Amsterdam Business School
Are the role models closing the legitimacy
gap by reporting their carbon footprints?
A content analysis of environmental changes and Corporate Social Responsibility
Name: Linda Smits
Student number: 10468056 Date of final version: 10-08-2015 Word count: 16777, 0
MSc Accountancy & Control, specialisation Control Amsterdam Business School
Faculty of Economics and Business, University of Amsterdam Supervisor: Drs. R.W.J. van Loon RA
Statement of Originality
This document is written by student Linda Smits who declares to take full responsibility for the contents of this document.
I declare that the text and the work presented in this document is 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 the completion of the work, not for the contents.
Acknowledgements
I would like to thank the many people who have provided ideas, support and encouragement during this research study.
In particular I would like to thank my supervisor, Ron van Loon for his practical assistance. I would also like to thank the company Takeaway.com (my employer), for the possibility to further develop my competencies, by means of this study. Moreover, they decided three years ago that English would be the official language of their communication and documents - this experience was very helpful for writing this thesis.
Finally, I would like to thank my family and friends, who had to endure three years of me studying during evenings and on weekends. They have supported me throughout with their warmth and understanding.
Abstract
Purpose: The purpose of this study is to describe and examine how global companies, as role models, justify themselves in their reporting on sustainability. Corporate Social Responsibility (CSR) is becoming increasingly important and, consequently, companies disclose their legitimacy gap. However current research has not been able to produce a consistent answer to the following question. Does integrated reporting providing a greater legitimacy for carbon footprint behavioural reporting?
Design/methodology/approach: This paper focuses on global companies, which report through integrated reporting as well as stand-alone reporting methods. Content analysis of annual reports, CSR reports (stand-alone) and integrated reports are employed to compare different companies that show symbolic or behavioural actions to report their carbon footprint. Carbon footprint and sustainable energy disclosures from the years 2011 and 2013 are compared. The framework by Hrasky (2011) is used to divide the disclosure findings into the groups.
Originality/value: Research has been conducted on sustainability reporting and behavioural action in several areas and countries. This study explores from a global perspective with companies functioning as role models, whether integrated reporting provides a greater legitimacy for companies’ carbon footprint behaviours. It appears to be the first study to investigate this subject from a global perspective with role models.
Keywords: Carbon footprint, Integrated reporting, Legitimacy theory, Disclosure, Isomorphism, Global Reporting Initiative.
Table of contents
1 Introduction ... 7
1.1 Background ... 7
1.2 Research question ... 12
1.3 Contribution of this research ... 13
1.4 Structure of this research ... 14
2 Theoretical debate ... 15
2.1 Corporate Social Responsibility, climate change and profit (literature causality) ... 16
2.1.2 Carbon footprint ... 17
2.2 Specific country, region, continent or globally (literature geography) ... 18
2.3 Climate and specific industry vs nonspecific industry (literature industry) ... 19
2.3.1 Specific industry sample group ... 19
2.3.2 Non-specific industry literature ... 20
2.4 Conclusion: Large global companies as Role models ... 21
3 Theoretical framework and hypotheses ... 22
3.1 Legitimacy theory ... 22
3.1.2 Legitimacy gap: symbolism vs. behavioural action ... 24
3.1.3 Legitimacy vs. isomorphism... 25
3.2 Concluding theoretical framework ... 27
3.3 Hypotheses ... 27
4 Research Methodology ... 29
4.1 Data analyses ... 29
4.1.1 Framework ... 30
4.1.2 Dependent variable & independent variable ... 34
4.2 Research Method ... 35
5 Result of research ... 37
5.1 Research ... 37
5.2 Results first hypothesis – 2011 compared with 2013 ... 37
5.2.1 Observations and tests H1 ... 37
5.3 Results second hypothesis – IR compared with SA ... 40
5.3.1 Observations and tests H2 ... 40
5.3.2 Test result H2... 41
5.4 Results third hypothesis – CII compared LCII ... 42
5.4.1 Observations and tests H3 ... 42
5.4.2 Test result H3... 44
5.5 Results fourth hypothesis – EsM compared with EmM ... 45
5.5.1 Observations and tests H4 ... 45
5.5.2 Test result H4... 47
6 Conclusion and discussion ... 48
6.1 Role models closing their legitimacy gap ... 48
6.2 Recommendations for future research... 50
6.3 Concluding comments ... 51
7 References ... 52
7.1 Literature references ... 52
7.2 Data references ... 58
8 Appendices ... 60
8.1 Literature flowchart Sustainability ... 61
8.2 Sample group Stand-Alone and industry categorisation ... 63
1 Introduction
The idea for this research arose during a lecture on sustainability at the University of Amsterdam. The partial subject of this lecture was the environmental disaster in Gulf of Mexico in 2010, caused by an oil spill related to the oil company British Petroleum (BP). This lecture discussed in which way BP was reporting their carbon footprint in their sustainability report. Are they closing their legitimacy gap in their sustainability report with a behavioural action or was this merely symbolism?
1.1 Background
Climate change is one of the crucial environmental issues, which has received increasing attention since 1990. Gross (1990) describes that in 1990s, civil society could express its opinions freely and that these opinions were taken into account in the formulation of public policy. Politicians and planners were obliged to at least coat their policies with a green varnish if not actively re-plan for sustainable development. Moreover with the recent transformations in Central and Eastern Europe and the re-emergence of pluralist politics throughout most of Latin America, the number of societies experiencing public pressure to rethink future development through a green prism has increased substantially.
According to Hrasky (2011) there is a growing public awareness about the environment and climate change. It comes down to the fact that there is a concern in the community about the impact that companies have on the environment. The society expecting companies to quantify their carbon dioxide (CO2) emissions.
The motivation to provide the community with more information, about the impact a company's operations has on the environment can be supported by the legitimacy theory. The legitimacy theory assumes that firms can only operate as long as the social contract is maintained with the stakeholders (Deegan et al, 2002). According to Ven & Jeurissen (2005) the increased pressure and expectations of the stakeholders in the field of CSR activities force businesses to meet these expectations. Legitimacy is then determined as the operations are consistent with the expectations of the wider public. This is referred to as the social contract. Companies try to demonstrate their accordance with this agreement by describing what their sustainable actions are in the corporate responsibility reports. As a result, these act as a public reporting and effective management tool to convince stakeholders that a company operates responsibly.
However, according to Hopwood (2009) there is a risk in the pursuit of legitimacy. With regard to legitimacy there are two types of reporting arising, namely behavioural and symbolic reporting. If companies report their disclosure of carbon footprint without adjusting the activities of the company in a more sustainable manner, this is symbolic reporting. On the other hand, behavioural action is when reporting and the activities of the companies both demonstrate a decrease in their carbon footprint. Yet, as Hopwood (2009) also states, the development of behavioural reporting is too slow and, thus, this requires critical and facilitative research.
