the world’s biggest food and beverage
companies
L.H. (Luuk) Hoogeveen
Nieuwe Boteringestraat 38a
9712 PM Groningen
luukhoogeveen@gmail.com
June 2013
University of Groningen - Faculty of Economics and Business
Master’s Thesis:
MSc BA Strategic Innovation Management &
MSc Technology & Operations Management
Supervisor Msc SIM: dr. T.L.J. (Thijs) Broekhuizen
Abstract
Being sustainable as a firm has cost-advantages as well as marketing advantages. This research explores ways to signal greenness to stakeholders. The effects of the quality of the environmental report and having a Chief Sustainability Officer (CSO) on the number of sustainability awards and membership of the Dow Jones Sustainability Index (DJSI) were investigated. Main outcomes of the research were: having a CSO does not have an effect on the number of awards nor DJSI membership, the quality of the environmental report has both an effect on the number of awards as DJSI membership. Stakeholders are thus more influenced by previous actions that are reported on in the environmental report than by the promises made by a CSO. Managerial implications and theoretical implications are discussed.
Keywords: sustainable image, quality of environmental reports, DJSI, CSO, signaling theory,
sustainability awards, food and beverage industry, sustainable innovation
Word count: 12.133
Acknowledgements:
Table of Content
Chapter 1. Introduction ... 4
Chapter 2. Literature ... 7
§2.1. Sustainability and Corporate Social Responsibility ... 7
§2.2. Signaling theory ... 8
§2.3. A sustainable image ... 10
§2.4. Environmental reporting ... 11
§2.5 Chief Sustainability Officer ... 13
§ 2.6. Conceptual model ... 14
Chapter 3. Methodology ... 15
§3.1. The sample ... 15
§3.2. Dependent variable ... 15
§3.2.1. The investors’ sustainable image ... 15
§3.2.2. The customers’ sustainable image... 16
§3.3. Independent variables... 16
§3.3.1. Quality of the environmental report ... 16
§3.3.1.1. Word count ... 17
§3.3.1.2. Number of topics... 17
§3.3.1.3. GRI compliance level ... 19
§3.3.1.4. Sustainable innovation projects score ... 19
§3.3.1.5. Quality of environmental reporting... 21
§3.3.2. Presence of a Chief Sustainability Officer ... 21
§3.4. Control variables ... 21 §3.4.1. Innovation efforts ... 21 §3.4.2. Country of origin ... 23 §3.5. Summary of variables ... 24 Chapter 4. Results ... 25 §4.1. Descriptive statistics ... 25
§4.2. Antecedents of the investors’ sustainable image ... 27
§4.3. Antecedents of the customers’ sustainable image ... 28
§4.4. Additional test ... 29
§4.5. Summary of results ... 29
Chapter 5. Discussion and conclusions ... 30
§5.1. Discussion ... 30
§5.2. Managerial implications ... 32
§5.3. Limitations and future research ... 32
References ... 35
Appendix I ... 44
Chapter 1. Introduction
Sustainable development is described by the Brundtland Commission of the United Nations as: “the development that meets the needs of the present without compromising the ability of future generations to meet their own needs”. Business performance and social welfare have been treated for decades as a zero-sum game, general believe was that when business performance goes up social welfare goes down and opposite. According to Porter and Kramer (2006) this causal relationship does not exist. Businesses should identify their environmental strengths and weaknesses and find ways to deal with those weaknesses to become more successful.
Customers are becoming more aware of the pollution caused by the companies they buy their products from (Arora & Gangopadhyay, (1995). This environmental consciousness has become strong enough to prevent those customers to buy from ‘bad’ producers, consumers value sustainability more and more and are even starting to base their purchasing on this issue (Marsden, Murdoch and Morgan, 1999, Tiesl, Roe & Hicks, 2002).
Not only customers show interest in more sustainable businesses. For instance investors also look at the environmental impact of their investments. Investors show an immediate response to new press releases concerning environmental issues. Janney and Gove (2011) showed that being involved in an environmental scandal was devastating for a company’s stock value. Hamilton (1995) showed that companies with significant toxic waste lost on average 4.1 million dollars in equity after the U.S. Environmental Protection Agency launched their Toxics Release Inventory program. Also the number of these particular social responsibility funds is rising (Sabbaghi, 2011). These investment funds only fund companies that comply with their social responsibility standards (Barnett & Salomon, 2006). An example of such a social responsibility investment fund is the CERES investment fund that manages 11 trillion dollar in assets (www.ceres.org).
Companies that are considered to be sustainable attract more and better potential future employees (Murray & Ayoun, 2010). Hence, purchasing managers and supply chain managers let the sustainable image of a company play a leading role in their decision making processes (Peloza, Loock, Cerruti & Muyot, 2012). Thus it provides a lot of advantages to be considered a green company.
Stakeholders thus value sustainability. Unfortunately, sustainability is not easily assessable by outsiders as only the insiders know exactly what is going on in their companies. There is an information asymmetry between the company and the stakeholders (Spence, 1973). To make sure that stakeholders get to know a company’s green intentions they must be provided with information. Information that is used to bridge the information asymmetry is called ‘signal’ (Basuroy, Desai & Talukdar, 2006).
There are two signals that are used to signal greenness to stakeholders that are under the direct control of the senior management. One of them is environmental reporting. Environmental reporting can be defined as:
“The preparation and publication of an account about an organization’s social, environmental, employee, community, customer and other stakeholder interactions and activities and, where possible, the consequences of those interactions and activities” (Gray, 2008).
Companies can use environmental reports to inform their stakeholders about their efforts to become more sustainable. In such a report, different parameters are used to make the sustainable efforts of a company visible and measureable for outsiders. In this study the term environmental report will be used, though companies use a variety of terms to describe the same document, for example: sustainability report, health, safety and environment report, corporate social responsibility (CSR) report, social and environmental report, environmental disclosure, sustainable living plan, sustainability and responsibility report and citizenship report.
Companies make such a report every year, much like an annual report. There are no laws or general rules concerning what should be included in such an environmental report (Global Reporting Initiative, 2011). Often it is assumed that more is better, empirical evidence suggests that this also holds true in the field of environmental reporting (Aerts and Cormier, 2009).
Another way in which a company can show that they really take sustainability serious and are eager to implement a more sustainable strategy, is by appointing a CSR manager to join their top management board. A CSR manager in this position is called the Chief Sustainability Officer (CSO) (Strand, 2013). This study looks into signals that can be used to signal a green business to stakeholders in the food and beverage industry. Making the research question:
What are the influences of a high quality environmental report and the presence of a CSO on the stakeholders’ perceptions of the greenness of companies?
