Corporate social responsibility : the link between reporting and reputation

Corporate social responsibility: the link between reporting and

reputation

Name: Sabine Borghuis Student number: 10809457

BSc: Economics and Business Administration

Supervisor: Hesam Fasaei

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Statement of Originality

This document is written by Sabine Borghuis who declares to take full responsibility for the contents of this document.

I declare that the text and the work presented in this document are original and that no sources other than those mentioned in the text and its references have been used in creating it.

The Faculty of Economics and Business is responsible solely for the supervision of completion of the work, not for the contents.

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Table of contents

1. Introduction p. 5

2. Literature Review p.7

2.1 Unpacking the concept of corporate social responsibility p. 7

2.2 Reputation p.8

2.3 Greenwashing p.9

2.4 Guidelines for sustainability reports p.10

2.4.1 Stakeholder inclusiveness p.11

2.4.2 Sustainability context p.13

2.4.3 Materiality p.15

3. Methods p.17

3.1 Data and sample p.17

3.2 Measures p.18

3.3 Variable measurements p.20

4. Results p.21

5. Conclusion and discussion p.29

5.1 Implications for practice p.31

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Abstract

In today’s business life corporate social responsibility (CSR) plays a major role. Companies are increasingly pressured to take into account their social and environmental impacts. As a consequence, companies are expected to report about their social and environmental activities as well. However, the question arises whether the reported information that companies

provide about their social and environmental activities could be interpreted as an indicator of the social responsibility reputation of a company. To examine the correlation between the reporting trend of companies and their social responsibility reputation, this research applies information and methods from the Global Reporting Initiative (GRI) and the Harris Poll. This report’s main hypothesis is that in the CSR or annual reports of companies that have a high social responsibility reputation, the standards of the GRI will be more present than in the reports of companies that have a low social responsibility reputation ranking. The hypothesis was tested through analysing the reports of 9 companies with a high social responsibility reputation and the reports of 9 companies with a low social responsibility reputation. The reports were analysed on three different aspects: stakeholder involvement, sustainability context and materiality. The formulated hypothesis is not supported for this study. This would suggest that GRI standards are by no means appropriate tools to determine the social

responsibility reputation of a company. Based on the results of this research, it is recommended that future research examines the possibilities to control reports for false information, for example by an independent authority instead of settling for voluntary guidelines.

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1. Introduction

Corporate social responsibility (CSR) has become increasingly important in today’s business life and the view on CSR is changing step by step. Before CSR was seen as the job of

sustainability and CSR departments, a risk to be managed or a cause supported. But nowadays the view is that social responsibility should be completely integrated into the business strategy and the purpose of a company. And instead of CSR being something that a company just spends money on, it can even more so be a way to earn money (Williams, 2015).

This recent shift in the view on CSR has, among other things, to do with a shift in needs of consumers. Porter & Kramer (2001) argue that the shift of consumers’ needs is caused by the fact that companies are perceived guilty regarding many current social, environmental and economic problems. And that in response, the past decades sustainability has become the point of focus in business practices (Crittenden, 2010; Porter & Kramer, 2001).

The increased attention for CSR has made it into a generally accepted success factor for both public and private companies (Matten and Moon, 2008). However, implementation of CSR is not always that easy. Many companies struggle how it can be done profitably, mostly caused by a lack of knowledge. In her book E. Freya Williams (2015) states that many companies have failed with ‘green’ or ‘eco-friendly’ products, because they assume that ‘green doesn’t sell’. Nevertheless have companies proved them wrong lately. They have shown that social responsibility does not have to be in conflict with delivering shareholder value or making profit, but can in fact drive it.

Another reason for companies to fail in implementing CSR is, according to Sen and Bhattacharya (2001), is that a CSR activity should be relevant to the company’s existing products in order to be evaluated favourably by consumers. Some companies threat CSR like an afterthought to their core strategies. They claim green initiatives that in fact lie at the margins of the business. In this case CSR is treated as a separate strategy, one that is parallel to a company’s main business (Laszlo and Zhexembayeya, 2017). Although more and more attention is payed to this specific area, it has not thoroughly been researched yet and many things remain unclear.

Yoon and Schwarz (2006) noted a research gap in literature about the true motives behind CSR activities of companies, which makes consumers to be sceptical. Therefore, Yoon and Schwarz argue that this topic should be better investigated. For companies it is important to know in what way they can effectively engage in CSR in order to be credible to the

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consumer and to turn CSR into a competitive advantage. Basu and Palazzo (2008) argue that researchers have failed to understand the underlying mechanisms or triggers that shape activities related to sustainability. In conclusion, it is more likely for a company to benefit effectively from “doing good” if the respective CSR strategy is tailored to the specifics of the firm (Porter & Kramer, 2006).

The increasing pressure on companies to take into account their social and

environmental impacts has entailed other consequences as well. For example, companies are expected to report their social and environmental initiatives and make this publicly available. The reporting of social and environmental initiatives has led to a new set of standards for companies to report CSR performance in CSR or annual reports (Bartley 2007; Gilbert et al. 2011). An example is the Global Reporting Initiative (GRI) that helps companies to

implement, manage and report their corporate social and environmental activities (Waddock 2008). These standards can be used on voluntary basis but are nevertheless commonly used (Brunsson et al. 2012).

Many research has been done on different areas of sustainability reporting. Some researchers have examined the potential problems with data quality while others have focussed on the concept of greenwashing. And although prior research has showed that for most companies the main reason to report sustainability is reputation management and brand protection (Hussey, Kirsop and Meissen, 2001) not much attention has been devoted to

explore whether the appearance of GRI standards in CSR or annual reports can be an indicator of the social responsibility reputation that a company has among its consumers. This paper will contribute to the literature by linking the company’s reputation among consumers and the company’s reported social and environmental activities. This will be done by researching to what extent the social responsibility reputation of a company is related to the level of presence of the Global Reporting Initiative standards in their CSR or annual report.

This research will hopefully show that in the CSR reports of companies that have a high social responsibility reputation the Global Reporting Initiative standards will be more present than in the reports of companies that have a low social responsibility reputation ranking. The results can therefore provide companies with information about the way the company reports its CSR activities can influence their CSR reputation. The outcomes of this research can also have consequences for stakeholders, in particular consumers who interact directly with the company, because it could show whether the presence of GRI standards in a report is an indication of the credibility of CSR activities.

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it remains questionable whether this policy is implemented because of motives that represent the company’s values, or because they are currently more or less ‘obliged to’ and engage in CSR just because it looks good to the outside world. The use of CSR standards can contribute to substantiating firms’ CSR claims and enhancing their credibility (Rasche, 2011). CSR will only lead to competitive advantage when it is consistent with the DNA of the company. The results of this research project could contribute to further research on what is needed for CSR activities to gain credibility of the consumer and in that way achieve a better social

responsibility reputation .

