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More disclosure=better CSR reputation? An examination of CSR reputation leaders and laggards in the global oil and gas industry



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Christopher J. Hughey
Adam J. Sulkowski
This paper contributes to the scholarship of CSR and sustainability reporting by testing whether greater
data availability about companies leads to their having better CSR reputations and possibly CSR
performance. The authors begin with a brief literature review to develop the hypothesis that greater data
availability may be correlated with having a positive CSR reputation. The authors choose the international
energy industry as a focus, since these companies were early adopters of sustainability reporting and
have the potential to have widespread and either very good or very bad reputations. Leaders and
laggards in terms of perceived CSR performance within this industry are identified using scores
generated by CSR Hub, a reputation aggregation service. A regression test is performed and the results
indicate a significant positive relationship: the more data is available about a company in the international
oil and gas industry, the better its CSR reputation tends to be. Since this study only considers availability
of data, and not the quality or content of information, the key finding appears consistent with the old
adage that “any publicity is good publicity.” The authors also share some observations about the
characteristics of the reputational leaders and laggards and their reputations across various aspects of
CSR. For example, consistent with previous findings, CSR reputation leaders are found to be older and
larger, while laggards are newer and smaller. The authors conclude with a discussion of implications for
managers and scholars and potentially fruitful future veins of inquiry.
Keywords: Corporate Social Responsibility (CSR), Oil and Gas Industry, Energy Industry, International
Business, Corporate Governance, Sustainability, Sustainability Reporting, Disclosure, Reputation
Thousands of companies around the world, including a majority of the Global Fortune 500, voluntarily
report on their environmental, societal, and economic impacts (Scott, 2000). The practice is alternatively
known as corporate social responsibility (CSR) reporting, sustainability reporting, citizenship reporting,
triple bottom line (TBL), or environmental, societal, and governance (ESG) reporting (Sulkowski and
White, 2009).
While the practice of sustainability reporting is growing rapidly, the practice and its benefits are
imperfectly understood by practitioners and scholars. The perceived CSR performance of companies is
also growing in importance, as various stakeholders continue to take a greater interest in the
environmental, economic, and societal impacts of companies in which they may invest, or for which they
may work, or from which they may buy.
This paper contributes to the scholarship of CSR and sustainability reporting by testing whether greater
data availability leads to companies having better CSR performance ratings in the international energy
industry. The authors show that having more data available results in companies, at a minimum, having
better CSR reputations. Because the study did not discriminate based on the quality or positive vs.
negative nature of the data available, it appears that the volume of data alone impacts reputation. This
interpretation is consistent with the old adage that “any publicity is good publicity.” If one accepts
performance ratings to be reflective of actual performance, then one may further conclude that greater
disclosures and visibility are leading to better mitigation of negative impacts and an increase in positive
impacts. The authors also document observations of some characteristics of leaders and laggards in
terms of CSR reputations in this industry. The paper concludes with a discussion of implications for
managers and researchers.
The origins of the term corporate social responsibility in scholarly literature date back to the 1950s (Caroll,
1999). Since then, perceptions of CSR have evolved. The concept of CSR can be defined in many ways.
One common definition is "actions that appear to further some social good, beyond the interests of the
firm and that which is required by law" (McWilliams and Siegel, 2001). As stated above, sustainability
reporting (also known as CSR reporting) is the practice of reporting a company’s environmental, societal,
and economic impacts; it is sometimes known as ESG (environmental, societal, and governance)
Corporate reputation has been defined as the perceived capacity of a firm’s ability to meet stakeholders’
expectations(Waddock, 2000), or the perceived stakeholders’ opinion of a firm which depends on the
extent to which the expectation of those stakeholders is met” (Fombrun and Shanley, 1990). Some have
suggested that a firm’s reputation is composed both of its own actions and the status of those actions
relative to the actions of others, which set the expectations of the firm’s stakeholders (Bertels and Peloza,
Soppe et al. (2011) offer an excellent summary of the theoretical framework and a model for gauging
CSR reputation. Siltaoja (2006) points out that there is no single “right” set of criteria for CSR reputation.
Both Fombrun (1998) and Lewis (2001) suggest that CSR reputation is comprised of the following criteria:
(1) environmental impacts, (2) treatment of employees, (3) financial performance, (4) product quality, and
(5) quality of management or organizational issues. To this list of criteria that they hold in common,
Fombrun (1998) adds (6) community involvement, while Lewis (2001) adds (6) customer service and (7)
social responsibility. Schultz et al., (2001) and others have offered variations on what comprises CSR
The concept of disclosing data on CSR-related issues gained traction in the mid 1990’s through the work
of John Elkington (1994 and 1998). Clarke and Gibson-Sweet (1999) suggest that companies are
motivated to publish CSR performance data by the strategic need to manage their reputation and
legitimacy. Ullmann (1985) offers a model for predicting such CSR activities based on a stakeholder
theory of strategic management. Some have been critical of CSR reporting, arguing that it does not lead
to better conduct, but rather that the exclusive aim and outcome is to manage reputation (Moneva et al.,
2006; Gnepa, 2005). Others articulate variations upon this central theme of data disclosure being
motivated by a desire to legitimize management decisions and heighten the company’s image as socially
and environmentally responsible (Eden, 2000). Empirical studies show that “measures of stakeholder
power, strategic posture, and economic performance are significantly related to levels of corporate social
disclosure” (Roberts, 1992). Hasseldine et al. (2005) confirmed that CSR disclosures positively impact
As of the second decade of the 2000s, there is a nascent consensus among researchers that there is a
positive relationship between the publicized CSR activities of a company and its financial performance
and value. Tsoutsoura (2004) found a positive relationship between financial performance and CSR
activities in 500 companies worldwide over a five year period. Rossi (2009) found that the firms
comprising the Bovespa Corporate Sustainability Index (ISE) are traded at a premium. While not every
study proves such a connection (Wu et al. 2010), the weight of empirical evidence suggest CSR activities
and financial performance are positively related (Van Beurden and Gössling, 2008). Findings to the
contrary typically cite to out-of-date data (Van Beurden and Gössling, 2008). A review of 52 scholarly
articles found the same consensus, and further concluded that CSR reputation was the means by which
CSR activity boosts financial performance (Orlitzky et al., 2003).