To answer this question the following sub questions will be answered in this research:
What determines the quality of an environmental report?
Chapter 2. Literature
This chapter explains the following concepts: sustainability and Corporate Social Responsibility, sustainable image, signaling theory, environmental reports and the Chief Sustainability Officer. Figure 1 gives an impression of the relationships between these concepts and in what order they will be introduced. At the end of this chapter a conceptual model is introduced with the underlying hypotheses.
Figure 1) The building blocks of this chapter
§2.1. Sustainability and Corporate Social Responsibility
Over the years different terms were used to describe sustainability. Strand (2013) found different terms that described the same concept, for instance: ‘Corporate Social Responsibility’ or ‘CSR‘,‘Corporate Responsibility‘ or ‘CR‘, ‘Social Responsibility‘, ‘Sustainability‘, ‘Sustainable‘, ‘Citizenship‘,‘Ethics‘, ‘Stakeholder‘, ‘Triple Bottom Line‘, ‘Stewardship‘, ‘Compliance‘, ‘Governance‘, ‘Business Conduct‘, ‘Health, Safety and Environment‘, ‘Community‘, ‘Diversity‘, ‘Inclusion‘, ‘External Relations‘, ‘External Affairs‘, ‘Philanthropy‘, ‘Green‘ and ‘Renewable‘. In this report the terms ‘sustainability’ and ‘corporate social responsibility‘ will be used.
There are three reasons why a company would choose to follow a sustainable strategy according to Bansal & Roth (2000). The first reason is to become more competitive and to be able to make use of green marketing. The second driver is to comply with the law and for this process they make use of networks with environmental interest groups. The third driver is environmental responsibility, which originates from the core values of the leaders of the organizations, these values result in (unpublished) initiatives, donations to environmental causes and life cycle analyses. According to a McKinsey survey conducted in 2010, 76 percent of executives thought that sustainability will contribute to shareholder value in the long term, while 50 percent also saw short term value creation.
involvement. The second strategy is the ‘defensive’ strategy, in which top management only deals with environmental issues when necessary, companies following this strategy basically only try to comply with environmental regulations. Third is the ‘accommodative’ strategy, in companies that follow an accommodative strategy top management has some involvement, there are internal reports, sometimes small external reports and some employees get environmental training and involvement. The last and most pervasive strategy is the ‘proactive’ strategy, in companies that follow this particular strategy the top management is involved in environmental issues and employees get environmental training and involvement. Only in these ‘proactive’ companies extensive external reporting exists. Henriques and Sadorsky (1999) add to the framework of Caroll (1979) that ‘reactive’ companies only see the media as an important stakeholder in environmental issues, where ‘proactive’ companies consider all their stakeholders as being important.
§2.2. Signaling theory
When there is an asymmetrical division of information between parties decisions are made by making use of signals. In the food and beverage industry, most information concerning the sustainability of the company is only available to the company itself, customers and investors both have to rely on the available signals of sustainability. This paragraph looks into signaling theory.
Figure 2 depicts the signal loop, in which the signaler is an individual who possesses information about a firm, a person or a product, that is unavailable to outsiders. This individual has access to both positive as negative information and has to decide which information he will pass through to outsiders and how. Signaling theory focuses on positive signals that are sent to positively influence the perceptions of stakeholders (Connely, Certo, Ireland & Reutzel, 2011). There is a difference in effectiveness per signal, according to Lynch (2006). Lynch (2006) uses the term ‘diagnostic value’ to describe to what extent consumers are moved by a signal to choose for different options. Two factors are important to assess whether a signal is effective, signal observability and signal cost. Signal observability relates to the extent to which a signal can be seen by outsiders (Cohen & Reed, 2006). Signal cost refers to the theory that a signal that is more costly to send, is also more effective than a signal that is cheap to send (Bird & Smith, 2005). Applying for an ISO 9000 certificate is for example an expensive procedure to signal to outsiders that products are of high quality. Another example comes from companies that add “.com” to their firms name (signaling a more international, modern and digital image), changing a company’s name is expensive, however stock prices were going up for most firms after this change (Lee, 2001). The higher the costs of sending a signal, the higher the signal’s diagnostic value will be. Important is that the signal that is send is justified by the actual underlying situation. A company that sends signals that are not based upon some underlying quality will face ‘penalty costs’ (Wernerfelt, 1988), which means that they will lose reputation. The receiver is an individual that does not have access to all information that is available to the sender and is the target of the sender.
Signaling theory has been applied to different situations, for instance when a company is hiring a person. The productivity of a person cannot be reviewed during the hiring process, thus an employer is not able to give a highly productive prospective employee a higher wage. Employer uses educational achievement to predict the productivity of his prospective employee to set his initial wage (Spence, 1973). Signaling has been applied to the movie industry as well, where reviews in newspapers (Gemser, van Oostrum & Leenders, 2007), movie awards (Gemser, Leenders & Wijnberg, 2008) and star actors (Ravid, 1999) are considered to be signals of quality. Also, consumers that buy wines, look for signals such as the price, label information and region of origin to predict the quality of a wine (Miller, Stone, Stuen & Barker, 2011). Signals are thus used to predict the quality of something before it has actually been used.
Firms use all kinds of signals to influence their stakeholders’ perceptions about them. Companies can for example use their board structure to influence potential investors’ buying decisions, the more prestige their board has, the more legitimate their business seems to be and the more shares will be sold (Certo, 2003). Another example of signaling in companies is to use product prices to influence the consumer’s perception of quality prior to actual consumption. Consumers tend to think that quality and price are positively correlated (Suk, Lee & Lichtenstein, 2012). According to Sengupta (2012), price can also be used to signal environmental responsibility to the consumer. Robinson, Kleffner and Bertels (2011) argue that signaling environmental responsiveness results in higher stock prices. In this study, two signals will be tested to see if they have effects on stakeholders’ perceptions on the greenness of companies. To see if a company is really taking corporate social responsibility seriously and want to implement it in their day-to-day business; they can hire a CSO (Strand, 2013). This manager can influence the corporate strategy towards a more sustainable one. Having a CSO is a sign that a company wants to pursue a proactive strategy (Caroll, 1979). The first signal is the environmental report, which is a document that is meant to inform the public about the progress that is made in the last year(s) in terms of the sustainability of the company and gives a sneak peek of future projects. Both these instruments are signals that companies use to convince stakeholders about their greenness. Figure 3 visualizes the time dimension of signals; the presence of a CSO gives stakeholders the impression that the company will be more sustainable in the future, while the environmental report is a signal of the companies past sustainability improvements.
