an act
of legitimacy, stakeholder management or
reputation management have helped improve
our understanding of SER, the results have
nevertheless been somewhat partial, contradictory
and frustrating. Partly this has been because of
the methods employed. Statistical analyses have
been useful in understanding broad trends in
SER over time and across companies, but the
quantitative methods employed by these studies
now appear to be inherently limited in their ability
7 The basic thesis underlying this argument is that the
additional legitimating disclosures succeed in giving the
impression that (for example) oils spills such as Valdez
are only incidental accidents. A counter argument is
that such ‘blips’ are actually systemic and they may be
better understood as manifestations of deeper structural
problems within our system of business, economic and
financial organisation.
to offer detailed explanations for why companies
undertake SER (for example, Deegan 2002 and
Roberts 1992). Researchers have, consequently,
turned to a more qualitative, field-based approach
and have shown that the simple explanations
of SER are underspecified and that the motives
for disclosure are complex and variable. (See,
for example, Adams 2002; Buhr 2002; Gray
and Bebbington 2000; Gray et al. 1995b, 1998;
Larrinaga-González and Bebbington 2001;
Larrinaga-González et al. 2001; O’Dwyer 2002,
2003, 2005.) Speaking to those directly involved
in SER practice allows for an alternative analysis
of SER motivations to that offered by quantitative
studies and shows how people within companies
speak and apparently think about SER. This itself
can contribute much to an understanding of the
SER phenomenon. In particular, the way in which
motivations apparently cohere and differ across
firms can be explored in depth through this
method. Stories of internal struggles may reveal
much about the interests that are driving and
shaping SER practice.
The literature indicates that there may be
much still to learn about SER and the process
of developing SER within firms (Adams 2002;
Buhr 2002). Because of this uncertainty, and
because of a personal preference on the part of
the researchers for talking to people involved,
a primarily inductive, exploratory approach
was taken to researching SER within firms (see
Chapter 3 for further discussion and justification
of this). Individuals within firms were interviewed
and encouraged to give their views about SER.
Because of the complexity and richness shown by
the previous qualitative studies (see, for example,
Adams 2002; Buhr 2002; Gray et al. 1995b
and O’Dwyer 2003), the issues explored in the
interviews of this study were initially left relatively
open. The analysis undertaken (Chapter 3) was
directed towards establishing themes in interview
1. Introduction and outline (continued)
transcripts. These themes may be summarised
into the principle categories of motivations:
business efficiency
market drivers
reputation and risk management
stakeholder management
pressures from
benefits from
mimetic motivations
internal champions.
As the study progressed, it also became more
focused on what interviewees routinely referred to
as the ‘business case’.
There is something both deceptively subtle and
yet self-evident about the notion of a ‘business
case’ as an explanation of why companies do
(and, indeed, should) report voluntarily on such
issues as their interactions with society and with
the environment, and their impact on the future
sustainability of the planet. The issue is self-
evident in that, despite years of appeals to the
‘better nature’ and ‘decency’ of the corporate
world by advocates of sustainability (see, for
example, Elkington 1997; Gray and Bebbington
2001; SustainAbility/UNEP 1997, 1998) the
extent to which our current predominant forms of
capitalism can permit pure altruism remains fairly
limited. More significantly, with listed companies
and the increased surveillance and arbitrage in
their markets, the opportunities for such altruism
become very limited indeed. Any manager is likely
to be deterred from undertaking activities whose
‘goodness’ may not be in question but which may
conflict with the enterprise’s profit generation.
Consequently, almost any activity undertaken by
a listed company – be it a ‘responsible’ action or
an activity of accountability – must be, virtually by
definition, in the interests of the organisation and
its financial participants.8
Why explanations of SER that embrace notions
of a business case might be thought deceptively
subtle, is somewhat more complex. As we have
already seen, responsibility and accountability
might be thought of as consonant with corporate
profit seeking (see, for example, Cowe and Hopkins
(2003) for an introduction). This suggests either
that acts of responsibility and/or accountability
are profoundly constrained acts (only those acts
of responsibility that are profitable are truly acts
of responsibility) or that all recognisable forms
of responsibility and accountability are profitable
(responsibility always produces profit). This leads
to an important potential inference, namely that
the current form of capitalism does and can
deliver the best of all possible worlds – a subject
on which both Marx and Friedman had much
to say. No matter how one considers the issue,
it seems unlikely that such a statement can be
accepted in an unqualified manner.9
8 This is not to suggest that listed companies are
always less altruistic than private companies but simply
to argue that the room for discretion – and therefore the
potential for it – is much less.
9 A corollary of this might well be that all damage and
injustice in the world is caused by poor people and badly
run companies – an argument often heard in disguised
form but a difficult argument to sustain.
1. Introduction and outline (continued)
Such argumentation leads to the inference that
actions of responsibility and/or accountability
that are driven by concern for profitability may, in
all probability, be responsible or accountable in
appearance alone.10 We do not need to dwell on
the complex ethics involved in this argument (see,
for example, Jacobsen 1991) to see that with a
little sophistry we can then claim that only actions
in conformance with profit seeking are socially and
environmentally responsible and, therefore, there
is no conflict – and cannot be any – between profit
seeking and responsibility and/or accountability.
Hence, if an act is not in conformance with
corporate self-interest it cannot be a responsible
action and must, by definition, be something else
entirely (Thielemann 2000).
Thus do we arrive at what we fear may be the
greatest – and perhaps the most dangerous – of
all tautologies:11 it is in companies’ interests to
be responsible and/or accountable/sustainable
and therefore successful companies are (and by
definition must be) responsible, accountable and
It is in the heart of this tautology that this research
is located. The research started out as an attempt
to add further depth to our current understanding
of the voluntary reporting phenomenon and
the (arguably) relative poverty of that reporting.
10 Although to help old ladies across roads is a
responsible act, to do so only when one is paid well to do
it may not be so responsible.
11 The tautology is dangerous because if responsibility
equals profit then too easily profit is seen to equal
responsibility and, as a consequence, profitable
companies do not need to be regulated because they
are, by definition, responsible (see Orlitsky et al. 2003,
who arrive at just this conclusion). If there is damage in
the world it is therefore done by somebody (it becomes
unthinkable that it could be done by profitable business)
and that somebody is probably poor people. It is difficult
to imagine a more pernicious form of reasoning.
The exploration became redirected and
predominantly focused on how businesses
articulate and understand this most dangerous
of tautologies and, eventually, whether or not
such businesses have any awareness that they
are a part of and supportive of it. If the ‘business
case’ (for responsibility, reporting, accountability,
sustainability or whatever) has become ubiquitous
and, apparently uncontentious, it deserves, in
its own right, to be re-examined with care.12 Any
‘business case’ is clearly partial but its use in
business-related language is rarely explicit about
this (Milne et al. 2005, 2006). There is generally
little or no recognition by business that there may
be a limit to what the business case can deliver.
Indeed, it is in the nature of business to consider
merely business cases. Consideration of situations
for which there is no business case is beyond
the scope of business. This may or may not be
a healthy situation. This report seeks to explore,
clarify and, if necessary, expose the potentially
delusional use of this apparently ‘commonsense’
approach to the future of corporations (and,
inevitably, that of the planet and its people).
12 To illustrate further: a major company used
a variant (for reasons of sensitivity the identity is
not revealed here) on the phrase ‘feeding the world
through good chemistry’ as its strap line. The sentence
is nonsense because it is, in no sense, an accurate
description of what the company actually did, which
was to undertake good chemistry through which it was
sometimes possible to provide food for people. The
rhetoric is seriously misleading.
1. Introduction and outline (continued)
The report is organised along traditional lines.
The next chapter provides a literature review
in which the two approaches to understanding
social reporting – what we will temporarily call the
‘quantitative’ and the ‘qualitative’ approaches –
will be reviewed and examined. The conclusions
of Chapter 2 are picked up in Chapter 3, where
the research design and methods are introduced.
The interview method employed is explained
and justified and the evolving nature of the
enquiry (and consequently the changing research
question) is presented. Chapters 4 and 5 contain
the actual research itself: the pilot study, its results
and analysis, and the main study. Chapter 6
examines the business case issues in some detail
before Chapter 7 provides a digest of the findings
and an exploration of the implications for the
way in which reporting, voluntary initiatives and
regulation are considered at this most critical
time. 13
13 Never, it seems, has the urgency of issues
surrounding planetary (eg climate change, water,
resource use) and social (eg debt, poverty, exclusion)
conditions been more widely recognised (eg Meadows
et al. 2004; Porritt 2005; WWF 2004). The whole role of
economic and environmental and social interaction and
potential conflict is at the heart of such concerns and, as
we shall see, at the heart of the voluntary reporting and
business case discussions.
1. Introduction and outline (continued)
Solomon and Lewis (2002), in a thorough and
wide-ranging review of some of the arguments
as to why organisations voluntarily make
environmental disclosure, ask why they do so
when the incentives are far from clear and the
disincentives appear to be overwhelming. This
chapter explores what the extant social and
environmental accounting literature has to say
on this apparent conundrum. First, we will define
what we mean by social and environmental
reporting, in the sense of identifying the
exact phenomena that will be the focus of the
analysis. Secondly, we will discuss the current
quality of SER with particular reference to
whether or not SER permits an understanding
of an organisation’s social, environmental and
sustainability performance. We will then discuss
in detail both historical and recent work into the
motivations that underlie SER.
Historically, the bulk of formal social and
environmental reporting – and the bulk of social
and environmental reporting research – has been
based in and around the organisation’s annual
report.14 Although reporting of various aspects
of the organisation’s social and environmental
interactions might appear in advertising, letters
to employees and so on (see, for example, Buhr
1998; Unerman 2000; Zeghal and Ahmed 1990)
the diversity and informality of this reporting
has only occasionally attracted attention in the
14 Whereas the vast majority of the literature has taken
the annual report as its object of study, there are only
a handful of works that have focused on stand-alone
reporting in its own right (see, for example, Buhr 2002
and Miles et al. 2002).
literature. For a range of reasons, therefore, it is
with the reporting of social and environmental
issues in a more formal and systematic manner
that we begin this review and with which sections
2.3 and 2.4 are concerned. The majority of this
work has focused solely on the annual report,
although the phenomenon of communicating
through stand-alone social, environmental or other
reports is starting to be given more prominence in
the SER literature.
Although the emergence of stand-alone reporting
is of interest in itself, the literature has not treated
this change as one that is fundamentally different
in character from annual report disclosures. A
clear distinction between findings relating to
reporting through the annual report and findings
relating to stand-alone reporting is therefore
not made in this literature review. Stand-alone
reporting may be considered simply an extension
of the SER function, albeit one that may bring with
it new symbolic significance.
It should be noted that the work on stand-alone
reporting is very much sparser for a variety of
reasons. First, stand-alone reporting is a relatively
recent phenomenon.15 Therefore, there has
simply been less time to study it. Additionally,
annual report disclosures offer the advantage of
permitting historical analysis over long periods
of time. There are still many firms that do not
produce stand-alone reports, and so comparison
across firms is difficult. Nevertheless, as stand-
15 It is typical to date the stand-alone social,
environmental or sustainability report phenomenon
from 1990 and the influential activities of Norsk Hydro,
British Airways, BSO Origin, Noranda and others (see, for
example, Gray and Bebbington 2001; Gray et al. 1996).
There have, however, been many examples from the
1960s, 1970s and 1980s of organisations that produced
stand-alone reports, whether as employee, employment
or even one-off environmental reports.
2. Literature review and explanations of corporate social and
environmental reporting
alone reporting grows it is increasingly likely
that the SER literature in the future will focus
on this phenomenon as the pre-eminent form
of reporting. Indeed, it is stand-alone reports
with which the empirical part of this study is
A number of ‘advances in wider accountability’
(ACCA 2006: 13) have been made in recent years.
The number of companies that have taken up the
production of stand-alone social, environmental
or sustainability reporting in the last 15 years
has increased rapidly. The very fact that such
reports are produced at all – and by so many
organisations – represents a degree of success.
Looking at these processes in conjunction with the
increasing standardisation and professionalisation
of the field, as exemplified by the development
and proliferation of standards such as AA1000
and the ever-evolving Global Reporting Initiative
(GRI), ‘global progress in sustainability reporting
is indisputable’ (ACCA/Corporate Register 2004:
13). Indeed, some commentators have suggested
that we are in the midst of a ’transparency
revolution’ (SustainAbility/UNEP 2004: 9), noting
the increase, not just in levels of reporting, but in
the quality of the reports that are produced:
in the ten years since SustainAbility and UNEP
launched our first international benchmark survey
of corporate non-financial reporting, the number
of reporting companies has exploded, the overall
quality of reporting has improved considerably
and the range of issues addressed has broadened
spectacularly (SustainAbility/UNEP 2004: 6).
Nonetheless, this apparently ever-increasing
progress in SER may be beginning to temper.
ACCA/Corporate Register (2004) notes a levelling
off, globally, in the number of companies taking
up reporting. Sustainability/UNEP (2004) also
concedes that the vast majority of multinational
corporations do not produce an SER of any
description. While SER remains a marginal activity
in terms of the number of companies reporting
worldwide, the quality of the reporting that does
take place has been questioned. Gray (2000)
argues that the backbone of environmental
reporting should be either an eco-balance
calculation and/or some attempt at measurement
of an ecological footprint (see Chambers and Lewis
2001). Given that humanity’s collective ecological
footprint is always growing (see Meadows et al.
2004; Millennium Eco Assessment 2005; WWF
2004), such information is necessary in order
to understand the extent to which corporations
contribute to this and, more importantly, what
role they could play in its amelioration. Corporate
claims of environmental responsibility fail to stand
up if they are not supported by information that
demonstrates their overall environmental impacts.
Environmental reporting continues to display a
concern with eco-efficiency rather than the more
pressing issue of overall environmental impact
(Milne et al. 2006).
Social reporting has also been criticised on the
basis of its failure to outline the organisation’s
key impacts and state to whom it is accountable
(ACCA 2006). There is also the charge that much
SER cherry-picks good news. Adams (2004), for
example, suggests that there is a gap between
reporting and performance in the UK, with
SERs often ignoring the more controversial and
negative issues that are picked up by the media.