Since the last century, annual reporting of financial results has been a basic requirement for companies to inform the public about the aChievements of the past year. However, inspired by climate change, societies believes that financial results only does not show a full picture of companies’ influence on the environment. O’Donovan (2002) explains that companies report about their legitimacy in carbon footprint, in order to retain the social contract that they have with their stakeholders. The continuity of the business could be jeopardized if the social contract is broken with the stakeholders, Waddock (2005), because of the fundamental problem with society’s broken contract seems to revolve around the short-term orientation.
Companies are currently under enormous economic pressure and in times of pressure focus is quickly turned to bottom line profitability (Ullman, 1985). This kind of bottom-line focus is fuelled by accounting regulations, which currently fail to include matters of sustainability into the equation. (Herbohn, 2005).
Furthermore, Deegan & Shelly (2014) discuss whether corporate social responsibilities and accountabilities should be regulated, or left to be determined by market forces. They further state that the support of governments is essential to aChieving sustainable development, as the activities of business organizations also contributes to the state of the environment and impact the social well-being of various stakeholders. Thus, the pressure from society, shareholders and the government have ensured that there is a progressive trend in sustainability reporting.
The first environmental reports were published in the late 1980s by companies in the chemical industry, which were facing serious image problems. As Ven & Jeurissen (2005) states society expects transparent reports which explain how they adjust business activities which have a damaging effect on the environment. Listed companies that published
sustainability reports had a better image than those without sustainability reports. Consequently, strategies were drawn up to respond to climate change by developing solutions to reduce CO2. However, this also carried risks, as the goal to increase their corporate image, which manifests itself as a symbolic reduction of CO2 Hrasky (2011). Attempting to redefine the corporate image and stakeholder concerns in a way that serves the company’s own interests there is a progress in symbolic behaviour (Livesey, 1999; Livesey & Kearins, 2002).
Corporations have several responsibilities when drafting sustainability reports, including being honest about their progress and presenting accurate information to their consumers. However, as Bond (2012) describes, some companies disregard sincerity and mislead the public by “greenwashing,” which means they exaggerate their environmental efforts or provide false information (symbolic behavioural) with their customers in an authentic guise. The call in his article to avoid “greenwashing” in reporting on sustainability.
Following this, Page (2007) claims that the global climate change raises a number of important issues for political scientists and theorists, which were also taken in consideration in the Kyoto protocol. The Kyoto Protocol regulates the reduction of greenhouse gas emissions and, outline three rival ‘climate architectures’, evaluating each in terms of some basic principles of equity. Generally, political and consumer awareness and concerns about carbon emissions, climate change and global warming have been heightened by a number of factors, including ratification of the Kyoto protocol by many governments, growth in emissions trading, carbon tax, and carbon offset schemes (Hrasky, 2011). Moreover, the research study by Kumazawa & Callaghan (2012) found that emissions decreased after the signing of the agreement, especially in industrialised countries as a whole. However, the protocol may not be an effective policy in the short-term if activities that lead to increases in the carbon footprint simply shift from developed to developing countries due to global trade (Dasgupta et al., 2002; Jaffe et al., 1995;Sathiendrakumar, 2003).
Therefore, according to Kolk & Pinkse (2004), companies have to become more pro-active and have to take steps to prepare for the potential risks and opportunities posed by climate change. Companies who comply with this have launched several initiatives including the reduction of carbon footprint (CO2 emissions) but do so to anticipate political and social developments relating to climate change and environmental matters.
Moreover, James (2014) describes that currently most companies reporting on sustainability publish stand-alone reports. However, a trend toward integrating sustainability
reporting with financial results is emerging and is supported by the International Integrated Reporting Council's (IIRC) efforts. To allow for a more holistic reporting method, they have developed a universal integrated reporting framework. James (2014) finds that overall, major accounting companies (Big Four) tend to support sustainability reporting of multiple performance indicators which relate to environment and safety, employees and community, and corporate governance both in terms of current year and comparatively across a company’s timeline.
Over the past two decades, social and environmental disclosures have increasingly been made in separate stand-alone reports in addition to a variety of other media such as websites (Cho et al., 2009). These stand-alone social and environmental reports have become a response to the increased complexity and length of annual reports. Recently, however, there have been moves to combine some social and environmental disclosures with financial disclosures in single reports. Moreover, according to Hąbek & Wolniak (2015), there are a growing number of companies issuing CSR reports, but their quality varies significantly. In contrast to earlier social and environmental disclosures made within annual reports, these recent single reports have sought to integrate social, environmental, financial, and governance information (Dey & Burns, 2010; Hopwood et al., 2010).
This raises the question if CSR should always be reported in an integrated report. As Hassn (2014) states “governance mechanisms appear to be more related to social disclosure in annual reports than in stand-alone reports. This result supports the theoretical view that corporate governance considerations should be extended to all stakeholders”.
Moreover, KMPG (2012) describes the advantages of integrated reporting as follows: • Integrating corporate responsibility reporting demonstrates the connection with
business operations and strategy.
• Reporting should be driven by the business model and linked to strategy and potential for future value creation and defence.
• Different reporting approaches and performance measures are needed depending on the nature of each issue.
• Every issue and opportunity needs to be put into a business context with enough detail for readers to understand the potential implications for business value.
The resulting practices have come to be known as integrated reporting. Next to “The concept of Integrated Reporting” this is a framework in which both the financial and
non-financial key results are connected to a company's strategy. This means that a separate sustainability report is not merely added to an existing report. With integrated reporting, both are accounted for in a single document, and the connection with the mission and vision of the company should be clear. However, because of the difficulties that implementing this framework entails, integrated reporting has no widespread, uniform support from companies.
Despite the fact most companies do not adhere to this reporting approach, there is an established umbrella organisation that supports the concept of integrated reporting: the International Integrated Reporting Council (IIRC). Only recently, in 2013, this body released a new draft version. Their framework aims to set expectations of stakeholders for corporate undertakings regarding the information companies report. Another objective of the framework is to guide investors to provide capital in a responsible manner. The latter implies that investments are continuously made, creating value that corresponds to the limits of this planet and meets general social expectations (Soyka, 2013).
Furthermore, according to Suchman (1995) legitimacy is "a generalized perception or assumption that the actions of an entity are desirable, proper, appropriate within some socially constructed system of norms, values, beliefs, and definitions". The activities of corporate companies could include actions that could harm the environment. (Sheridan, 2014).
According to legitimacy theory there are two kinds of possible actions, symbolic and behavioural action. Hrasky (2011) investigates the legitimacy strategies of Australian businesses as a result of increased social concerns in the area of climate change and CO2 emissions. The aim of her study is to determine whether companies have implemented changes in reporting on CO2 emissions and whether this is a symbolic or behaviour action which corroborates a company’s legitimacy. In case of symbolic action, there is a risk that these reports give a wrong image of an organization. This is the case if the company is trying to create a positive image of its business without actually initiating operational changes. Conversely, behavioural action is the opposite of symbolic action. Behavioural action entails that companies identify which changes are actually implemented in the business, moreover, these are in line with society's expectations (Kim et al, 2007). Finally, legitimacy is an indication of the extent to which the operations are consistent with the norms, behaviours, and values of the society to which the company belongs (Dowling and Pheffer, 1975).