Executives agree that there is a link between reporting on their CSR activities, managing CSR
reputations, and ultimately company performance and value, as evidenced by the popularity of
sustainability reporting. In 2011, KMPG researched the sustainability reporting practices of the largest
100 companies (N100) in each of 34 countries (KPMG, 2011). This resulted in the following list of the
percentage of the N100, by country, that reported on CSR activities: UK (100%), Japan (99%), South
Africa (97%), France (94%), Denmark (91%), Brazil (88%), Spain (88%), Finland (85%), United States
(83%), Netherlands, (82%) Canada (79%), Italy (74%), Sweden (72%), Hungary (70%), Portugal (69%),
Nigeria (68%), Mexico (66%), Switzerland (64%), Slovakia (63%), Germany (62%), China (59%), Russia
(58%), Australia (57%), Bulgaria (54%), Romania (54%), Ukraine (53%), South Korea (48%), Singapore
(43%), Taiwan (37%), Greece (33%), Chile (27%, New Zealand (27%), India (20%), Israel (18%). To
summarize: over 50% of the N100 in 26 out of the 34 countries in the study reported on CSR activities.
Its 2011 study was the latest of three surveys by KPMG that also surveyed executives about their
motivations for sustainability reporting. The percentage of executives at the largest 250 companies in the
world (the Global Fortune 250) who chose “reputation or brand” as a motivation for sustainability reporting
grew from 27% (KPMG, 2005) to 55% (KPMG, 2008) to 67% (KPMG, 2011). Other prominent drivers of
sustainability reporting included “employee motivation”, encouraging “innovation and learning” and
“access to capital or shareholder value”. The rise of “reputation or brand” from the seventh most
commonly chosen response (KPMG, 2005) to the most popular response (KPMG, 2011) reflects a
widespread and growing conviction among executives that CSR data disclosure impacts reputation.
Based on the foregoing literature review and data, the following hypothesis is proposed:
H1: Greater availability of CSR data about a company leads to having a better CSR reputation.
Conversely, the null hypothesis is that there is no significant CSR reputation difference between
companies based on the availability of data on their CSR performance.
To test their hypothesis, the authors used the CSR Hub performance rating tool, available online at CSR Hub’s objective is “to provide consistent ratings of Corporate Social Responsibility
(CSR) performance for as broad a range of companies as possible. As described on the company’s
website: [o]ur search system allows CSRHUB users to find and compare the ratings of companies in
different industries and countries. Both consumers and businesspeople can use this information to make
economic decisions, look for employees or jobs, organize buycotts and boycotts, and make purchasing or
supply chain decisions.
It is vital to stress that the authors do not offer any conclusions or observations as to whether CSR Hub’s
tool is indicative of actual CSR performance of companies. Regardless of whether or not CSR Hub’s
ratings reflect realities of comparative CSR performance, the authors simply used its ratings as a fair
indicator of CSR reputations.
To elaborate: inherently, judging CSR performance involves choices by the judging entity: what data to
consider, how many sources to reference, what metrics to use, how much weight to assign to certain
aspects of CSR performance, and many other decisions about which reasonable and informed experts
may disagree. The creators of CSR Hub, as described below, acknowledge this.
Access to CSR Hub was purchased and the authors have no financial stake or any other vested interest
in or sense of loyalty to CSR Hub or its founders that would undermine their objectivity in carrying out the
present study.
The authors chose CSR Hub because it is the most comprehensive CSR information aggregation tool
that could be identified: the methodology of CSR Hub ratings uses 125 sources of CSR information, with
the largest contribution of data coming from aggregating five of the eight leading Environmental, Social,
and Governance (ESG) research firms. The CSR Hub source database also includes information from
publishers, non-governmental organizations (NGOs), and three government agencies. Using a proprietary
system for mapping and normalizing this broad range of information, CSR Hub provides ratings on
around 5,000 companies in 65 countries.
The 125 CSR information sources referenced by CSR Hub use different metrics to assess CSR
performance (e.g., money donated to charity vs. hours volunteered by employees), produce different
results (“Top 50” rankings vs. numerical scores vs. symbols like “+” and -“), track different industries,
cover different geographic regions, evaluate at the product, subsidiary, or parent company level, and
update their analyses at different time intervals,
CSR Hub’s proprietary system endeavors to remove bias and inconsistency by mapping to a central
schema (over two million data elements are assigned to 12 subcategories of CSR performance),
converting data to numerical scales, normalizing to adjust for detected biases among sources,
aggregating (weighting sources for credibility and value, generating ratings at 12 subcategory levels, and
then further consolidating these ratings to four main category levels), and, finally, trimming approximately
1,500 ratings when there is inadequate information. CSR Hub further states that it researches each rated
company and determines its appropriate category of industry. The result is a database of hundreds of
companies, searchable by industry or other characteristics, with overall CSR performance ratings ranging
from 0 to 100, with 100 being the ideal. Again, the authors emphasize that, for the purpose of this study,
the score is taken, at a minimum, as being indicative of widespread overall CSR reputation.