The remainder of this paper unfolds as follows. The first section presents a short summary of the relevant academic literature which underpins this paper. Next, three aspects of the Global Reporting Initiative are discussed. Then the data selection for this paper is discussed according to the Harris Poll. Next, the methodology for the content analysis is explained. The paper then proceeds to present the results of the study. The paper concludes by summarising the overall contribution of this paper, addressing the limitations of the work and suggesting recommendations for future research.

2. Literature review

2.1 Unpacking the concept of corporate social responsibility

Although for most companies the main goal is to earn profit, according to the principle of Corporate Social Responsibility (CSR) companies should also take initiative for welfare of the society and should perform its activities within the framework of environmental norms (Schwartz, 2017). CSR includes such elements as environmental protection, social equity and economic growth. Companies are expected to respond to the increased demands for socially and environmentally conscious businesses that their stakeholders require (Flammer, 2013). Companies that show their responsibility toward the environment usually have an increase in stock price and competitive resources (Flammer, 2013). The CSR activities of a company can lead to a possible competitive advantage. This kind of advantage could improve the

company’s public image and market position, which could lead to boosting sales and profits (Prakash, 2011). In the book The age of responsibility (2011) Stuart Hart describes CSR as a new capability which requires effort to develop. But if you do it and do it well, he says, it can yield new business opportunities based on trust and social capital that makes you virtually impossible to dislodge.

Although on the other hand, researchers argue that CSR does not necessarily have to be beneficial for companies. They emphasize that the assumption of social responsibility must

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surpass the scope of business as usual. The definition by McWilliams and Siegel (2001) reflects this perspective as they consider CSR to be "actions that appear to further some social good’’(Carroll & Shabana, 2010). CSR can be irrelevant if the actual business operations have inherent negative implications or are dishonest (Falck and Heblich, 2007). When a company is not able to engage in CSR in a credible way, companies may involve risks with regard to reputation and trustworthiness and may result in scepticism and a lack of credibility (Moratis, 2017).

Stakeholders are often viewed as the determinants of corporate resources and have proven to be of great strategic importance for companies (Moratis, 2017). One of the reasons CSR has become important for companies is the impact it can have on the stakeholders of a company (Hull, Rothenberg & Tang, 2012). Consumers continue to stress the importance of a socially and environmentally conscious business and nowadays even expect companies to engage in a form of CSR (Stubblefield Loucks, Martens & Cho, 2010). Consumers increasingly want to collaborate and work with socially and environmentally conscious businesses. The scope of sustainability is broad, and companies from around the world are perceived as major leading responsible parties that should contribute to settle several major issues.

2.2 Reputation

One of the most powerful incentives for a company to meet social and ethical standards is the response of stakeholders to bad corporate behaviour. It makes companies want to engage in CSR because otherwise it can have an influence on its reputation. Fombrun (1996) describes reputations as:

‘a perceptual representation of a company’s past actions and future prospects that describe the firm’s overall appeal to all its key constituents when compared to other leading rivals’.

Today companies are often expected to show that their actions and policies meet social and ethical standards. This can turn out well for the company: by doing so it can help build its reputation. But it can also be harmful for the company, because when it fails to do so it can be a source of reputational risk (Fombrun, 2005). Building a strong reputation is not something that is easily done and it certainly takes some time. A strong reputation can have an effect on consumer responses. A company is perceived to be more trustworthy and this leads for a company to be able to attract better talent, sell more products and have higher price valuations

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(Lii and Lee, 2012). But on the other hand, a company can lose a reputation overnight and those consequences can be financially devastating.

According to Lii and Lee (2012) CSR activities will have the most impact on a company’s reputation when the activities overlap with their own self-concepts, because in that way they develop a greater identification with the firm and are more likely to support it. For example Tesla Motors, which manufactures the world’s first commercially successful all-electric vehicle. Tesla’s goal is to bring forward the age of renewable energy. This vision is an integrated part of the company’s DNA: the company desperately wants to change the world we live in today and wants to do something for society, but not because it’s the most natural approach to guaranteeing maximum profits (Williams, 2015). And with its strong and social reputation Tesla now has managed to generate a revenue of 11.76 billion USD (Tesla, 2017). 2.3 Greenwashing

The great influence of CSR on a company’s reputation has made many companies want to engage in CSR activities as well. They act as if they’re doing a lot of good work, but that’s not necessarily based on the truth. The problem here is that the environmental impact of the company’s activities is still hard to measure, despite the increase in environmental disclosure from companies. Under the guise of ‘what gets measured get managed’, business is now more than ever embracing the need to report on corporate social responsibility (Williams, 2015). But the CSR reporting remains, unlike the annual report, voluntary, unaudited and is not practiced systematically or in a standardized way (Beck, et al., 2010; Cormier, et al., 2005). This can make it difficult for stakeholders to evaluate a company’s environmental

performance. Critics therefore say that it could be confusing to use annual reports as a measure of CSR because it is difficult to distinguish what the company claims to be doing compared with what they actually do (Coughlan & Sweeney, 2008). For example, Natura speaks in its report about ‘the value to society, the value from increased employee morale and long-term productivity, and the positive impact on Natura’s reputation and brand’. Those are nice words, but how do you place a value on those? Reporting about CSR is a new system of accounting for a new era of business and is still in its infancy (Williams, 2015).

Another problem that arises with CSR reporting is that the legitimacy of the reported activities may be questionable. Companies that have a negative impact on the environment, or on another area of CSR, can choose to not report this. Instead they report on the other areas where they have a positive impact (Mitnick, 2000). When a company enhances positive social and environmental information either by 'lying' or bending the information in the CSR reports

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it could be considered as ‘greenwashing’. Greenwashing is defined as ‘intentionally misleading or deceiving consumers with false claims about a company´s environmental practice and impact’ (Gangadharbatla, Nyilasy & Paladino 2013). Greenwashing can be seen as 'lying' to stakeholders and can also be described as a combination of poor environmental performance and positive communication about environmental performance (Delmas and Burbano, 2011). The information is not always truthful but bended, overstated or

misrepresented (Vos, 2009). Pure greenwash, when a company purposeful claims untruths about its reported social and environmental activities or impacts of products, is not expected to occur very often. But a less extreme version of greenwashing by bending certain

information happens an awful lot (Winston, 2010). Greenwashing is a serious matter. It can have profound negative effects on consumer confidence in green products. And it can make sustainability-related marketing untrustworthy: it’s hard for consumers to know what choices make a difference when some marketers ruin the existing structure and mislead the consumer (Delmas and Burbano, 2011; Winston, 2010). In this way, greenwashing slows down the progress towards a sustainable economy.