1.2 Research question
According to Deegan & Shelly (2014), integrated reporting from coercive isomorphism perspective (forced by external forces, explained in chapter 3) has a positive effect. Currently, sustainability reporting still is voluntary, which implies a delay in closing their legitimacy gap on carbon footprint reporting, while various studies have already concluded that there must be a faster progressive disclosure in carbon footprint and adjustments in operations (Hopwood, 2009; Unerman, 2014; Deegan & Shelly, 2014). As Deegan & Shelly (2014) state, results show that the business community overwhelmingly favours an anti-regulation approach, whereby corporations should be left with the flexibility to determine their social responsibilities and associated accountabilities, and ‘enlightened self-interest’ should be retained as the guiding mechanism for social responsibility initiatives.
However, to establish sustainability reports as a uniform (if not mandatory) procedure, the International Integrated Reporting Committee (IIRC) has been established to develop a new integrated reporting framework, combining financial and non-financial disclosures (IIRC, 2011). In this way, companies can implement integrated reporting in the most effective manner.
Thus, this study strives to answer whether integrated reporting governance mechanisms should be more related to social disclosures in integrated reports than in
stand-alone reports. Moreover, this study is the first to examine the influence integrated reporting has on behavioural action. It is expected that, in this context, the leading global companies serve as role models to respond in this way the literature requested: to accelerated examination of development of behavioural reporting. As such, this paper follows the assumption global companies can function as role models to motivate and encourage strategies that meet regulations and assuage social concerns (Lockwood, 2002).
Companies on the FORBES 2.000 are World’s biggest public companies considered leaders in an economic, environmental and social assessment. The reporting of FORBES 2.000 global companies be the overall samples that will be used for the analysis. Next to that the IIRC (International Integrated Reporting Council) Pilot Programme Integrated Report will be used to choose the variable that will be measured as integrated reporting data. The focus in this research is on the years 2011 and 2013. An analysis will be done on disclosures of gaps between the expectations and the possibilities within society and CSR.
Thus, the leading research question is as follows:
How did companies of FORBES 2.000 index and IIRC Pilot Programme Integrated Reporting report their carbon footprint, in the years 2011 and 2013, did it contribute to close their legitimacy gap or was it merely symbolism?
1.3 Contribution of this research
The content analysis conducted in this study on the framework designed by Hrasky (2011). This framework represents a way of determine if the form of action is symbolic or behaviour. In addition, the framework of the IIRC supports (www.theiirc.org) the content analysis. On the basis of comment analysis, gap analysis and expectations, integrated reporting is visually represented in the above diagram, figure one. The IIRC developed this framework for integrated reporting, in order to allow organizations to communicate their strategies, governance, and prospects. In the context of its external environment, this leads to the creation of value in the short, medium, and long term.
Moreover, according to Hrasky (2011), the term "carbon footprint" (CO2 emissions) has lately been widely used in articles and the media. As such, public awareness of environmental sustainability and climate change is increasing. Thus, society is concerned about the effects of the general human carbon footprint on the environment.
The contribution of this study is a response to the call, formulated in a variety of different literature, that requests the accelerated examination of development of behavioural reporting (Hrasky, 2011; Hopwood, 2009; Kolk & Pinkse, 2007; Deegan & Shelly, 2014).
1.4 Structure of this research
Following the introduction, the next section provides an overview of the previous literature on CSR. In the third chapter, legitimacy theory and assumptions are discussed, while in chapter four, the methodology is explained. The results are represented in chapter five. Finally, a detailed discussion and conclusion follow in chapter six.
2 Theoretical debate
This chapter offers an overview of the theoretical debate regarding the relationship between CSR and behavioural or symbolic action in reporting on carbon footprint. The existing literature provides relevant information and reveal existing pressures from society, shareholders, and the government to ensure that sustainability reporting is progressively established as a trend Deegan & Shelly (2014). This thesis contributes to this field of study, as it offers an examination of the development of behavioural reporting. An overview of the structure is provided in appendix eight.
In 1987, the Brundtland Report introduced a universal definition of sustainability: "Development that meets the needs of the present without compromising the ability of future generations to meet their own. Sustainability is improving the quality of human life while living within the carrying capacity of the Earth’s supporting eco-systems according to International Union for Conservation of Nature (IUCN)”.
Additionally, as Porter and Kramer (2006) argue, CSR relates to the companies’ triple P-line, including People, Planet, and Profit, where economic, social and environmental performance are theorised as a unity. Companies are aware that society will not accept their business practices if profits are made at the expense of precious resources. According to Artiach et al. (2010), profitable companies can be sustainable.
2.1 Corporate Social Responsibility, climate change and profit (literature causality)
Since the 1990s, climate change has been widely discussed and received increasing attention from businesses, stakeholders and the governments. All three parties have become aware of the consequences that climate change carries, and that appropriate action has to be taken (Kolk & Pinkse, 2007). From 1995, the United Nations Framework Convention on Climate Change (UNFCCC) has held annual summits on climate change, leading to the adoption of the Kyoto Protocol in December 1997, a binding agreement signed by several developed countries. Moreover, general public demand for sustainable operations has been increasing in the past years (KPMG, 2011). Consequently, the organisational responsibilities should be in line with the expectations of stakeholders, employees and society (Carter & Rogers, 2008). Research literature dealing with CSR focuses on the discrepancy between level of corporate sustainability performance, corporate financial performance and the level of quality corporate sustainability disclosure (Al-Tuwaiji et al., 2004).
Furthermore, as Alexander (2007) describes, the pursuit of profit maximisation above morally preferable initiatives, such as behavioural action regarding sustainability. Alexander (2007) further states that morally preferable initiatives keep on failing, as the existing system is focuses on maximising company profits as the primary operational value. Consequently, attempts to close the legitimacy gap in their carbon footprint continues to fail. If there is no relative change made to laws and regulations that can guide the companies to increase in behavioural CSR (Hopwood, 2009; Alexander, 2007; Deegan & Shelly, 2014).
Benjamin (2009) devotes his research to the emerging of legal and policy regimes concerning establishing a less carbon intensive industry. He has taken the financial markets as his case study. However, largely confines the financial sector to provide capital for clean energy. The financial sector’s potential to affect more positive changes in the economy has been insufficiently acknowledged. Indirectly, regulating greenhouse gases through the legal system by stipulating Socially Responsible Investment (SRI) allows investors to respond to climate change threats. However, the potential contribution of SRI to address climate change problems more comprehensively is presently limited owing to inadequate governance
frameworks, as well as the financial sector’s increasing abandonment of its traditional ethical agenda.