§2.3. A sustainable image
A corporate image is defined as “the beliefs and impressions held about the organization” (Dowling & Moran, 2012). Believes and impressions cannot be bought nor touched; it is that what is in the mind of the stakeholders. Stakeholders are defined as ‘any group or individual who can affect or is affected by the achievement of the organization’s objectives’ (Freeman, 1984). By investing heavily in corporate social responsibility programs, companies spend a lot of money to influence the image that stakeholders have about their sustainability (Dowling & Moran, 2012). Graves and Waddock (2000) found that companies that invested in stakeholder relationships were able to achieve higher return on sales, assets and equity. So signaling a positive sustainable image to the stakeholders of the company has its advantages. In this paragraph the stakeholders that determine the sustainable image will be identified.
According to Spitzeck and Hansen (2010) stakeholders have a voice in operational, managerial and strategic issues. Because each stakeholder is different and needs to be managed differently, Newcombe (2003) came up with a power/interest matrix to map the stakeholders, to make clear how to manage each stakeholder. The model is not static however, stakeholders can change from quadrant. For example American housewives are not an interested stakeholder with high power in most political issues, until Oprah Winfrey pays attention to it, viewers of the Oprah Winfrey Show that first did not vote, were activated to vote by Oprah’s program (Baum & Jamison, 2006). In this study Newcombe’s matrix (2003) was used to assess which stakeholders were the highest in power and interest in the food and beverage industries’ sustainability projects.
Level of interest
Low High
Power
Low Zone A (minimal effort) Zone B (keep informed)
High Zone C (keep satisfied) Zone D (key players)
Table 1) Power/interest matrix in the food and beverage industry (Newcombe, 2003)
Three stakeholder groups are assigned to the Zone D quadrant of Table 1 in this particular setting, those three are:
Employees are clearly highly interested in the company they work for. Sustainable practices are very
important to them as they live nearby and their health also depends on them. They are able to force companies to work more sustainable. Also, prospective employees seem to value sustainability (Turban & Cable, 2003). Thus employees are in the Zone D quadrant.
Customers are an interesting group in the case of the food and beverage industry. Companies
recent years from the low interest – high power quadrant (Zone C) towards the high interest – high power quadrant (Zone D) (Marsden, Murdoch & Morgan, 1999; Tiesl, Roe & Hicks, 2002).
Investors, are becoming more interested in the sustainability of their portfolio (Janney & Gove, 2011;
Barnett & Salomon, 2006). All companies in the sample are public companies in which shareholders play an important role. Thus investors are as well in the Zone D quadrant.
Still, the sustainable image of the three most important stakeholder groups will differ from each other (Sharma and Henriques, 2011). All stakeholders will look at different aspects when assessing the sustainability of a company. Where employees value investments in the safety of their workplace, investors may see this as a waste of their money. The sample is too big to conduct interviews with the employees of all companies, thus in this research only the customers and the investors will be used to determine the sustainable image of the company. The interests of these two stakeholders groups differ much, so their sustainable image will be determined separately.
§2.4. Environmental reporting
According to O’Donovan (2002) companies write an environmental disclosure or an environmental report to show to the public that they are acting between the boundaries of socially acceptable behavior. What an annual report is to shareholders is an environmental report to stakeholders; though, where all shareholders have quite similar interests, stakeholders often have conflicting interests (Adams & Evans, 2004). Another main difference between the two is that an annual report needs to comply with certain rules and laws, where an environmental report does not. Environmental reports are written for a quite heterogeneous group of stakeholders with conflicting interests and there are no rules on how to write them, making that all environmental reports differ in structure and in the issues that they discus.
The Global Reporting Initiative (GRI) is a non-profit organization that aims to contribute to a more sustainable world by providing standard guidelines that companies can use to assess their sustainability. Their guidelines are very extensive and constantly evolve. This study uses the most recent GRI guidelines, the G3.1 guidelines of 2011. In a recent study based on interviews with executives of 107 multinationals, the Global Reporting Initiative was identified as the most influencing forum in the field of environmental reporting (Berman et al., 2003). Although most companies still use their own reporting guidelines, many are adopting the guidelines of the Global Reporting Initiative as well (Marimon et al., 2012). However, when using these guidelines, firms are still free to exclude information, which gives companies the possibility to include only the information that they think is important (or favorable) for their businesses (Beets & Souther, 1999). According to Wiseman (1982) excluding information leads to an incomplete view of a company’s environmental efforts, making it not related to their actual environmental performance.
according to the GRI reporting guidelines, covering at least the topics Economic, Environmental and Social. A ‘B compliance level’ requires reporting on 20 performance indicators, of which 14 must be from the official GRI guidelines. The A status is given to the companies that include all performance indicators of the GRI framework and in case they do not include a certain indicator explain why they did not include it.
A ‘+’ can be earned when the report is externally assured. An external assurance should have six qualities according to the GRI:
The assurance should be made by an organization or individual that is external to the company and is competent in the subject matter.
The assessor should not be influenced by their relationship with the companies’ stakeholders or the company itself.
The external validation is implemented in a systematic way.
The report appears to give a reasonable and balanced presentation of performance. Audit to which extent the GRI reporting framework has been used.
Results should be publicly available and it should include a statement of the assurance
provider regarding their relationship with the organization that made the report.
These rules for external assurance make it more difficult to cheat, so environmental reports that have been externally assured have a higher diagnostic value than reports that have not been externally assured (www.globalreporting.org/).
The content of environmental reports consists of performance parameters and examples of their current sustainability projects. This research will look into innovation projects aimed upon sustainability. Hansen et al. (2009) used the Life Cycle Assessment phases to come up with the following table:
Life cycle phases (Hansen et al., 2009) Manufacture Packaging and
distribution Use and maintenance End of life Economic Production efficiency Efficient packaging and logistics
Quality Costs of
take-back/disposal/ landfill Environmental Use of environmentally friendly materials and processes Reduce packaging resources, minimized transports Durability, energy consumption Dangerous materials, recycling, re-make or re-use
Social Occupational health and safety, child work, wages, safety, diversity Customer health and safety Health threats of landfills
Table 2 Different innovation projects, based on Hansen et al. (2009)
dimensions, e.g. more efficient production does not only provides the company with economic advantages, it also lowers the environmental impact of the production process and can be beneficial to the health and safety of the workforce.