2.4 Guidelines for CSR reports

The pressure for companies to engage in CSR activities also comes with an increasing

pressure to manage and report their social and environmental impacts. Many companies report on their CSR activities in a section of their annual reports and or even have an individual CSR report for their CSR activities, illustrating the importance they attach to such activities

(Servaes and Tamaya, 2013). Large companies are required to report information to the public at least once a year. Social reporting is the reporting of a company’s social performance to its internal and external stakeholders. Social reporting can be seen as a dialogue between the company and its stakeholder and a means by which the stakeholders can participate in the activities of the company. Through social reporting a company can engage with its

stakeholders and it can be seen as an act of responsibility (Roberts, 2003; Greenwood, 2007).

Traditionally reporting to stakeholders is done by the annual report. For companies it is optional, but for large multinational corporations it is effectively mandatory to include the CSR performance in the annual report or CSR report (MacLeod, 2001). The CSR report offers stakeholders a view of how the company manages the sustainable development- through a report about the company´s environmental, social and economic performance (KPMG, 2008). According to KPMG (2011, p. 6), 95 % of the 250 largest companies in the world (based on

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the Fortune Global 500 ranking) produced a CSR report in 2011, a 14 % increase from 2008. A couple of corporate scandals and the global financial crisis that started in 2007 have created a general feeling of distrust towards companies and the fact that companies can self-regulate their reports (Ioannou and Serafeim, 2017). That is why transparent reporting is key to sustainable business. It helps companies be more aware about their own business’ impact but it also allows criticism and feedback from external parties and assists companies to implement and shape their reported social and environmental activities. These reasons caused a need for voluntary standardization of reporting content. At first companies themselves drew up guidelines and formats to voluntarily adopt. By joining such initiatives firms hope to acquire more expertise and gain credibility for the activities they describe in their report (Fortanier, Kolk and Pinkse, 2011).

Examples of different guidelines for social reporting are the UN Global Compact, the OECD guidelines, ILO Conventions, ISO standard and GRI guidelines. The UN Global Compact aims to “mainstream these ten principles in business activities around the world”, and to provide an “international framework to assist companies in the development and promotion of global, values-based management” (Global Compact, 2005). The OECD guidelines focus on the other hand on the “level the playing field between competitors in the international market place” (OECD, 2005). ILO Conventions and ISO standard aim to be a reference for responsible behaviour respectively management (Fortanier, Kolk and Pinkse, 2011).

Global Reporting Initiative (GRI) is the most widely adopted set of reporting guidelines for reported social and environmental activities. It helps companies to report on their environmental, social and economic performance and to increase their accountability (Moneva, Archel and Correa, 2006). The GRI includes stakeholder inclusiveness,

sustainability context and materiality. The aim of all these standards is generally two-fold: on the one hand, to increase and stimulate responsible behaviour, and on the other hand, to harmonize and increase comparability of firms’ CSR activities (Fortanier, Kolk and Pinkse, 2011).

2.4.1 Stakeholder inclusiveness

Stakeholders are defined as entities or individuals that are expected to be affected by the company’s activities, products, and services. Moreover, their actions can affect the ability of the company to successfully implement its strategies and achieve its objectives (GRI 4, 2013).

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Stakeholders include not only shareholders, employees and clients, but also suppliers, public authorities, local initiatives and society in general (Perrini and Tencati, 2006). When a

company involves stakeholders in the process and implementation of organizational activities it is called ‘stakeholder involvement’(O’Riordan and Fairbrass, 2014). This implies that the company concretely identifies its stakeholders and to which of these stakeholders the company has a certain responsibility. Nowadays it is required of companies to take into account the rights and interest of stakeholders and explain the way the company has

responded to their expectations and interests. Wiley & Sons (2006) state that the sustainability of a firm depends on the sustainability of its stakeholder relationships, because of the

increasing presence of committed and well-informed stakeholders. The aim of stakeholder involvement is to provide an informed basis for the company’s decisions (ISO, 2010). Ideally, stakeholder involvement is based on a mutually beneficial and equal relationship between the stakeholder and the company and a win for all sides.

In the CSR or annual report, companies can respond to the specific interests and expectations of stakeholders who can reasonably be expected to make use of the report. The interests of these stakeholders should be acknowledged in decisions about the content of the report (GRI 4, 2013). It is important to document the processes and approaches taken while making these decisions. Apart from providing a general framework of the company’s activities that are planned to be implemented, a CSR or annual report should also

communicate more detailed information to stakeholders as well (GRI, 2006). It is important that in the report the process of stakeholder engagement is present and it should be easy to identify the direct input from the stakeholders. A company might encounter conflicting views or differing expectations among its stakeholders and might need to be able to explain how it balanced these in reaching its reporting decisions. For the report to be assuring, it is important to document the process of stakeholder engagement. The company should for example define which stakeholders it engaged with. It should also document how and when it engaged with them, and how engagement has influenced the report content and the company’s reported social and environmental activities (GRI 4, 2013).

The main challenge for businesses is the task of concretely identifying to whom the company is responsible (O’Riordan and Fairbrass, 2014). The reasonable expectations and interests of stakeholders are a key reference point for many decisions during the process of preparing the report (GRI 4, 2013). Failure to identify and engage with stakeholders is likely to result in reports that are not suitable, and therefore not fully credible, to all stakeholders. In contrast, systematic stakeholder engagement enhances stakeholder receptivity and the utility

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value of the report. When executed properly, it is likely to result in ongoing learning within the company and by external parties, as well as increased accountability to many stakeholders (GRI4, 2013). Accountability strengthens trust between the company and its stakeholders. Trust, in turn, adds to report credibility (Pivato, Misani and Tencati, 2008).

To test stakeholder inclusiveness as described in the GRI, the following hypothesis has been drawn up:

Hypothesis 1: Companies with a high social responsibility reputation will provide more information about the involvement of its (intended) stakeholders than companies with a low social responsibility reputation.

2.4.2 Sustainability context

Besides stakeholder inclusiveness the Global Reporting Initiative focusses on the presence of sustainability context in a report. The underlying question of sustainability reporting is how a company contributes, or aims to contribute in the future, to the improvement of economic, environmental and social conditions. This can be at local, regional or global level. If a company is only reporting on trends in individual performance (or the efficiency of the company) it thus fails to respond to this underlying question (GR4, 2013). The company’s own sustainability and business strategy provides the context in which to discuss

performance. The relationship between sustainability and organizational strategy should be made clear, as should the context within which performance is reported. In short, the GRI expects a company to show a broader perspective of the global problem the company wants to solve. Laszlo and Zhexembayeya (2017) give two examples:

‘Firslty, America’s oil dependence will not be resolved by raising the fuel efficiency of its cars by 25 or even 50 per cent. And secondly, meeting the needs of the 4 billion people who are largely excluded from global markets cannot be done with only minor modifications to existing business models.’