The authors used CSR Hub’s default weight-of-importance assigned to the four main categories of CSR
performance (community, governance, employees, and environment). CSR Hub offers the option of either
using the default user profile (and its weights-of-importance) or customizing a personal profile that reflects
a user’s own personal convictions as to the comparative importance of different aspects of CSR
performance (for example, some users may find environmental issues to be more important than social
issues, or visa-versa). If a user chooses to raise the importance, for example, of environmental impacts,
this would change the weights of certain factors and alter the final ratings of companies.
The authors started by selecting the international oil and gas extraction industry as a focus because they
were among the first to regularly publish reports on their environmental impacts starting in the 1980s
(Patten, 1991), and therefore there is a potentially great abundance of data available about these
companies. Also, the companies have a large potential to have widespread and either very good or very
bad reputations. On the one hand, some major industry members are easily to isolate and vilify for their
role in a carbon-intensive energy economy that contributes to global climate change. On the other, they
have enormous resources to advertise whatever steps they may be taking to improve engines, fuel
blends, and negative side effects of production, transportation, refinement, and distribution. In the human
rights arena, fossil fuel companies have been castigated for their working relationships with murderous
dictatorships (as in Nigeria and Burma), yet, again, have the resources to make and publicize
humanitarian and charitable donations. To mention one more (but by no means the only other) basis for
notoriety, the safety performance of the fossil fuel industry occupies headlines after a fiasco such as the
2010 Deep Water Horizon offshore drilling platform disaster and subsequent oil spill in the Gulf of Mexico.
The subsequent positive and negative aspects of efforts to arrest damage and make amends have the
potential to ruin or burnish a company’s CSR reputation.
For a dataset, the authors chose the 190 companies classified as being in the oil and gas extraction
industry by CSR Hub. Their respective CSR scores were retrieved from CSR Hub’s database on
November 1, 2011. To better be able to make some observations about the reputational outliers, the 35
companies with the best overall CSR rating in this dataset and the 35 companies with the worst overall
CSR rating were identified. Among those 70 companies, the authors then further identified those at the
extremes, as defined by being at least 10 points below (among the worst) or 10 points above (among the
best) the subset’s average overall score. This brought the total number of companies in the dataset to 53.
This identification of CSR “leaders” and “laggards” is consistent with the methodology employed by
Jenkins and Yakovleva (2006) in their analysis of CSR disclosures based on case studies of ten mining
The authors further excluded a few companies for the following reasons. Oil Sands Quest (Canada) and
OGX (Brazil) were excluded because they had zero revenue, as both are still in the exploration-only
phase. Petrohawk was excluded because it is a wholly-owned subsidiary of Billiton. Parallel Petroleum
was excluded because it is privately held by an asset management company, meaning key financial data
was unavailable. Franco-Nevada was excluded because they are primarily focused on gold mining, not oil
and gas. Addax Petroleum was excluded because it is a wholly-owned subsidiary of Sinopec. Finally,
China Blue Chemical and Bill Barrett Corporation were excluded because they only were referenced by
two data sources.
After this scrutiny and screening, a final dataset of 45 companies remained, 25 being outliers with
extremely good reputations and 20 being outlines with extremely bad reputations.
The analysis of the data indicates a significant positive relationship: the reputational scores of the
companies in the dataset are strongly correlated to the amount of data on each company. On average,
the twenty-five companies with the best reputations are associated with over four times as many data
sources as the twenty companies with the worst reputations. The relationship appears to be causal.
Multiple R
R Square
Adjusted R Square
Standard Error
Significance F
t Stat
X Variable
It is important to acknowledge the limitations of this study. First, the study relies upon the methodology of
CSR Hub in generating scores that the authors have accepted as broadly representative of, at the least,
company CSR reputations. Second, the total sample size of 45 is not a large dataset.
Nonetheless, the results suggest that more data being available about a company in the international oil
and gas extraction industry will cause its CSR reputation to be better. The converse is also true.
Depending on whether one accepts that CSR Hub’s methodology and scores are also indicative of actual
CSR performance, one may also conclude that the more data is available about such a company, the
better will be its actual performance, and vice-versa.
Might it be true that the twenty CSR laggards are in fact not such bad companies, but rather that they are
just not reporting information or are under-researched? The authors are not inclined to believe that these
negative CSR performance scores are utterly baseless, because the authors deliberately excluded any
company associated with fewer than three data sources (and, to begin with, CSR Hub’s methodology
claims to eliminate results that are based on an inadequate number of sources). There is publicly
available data concerning all the companies in the dataset that stakeholders, opinion leaders, and
analysts use to judge CSR performance and upon which the CSR reputations are based.
To produce the graph below, the authors grouped the 45 companies in the dataset into groups of five
companies each, starting with the twenty-five CSR leaders, represented by the numbers one through five
(the best five) and moving down the dataset through the laggards, represented by the numbers six
through nine (the worst five). Clearly, the CSR score and number of data sources trend downwards
together, though not completely smoothly.
Blue line on Y-axis = CSR score of each of nine 5-company subsets compared to the dataset average
Red line on Y-axis = average number of data sources related to companies in each 5-company subset
X-axis: 5-company subsets (from 1 = best of leaders, to 9 = worst of laggards)
One might speculate that there are differences in terms of the composition of the CSR leader and laggard
cohorts based on company nationality, or the country with which they are primarily associated. Among the
twenty-five companies with the best reputations, only one (Petroleo Brasileiro of Brazil) was primarily
associated with an emerging economy. By contrast, the twenty laggards include three companies from
developing countries. However, U.S. and Canadian companies are twice as well represented in the
cohort of the twenty companies with the worst reputations than among the twenty-five best. Therefore, it
seems that this study does not support generalizations regarding the likelihood of developing vs.
developed market companies being leaders or laggards in terms of CSR reputation or performance.