Kuasirkun and Sherer (2004) similarly show
that SER presents a somewhat selective and
sanitised picture of social performance. Even
where companies do pick up on issues that have
caused public controversy, they overwhelmingly
do so in a self-laudatory manner (see, for
2. Literature review and explanations of corporate social and environmental reporting (continued)
example, Freedman and Patten 2004; Hogner
1982; Hughes et al. 2000, 2001; Maltby 2004;
Patten 2002; Patten and Trompeter 2003). Thus,
companies overwhelmingly skew their SERs in a
positive direction (see also Deegan and Rankin
1996; Guthrie and Parker 1989).
Moreover, although an increasing number of
companies are embracing Triple Bottom Line
Reporting in some fashion, and/or producing what
are purportedly ‘sustainability reports’, very few
of these confront the key sustainability issues or
try to envisage what a sustainable corporation
would be like (ACCA/Corporate Register 2004;
Gray and Milne 2002, 2004). Gray and Milne
(2004) point out that Triple Bottom Line reporting
is a concept that applies to the individual
organisation, accounting for its immediate and
direct social, environmental and economic
impacts. There is a fundamental distinction
between this and sustainability reporting because
sustainability applies to the system within which
the organisation operates (eg a society or an
economic system although, ultimately, even
these can be understood only within the context
of the whole of humanity and the biosphere).
A sustainability account therefore requires
consideration of an organisation’s impacts within
the context of the whole system. Gray and Milne
(2002) suggest that for organisations to produce
a sustainability account they need to look beyond
the organisational boundary and consider also the
socio-environmental impacts of the organisations
with which they contract. It is here too that we can
draw a distinction between CSR and sustainability.
Whereas the former refers to an organisation that
actively improves its social and environmental
impacts at the entity level, the latter refers to that
same organisation’s impact on the whole system.
In this sense one could envisage an ostensibly
‘responsible’ organisation as one that, for example
uses entirely renewable energy, recycles/reuses
a huge percentage of its waste, is one of the best
places to work and produces a product that is
hugely beneficial for society. Nonetheless, if that
organisation simultaneously contracts with, or
invests in, a large number of companies that are
not so responsible then its overall impact on the
whole system may still be negative. Sustainability
requires systems thinking, a level very few
companies ever consider, much less attempt to
account for.
Thus, just as the quality of SER in general has
been questioned, the applicability of the term
‘sustainability’ to sustainability reporting similarly
raises doubts. Even institutional developments
such as the GRI have arguably been limited or
even complicit in preventing SER from achieving
a meaningful degree of quality. For example,
Hammond and Miles (2004: 75) argue that the
full ‘warts and all’ approach to reporting that
has been adopted by many organisations since
the proliferation of standards such as the GRI is
really just a distraction and ‘may be used as a
legitimation device to detract attention from more
serious issues. In many instances the bad news
disclosure is selective, or reflects information that
is already in the public domain, as opposed to
providing honest coverage’.
There is thus a tension between what appears
to be reporting progress, on the one hand, with
critiques of reporting quality on the other. With
the increased numbers of companies reporting,
the broadened range of issues that are being
covered, and the development of SER standards
such as the GRI and AA1000, SER can begin to be
understood in more concrete and standardised
terms. Whether these developments result in
reports that allow assessment of an organisation’s
socio-environmental performance or impact upon
sustainability is debatable.
2. Literature review and explanations of corporate social and environmental reporting (continued)
SER in the UK and elsewhere is (largely) non-
mandatory. Given this, why organisations
would undertake the (often) burdensome task
of collecting and disseminating information
pertaining to their socio-environmental
performance is clearly of interest. Quantitative
research studies, which have looked at the
relationship between SER disclosure and
corporate characteristics, have given us some
broad insights into why companies might do
so. For example, we now know that SER is more
prevalent among larger companies (see, for
example, ACCA/Corporate Register 2004; Adams
et al. 1998; Al-najjar 2000; Choi 1999; Gray et al.
2001; Hackston and Milne 1996; Patten 1992)
and organisations from ‘higher profile’ industries
(see, for example, Choi 1999; Clarke and Gibson-
Sweet 1999; Cowen et al. 1987; Gray et al. 2001;
Hackston and Milne 1996; Walden and Schwartz
1997). We also know that it is a phenomenon
of the industrially developed countries (see, for
example, Belal 2000; Choi 1999; Elad 2001;
Kuasirkun and Sherer 2004; Rahaman 1999; and
Rahaman et al. 2004). ACCA/Corporate Register
(2004) notes that North America and Western
Europe are the most active reporting regions.
Although there have been some recent
developments in Asia (SER became mandatory
in Malaysia, for example, in 2007), reporting
is still mostly concentrated in Australasia and
Japan; the Caribbean and Latin America show
no significant signs of reporting and throughout
the whole of African and the Middle East it is the
more industrialised South Africa that shows the
most significant levels of reporting activity (ACCA/
Corporate Register 2004).
These quantitative studies have provided the
basis for the dominant theoretical perspectives
in the SER literature: Stakeholder (Roberts 1992
and Ullmann 1985), Legitimacy (Deegan 2002
and and Neu et al. 1998) and Political Economy
theories (Tinker et al. 1991). Each of these
describes in one way or another how SER will arise
in response to pressure on firms to be responsible
(namely the large, high-profile companies of the
industrially developed countries). SER is viewed in
these theories as a means of placating powerful
and/or antagonistic stakeholders, thereby
maintaining the legitimacy of the firm along with
the wider legitimacy of the market system within
which the reporting organisation operates.
Such theoretical interpretations have largely
resulted from quantitative studies into SER. These
studies have succeeded in establishing broad
relationships between SER and other factors
such as industry variables, size and country
(see above), but the interpretations of SER are
somewhat simplistic. Qualitative work has yielded
insights into SER that suggest that motivations
to disclose are somewhat more complex than
simply to achieve organisational legitimacy, or to
manage stakeholder relationships (eg Buhr 2002).
A key characteristic of these qualitative studies
is their emphasis on eliciting directly the views
and opinions of those involved in producing SERs
for organisations, normally undertaken through
interviews, case studies or surveys.
In one of the few detailed case studies in the
area, Buhr (2002) considers the initiation
of environmental reports in two Canadian
companies. This study shows that changing
environmental disclosure practices is a long and
complicated process, which varied across the
two firms. In one case, motivations were related
to investor pressure. In the other case, the main
motivation related to someone inside the company
who championed the process. Gray et al. (1995b)
2. Literature review and explanations of corporate social and environmental reporting (continued)
also show the role of individual champions
to be significant in initiating environmental
reporting. Gray et al. (1995b) assess the extent
to which environmental reporting is implicated
in organisational greening, concluding that the
change brought about by environmental reporting
has been largely synthetic.
Gray et al’s study (1995b) has been replicated
for a group of Spanish companies by Larrinaga-
González et al. (2001). They concur with the
findings of Gray et al. (1995b) that fundamental
organisational greening does not take place
as a result of environmental reporting. The
central values of organisations appear to remain
unchanged by environmental reporting. Larrinaga-
González et al. (2001) go further, to assert that the
environmental report is used as part of a change-
resistance strategy, to prevent more radical
approaches to organisational greening from taking
hold. These themes are built upon in Larrinaga-
González and Bebbington (2001), a more detailed
case study of a Spanish organisation. As in
Larrinaga-González et al. (2001) and Gray et al.
(1995b), Larrinaga-González and Bebbington
(2001) question whether organisations
change substantially when they respond to the
environmental agenda or whether they change the
environmental agenda itself in order to perpetuate
the status quo. Their results suggest that both are
taking place simultaneously, thus implying that
motivations underlying SER are both numerous
and complex.
Miles et al. (2002) report on what appears to be
the broadest investigation to date into UK SER
motivations. Four broad factors are shown to
motivate organisations to undertake SER. These
are, in ascending order of importance, peer
pressure and benchmarking activities; stakeholder
pressure; government pressure; and pressure
from the City. Whereas the initial decision to report
is understood by SER managers as a reaction
to pressure, Miles et al. (2002) show that, once
the organisation has started reporting, a number
of perceived benefits arise: enhanced external
reputation; external recognition via awards/
ranking exercises; increased staff morale; and
‘business drivers, such as cost or risk reduction’
(p. 85). Therefore, there was a mixture of both
proactive and reactive reasons for continuing to
Adams (2002: 223) highlights a series of ‘internal
contextual factors’ that play an important part in
influencing reporting. The factors relate both to
the attitudes of organisational members and to an
organisation’s internal processes and governance
structures. For example, in addition to managerial
attitudes towards reporting and responsibility,
Adams (2002) suggests that the way in which
organisations structure their reporting process (ie
which departments are involved and the timing
and resources committed) has an important
impact on how the report will turn out. This points
towards a potential variety of reasons, or ‘internal
contextual factors’ (Adams 2002: 223) that may
explain the diversity in SER practice and that may
be relatively independent of the actual motivations
that purportedly underlie SER.
The qualitative literature therefore suggests
that SER motivations are numerous, complex
and require analysis in order to unpick them.
They can also be contradictory. For example,
O’Dwyer (2003) reports that Irish managers hold
broadly two sets of motivations for corporate
social responsibility (CSR): enlightened self-
interest, where CSR is a manageable activity
that is congruent with conventional business
objectives; and rights/obligations, where there
is a sense of responsibility for constituencies
external to the firm. Probing deeper revealed
2. Literature review and explanations of corporate social and environmental reporting (continued)
that, in the case of conflict between financial and
social/environmental considerations, the former
dominates the latter. A similar dual rationale is
noted by Gray and Bebbington (2000), who report
that individual managerial perceptions of what
sustainability implies for business conflict with the
official organisational conception.
These two studies suggest that CSR activities
are presented as moral obligations/duties when,
in fact, the ‘reality’ is closer to enlightened
self-interest. These findings also problematise
the notion that pursuing business-as-usual
is consistent with fulfilling responsibilities to
society. Any such tension is largely absent from
the business literature on SER and CSR. For
example, AccountAbility has been working hard
for the last few years to try to convince business
that there are benefits in pursuing CSR and
SER. In 2000, for example, their publication
Conversations with Disbelievers began to point
out the various financial benefits that could be
achieved as a result of undertaking social and
environmental initiatives. Their 2002 Innovation
through Partnership outlines some of the less
tangible, yet no less beneficial, effects on
corporate performance that result from engaging
with and becoming accountable to communities.
Organisations such as Business in the Community
have pointed out the business benefits that can
be yielded through the implementation of such
things as environmental management systems
and ‘corporate responsibility reporting’ (Business
in the Community 2005) in an attempt to get
more companies to pursue CSR. Numerous think
tanks and consultancies are involved in CSR, and
these are actively promoting the business case for
SER and CSR. The London Benchmarking Group
(2006), for example, has developed a methodology
that allows corporations to target their community
investment in a way that maximises the
business benefits that arise as a result. Surveys
of SER by SustainAbility use the language of
risk management and highlight the increasing
discernment of investors over SER, again
indicating an increasing emphasis on business
imperatives to report rather than on moral duties.
In Gearing Up, SustainAbility (2004) also asserts
that most CSR initiatives are not closely enough
integrated into company core strategy and that
companies are not receiving the benefits that they
could, as a consequence.
The business/professional literature therefore
reflects a ‘business case’ emphasis, whereby
attempts increasingly are being made to
capture the CSR attention of companies with
financial carrots. This can be contrasted with the
academic literature. The theories of SER have
been developed to reflect a concern that SER
serves a socio-political function as a mediator
between organisations/management and society/
stakeholders. The qualitative literature that has
been outlined here suggests that a much more
complex and contradictory set of motivations
underlie SER. Comparing and contrasting
these different literatures reveals a plethora of
explanations as to what motivates SER, some of
which are complementary and some of which are
mutually exclusive. There certainly appears to be
value in exploring corporate motivations further
in an attempt to clarify whether the business
case rationales that are implied by the business/
professional literature contradict the socio-political
theorisations of SER and the more nuanced
explanations offered by qualitative academic
2. Literature review and explanations of corporate social and environmental reporting (continued)
There has been much written on SER and
this literature review has not sought to be
comprehensive but rather to show some relative
fixities and trends. Comparing the data from
recent fieldwork into SER motivations with
the different information coming from the
business literature, we have tried to show how
our explanations of SER remain underspecified.
Qualitative work suggests that the process by
which SERs come about and take shape within
organisations is far from straightforward. More
specifically, qualitative studies suggest SER
motivations to be much more complex and
multifarious than is reflected in stakeholder,
legitimacy and political economy theories. Yet the
evidence from business and professional studies
suggests that business is merely pursuing CSR
and SER for business reasons. This study will seek
both to take account of increasingly prominent
business arguments for SER and to build upon
the insights offered by the fieldwork described
in the reports cited above. In so doing, this study
attempts to enhance our understanding of, inter
alia, SER motivations. The way in which this
exploration has been carried out will be reported
upon in the next chapter.
2. Literature review and explanations of corporate social and environmental reporting (continued)
The preceding chapter illustrates the diverse and
occasionally complex explanations that appear to
underlie the decisions and the processes that lead
to the (non) disclosure of social and environmental
information by organisations. A key factor here
is that the more popular explanations (typically
stakeholder theory, legitimacy theory and political
economy theory) – although undoubtedly partly
successful – are clearly under-specified and
offer only partial and not entirely persuasive
explanations of reporting. At our current level of
understanding, at least, these theories appear
to offer relative simplicity at the cost of fuller
realism. A range of new insights, greater subtlety
and more diversity of explanation appear to
be emerging from the field-based research.
Possible explanations for voluntary social and
environmental reporting include arguments that it:
legitimates the organisation
legitimates capitalism
signals risk management to financial
demonstrates what the organisation does
demonstrates the organisation’s social
puts the organisation’s point of view
forestalls regulation.
Voluntary reporting is sometimes a result of key
individuals’ efforts and commitment or simply of
external pressure.
The present research has a field-based approach.
If one seeks improved understanding of the
reporting process, such an approach is arguably
the most fruitful. The inferences drawn from the
business/professional literature stand in sharp
contrast to the diverse explanations of reporting
practice discussed in the academic literature.