The GRI wants companies to elaborate on the sustainability context by discussing the performance of the company in the context of the limits and demands placed on

environmental or social resources at the sector, local, regional, or global level (GR4, 2013). This can for example mean that a company reports on its absolute pollution load and the knowledge of new developments in the field of replacements and new technologies that can

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contribute to the general problem of pollution. To analyse whether a company covers this aspect of the GRI the following hypothesis is formulated:

Hypothesis 2: Companies with a high social responsibility reputation provide more

information and understanding of the sustainability context of their social responsibility plans than companies with a low social responsibility reputation.

The concept of sustainability context is often most clearly articulated in terms of global limits on resource use and pollution levels. However, it may also be relevant with respect to social and economic objectives. For example, a company may report on employee wages and social benefit levels in relation to nation-wide minimum and median income levels, and the capacity of social safety nets to absorb those in poverty or those living close to the poverty line

(GRI4).

Another point of focus for the GRI is the way sustainability is embedded into the core business and their long-term strategy. Many companies ‘bolt on’ sustainability like an

afterthought to their core strategies. Despite their best intentions, they tend to declare green initiatives and show of their social responsibility while it only covers a particular aspect of their overall strategy. Such phenomena result in symbolic wins that inadvertently highlight the unsustainability of the rest of their activities (Laszlo and Zhexembayeya, 2017). If H&M’s ‘conscious’ line of clothing is sustainable, what are its other products?

Sometimes sustainability becomes pragmatic: sustainability functions as a strategy that is in fact parallel to the company’s main strategy. A good indicator of sustainability that is bolted on and not embedded is a situation in which its internal teams are working without the close collaboration of suppliers, customers, NGO’s and other stakeholders (Laszlo and Zhexembayeya, 2017; Pivato, Misani and Tencati, 2008). That is why one of the main focus points of GRI is for companies to integrate green and social responsibility projects into the rest of their value-added activities.

When a company works closely with value chain partners, CSR can be internalized and become a part of the value system of the company. According to (Wicki and Kraaij, 2007) it is a matter of trust to make CSR part of the value chain and it should be initiated and supported through people inside the company. Meanwhile, more and more companies have learned that by means of strong collaboration, a company can enable greater efficiencies, cost reduction, better product and packaging performance. This can, in turn, ultimately lead to an increased competitive advantage (Porter and Kramer, 2006).

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trading initiatives, which led to the growth of fair trade in supply chains and labelling

agricultural products. The process towards fair production started to grow exponentially when multinationals developed their own sector based initiatives (Visser, 2011). One of the most widely known initiatives is the Wal-Mart effect. For Wal-Mart cost and supply management stands at the centre of its success and long-term strategy. The company redesigned the

packaging of its products and its distribution products which allowed for significant reduction of paper, plastic and fuel expenses (Laszlo and Zhexembayeya, 2017). In this way Wal-Mart embedded its social responsibility throughout its whole value chain to only source from sustainable and responsible supplier. Their goal for CSR is to be invisible, similar in quality, yet still capable of hugely motivating employees and creating loyalty among consumers and supply chain partners (Laszlo and Zhexembayeya, 2017). To analyse whether a company has included CSR in its value chain activities and long-term strategy the following hypothesis is formulated:

Hypothesis 3: Companies with a high social responsibility reputation describe the link between its CSR activities and its long-term strategy and value chain activities in more detail than companies with a low social responsibility reputation.

2.4.3 Materiality

Companies are faced with a wide range of topics on which they could choose to report. Relevant topics are those that might reasonably be considered important for reflecting the company’s economic, environmental and social impacts, or influencing the decisions of stakeholders. The GRI standards explicitly acknowledge that an impact of a company on the economy, environment or society can lead in return to important consequences for that company as well (GRI4, 2013). Materiality can be seen as the foundation of reporting

(Williams, 2015), it is commonly defined as ‘any factor that is relevant and substantial to the overall performance, results and viability of a business’.

One of the aspects materiality covers is the feasibility of the social responsibility plans of the company. Companies should provide a complete overview of the working method to achieve their social responsibility plans. This should also be supported with proof that the working method has been drawn up through sound investigation by people with recognized expertise (GRI4, 2013). To analyse whether a company has included a feasible and complete overview of the working method the following hypothesis is formulated:

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Hypothesis 4: Companies with a high social responsibility reputation will better substantiate the feasibility of their social responsibility plans than companies with a low social

responsibility reputation.

However, the materiality focus of sustainability reports is broader than the company’s working method, feasibility or financial materiality. Materiality in sustainability reporting is not limited to sustainability topics that have a significant financial impact. The level of materiality is associated with the economic, environmental and social impacts that are

addressed in the CSR or annual report of the company. In addition a company should include a description of the potential affects these impacts can have on meeting the needs of the present without compromising the needs of future generations (GRI4, 2013). This should be covered in the report because social and environmental activities of a company can have an influence on the company as well. Material topics will often have a considerable impact on a company on the near-term or long-term.

Ford is an example of a company that has addressed materiality in its report by referring to possible consequences of assessing and responding to climate change and energy future. The company points out that it can ‘involve risks to product strategy, facilities and physical infrastructure, supply chain, regulatory environment, consumer demand, and

ensuring access to affordable, reliable and sustainable energy for our business and customers’ (Ford, 2016).

Materiality analysis is about setting priorities right. By engaging social and

environmental activities, materiality helps to ‘align a business strategy with a company’s risks and stakeholders’ interests, while at the same time achieving broader impacts in

sustainability’ (GRI 4, 2013). Materiality is becoming an influential notion in sustainability reporting. And it will not be long before companies realize the potential benefits of including materiality in their CSR or annual reports can have for their overall and sustainability

performance.

To analyse whether a company provides information about the consequences its social and environmental activities can have on the company the following hypothesis is formulated:

Hypothesis 5: Companies with a high social responsibility reputation describe the potential consequences of their the social and environmental activities for the company in more detail than companies with a low social responsibility reputation.

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3. Methods 3.1 Data and sample

This research investigates the differences in presence of the Global Reporting initiative standards between the sustainability reports of companies that have a high social responsibility reputation and reports of companies that have a low social responsibility reputation ranking.

The expectation has been tested by performing a content analysis. A content analysis is a research method for studying and interpreting content of data. In this research the content consists of the annual reports of 20 companies. The annual reports of companies that are analysed are the top and bottom 10 from the social responsibility rankings conducted by the Harris Poll. The Harris Poll was an online research conducted among 23,633 U.S.

respondents. The first part of the research was to identify what companies have the most ‘visible’ reputation according to the respondents. The respondents were asked what they believed to be companies that stand out as having the best and worst reputations. This resulted in a final list of 100 most visible companies in the U.S. The second part of the research was to rate the companies on their reputation grouped into six different reputation dimensions: emotional appeal, financial performance, products and services, social responsibility, vision and leadership, and workplace environment. For each dimension a ranking of the top and bottom 10 was made. For this research the ranking of social responsibility reputation ranking is relevant and is therefore the one that has been used (Table 1). The Harris Poll only

published the top and bottom 10, a list including the other 80 ‘most visible companies’ has not been published.