The high variety in environmental reports makes it difficult for academics to assess the quality of the environmental reports (Mahadeo, Oogarah-Hanuman & Soobaroyen, 2011; Suttipun & Stanton, 2012; Eljayash, James & Kong, 2012; Perrini, 2005; Wiseman, 1982). This research uses four factors to make sure that the most important aspects of an environmental report are covered. By looking at the number of topics covered, the GRI compliance level, a word count and a scoring of the sustainability projects, this study aims to cover the completeness, legitimacy, extensiveness and the content. A more detailed description on how the quality of environmental reporting is assessed is stated in chapter 3, §3.3.1.
This leads to the following hypotheses:
H1) The higher the quality of the environmental report, the more positive the sustainable image a) in the eyes of the investors.
b) in the eyes of the customers.
§2.5 Chief Sustainability Officer
Very important for companies that face environmental issues is that they have a strong champion who makes sure that these will be taken care of those issues (Anderson & Bateman, 2000). Some companies have a department that tries to implement CSR, what is not that effective according to Wright, Nyber and Grant (2012), as an environmental champion needs a certain amount of status to be taken seriously by the rest of the company. Status can be derived from a high position in the hierarchy of the company and companies can use the composition of their top management to signal credibility to stakeholders (Rao, Chandy & Prabhu, 2008). The composition of the top management has an influence on future decisions of investors (Higgins & Gulati, 2006). At the moment, an increasing number of companies are installing a chief sustainability or a chief CSR in their top management (Deutsch, 2007; Strand, 2013). According to Crognale (2011) those CSOs are not just environmental, health and safety professionals, but are individuals that have expertise in handling outward-facing, external affairs. Still a standard name for such a function does not yet exist, names that are used to describe the ‘Chief Sustainability Officer (CSO) vary widely (Strand, 2013).
Strand (2013) argues that companies that had a CSO in their top management were able to get included in the Dow Jones Sustainability Index easier than firms that had no CSO. Also Ghani, Sharma and Stagliano (2011) found that the hiring of a CSO had a positive effect on stock market prices.
This leads to the following hypotheses:
b) in the eyes of the customers.
§ 2.6. Conceptual model
In this study signals that are used to sign sustainability in the food and beverage industries in Europe and in the United States will be examined. Figure 4 depicts the conceptual model.
Figure 4) Conceptual model
With the hypotheses:
H1) The higher the quality of the environmental report, the more positive the sustainable image a) in the eyes of the investors.
b) in the eyes of the customers.
H2) Firms that have a CSO will have a more positive sustainable image a) in the eyes of the investors.
Chapter 3. Methodology
This study makes use of secondary data such as environmental reports, annual reports and other information that was available through the companies’ websites. The current chapter is structured as follows, first the sample will be explained, after which the dependent variables will be described. Thirdly the independent variables will be discussed, followed by the control variables.
§3.1. The sample
The companies that are studied in this research are the biggest companies from the Forbes top 2000 list that are in the food producing or in the beverage industry. Only companies that have a higher number of total sales of $3,7 billion, a higher number of profits of $239,2 million, a higher number of total assets of $7,34 billion or a higher market value of $4 billion can qualify to be included in this list. Each metric gets a score, if a number for one of the metrics is below the minimum number to qualify to be included this metric will get a score of zero. All scores for all metrics are cumulated and this results in the Forbes top 2000 list of biggest companies (www.forbes.com).
All companies that are not in the food processing or beverage industry or are not based in the US or in Europe have been filtered from the Forbes top 2000 list. Only US and Europe based companies are included because they are quite similar in their approach of environmental issues (Maignan & Ralston, 2002). This resulted in a sample of 41 companies of which 31 wrote an environmental report. The companies that did not write an environmental report were excluded from the sample. One environmental report was not useable, this company was also excluded. A full table with the information from the sample is shown in Appendix I.
§3.2. Dependent variable
The dependent variable in this research is the sustainable image of the stakeholders. Not all stakeholders have the same image of a company; investors can look at whole other factors than for instance customers and employees. From chapter 2.3 followed that the most important stakeholders that determine the sustainable image are the investors and the customers. This paragraph will make clear how their sustainable image is determined.
§3.2.1. The investors’ sustainable image
Inclusion on the Dow Jones Sustainability Index (DJSI) is used to measure the investors’ sustainable image. The DJSI is the most famous and prestigious social responsibility investment fund. Being part of a social responsibility investment fund helps companies to attract investors (Sariannidis, et al., 2009).
to measure sustainable image before (Robinson et al., 2011; Cho, Guidry, Hageman & Patten, 2012, Sariannidis et al. 2009)
§3.2.2. The customers’ sustainable image
The number of environmental awards that are mentioned in the sustainability report is used to measure the sustainable image of the customers. An award is given when an external party believes that a company deserves a prize for their efforts and results and is thus an excellent variable to measure recognition. In other fields of research awards have proved to play a role in all kinds of decisions. Gemser et al. (2008) found that movie awards have a positive influence on future movie revenues. According to Lincoln, Pincus, Koster and Leboy (2012) the awards that are given to scientists for their academic work are very important in the advancement of their careers, as tenure and promotions depend on them.
Unfortunately there are no global sustainability awards; there are no Oscars or Nobel prizes for sustainable developments. However, this does not mean that awards do not play a role in corporate social responsibility. According to Klassen and McLaughlin (1996), sustainability awards lead to market gains and are a signal of cost savings. A lot of awards are given to companies to give them recognition for their corporate social responsibility programs. The awards are given by companies, institutions, governmental agencies, consumer organizations, universities and several other parties. Just like the customers of the food and beverage industry, the award giving parties are very heterogeneous, all have different focuses and different interests. Thus the award giving parties are a good representative group for the customers of the food and beverage industry.
Awards are for instance given for the environmental design of products, equality, employees of different genders or for using minimal water in production processes. Because the reasons for the granting of awards differ per case, noting can be said about the awards themselves. It is not possible to give one award a different weight than another. Even though nothing can be said about the awards itself, the number of awards is a metric that says something about the visibility of the environmental projects towards customers. When an environmental project is not visible to customers, a company will not get any awards. Also the number of awards can be measured easily as companies are proud of the awards they get and state them in their environmental reports. In the 30 reports that were reviewed in this study 294 awards were found.
§3.3. Independent variables
The independent variables of this study are the quality of the environmental report and the presence of a CSO.