Although the companies have increased their disclosures of their carbon footprint (Hrasky, 2012; Hopwood, 2009), development in behavioural reporting is still lagging (Hopwood, 2009). Thus, this thesis employs existing literature to explore a not yet examined
global perspective, where global companies are considered as ‘role models’ in terms of how they focus on reporting their carbon footprint. The theoretical framework and research methodology sections further elaborate on the global perspective and the involvement of role models.
2.1.2 Carbon footprint
There are many definitions of an ecological footprint but only a few of a carbon footprint. According to Wiedmann et al. (2007) and East (2008), carbon footprint is a direct measure of greenhouse gas emissions (expressed in tons of carbon dioxide [CO2] equivalents) caused by a defined activity. At its minimum, this measurement includes emissions resulting from activities within the control or ownership of the emitter and indirect emissions resulting from the use of purchased electricity.
Alternatively, Hrasky (2011) presents an overview of the definition of 'carbon footprint', as there seems to be no universally accepted definition for the term. According Hrasky (2011), is the definition of carbon footprint from popular literature rather than the scientific literature. Moreover, according to Weidmann et al. (2007), the term carbon footprint has been widely used lately in the media, by governments and in businesses.
Furthermore, the United States Environmental Protection Agency state that reports on environmental or carbon footprint can contribute to sustainability. Assessing environmental footprints may help frame and inform sustainability discussions by providing a better understanding of the limitations of local resources to support social, economic, and environmental systems. Environmental footprint analyses also help summarize a complex array of environmental indicators into a single or small number of values so they can be applied to decision-making processes.
This thesis focuses on the most recently published articles, while it also relies, to a lesser degree, on less recent articles as its key sources. In the literature review, all relevant articles will be categorised into several levels, which present a structured overview. This structured approach gives an overview of the existing literature, which is suitable for further research on the development of behavioural reporting, and which further supports the assertion that this development is going too slowly (Hopwood,2009). Also according to Hrasky (2011), there is a legitimacy gap in reporting on behavioural action regarding carbon footprint which is further explained in the theoretical framework section.
2.2 Specific country, region, continent or globally (literature geography)
This paper researches the effect of CSR on behavioural or symbolic action in reporting on carbon footprint from a geographical perspective. Research is frequently conducted according to a country, region, or continent, as judicial legislation is an important aspect of this field (Stubbs, 2014; Hrasky, 2011; Deegan & Shelly, 2014; Humprey et al., 2011).
Gamerschlag et al. (2011) assess the advantages of focusing on a specific country, region, or continent, because there are no regulation differences. They further contend that other European countries like the United Kingdom (UK), France, and the Netherlands have more specific guidelines or requirement for the provision of CSR information than countries like Germany, Spain, or Italy. These differences in regulatory environments may have affected the results of previous studies focusing on businesses in Europ ( Kolk, 2005; Kolk et al., 2001; Maignan & Ralston, 2002; Meek et al., 1995).
However, in existing literature, the reason for selecting a restricted sample group from a country, region, or continent is not always sufficiently explained. For example, Humprey et al. (2011) have restricted their sample group to UK companies yet have not justified their choice. Nevertheless research from a global perspective is rejected, due to differences in legislation and other reasons that could differ to geographic regions (Humprey et al., 2011; Gamerschlag et al., 2011).
In this paper differences in legislation per country, region or continent are not researched. Instead, the focus is on how role models can act as examples in closing the legitimacy gap in reporting in its carbon footprint.
Moreover, a plethora of studies deal with global companies who are not confined to national or regional borders. Both challenges and opportunities are attached to developing across borders and beyond boundaries, which affect profit maximisation (Castagnolia, 2014). However, little research has been conducted on CSR from a global perspective.
Furthermore, as Schaltegger et al. (2014) describe, sustainability management not only improves companies’ triple bottom line, it also secures legitimacy claims for companies in most countries. This is a compelling reason for all international companies to vigorously engage with sustainability. This book is also a good place to start understanding the international state of the art. It fills a much needed gap in our understanding of internationally comparative corporate sustainability practices.
Because, research from a global perspective is rejected, due to differences in legislation and other reasons that could differ to geographic regions, this raises the question if CSR has limits and what these are. In this thesis large global companies are considered to take a leading role in closing their legitimacy gaps by reporting their carbon footprints and increasing their behavioural action of CSR.
2.3 Climate and specific industry vs nonspecific industry (literature industry)
For this paper, the existing literature on a specific industry sample group is compared to literature on a nonspecific industry sample group, with regard to leading global companies as role models for reporting their carbon footprints. By making a literature flow chart the choice of a sample group for this thesis can be made in an independent suitable manner.
The research of Moura-Leite et al. (2012) explains the relative importance of diverse industry level effects on CSR. Additionally, they find evidence that companies use CSR for strategic decision-making. According to Artiach et al. (2010), leading companies that invest in CSR have significantly higher levels of growth and a higher return on equity than conventional firms. Industry plays a moderating role in social responsibility intensity because of the presence of industry-specific stakeholder pressures for improved social responsiveness. Consequently, industrial organisation researchers have argued that strategy and performance are primarily determined by the membership of an industry and are sustained through entry barriers (Rumelt, 1991).
In the theoretical framework chapter of this thesis, CSR research from the perspective of legitimacy theory, including aspects of institutional theory, is analysed. Following Dimaggio & Powell (1983) and Chung Hee et al. (2013), CSR research needs to consider these interactions and dynamic processes with care and thus, institutional theory can help provide a sufficient research framework. This could lead researchers to challenge the validity of the extant standardised global approach. In this thesis, we will focus on what the role model could mean for progress in behaviour action in reporting on carbon footprint.
2.3.1 Specific industry sample group
Several studies with a specific sample industry reflect that this segment can offer a deeper investigation of the issues in specific contexts, for example, legislation or carbon footprint per country or region (Moura-Leite, 2012). Another example is whether a particular industry is able to glean additional benefits from the surrounding environment. Companies can equally
benefit or be hindered when trying to be environmentally proactive, through a case study as qualitative methodology in a specific industry. The major benefit is the prevention of
sanctions, followed by the improvement of corporate image, long-term cost savings, and new business opportunities (Humphrey et al., 2011). On the other hand, the main obstacles
companies face are a lack of institutional and financial support (Dimaggio & Powell, 1983; Chung Hee et al., 2013).
Ki-Hoon (2012) is a clear example of specific industry research study, which focuses on the manufacturers of the Korean automotive industry. His approach is to explore the role of environmental management accounting and, in particular, the eco-control approach for carbon management in the supply chain. By measuring carbon performance in a production plant his study finds that eco-control can foster alignment between a firm’s carbon
management strategy and carbon performance measurement, and provides useful quantified information for corporate decision makers. In addition, viable mapping of carbon flow in during production provides important insights and opportunities to improve carbon performance within the supply chain.
