Legitimizing Negative Aspects in GRI-Oriented Sustainability Reporting: A Qualitative Analysis of Corporate Disclosure Strategies

Corporate sustainability reports are supposed to provide a complete and balanced picture of corporate sustainability performance. They are, however, usually voluntary and thus prone to interpretation and even greenwashing tendencies. To overcome this problem, the Global Reporting Initiative (GRI) provides standardized reporting guidelines challenging companies to report positive and negative aspects of an organization’s sustainability performance. However, the reporting of “negative aspects” in particular can endanger corporate legitimacy if perceived by the stakeholders as not being in line with societal norms and values. Starting from the theoretical lenses of economics-based disclosure theories and socio-political theories of disclosure, the focus of this study therefore was to analyze the communicative legitimation strategies companies use to report “negative aspects,” i.e., negative ecological and social impact caused by corporate activity. Using qualitative content analysis of GRI-oriented sustainability reports from companies listed on the US Dow Jones Industrial Average Index and on the German DAX Index, we identified six legitimation strategies. We discuss these strategies regarding to symbolic and substantial management of legitimacy. We show that symbolic legitimation strategies aiming at modifying the perception of legitimizing stakeholders dominate in the reports at hand. Such persuasion, however, does not meet the requirement of impartiality as postulated by the GRI guidelines. Building upon this conclusion we propose a concise characterization of “negative aspects” and develop a GRI-compliant schema of reporting about them. In doing so, we offer a way to improve the overall “balance” of sustainability reporting contributing to a true and fair view in sustainability disclosure.     

Engaging Stakeholders in Emerging Economies: The Case of Multilatinas

Stakeholder engagement is central to organizations’ social impact. Engagement activities rely on mechanisms whose complexity increases for multinational corporations (MNCs). This study explores the boundary conditions of our Western/Northern-based knowledge of stakeholder engagement mechanisms through the examination of such practices in multinational companies founded in Latin America (Multilatinas—MLs). Based on previous studies on the identification of organizational stakeholders in the region, we aim to understand the specific engagement mechanisms MLs use. To this end, we analyze qualitatively 28 corporate sustainability reports by relevant firms. Our findings show that the community includes silent (or non-visible) stakeholders composed of subgroups not listed as organizational stakeholders but mentioned in the report as engaged by the company or a subsidiary. MLs in our sample use four main mechanisms to engage these subgroups: (a) strong, visible commitments to local social organizations; (b) continuous dialogue with members of the community; (c) networks of volunteers to help perform the social activities of the companies; and (d) creation of social infrastructure institutions. We end by detailing the theoretical implications for stakeholder engagement among emerging economies multinational companies (EMNCs) and for MNCs in general.     

Empirical Findings on Business–Society Relations in Europe

Based on a theoretical exploration in a previous article, this paper empirically analyzes which issues of SD are taken into account by corporations and stakeholders in what way, and to what extent the concept of sustainable development (SD) can be achieved through stakeholder relations management (SRM) on the corporate level. An important basis for this empirical analysis is a referential framework, which specifies 14 issues of SD. In a first empirical step, the literature-based framework has been operationalized for the business world by analyzing sustainability reports. In a second empirical step, the operationalized framework served as the basis for a survey of selected MNCs. The analyses of the sustainability reports and the survey show how MNCs deal with particular issues of SD and what role they perceive particular stakeholders play. A key conclusion of the article is that SRM indeed promotes SD, but that it is no alternative to predictable government regulation.     

Recognizing Ethical Issues: An Examination of Practicing Industry Accountants and Accounting Students

The academic debate why and how companies are dealing with sustainability is dominated by two main arguments—the profit-seeking and the legitimacy-seeking view. While the first argues that companies (only) establish sustainability management measures if this helps to increase their economic success, others emphasize that companies predominantly react on societal pressure dealing with sustainability (only) to secure legitimacy. Whereas both lines of argument have gained a lot of attention in academia, little is known about their relative importance in shaping corporate practice. This papers aims to fill this gap with an empirical analysis of corporate practices of large companies in ten countries worldwide. To capture the organizations’ rationale in sustainability management practice, we systematically applied various measures related to actors and operational activities focusing on the companies’ intention to pursue sustainability management, the integration of sustainability management to the core business, and the actual implementation of related measures. Overall the findings indicate that seeking legitimacy dominates corporate sustainability management practices.     

