Corporate Sustainability Report Environmental Responsibility

Question: Describe about the Corporate Sustainability Report for Environmental Responsibility? Answer: Introduction The GRI plays a crucial role as a public standard setter in developing standards for sustainability reporting for companies. The GSSB is a governance structure that helps organizations and stakeholders benefit from these prescribed standards. The GRI lays down the criteria for the organizations to prepare their sustainability report according to Guidelines. The Systems Oriented Theories consist of Legitimacy Theory, Stakeholder Theory, and Institutional Theory. These theories stress on voluntary reports from corporate on economic, environmental and social aspects on the society they live in. The top two multinationals taken for study are Walmart and Apple Inc. This study uses periodicals, journal articles, sustainability reports and annual reports of these multinational for analysis and findings on their reporting standards are made. Literature Review GSSB: The GRI Global Sustainability Standards Board is established as an operating entity working independently under GRI. Its sole responsibility is to set globally accepted standards through sustainability reporting (Globalreporting, Global Sustainability Standards Board, 2015). Public Interest (in sustainability reporting context) is: To promote positive impact on the ecological, social, economic and environmental systems To make well-informed decisions and access to reliable and transparent information Systems Oriented Theories Within a system, an entity is assumed to influence and have an influence on the society in exists in. The relationship between the organizations with other parties is also dealt with (Bebbington, Unerman, Dwyer, 2014). The three theories studied here are: Legitimacy Theory: Companies disclose information on sustainability in response to the pressure and demand of the sustainability practice. Stakeholder Theory: Companies disclose information by identifying the stakeholders interest in their practical application Institutional Theory: Companies disclose information according to the social change and institutional pressure (Henderson, Peirson, Herbohn, Issues in Financial Accounting, 2013) Through sustainability, CEOs understand the need for the management to involve themselves in decision analytical frameworks which are normative, descriptive or deliberative. Sustainability measurement serves as a quantitative basis towards sustainability of the environment, economy and social domains (Khalili, 2011). Objectivity of Global Sustainability Standards Board The Global Sustainability Standards Board or the GSSB is an operating entity working independently under GRI. It consists of 15 members who are responsible for setting standards that are globally acceptable for sustainability reporting. It works according to its mission and vision and works for the public interest. Objectivity of GSSB Some of the objectives of the GSSB are: G4 Guidelines transition into a set ofGRI Standards Multi-stakeholder approach towards sector guidance, sector understanding and sector indicators Introducing metrics that the set of Standards have not included. Due Process and Steps by which GSSB develops Sustainability Reporting Standards The GRI Standards have been developed by Due Process Protocol, overseen by DPOC or Due Process Oversight Committee. The Due Process Protocol sets the process towards developing GRI Standards. This helps to promote public interest which is aligned with the mission and vision of GRI starting from identification of project, content development, public exposure and feedback to final release of the product (Globalreporting, Global Sustainability Standards Board, 2015). Steps through which GSSB develops Sustainability Reporting Standards GSSB keeps track of global initiative to make organizations disclose environmental, governance and social reporting. Through Explain Campaign Forum 1. Organizations can contribute and join the Campaign Forum by sharing information, disclose developments and publicly support them 2. Government encourages organizations towards minimum disclosure of sustainability reports 4. Regulators can be approached for transparent disclosures and more participation (IISD, 2014). Global Reporting Initiative (GRI) Sustainability Reporting Guidelines The GRI developed a unique governance structure in 2014 to build global standards towards sustainability reporting. These guidelines have been implemented and accepted by around 90 countries and 5000 organizations as recognition of its public interest standards (SASB, 2015). Primary Objective The GRI has a mission to develop and spread guidelines for sustainability reporting that is globally applicable on environmental, social and economic dimensions. GRI Guidelines have to be followed and stakeholders make use of these reports. 4.2 Criteria that an organization should apply in preparing sustainability reporting in accordance with G4 sustainability reporting guidelines (Ford, 2014) In order to follow GRI Guidelines, organizations require certain resources An organization requires committed management and leadership to collect information and evaluate performance of the entire organization Proficiency of skills: Assessment of data, skill in developing reports ad experience in social research methods are skills required from staff members Courses, and support: GRI does not offer any training programs for sustainable reporting, however, NGOs and other consultancies offer such services (Guidelines, 2014). Reporting principles with respect to defining report content and defining report quality The G4 Guidelines on sustainability reporting helps organizations to report vital information. Report Content Through GRI Guidelines, organizations can disclose critical impacts, both positive and negative, that have their effects on the economy, society, and the environment. Reliable and relevant