2.3.2 Non-specific industry literature
Hrasky (2011) studies carbon footprints and legitimation strategies without focusing on a specific industry. The sample of diverse industries is stratified into two groups, namely the more carbon–intensive industry sector and the less carbon intensive sector. It is often claimed that companies in the United States of America (USA) and Australia have one of the heaviest carbon footprints (KPMG, 2008). However, the findings in this study demonstrate that the less carbon-intensive industry report their carbon footprint in a more symbolic way than the more carbon-intensive industry. This study is based on 50 largest listed Australian
companies. This is a small sample, yet despite this limitation, the study provides useful insights into the great degree of variability and inconsistency in what firms are reporting about their carbon footprints. It further appears that voluntary actions to reduce carbon impacts are generally not producing improved carbon outcomes. As both Deegan & Shelly (2014) and Hrasky (2011) state, further regulations that encourage emission reduction may be required to achieve progress in disclose the legitimacy gap through their reporting.
2.4 Conclusion: Large global companies as Role models
Although the CSR, including the institutional perspective versus behavioural reporting, is not the focus of this thesis, the overall conclusion is that CSR now faces different motivational factors, value systems, and commitments to different international agendas the existing literature (Chung Hee et al., 2013). As Hopwood (2009) states, more research on the fast development of behavioural reporting of carbon footprints is necessary.
Moreover, a specific industry sample form a global perspective is suitable for greater legitimacy in the reporting of carbon footprints. This thesis further investigates from a global perspective whether corporate role models encourage other companies to be more pro-active in combatting climate change and demonstrating behavioural action in any industry
(Hopwood 2009 and Klok and Pinkse 2004). Therefore, in this thesis, a non-specific industry sample is selected. In addition, it is assessed whether role models effectively increase the development of behavioural action in the carbon footprint reports of other companies. Nikolaeve & Bicho (2011) investigated that as the GRI framework becomes more
3 Theoretical framework and hypotheses
In this chapter the theoretical framework for this thesis is elaborated, and the relationship between role models closing their legitimacy gap and reporting their carbon footprint in a behavioural manner is further explained. First the definition of legitimacy is given, after which the complementary institutional theory (isomorphism) in reporting carbon footprint is explained. Subsequently, hypotheses are presented based on the employed framework to determine the expected outcomes of this study.
3.1 Legitimacy theory
Previous studies have examined why companies report on Corporate Social Responsibility (CSR). Different theories have been used in these studies to seek explanations for why companies report on CSR at all ( Deegan et al., 2.000;Banerjee, 2007; Deegan & Islam 2012). As Deegan and Islam (2012) contend, the real reason for reporting on CSR is to demonstrate corporate commitment to sustainability. Additionally, Hartmann (2011) mentions that CSR reports meet the requirements, stipulated by society and the media, for more transparency. Specifically, guidelines for sustainability reporting were launched in 1997 by Global Reporting Initiative.It is clear that by using the Global Reporting Initiative
reporting framework companies have greatly improved their non-financials performances. As such, through the application of the GRI framework, the reports appear to have become more integrated (Porter & Kramer, 2011).
Furthermore, CSR and disclosure currently is still voluntary. Thus, there can be several reasons for a company to provide more or less transparency of the social and environmental consequences of their business activities (Deegan & Shelly, 2014; Hrasky, 2011). If the social contract is violated, this leads to the perception among stakeholders that a company is not in compliance with the prerequisites that determine its legitimacy (Deegan et al., 2.000). The legitimacy theory is used in most of these studies to analyse CSR from a social perspective.
According to Suchman (1995), legitimacy is "a generalized perception or assumption that the actions of a company desirable, accurate or appropriate within some socially
constructed system of norms, values, beliefs and definitions". However, Dowling & Pfeffer (1985) have a different definition of legitimacy, but which covers the same theme.
informing the public about the actual changes in behavioural action. In addition, the view of the public, and the changes in the course of time.
In this paper, behavioural and symbolic action in company’ reports are analysed from the perspective of legitimation strategies. There are three types of legitimacy in an organisation (Suchman, 1995):
• Pragmatic legitimacy (symbolic action) • Moral legitimacy (behavioural action) • Cognitive legitimacy
The interaction of pragmatic and moral legitimacies in companies is the most significant in the context of transparent CSR disclosure strategies (Suchman, 1995). The first type of legitimacy is pragmatic legitimacy, also referred to as symbolic action. In this thesis, the latter term is used. This is motivated by companies’ interests or advantage, which disregards others in their behaviour calculated the support of the companies towards society Suchman (1995). One particular variant of pragmatic legitimacy is dispositional legitimacy. Companies pursuing dispositional legitimacy attempt to create an image of the company that is honest and trustworthy, sharing, and promoting the values that society also has. The pursuit of dispositional legitimacy is consistent with a symbolic action approach.
Moreover, moral legitimacy is acquired when the companies’ stakeholders conduct a transparent evaluation of the organisation and its activities Suchman (1995). There are two forms of moral legitimacy: consequential legitimacy and procedural legitimacy. According to Suchman (1995), the term behavioural action is also used for the moral legitimacy, thus, the name behavioural action is further used in this thesis. Suchman (1995) describes
consequential legitimacy as follows: society judges what the company actually accomplishes with their action within CSR framework. Additionally, procedural legitimacy requires the techniques used to aChieve the company accomplishments. Companies are considered procedurally legitimate to the extent that their processes accord with socially accepted techniques. In addition, disclosures must reveal both the outcomes and the processes in order to assess a company’s claim to moral legitimacy.
However, as Hopwood (2009) describes, these two approaches (symbolic action and behavioural action) to legitimation through disclosure need to be considered within the framework of a rational legitimation, which deals with environmental disclosures. Hopwood (2009) also states the risks that occur when symbolic action, regarding transparency, is used
to construct a new “sustainable” image of the company. Moreover, Hrasky (2011) has researched the different approaches and has conducted a content analysis of legitimation strategies. The focus is on carbon footprint related actions and disclosing strategies of ASX’s Top 50 companies, and whether their reporting methods can be as symbolic or behavioural action. She finds that less carbon intensive companies report their carbon footprint in a symbolic manner. She recommends more stringent regulations to improve legitimation by reporting carbon reductions.
Furthermore, according to Suchman (1995), there are two approaches to a company’s organisational legitimacy, namely the institutional and strategic approaches. The institutional approach assumes that legitimacy is considered a constitutive belief (DiMaggio and Powell, 1993). In this situation, companies have to deal with pressure from institutions that require their operations to be consistent with their legitimacy. This means that companies have only a small effect on the societal perception of legitimacy. On the other hand , the strategic
approach assumes that companies can take action to influence their legitimacy. The perceived legitimacy among stakeholders ensures that companies maintain access to resources or
markets that are necessary for their continuity (Hahn & Lülfs, 2014). Nevertheless, the perceived legitimacy may be compromised by changing expectations, incidents, or environmental related issues, such as the carbon footprint of the company and sustainable energy. When companies anticipate these in a untimely matter, these can creates a legitimacy gap.