§3.3.1. Quality of the environmental report
Quality of environmental report
Metric Measuring Used before by
Word count Extensiveness Aerts and Cormier
(2009)
Number of topics Completeness Wiseman (1982)
GRI compliance level Legitimacy Lungu et al. (2011)
Sustainable innovation project score Content -
Table 3) Factors that determine the quality of the environmental report
Aerts and Cormier (2009) found that the perceived environmental legitimacy was positively affected by the extensiveness of environmental reports. While Wiseman (1982) saw the number of topics as a good measurement, to assess the completeness of the report. Lungu et al. (2011) found that the reported level of GRI compliance was giving an impression of the quality of the environmental report. This research takes all three of these factors into account and adds one new metric that says something about the content of the report: the sustainable innovation project score. All these metrics will be explained in the following subparagraphs.
§3.3.1.1. Word count
Word count will be used to quantify the information. This method has been used before to assess the quality of environmental reports by Mahadeo, Oogarah-Hanuman and Soobaroyen (2011), Suttipun and Stanton (2012), and Eljayash, James and Kong (2012). This word count does provide information on the extensiveness of the report. To deal with the skewness of the distribution of the word counts of the environmental reports, the natural logarithm was calculated to make it easier to process.
§3.3.1.2. Number of topics
Topics Examples
Economy Economic value generated, donations and other community investments, employee compensation, financial implications of climate change, financial subsidies received from governments, proportion of spending on locally based suppliers, local hiring, infrastructure investments for public benefit, understanding and describing significant indirect economic impacts, et cetera.
Environment Materials used in weight or volume, recycled input materials, direct and indirect energy consumption, energy saved by efficiency improvements, total water withdrawal by source, percentage of water reuse, impact on biodiversity outside the firm, total direct and indirect greenhouse gas emissions and ozone-depleting substances by weight, total weight of waste and spills by type and disposal method, reclaiming of sold products and packaging materials, environmental impacts of transporting products of the organizations workforce and the firm’s operations, environmental protection expenditures, et cetera.
Labor practices Employment types, contracts and regions, employee turnover, percentage of employees covered by collective bargaining processes. Health, injuries related to work, education, training, prevention of diseases and injuries, equality of men and women, employee diversity and career development opportunities, et cetera.
Human rights Contracts with suppliers incorporating human rights concerns, employee training on human rights concerns, discrimination issues, freedom of association and collective bargaining, child labor, forced labor, security personnel. Human rights reviews and impact assessments, formal grievance mechanisms, et cetera.
Society Engagement of local communities, impact assessments and development programs,
prevention measures on local communities, corruption, public policy, lobbying, financial contributions to politicians or institutions, legal actions for anti-competitive behavior, anti-trust and monopoly practices, monetary values of fines for non-compliance with laws and regulations, et cetera.
Product responsibility
Customer health and safety assessments broken down by life cycle stages, incidents of non-compliance to health and safety regulations, product and service information and labeling, customer satisfaction, marketing communications, customer privacy, monetary value of fines for non-compliance to laws and regulations concerning the use of products and services, et cetera.
As can be seen in Table 4, there is a lot that can be included in an environmental report. The examples that are provided are not exhaustive; companies have the freedom to include other information whenever they think this is important.
§3.3.1.3. GRI compliance level
The GRI compliance level gives an indication of the amount of performance indicators that are included in the report and whether it is externally assured. The GRI compliance level gives a grade for the environmental report, a complete report gets an ‘A’ level, when less topics are covered the report gets a ‘B’ level or even a ‘C’ level. If it is externally assured it gets a ‘+’, so if a company with a level “A” report lets an external party validate their report, it gets an “A+” level. If a company let an external party give an opinion on their environmental report this improves the legitimacy of the report.
§3.3.1.4. Sustainable innovation projects score
To influence the image their stakeholders have, companies present their newest sustainable innovation projects and their newest technologies that are more sustainable than their previously used ones in their environmental report (O’Connor & Gronewold, 2012).
This study uses a score of the sustainability projects that are mentioned in the environmental report, to make sure that the environmental reports are based on content. Almost none gave an objective measurement in terms of CO2 or other qualifyiable data and the total number of projects that are
reviewed is too big (283 projects were found) to contact all companies about these projects’ environmental impacts. In order to still be able to give a score to the projects, this study makes use of an applied model of Hansen et al. (2009). All projects are put in one of these columns. An innovation project in one phase of the life cycle of a product has lower impact than projects that take place in another phase and will thus be scored differently. With the help of literature and examples from the sample scores are given to each column. Table 5 gives an overview of the different categories and their accompanying scores.
Life cycle phases External to
the life cycle
Manufacturing and new product innovations
Packaging and Distribution
Use and maintenance
End of life External
projects
Points 5 2 0 1 0
Table 5) The innovation project score table
The scoring:
Manufacturing and new product innovations: 5 points. According to Yakovleva, Sarkis and Soan
Carlsberg has installed in one of their factories that reduces the use of conventional gas and reduces the use of coal (www.carlsberg.com).
New product innovations are scored the same as manufacturing innovations, because these make other (more polluting) products redundant. According to Kurapatskie and Darnall (2012) product innovations have a huge effect on environmental impact. In the food and beverage industry this can be new products that for instance aim to reduce infant mortality rates or prevent diseases. An example for this is the Immunofortis® project, run by Danone that aims to reduce allergies and their long term effects by adding probiotics to their infant formula. (www.danone.com)
Packaging and distributions: 2 points. The high volumes that characterize the food and beverage
industry make packaging and distribution important issues. Packaging is used in these industries to conserve the freshness and quality of the products, to make storage and distribution easier and to attract consumers as well. There is a rising concern for the environmental impact of packaging (Zabaniotou & Kassidi, 2003). An example of an innovation in this category is the development of the PlantBottle™ by Coca-Cola, which is a bottle made for 30% out of plants. (www.coca-cola.com Heinz also is making use of this same technology in their bottles www.heinz.com)
Low profit margins, high volumes and a short shelf life of food and beverages make distribution an interesting issue. Formerly food quality and safety where the most important issues for food distribution, but nowadays sustainability is taken into account as well (Akkerman, Farahani & Grunow, 2010). An example of an innovation project where the environmental impact of the distribution is decreased is the development of the fleet-sharing program of AB-Inbev, they share their distribution in Brazil with Sara Lee, Unilever and BRF Brazil Foods, to gain efficiencies. In this particular project and 500.000 metric tons of carbon emissions were avoided. (www.ab-inbev.com)
Use and maintenance: 0 points. This issue is not of importance in the food and beverage industry.
Maintenance does not exist and the environmental implications of use are minimal.