However, two observations about the two cohorts merit further discussion and future research: CSR
reputation leaders are older and larger than the laggards. The leaders have been in existence for an
average of seventy years, while on average the laggards have been in existence for only twenty years.
While it is more common to measure company size by their market capitalization, the authors compared
the companies based on revenue per annum in U.S. dollars, because sales are more indicative of the
scale of operations than equity markets’ valuation of their worth. The CSR reputation leaders were, on
average, much larger than the laggards - by a factor of thirty. All but one of the CSR reputation leaders
were multi-billion dollar companies and the group as a whole had an average annual revenue stream of
over 92 billion dollars. By contrast, the twenty laggards were much smaller companies with average
revenue of just 3 billion dollars.
The positive relationship between measures of CSR performance and the age and size of companies has
been documented by previous empirical studies (e.g. Wei et al., 2011; Wagner et al., 2002; Waddock and
Graves, 1997; Henriques and Sadorski, 1996). The theoretical model for such an effect is based on the
reality that larger firms are generally more publicly visible and therefore have more to gain if they are
seen to be conducting business responsibly (Wei et al., 2011). The larger the firm, the more susceptible it
may be to public scrutiny by third parties (such as news media, business analysts, and stakeholder
NGOs), and hence larger firms may feel more external pressure to actually perform better in terms of
CSR. Conversely, the worst offenders may not just seem worse because they disclose less; perhaps they
are worse actors partly as a result of being less noticed. With fewer people and groups scrutinizing them,
smaller companies may feel less pressure to improve their CSR performance and hence may be
comparatively less responsible with regard to impacts on the environment and society.
On this issue the authors would like to proffer a provocative postulation. One might speculate that these
results reveal a phenomenon analogous to the concept of the environmental Kuznets curve (the
controversial theory that people accept the degradation of their environment during early stages of
economic development, but later demand a better environment to accompany their improved lifestyles
(Stern, 2004). Is it possible that something similar occurs among stakeholders in organizations? Are
shareholders, entrepreneurs, employees, clients, neighbors, and activists who otherwise demand more in
term of CSR conduct from a large and established company such as Shell or BP willing to turn a blind eye
in the case of smaller companies? Could lower CSR expectations for newer, smaller companies be based
on the idea that CSR is a luxury they cannot afford during early stages of development? This would be
consistent with the phenomenon of bolting-on CSR activities rather than building CSR into core
business activities; perhaps stakeholders and managers delay having higher expectations of
responsibility with the assumption that a company can always reactively address CSR later in the lifecycle
of the enterprise.
Aside from the differences in company characteristics, there are differences in CSR scores between and
among the CSR reputation leaders and laggards that merit discussion. First, as illustrated below, the
twenty-five leaders are better in all of the four major aspects of CSR performance (community,
governance, employees, and environment), than the twenty laggards. The widest gulf between the
leaders and laggards was in the environmental aspect, where there was a twenty-nine point gap between
the groups’ respective averages. The smallest difference was a nineteen point gap between the leader
and laggard cohorts’ community scores.
Zero on the y-axis = respective average score of 190 companies in the oil and gas extraction industry
The second observation about CSR scores is that the companies not just the average of the cohorts of
CSR reputation leaders and laggards are clearly differentiated and either score very well across all
aspects of CSR performance or do very badly across all categories. No company among the twenty
laggards achieved a score over 48 in any category, while no company in the top twenty-five had a score
under 48 in any category. The third observation about CSR scores is that the twenty-five CSR leaders
demonstrated much less variation across the four categories of reputational performance (community,
governance, employees, environment), with a standard deviation of just under four. Among the twenty
companies with the worst reputations, the standard deviation across the four categories was more than
five. Therefore, the study supports the proposition that CSR leaders tend to be consistently positive in
terms of various aspects of their environmental, societal, and governance reputations (and, possibly, CSR
activities) while laggards tend to have not only much lower, but also greater variation in their low
performance across various aspects of CSR reputation (and, possibly, CSR activities).
Finally, it is vital to note that this study focused on the volume of data that was available about each CSR
leader and laggard. The study did not identify the quality or the type of data related to companies.
Similarly, this study was blind as to whether positive vs. negative information or narratives were
communicated. Some of the largest players in the oil and gas extraction industry experience a glut of
negative media exposure and stakeholder scrutiny. As mentioned above, some have had to communicate
about calamities such as the Deep Water Horizon oil drilling platform accident and disastrous aftermath in
the Gulf of Mexico. Others, such as Halliburton, have recently grappled with voluminous negative publicity
surrounding practices such as hydraulic fracturing in the U.S. that may endanger human health. The
controversial exploitation of the Canadian tar sands is another issue about which large companies such
as Shell have had to communicate. Regardless, there appears to be a near perfectly positive relationship
between the availability of data about companies and their CSR reputations. Further, the largest
companies which tend to attract the most negative publicity are found to be CSR reputation leaders.