information to assess the risks ad opportunities are generated to help in decision-making, within the business, and among the stakeholders. These Guidelines are applicable to all types of organizations and all sectors around the world. Report Quality Part 1 of G4 consists of Standard Disclosures that organization can make use of to report the performance and impact of sustainability reporting. The Reporting Principles help in effective reporting with criteria in accordance to the Guidelines. Part 2 of G4 consists of the Implementation Manual which has to be followed to prepare the sustainability report. This report explains how the Reporting Principles are to be applied for; information to be prepared, concepts to be interpreted, etc (Globalreporting, G4 Sustainability Reporting Guidelines, 2014). Features of the new governance structure Creation of an organizational firewall differentiating general organizational activities and standard-setting activities. of the global multi-stakeholders GRI standard development to be strengthened through Due Process Protocol Establishment of an independent public funding base towards GRIs standard-setting activities Transparent standards development processes Creating three new bodies of governance structure for standard-setting GSSB (Global Sustainability Standards Board) DPOC (Due Process Oversight Committee) IAC (Independent Appointments Committee) Features of Systems Oriented Theories The Systems-oriented theories consist of Legitimacy Theory Stakeholder Theory Institutional Theory These theories give importance to disclosure of information between groups, individuals, state, and organizations. As economic issues have to be investigated in the context of social, political and institutional framework all the economic activities have to be considered (Deegan, 2014). Legitimacy Theory explains why an entity makes particular and voluntary disclosures. This is compared to the Political Cost Hypothesis as it describes corporate behavior. Organizations ensure that they work within the norms and bounds within the society they exist in. Norms and bounds are not static (Deegan, 2014). CSR reporting of legitimacy theory Starbucks Coffee in Australia follows corporate philanthropy as it allows its workers to donate to charity by working for any charity which they like to choose. This promotes the social responsibility image of the company(Henderson S. , Peirson, Herbohn, Artiach, Howieson, 2014). Organizations should adapt to changes in the community and make changes. It should not rely on assumptions about market efficiency or wealth maximization assumption. Stakeholder Theory provides the basis for framework and concepts that are practice-oriented. It identifies numerous interests between the stakeholder and its firm. It has two branches which are normative or ethical branch and managerial or positive branch. It develops policies that are supportive and consistent to deal with them. It links the corporate behavior with the stakeholder management as well as ethical considerations (Frakenberger, 2006). Stakeholders are individuals or groups who affect the objectives of the organization or are affected by it. The management should treat all stakeholders equally and coordinate their interests. Primary stakeholders are essential to the survival of an organization while secondary stakeholders are those who influence or are influenced by the organization. CSR reporting of stakeholder theory Google developed conflicts in goals and environmental organizations. Through its project Google Green the company set the goal of carbon-neutral and to achieve 35% reduction in energy source and increase renewable sources within 2012. However, these targets were not achieved or disclosed officially as there were stakeholder conflicts regarding this. Through sustainability reporting Google was forced to take steps to implement further action regarding this issue. Institutional Theory: Institutional theory is of two main dimensions: Isomorphism and decoupling. Isomorphic processes may be regulative, normative or cultural-cognitive. Organizational theory tends to take similar characteristics. The institutional theory explains how organizations respond to social changes and institutional expectation and pressure. Organizations tend to practice the same form of homogeneity as they follow the same practices that different organizations practice (Stanusch, 2010). Isomorphism shows tendency to similar process and structure of corporations. They do not always increase the efficiency of the organization as the strategies have more of form or show than about the substance. CSR reporting of institutional theory Lake Nona attracted partnership with Tavistock and GE leaders to develop new ideas to enlighten its surroundings. GE experimented with a novel lighting system with LED lighting. The lake got its lighting and GE had produced a new product that it could market globally. Institutional theory is about how organizations in an environment seek legitimacy and become isomorphic in their environment (Henderson S. , Peirson, Herbohn, Artiach, Howieson, 2014). Legitimacy of the systems-oriented theories The legitimacy of the systems-oriented theories cannot be measured in monetary terms as there are no proper guidelines that give real-time value to social and environmental changes. Reports are too long and require a high cost for data preparation. Hence, organizations try to evade or give basic emphasis to such evaluation. There is much overlapping between the three system-oriented theories as norms and values overlap. Organizations do not get the necessary support as there are legal restrictions that make it difficult to continue operation. Multinational Companies from Global 500 I 2015 The top five multinational companies from Global 500 2015 are Walmart, Sinopec Group, Royal Dutch Shell, China National Petroleum, and Exxon Mobil. Apple is in the 15th position from the top (Global500, 2015). For our