Theoretical closure is some distance off. As the
literature reviewed in Chapter 2 implies, there
remains considerable scope for more exploratory
fieldwork in this area.
Consequently, we conducted exploratory
interviews with a range of organisations. This
chapter explains the derivation of the interviews,
the acquisition of the sample, and how the
approach changed as the interviews progressed.
The chapter is organised as follows. Section 3.2
introduces the research focus and the way this
developed over the different stages of the study.
Section 3.3 explains the population and sample,
and section 3.4 discusses how the interviews were
approached and conducted. Section 3.5 outlines
the data analysis processes. Section 3.6 provides
a brief discussion of the material covered in this
The purpose of this research is to explore why
companies report social, environmental and
sustainability information voluntarily – but do so
only partially. Where, if anywhere, do organisations
see the limits of advantage to their reporting and,
most especially, where do the conflicts lie between
typical measures of corporate success and a wider,
more embracing accountability? It may be the
case that, for the many organisations that do not
report, the disadvantages of reporting outweigh
the attractions; the arguments for reporting are
not universally applicable. It is considered that, by
codifying different stakeholders and the nature of
3. Research design, sample and methods
3. Research design, sample and methods (continued)
the different pressures and incentives that lead to
different approaches in reporting, the study may
reveal the strength of the constraints on greater
accountability and, as a consequence, allow
assessment of the possibilities of SER.
As will be discussed in more detail below (and
expanded in Chapter 4), the intellectual focus
and research design evolved as the project
progressed. More specifically, the initial broad-
based enquiry sought to embrace both reporting
and non-reporting organisations. Furthermore,
for purposes of comparison and in order to reveal
unwitting assumptions, the pilot study was also
directed at both UK and non-UK companies. This
pilot study raised two broad issues. First, the
attempt to develop a reporting/non-reporting
and UK/non-UK sample was impractical (see
the next section). Second, analysis of the broad-
ranging interviews produces a range of insights
into a number of aspects of reporting motivations
and the processes of reporting. This analysis, in
particular, also offers a tantalising glimpse of a
potentially unifying theme – that of ‘the business
case’. This process will be explained in more detail
but, for now, its importance lies in the fact that
the interviews in the main study, which followed
the pilot, were focused on the issue of what ‘the
business case’ comprises, how such a case is
articulated and understood, and the limitations
that such a case exhibits.
The research was initially intended to explore two
kinds of organisation: those involved at the leading
edge of social, environmental and sustainability
reporting; and those who are not – or only
peripherally – involved in such reporting. The
methodology was to have comprised interviews
with the (non) reporting organisations and, if
appropriate access could be arranged, detailed
case studies of the reporting experience.
The population of reporting companies chosen
comprised those that submitted reports to the
ACCA Reporting Awards Scheme in 2003, with
especial emphasis on those that were shortlisted
by the scheme and that might, therefore, be
considered the leading edge of reporting.16 Of
these submissions, an explicit focus was placed on
the larger companies because, as was discussed
in Chapter 1, the motivation for this research lay
in the importance of accountability as a means
of ensuring a democratic debate over the role
in society of the organisations with the most
significant socio-environmental impacts.
An initial approach was made to a selection of
these companies (chosen initially somewhat
haphazardly), with, in the first place, an emphasis
on their size, their location and industry
representativeness. As positive responses
were received, approaches were then made to
comparable companies that did not produce
stand-alone social, environmental or sustainability
reports. The initial intention was that the resulting
sample of shortlisted organisations was to be
matched, as far as possible, with a sample of
‘non-reporting’ organisations. Only one positive
16 There are, of course, UK organisations that
report and do not submit to the ACCA Awards and
some of these reports may be considered significant.
Nonetheless, the submissions arguably represent a
reasonable approximation of all UK reporters and there
seem to be very few significant reporters that are not
included in the ACCA shortlist. In addition, by restricting
the population to those in the ACCA Reporting Awards
Scheme, we were able to offer some control over one
factor that appears to have a significant influence in the
decisions to report (see, for example, Miles et al. 2002
who note that some organisations have been motivated
to report, at least in part, by the existence of the ACCA
3. Research design, sample and methods (continued)
response was received from a non-reporting
company despite numerous attempts and this
therefore had a significant effect on the intended
sampling strategy.
The initial (pilot) sample finally comprised 13
organisations – one of which was a non-reporter
(in the financial services industry) and 12 of which
had produced a stand-alone SER. Two of these 13
organisations were from Italy (this is summarised
in Table 3.1 on page 30). The outcome of all
these interviews – which were wide-ranging
and influential in how the rest of the study was
conducted – is described in Chapter 4.
The experiences of the pilot study led to a more
focused and coherent approach to sampling for
the main study. It was decided that the sample
should be further restricted to listed companies
and should not include any organisation included
in the pilot study. Furthermore, from the pilot
study it emerged that the lack of completeness
in the reporting – something observed elsewhere
in social and environmental reporting literature
(see, for example, Gray and Milne 2002) – had
some impact on the responses recorded. It was
therefore decided to focus on the organisations
whose reports might be thought to represent the
most complete examples of social, environmental,
and/or sustainability reporting. For this reason, the
‘Sustainability’ category of the reporting awards
was selected as the most important. Sustainability
reports should include some consideration of
both social and environmental issues, not just one
or the other, and reports labelled ‘sustainability’
should be the most complete of those within the
category of ‘best practice’.17
17 ACCA has since changed the structure of its Awards
scheme, combining all reports into one ‘Sustainability’
Following the high response rate among reporters
in the pilot study, letters were initially sent to
organisational CSR or Environment departments
identified in the back of corporate reports,
requesting an interview with the individual(s)
responsible for producing the organisation’s
SER. As responses to these letters were not
forthcoming, telephone calls were made and
then e-mails sent as a follow-up to the relevant
individuals. This proved to be much more
successful. In total, 25 companies agreed to give
an interview: 21 interviews were successfully
arranged with ‘sustainability reporters’; the
remaining four organisations were drawn from
either the environmental or social categories.
These organisations were chosen on the basis
of the breadth of issues covered in their reports.
The reports from the four companies not in the
sustainability category did cover both social and
environmental issues in roughly equal proportion
and so were deemed suitable for inclusion in
the sample. Eventually, 27 individuals were
interviewed from 25 organisations.
The overview of the organisations interviewed is
shown in Table 3.1 – it should be noted that two
of the interviews in the main study involved two
people, rather than only one person. Main sample
interviews therefore include the views of 27
The individuals interviewed were generally those
responsible for the day-to-day collation of the
sustainability report. In two cases, the individual
worked on the report, but did not have overall
responsibility for it. Elsewhere, two interviewees
were the directors with ultimate responsibility for
the report, but subordinates dealt with the day-to-
day process of producing the report. This scenario
was not one that was deliberately sought out by
the researcher; rather it depended on availability
of the relevant individual and the person to whom
3. Research design, sample and methods (continued)
the researcher was directed. Thus, there was
some difference in opinion over who the relevant
individual was, although generally the ‘SER
managers’, ie those responsible for the day–to-day
process of producing the report, were those who
were interviewed. These individuals were generally
below board level and part of either the corporate
environment department, the environment
department, the health and safety department
or the corporate responsibility/sustainability
Table 3.1: Distribution of interviews undertaken
Industry sector Pilot sample Main sample Comments
Water and waste 4
Power generation and
1 3 The pilot interview involved two people
Pharmaceuticals 1
(including oil and gas)
Both pilot companies were Italian and one
of those interviews involved three people;
one interview in the main study involved two
Speciality metals 1
Construction 2 One of these interviews involved two people
Telecoms 1 1
Property 1
Logistics 1
Aviation 1
Financial and
corporate services
One in the main study and one in the pilot
was a non-reporter
Music and publishing 3 One was a non-reporter
organisation 1
SMEs 2
Tobacco and gaming 2
Total 13 25
Companies that rejected the approach for an
interview were often unwilling to provide a reason
– or suggested that one read the report in order
to obtain any information that was required. The
main reason given for not granting an interview
was that the individuals and their departments
were insufficiently resourced and/or had a limited
amount of time. A common comment was that
they already spent considerable amounts of time
filling in academic and investment questionnaires.
3. Research design, sample and methods (continued)
One respondent said:
There is quite a severe issue of CSR questionnaire
fatigue/overload, in which companies receive large
numbers of enquiries from a) many bodies such as
ACCA, b) even more organisations doing research
work on their behalf (ie this is the third enquiry re.
work commissioned by ACCA that I have received
in the last month or so), and c) an amazing amount
from BSc and MSc students looking to write
dissertations based on surveys of the FTSE100/250.
One of the interviewees in the study developed
this view when he remarked that having to spend
lots of time reporting and dealing with external
communications prevented him from changing
the organisation. There seems little doubt that
a number of organisations experience ‘research
fatigue’ and many may find that the apparatus
of being seen to be ‘responsible’ hinders them in
achieving true responsibility. This is increasingly
the case with the growing formalisation and
standardisation of SER through initiatives such as
ISEA and the GRI. The limited ability of business
generally to respond to civil society’s concerns
about its socio-environmental activities is itself
indicative of the relative dearth of resources
committed to both CSR and SER. This suggests
the lack of priority given to socio-environmental
The interviews were all conducted at the premises
of the interviewees, carried out face-to-face and
recorded, with the guarantee of anonymity in any
subsequent publications. All interviews were semi-
structured, involving a single researcher and were
conducted as guided conversations (Llewellyn
2001; O’Dwyer 2004) where the individuals were
directed into relevant themes and topics and then
left relatively free to convey their own views and
beliefs. The interviewees were not supplied with
a copy of the interview protocol beforehand, but
simply informed that the research was concerned
with discussing the motivations behind SER and,
in the main study, any conception of a business
case for it.
The pilot study interviews were structured around
broad discussion areas identified by Adams
(2002: 223), who describes a series of ‘inner
contextual factors’ that influence reporting within
organisations. She classifies these variables as
process variables or attitudes. Process variables
include the degree of formality with which reports
are constructed, the departments that are involved
in the preparation of reports, and the way in
which, if at all, stakeholders are engaged as a part
of the reporting process. Attitudes are largely the
explicit reasons given for reporting per se as well
as views on such things as reporting ‘bad news’.
Adams’s work (2002) was used as a basis for
the pilot study because of the breadth offered
by her protocol, which covered a range of issues
relating to reporting motivations and the process
of reporting. A similar protocol gave the pilot study
a frame whereby the researcher could understand
something of the way in which company managers
view and talk about SER.
The key areas in the pilot interviews were:
the reporting process
reasons for reporting
perceived effects of reporting
issues not reported on
reporting in the future
reporting audiences
views on reporting regulation
the influence of the ACCA Awards.
The intention was not, however, to replicate
Adams’s study (2002). Whereas Adams (2002)
3. Research design, sample and methods (continued)
raises questions relating to both broad and
specific reporting issues and succeeds in
identifying areas that may be worthy of further
research, the pilot study was intended to go into
more depth on a narrower range of issues. The
pilot study focused on the motivations underlying
SER rather than the detail of the costs associated
with it or the links between the systems for
collecting the environmental and economic data.
Therefore, the protocol used by Adams (2002) was
adapted slightly for the pilot study. The protocol
was edited a little, providing a loose framework
within which to explore reporting motivations.
Although the interview protocol remains quite
wide ranging, all the areas of the revised protocol
were related in some way to reporting motivations.
Immediately before the interviews, the
interviewees were informed that the researcher
had a protocol of issues to cover but that it need
not be followed rigidly. It was stressed to the
interviewees that the main point of the interviews
was to hear their story about the reporting process
and why their organisations were undertaking
SER. The intention was to discuss a range of
theoretically interesting issues and, on the basis
of subsequent analysis, highlight areas worthy of
further investigation. In practice, the conversations
drifted away from the interview protocol at times,
and areas of apparent interest were pursued by
the researcher. The interview protocol still served
to structure the conversations loosely. Each topic
on the interview protocol was discussed, although
the extent to which the interviewees talked about
any particular issue varied.
The results of the pilot study are presented in the
following chapter. The pilot study encompassed a
diversity of theoretically relevant areas, while the
main study concentrated on issues that emerged
from the pilot study analysis, such as ‘win-win’,
the consonance of profit and responsibility,
and the potential for conflicts in accountability
and responsibility. The main focus remained
on motivations but this was accompanied by a
concern to explore in more depth the ideologies
and beliefs of the interviewees. The protocol was
adapted from the pilot study in order to enable
This tighter focus for the main study necessitated
some adaptation in the interview technique.
That is, in the pilot interviews the interviewer
was relatively passive but in the main interviews
there was more active probing. Such probing was
related, primarily, to:
1 whether respondents considered that there
was any sense in which pursuing notions of
responsibility consonant with the business
case might undermine genuine responsibility
2 how the completeness/incompleteness of the
reporting was explained18
3 the extent to which respondents recognised
boundaries and conflicts in this area and
how they were resolved.
Although the researcher was more active in
probing in the main study than in the pilot study,
the interviews were always of a semi-structured
nature. Interviewees were still encouraged to tell
their stories. Thus, the change in methodology
between the two studies was intended to provide
a more relevant theoretical frame of reference.
The conversations became more guided
(Llewellyn 2001; O’Dwyer 2004) but they always
18 Assertions of completeness were challenged by
reference to ecological footprints as approximations of
environmental completeness (see Gray 2000).
3. Research design, sample and methods (continued)
remained conversations and never regressed into
straightforward ‘question and answer’ sessions.
The interviews themselves (in both the pilot and
main studies) lasted between half an hour and two
hours. The average time for the pilot study was
around one hour while the majority of interviews in
the main study lasted one and a half hours. All but
two were recorded and subsequently transcribed.
The transcription for the remaining two was
based upon written notes taken by the principal
researcher (see below).
Miles and Huberman (1994) note that there
are three concurrent themes during qualitative
data analysis: data reduction, data display, and
conclusion drawing and verification. Throughout
the data collection stage, extensive notes were
taken during the actual interviews and following
each interview personal reflections were written
in a memo book in order to collect initial
impressions. Thus, some form of data analysis
was done during the data collection phase. As
O’Dwyer (2004) notes, data analysis ‘constitutes
a pervasive activity throughout a study’s life and
does not commence (only) after interview evidence
has been collected’. Similarly, Ahrens and Dent
(1998) remark that ‘it would be a strangely
disinterested researcher who could withhold from
at least tentative pattern making at an early stage
during the research process’.