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For this research the CSR or sustainability reports of the companies in Table 1 were used. The reports can be found on the websites of the companies. Some companies did not issue a separate CSR or sustainability report but included a sustainability section in their annual report (this applies to Tesla Motors, Amazon.com and Whole Foods Market). Two companies did not report about their social and environmental activities at all, namely L.L. Bean and Takata. Therefore these companies are not included in this research.

3.2 Measures

Since the Harris Poll used data from 2016 for their research, this research is based on the information from the CSR or annual reports of 2016 as well. The CSR or annual reports were examined on three criteria of the Global Reporting Initiative standards: stakeholder

inclusiveness, sustainability context and materiality. Each of the three criteria were divided into one or more sub questions to better assess the criteria (Table 2). \

Stakeholder inclusiveness was examined by looking for descriptions of the intended stakeholders the company wants to focus on and in what way the company has included these stakeholders in the process of coming up and implementing social and environmental

activities that the company wants to engage in (hypothesis 1). Table 1: The Harris Poll 2017 Social Responsibility Ranking.

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To test the presence of sustainability context the following two sub-questions were asked: 1) Does the reporting company present its understanding of sustainable development, drawing on objective and available information and authoritative measures of sustainable development (hypothesis 2)?

And 2) Does the reporting company describe how their social and environmental activities are related to their long-term strategy and value chain (hypothesis 3)?

The third criteria concerns materiality and was researched by answering two sub-questions: 1) Has the reporting company shown that their social and environmental activities have been drawn up through sound investigation by people with recognized expertise? And 2) To what extent are the potential consequences of their social and environmental activities for the company described, for example risks to its business model or reputation (hypothesis 5)?

To compare the different criteria for the different companies a method of Kinder, Lydenberg, and Domini (KLD) was used. KLD has developed a big data set on corporate social performance for S&P 500 companies. The amount of companies they have used for their research, the fact that they use objective publicly available information and frequently

Global Reporting Initiative Stakeholder inclusiveness Intended stakeholder group and their

involvement Hypothesis 1 Sustainability context Broad understanding of the sustainability context Hypothesis 2 Long term strategy and value chain activities Hypothesis 3 Materiality Feasibility of the scoial activity plans

Hypothesis 4

Consequences for the company

Hypothesis 5

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update the data set over time have made that KLD data is widely accepted in both academic and managerial communities (Berrone and Gomez-Mejia 2009; Waddock and Graves 1997). One research method they apply is by creating several categories and assigning a score to each category for each firm. Each category is given two ratings, one for strengths and one for weaknesses. The scores range from 0 to 2 points. A score of 0 indicates no strengths or no concern; a score of 1 indicates some strength or some concerns, while a score of 2 represents a major strength or a major concern. The total score is subsequently calculated by adding the strength performance scores and subtracting the sum of the weaknesses performance scores.

Since this research solely examined the presence of the GRI standards, the categories will just be rated on the strengths. So only a score ranging from 0-2 will be given and no subtracting was necessary for weakness performance scores. A score of 0 means that the requested information is not present in the report, a score of 1 means that the requested

information is mentioned but not as elaborated as should be. When the required information is present in the report and described in detail 2 points have been assigned.

3.3 Variable measurements

For this research the reports of the companies will be checked on five different aspects: intended stakeholder group and their involvement, broad understanding of the sustainability context, long term strategy and value chain activities, feasibility of the social activity plans and consequences for the company. For each of these aspects the company will receive a score. In this paragraph will be explained how the scores are assigned for each aspect.

For hypothesis 1 the score is dependent on the provided information about the intended stakeholders the company wants to focus on and how the company includes these stakeholders in the process of social and environmental activities. When the stakeholders are not mentioned in the report 0 points will be given. When the company mentions the

stakeholders it wants to focus on 1 point is given. When a company describes the stakeholder group it wants to focus on and also describes in what way they are or will be involved in the social and environmental activities the maximum score of 2 will be given.

The score for hypothesis 2 is dependent on the provided information and

understanding of the sustainability context of their social activity plans. When the company does not provide any information about the sustainability context 0 point will be given. When the company only describes the sustainability context of the social activity plans it wants to implement but does not provides a broader understanding of the sustainability context of their

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plans, a score of 1 is given. When the company does describe a broader understanding of the sustainability context, the maximum score of 2 points is given.

The score for hypothesis 3 is dependent on how the company links its social and environmental activities to its long-term strategy and value chain activities. When neither subjects are mentioned, 0 points will be given. When the company links its social and environmental activities to its long-term strategy 1 point is given. When the company also involves its value chain activities and describes how these activities are affected by the social activity plans a maximum score of 2 points will be given.

The score for hypothesis 4 is dependent on the feasibility of the social and

environmental activity plans of the company. When nothing is mentioned about the feasibility of the plans 0 points will be given. When the company provides information about the

feasibility for the social and environmental activity plans but this is supported with sound investigation by recognized expertise, 1 point will be given. When the company does show the feasibility of its plans on the basis of sound investigation by recognized expertise a maximum score of 2 points will be given.

The points for hypothesis 5 depend on the extent to which the company describes the potential consequences of the social and environmental activities for the company in the report. When this is not mentioned 0 points will be given. When the potential consequences of the social and environmental activities are described but not specifically for the company but more in general, 1 point will be given. When described what the potential consequences of the social and environmental activities specifically can be for the company, 2 points will be given.

In conclusion, in this paper the differences between the scores of the top 10 and bottom 10 companies of the social responsibility ranking were examined by comparing the scores they got assigned for each of the five hypotheses. Both lists of companies with a high and low social responsibility reputation can receive a maximum score of 90 points: in each list are 9 companies and for each of the five hypotheses a maximum score of 2 can be received. There probably is a difference between the individual companies as well, but the focus of this research is on the total difference between the top and bottom 10.

4. Results

In this section the results of the analysis will be discussed. Table 3 provides a summary of the averages of both the top 10’s for each hypothesis. The results show a higher score for the

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bottom 10 companies for each of the hypotheses. The average total scores for the top 10 and the bottom 10 are respectively 1,33 and 1,62.

Top 10 companies Bottom 10 companies

Hypothesis 1 1,22 1,55 Hypothesis 2 1,11 1,77 Hypothesis 3 1,66 1,77 Hypothesis 4 1,44 1,55 Hypothesis 5 1,22 1,44 Total 1,33 1,62

Table 3: An overview of the average scores for each hypothesis.

Below are the individual results for each hypothesis shown. The results of hypothesis 1 are shown in table 4 and 5. For hypothesis 1 the results show that companies that have a high social responsibility reputation do not necessarily provide more detailed information about stakeholder inclusiveness than companies that have a low social responsibility reputation. This includes information about which stakeholders the company focusses on and in what way the company has included these stakeholders in the process of coming up with and implementing social and environmental activity that the company wants to engage in. The results for hypothesis 1 showed that for the top 10 companies, four companies (Publix Super Markets, Lowe’s, UPS and Walt Disney Company) scored 2 points, 3 companies (Wegmans, Amazon.com and Whole Foods Market) scored 1 point and two companies (Tesla Motors and USAA) scored 0 points (Table 4). This results in an average of 1,22 and a total score of 11.