Searching for New Forms of Legitimacy Through Corporate Responsibility Rhetoric

This article looks into the process of searching for new forms of legitimacy among firms through corporate discourse. Through the analysis of annual sustainability reports, we have determined the existence of three types of rhetoric: (1) strategic (embedded in the scientific-economic paradigm); (2) institutional (based on the fundamental constructs of Corporate Social Responsibility theories); and (3) dialectic (which aims at improving the discursive quality between the corporations and their stakeholders). Each one of these refers to a different form of legitimacy and is based on distinct theories of the firm analyzed in this article. We claim that dialectic rhetoric seems to signal a new understanding of the firm’s role in society and a search for moral legitimation. However, this new form of rhetoric is still fairly uncommon although its use is growing. Combining theory and business examples, this article may help managers and researchers in the conceptualization of how firms make sense of their role in society and what forms of differentiation they strive for through their rhetoric strategies.     

An Empirical Study of Environmental Awareness and Practices in SMEs

With increasing awareness of environmental issues, there has been rising demand for environmental-friendly business practices. Prior research has shown that the implementation of environmental management practices is influenced by existing and potential stakeholder groups in the form of external pressures from legislators, environmental groups, financial institutions and suppliers, as well as internally by employees and owner/manager attitudes and knowledge. However, it has been reported that despite business owner/managers having strong “green” attitudes, the level of implementation of environmental-friendly practices is low. In order to explore the connection between pressures for improved practices and the management actions taken, this article examines how influence from various stakeholders is related to awareness of environmental issues, and how this awareness relates to actions taken within the businesses to reduce the environmental impact of their operations. The results indicate that legislation does result in general environmental awareness, and that organizations are then willing to␣change their business processes and environmental strategies. However, despite their actions they have little awareness of the benefits that might arise from cost reductions from their environmental-friendly practices. Those influenced by their suppliers act to reduce waste, but do not put into place formal environmental management systems, or use environmental messages to market their goods or services. Nevertheless, it can be argued that they have a real commitment to environmental issues, as evidenced by a willingness to voluntarily contribute to environmental organizations.     

Sustainability reporting and corporate identity: action research evidence in an Italian retailing cooperative

Cooperatives are facing the challenge to be competitive in the market, without losing their traditional values of mutuality and democracy. To do that, they need to re‐construct open and participative dialogue with their employees and members based on more democratic forms of communication and engagement. From this point of view, the measurement and communication of sustainability aspects may allow a dialogue to be mobilized with shareholders and stakeholders without losing the attention on competitive factors. Based on these premises, the article analyses the experience of a 5‐year action research project (from 2006 to mid‐2011), carried out within Unicoop Tirreno, an Italian consumers' cooperative, and aimed to implement different tools for sustainability accounting and to embrace a more open dialogue with stakeholders, in particular with employees and members. In this process of change, the tools implemented for sustainability accounting played a key role in supporting the cooperative to reinterpret its own values and in stimulating a new and participative management approach. The results indicate a virtuous circle between the management and measurement of cooperative principles and the management and measurement of sustainability issues.     

Institutional and corporate drivers of global talent management: Evidence from the Arab Gulf region

This study analyses how talent management (TM) is molded by institutional and corporate drivers. We borrow from the vast institutional literature to understand how organizations adopt and implement TM practices within the Gulf Cooperation Council (GCC) context. This context is valuable not only because it tackles an under-researched region, but also because the type of variables found further our understanding of TM processes in non-Western contexts. Companies abide by localization rules to sustain their “legal” legitimacy, while trying to improve efficiency through actions that enhance their economic sustainability. Companies try to strike a strategic balance between local adaptation and global assimilation of their TM processes. We conclude by presenting a framework that portrays how various forces impact the TM process.     