As the interviews were transcribed these notes
were added to and interrogated. An interpretative
reading of the transcripts was then undertaken
in conjunction with these notes. This reading was
largely inductive, although the fundamental thread
to be considered was SER motivations. The other
issues that were covered during the interviews
ensured that these motivations were not viewed
in isolation. Nonetheless, the analysis was not
undertaken just to understand specifically what
each interviewee said about those particular areas.
Rather, the interview transcripts were treated as
stories in themselves. These stories were read and
re-read in order to get an intuitive sense of what
was being told.
It was this informal pattern seeking, coupled with
the sampling issues, that eventually led to the
designation of the initial exploratory interviews
as a pilot study. The 13 interview transcripts
from the pilot study were read and re-read and
broad inferences drawn. Revising, presenting and
discussing these led to the decision to focus upon
‘the business case’ (see Chapter 4).
The material from the main study was more
detailed and although the approach employed
in the pilot study was also adopted in the main
study, the data were still very difficult to manage
and link together. Hence a more systematic
approach to data analysis was undertaken in order
to facilitate the writing of the ‘meta-story’ of the
interviews. The approach followed throughout the
data analysis phase is summarised in Fig. 3.1 on
page 34.
During the main study each transcript was coded
in sections using NVivo software. The codes were
derived initially from the interview protocol but
the semi-structured nature of the interview meant
that most of the codes were intuitively derived. For
example, 89 ‘free nodes’ were derived, over 30
of which were identified as specific motivations.
So codes had to be derived for each motivation
as it was interpreted. Also, the loosely guided
conversations invariably extended beyond the
interview protocol, and codes had to be derived
for the various topics discussed. Throughout this
process, a memo book, separate from the one
that related to each individual interview, was kept
3. Research design, sample and methods (continued)
Data reduction 1 – preparatory
Construction of interview protocol
Notes taken during interviews
Reflections recorded in Memo Book 1:
immediately after interview and
Tape-recorded reflections:
immediately after interview
Data reduction 2
Transcribe interviews and record
thoughts in Memo Book 1
Prepare ‘big picture’ summaries
On second reading of interview
scripts, record emerging themes
using NVivo software
Develop intuitive coding scheme
iteratively and reflexively
Review Memo Book 1
New thoughts recorded in Memo
Book 2
Data reduction 3
Review initial coding
Record thoughts on each code
Construct matrices for motivations
and audiences
Draw out relationships and
contradictions in the data
Data display
Collate open codes into general
Separately record ‘uncollapsed’
Prepare motivations mind map
Data interpretation 1 – constructing
the ‘meta story’
Make detailed examination of mind
map and matrices
Identify key patterns in codes
Question if evidence can be
organised differently: make changes
Review: interview guide; field notes;
memo books; summaries
Data interpretation 2 – theorising the
‘meta story’
Neo-Gramscian interpretation
Interplay between meta-story and
Figure 3.1: Process of data analysis
(adapted from O’Dwyer 2004)
3. Research design, sample and methods (continued)
in order to reflect on potential general themes
and the meaning of the data as a whole. Once a
number of transcripts had been coded using the
intuitively derived codes, the process of coding
became less cumbersome and the need to revise
codes became less frequent. The coding of the
initial transcripts was the most demanding.
The process of coding was primarily inductive.
Although background theorising inevitably
influenced the formulation of open codes, a
conscious attempt was made to keep the codes
as atheoretical as possible. Terms such as ’risk
management’ or ‘customer satisfaction’ were as
abstract as the codes became, and these were
based on the language constructs used by the
interviewees themselves. The intention was to
produce an inductively derived, descriptive ‘meta-
Ahrens and Dent (1998) note that the most
untheorised part of the qualitative research
process is the way that the researcher sees certain
streams in the data. As mentioned above, this
process of theorising is pervasive throughout
the life of the study, starting with the framing
of the interview protocol, continuing with the
way in which the researcher interacts with the
interviewees in the field, through to the analysis
and writing up of the data. It is a highly creative
process (Ahrens and Dent 1998).
Following the coding of each transcript, ‘big
picture summaries’ were made for each
interviewee. The summaries were constructed
around the themes on the interview protocol. The
summarising of each transcript served two main
purposes. First, it allowed a clearer reading of each
interview and how each interview corresponded
to the various themes. Secondly, the systematic
data analysis carried out served to dissect the
data and provide greater understanding of various
elements. Although this helped enormously in
understanding the links between motivations and
corporate behaviour, the utterances were not
looked at in isolation. The context and general
thrust of each interview were always taken into
Once the coding was completed and summaries
had been prepared, the motivations themselves
were analysed. NVivo records as an extract
each section of transcript that has been given
a specific code. Each code was therefore itself
subject to analysis. This was particularly useful
for understanding the intricacies of the various
motivations claimed for SER and CSR. To facilitate
this understanding, matrices were constructed
where each citation of a motivation was recorded
next to the interviewee’s name in a table. This
table showed the relative incidence of various
themes and further helped to highlight similarities
and differences between the motivations. It also
served to smooth out the coding, which, as it was
developed in iterative fashion, invariably resulted
in the initial application of some codes where
others were later deemed more appropriate.
At this stage, two motivations were reduced in
importance while two others were eliminated, their
sections being transferred to other, apparently
more relevant, codes. As the codes were analysed
and matrices constructed, inferences about each
motivation were recorded in a memo book.
The construction of the matrices also helped in
revealing contradictions in the data. Each free
node (the NVivo term for open code) included
both affirmative and negative information. For
example, the node for Motivation-Reputation
included transcript sections that were either
indicative of reputation as a motivating factor for
SER/CSR, or that questioned or denied reputation
as a motivating factor. During the construction
of the matrices, only the affirmative statements
3. Research design, sample and methods (continued)
were included as the purpose of the matrix was to
display the motivating factors in SER and CSR. The
contradictory statements were noted in the second
memo book and were consulted when writing the
The two interviews that were not transcribed have
not been included in the matrix. The matrices
and incidences talked about therefore are in the
context of 23 interviews. This is not to say that
these other interviewees have not been considered
in the analysis. On the contrary, their views and
comments have been noted down and woven
into the narrative. It was judged, however, that
the detailed notes taken during and after these
two interviews were not of the same breadth or
depth as the rest of the interviews and they might,
therefore, ‘skew’ the numbers because of the
many boxes that would remain empty.
Finally, a ‘mind map’ of the various motivations
was drawn in order to visualise the different
motivations and group them (intuitively) into
more general motivational themes. As can
be seen from the mind map (see Appendix 1
on page 73), certain general themes such as
‘stakeholder management’ or ‘market-driven’
motivations have been used to group free nodes.
The groupings into motivational themes are
arbitrary and it is recognised that alternative
groupings are possible. The focus is not, however,
on dissecting the business case to understand it,
but rather on understanding how the business
case, as represented by various business drivers,
appears to dominate CSR and SER. This theme is
developed in Chapters 5 and 6.
The research approach taken here used novel
methodologies on which there is little previous
reporting, rather than the more deductive,
hypothesis-testing, ‘scientific’ methods generally
favoured by researchers, but the choices made in
the design of this project seem entirely justified by
the outcomes. The need to go beyond the testing
of theory into a more deductive mode of fieldwork
has been well established (Adams 2002; Gray
2002, 2005; O’Dwyer 2003). What is less well
established is how that fieldwork might be most
productively conducted. The broad exploratory
pilot study, followed up by a more focused
main study and a rigorous approach to data
analysis, has led in unexpected directions. Those
directions (towards the business case debates) in
retrospect seem logical, but they have not been
especially privileged in the previous literature
and were, therefore, not expected. Chapters 4, 5
and 6 explore the substance of this discovery and
Table 4.1: Dominance of the ‘business case’
‘Business case’ v. ‘Socio-environment’
Number of
‘Business case’ as the primary
motivating factor for SER/CSR
‘Socio-environmental concerns’ as the
primary motivating factor for SER/CSR
‘Socio-environmental concerns’
articulated at all
If you expect your investment in a social and
environmental reporting system to pay back in 12
months, a year whatever it is, I don’t necessarily
think that happens. I think it can on occasion, but I
think it’s a much more organic process of actually
gaining the benefits. You know, you spend £50,000
on a system to record your employee demographics
and then two years later that has a direct payback
on your bottom line (Corporate Social Responsibility
Manager 2).
One interviewee in particular was very clear about
what was driving both SER and CSR.
I think that we start this stuff from a commercial
point of view: if it doesn’t make business sense,
then you are not going to do it. You have to have
a bottom line benefit, otherwise you have no
compelling argument for your shareholders, you
have no compelling argument within the business.
If it doesn’t deliver tangible reputational benefits,
tangible business benefits, then it is impossible to
justify. We are not a registered charity (Corporate
Communications Director 1).
There was a striking preoccupation with business
benefits, or with the ‘business case’, as some
interviewees described the harnessing of SER
and CSR strategies to business concerns. In
line with earlier literature (O’Dwyer 2003), the
researchers expected motivations related to SER
The pilot study comprised 13 wide-ranging
exploratory interviews in one non-reporting and 12
reporting organisations, 11 in the UK and two in
Italy. Chapter 3 has explained the rationale for the
pilot study and how this was used as the basis for
developing the main study. This chapter reports
the findings from the pilot study.
As mentioned in the previous chapter, the pilot
study had a strong exploratory emphasis, but the
main focus was on ascertaining motivations for
SER. A specific point-by-point analysis around
the interview protocol was not carried out. Rather,
the themes that were identified as more salient
are presented below. This has allowed a ‘skeletal
theory’ (Laughlin 1995) to be formed regarding
SER motivations, and, in turn, raised a number of
issues that were pursued in the main study.
From the outset many of the interviewees stated
that they did not make clear distinctions between
SER and CSR and that the former could generally
be understood only in the context of the latter.
The discussions therefore invariably developed
around SER and CSR together. The most salient
theme identified from the interview analysis was
that the interviewees were all articulating business
reasons for their approach to SER and CSR. For
example, some of the interviewees described the
importance of making sure that financial outlays
were controlled and tied into business benefits.
So it’s not like we have to have a cost-benefit
analysis for each decision that we make and of
course a lot of the stuff that we do does not generate
any revenue or anything... So you have to determine
what is realistic and that is in large part determined
by budget, resources and human resources as well
(Corporate Social Responsibility Manager 1).
4. Initial explorations: the pilot study
4. Initial explorations: the pilot study (continued)
and CSR to be articulated in terms of their socio-
environmental value. The interviewees did not,
however, put forward any primarily ‘responsible’
arguments for SER or CSR strategies. Rather,
‘responsible’ behaviour was blended with business
case arguments. This situation is reflected in
Table 4.1 on page 37, where commercial concerns
(referred to as the ‘business case’) are shown as
the primary motivation for every interviewee’s
organisation. This business case was often
articulated as if it were self-evidently the primary
motivating factor. Socio-environmental concerns
(being a concern with social or environmental
issues) were articulated only insofar as they were
linked to some commercial benefit, not as an end
in themselves.
Figure 4.1: SER/CSR motivations (Pilot Study)
This leads to interesting issues central to the
main study. Socio-environmental concerns were
important only if there was a business spin-off.
Thus, socio-environmental concerns appeared
to be addressed only in certain circumstances.
By describing business spin-offs in the context
of pluralistic or win-win scenarios, interviewees
made it appear that the business case can deliver,
or is even a prerequisite for, socio-environmental
The model for sustainable business nowadays is that
it is no longer good enough to just look after the
interests of your shareholders. Or rather, put another
way, if you are looking after the long-term interests
of your shareholders then you also need to look
after the interests of your other stakeholder groups
(Corporate Social Responsibility Manager 5).
We have shown that our CSR activities contribute
directly to levels of customer satisfaction to the
extent that if we stopped doing them, levels of
customer satisfaction would fall and there is a high
financial correlation between customer satisfaction
and sales (Corporate Social Responsibility
Manager 6).
Thus, although the interviewees were very clear
that the business case is the primary motivating
factor, they did not recognise limits to the extent
to which socio-environmental effect could be
addressed through the business case (this
simultaneous dominance and conflation is
presented in Fig. 4.1). Whereas O’Dwyer (2003)
argues that individuals within firms hold distinct
and competing rationales initially, the interviewees
in the pilot study blended the business case with
the socio-environmental arguments immediately.
This gives rise to the dangerous tautology referred
to in Chapter 1 (that it is in companies’ interests
to be responsible and/or accountable/sustainable
and, therefore, successful companies are – and
by definition must be – responsible, accountable
and sustainable), which it was the purpose of this
study to explore.
4. Initial explorations: the pilot study (continued)
The pilot study suggests that the intended
audiences for sustainability reports are what a few
interviewees termed ‘opinion formers’.
Well, the key target audiences are investors, the CSR
community, government and policy makers, and
then to a lesser extent we would hope that some
suppliers, customers and employees would read it;
and then to an even lesser extent we would hope
that... NGOs would read it as well. But our key target
audience are the people who work on CSR on a
professional basis, whether that be a government
person or an investment person or whatever
(Corporate Social Responsibility Manager 1).
I think the readers to a certain extent are what we
have called opinion formers. So these would be some
of the commentators; they are the government,
MPs, that kind of area as well; our counterparts in
other organisations; the standard setters, people
who are looking at things like GRI and AA1000;
people like yourself, academics. There is no sense
that this document is written for consumption by
the general public unless people are very interested
in a particular area. I think we have always set
the standard of this quite high, quite academic,
quite detailed (Corporate Social Responsibility
Manager 4).
It was not clear that the audience for the SERs
were mostly the financial stakeholders, as previous
research has suggested (Milne and Patten 2002;
Neu et al. 1998). It seemed from the pilot study
that business was targeting both itself (‘the
CSR community’ and ‘counterparts in other
organisations’) and various stakeholder groups.
The main study explores the audiences for the
reports in more detail. From the pilot study it may
be conjectured that SER is a strategy to appease
wider stakeholders while simultaneously creating a
consensus among the business community.