0 1 2

Hypothesis 1

Hypothesis 1: Stakeholder inclusiveness (top 10)

1. Wegmans 2. Publix Super Markets 3. Amazon.com 4. Tesla Motors 5. USAA 6. Lowe's

7. UPS 8. Walt Disney Company 9. Whole Foods Market Table 4: Results hypothesis 1 (top 10).

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Table 5 shows the results for the bottom 10 companies for hypothesis 1. Six

companies (Bank of America, Volkswagen Group, ExxonMobil, Halliburton, Wells Fargo & Company and Monsanto) achieved a score of 2 points, two companies (AIG and Goldman Sachs) received a score of 1 point and one company (BP) did not receive any points. This results in an average of 1,55 and a total score of 14.

The results of hypothesis 2 are shown in table 6 and 7. Hypothesis 2 is about the information and authoritative measurements the company provides for the sustainability context of their social activity plans. The results show that this information was not provided more in reports of companies with a high social responsibility reputation than in the reports of companies that have a low social responsibility reputation. For hypothesis 2 the results

showed that three companies of the top 10 (USAA, Lowe’s and UPS) scored 2 points, while four companies (Wegmans, Amazon.com, Tesla Motors and Whole Foods Market) scored 1 point and two companies (Publix Super Markets and Walt Disney Company) did not receive any points (table 6). This results in an average of 1,11 and a total score of 10.

0 1 2

Hypothesis 1

Hypothesis 1: Stakeholder inclusiveness (bottom

10)

1. AIG 2. Bank of America 3. Volkswagen Group 4. ExxonMobil 5. BP 6. Halliburton 7. Goldman Sachs 8. Wells Fargo & Company 9. Monsanto

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The bottom 10 companies scored higher for hypothesis 2 (Table 7): seven companies (Bank of America, Volkswagen Group, ExxonMobil, Halliburton, Goldman Sachs, Wells Fargo & Company and Monsanto) received a score of 2 points and two companies (AIG and BP) got 1 point. This results in an average of 1,77 and a total score of 16.

Table 7: Results hypothesis 2 (bottom 10).

The results of hypothesis 3 are shown in table 8 and 9. Hypothesis 3 investigates whether the relation between the company’s social and environmental activities and the long-term strategy and value chain activities is described in the report. The results show that companies with a low social responsibility reputation describe this relation in more detail than companies with a high social responsibility reputation. The results for hypotheses 3 showed that of the top 10 companies six companies (Wegmans, Publix Super Markets, Tesla Motors, Lowe’s, UPS and

0 1 2

Hypothesis 2

Hypothesis 2: Sustainability context (bottom 10)

1. AIG 2. Bank of America 3. Volkswagen Group 4. ExxonMobil 5. BP 6. Halliburton 7. Goldman Sachs 8. Wells Fargo & Company 9. Monsanto 0

1 2

Hypothesis 2

Hypothesis 2: Sustainability context (top 10)

1. Wegmans 2. Publix Super Markets 3. Amazon.com 4. Tesla Motors 5. USAA 6. Lowe's

7. UPS 8. Walt Disney Company 9. Whole Foods Market Table 6: Results hypothesis 2 (top 10).

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Walt Disney Company) scored the maximum of 2 points and three companies (Amazon.com, USAA and Whole Foods Market) scored 1 point (Table 8). This results in an average of 1,66 and a total score of 15.

Seven companies from the bottom 10 companies (Bank of America, Volkswagen Group, ExxonMobil, Halliburton, Goldman Sachs, Wells Fargo & Company and Monsanto) scored 2 points for hypothesis 3 and two companies (AIG and BP) a score of 1 (Table 9). This results in an average of 1,77 and a total score of 16.

The results of hypothesis 4 are shown in table 10 and 11. Hypothesis 4 covers the aspect of feasibility for the social activity plans of the companies. The hypothesis states that a company with a high social responsibility reputation will provide more details of sound investigation by recognized expertise about the feasibility of their social and environmental activities. This in

0 1 2

Hypothesis 3

Hypothesis 3: Sustainability context (top 10)

1. Wegmans 2. Publix Super Markets 3. Amazon.com 4. Tesla Motors 5. USAA 6. Lowe's

7. UPS 8. Walt Disney Company 9. Whole Foods Market

0 1 2

Hypothesis 3

Hypothesis 3: Sustainability context (bottom 10)

1. AIG 2. Bank of America 3. Volkswagen Group 4. ExxonMobil 5. BP 6. Halliburton 7. Goldman Sachs 8. Wells Fargo & Company 9. Monsanto Table 8: Results hypothesis 3 (top 10).

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comparison to companies with a low social responsibility reputation. Hypothesis 4 resulted for the top 10 companies in a score of 2 for five companies (Publix Super Markets, USAA, Lowe’s, UPS and Walt Disney Company), a score of 1 for three companies (Wegmans, Amazon.com and Whole Foods Market and one company (Tesla Motors) did not get any points. This results in an average of 1,44 and a total score of 13.

For hypothesis 4 six companies of the bottom 10 companies received a score of 2 points (Volkswagen Group, ExxonMobil, Halliburton, Goldman Sachs, Wells Fargo & Company and Monsanto), two companies scored 1 point (AIG and Bank of America) and one company did not receive any points (BP). This results in an average of 1,55 and a total score of 14.

0 1 2

Hypothesis 4

Hypothesis 4: Materiallity (top 10)

1. Wegmans 2. Publix Super Markets 3. Amazon.com 4. Tesla Motors 5. USAA 6. Lowe's

7. UPS 8. Walt Disney Company 9. Whole Foods Market

0 1 2

Hypothesis 4

Hypothesis 4: Materiallity (bottom 10)

1. AIG 2. Bank of America 3. Volkswagen Group 4. ExxonMobil 5. BP 6. Halliburton 7. Goldman Sachs 8. Wells Fargo & Company 9. Monsanto Table 10: Results hypothesis 1 (top 10).

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Lastly, hypothesis 5. The results of hypothesis 5 are shown in table 12 and 13. Hypothesis 5 investigates whether the potential consequences of the social and environmental activities for the company are described. The hypothesis states that companies with a high social

responsibility reputation would describe this more elaborately than companies with a low social responsibility reputation. Four companies from the top 10 received 2 points (Publix Super Markets, Lowe’s, UPS and Walt Disney Company). Three companies received 1 point ( Amazon.com, USAA and Whole Foods Markets) and two companies did not get any points (Wegmans and Tesla Motors). This results in an average of 1,22 and a total score of 11.