The results may therefore be interpreted as an example of the old adage that “any publicity is good
publicity” (which has not been conclusively attributed to any one individual) and are possibly even
consistent with the notion of “succès de scandale” (success from scandal). The concept originated during
the Belle Époque in Paris at the turn from the 19th to 20th century when artists (including Oscar Wilde,
Edouard Manet, Igor Stravinsky, and Richard Strauss) leveraged shocking negative news into fame and
success. Similarly, contemporary celebrities (such as Hugh Grant, Charlie Sheen, Madonna, and Paris
Hilton) have demonstrated that “any press is good pressby profiting from notoriety for shocking
behavior. Perhaps a key implication of this study’s findings (including but not necessarily limited to
corporations) is that visibility and transparency regardless of the nature or quality of conduct may
ultimately have a positive impact on reputation. Further studies such as content analyses of sustainability
reports and news stories related to CSR leaders and laggards could further substantiate this possibility. It
may also be possible that it is not solely data availability, but rather the masterful corporate
communication strategies of large companies with superior resources that allow them to be CSR leaders
regardless of whether they must grapple with disasters or have positive information to communicate.
The key contribution of this study to the fields of CSR and sustainability reporting is the finding that
increased availability of data about a company results in, at the least, better CSR reputations for
companies in the international oil and gas extraction industry. If one assumes aggregated reputational
scores to reflect actual CSR performance, then one could further conclude that increased availability of
data leads to improved CSR conduct. Among oil and gas extraction companies, older and larger
companies tend to be among the leaders in terms of CSR reputation while CSR laggards are smaller and
newer. This is consistent with existing theoretical frameworks and previous findings of empirical studies.
Further, the leaders and laggards are clearly differentiated by a large gap in CSR reputational scores
across all four major aspects of CSR (community, governance, employees, and environment), but
especially in terms of reputation for conduct related to the environment. CSR leaders in this industry tend
to be perceived as more consistently good across all four aspects of CSR performance, while CSR
laggards tend to have greater variation in their negative scores across the four aspects of CSR
performance. Finally, the authors point out that the study took into account only the amount of data
available about each company, not the quality or whether it communicated positive or negative facts and
narratives. Given that it is just the volume of available data that appears to positively impact reputation,
the results appear consistent with the old adage that: “any publicity is good publicity”. The implications of
this study for managers are that greater disclosures related to CSR will likely improve a firm’s CSR
reputation and that transparency may possibly even lead to better conduct. For scholars, this study
suggests several fruitful veins of future research. This study could be repeated using data from other
industries, using different measures of CSR reputation and conduct, over varying periods of time, and by
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Christopher J. Hughey earned his undergraduate degree in languages and international studies from the
Universitetet i Bergen (University of Bergen, Norway) in 1995. He is currently Project Executive at
Viewpoint Construction Software. He can be reached on
Adam J. Sulkowski is an Associate Professor of Law and Sustainability at Babson College. He earned his
JD and MBA at Boston College in 2000. He is recipient of several awards for teaching, research and
service excellence. While at the University of Massachusetts (Dartmouth), he mentored MBA students to
produce the first GRI-guided sustainability report by a university anywhere in the world to achieve an A
level of compliance with the premier global standard for reporting on CSR performance.
... The relationship between the availability of data on CSR and firms' CSR reputation [37]. ...
... Thus, these companies are largely involved in sustainability reporting and, due to the important social and environmental externalities they generate, these companies often draw up sustainability reports, over and in addition to the financial report. Thus, the oil and gas sector will have a great deal of information on sustainability disclosure [37]. Furthermore, the oil and gas companies, since they operate in different geographical areas, are subject to different national disclosure regulations. ...
The Directive 2014/95, in force in 2017, is the first European step that requires mandatory non-financial information to undertakings (all “public interest entities” with more than 500 employees). The regulation is concerning sustainability information as environmental, social and employee, human rights and anti-corruption and bribery matters and disclosure of diversity policy for board members. The study, in the strand of the regulation of accounting, part of the broader field of research into accounting regulation, contributes to the debate on the quality of regulation, in this specific case referred to sustainability disclosure. The regulation of sustainability matters is studied in literature broadly in a post-implementation phase and at national level. This research, instead, aims to analyse, through the causal chain of regulatory policy, in the ex-ante stage, the quality of the regulation and, at least, the usefulness of the normative pressure. The Oil & Gas sector is chosen as sample of the study, because it is one of the most advanced sectors in sustainability disclosure. The examination of the law, in terms of content requirements (what) and location of information (where), is the basis to apply the disclosure-scoring system, a partial form of content analysis, to the reports of the sample. The findings reveal a good level of completeness of non-financial information, however, there are some areas that have to be improved to reach the requests of the Directive. Results show also the presence of overlap between financial reports and sustainability ones. In conclusion, the regulation is useful to prompt undertakings to reflect on their reporting and so doing improve their sustainability approach.
... It contributes to a better understanding of the specific characteristics of energy industry in terms of ESG-related policies. Arguments for choosing energy industry start with the pioneering sustainabilityoriented activities (Hughey & Sulkowski, 2012) and relay on the increasing importance conferred by researchers and scientific journals' editors, overtime (Soytas et al., 2017;Patari et al., 2014;Lu et al., 2014), as highlighted by Lungu et al. (2019). ...