By articulating a socio-environmentally worthy
business case, interviewees demonstrated a
convergence of interests and they presented
business as the only mechanism for socio-
environmental sustainability. The discussion
around voluntary versus mandatory reporting
conveyed this.
We’d be deeply unhappy to be in any regulated
environment on any of this stuff and we have
said this to the minister responsible for social
responsibility umpteen times. Not really because
of the impact that it would have on us, I think we’d
shine because of the work we have done in the area,
but more specifically because of the impact it would
have in discouraging SMEs from doing anything in
this area at all... I think it is something in the order of
21–25 of the FTSE 100 companies currently report
a single social report... that is a growing number,
there are an increasing number of FTSE companies
that are reporting in this way, and that is to be
encouraged. And it is happening because it is not
mandatory. I think if it was made mandatory you
would see a fall off in the number of people involved
(Corporate Communications Director 1).
Others were keen to see more widespread
reporting but emphasised that business should be
allowed flexibility.
We would not be hugely supportive of mandatory
[reporting], not so much because it is mandatory
but because we don’t have the confidence in a ‘one
size fits all’ approach applied by government. We feel
quite strongly that government officials are unlikely
to come up with something that is going to help.
But we do think that more and more companies
should be obliged to report, so in that sense we are
not opposed to it (Corporate Social Responsibility
Manager 1).
4. Initial explorations: the pilot study (continued)
In espousing standard anti-regulatory views, the
interviewees appeared keen to remain free to
construct their own image of corporate socio-
environmental interactions. The imposition of
guidelines requiring the calculation of ecological
footprints and rigorous, meaningful stakeholder
engagement would probably result in an SER that
showed conflicts between commercial objectives
and socio-environmental criteria.
In talking overwhelmingly about the ‘business
case’ for SER and CSR, the interviewees exhibited
an adherence to ‘win-win’ thinking whereby SER
and CSR are undertaken to the extent that they
bolster the commercial health of the company.
Moreover, one must also consider the type of SER
and CSR that was discussed, eg what relationship
does customer satisfaction have with wider notions
of CSR or sustainability? The work of Bebbington
(2001), Gray and Bebbington (2000) and O’Dwyer
(2003) permits a ‘skeletal theory’ (Laughlin
1995) to be formed at this point. Their work
suggests that the commercial benefits described
by the interviewees above may derive from a
significantly restricted understanding of what
environmental stewardship, social responsibility
and sustainability entail in practice. Beyond the
exploitation of win-win scenarios, however the
social and environmental ‘benefits’ are defined,
the reality of large-scale corporate activity in
the current market system may be one that
encounters significant social and environmental
conflicts. Some commentators argue that win-win
scenarios are viable only up to a point (see Walley
and Whitehead 1994).
Nevertheless, the primary frame of reference for
corporate approaches to SER and CSR may be the
win-win scenarios. One could reasonably presume
that lose-win scenarios, where organisations
undertake socio-environmental initiatives
without a perceived business benefit, will not be
considered by business. Indeed, the corporate
desire to stay within business bounds is noted by
Owen et al. (2001), who are somewhat critical of
the very notion of a business case for SER.
The fundamental flaw in exclusively promoting
the ‘business case’ for [SER] lies in a failure to
fully recognize that stakeholder conflict, rather
than harmony, permeates much economic activity.
Equally, there is a refusal to acknowledge that
such conflict is invariably resolved in favour of
shareholders as a powerful combination of external
financial hegemony and internal bureaucratic control
conspire to prevent organizations from being socially
responsible in anything but an instrumental sense
(Owen et al. 2001: 276).
Chapter 4 reviewed the pilot study and concluded
that SER motivations are apparently grounded in
conventional business notions of strategic benefit.
That conclusion formed the basis on which the
main study was founded, that is, to investigate
the motivations for reporting, within a broad
framework of articulating, exploring and analysing
the notions of the ‘the business case’.
The main study comprises 27 in-depth interviews
from 25 companies. Of these, 23 permitted taping
so that detailed analysis of the transcripts could
be undertaken, and two did not. The majority
of the comments here are from the 23 taped
The main study interviews were structured around
a number of key themes. These are shown in the
list of key areas in the pilot interviews on page 33.
This chapter is broadly organised around the first
three of these themes with the main emphasis
being placed on section 5.4 (motivations). Sections
5.2 (interviewees) and 5.3 (structural issues) are
included principally for completeness. The themes
starting from ‘Conflicts’ onwards will be discussed
in the following chapter.
There are two issues worth noting at the
outset. First, there were many occasions when
interviewees intertwined – or even confused – CSR
and SER. This was not challenged in the interviews
and the implications of this will be explored later.
Second, there was no attempt to establish what
‘the’ business case is in practice or indeed what ‘a’
business case might be. This will emerge from the
discussions and is perceived in very varied ways.
As discussed in Chapter 3, the interviewees were
generally the ‘SER managers’, ie those responsible
for the day-to-day process of producing the
sustainability report. These individuals were
generally below board level. The backgrounds of
the interviewees were varied. Some had worked
for years in the environment or health and
safety departments of their current or previous
organisation. Others had come from other
business departments entirely and seemed to
have arrived in their new CSR role by way of a
perceived opportunity to develop their careers. It
may be significant that a number of interviewees
were non-specialists by background, implying that
CSR and SER are simply other business units like
any other and that universal business principles
may apply during their implementation. It should
be noted that a few interviewees were explicit on
this point, suggesting that they did not want CSR
or Sustainability to become just another business
function, or a bureaucracy in its own right. Rather,
they were concerned that CSR or Sustainability be
fed right throughout their organisation.
The people interviewed generally worked in the
corporate ‘environment’, ‘environment, health and
safety’, or ‘corporate responsibility/sustainability’
departments. They worked either individually or as
part of a small team that was generally concerned
with both reporting on social and environmental
performance, and with social and environmental
performance itself. While these people led the
reporting function, however, it would appear
that many other people and departments
throughout the organisation were also involved.
For example, individuals in other departments
5. Why do corporations report on social and environmental issues?
5. Why do corporations report on social and environmental issues? (continued)
would be responsible for particular health and
safety protocols, as well as the collection of
health and safety data. Many of the interviewees
told of how collecting information for the report
involved, in large part, the contacting of relevant
individuals in other departments. In many cases,
the interviewees were the people responsible for
the final SER and (in some cases) responsible
for setting socio-environmental targets, whereas
people in other departments were charged with
supplying the relevant information and with
meeting those targets.
The researchers did not expect that motivation
for reporting – and certainly the discussion of
organisational motivations – would be simple. One
manifestation of its complexity was that not only
were there a range of articulations as to why
reporting takes place and a wide range of aspects
of a ‘business case’, but it was also exceptional for
an articulation to specify the case for SER and CSR
explicitly in terms of income generated or costs
saved. The nearest examples of such a direct claim
might be:
…in terms of a financial bottom line, and the
environmental perspective, the savings, the potential
savings and the realised savings run into multi-
million pounds purely because of the economies of
scale of our business. I mean, our sickness absence
is costing us £250 million pounds a year. So they
are huge figures that we are talking about here.
So actually bringing in a coordinated approach
is definitely having an impact (CSR Manager,
All of this social and environmental performance
improvement is actually a means to an end and that
end is to make more money (Environment Manager,
Although costs and income were raised regularly
as issues, only rarely was either SER or CSR
justified as purely financial. Rather, the vast
majority of business case articulations made
reference to much less tangible business benefits.
Equally, a number of respondents spoke in non-
business terms – as though they wished to stress
that SER and CSR were ‘over and above’ the
business case – that true altruism and decency
were a sine qua non of any activity. These ‘moral
cases’ were diverse and were invoked, to some
degree or another, by 11 of the 25 interviewees.
I am not saying this lightly: [company X] I believe
inherently is a good organisation and has a desire to
be good (CSR Manager, Energy).
... it is sometimes difficult to disentangle ... what
we would regard maybe as moral values and being
responsible (Sustainability Manager, Extractive).
The second main driver or imperative [after risk
management] is probably the moral imperative. Or it
is also driven by individuals, visionaries, people who
believe it is the right thing to do, or perhaps people
who have been kicking around from the risk scenario,
they understand that there is a moral obligation
for them to do these things above and beyond the
SWOT analysis and mitigating potential risk (CSR
Manager, Oil and Gas).
So there are pressures, but essentially we think
that we are doing it because it is the right thing
to do (Purchasing and Internal Affairs Director,
Equally, when interviewees talked directly about
reporting, they might not talk about social welfare
or some analogue of altruism, but ‘transparency’,
‘completeness’ and ‘honesty’ seemed to loom
large in the rhetoric and (perhaps) in the thinking
5. Why do corporations report on social and environmental issues? (continued)
What we just want to do is represent a real and
accurate picture of where we are. That is what we
are trying to achieve (Environmental Manager,
It may be, of course, that within business it is
normal to see the highest moral ground and the
business case within one’s own organisation
as wholly consonant. This is something we will
address in Chapter 6 when we examine limits and
conflicts. Nevertheless, the simple, hard-nosed
business case cannot be said to be ubiquitous
or, at least, its articulation cannot be said to be
The analysis undertaken (as explained in
Chapter 3) was directed towards establishing
themes in the interview transcripts. These themes
may be summarised into the principal categories
of motivations:
business efficiency
market drivers
reputation and risk management
stakeholder management
pressures from
benefits from
mimetic motivations
internal champions.
The rest of this section will be organised around
these themes.
Business efficiency
This motivation refers to the ability of SER or CSR
to help manage physical business operations in
a more efficient fashion, ultimately resulting in a
direct and tangible impact on the bottom line. For
example, six interviewees said that reporting on
their social and environmental performance was
tied up with improving their performance in that
regard. In some cases it helped to identify impacts
that needed to be managed.
It is a bit like the AR and accounts, you know, ‘that
figure isn’t very good, we need to work on that’
(Environment Manager, Extractive).
For others, reporting was more of a manifestation
of the fact that they were managing their impacts,
although the fact that they report acts as an
impetus to do so. In turn, the managing of social
and environmental impacts could be justified
in terms of the cost savings that accrue. Eight
interviewees cited costs as a driver of their SER/
CSR to some extent.
Some of the things, particularly on the environmental
side – some of this is about cost saving…in terms
of energy efficiency, energy consumption you can
actually demonstrate that you are saving money
(Sustainability Manager, Financial Services).
Cost savings and narrow financial wins were
therefore considered important by a number of
interviewees, although the business case, in the
main, seems to be found beyond short-term, direct
financial returns.
Market drivers
This sub-group of motivations covers those
created by pressure from the market, such
as when seeking share inclusion in Socially
Responsible Investment (SRI) indices or achieving
differentiation among investors through other
means. About half the interviewees mentioned
market-related reasons for their SER and CSR.
Ethical investment, in particular, was seen as a
One could actually say that if you are managing
environmental issues, then it demonstrates as well
that your management of the business is good
People then are more likely to invest (Environment
Manager, Utilities).
5. Why do corporations report on social and environmental issues? (continued)
Around half the interviewees stated specifically
that their SER was driven by a perceived desire
in the marketplace for information or by a belief
that, by reporting, their firm’s market performance
We have done some work with some external
stakeholders, in particular some investor
stakeholders, to see whether they give [company X]
a better rating because of it [the report]. It enhances
our reputation. I think we can demonstrate that it is
a positive in that respect (Sustainable Development
Director, Utilities).
I think that to some extent that will earn more
brownie points than a company that refuses to
report, won’t tell you what they are doing, keeps their
cards close to their chest (Public Affairs Manager,
The influence of the market was made clearer by
a number of interviewees whose companies had
become listed only in the previous few years.
Now that we are listed, that has had a big impact…
the scope of the report is now wider. But also in
terms of the amount of questionnaires that we get
in, interest from investors. So now we are doing the
Dow Jones Sustainability Index, FTSE4Good, Insight
investment, there is a biodiversity index and we have
been asked to do a health and safety one. So there
are now more demands on us than there were before
we were listed (Sustainability Manager, Utilities).
One interviewee recognised the market’s demand
for information somewhat reluctantly.
Obviously we are trying to respond to this additional
need for information, but there can be a frustration
because the questionnaires are very general, they
have to be. But they don’t necessarily address our
business. You get to the stage where you say ‘well
none of those boxes are relevant for me but if I don’t
tick one of them there will be a minus somewhere in
the system’ (Communications Manager, Property).
The market therefore appears to be driving SER
and CSR to some extent, but it is not necessarily
the mainstream of the market that is interested in
this. The marketing director of a pharmaceutical
firm said that ‘CR’ is not significant to mainstream
investors and that the market is more likely to
punish firms for negative performance than it
is to reward companies for the good that they
do. Thus, it is implied that CSR is more about
avoiding scenarios that will subtract value from
the company than it is about proactively seeking
benefits that add value. In this sense, the business
case may be seen as a defence mechanism or,
as is described below, a risk management tool.
Nevertheless, the marketing director outlined how
his company was trying to convince mainstream
investors of the ‘value’ of its approach to CSR. He
believed that they would recognise it eventually.
Another interviewee recognised this too, and
mentioned how they were including in their report
now, and beginning to manage, activities that
will ‘later on become meaningful to investors’
(Sustainable Development Director, Utilities).
Reputation and risk management
Reputation and risk management have been
grouped together here because of the significant
crossover between the two. Although the two were
coded separately, the interviewees often talked
about one in the context of the other. For example,
some interviewees described the wide-ranging field
of risk management as being ultimately conducive
to maintaining a good reputation. Conversely,
others saw reputation as a risk itself that needed
to be managed. Nonetheless, it should be noted
that, although there appears to be significant
crossover between the two on a higher level,
they may also be considered distinct at a lower
5. Why do corporations report on social and environmental issues? (continued)
level. Risk management refers to a wide range of
issues that are important to business in their own
right, irrespective of whether they are ultimately
conducive to enhanced reputation or not.
Ten interviewees talked specifically about risk and
the role of CSR in managing risks. Moreover, a
number of interviewees were quite clear that risk
management was the key driver for them. These
‘risks’ are issues that may arise, or become more
important, in the future although not necessarily
affecting the financial results immediately.
I think it is fair to say that most of what we do
comes under the heading of risk management
(Sustainability Manager, Extractive).