3.1.2 Legitimacy gap: symbolism vs. behavioural action
Companies aim to maintain their social contract with society. If the social contract appear to be broken, a legitimacy gap may occur, and firms might be expected to respond with
disclosures. Companies thus have to effectuate the perception that they are behaving in a manner that is acceptable to the society in which they operate (O’Donovan, 2002).This generally occurs in response to current societal concerns, for example, to demonstrate
attempts to reduce carbon dioxide emissions, or a range of products to reduce greenhouse gas emissions are developed. This also occurs if a specific environmental disaster occurs, for instance, the BP oil spill in the Gulf of Mexico or EXXON in Alaska. Society requires transparency with regard to the behavioural actions of companies, with particular respect to long period strategies (Hrasky, 2011).
Furthermore, O'Donovan (2002) describes a number of ways in which a legitimacy gap may occur. A situation may arise where the business remains unchanged, but the societal
expectations of these activities have evolved. According to Elsbach et al. (1994), this is largely due to the phenomenon that social values change as a result of a changing social consciousness.
Moreover, Martin (2008) asks why role models, such as BP, Shell, or Exxon sometimes are promoted as climate leaders due to their reports on their carbon footprint, while really only making marginal adjustments under new, misleading headlines.
Consequently, Martin (2008) also recommends the increased regulation of CSR activities. For example in this study the sustainability report of company Deepwater is considered as dependent variable, they leased their platform to BP, and their CSR report 2011 and 2013 was not found publicly on the internet. While society likes to know how in the future such disaster as in the Gulf of Mexico in 2010 will be prevented, by transparent reporting (Hopwood, 2007; Hrasky 2012).
However , more cynical views of corporate environmental reports have been expressed. According to Deegan & Gordon (1996) and Deegan & Rankin (1996),
environmental disclosures are merely self-laudatory. Also, as Bond (2012) describes, some companies disregard honesty and mislead the public by “greenwashing,” which means that they exaggerate their environmental efforts or provide false information (symbolic action) to their customers in an authentic manner. Consequently, several researcher (Hopwood, 2007; Hrasky, 2011; Klok & Pinkse, 2004; Deegan & Shelly, 2014) call for more behavioural action reporting, which, however, must be examined further and more speedily by current researchers.
3.1.3 Legitimacy vs. isomorphism
Legitimacy theory, including the concept of the legitimacy gap, interacts with institutional theory, particularly regarding causality (Chen & Roberts, 2010). Institutional theory concentrates on patterns and configurations that persist, meaning that claims on
organisational change must be based on changes in rules and routines or that new patterns of behaviour are reproduced within a company (Soin et al., 2002).
Dimaggio & Powell (1983) have describe a short explanation of the three isomorphism:
• Normative isomorphism: norms and processes in line with strategy of the company.
• Mimetic isomorphism: imitate another organization's structure because of the belief that the structure of the company is beneficial.
Normative isomorphism contrasts with mimetic isomorphism, where uncertainty encourages imitation, and is similar to coercive isomorphism, where organizations are forced to change by external forces (DiMaggio & Powall, 1983).
Moreover, as DiMaggio & Powell (1983) assess, “management accounting and control systems” can enhance progressive behavioural actions in CSR, following
isomorphism theory, when all three isomorphism’s (normative, coercive, and mimetic) are balanced. In addition, integrated reporting from the coercive isomorphism perspective (forced by external forces) could have a positive effect on behavioural action in reporting within the CSR framework (Chung Hee, 2013).
Because sustainability reporting is voluntary, there is a delay in the progressive line in relation to the climate change (Deegan & Shelly, 2012). While various studies have already concluded that a faster progressive disclosure of carbon footprints and adjustments in
operations must be developed, the progress is slow (Deegan & Shelly, 2014, Hrasky, 2011 & 2012). DiMaggio & Powell (1983) also stated that normative, coercive, and mimetic
isomorphism’s should coincide with legitimacy theory to prevent a symbolic reporting. In this thesis, the isomorphism framework is employed to explore the relations and balance of the disclosure categories. The leading global companies are considered to be role models for closing the legitimacy gap through their CSR reporting.
Moreover, Chen & Roberts (2010) state that CSR practices face pressures from fast changing economic and institutional forces, which require firms to adapt strategically to different institutional contexts and to reflect these pressures in their CSR practices. CSR practices therefore need to be sensitive to the interactions between institutional factors, specific pressures of economic and political change, and global pressures
Furthermore, as Hrasky (2011) asserts, it is highly important for organisations to establish their general structures in line with the expectations of society. Although
institutional theory is similar to legitimacy theory, there is a difference. Institutional theory focuses on the relationship between environment and organisations, and its stability.
Conversely, the legitimacy theory itself does not specifically express how to meet social expectation and gain social support (Chen & Roberts, 2010).
3.2 Concluding theoretical framework
This chapter confines the definition of CSR to the legitimacy gap (symbolic or behavioural action) within a theoretical framework. Using this framework, hypotheses are made to predict the relationship between role models’ reporting their carbon footprints in a behavioural manner. By using this framework based on legitimacy theory, this thesis also applies the institutional theory perspective and analyses if there are relationships and interactions between the disclosure categories of the framework.
3.3 Hypotheses
There are several ways to ascertain the legitimacy of the actions of a company. Partially, this can be deducted by the way a company communicates its goals and actions regarding
sustainability. In this thesis, the focus is on the reporting of carbon footprint in integrated reporting or stand-alone reports, such as corporate social responsibility reports, corporate citizen reports, and transparency report. Another way is to embed the report in their annual report; however, this is not an integrated report.
Following existing literature and the theoretical framework, the question arises of what assumptions can be made about the relation between role models closing their
legitimacy gap and reporting their carbon footprints in a behavioural manner. To answer this, the following research question is formulated:
How did companies of FORBES 2.000 index and IIRC Pilot Programme IR report their carbon footprints in the years 2011 and 2013, and did it to closure of their legitimacy gap or was it merely a symbolic act?
Consequently, four main hypotheses are tested in this research study:
There are made hypotheses in line with the framework and search for relations and
differences between the several disclosure categories as explained in chapter three to combine the legitimacy and institutional theory. Also as explained in chapter two this research will be focusing from a global perspective, equally well we compare also in this thesis the
established countries and the emerged countries. This thesis will make more in depth research to analyse the relationships and balance between the several disclosure categories and
measure the database for significant differences. Are they role models because they do integrated reporting or they are doing this because they have to be integrated reporting role models. What could provide symbolic behaviour:
Four hypotheses to answer the research question:
H1 Role models are increasing their behaviour action-related information in the reports of 2013 in comparison with 2011.
H2 Role models’ integrated reporting provides for greater legitimacy in reporting carbon footprint then role models report on carbon footprint in stand-alone reports.