Directors’ Roles in Corporate Social Responsibility: A Stakeholder Perspective

We propose that corporate directors are important in helping organizations deal with two major issues of stakeholders. First, directors can help manage the interests of organizational stakeholders, and second, they assist in protecting the interests of their organizations as stakeholders in society. Their contribution can be conceptualized as the directors’ roles in corporate social responsibility (DR-CSR). We identify two types of DR-CSR, organization-centered and society-centered roles. Based on a study of 120 corporate directors, we observe that the more concern that corporate directors have for stakeholders, the more likely that they will perceive the need to perform their DR-CSR effectively.     

Towards a theory of Sustainable Communication in Risk Society: Relating issues of sustainability to marketing communications

There has recently been much discussion about a preferred ecological outcome for late capitalism to work toward, that is sustainable consumption. Related to this is a fundamental question, can business in Western industrial society (some now use the label risk society) be transformed into ecologically sustainable organizations? If we optimistically assume the answer to this question to be 'yes' how would these organizations communicate with the world in which they operate? This paper reports the author's application of a social constructionist approach to 'green' communicative acts and those responsible for them in an attempt to start answering such questions. In a qualitative empirical study of an environmental and social justice communications consultancy the social world of the people involved is explored as they interact with and communicative the issues with which they are concerned in risk society. A main research theme attempted to relate three issues of ecocentrism to what is known as marketing communications. In this respect the author has concentrated on a leading edge agency and four of its clients in the fields of animal, personal health and planet preservation. In the analysis the author lays the foundations for a new theory, Sustainable Communication, which can account for communicative acts, in any eco-discourse (Harris, 1996), that have issues of sustainability as their focal point. This process is then problematized for the reader in relation to capitalist organizations and the final discussion proposes that others, interested in this theoretical area, play with this notion of Sustainable Communication to help in its future development. In this respect the author proposes a fruitful allegiance between Critical Macromarketing and Sustainable Communication. Throughout the paper, especially in the section on 'building blocks', the author chooses to illustrate key points for the reader by drawing on data from the study.     

GHG Reporting and Impression Management: An Assessment of Sustainability Reports from the Energy Sector

The objective of this study was to analyze the quality of climate information disclosed by companies and the impression management strategies they have developed to justify or conceal negative aspects of their performance. The study is based on a qualitative content analysis of the sustainability reports of 21 energy-sector companies that use the Global Reporting Initiative (GRI) with A or A+ application levels over a period of 5 years (n = 105). It contributes to the literature on climate disclosure by demonstrating the ineffectiveness of the external assurance process in ensuring the quality and representativeness of the data. Significant non-compliance with GRI standards was identified in 86 of the 93 reports audited by a third party. In addition, six of the 21 companies surveyed were found to disclose increasingly opaque information over time, concealing information on the measurement and methodology used. Through this study, four impression management strategies were identified. These are employed either to justify certain information (by minimizing impacts, excuses and commitment) or to conceal it (through strategic omissions and manipulation of figures). In exposing the high incidence of non-compliance in GRI reporting and the use of impression management strategies by companies, this study shows that it will be difficult or impossible for stakeholders to reasonably assess, monitor and compare companies’ climate performance on the basis of these reports.     

Defining the Content of Sustainability Reports in Nonprofit Organizations: Do Stakeholders Really Matter?

The aim of the article is to investigate the role of stakeholder engagement and participation in nonprofit organizations’ sustainability reporting, according to the literature on third sector and stakeholder theory. To verify the levels of involvement, the authors conducted an empirical survey, using content analysis, on a sample of 54 sustainability reports of nonprofit organizations included in the Global Reporting Initiative database as of September 1, 2012. In order to strengthen the results obtained from the content analysis, the authors shared their findings with the organizations of the sample. The survey showed that there were some criticisms regarding stakeholder participation in the targeted research field. These are considered in the conclusions. Questions for the future included whether stakeholder engagement is moving from being simply a way to consult and influence stakeholders to being an effective instrument for involving them in nonprofit organizations’ reporting and decision-making processes, through mutual commitment.     