Hypothesis 5 resulted in a score of 2 for six companies of the bottom 10 (Volkswagen Group, ExxonMobil, Halliburton, Goldman Sachs, Wells Fargo & Company and Monsanto), a score of 1 for one company (BP) and zero points for two companies (AIG and Bank of America). This results in an average of 1,44 and a total score of 13.

0 1 2

Hypothesis 5

Hypothesis 5: Materiallity (top 10)

1. Wegmans 2. Publix Super Markets 3. Amazon.com 4. Tesla Motors 5. USAA 6. Lowe's

7. UPS 8. Walt Disney Company 9. Whole Foods Market

0 1 2

Hypothesis 5

Hypothesis 5: Materiallity (bottom 10)

1. AIG 2. Bank of America 3. Volkswagen Group 4. ExxonMobil 5. BP 6. Halliburton 7. Goldman Sachs 8. Wells Fargo & Company 9. Monsanto Table 12: Results hypothesis 5 (top 10).

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Tables 14 and 15 show the individual score for each company for each hypothesis. In the top 10 companies of the social responsibility reputation ranking only two companies (Lowe’s and UPS) received the maximum score of 10 points. In the bottom 10 five companies

(Volkswagen, ExonnMobil, Halliburton, Wells Fargo & Company and Monsanto) received the maximum score of 10 points in total. The lowest total score is 3 in the top 10 for Tesla Motors and in the bottom top 10 a score of 4 for AIG.

Top 10 companies Hypothesis 1 Hypothesis 2 Hypothesis 3 Hypothesis 4 Hypothesis 5 Total Wegmans 1 1 2 1 0 5 Publix Super Markets 2 0 2 2 2 8 Amazon.co m 1 1 1 1 1 5 Tesla Motors 0 1 2 0 0 3 USAA 0 2 1 2 1 6 Lowe’s 2 2 2 2 2 10 UPS 2 2 2 2 2 10 Walt Disney Company 2 0 2 2 2 8 Whole Foods Market 1 1 1 1 1 5 Total 10 9 13 12 11 55

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5. Conclusion and discussion

Using a content analysis the CSR or annual reports of 18 companies were analysed. These companies are part of the top and bottom 10 of the social responsibility reputation rankings. These rankings are an outcome of a research conducted by the Harris Poll. To help and support companies during the process of reporting about their social and environmental activities several guidelines have been drawn up. The most widely adopted guideline for reporting social and environmental activities is the Global Reporting Initiative. Companies that act in accordance with the Global Reporting Initiative are required to mention the standards of their activities in their annual report. This research examined such reports to determine to what extent the social responsibility reputation of a company is related to the level of presence of the Global Reporting Initiative standards. The CSR or annual reports of companies were analysed on three criteria: stakeholder inclusiveness, sustainability context and materiality.

It was expected that the outcomes of this research would show that in the CSR or annual reports of companies that have a high social responsibility reputation the Global Reporting Initiative standards are more present than in the reports of companies that have a

Bottom 10 companies Hypothesis 1 Hypothesis 2 Hypothesis 3 Hypothesis 4 Hypothesis 5 Total AIG 1 1 1 1 0 4 Bank of America 2 2 2 1 0 7 Volkswagen 2 2 2 2 2 10 ExxonMobil 2 2 2 2 2 10 BP 0 1 1 0 1 3 Haliburton 2 2 2 2 2 10 Goldman Sachs 1 2 2 2 2 9 Wells Fargo & Company 2 2 2 2 2 10 Monsanto 2 2 2 2 2 10 Total 14 16 16 14 13 73

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low social responsibility reputation ranking. The results of this research are quite different from what was initially expected. The results of this research imply that the presence of GRI standards in reports is not related to the social responsibility reputation of a company. This content analysis of the presence of GRI standards in CSR or annual reports of companies did not find support for the previously formulated five hypotheses. Below follows a description for each of the five hypothesis and the corresponding results.

Concerning hypothesis 1, results show that companies that have a high social responsibility reputation do not necessarily provide more detailed information about stakeholder inclusiveness than companies that have a low social responsibility reputation. Although it was expected that companies with a high social responsibility reputation would provide more detailed information about stakeholder inclusiveness, the results of this research have shown otherwise. In fact, the top 10 companies received a total score of 10 and the bottom 10 companies received a total score of 14. Therefore, this hypothesis can be rejected.

Hypothesis 2 concerns the information and authoritative measurements the company provides for the sustainability context of their social activity plans. The results of the current research show that this information was not provided more in reports of companies with a high social responsibility reputation than in the reports of companies that have a low social responsibility reputation. This is again a result that was not anticipated by the hypothesis. Therefore, this hypothesis is rejected. It is however noteworthy that the difference between the results of the top 10 companies and the bottom 10 companies was the most substantial for this hypothesis. The top 10 companies received a total of 9 point while the bottom 10

companies received 16 points.

Hypothesis 3 predicts that the relation between the company’s social and

environmental activities and the long-term strategy and value chain activities is described in more details in reports of companies with a high social responsibility ranking. This hypothesis states that companies with a high social responsibility reputation would provide more

information about the long-term strategy and value chain activities. Because the results do not support this hypothesis, this hypothesis is rejected. For this hypothesis both the top 10

companies and the bottom 10 companies received the highest scores compared to the scores received for the other hypotheses, respectively 13 and 16 points out of 18 points.

Hypothesis 4 covers the aspect of feasibility for the social activity plans of companies. The hypothesis states that a company with a high social responsibility reputation will provide more details of sound investigation by recognized expertise about the feasibility of their social

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and environmental activities. However, the results show the opposite: companies with a low social responsibility reputation actually provided more information about the feasibility of their social and environmental activities.

Lastly, hypothesis 5 is focused on the question whether the potential consequences of the social and environmental activities for the company are described. The hypothesis states that companies with a high social responsibility reputation are expected to more elaborately describe such activities than companies with a low social responsibility reputation. Because the results are different from what was expected in the hypothesis, this hypothesis is reject

Overall one can conclude, based on the results of the current research, that the GRI standards are more present in the CSR or annual reports of companies with a low social responsibility reputation than in the reports of companies with a high social responsibility reputation. The total amount of points that was attributed to the companies with a low

reputation mounted up to 73, whereas the total points of companies with a high reputation was a lower 55.

5.1 Implications for practice

The results of this research differ from the results that were expected. The outcomes of this research suggest that the presence of GRI standards is not related to the social responsibility reputation of a company. These results therefore prove to be relevant and could be of further use because the utility of CSR or annual reports is scrutinized in this report. Further research could clarify the implications of the reports and its accordance with the actual activities performed by companies.