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Research Question: Is there an association between ESG factors disclosure and the firm's value for the companies acting in energy sector? Motivation: Identifying whether a connection exists between the ESG factors disclosure and firm's value is a current and much debated matter, with a focus on the presentation of non-financial information. The necessity of demonstrating the existence of an association is based on the inclusion of non-financial information in the company's corporate reporting combined with financial information. Non-financial information presents the long-term prospects of a company and is focused on the value creation process, as opposed to financial information which is limited to historical data and short-term goals such as profit maximisation. In order to describe the value creation process, the company is analysed from different stakeholders' points of view (customers, suppliers, employees, local community, government, environments activists, etc.) and the interdependencies created between the company and these stakeholders. Therefore, by choosing to present a more holistic view of a company, the management of the company may attract new capital from investors by showing that there is a positive association between ESG factors and firms' value (Sadiq et al., 2020; Wong et al., 2020). Idea: This paper assesses the possibility of an association between ESG factors and firm's value by developing two linear regression models. Environmental, social and governance disclosure associated with the firm value. Evidence from energy industry Vol. 20, No. 1 57 Findings: The main findings of the research is that there is an association between ESG factors disclosure and firm's value, and based on the type of the connection (positive or negative), companies may include aspects regarding non-financial information, namely ESG factors, which could attract new capital. Contribution: This paper contributes to the previous research conducted on the disclosure of ESG factors and its influence on firm's value by showing that there is an association between ESG factors disclosure and the value of the company. The evidence obtained based on the two research models applied to the dataset may persuade the management of the companies to include non-financial information in their corporate reporting.
... For example, Jackson & Apostolakou, 2010) revealed in their study, based on the interaction effect of institutionalized forms and sectorial level, that CSR initiatives are implemented by companies as a way of managing their social reputation to legitimise their business practices so as to address the stakeholder expectations. A study on the international oil and gas industry found that those firms that provided more data in their sustainability reports tended to have better reputations than those that provided less information irrespective of the type of market economies those firms represent (Hughey & Sulkowski, 2012). Similarly, another study examining the motivations and barriers for sustainability reporting in the airline industry found brand value, employees' CSR awareness, and communication with stakeholders were primary motivators for sustainability reporting (Kuo, Kremer, Phuong, & Hsu, 2016). ...
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The study attempts to reveal differences in the quality of information disclosed on occupational health, safety (OHS) and well-being in 250 sustainability reports within and between large companies in different industries and countries (i.e., market economies). Using a mixed research design, our results indicate that industry affiliation and type of market economy have no significant influence on the quality of disclosure on OHS and well-being aspects. Instead, companies tend to disclose information on legal requirements and OHS standards to secure their social legitimacy. However, in the finance, insurance, and real estate industry groups, membership in the Dow Jones Sustainability Index emerged as an influencing factor on the quality of disclosures on employees’ well-being. In general, companies merely disclose sententious information about OHS and well-being in disclosures of management approaches in the Global Reporting Initiative, and otherwise rarely attempt to translate their claims into outcomes. Contributions to institutional theories and practices are discussed.
... shows that ESG score (esg_holding) and size (ta_holding) have a positive and highly significant effect on a fund's ESG score. This result recalls previous studies on the relation between firm size and ESG scores (Drempetic et al., 2020;Gavana et al., 2017;Hughey & Sulkoski, 2012). On the contrary, ROE does not add explanatory power to the specification. ...
Sustainable and Responsible Investment (SRI) funds – the largest component of the fast‐expanding sustainable financial investment industry – apply environmental, social and governance (ESG) analyses to manage their investment portfolios and are particularly demanding in terms of issuers' disclosure. In this paper we take a step forward and ask whether adopting high‐quality sustainability disclosure is important also for SRI funds' holding companies. Specifically, we introduce a novel metrics on the extent of holding companies' sustainability disclosure based on the quality of their Global Reporting Initiative (GRI) reporting. In parallel, we use a standard approach to measure a fund's ESG intensity, that is, the weighted ESG average of a fund's investments. Indeed, we find that an SRI fund's ESG intensity systematically improves when the associated holding company improves its GRI sustainability disclosure. Moreover, we show that this positive effect of holdings' disclosure on a fund's ESG intensity is larger in jurisdictions with less stringent regulation on disclosure, where the signaling value of GRI disclosure is supposedly heightened. Our results do not seem to be driven by endogeneity between a fund's ESG intensity and its holding company's GRI reporting. First, a fund's ESG investment policy and its holding company's sustainability disclosure policy lie on separate decision ladders. Second, we show that the two variables are empirically uncorrelated. Third, our results prove resilient to a battery of robustness checks. The implication of our finding is that holding companies' sustainability disclosure engagement can reap a benefit for their managed SRI funds – provided ESG ratings are reliable –, whose enhanced credibility might prove a key competitive factor.
... Our primary analyses employ firm-level CSR ratings from CSRHub. CSRHub has been utilized by academic researchers as a reliable data source for CSR ratings (Hughey and Sulkowski 2012;Aggarwal, 2013;Bu et al., 2013;Cruz et al., 2014;Rezaee and Tuo 2017;Westermann et al., 2018;Arminen et al., 2018;Lin et al., 2020). CSRHub compiles data from over 600 external sources, including ESG analysts, governments, NGOs, and other publications and lists. ...
We investigate the corporate social responsibility (CSR) performance of firms with a dual-class share structure. Dual-class firms, which represent a fast-growing segment of the U.S. capital market, violate the "one share, one vote" principle by giving corporate insiders control in excess of their economic interest in the firm. We observe a negative association of excess insider control and firms’ CSR performance, primarily with respect to the community- and employee-related dimensions of CSR. Extended analyses reveal that this negative association is mitigated by high financial resource availability. Consistent with a trade-off between corporate spending on CSR or on benefits for insiders, we also observe a negative association between CSR performance and executive pay in dual-class firms. Taken together, these extended analyses are consistent with self-interested behavior of entrenched insiders who, unless resources are abundant, appear to reduce CSR activities to maintain resources available for their personal benefit. While the exposure to risks engendered by a dual-class equity structure may be reflected in the share price, our findings draw attention to an externality: diminished CSR performance affects not just shareholders, but all stakeholders.