End of life: 1 point. Just a little environmental impact originates from the end of life of products, most
of them are consumed and parts that are not are mostly biodegradable. However, companies can make an effort to improve recycling and reuse of their products. Danone recycles their bottles in Indonesia to avoid the environmental impact that these bottles can have. (www.danone.com)
External projects: 0 points. To make sure that all projects that were mentioned fit into the table, the
§3.3.1.5. Quality of environmental reporting
To add to the simplicity of the model, the quality of the environmental report has been made one variable. This has been done by a factor analysis.
Factor analysis of quality of environmental report GRI ,870 Topics covered ,881 Projects ,815 Ln(wordcount) ,881 Eigenvalue 2,975
Table 6) factor analysis of the quality of environmental report
According to Horn (1965) it is possible to make one factor out of these four factors because: the eigenvalue of one component was above 1, the KMO = 0.827, the χ2 = 59,279, the df = 6 and the significance level 0,000. These four factors make up a new factor, named quality of environmental reporting and this is calculated as follows:
0.87*GRI compliance level + 0.881 * topics covered+ 0.815 * sustainable innovation projects+0.881 * ln(wordcount) = quality of environmental reporting
§3.3.2. Presence of a Chief Sustainability Officer
The second independent variable is a dummy variable, having a CSO will give a 1, having no CSO will give a 0. This information will be found in annual reports, company website or in the environmental report. The same criteria are used as Strand (2013) to assess which managers are in the top management team and what positions titles are considered to be similar to a CSO. In appendix II the titles that were used in the sample’s companies to address their top management position for sustainability are stated.
§3.4. Control variables
To increase reliability of the results three control variables are used: a patent analysis, percentage of R&D expenditures and the location of the company. Patent analysis and the percentage of R&D expenditures account for the innovation efforts.
§3.4.1. Innovation efforts
should also put effort in making sure that the future itself will exist by minimizing (or even neutralizing) their environmental impact. A company that wants to be sustainable should measure its environmental impact in a consistent manner, writing an environmental report according to the GRI guidelines is an excellent way to do so.
Companies that want to become more sustainable need to have capabilities in innovation. They need to be innovative, because they have to change their processes and their resources in order to become sustainable. In innovation management literature a growing number of articles is elaborating on the dynamic capability theory (Danneels, 2011; Teece, Pisano & Shuen, 1997; Deeds, DeCarolis & Coombs, 2000; Helfat et al., 2007). Dynamic capability is defined by Helfat et al. (2007) as “the capacity of an organization to purposefully create, extend, or modify its resource base”. Thus a company needs dynamic capabilities to be able to change its processes in more sustainable ones. According to Hanse, Gropsse-Dunker and Reichwald (2009), there are two perspectives from which innovation management and sustainability should be linked: a moral view and a business view. From a moral view, businesses are the ones in society that have the capital, the management capabilities and the resources in house to make innovations in for instance clean technologies or alternative renewable energy. According to Davis (1973) the Iron Law of Responsibility counts in this matter, ‘in the long run, those who do not use power in a manner which society considers responsible will tend to lose it’. Thus it is a company’s duty to be or become sustainable and to use their power to make innovations to improve the environment.
The other perspective from which innovation can be linked to sustainability is the business perspective, which states that the challenges that have risen due to the environmental problems are offering a great potential for innovations. This works from a regulatory push, new governmental rules make innovations required, and a vision pull, new ideas and visions lead to new business opportunities (Hart, 1997). According to Kurapatskie and Darnall (2012) radical, green innovations that have new products and processes as results have a higher impact on financial payoffs than incremental, green innovations that just have an impact on existing products and processes.
As sustainability is nowadays the main driver for innovation (Nidumolu, Prahalad & Rangaswami, 2009) there is causal relationship between sustainability and innovation. Therefore innovative companies will have more to write about in their environmental reports; they will have more innovation projects that are more sustainable than their predecessors. Companies that have the resources that are needed to follow an innovative strategy will perhaps also have resources available to write an environmental report of high quality.
§3.4.2. Country of origin
§3.5. Summary of variables
Variable Measure Metric From
Dependent variable
Sustainable image Sustainable image of the customer Number of awards/rankings of companies Environmental report Sustainable image of the investor
Member of the Dow Jones Sustainability Index; yes or no (0,1) Environmental report/company website/ communications Independent variables Quality of environmental report
Extensiveness Word count Environmental
report
Completeness Topics covered
Legitimacy GRI Compliance level
Content Number of sustainable
innovation points
according to Table 5
Presence of a CSO Having a CSO Having a CSO; yes or no (0,1) Environmental report/annual report/company website Control variables
Innovation efforts Patents/total sales Number of patents/total sales www.espacenet.com Percentage of R&D expenditures R&D expenditures/Total sales ORBIS database,
Country of origin Country of origin US (1) Europe (0) Company website
Chapter 4. Results
In this section first the descriptive statistics will be presented with a table showing basic information on the variables used, followed by a correlation matrix. After which the relations between the quality of the environmental report and having a CSO will be investigated with the dependent variables: membership of the DJSI and the number of awards.
§4.1. Descriptive statistics
Table 8 shows the descriptive statistics of the variables used; it gives the number of observations, the mean scores, the standard deviations of the means, the minimum and the maximum scores. Table 9 gives the relationships between the concepts.