Transparency of Corporate Social Responsibility in Dutch Breweries

According to the Dutch Ministry of Economic Affairs (2001), transparency by means of Sustainability Reporting should lead to better Corporate Social Responsibility (CSR) performance of companies. Sustainability Reporting should also give consumers the information they need to purchase the most sustainable products available (Dutch Ministry of Economic Affairs, 2004). This article analyses the driving factors influencing CSR and Sustainability Reporting at seven breweries in the Netherlands. It also gives a better understanding of organizational behaviour with reference to CSR and the reasons breweries have for Sustainability Reporting. The Dutch government has no intention of forcing organizations to publish a sustainability report, since it is trying to diminish the volume of legislation. Rather, the government prefers to rely on the willingness and initiatives of organizations to make CSR a success. In 2006, the Dutch Ministry of Economic Affairs will evaluate the effect of its CSR policy. But is it a success already? During our research, breweries appeared to find CSR more important than Sustainability Reporting. Sustainability reporting is, for most breweries, not the way to reach stakeholders. Most stakeholders have their own means for receiving information e.g. annual reports, meetings, public statements and press releases. Although small breweries think CSR is very important, they feel no pressure from outside to publish a sustainability report. For them it is very complex and expensive to publish a sustainability report. Large breweries feel pressure from many stakeholders to be transparent, but not on a regular basis. We conclude from this research that CSR does not stimulate Sustainability Reporting, but neither does Sustainability Reporting stimulate CSR.     

Unmasking Corporate Sustainability at the Project Level: Exploring the Influence of Institutional Logics and Individual Agency

Due to their consolidated nature, corporate sustainability reports often mask the evolution of organizations’ sustainability initiatives. Thus, to more fully understand the environmental performance of an organization, it is essential to examine the experiences of specific projects and how they relate to corporate sustainability. Based on case studies of green projects in four different organizations, we find that it is difficult to determine the environmental impact of a project a priori, even in cases where environmental considerations are included as part of the initial project scope. Instead, the decision to integrate environmentally favorable elements into projects is a dynamically occurring interaction between competing institutional logics and organizational identities, which create windows of opportunity for individual agency. During these windows, individuals may engage in reinforcing microprocesses that support traditional practices, or invoke enabling microprocesses to facilitate green decision-making, consistent with ecosystem logics. The process model developed in this paper provides a new perspective on the temporal and contextual dimensions of environmental championship behaviors, and sheds light on otherwise puzzling results such as why organizations with strong environmental orientations continue to struggle with delivering projects with strong positive environmental impacts.     

The Evolution of Business Groups’ Corporate Social Responsibility

Although establishing gender equality in board and managerial positions has recently become more important for organizations, companies with low levels of gender diversity seem to perceive an ethical dilemma regarding the ways, in which they attempt to attain it. One way that organizations try to move toward gender equality is through the use of their corporate websites to manage potential applicants’ impressions of their current levels of, and actions to improve, gender diversity. The dilemma is whether to truthfully communicate their low level of gender diversity, conceal it, or exaggerate it. On the one hand, organizations that are truthful may find it difficult to achieve equality because women are less attracted to companies that lack diversity. On the other hand, organizations that are untruthful risk their moral legitimacy. The present work investigates gender diversity-related communication on the corporate websites of 99 major German companies. Based on theoretical work on minority attraction, we apply an organizational impression management taxonomy to guide our in-depth content analysis. With this approach, we hope to advance the understanding of how the issue of gender diversity is presented on corporate websites, which is useful for both organizational decision makers as well as diversity researchers. We found that although gender diversity-related communications on corporate websites contain both assertive and defensive organizational impression management tactics, as well as a third type of tactic we refer to as “acknowledgement,” assertive tactics were used more frequently. We argue the existence of a paradox whereby organizations use assertive impression management tactics to maintain pragmatic legitimacy but compromise their moral legitimacy by doing so. Furthermore, we argue that moral legitimacy can be maintained or restored through the sincere use of defensive impression management tactics and acknowledgement.     