... Indeed, the coefficient of the GRI dummy is now 0.28 vs. 0.18 of Model 6 and its significance is now even higher. This result is indeed somehow puzzling since it would suggest that using the granular ladder as in GRI score is less valuable than treating all the firms with the 0/1 dummy, which could be in line with Hughey et al. (2012) [46]. We will return to this issue at the end of this section. ...
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Sustainable disclosure has become common for companies to publicly signal their responsible behavior. Our research idea is twofold. First—irrespective of its content—better quality sustainable disclosure should identify more sustainability compliant companies. Second, we propose that those companies should have a more stable—and thus more sustainable—performance. Focusing on the top-capitalized companies of the EU-28 stock exchanges, we assess how GRI sustainable-reporting quality associates with stock-price volatility and distance-to-default. Our results, which resist various robustness checks, confirm that better quality sustainable disclosure couples with more sustainable performance. Thus, pro-disclosure policies could enhance long-term value creation.
... A lot of this extant literature have focused on examining the effect that CG has on financial performance (Ahern & Dittmar, 2012;Carter, D'Souza, Simkins, & Simpson, 2010;Gyapong, Monem, & Hu, 2016;Jackling & Johl, 2009;Marimuthu & Kolandaisamy, 2009;Ntim, 2015;Salloum, Jabbour, & Mercier-Suissa, 2019;Sarhan, Ntim, & Al-Najjar, 2019a). Other studies have linked CG structures to other organisational outcomes such as compensation (Agyei-Boapeah et al., 2019;Core, Holthausen, & Larcker, 1999;Elmagrhi et al., 2019;Liu et al., 2017), audit fees, book-tax differences and dividend policy (Abdul Wahab et al., 2018;Gyapong et al., 2019;Sarhan et al., 2019b), disclosure (Elamer et al., 2019;Hughey & Sulkowski, 2012), earnings management and fraudulent reporting (Cumming, Leung, & Rui, 2015;García Lara, García Osma, Mora, & Scapin, 2017), efficiency (Yamori et al., 2017), environmental performance (Haque & Ntim, 2020;Shahab et al., 2020b), and stock price informativeness (Gul, Srinidhi, & Ng, 2011;Shahab et al., 2020a). ...
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A considerable amount of accounting, economics and finance studies have investigated the link between corporate governance (CG) and performance in profit and non-profit organisations. This paper departs from the existing literature by investigating the relationship between CG structures and both financial performance (FP, measured as return on assets (ROA) and equity (ROE)) and non-financial performance, measured as league points won (NFP-Points), of sports organisations with specific focus on UK premier leagues’ football (soccer) teams. We collect data relating to CG structures, FP and NFP-Points of football clubs playing in the four UK premier leagues in England, Northern Ireland, Scotland and Wales along with the English Championship teams over the 2011-2016 period. We analyse our data relating to 80 football clubs over a 6-year period (generating 397 club-year observations) by running a number of multivariate analyses to test our hypotheses. Our findings are as follows. First, we find that NFP-Points is higher in clubs with larger boards, non-executive directors (NED), CEO role duality, and higher percentage of foreign and/or younger directors, but lower in firms with higher percentage of female directors. Second and by contrast, we find that the relationship between these same set of variables and FP is, however, insignificant except for boards with NED that remained significant and negatively related to ROA. Our findings appear to reflect the prioritisation of on-the-field performance over off-the-field performance by sports organisations. Our evidence is largely robust to using alternative measures and estimation models.
... CSR can be performed through various corporate activities/actions such as donations (Pyo & Lee, 2013), paying taxes (Lanis & Richardson, 2012), CSR related disclosure (Hughey & Sulkowski, 2012), reduction in corporate fraud (Rodgers, Söderbom, & Guiral, 2015), (Rao, Tilt, & Lester, 2012;Ntim, Soobaroyen, & Broad, 2017). ...
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This paper provides an up-to-date and comprehensive systematic literature review (SLR) of the existing research on women on corporate boards (WOCBs) and corporate financial and non-financial performance. The aim is to synthesise and extend current understanding of both the existing (i) theoretical (i.e., economic, psychological and social) perspectives and (ii) empirical evidence on the (a) multi-level (i.e., individual-, social-, firm- and country-level) antecedents of WOCBs, and (b) the effects that WOCBs have on a wide range of corporate financial and non-financial performance. We achieve this by adopting a three-step SLR approach to analyse/review one of the largest SLR datasets to be employed to date, consisting of 634 mixed, qualitative, quantitative and theoretical studies conducted in over 100 countries from more than 10 disciplines (e.g., accounting, finance, economics and governance) from 1981 to 2019 and published in 270 top-ranked journals. Our findings are as follows. First, a large number of existing studies are descriptive and/or they draw on single rather than multi-theoretical perspectives. Second, existing studies have focused on firm-level rather than country-level antecedents of WOCBs. Third, observable methodological limitations include the dearth of qualitative, mixed-methods and cross-cultural/country studies. Finally, we outline opportunities for future WOCBs research.
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This study aimed to determine the extent of the application of social responsibility accounting in tourism companies in Iraq, identifying the extent to which these companies' departments are aware of the concept of social responsibility, and the areas of application of responsibility accountability. To achieve the goals of the study, a questionnaire was designed and distributed by hand to the managers and their assistants. The results of the study indicate that tourism companies' departments are aware of the concept of social responsibility, and they apply social responsibility accounting to varying degrees. Meanwhile, the field of environmental protection was poorly implemented. The research also presented a set of recommendations to enhance the application of liability accounting in tourism companies.