N Mean Std. Deviation Minimum Maximum
(1)GRI 30 3,1333 1,90703 1 7 (2)Topics covered 30 4,9000 1,42272 1 6 (3)DJSI 30 ,4333 ,50401 0 1 (4)no. Awards 30 9,8000 6,40797 0 23 (5)CSO 30 ,3667 ,49013 0 1 (6)R&D/Sales 23 ,0124 ,01354 0 ,06 (7)Projects 30 40,3333 23,59476 9 89 (8)Patents/sales 26 93,98 210,097 1 1048 (9)Ln(wordcount) 30 9,9894 1,00292 7,75 11,62 (10)QoER 30 48,7152 21,67168 18,49 94,15 (11)Country 30 ,6667 ,47946 0 1
(1) (2) (3) (4) (5) (6) (7) (8) (9) (10) (11) (1)GRI 1 (2)Topics covered ,73** 1 (3)DJSI ,23 ,35 1 (4)no. Awards ,46* ,65** ,44* 1 (5)CSO ,17 ,15 -,25 ,09 1 (6)R&D/Sales ,07 ,00 -,15 -,03 ,36 1 (7)Projects ,58** ,61** ,49** ,56** -,25 -,19 1 (8)Patents/sales ,29 ,23 ,22 ,44* ,22 ,15 ,10 1 (9)Ln(wordcount) ,69** ,70** ,44* ,52** -,11 -,27 ,65** ,15 1 (10)QoER ,66** ,68** ,50** ,59** -,20 -,18 ,99** ,13 ,71** 1 (11)Country -,37* -,10 -,10 -,12 -,05 -,26 -,15 -,26 -,20 -,18 1
Table 9) Correlation table (Pearson correlations) of the variables used *Correlation is significant at the 0,05 level (2 tailed)
** Correlation is significant at the 0,01 level (2 tailed)
All observations have a N = 30, except for R&D/Sales which has an N = 23 and Patents/sales which has an N = 26
For both Table 8 and Table 9 the following applies:
Ad. (1) The level of compliance to the guidelines of the Global Reporting Initiative (7 for A+, 6 for A, 5 for B+, 4 for B, 3 for C+, 2 for C, 1 for no compliance)
Ad. (2) Topics covered in the environmental report (1-6)
Ad. (3) Listed on the Dow Jones Sustainability Index (1 for yes, 0 for no) Ad. (4) Number of Awards
Ad. (5) Presence of a CSR manager in the top management team (1 for yes, 0 for no) Ad. (6) R&D expenditures / total sales
Ad. (7) Cumulative score of innovations projects aimed upon sustainability, mentioned in the environmental report
Ad. (8) Total number of patents / total sales (in billions of dollars)
Ad. (9) Natural logarithm of the total word count of the environmental report
Ad. (10) Quality of the environmental report, as a function of the variables (1),(2),(7) and (9) Ad. (11) Country of origin . (1 for US, 0 for Europe)
Table 8 does not contain any unexpected results, the means and standard deviations do not have unexpected results. The Orbis database did not have all the data on R&D expenditures that was needed to calculate the R&D/total sales of all the companies from the sample, as some companies do not want their competitors to know their expenditures in R&D. Also not all data on the number of patents was available via the Espacenet database.
§4.2. Antecedents of the investors’ sustainable image
The investors’ sustainable image is determined by the Dow Jones Sustainability Index, companies that are included in this index get a 1, while companies that are not included get a 0. This is thus a binary variable, so a binary logistic regression was used. Two models are needed to explain the relationships. Model 1 is only testing the influence of the control variables, while model 2 looks at the influence of the independent variables.
Binary regression analyses dependent variable = DJSI membership
Model 1 Model 2
Exp(B) (sig.) Exp(B) (sig.)
Control variables Patents/Sales 1.002 ,431 1,003 ,337 R&D/Sales 0.000 ,375 0,000 ,959 Country 0.547 ,575 ,425 ,994 Independent variables CSO 0.284 ,293 Quality of environmental report 1.090* ,053 R2 12.2% 52,1% F change 0.578 ,637 0.4203** ,033
Table 10) Regression analysis on the relationship of having a CSO and the quality of the environmental report on DJSI membership
* = p< 0,1, ** = p < 0,5, *** = p < 0,01
§4.3. Antecedents of the customers’ sustainable image
The customers’ sustainable image is represented by the number of awards that are listed in the environmental report. This number varies in the sample from 0 to 23. So a linear regression model needs to be applied. Two models are needed to explain the relationships. Model 1 is only testing the influence of the control variables, while model 2 looks at the influence of the independent variables.
Linear regression analyses dependent variable = Number of awards
Model 1 Model 2
Stand. β (sig.) Stand. β (sig.)
Control variables Patents/Sales .511** .027 .441** .047 R&D/Sales -.78 .711 -.13 .951 Country .080 .718 .124 .554 Independent variables CSO .109 .613 Quality of environmental report .458** .032 R2 23.7% 42.3% F change 1.968 .153 2.731* .094
Table 11) linear regression model of the relationships between having a CSO and the quality of the
environmental report
* = p< 0,1, ** = p < 0,5, *** = p < 0,01
The R2 of model 2 has increased significantly in relation to the R2 of model 1, which means that the variance in the number of awards is better predictable when information is available on the quality of the environmental report and on the presence of a CSO. Unexpected is the positive, significant relationship between the number of patents/sales and the number of awards.
§4.4. Additional test
Crognale (2011) found that the main responsibility for CSOs is to prepare the annual sustainability report. Therefore it could also be the case that having a CSO has a positive effect on the quality of the
environmental report.
To assess this relationship an independent-samples t-test was conducted. Remarkably, the mean score on the environmental report of companies that have a CSO was 21% lower than the mean score of companies without a CSO, although this difference was not significant (t(28) = 1.103 with a p value of 0.279). Thus this research shows no support for a relationship between the presence of a CSO and the quality of the environmental report
§4.5. Summary of results
Hypothesis Result
H1a) The higher the quality of the environmental report, the more positive the investors’ sustainable image of the firm.
Supported
H1b) The higher the quality of environmental report, the more positive the customers’ sustainable image of the firm.
Supported
H2a) Firms that have a CSO will have a more positive sustainable image in the eyes of the investors.
Not supported
H2b) Firms that have a CSO will have a more positive sustainable image in the eyes of the customers.
Not supported
Chapter 5. Discussion and conclusions
In the following chapter the results will be discussed, followed by managerial implications, after which the limitations and interesting directions for future research will be presented.
§5.1. Discussion
This research aimed to research how firms can effectively signal their sustainable image to customers and shareholders, in other words: which signals are picked up by the stakeholders such that they accept the sustainability of a firm. The main outcomes of this research are that companies can signal a more positive sustainable image to their stakeholders by writing an environmental report of high quality and that having a CSO has no effect on the sustainable image of stakeholders.
A positive relationship was found between the quality of environmental reporting and the sustainable image stakeholders have of the firm. As expected, companies that write environmental reports of higher quality receive more customer sustainability awards (as an indicator of customer acceptance of sustainable image) and it leads to a higher chance of being selected for the Dow Jones Sustainability Index (as an indicator of shareholder acceptance of sustainable image). When a company values sustainability and acts this way, it is also quite possible that they make extra efforts to get recognitions in the form of awards or try harder to become included in a prestigious sustainability index like the DJSI.
Despite the fact that a link was established between the presence of a CSO and being part of the DJSI by previous research (Strand, 2013; Ghani et al., 2011) this research did not find support for such a relationship, nor could it find a relationship between the presence of a CSO and the number of awards mentioned in the environmental report. It could be that CSOs are only brought into a top management team when the company is performing badly, which could mean that some time is needed before the newly hired CSO will yield more positive results. According to Spitzeck, (2009) the environmental strategy of the company is the responsibility of the CEO, which raises doubt to the reason for the appointment of a CSO. Maybe CSOs are only appointed in companies in which the CEO does not consider sustainability as his or her responsibility.