study, we take two multinational companies for study. References are taken from Annual Reports and Sustainability Reports, 2015 for Walmart and Apple(Apple, Apple.Inc, 2015),(Apple, Environment Responsibility Report, 2014), (Walmart, Corporatereport, 2015),(Walmart, Global responsibility, 2015) . Multinational Company 1: Walmart Walmart has revealed its sustainability report in its Global Responsibility Report 2015. Environmental sustainability is an important ingredient of a successful business as shown by Walmart through its sustainability report. Energy: Walmart is aiming towards 100% renewable energy as energy efficiency is good for its customers, shareholders and the future of the world. Clean and affordable energy can bring down costs while increasing energy efficiency. Waste: To achieve zero waste is one of the goals of Walmart. Offices in Japan and UK have a diversion rate that is 90% while in Canada and Mexico it is 70%. Other measures are reduction in plastic bag wastage and introducing bio-plastic wraps for packaging. Products: Walmart uses sustainability in the purchase of products which are environment-friendly to meet the issues of the society. Responsible Sourcing: Walmart continues its responsibility drive in its supply chain in all the countries through strengthened internal programs. In 2015, it has increased its responsible sourcing associates by 200 (Walmart, Global responsibility, 2015). In 2014, Walmart had implemented the Sustainability Index for progress measurement by focusing on three core areas: sustainability, local communities, and opportunity. Some of its initiatives in 2014 were fertilizer reduction, sustainable chemistry, Bangladesh fire safety, new jobs, empowering women and bringing back manufacturing jobs to the US (Walmart, Global Responsibility Report, 2014). Multinational company 2: Apple Apple, the tech giant, is on its way to becoming a sustainability leader through its green announcements. It has embraced the renewable revolution Apple has implemented power consumption on its new and old buildings through renewable energy sources. Enforced sustainable supply chain According to the progress report of the Supplier Responsibility, Apple had audited the supplier facilities in 19 countries in 2014. However, fifteen factories were suspended for serious pollution of fresh water supplies and air. Apple is also working with Dutch quango to find an alternative source of tin that is sustainable. Poor working conditions found in its Chinese factories were rectified after investigations through regulators. Entering into the electric car market Apple has hired experienced vehicle designers to shake the electric car market to develop battery-powered minivan electric vehicle. Commitment to resource efficient in its products Apple Retail stores around the world have introduced recycling programs to recycle its own products and in university campuses and cities (Vallone, 2014). The new Apple Campus 2 to be the greenest building ever Apple is building a new campus in Cupertino which is to have 100% renewable solar energy; drought tolerant plants reduce water usage (Google, 2015). According to Apples Global Responsibility Report in 2014, the data center Maiden, has the largest onsite solar array; carbon emissions have dropped by 3% on a year to year basis. Energy savings has gone up by 30% through wind, solar, geothermal and micro-hydro renewable sources (Apple, Environment Responsibility Report, 2014). Similarities and Differences in report content We find that Apple and Walmart have given importance to bringing down energy consumption and pollution control. Apple has gone one step further in building a green building in its campus while Walmart is one of the first to introduce new technology in its recycling process and introducing new bio-plastic wraps. Similarities and Differences in portrayal of the company Walmart has brought a revolution for a cleaner environment in all its stores across the globe by bringing in zero wastage policy and 100% renewable energy. However, it has a long way to go to achieve these targets. Apple has also taken giant steps towards poisonous emissions removal. The negative aspect of poor working conditions in Chinese outlets was exposed and Apple had to introduce better conditions for its employees and show the steps undertaken by the company. Both the companies need to portray the social and environmental reports with more specifications through concise reporting for users to measure and compare long-term values.0 Conclusion The GRI through GSSB oversees that corporate follow guideline. Public disclosure of sustainability reports, annual reports, and websites reflect the changes in the corporate activities of companies in the current environment. Financial Accounting and Social Performance Information link the societal values to organizational practices through their report content and quality according to GRI rules. We find that the societal theories such as legitimacy theory, stakeholder theory, and institutional theory see that the organization functions and reports within the Guidelines prescribed in a relationship with other parties in the social system. From the reports of the multinationals Walmart and Apple, we find that sustainability practices have been implemented and published to the general public. We conclude that though malpractices do exist, sustainability reporting by corporate is the right step towards looking into the interests of the society. References Apple. (2015, May). Apple.Inc. Retrieved January 22, 2016, from Environmental Responsibility Report: https://www.apple.com/environment/pdf/Apple_Environmental_Responsibility_Report_2015.pdf Apple. (2014). Environment Responsibility Report. Environment Responsibility Progress Report, 2014 , 29. Bebbington, J., Unerman, J., Dwyer, B. (Eds.). (2014). Sustainability Accounting and Accountability (2 ed.). New York: Routledge. 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