The Elaboration Process of the Sustainability Report: A case study.

AutorCunha, Darliane Ribeiro

1 Introduction

Today, many interest groups demand social and environmental aspects to be considered as key variables in understanding the performance and strategic position of companies. Until recently, the concern with these aspects in business activities had involved a small group of companies. Today, however, the significant growth in the number of companies that have begun to adopt the concept of Corporate Social Responsibility (CSR) is evident and noticeable, especially among large organizations and business groups (Moneva, 2005b). As an example, in 2015, 92% of the 250 largest Fortune 500 companies in the world elaborated their reports following the principles of CSR, while in 2005 and 2008, that percentage barely reached 64% and 83%, respectively (KPMG, 2015).

CSR disclosure practices are increasingly being used by large companies as instruments to eliminate the information asymmetries of stakeholders (Navarro, Alcaraz, & Ortiz, 2010). Previous studies highlight the constant increase in this type of information (Alazzani & Wan-Hussin, 2013; Bonson & Bednarova, 2015; Husillos, 2007; Larrinaga, Carrasco, Correa, Llena, & Moneva, 2002; Mosene, Burritt, Sanagustin, Moneva, & Tingey-Holyoak, 2013).

Companies need to disclose their CSR actions to improve their reputations, but they must do it correctly, with transparency and in a reliable, understandable, and timely manner (Baraibar-Diez & Sotorrio, 2018).

In the literature it is observed that one motivation to increase the dissemination of CSR information consists of the attempt by companies to achieve legitimacy in the eyes of society and institutions (Husillos, 2007). Organizations try to make sure that they act, or at least appear to act, within the limits of the rules established for the societies in which they operate (Deegan, Rankin, & Tobin, 2002).

The obligation to achieve legitimacy is a constant in the business context, together with the growing demand for social and environmental information from different stakeholders. The theory of legitimacy can explain the relationships between the company and society. According to this approach, there is a contract between a company and society in which society requires the services of the company, which, in turn, receives the approval of society. This contract, which involves meeting the expectations of both parties, is dynamic in character and can be modified or revoked when one of them does not meet the expectations of the other (Archel, 2003).

Legitimacy requires companies to modify their actions so that they are acceptable to the community and to make it known that such actions are consistent with social values (Frost & Seamer, 2002).

Husillos (2007) observes that the publication of information on CSR initially serves to respond to the demands and pressure from interest groups and, consequently, the desire of the entity to achieve legitimacy in the eyes of its main stakeholders. Therefore, it is of interest to identify and know the elements that exert a greater or lesser influence on the decision of business managers to disseminate information on CSR, for this could allow the identification of a disclosure profile, as well as add an important contribution to the knowledge on the tendencies of organizations in this respect, serving as a reference and incentive to achieve greater disclosure of environmental information, in accordance with social values, norms, and conventions.

The theory of legitimacy involves users being offered positive information about the social and environmental performance of a company in order to form a positive image of it and with the intention of achieving maximum acceptance by the stakeholders related to it (Gray, Owen, & Adams, 1996).

To achieve legitimization it is very important for companies to take into account the quality and relevance of the reported CSR information (Iatridis, 2013). The previous literature that has analyzed the content of sustainability reports reveals limited and partial disclosure of this type of information (Alazzani & Wan-Hussin, 2013; Bonson & Bednarova, 2015; Mosene et al., 2013).

The interest of companies in making their commitment to the environment visible, so as to achieve legitimacy, leads them to consider sustainability as a key variable in their management. The sustainable management of companies must take into consideration not only a series of policies aimed at complying with the three aspects of the Triple Bottom Line, but companies must also incorporate various stakeholders into their activities, offering them appropriate, timely, and complete accountability (Moneva, 2005a).

Thus, companies have to determine which interest groups they must not only provide information to but also make part of the accountability process. In this context, this investigation is developed in order to answer the following question: "What reasons can influence the development and publication of companies' sustainability reports?" Based on this question, the paper aims to identify the factors that influence the elaboration and publication of the sustainability reports of four companies (three Brazilian and one Spanish) belonging to environmentally sensitive sectors (oil, chemicals, and energy).

2 Literature review

In the academic literature, several papers are found that use the case method to explore the main factors that could be influencing the elaboration, development, and dissemination of sustainability reports. In the European context, the studies by Albelda, Correa, and Carrasco (2007), Husillos, Larrinaga, and Alvarez (2011), Llena (1999), and O>Dwyer (2002) are relevant.

Llena (1999) conducted an investigation based on interviews with 6 companies in the chemical and oil sectors. In this study, the author highlights the need to establish criteria for accounting performance, both external and internal. It also mentions that standards for the treatment and presentation of financial and non-financial information of an environmental nature must be established.

In his study, Llena (1999) highlights that as the main reasons for their environmental performance, the companies analyzed consider those generated internally, either through their own commitment or through imposition by their parent corporations; while of all the external pressures received, the legal one is the most influential in their behavior.

O>Dwyer (2002) conducted a study of 27 Irish companies to investigate the factors that influence environmental disclosure. The results indicate that managers do not use sustainability information as a mechanism to achieve legitimacy. Albelda et al. (2007) investigated environmental management and accounting practices in 10 Spanish companies. The study identified factors that can influence environmental performance, such as: employee awareness, knowledge of the environment, the skills and experience of employees, the commitment of managers, the coordination of cross-functionalities, the integration of environmental issues into the strategic planning process, and the use of management accounting practices.

Husillos et al. (2011) conducted a study with the objective of exploring the main factors that could be influencing the elaboration and development of sustainability reports in the Spanish context. For this study, 30 semi-structured interviews were carried out with managers involved in the elaboration of the sustainability reports of 20 Spanish companies. The results of the paper suggest that both the internal context (organizational and individual) and the external one influence the decision to elaborate a sustainability report and the process of doing so.

The influence of stakeholders in the elaboration and presentation of sustainability reports is evident and essential. In the study by Deegan and Blomquist (2006) of Australian stakeholders, it was possible to note this attitude. The results of the study show that companies are willing to listen to an NGO and make changes or modify their behavior.

3 Methodology

3.1 Classification of the investigation

This study is based on a qualitative analysis, using the case study method, which is a qualitative and empirical research method geared towards obtaining an in-depth understanding of an object, event, process, or event in its natural context. Yin (2009) notes that an empirical investigation studies a contemporary phenomenon in its real context, when the borders between the phenomenon and the context are evident and in which multiple sources of evidence are used.

According to Hernandez (2012), this type of research, unlike an external observation approach to the object of study, allows researchers to "approach" the participants of the companies under study, to access their internal logic and interpret the subjective understanding of their reality.

One of the main biases associated with case studies is that their conclusions are not statistically generalizable, since they do not represent a sample of a specific population or universe. However, they can help to develop theoretical propositions, since the objective of the researcher is to broaden and generalize theories--analytical generalization --and not to enumerate frequencies--statistical generalization (Yin, 2009).

Yin (2009) considers the case study method to be appropriate for those topics that are considered novel or that require further analysis of behavior, because, in his opinion, empirical research has the following distinctive features: it examines or investigates a contemporary phenomenon in its real environment; the boundaries between the phenomenon and its context are not clearly evident; multiple sources of data can be used, and both a single case and multiple cases can be studied.

Thus, this study uses the multiple case study method, examining 4 companies, three Brazilian and one Spanish. The companies are called A, B, C, and D without following a constant order. The application of the case study method consists of carrying...

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