I have always maintained that there are roughly
three drivers for people getting involved in CSR in
the first place. The risk imperative is seen as the
most obvious: risk to persons, risk to operations,
risk to maintaining or not obtaining the license
to operate from the community point of view.
That is probably the first place and certainly most
extractive companies start there. So to understand
the risk and begin to address the risk and finally
to avoid risky situations – that involves talking to
people, understanding stakeholders. So they do
their risk mapping and assessment and they put
their management plans in place before they go
into places and do things which may expose them
to some of these risks…I think most extractive
companies, and [company X] is certainly one of
them, started with risk when CSR started in 199719
(CSR Manager, Oil and Gas).
19 To say that ‘CSR started in 1997’ is an interesting
statement for all sorts of reasons. For example, does
it suggest that companies were never concerned with
social responsibility until this date, or does it merely
imply that the phrase CSR was not in wide circulation
until then? An in-depth analysis around this might reveal
some interesting issues, but this was not a key concern
of the study and will not be further pursued here.
A few interviewees talked specifically about the
role of reporting in demonstrating good risk
Strategic risk management, there is good
governance, good management, and all those proxies
that are out there. They work and that is, I guess, one
of the reasons that we are reporting: to demonstrate
to our shareholder community that we have controls
in place (CSR Manager, Speciality Metals).
Some bemoaned the pressures on them to
demonstrate risk management, because it
precluded them from devoting more time to actual
performance improvement.
What we wanted to do was produce one every
two years, with more stories, more time to collect
the information. But such are the pressures of risk
management that we need to be producing it more
and more often (Environment Manager, Extractive).
This interviewee then went on to highlight
the crossover between reputation and risk
You are seeing people jostling people for the
marketplace that is reputation, to hopefully secure
investment from very large funds, owing to being
able to demonstrate excellent risk management in
the medium and long term (Environment Manager,
SER was seen by the interviewees variously as a
‘strong reputational tool’, a ‘reputation builder’ or
even a ‘marketing document’.
So the risks for us are really all about reputational
risks. So the perception out there is that we are a
clean, green organisation, that was before we did any
of this stuff. I think this gap between perception and
what is going on is actually quite a risk really. So I
5. Why do corporations report on social and environmental issues? (continued)
think that by reporting on it we are closing that gap a
bit (Sustainability Manager, Financial Services).
Reputation seemed to be an important motivation
for producing SERs for at least half the companies
interviewed. Reporting aside, some interviewees
mentioned that it was their practical CSR activities
that had an impact on reputation. The purchasing
director of a publishing company mentioned that
it would be a ‘nightmare’ to find out that child
labour was used in their supply chain. Another
interviewee talked about how involvement in a
tree-planting scheme enhanced the company’s
reputation among the local community. Another
mentioned how their actual ‘relationships with
society’ had an influence on brand and reputation.
Some of the interviewees pointed out that not
managing their risks would result in bad publicity
and therefore have a negative effect on reputation.
The relationship between reputation and risk
management motivations and CSR and SER
is therefore complex. One could say that CSR
is the management of risks whereas SER is
the demonstration of that management. Thus,
CSR provides the risk management whereas
SER delivers the reputation. This appears to be
plausible, but such an analysis is incomplete. CSR
itself is perceived by some interviewees to help
both in managing risks and in directly enhancing/
maintaining reputation. Similarly, SER may help in
identifying risks that need to be managed and so
is not merely a reputation deliverer. There is thus
much overlap between SER and CSR as regards
both reputation and risk management. These
overlaps informed the decision to treat reputation
and risk management as one motivational
Stakeholder management
This is a very broad heading under which much
has been gathered. The various sub-groups of
stakeholder management were coded separately
(see the mind map in Appendix 1, page 73)
under various intuitive schema. First, there are
the nodes pertaining to pressures experienced by
organisations from various stakeholder groups
and society generally. Then there are the actual
benefits that are accrued from deploying CSR/SER
as a ‘stakeholder management tool’.
To consider first the pressure experienced,
generally, from stakeholders: the majority of the
interviewees talked explicitly about current and
future stakeholder expectations as a driver for
their CSR activities. Reporting, in particular, was
cited by a number of interviewees as a reaction to
stakeholder demands.
Stakeholders expect it, employees expect it, the
communities expect it, our peers expect it, the
government expects it. There is an awful lot of
people out there who are watching, because we are
such a big company out there. Because we supply a
lot of people with their life assurance, they want to
know that we are a good company, and that is why
we do a lot of what we do out there (CSR Manager,
Financial Services).
My view is that CSR is usually issues-based within
an organisation. So the biggest issue for [us] in
the past has been [our] safety and environmental
performance. That has been the biggest concern
in terms of society’s expectations (CSR Manager,
There was much talk of reporting per se in order to
meet societal and stakeholder expectations. A few
interviewees went further, to say that the actual
form and content of their report were influenced
by specific stakeholder expectations. Not everyone,
however, was clear that they were reporting in
order to meet stakeholder expectations. A few
interviewees mentioned that they were not under
much pressure from wider stakeholders for
5. Why do corporations report on social and environmental issues? (continued)
information. Similarly, the interviewees from the
two companies that do not produce stand-alone
reports claimed there was no pressure, from
either society generally or stakeholder groups
specifically, to expand their reporting.
According to interviewees, it is not just reporting,
but organisational CSR activities generally that
are influenced by stakeholder pressure although,
again, it is not always easy to separate a reporting
response to stakeholders from an actual change in
organisational activities prompted by stakeholders.
If climate change is the biggest problem we face
and if regulation is going to gradually increase, and
not just regulation but I firmly believe that there
will be other constraints on us, ultimately from
consumers and our customers, the people who buy
our materials, to use the natural environment more
responsibly and to try and reduce emissions, then
I think it is as well that we take, where we can, a
leadership role on that and present the company as a
responsible environmental player, so it is responding
to future and existing pressures (Sustainability
Manager, Extractive).
A number of specific stakeholder groups whose
views or expectations were identified as important
enough to warrant a reporting response were
mentioned by interviewees.20 Seven interviewees
mentioned NGOs specifically. Ten interviewees
mentioned government pressure as a key
driver. With the exception of shareholders and
institutional investors, the government was most
cited as the stakeholder that was putting pressure
20 It should be noted, however, that the notion of
stakeholders was not discussed in depth during the
interviews. The figures discussed above were identified
during the data analysis phase and, although perhaps
indicative of broader trends, should be interpreted with
on organisations to take action in this area.
Regulatory pressure was also cited by a number
of interviewees as a key factor for both their SER
and CSR. Complying with legislation was, it was
emphasised, the lowest bar. A business case was
to be found also in going beyond the regulatory
minimum. This seemed to be motivated, at least
in part, by a desire to pre-empt any attempts
at future legislation (see section 6.4 ‘Reporting
regulation’ on page 60 for a discussion of this).
Moving beyond general discussion around
stakeholder expectation and pressures, the
interviewees outlined various ways in which SER
and CSR helped in the proactive management
of stakeholder relationships. A number of
interviewees said that they were using CSR to try
to change external perceptions of their business
or industry, engender trust or improve stakeholder
relationships, because doing so would make things
easier in the future.
Because when you have good relations with the
community when you put in a new mast, then when
you want to put in another mast, you won’t have
problems (CSR Manager, Mobile Phones).
I think it would be very difficult for us to go out
there and say ‘we want new runways here there and
everywhere’, if we didn’t tell people what we were
up to. People would be a lot more sceptical about
what we were doing, they wouldn’t understand it as
much so it is extremely important for us to be open
and transparent and if we make mistakes we admit it
(Public Affairs Manager, Aviation).
It was within this context of the benefits of
stakeholder management generally that
employees and customers were mentioned as well.
Seven interviewees articulated customer-related
business drivers for their CSR or SER.
5. Why do corporations report on social and environmental issues? (continued)
There are strong drivers to work with customers on
these issues (CSR Manager, Energy).
A couple of organisations that were consumer-
oriented were clearly driven by customer
concerns, although these were not considered to
be hugely significant.
There is a growing band of green consumers out
there generally. It is not a huge pressure from our
customer base but there is some (Sustainability
Manager, Financial Services).
Another couple of interviewees, who were not from
consumer-oriented industries, attached more
importance to the benefits that could be reaped
from increased customer satisfaction.
The KPI [Key Performance Indicator] for the client
there was for us to produce a facility that enabled
him to attract and retain staff. We didn’t have any
of this stuff when I was a young student or a young
engineer. It was all about ‘can we programme it in
on time, can we get anywhere near the budget, can
we do it without injuring too many people and will
it be to the right quality?’ Well those elements are
expected to be to a certain standard already. So this
is the added value, the differentiator (Environment
and Engineering Director, Construction).
Nine interviewees in total made some link between
their SER or CSR and business benefits related
to employees. Five of these nine said that doing
things in this area increased staff morale.
It creates a sense of pertinence to a company. It sets
the boundaries of what you as an employee can and
can’t do. It also gives an opportunity for people in
the company to fill the social part that all of us have
(CSR Manager, Telecoms).
This morale effect was one that helped to generate
‘buy-in’ for CSR in the company. Given that there
was also believed to be a strong business case for
CSR and SER, enthusiastic employee acceptance
of these meant that there was more chance that
the benefits to the organisation arising from CSR
activities would be realised.
There is always a feel-good factor to these things,
which is of benefit to the organisation (CSR
Manager, Energy).
People really do quite like the feeling that they are
doing something that isn’t raping and pillaging the
world. And that is right. If you take it too far down the
‘you do this or I will give you a good caning route’,
it is not the most innovative, it is not going to be as
exciting and you will not get the full holistic benefits
that you would if you did it from a more strategic
perspective (Environment Manager, Extractive).
In addition to having a morale effect, CSR
was linked by some interviewees to staff skills
development or the recruitment and retention
of better staff. Two interviewees noted that
their employee volunteering schemes were
actually ways of developing project management
skills for their staff. A further two explained
how their community education projects were
linked into improving the quality of their future
workforce pool. In turn, another interviewee
made the link between better-trained people
and business benefits while talking about one
of their sustainability strategies to improve staff
There is the link between having good efficient
people who are well trained, so our policy is part of
that, into how efficient they are and how productive
they are. There is no doubt about it, the more
productive management, better management,
is going to produce better EPS [earnings per
5. Why do corporations report on social and environmental issues? (continued)
share] and profitability and things like that for the
business (Environment and Engineering Director,
Having a socially and environmentally responsible
reputation was also linked by a number of
interviewees to enhanced quality in staff
recruitment, particularly among graduates.
Mimetic motivations
This motivational group brings together
interviewee articulations of the business case
for mimicking the approach to SER or CSR of
competitors or ‘best practice’ organisations.
Peer pressure is also included in this section.
Although responding to peer pressure does
not necessarily entail an exact mimicking of
peer reporting practices, it is presumed to
entail some sort of organisational response that
enhances conformance with the values and
norms established among peer or ‘best practice’
groups. Thus, mimetic and peer pressures may
not be identical, but it is presumed that there is
significant overlap between them, to justify their
being considered in conjunction.
Nine interviewees cited some sort of peer
pressure, specifically for their reporting.
I think that is a part of why we are reporting: industry,
peer pressure you might call it (Sustainability
Manager, Extractive).
Another interviewee talked about ‘best practice’
and how learning from others was a good way to
proceed in this area.
A lot of the indices you look at and say ‘who is
involved with that, is that worth signing up to, who is
heading that up?’ Currently I think there is an awful
lot of peer respect going on and peer learning (CSR
Manager, Financial Services).
This peer pressure was not restricted solely to
industry competitors, but for many companies it
was driven also by reporting leaders whom they
were trying to follow, at least to some extent. Some
interviewees explained in more detail why it was
important to match others’ endeavours.
I think that it is a shame because it costs tens of
thousands of pounds to produce it whereas what
we could do is take everybody who is interested in
our business in this way, take them all into a room
and talk to them about the contents of this report,
for about 10% of the cost on an annual basis. Still
get the same information across but then every
time a list of the top 250 companies comes out
that produce reports you would be at the wrong end
of it. So you have almost got this very basic peer
pressure that says: ‘you need to have one of these’
(Environment Manager, Extractive).
This discussion around peer pressure raises the
interesting question of whether an organisation’s
SER and CSR are related more to what other
companies are doing than to its own underlying
activities. Although real pressures to mimic
competitors and industry leaders were outlined
by the interviewees, this mimicry may have
the potential to direct attention away from
substantive consideration of organisational socio-
environmental interactions and towards, instead,
the mere use of certain types of language and
guidelines that display conformity. Alternatively,
one might argue that this peer pressure
encourages organisations to follow the leaders,
thus raising the level of SER and CSR as a whole.
One’s position may depend on the view that one
takes of the quality of current SER and CSR ‘best
Internal champions
Some interviewees claimed that SER and CSR
were driven by key individuals within organisations
– the motivational sub-group comprising ‘internal
5. Why do corporations report on social and environmental issues? (continued)
champions’. Eight interviewees mentioned senior
management, the board or the CEO as significant
in driving the process. Three specifically indicated
the influence of the CEO. One interviewee talked
about how there had been various attempts to get
environmental issues on the corporate agenda
within his organisation, but they had succeeded
in doing so only in the last couple of years. He
indicated that the change of chief executive was
one of the main things that had brought about
that transition. His views were echoed by one of
the other interviewees.
Our current CEO…when he came on board, he saw
the importance of sustainability and he pushed it
toward the centre of the organisation and actually
it is part of everything we do now whereas, as
I understand it, his predecessor thought it was
important but it wasn’t at the heart of everything we
were doing. Now he has made that shift, recognised
the importance and it is across everything we do now
(Public Affairs Manager, Aviation).
Others indicated the importance of their senior
management team more generally.
When I joined the team in November 2002, the
initial remit was to produce a CSR report within three
years internally. However, the momentum at board
level had increased quite significantly so it changed
from a three-year project to ‘can we do one next year
in July please’ (CSR Manager, Energy).
We have become more aware of the risks to our
operations that come from not managing SD
[sustainable development] issues properly. This has
led to a significant increase in emphasis in the whole
area and because our senior management think that
it is important we do things to certain standards.
They also believe that it is important that we report
on this, to show the world what we are doing
(Sustainability Manager, Extractive).