Crognale (2011) stated that one of the responsibilities of a CSO is to write the environmental report, the assumption that was made in this study was that when someone who has a high position in the company is responsible for this report, the environmental report would be of higher quality than a report that was written by someone who was lower in the organization. This was also not supported by the data, as the quality of reporting means seemed to be lower for the companies in which a CSO was present than for companies without a CSO, although not significant. This may hint that CSOs are mainly hired to signal to the market that the firm is sustainable, but that it does not lead to an environmental report of higher quality, nor does it result in a more positive sustainable image.
and 2010, while this study focused on companies that only were in the food and beverage industry. Because the need is high to become sustainable in this industry, more companies will have a CSO. Another explanation is that the number of CSOs has grown in three years, which can be explained by Abrahamson and Eisenman’s (2008) theory of management trends. Over the years different concepts became popular among managers (e.g. Total Quality Management and Business Process Reengineering) that were popular enough to get a representing manager in the top management team. Corporate Social Responsibility is also a concept that has attracted the attention of managers and also already got some representing managers in the top management team, it could be that CSR is also just a trend that will blow over in the near future.
This research also found that there is a relation between the number of patents that a company holds and the number of awards that are mentioned in the environmental report. This approves the results of other researchers that there is a relationship between innovation and sustainability (Nidumolu et al., 2009; Hanse, et al., 2009. By applying for a patent, a company makes technical information about an invention public. This makes their sustainable innovation project visible to the public, what increases the chance of winning awards. The award giving parties have to deal with bounded rationality; they cannot have complete information so they have to rely on information that is easily accessible, like patents.
In recent literature many researchers were struggling to make the quality of environmental reports measureable. Word counts (Mahadeo, Oogarah-Hanuman & Soobaroyen, 2011; Suttipun & Stanton, 2012; Eljayash, James & Kong, 2012), sentence counts (Perrini, 2005) and content analysis (Wiseman, 1982) were used to assess the quality of environmental reports. In this research the quality of environmental reports is evaluated by making use of four different components, each measuring a different aspect that defines quality. To measure extensiveness, completeness, legitimacy and content, this study used word count, the number of topics covered, the GRI compliance level and the sustainable innovation projects score. This new methodology that was used to assess the quality of environmental reports is a contribution to the environmental reporting research field.
Writing an environmental report can be considered a direct action to improve the sustainability of a company. Impact is measured, projects are reported and most importantly; the results get published. By publishing the efforts that were made to become more sustainable, stakeholder expectations about future actions and impact reductions rise. Also to be able to write a high quality environmental report a lot of projects need to be executed, because without projects there is nothing to write about.
The results of this research are in line with the results of Cho et al. (2009) who stated that actions speak louder than words. This also applies to other fields, Peek and Rosengren (2001) for instance found that concrete actions of governments have a larger effect on financial markets than government announcements and Braumoeller and Gaines (2001) found that students who were only threatened by teachers not to commit plagiarism, were committing more plagiarism than students that knew that their assignments were actually checked by anti-plagiarism software.
§5.2. Managerial implications
What managers should take away from this research is that it is important to write environmental reports. Environmental reports of high quality have a positive relationship with external recognition of the sustainability of the company. It also is a way to encourage your own company to become more sustainable by raising the expectations of stakeholders. A well written environmental report has a lot of information on past projects; stakeholders expect that in the future the same effort will be put into a sustainable strategy. The positive relationship between a published environmental report of high quality and a more positive sustainable image can be an extra reason to conduct more sustainable projects. Managers should take this positive effect on the sustainable image of sustainable innovation projects into account when making investment decisions.
Companies should also know that customers and investors look different into their environmental reports. Managers should take this into account when they write such a report. Managers should for instance write separate sections in their reports for customers and investors in which they focus on their own special preferences and interests.
Another take away is that appointing a chief sustainability officer does not have any influence on the quality of the environmental report nor the sustainable image of the firm. So when these are the goals of a company they should not hire a CSO manager.
§5.3. Limitations and future research
This study has several limitations and is providing some interesting possibilities for future research. First, quality of environmental reports is not easy to measure. Even though sustainability is becoming more important in businesses all over the world; not a lot of academic work on this topic is yet available. It is clear to academics that environmental reports have an impact and are of importance, still, they do not yet agree on a standard measurement system to measure the quality of these reports yet. Unlike financial data, it is not easy to benchmark environmental data. In this research a self-constructed measurement system to qualify the reports was used. The extensiveness, completeness and legitimacy all are objectively measurements, the innovation project score had a subjective element in it. The scores that were given to the life cycle phases were, although based upon literature, still subjective. A way to make those scores less subjective is by not scoring the projects on the phase they are in, but on their environmental impact in kilos CO2, by making use of Life Cycle Assessment
research this was not used, because not all reports stated a reduction in quantity of materials or gasses, future researchers should contact all companies to get this information.
Second, this study is limited by sample size. The original sample derived from the Forbes top 2000 list, consisted out of 41 companies, of which just 30 companies wrote an environmental report. It would be good to test the same hypotheses in a larger sample. Sustainability is a global issue and being considered sustainable by stakeholders has its advantages for companies all over the world, so to enlarge the sample size, it could be an option to include non-Western countries as well.
Third, not all reports are about the same period of time. The year of publication of the environmental reports varies from 2010 to 2013. Also not all companies write a new environmental report every year (a complete overview of the reporting periods of the environmental reports is given in Appendix II). It is most likely that some environmental issues became more or less important in 2010 to 2013 influencing the reports of the writers. Also the GRI updated the guidelines in 2011 to the G3.1 guidelines, which also influenced the quality of the environmental reports that were published after 2011. Not only the years of publications differed, also the periods that are between the publications of an environmental reports differed. Some companies chose to write an environmental report every two years and in the years in between they give an update on the main performance indicators. This has an influence on the metrics that are measured in this research. A company that writes one environmental report every two year shall have more to write about without repeating the ones they already mentioned than companies that write reports every year. This would affect the metric quality of environmental reporting in this research.
Fourth, this study only applies to the food and beverage industry. This industry was chosen because the supply chain plays a huge role in this industry and this is where the main focus of the environmental report lays upon. It could be for example that the electronics industry focusses more on human rights and workplace conditions, while financial institutions focus more on the community. Wanderley, Lucian, Farache and Filho Sousa (2008) already found that companies from different sectors stated different information concerning CSR on their company websites. Therefore, the outcomes of this study are not applicable to other industries.