H3 Less carbon intensive companies have less behavioural action in its reporting then carbon intensive companies.
H4 Global role models established markets provide according to the framework for greater legitimacy in carbon footprint and behavioural reporting then emerged markets.
The formulated hypotheses are tested by means of content analysis of the
environmental information in the annual report, integrated sustainability report and CSR report of the selected companies.
4 Research Methodology
In the preceding chapters the existing literature has been discussed. Also the added value of this thesis for the research field of the legitimacy gap disclosure in reporting in a behavioural manner. The sample consists of hundred global companies of the Forbes 2.000 listed
companies. The formulated hypotheses have been posed on legitimacy theory supported by institutional theory. This chapter describes how the theoretical model will be operationalized. In which manner the data is gathered, subsequently the research method is discussed in the last section.
4.1 Data analyses
There are two types of methodology in scientific research: qualitative research and quantitative research. For this research only the quantitative research will be explained. According to Flick (2006), the goal of quantitative research methods is to develop mathematical models and employ them. There are five quantitative methods: surveys, experiments, statistics, observations and content analysis. Yin (2003) states that content analyses are qualitative research. This discussion is not the subject of this thesis, so we just speak of content analysis for this thesis without labelling it as a method. This study will use a content analysis to investigate the legitimacy strategies for FORBES 2.000 listed companies reporting on their carbon footprint. This research method is the most common method to review notes on social and environmental areas (Unerman, 2008).
The literature flowchart (appendix 8) explicates which database is suitable for this thesis to provide insight in the possibility of a greater legitimacy in carbon footprint behavioural reporting. For the content analysis a sample was selected from the FORBES 2.000. This list consists of more than 2.000 companies that represent and covers different geographical areas (Australia, Europe, Japan, and North America) and a wide array of industries. Also offering a rich diversity of corporate cultures. To make a selection for the database on an independent basis, this thesis uses the sample of 100 global companies of the IIRC pilot programme. Subsequently it is checked whether the companies are listed in the FORBES 2.000. Solely when it is listed there, it is included in the database. The forty-four companies that were listed in the FORBES 2.000 will be the data for Integrated reporting variable. Although they not all are operational in using Integrated Reporting they are
states, as participants in the IIRC pilot programme, they are leading the way in evolving the integrated reporting from a promising concept to a powerful practice with transformational effects not just on the way an organizations reports, but on the way it thinks and act (IIRC, yearbook 2013). Consequently the companies of the database of IIRC pilot programme were not all listed in FORBES 2.000, so independently the other forty-four companies were selected by alternately adding a rank there and get a rank off the Integrated Report variable. These will be the variable Stand Alone Report. A risk lies in the fact if companies at their discretion filling in the framework of Sustainability Reporting Guidelines (GRI, 2006) that eventually could create a symbolic behaviour (Hrasky, 2011).
For the sample group the annual report have been collected for 2011 and 2013, including corporate sustainability report (CSR) or the Integrated Report (IR). These have been selected of de selected through their official internet site. This will ensure that only the official company communications are used. This is also where possible stakeholders would gather this information. If for instance the reports are not available on their official internet site, the company was not considered for the database.
For the content analyses counting terms has been done by using the word counting function of the Adobe Acrobat PDF XI PRO reader version 11.0.10. All words have been searched, including alternate ways of writing or words enclosed by punctuations. For instance ‘waste’ can also be found as ‘wastewater’ or ‘-waste-’, employment can also be found as ‘unemployment’ and ‘community’ can also be found as ‘communities’. These alternatives of the original search-word also count as a word for sustainability purposes and therefore are considered in the analysis. Two words however have been searched for specifically; ‘fines’ and ‘diversity’, which have extensions that do not refer to corporate sustainability. For ‘fines’ a much found extension was ‘defines’ and ‘diversity’ conflicts with another search word; ‘biodiversity.
4.1.1 Framework
The theoretical framework of Hrasky (2011) is used for this thesis. Two groups were made for the classification of companies by carbon intensity: carbon intensive industries and less carbon intensive industries, see table one below. The total database contains hundred companies, only those who made the reports publicly available have been used, a total of eighty-one companies. As previously described in chapter 3.1.2 it was remarkable what drove the company Deep water (oil rig leased by BP) to not make reports 2011 and 2013 publicly available. Also a lot of Integrated Reports and Stand Alone reports were not an easy to find
and gather despite the fact that they have been made publicly available. This confirmed the need for more research into behavioural reporting and transparency in sharing information publicly in an accessible way (Hopwood, 2009).
Table 1: Classification of companies by carbon intensity
Sector Number of firms
Carbon intensive industries Materials
Industrials
Energy & Utilities Total
18 8 9 35 Less carbon intensive industries
Financials Consumer discretionary Consumer staples Healthcare Telecommunications Total 27 6 10 1 2 46
The framework of Hrasky (2011) used for this thesis works with a set of coded categories which were derived inductively from the analysis to capture differences in the nature of the disclosures and to capture and distinguish the dimensions of disclosure necessary for the analytical requirements of this thesis.
There are eight disclosure categories in Hrasky’s framework, category one until six are used for this thesis, no attempt was made to weigh category seven and eight because of focus on the pursuit on behavioural action so companies progressing in their reporting in carbon footprint.
First the framework sets out the symbolic approach, three categories are used and will reflect to capture these disclosures. With the category “ normative statements” concern or intentions will be espoused about the relevant issues but not a specific action. Also the second category “aspirational objectives or targets” is without a specific action. As well as statement reporting on “external recognition and awards” that the company had received related to carbon footprints, global warming or climate change, are without a specific action
description. These three categories are aggregated to obtain the total number of symbolic disclosures that are made in each year by each company.
Table 2: Framework symbolic action
Disclosure type Description Exemplifying disclosure
Normative statement Statements espousing commitment to and recognition of the importance of carbon footprints, global warming and climate change but not indicative of specific action or outcome
We believe it is important for the world to establish a long-term greenhouse gas emissions reduction goal and to map a path to achieve it Climate change and resource scarcity are issues that require us to evolve our business model to meet our responsibilities
Aspirational target Articulation of targets or objectives to be achieved in the future without associated action
Our ultimate goal is to have no carbon emissions
released to the atmosphere We have set targets for paper use, recycling
facilities and greenhouse gas emissions
Awards/recognition Statements indicating external recognition of positive efforts pertinent to carbon footprints, global warming and climate change
We were included in the 2011 or 2013 Climate Leadership Index
comprising the 50 “best in-class” response
There are also three categories to capture disclosures providing a reflection of a behavioural action approach. See table three below for the framework of behavioural action. The first relates to “internal corporate activities” to improve the corporate carbon footprint and actively respond to the call for action regarding climate change, in order to have behavioural
initiatives as well as reporting in a behavioural action manner for a legitimacy disclosure. According to Deegan & Unerman (2006) institutional theory can be used as a complementary theory in organization behaviour, it explains why companies react to changes in the social
environment and how those changes are internalised. Similar relates involvement in “external
activities” to achieve a progressive behavioural action. The last disclosure types states that indicate actions taken to “assist others” to reduce their carbon footprints.