It would be easy to conclude that boards and CEOs
are driving CSR in organisations because they see
the business case. One interviewee indicated some
potential tension between the business case and
the fancies of senior management.
The board came back to me and said… ‘right, we
want to report on our Human Rights situation after
August’. That was the first time the board have
actually fed back to me and said ‘look into this issue
and feed into us again’. That was brilliant because
it meant that they had actually read the report and
actually picked up on issues and talked about things.
But it means that they are aware of the things that
we need to be aware of as well. They can do that. If
the board say that, it is a business case already; if I
come up with it I have to prove that it is a business
case. That is a bit of a discrepancy at the moment,
but that is the way business is; I just get on with it
(CSR Manager, Financial Services).
This opens up a potentially interesting area of
enquiry that would depict the business case as a
rhetorical device. Although the need to construct
a business case remains strong, the implication
of this is that the way in which business cases
are constructed may leave managers a zone of
discretion. Thus, while in the first instance the
extent to which the business case translates
itself into hard financial figures would appear
quite limited, in the second instance the wider
intangible notion of the business case might not
really be a business case at all. There may be so
many grey areas when discussing the business
implications of socio-environmental activities that
constructing even a flimsy business case might,
in some instances and depending on who does
the constructing, be enough to justify a particular
socio-environmental initiative. The extent to which
this might occur can only be speculated upon
here but the potentially rhetorical nature of the
5. Why do corporations report on social and environmental issues? (continued)
business case would certainly be something worth
pursuing in future research.
It becomes quite apparent that, although matters
may be expressed in many ways, the range of
discretion outside a business case that most
respondents perceive is very limited indeed. The
business case must dominate. The notion of the
business case is, itself, variable but it seems to
contain one central – if tautological – element:
namely anything that yields business benefits.
Quite what those benefits might be, how they are
identified and articulated, does not seem to be
crucial – and seems to be dependent upon the
specific context in which an individual is working.
That is, it seems to be an attitude that seeks out
an articulation of a business case and then adapts
that articulation for the current organisational
I think there is a business case but whether it is clear
or not I think is a different thing. I think in some
areas it is clearer in other areas. Because there is
so much under this heading of SD [sustainable
development], you can’t treat it all equally
(Sustainability Manager, Extractive).
So as long as it fits in with our overall strategy
then that is the business case in itself. We have
projects that don’t fit in necessarily immediately but
when you look at the long-term impacts then that
is actually going to be a business benefit (Public
Affairs Manager, Aviation).
We can begin to see that CSR (and, to a degree,
SER) is a strategic issue. It is interwoven with
(or should in some way be articulated with) the
core values of the business and is, therefore, a
means whereby there is a formal linking of social
and environmental activities and positions to the
formal business goals of the organisation. This
is so much so that the more ‘mature’ business
response to the CSR agenda is to see it as a
repackaging of existing business-driven activities.
It is about making sure that the business is being
run in the best interests of the shareholder and the
interests of the shareholder are met by running the
business in the most professional way and making
sure that issues that now have a label of CSR, but
which in most cases we have been doing for some
time [sic]. You know, we have just said ‘oh, that is
CSR’, but it shouldn’t really have that, it should be
fundamental to the way the business runs. It is just
that the world at large has decided to put a label on
it (Communications Manager, Property).
‘…how long have you had in place CSR practices?’,
and I said 30 years, at least. It is only the last two
or three years we have called them CSR (CSR
Manager, Energy).
Consequently, we can begin to see that the
majority – although probably not quite all – of the
articulations of motivations for CSR and SER can
be subsumed within and/or seen as expressions
of ideas in the currently legitimate mores of the
business. Whether stakeholders, risk, decency,
staff morale, reputation, industry credibility or
whatever – these are simply variants on a complex
notion of the ‘business case’.
5. Why do corporations report on social and environmental issues? (continued)
6. The business case: beliefs and constraints
The previous chapter outlined the results from
the main study on the principle motivations
underlying SER and CSR, as articulated by the
interviewees. It was suggested throughout that
chapter that the various motivations underlying
SER and CSR can be subsumed within a ‘business
case’ rationale where commercial concerns
predominate. This chapter presents the results
from the remainder of the issues explored
in the main study interviews. In doing so, it
provides an opportunity to interrogate in more
detail the implications of this ‘business case’.
In particular, the extent to which the ‘business
case’ is perceived as presenting real conflicts with
socio-environmental concerns is delineated in
the following section, alongside evidence relating
to the extent to which the ‘business case’ really
does set the parameters. Following from this is
a discussion of the perceived audiences for SER,
which, combined with the subsequent exploration
of views on reporting regulation in section 6.4,
serves to illuminate and shed further light on the
motivations underlying SER in particular, and
what function SER is intended to serve. Finally,
the extent to which the ‘business case’ presents a
constraint on greater accountability is discussed
in section 6.5 through interviewee perceptions of
the value of the ecological footprint as a basis for
environmental reporting.
The motivations outlined by the interviewees were
overwhelmingly in terms of a business case, but
this strict ‘business case’ was not the only thing
articulated by interviewees. Some interviewees
outlined socio-environmental drivers that are
apparently unrelated to business case concerns.
Furthermore, even where a ‘business case’ was
articulated, it was generally conflated with some
socio-environmental justification. There was thus
more to the discourse of the interviewees than
simply the financial return.
That said, the extent to which companies are free
to pursue socio-environmental objectives without
consideration of business-case concerns was a
key element of the research study. Interviewees
were probed explicitly on whether there was a
limit to allowed socio-environmental activities and
reporting. Some interviewees were very explicit
that there were clearly demarcated limits.
Any company that says that they do not feel
constrained probably isn’t telling you the truth. There
is a limit to what you can spend…you have to be
aware that we are custodians of shareholders’ values
and we have to be very logical in our assessments of
how much money we can spend in these respective
areas and still deliver returns to those shareholders
(Sustainable Development Director, Utilities).
Some interviewees talked about the need to
achieve a payback for any initiative but, generally,
interviewees defined the limits placed on their CSR
and SER in terms of a more strategic, less tangible
business case:
There has to be added value in doing what we are
doing. We couldn’t just go and do something for
the environment or the community just because
we wanted to (Sustainability Manager, Water and
A couple of interviewees pointed out that it was
difficult to find a business case, but they did try.
Where there was not a business case, something
would not get done. Another interviewee described
how all attempts to be socially responsible were
tempered by commercial considerations.
6. The business case: beliefs and constraints (continued)
Getting bribes out of places like China is extremely
difficult, but that is what happens. We have to make
it absolutely clear that it is not something as a
global company that we could accept. But on the
other hand, the pushback was that we recognise
that bribes are there to give some companies a
competitive advantage… So you have to be mindful
of the competitive implications of doing that. So
there has to be understanding (Marketing Director,
A number of interviewees outlined limited
resources and staff as constraints on the extent
to which they could pursue socio-environmental
objectives. Pressure exerted from the City was
also a key factor mentioned by interviewees.
Interviewees particularly mentioned the need to
generate returns and adequate levels of growth
as being more important than any environmental
or social initiative. A couple of interviewees,
whose companies had recently been listed,
described how they now had extra pressure to
make sure that all their initiatives could be tied
into a business case. One interviewee described
in detail how, now that the company was listed,
it was scrutinising its philanthropic activities to
make sure that adequate intangible benefits were
being derived. Indeed, one particular relationship
with a cancer charity was to be discontinued
and replaced by another whose activities ‘better
reflected the focus of the business’.
Perceptions of conflict
So the business case appears to dominate both
CSR and SER. The interviewees were very clear
that everything that they did needed to be tied
in to a business case of some sort. Whether
or not the interviewees also perceived this to
represent a significant constraint on the ability
of their organisation to be responsible was also
explored in the interviews. Interviewees were asked
whether they perceived any conflicts between
commercial objectives and socio-environmental
criteria. In particular, interviewees were presented
with a conundrum: that of business growth and
environmental impact. They were asked whether
they thought that business growth imperatives
undermined their organisation’s environmental
Many of the interviewees did not deny that
there were conflicts, and were again quite clear
about which of the three pillars of sustainability
(economic, environmental and social) was the pre-
eminent one.
For us, to continue to be a successful company, and
achieve the sort of returns that we are looking for,
if that means burning oil and gas, which inevitably
impacts on the environment, then we will do that, so
long as we remain within the limits imposed upon us
in terms of those emissions (CSR Manager, Energy).
Many of the interviewees said quite clearly
that their companies’ primary objective was to
make money. Some said more specifically that
it was fundamentally important that they made
a profit, without which they could not begin to
be sustainable in non-financial terms. All the
interviewees went on to qualify this with further
explanations as to how a dominant financial pillar
is not necessarily a bad thing. That is, they justified
the pursuit of business goals in terms of the social
and environmental benefits that arose from their
A number of interviewees questioned the growth/
impact conundrum in terms of eco-efficiency. Two
interviewees remarked that growth helped in this
regard because of the economies of scale that it
‘If you are making spoons, if you are making ten
thousand spoons, you can make them much more
6. The business case: beliefs and constraints (continued)
efficiently than if you are making three spoons. So
you will be looking at less resources to do it (CSR
Manager, Speciality Metals).
This does not take account of the possibility
that business growth will undo any efficiency
improvements and leaving the organisation
with a greater environmental impact overall.
Other interviewees who stressed the positives
of improved efficiency invoked slightly more
sophisticated arguments in their defence. They
described how efficiency meant an overall
improvement for society or the environment,
rather than being undermined by growth, because
they were competing on increasing their share of a
market that did not grow:
...and it is OK for me to say that we should be
sustainable [financially] because if we are doing
stuff that is better than other people in the arena,
then it is better that we should be here, than we
should not be here (Engineering and Environment
Director, Construction).
A few interviewees questioned the validity of the
growth/impact conundrum on the grounds of
technological development. They argued that if
growth were coupled with the introduction of more
environmentally friendly technology, then their
business could grow without increasing its overall
A number of interviewees shifted emphasis
away from the conflict between business growth
and environmental impact by bringing into the
discussion the positive social impacts arising
from their organisations’ activities. For example,
a few interviewees re-framed the conundrum
between commercial and socio-environmental
considerations by pointing toward the conflicts
between social and environmental goals.
We could shut down all the quarries in this country,
not take any more stone out of the ground, but then
people would have to go back to living in mud huts,
things like that (Engineering and Environment
Director, Construction).
A number of interviewees made arguments
along similar lines, namely that they had an
environmental impact but that there were social
positives at the same time.
Environmental costs are obviously really important
and we are doing all we can within the industry...
but ultimately we can’t take away people’s demand
to air travel...people’s right to travel regardless of
the environmental cost (Public Affairs Manager,
A number of interviewees pointed out that their
organisation had found a balance between the
economic, the social and the environmental.
As long as they are all being considered, it is trying
to get a balance between them. I work on the [Six]
Sigma project. I sit on the committee to make that
into a standard, that is looking at how do you have
evidence that sustainability – environment, social
and economic – is being integrated into decision-
making processes? I think that provides a framework
for the decisions that the management team make.
I think it allows for decisions to be made on a more
balanced perspective (Sustainability Manager,
Another interviewee described how financial
considerations were pre-eminent, but that his firm
still manages to have overall outcomes for social
and environmental responsibility. Rather than a
win-win, he described a mixture of various wins
and losses.
We can’t invest like Shell or BP in hydrogen cells,
renewable energy. We have looked at all of these
6. The business case: beliefs and constraints (continued)
things but it is not something that is commercially
viable at the moment. So are we contributing to
sustainability? I take that [to mean] are we balancing
what we take out? No, it is impossible. I don’t think
there is any small or medium company who can
balance what they take out. We create jobs for
people and contribute to various oil provinces, West
Africa for example (CSR Manager, Oil and Gas).
He then went on to describe how this mix of wins
and losses could be turned into an ‘overall win’.
I think it is impossible to have a commercial activity,
certainly in our sector, without an environmental
impact. It is impossible. You will impact on the
environment, full stop. Whether you manage that,
and leave a net positive impact or at least put in
place the type of plans that make your impact not
just acceptable, but preferably minimum or zero,
if that is possible at all, but always strive to have a
positive impact. Then I think you have a licence to
operate (CSR Manager, Oil and Gas).
The interviews also explored who the audiences
were for the report. The most cited audience
for each organisation’s SER was investors,
whether that meant company shareholders or
the investment community more generally. The
principle audiences are:
local communities
local authorities
Only four organisations did not mention investors
as an audience, although each of these had
specific relevant circumstances that warrant
comment. Two were owned wholly by the UK
government’s then Department for Trade and
Industry; one was a German subsidiary that was
no longer listed on the London Stock Exchange;
and one was a mutual society. For those who did
cite investors as an audience for the report, a
significant number were quite clear that investors
were the primary audience.
The key stakeholder group are the investors and
analysts: our shareholders (CSR Manager, Speciality
I think we are fairly clear that our primary audience
is our investors. Do we consider other readers of
the report? Yes, not being totally ignorant of them
but they are not our primary audience (Sustainable
Development Director, Water and Waste).
There was some diversity of opinion about
which actual investors should be targeted. One
interviewee was not sure whether reporting made
any difference to the big institutional investors,
but he was more encouraged by the interest
shown by individual shareholders. The majority
of interviewees directed their report at the big
institutional investors and analysts, the City, rather
than their own shareholder base.
I think it is not necessarily shareholders, it is people
who work in the big investment banks, people who
work in the City of London, people who look at our
performance as a company. So investment analysts,
brokers (CSR Manager, Oil and Gas).
A few interviewees singled out socially responsible
investors (SRI) and ethical investors as a more
interested audience for the report.
6. The business case: beliefs and constraints (continued)
I liaise with our investor relations manager. His view
is that only really the SRI investors are interested
(CSR Manager, Utilities).
The next most cited stakeholder group (by
18 interviewees) as an audience for SER
was employees. Moreover, for at least three
organisations (two of which had specific
circumstances as defined above), employees
were specifically stated to be the most important
audience. For around half the interviewees,
employees seemed to be the most important
audience after investors.