According to Fortanier, Kolk and Pinkse (2011) transparent reporting is key to achieve sustainable business. Transparent reporting stimulates companies to become more aware about their own business’ impact. However, it also allows for criticism and feedback from external parties to arise. Moreover, it can assist companies in implementing and shaping their social and environmental activities. These incentives have directed companies towards the composition of voluntary guidelines to standardize reporting content - such as the GRI. However, the results of this research show that it appears to be relatively easy for companies to meet certain standards in their reports, while it is not a trustworthy reflection of what their social and environmental activities consist of or what the company’s social responsibility reputation is. One of the underlying reasons could be that reporting about a company’s social and environmental activities is not obligated and when companies decide to report they can

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follow guidelines (like GRI) without the information being checked. This can lead to misleading outcomes.

An illustrating example within this research is the company Tesla Motors. After applying the research methods on the report of Tesla, the company scored very low on the presence of the GRI standards, even though the company is part of the top 10 of companies with a high social responsibility reputation. They received 3 out of 10 points for presence of markers that indicate GRI standards within their report, which is a low score when looking at their actual social and environmental activities. One of the reasons for such a discrepancy between the score and the actual activities performed could be that Tesla has a very strong drive to ‘do good’ and this drive is at the core of every single aspect of the company. Simply put, their purpose runs deeper than just making cars. They are on a mission to transform the global economy to a more sustainable variant, by whatever means necessary. This also means that realizing profit is not the bottom line, and as such, they do not promote their company via explicitly stating their responsibility in their reports (Williams, 2015). Tesla also decided to release the company’s valuable patents in the hope that this would accelerate the development of electric cars. The core idea of the company is that the planet is more important than the company’s profit. Tesla’s social intentions are thus very strongly integrated in the company’s DNA. This is perhaps the reason they don’t feel the need to explain that once again in a report: sometimes actions speak louder than words (Rasche, 2011). This expression would perfectly explain the fact that their social and environmental activities are not thoroughly discussed in their reports, while they are mostly occupied with exactly such activities and their awareness of the responsibility they carry.

Another theoretical argument states that CSR must surpass the scope of business as usual to be beneficial for a company and to acquire a positive reputation among consumers. This is perfectly illustrated by the striking example of Volkswagen in this report. Previous research has demonstrated that when a company is not able to engage in CSR in a credible way, companies might risk their reputation and trustworthiness. This could even mount up to public scepticism and a lack of credibility (Moratis, 2017). An example of such a series of events can be found in the Harris Poll bottom 10 social responsibility reputation ranking. Volkswagen gained 10 points (the maximum score) for the presence of the GRI standards in their report, according to this current research. However, according to their position in the bottom 10 of social responsibility reputation ranking, their assumptions about the social and environmental activities they engage in or have planned do not seem to be credible to the consumer. For Volkswagen this is presumably correlated with the negative attention it

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received in 2015 with the ‘dieselgate’ scandal. The United States Environmental Protection Agency discovered a software in Volkswagen cars that enabled them to detect when they were being tested. The cars showed results for tests of the assessment of pollutants that did not represent the real driving situation (Kolk, 2004). In 2012 Volkswagen was praised for its ‘environmental management and corporate social responsibility’, yet after this scandal in 2015 Volkswagen’s reputation decreased tremendously. It turns out that it takes years to build up a strong reputation, but one can lose it overnight.

This research suggests that GRI standards are by no means appropriate tools to determine the social responsibility reputation of a company. Companies can put forward and discuss many ambitious plans and promises in their report, while in reality they won’t be able to live up to them. CSR reporting is in some cases rather a form of symbolic communication or impression management, instead of a means to communicate about organizational actions (Kolk, 2004). Following from existing literature, this proves to be a worrying phenomenon because it could negatively affect the consumer confidence in green products and make sustainability-related marketing untrustworthy. It can become more difficult for consumers to know which choices will make a true difference regarding sustainability, when some players in the field ruin the existing structures by misleading these consumers with big talk (Delmas and Burbano, 2011; Winston, 2010). This type of greenwashing is a serious matter, because it slows down the progress towards a sustainable economy. Furthermore, Rasche (2011) states that CSR will only lead to competitive advantage when it is consistent with the DNA of the company.

Since it seems that reporting guidelines are not a solution to prevent companies from bending information in sustainability reports, more convincing measures are necessary. Based on the results of this research, it is recommended that the content of the reports should be controlled for false information by an independent authority instead of settling for voluntary guidelines. This will hopefully push less sustainable companies in the right direction to realize their promises made in the guidelines, while it will at the same time be beneficial to those who are already occupying themselves with the strive towards a more sustainable and socially acceptable world.

5.2 Limitations and future research

The findings of this research must be considered in the context of the research’s limitations, which in turn offer suggestions for future research. The most notable limitation is the number of companies that are examined for this research. In total 18 reports were analysed. The

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limited amount of reports could have an influence on the generalizability of the research. It has to be noted however, that the companies that are examined during this research are really diverse. The companies that were analysed concern both financial companies and food

companies. This diversity adds to the generalizability of the research, as there was no focus on one particular sector within the business world.

Moreover, a content analysis was used in this research. Content analysis is a very time-consuming type of research method because the reports have to be thoroughly analysed. In order to perform this research with an increased research sample would require

significantly more time. Content analysis is a research method to provide a systematic and valid description of the content. However, content analyses in general also come with

restrictions that have to be mentioned as limitations to this research as well. The technique has a reliability risk, since the classification of scores may be influenced by the subjective

judgements of the researcher (Kolk, 2004). A team of multiple independent researchers would bring a solution to such a risk, although it will still not be fully reliable.

Future research could validate and improve this research. Instead of analysing the presence of GRI standards in reports, other reporting guidelines could be analysed as well to extend the scope of the research and strengthen its conclusions. It would be interesting to see whether different results would appear for different guidelines. Another suggestion for future research is to repeat this research and compare different industries with each other. Falck and Heblich (2007) state that CSR can be irrelevant if the actual business operations have inherent negative implications or are dishonest. Therefore it would be interesting for researchers to examine whether there is a difference in outcomes between industries, for example between industries with a bad reputation such as the oil industry and the financial sector, and other industries.

The impact of negative media attention would be another interesting factor that could be explored regarding the current debate and importance of social responsibility to the consumers. The factor of time could also be taken into account and be examined more

carefully in future research. This research analysed one specific time period. It could however be interesting to look at the differences between the reports of Volkswagen before and after the ‘diesel gate’? A question that might arise from such research could for instance be: Do changes in reputation lead to a different way of reporting? This would be particularly interesting because it would provide more details about the nature of the relation between reputation and the function of guidelines and can therefore carry on the essence of this research.

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This study thus represents a remarkable and useful investigation that could be the encouraging factor for further research. This research indicates that the presence of GRI standards in CSR or annual reports is not related to the social responsibility reputation of a company. Rather, companies with a bad reputation tend to present GRI standards more extensive in their reports than companies with a high reputation. Much more is to be learned about the social responsibility reporting of companies and how greenwashing in these reports may be controlled. In short, a rich array of research about social responsibility reporting awaits.