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A considerable amount of accounting, economics and finance studies have investigated the link between corporate governance (CG) and performance in profit and non-profit organisations. This paper departs from the existing literature by investigating the relationship between CG structures and both financial performance (FP, measured as return on assets (ROA) and equity (ROE)) and non-financial performance, measured as league points won (NFP-Points), of sports organisations with specific focus on UK premier leagues’ football (soccer) teams. We collect data relating to CG structures, FP and NFP-Points of football clubs playing in the four UK premier leagues in England, Northern Ireland, Scotland and Wales along with the English Championship teams over the 2011-2016 period. We analyse our data relating to 80 football clubs over a 6-year period (generating 397 club-year observations) by running a number of multivariate analyses to test our hypotheses. Our findings are as follows. First, we find that NFP-Points is higher in clubs with larger boards, non-executive directors (NED), CEO role duality, and higher percentage of foreign and/or younger directors, but lower in firms with higher percentage of female directors. Second and by contrast, we find that the relationship between these same set of variables and FP is, however, insignificant except for boards with NED that remained significant and negatively related to ROA. Our findings appear to reflect the prioritisation of on-the-field performance over off-the-field performance by sports organisations. Our evidence is largely robust to using alternative measures and estimation models.
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This article traces the concept of corporate social responsibility (CSR) from its post WWII beginnings in popularity up through the end of the 1990s. The article focuses on definitions or understandings of the concept/construct. It does not focus on actual company practices during this time as they were quite varied. (This article has been ranked #1 most read in the Business and Society journal for years now).
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Many studies have investigated the relationships among environmental management, financial performance and other firm attributes. Their results are inconsistent and contested. Most of the empirical studies to date are in the context of developed countries rather than developing countries. This study fills this gap by providing an empirical examination of the relationships among environmental management, firm value and other firm attributes in the Chinese context. In addition, this study is the first study of Chinese firms to use panel data analysis methods in the examination of the impact of environmental management on firm value. The results of panel data analysis show that environmental management has no significant impact on firm value. Pearson tests show that prior financial performance does not affect the level of environmental management. Rather, firm size is shown to be positively correlated with the level of environmental management.
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This paper presents the findings of a qualita- tive field study undertaken with senior manag- ers responsible for their firm ' s corporate social responsibility (CSR) activities to explore the interaction between a firm ' s reputation for CSR and the actions of its industry peers; the actions of its industry; and the actions of other firms in its local geographic community. Examining this phenomenon from an institu- tional perspective, we seek to explain how and why CSR norms become institutionalized both within and across industries. Specifically, we develop a model to explain the diffusion of CSR norms; a process that we argue results in slowly ratcheting expectations over time. We propose that firms in sensitive industries face and respond to higher stakeholder expectations for CSR. In response, elite firms operating in the same geographic community across a range of industries take cues from the firms operating in industries with higher expectations for CSR. Thus, norms for CSR are established among the elite firms within a geographic community rather than within industries. These norms are then diffused within industries through mi- metic forces. This creates a cycle whereby the general diffusion of these norms creates a new expectations gap for firms in high visibility industries. Their subsequent response will launch another cycle and, over time, raise expectations for CSR for all firms in the geographic region regardless of industry. Corporate Reputation Review (2008) 11, 56 - 72. doi: 10.1057/crr.2008.1
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Most theorizing on the relationship between corporate social/environmental performance (CSP) and corporate financial performance (CFP) assumes that the current evidence is too fractured or too variable to draw any generalizable conclusions. With this integrative, quantitative study, we intend to show that the mainstream claim that we have little generalizable knowledge about CSP and CFP is built on shaky grounds. Providing a methodologically more rigorous review than previous efforts, we conduct a meta-analysis of 52 studies (which represent the population of prior quantitative inquiry) yielding a total sample size of 33,878 observations. The meta- analytic findings suggest that corporate virtue in the form of social responsibility and, to a lesser extent, environmental responsibility is likely to pay off, although the operationalizations of CSP and CFP also moderate the positive association. For example, CSP appears to be more highly correlated with accounting-based measures of CFP than with market-based indicators, and CSP reputation indices are more highly correlated with CFP than are other indicators of CSP. This meta-analysis establishes a greater degree of certainty with respect to the CSP-CFP relationship than is currently assumed to exist by many business scholars.
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We outline a supply and demand model of corporate social responsibility (CSR). Based on this framework, we hypothesize that a firm's level of CSR will depend on its size, level of diversification, research and development, advertising, government sales, consumer income, labor market conditions, and stage in the industry life cycle. From these hypotheses, we conclude that there is an "ideal" level of CSR, which managers can determine via cost-benefit analysis, and that there is a neutral relationship between CSR and financial performance.
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In contrast to most studies of reputation ranking systems, this paper discusses the constitutive aspects of such systems. It analyzes the mechanics used to construct them, thus making their procedures the object of research. Based on a study of a Danish ranking system similar to the Fortune system, the authors suggest that reputation is sticky over time in spite of shifting ranking criteria and fragile statistical methods. We show that the ongoing development of an increasingly complex measurement system paradoxically becomes `more of the same' and thus creates sticky reputation for large and visible companies.Corporate Reputation Review (2001) 4, 24-41; doi:10.1057/palgrave.crr.1540130
From the sustainable development policies of far-sighted governments to the increasing environmental awareness—and cynicism—of consumers, a range of pressures is being brought to bear on business to improve its environmental performance. This article traces the development of some of those pressures, highlighting industries in the firing line, and examining some of the concerns of consumers. It looks at the ways in which companies can turn the environment game into one in which they, their customers, and the environment are all winners. It also explores the rapidly expanding area of corporate environmental reporting, including forms of environmental disclosure, target audiences, and leading exponents of the field.