The reasons given for citing employees as an
audience, or the effect that reporting had on them,
were generally described as ‘raising awareness’,
or something similar. This, it was claimed by some
interviewees, could influence behaviour and lead
to performance improvement. One interviewee
said it was important that employees knew what
the company was doing on the sustainability
front so that they could talk to the public about
these issues if need be. A few interviewees talked
about generating a ‘feel-good’ factor among the
workforce or lifting morale.
People like to know that they are donating more
to charity now. They feel better that we are giving
some of our wealth creation back to the community
(Environment Manager, Property Developer).
It should be noted that, although the view that
employees are an important audience for the
report was widespread, many interviewees
emphasised that they had other communication
channels for employees. Stand-alone SER was not
necessarily the primary means of communication.
The third most cited audience for the report was
NGOs, mentioned by 15 out of 23 interviewees.
Two interviewees mentioned that NGOs read the
reports, without actually saying that they were
specifically targeted or prioritised, although most
of the interviewees who mentioned NGOs as an
audience did view them as a group specifically
targeted with their SER. Very few interviewees
talked in depth about NGOs as an audience, as
they did for investors and employees. Rather,
NGOs were lumped in with the other audiences
for the reports, whom interviewees tended to call
‘opinion formers’.
Thirteen of the interviewees talked about using
their SER to reach government. Two of these
companies are fully owned by the government,
and so the importance of their reporting to the
government is perhaps more obvious than for
other organisations. The interviewee from one of
these organisations stated that the government
was their most important audience, while the
interviewee from the other DTI-owned organisation
placed employees at the top of the list, with
the government lumped in with other ‘opinion
Ten interviewees cited customers as an audience
for their SER, with two seeing them as a main
audience. For one of these two, a construction
company, a summary of their Web-based SER
was produced primarily, they said, in order to
communicate their sustainability credentials to
both existing and prospective customers. It should
be noted that these customers were generally
trade customers or other companies. There was a
general perception that individual consumers were
either not interested or not well enough informed
about sustainability to be targeted.
Other audiences mentioned by interviewees, but
not discussed by them in-depth, included peers,
competitors, local communities, local authorities,
regulatory agencies and suppliers.
6. The business case: beliefs and constraints (continued)
There was a generally negative view of the
desirability of reporting regulation. One
interviewee in particular described how, through
SER and CSR, the company was hoping to pre-
empt any attempts to introduce legislation.
You know, the stick is coming in. Maybe it is because
industry generally has been pretty poor on Health
and Safety and brought it on itself. But we are kind
of hoping that if we take enough proactive moves
on this then we can maybe nip regulation in the
bud. By showing keenness to take on voluntary,
almost self-regulatory type scenarios maybe we
can stop the framework becoming too much of
a stick and keep entering into this in the spirit in
which it was intended. Otherwise you are in danger
that it becomes a threat rather than an opportunity
(Environment Manager, Extractive).
For this interviewee, SER and CSR were actually
motivated, at least in part, by a strategic desire to
head off regulation. None of the other corporate
representatives were as explicit as this, but many
of them expressed fairly strong opinions about
regulation in the CSR area, both spontaneously
and when asked expressly as part of the more
formal interview protocol. Two interviewees were
quite clear that mandatory reporting would be a
bad thing.
I think if you start imposing regulation, then there is
a risk of it becoming a tick-box mentality. It prevents
you from differentiating yourself in the market place
(CSR Manager, Energy).
I think GRI and AA1000 are good enough. There is
no need to change them. We will keep working with
them and hopefully people will keep encouraging
companies and not criticising because that would
feedback in a positive way into how you could
change your own operations (CSR Manager, Oil and
There was a general anti-regulation stance to
reporting held by the interviewees, but this was
qualified by one:
I don’t think we would be particularly troubled by it
[regulation] either. Quite honestly it would be nice
to see a more level playing field where others who
are not reporting at the moment are required to…
to not just free-ride on our efforts (Sustainability
Manager, Extractive).
As far as regulation generally in the CSR arena was
concerned, there was some opposition to that as
well. Many interviewees expressed the view that
the voluntary business case is driving CSR and
that, if it were to become regulated in any way,
there would actually be a reduction in the high
levels currently being achieved.
I think they would be foolish if they did. I think
legislating CR is a good way to turn people off it. A
lot of what goes on in the social and environmental
areas of CR is due to the good nature of people
managing the company. I think you will lose that
if you start legislating, saying ‘you must do this’
(Business Planning Manager, Services).
One interviewee spontaneously stressed the anti-
regulation argument at the end of the interview
when asked if there was anything she would like to
Just to re-iterate that for us regulation wouldn’t be
the way forward. Because of our business and the
way we operate. If they regulated it, we would feel
pushed because it may work for UK companies but
from our perspective it would be trickier to comply.
6. The business case: beliefs and constraints (continued)
And we don’t need any pressure on reporting…
because that would just make them [the board]
back off (CSR Manager, Financial Services).
As discussed above, the business case presented
a constraint on an organisation’s socio-
environmental activities. Whether or not that
constraint was perceived as problematic is another
question, but the business case also seemed
to present tensions for fuller accountability.
During the interviews the feasibility of calculating
an ecological footprint was discussed.21 Two
interviewees in particular could see a business
case in undertaking an ecological footprint
analysis for their organisation.
I think the ecological footprint for the nuclear
industry is very important…the whole thing [is] about
proving that nuclear energy is part of a sustainable
solution and future when you compare it to other
forms of electricity generation. So when you get
blanket statements like ‘we are assuming that
nuclear energy is just as bad as coal’, you have got to
counter them (CSR Manager, Energy).
The other interviewee, who was from the water
industry, was interested in the ecological footprint
because it could help in assessing the long-term
cost implications of projects. These two aside,
however, the majority of interviewees displayed
some resistance to the idea of calculating an
ecological footprint. The idea that it may be the
‘right thing to do’ in terms of accountability, or
that it was presented by the researcher as the
ideal form for the environmental side of SER, did
21 Because of time constraints in some interviews, a
discussion about the ecological footprint was conducted
in only 20 of them.
not hold much sway with most of the interviewees.
Rather, they were quick to point out the practical
and methodological problems involved in the
More specifically, interviewees again mentioned
how they simply did not have the resources
or staff at their disposal to undertake such an
extensive exercise. Of course, businesses often
invest significant sums in new projects provided
there is a payback. The problem with calculating
the ecological footprint was that it was not
perceived as delivering an obvious benefit to
the business. In particular, interviewees were
concerned that it would not be useful in managing
their impacts. For that, disaggregated data would
be much more useful. Furthermore, there was
much concern that publishing an ecological
footprint would not show the organisation in the
positive fashion that it deserved. Interviewees were
concerned that focus on environmental impacts
would deflect attention away from all the positive
social benefits that the organisation contributes
to society. Underlying this argument was not
merely instrumental thinking, but an apparent
belief in the socio-environmental worthiness of
the organisation (see section 6.2 ‘Conflicts and
limits’, page 55). Thus, reporting the organisation’s
ecological footprint would show the organisation
unfairly as one that was riddled with conflicts
between commercial, social and environmental
criteria whereas, in fact, the organisation had
succeeded in finding a balance between the three
pillars of sustainability. What is needed is a report
that shows that such a balance has been achieved.
There is no business case for showing conflicts.
6. The business case: beliefs and constraints (continued)
In going beyond an exploration of SER and
CSR motivations and considering underlying
perceptions and beliefs about the organisation’s
relationship with society and the natural
environment, we have tried to reveal why certain
motivations have come to dominate or be
accepted within organisations. The apparent
belief in the organisation’s socio-environmental
worthiness may be a key element in shaping
the SER and CSR process within firms. This
perhaps constructs an ideological barrier
that more substantive reporting frameworks
struggle to overcome because they do not show
the right image to investors, employees and
other stakeholders. Furthermore, the lack of
controllability that enhanced reporting frameworks
are perceived to bring with them also undermines
their chances of acceptance. The need to have
a ‘manageable’ process may well be a key
factor in understanding any past or future SER
The previous two chapters have described in detail
the outcome of the study as it evolved from an
initial exploration of motivations and processes
of (predominantly) SER into a more focused
interrogation of the business case as the ultimate
constraining and enabling factor for SER within
organisations. This chapter has two principal
aims: to synthesise and reflect upon the foregoing
chapters; and to look forward to what we might
usefully consider as the next steps. Consequently,
this chapter will summarise the principal insights
of the study, reflect in more depth upon the
empirical results presented in the previous two
chapters, provide some conclusions to the study
and offer some suggestions for both future
research and future practice and policy.
Although the business case for SER and CSR
varies across firms, from a sustainability
perspective what is of more interest is the
dominance per se of this business case. The
evidence presented here suggests that the
business case significantly restricts SER and CSR
to what is manageable and can bring business
benefits. This restricts CSR activities to matters
of corporate self-interest and in so doing also
appears to shape the form that SER takes.
The extent to which this may be considered
problematic or not depends largely on whether
one thinks that the pursuit of conventional
business criteria is, to some extent, in conflict
with socio-environmental welfare and sustainable
development. This will be reflected upon in more
depth in section 7.4.
7. Conclusion, explorations and implications
The primary purpose of the study was to explore
the motivations underlying SER in the UK. By
default, this also involved an exploration of the
motivations underlying CSR, as the individuals
interviewed often found it difficult to separate the
two. The results show that SER and CSR within
the firms interviewed are driven by a variety
of different pressures and perceived benefits,
including: reputation and risk management,
stakeholder management, satisfying pressures
from the City, peer pressure, and socio-
environmental and business efficiency reasons.
The role of key individuals was also mentioned
as important in initiating and developing SER
and CSR. Notwithstanding the variety of different
motivations, and the way in which they manifest
themselves across firms, perhaps the most
important insight gained from this exploration
is that the overwhelming majority of motivations
appear to be driven almost exclusively by business
reasons. That is, the motivations are part of – or, at
least are expressed in the terms of – some overall
business case, however defined.
The dominance of this ‘business case’ was further
explored in the study, finding that it appears to
have significant implications for the form that SER
takes. In particular, both SER and CSR appear to
be shaped primarily by instrumental business
criteria. As a caveat to this, the majority of the
motivations described by interviewees were
non-financial. Indeed, it should be emphasised
that, in some instances, business cases may
be constructed rhetorically. This suggests the
possibility that there is some discretion as to
what actually constitutes a business case. The
limits to this discretion and how it is exercised by
managers were not, however, explored in detail in
this study.
7. Conclusion, explorations and implications (continued)
Further to this exploration of motivations,
the study was also concerned to understand
something of the way in which individuals within
organisations conceive of, and talk about, social
responsibility. In particular, notions of conflict
between commercial and socio-environmental
(especially environmental) criteria were
explored with the interviewees. It was found
that interviewees generally characterised their
organisations’ relationship with the natural
environment as largely harmonious, or at least
manageable. We speculate that this belief in the
worthiness of the organisation is significant and
that it may go some way towards explaining why
SER practice generally gives the impression of
relative harmony between business, society and
the environment (see Chapter 2).
Size was used as a criterion in selecting the
sample of companies. Large companies were
focused on from the outset but there was no
discrimination of size differences within the
sample, so whether or not the differences noted
across firms may be explained by size variables
is difficult to say. Nevertheless, the previous
literature does recognise this as important (see, for
example, Adams et al. 1998; Al-najjar 2000; Choi
1999; Gray et al. 2001; Hackston and Milne 1996;
Patten 1992).
Industry was another criterion used in
selecting the sample. Although firms from
different industries were included, the size
and configuration of the sample is such that a
systematic industry analysis could not be carried
out. Nonetheless, it is worthy of note that the
interviewees from water companies generally
displayed a more sophisticated understanding
of sustainability. At least in the discussions,
they looked beyond their own organisation
and considered society’s waste streams, at
times invoking more holistic conceptions of
the organisation in its environment. Two of the
interviewees had ‘sustainability’ in their job titles.22
The reasons for their apparently more advanced
thinking on sustainability may be speculated upon.
Clearly such a regulated industry would probably
have a fairly consistent approach to environmental
matters. The regulator demands a lot of
information from them and one of the interviewees
cited this as a reason for the generally high quality
of SER in the sector. This indicates that sectoral
particularities do exist. The remaining companies
interviewed were, however, drawn from various
sectors. Even those from the same sector had
operations that were in some cases quite different
from one another’s. It was therefore difficult
to form further inferences regarding sectoral
approaches to CSR and SER.
The only other industry-related observation that
seems to emerge from the data was that we may
perhaps make a tentative argument that service
companies have a somewhat less sophisticated
approach to CSR/SER than companies from more
operations-intensive industries. This inference
should, however, be treated with caution.
The principal insights offered by the study
related to SER and CSR motivations. Although
interviewees cited a number of different
motivations for their SER and CSR, it is the
similarities between these motivations that
22 Although not necessarily a good indication of
understanding, it is worthy of note that two of those
with the more holistic thinking reflected this in their
job titles. Nonetheless, it should be noted that this
correlation does not seem to hold across the whole
sample. There were others with an apparently very
rudimentary understanding of sustainability who also
had ‘sustainability’ in their job title or remit.
7. Conclusion, explorations and implications (continued)
concern the current study. This report opened
by outlining a tautology – namely that social
responsibility and business practice are consonant
notions. The research undertaken for this report
suggests that the articulation of ‘a business case’
is crucial to business’s understanding of both CSR
and SER and that only with a sharper focus on the
business exigencies that underlie reporting and/
or acts of (so-called) social responsibility may we
understand better the current levels and details of
reporting and social performance. The business
case, such as it is, is often an elusive phenomenon
(the rhetorical construction of business cases
being a case in point) and the identification
or indeed the recognition of such a case is
apparently as closely related to the organisation’s
predisposition to social and environmental
issues as it is to financial acumen as such. We
are therefore returned to the need to develop
an understanding of strategy and organisational
culture as potential prerequisites for undertaking
actions that are labelled as socially responsible,
and of the reasons behind a predisposition to
undertake social, environmental and sustainability
reporting – whatever one perceives the quality of
that reporting to be.
What does emerge, however, is that a crucial part
of the process is the way in which organisations
learn to articulate socially responsible and/or
accountable activities. As Cramer et al. (2004:
221) note, issues, once recognised, have to be
turned into ‘context suitable configurations’. In
other words, they must be transformed into the
language of the business