Statements in these three categories reflect the total number of behavioural disclosures that are made in each year by each company. These three categories have causality and need to be in balance, because of the risk of hidden symbolism. (Kolk and Pinkse, 2007; DiMaggio and .Powell, 1983). Also (Dimaggio and Powell, 1983; Hrasky, 2011; Deegan and Unerman, 2006; Chung Hee, 2013) stated that if the three categories of isomorphism behaviour are not in balance, government need to encouraging behavioural actions, a regulatory response may be required.
Table 3: Framework behavioural action
Disclosure type Description Exemplifying disclosure
Internal activities Statements about specific internal
corporate actions taken relevant
to carbon footprints, global warming and climate change
Where possible we install electricity generators that that use the waste gas as fuel. Electricity produced in this way actually reduces greenhouse gas emissions The x currency million plant that we opened in x period will generate approximately x megawatts of electricity per hour and reduce
greenhouse gas emission by x amount tonnes of carbon dioxide equivalent per year External activities Statements about
involvement in activities relevant to carbon footprints,
Since becoming a member of the Greenhouse
global warming and climate change that are initiatives developed with partners or projects external to the organization
division has completed a range of efficiency improvement projects resulting in reduced
greenhouse gas emissions of more than one million tonnes per annum to support efforts to research the impacts of climate change we have partnered with the Earth Watch Institute to offer an opportunity for our co-workers to join an international conservation research project
Assisting others Statements about actions taken to help others to reduce their carbon footprint
We have developed a range of products so customers have a choice about their contribution to greenhouse gas emissions reduction all colleagues who are allocated a car space for non-company vehicles are required to offset their annual
greenhouse gas emissions through a subscription to Green Fleet
4.1.2 Dependent variable & independent variable
The dependent variable carbon footprint can be described as the degree of carbon footprint in sustainability reporting.
The Independent variable is symbolic or behavioural action:
• Behavioural: search for words with action in the content of the data.
Words of sustainability
The analysis are done by counting a selected number of key terms in these reports. The list of terms can be found in appendix 8. The terms used in the document analysis are derived from the GRI framework (GRI, 2006) and represent a generally accepted framework of corporate sustainability subjects, that have to be discussed for reporting to be considered complete This has been done by counting a selection of sustainability subjects from the GRI framework in the annual reports and sustainability reports of companies.
The content analysis is done by counting a selected number of key terms in the divers report in 2011 and 2013. The keywords, just like the framework, are divided in categories. See table four below for the division of terms.
Table 4 Keywords symbolic and behavioural action
Disclosure type Keywords
Normative statement Carbon footprint, Carbon, Climate change, Greenhouse gases, society, waste.
Aspirational target Emission, Global warming, Responsibility.
Awards/recognition Awards, environment, innovation, Technology
Internal activities Effluents, energy consumption, Green-energy, Recycle, Renewable energy, Spills, Sustainable energy.
External activities Carbon emissions, Climate action, Co2 footprint, environmental impacts.
Assisting others Biodiversity, Community, Research, Solar energy, Solar panels, Wind energy.
4.2 Research Method
To determine a difference or change between the type of reporting in the timeframe 2011 & 2013, integrated reporting or stand-alone, the type of company carbon intensive or less carbon intensive, and established or emerge markets, an independent sample t-test is done for each type of key term.
Accompanying the t-test a Chi-square test was used to determine if the sample showed a representative dispersion of disclosure types of word within the symbolic and behavioural set of terms. The test checks whether observed numbers systematically deviate from expected (or average) numbers, and purpose calculates the total of the weighted squared deviations
between these numbers. A Chi-square test is widely used to analyse contingency tables. In the t test and Chi square test the reports are tested on quantities of words and also in the following groups:
• Years 2011 and 2013, as Hrasky’s (2011) research three year period looking for any progress in behavioural action. 2011 is the last end of the crisis. The year 2013 will be used to test if there is progress after the crisis in behavioural action in companies reporting
• Integrated reporting will be compared to Stand Alone Reports
• Carbon intensive industries will be compared to Less carbon intensive industries, determined on the basics of the framework of Hrasky (2011).
• Established markets will be compared to Emerged markets, classical G7 economies were pooled, as well as emerging markets, like Brazil, Russia, India, China and South Africa (BRICS) countries and Hong Kong, Singapore, South Korea, and Taiwan (ASIAN tigers).
As the theoretical framework in table two and three show, reporting on carbon footprint has been measured in different levels. Causality in the framework, data is external activities progressing and internal activities is staying behind than there could be a hidden symbolic action.
5 Result of research
To gain insight into the reporting behaviour of global role models and to answer the four formulated hypotheses, the results of the tests are reported in this chapter.
5.1 Research
To analyse the data of the companies annual reports of 2011 and 2013, excel was used. The hypotheses were tested using an independent samples t-test. This test is suitable for
determining the difference or change between two variables: for this thesis the use of
symbolic and behavioural terms in each of the hypotheses. Furthermore, after the t-test , a Chi square test was done to check the distribution of the fragmentation (6 categories) of the framework of Hrasky (2011) to give insight into which kind of the type of specific symbolic or behavioural terms were used in the annual reports of the role models. The crosstabs and subsequent Chi square tests show the preferences of subsets of the population of role models.
There is a complex relationship between being role model in adopting integrated reporting and reporting on carbon footprint, therefore a Chi square test was also done for the total score per category symbolic and behavioural.
5.2 Results first hypothesis – 2011 compared with 2013
In this section, the first hypothesis was tested:
H1 Role models are increasing their behaviour action-related information in the reports of 2013 in comparison with 2011.
To test this hypothesis, the difference or change between the years 2011 and 2013, the number of key words was counted in the sample group.
5.2.1 Observations and tests H1
The t-test has been used to determine whether there is a significant difference between 2011 and 2013 in the use of symbolic and behavioural terms. Furthermore two Chi square test were done on category level and the total score on symbolic and behavioural action words. Table 5 shows the results of all types of reports in the timeframe 2011 compared with timeframe 2013.
Table 5: Hypothesis 1: Timeframe 2011 compared with timeframe 2013.
Disclosure type Timeframe 2011 Timeframe 2013
Mean
Symbolic 310,671 324,443
Behavioural 96,921 84,341
T-test (p-value) T-test P-value
Symbolic -0,0309 0,379
Behavioural 0,826 0,205
Chi square Chi square P-value
Symbolic per category 8,935 0,011 *
Behavioural per category 2,414 0,299
Symbolic total 3,282 0,070
Behavioural total 17,613 2,706E *
Disclosure type % Timeframe 2011 % Timeframe 2013 %
Normative statement 17,67 % 16,12 % *