Emerging life sciences ventures: The quest for legitimacy

As an emerging life sciences venture, gaining legitimacy (credibility) with external stakeholders (e.g., investors) is a critical challenge in today's environment. This quest for legitimacy relates to issues that focus on the individual, the environment, and the process. Integrating insights gained from interviews with three CEOs of life sciences companies along with the academic literature, we provide guidance for entrepreneurs regarding the unique challenges facing life sciences ventures. We propose that these ventures are driven by a “quest for legitimacy” and that life sciences entrepreneurs therefore must be aware of the strategic issues which impact legitimacy in the eyes of external stakeholders (e.g., investors).     

Feelings that Make a Difference: How Guilt and Pride Convince Consumers of the Effectiveness of Sustainable Consumption Choices

A significant body of research concludes that stable beliefs of perceived consumer effectiveness lead to sustainable consumption choices. Consumers who believe that their decisions can significantly affect environmental and social issues are more likely to behave sustainably. Little is known, however, about how perceived consumer effectiveness can be increased. We find that feelings of guilt and pride, activated by a single consumption episode, can regulate sustainable consumption by affecting consumers’ general perception of effectiveness. This paper demonstrates the impact that guilt and pride have on perceived consumer effectiveness and shows how this effect rests on the ability of these emotions to influence perceptions of agency. After experiencing guilt or pride, consumers see themselves as the cause of relevant sustainability outcomes. The process of causal attribution associated with these emotions influences consumers’ use of neutralization techniques. Through the reduction in consumers’ ability to neutralize their sense of personal responsibility, guilt and pride positively influence perceived consumer effectiveness. The inability to rationalize-away their personal responsibility, persuades consumers that they affect sustainability outcomes through their decisions. The research advances our understanding of sustainable consumption and identifies a new avenue for the regulation of individual consumer behavior that has significant implications for the development of sustainable marketing initiatives.     

Identity Brokerage and Nonprofit Community Building

Scholars have increasingly approached organizations as complex systems with indeterminate, shifting boundaries. Boundaries in many nonprofit organizations may be especially fluid, given the heterogeneity of stakeholders and highly multiplexed relational and value characteristics involved in constructing identity. The present study frames nonprofit organizations as complex organizations seeking to build communities of legitimacy. Within these communities they construct their identity through a combination of boundary setting, or perceptions of the organization and in what ways it is distinct from other organizations and communities, and relationship building, through both interpersonal contacts and socially mediated interaction. These dimensions combine to allow organizations to identify and bridge structural holes in the larger network in which they are embedded, through processes of identity brokerage. These mechanisms have significant implications for driving growth and engagement in nonprofit organizations. In support of this theoretical model, the article describes a mixed-methods research study involving a nascent arts organization in a large U.S. city.     

Learning from Multi-Stakeholder Networks: Issue-Focussed Stakeholder Management

From an analysis of the role of companies in multi-stakeholder networks and a critical review of stakeholder theory, it is argued that companies practise two different types of stakeholder management: they focus on their organization’s welfare (organization- focussed stakeholder management) or on an issue that affects their relationship with other societal groups and organizations (issue-focussed stakeholder management). These two approaches supplement each other. It is demonstrated that issue-focussed stakeholder management dominates in multi-stakeholder networks, because it enables corporations to address complex problems and challenges in cooperation with stakeholders. Since deliberation is the key to issue-focussed stakeholder management, it helps to cope with numerous and at times contradictory stakeholder demands and enhances the legitimacy of corporate activities. The research for this article was facilitated by the ESC Rennes Management Research Fund.