Social and Environmental Reporting

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Guidelines for defining reporting contents (Information about disclosures)

- Inclusivity: Identify its stakeholders and explain how it has responded to their issues in the report.

- Materiality: The information in the report should cover issues and indicators that would substantively influence the decisions of the stakeholders using the report.

- Sustainability context: present its performance in wider context of sustainability.

- Completeness: Coverage of the relevant and material issues and indicators, and definition of the report boundary. It should be enough for the stakeholder to assess the reporting economically, environmental and social performance in the reported period.

Defining Report Quality (Refer to class discussion question)

Qualitative attributes such as

Reliability: Information and processes used in the preparation of a report should be gathered, recorded, compiled, analysed and disclosed in a way that could be subject to examination and that established the quality and materiality of the information.

Clarity information: Understandable and clear to the stakeholders.

Balance: positive and negative aspects of the organisation’s performance

Comparability: Issues and information should be selected, compiled and reported consistently.

Accuracy: Sufficiently accurate and detailed for stakeholder

Timeliness: regular schedule and information is available on time for stakeholders to make decision.

Guthrie and Parker found that environmental disclosure were totally absent until about 1950. After 1950 they were again absent. Disclosures recurred in the early 1970s and 1980s but remained at a relatively low level. Environmental disclosures peaked in 1970s, and Guthrie and Parker associated this peak with a time when the mining, steel, and oil industries became targets for the criticism by conservationists. In 1996, they also found that no Australian company provided “bad news” about its activities.

Guthrie and Parker (1990 p165) stated that voluntary social disclosures might be undertaken by the corporations in order to demonstrate a constructive response to social pressure and avoid further regulation of their disclosures.

Deegan and Gordon argue that the levels of corporate environmental disclosures are associated with the legitimation process, whereby companies seek to attain the status of legitimacy.

Brown and Deegan argue that if there is raised community concern about the environment issues, driven by the increased media attention, the increased concern should be matched by increased disclosures. (If consisted with legitimacy theory, disclosures policies are a function of community concern)

Points on Disclosures: Mentioned in Guthrie article

Industry size: High profile industries will report more than those with low profile. (Compbell et al,.,2003)

Dierkes and Preston (1977) contended that companies in industries where economic activities modify the environment, such as extractive industries are more likely to disclose information about their environmental impacts than are companies in other industries. Consumer oriented companies are can be expected to exhibit greater concern in demonstrating their social responsibility to the community, since this is likely to enhance corporate image and influence sales. (Cowen et,al 1987)

Difficulties associated with disclosures: Mentioned in Guthrie article

A problem with declarative in comparison with monetary and non-monetary disclosures is that they can be criticised for not being measurable, credible, or comparable between reporting periods or across companies. As a consequence, it is argued that the companies are not sufficiently addressing the limitations of TFR framework and are not complying with the Sustainability Reporting Guidelines (GRI 2002), which propose quantitative disclosures wherever.

Australian Food and Beverage Industry (AFBI): This industry has high significant on Australia’s economy and environment, and in under increasing pressure to manage a number of contemporary Social & Environmental (SE) issues such as obesity, food safety, alcohol abuse and packaging management issues. These issues are of increasing concern of Australia, with potential serious consequences for AFBI companies. (AFGC 2004) Legitimacy Theory

Consumer health and well-being accounted for 9.8 disclosures on average per company. Obesity and diet related disease is an important disease facing the AFBI with 60% men and 50% women being over-weight. (AFGC 2004)

The AFGC reported that the industry is committed to providing labelling on all packaged foods with information about the energy and nutrient content of the food. (AFGC 2004) With such a pressure on the industry, it is likely that the sample companies may seek to inform consumers about their performance and activities by reporting information on obesity and healthy options. Legitimacy Theory

Kuruppu & Milne Article

Brown & Deegan (1998) mentioned in the article that some disclosures are partial, incomplete, and self-serving public relations exercises that seek organisational legitimacy through appearance rather than changed behaviours.

Chan & Milne (1999) said that investors act negatively about the disclosures about contingent liabilities, fines and prosecutions, and positive disclosers can help offset these negative reactions. Recent experiment by Holm & Rikhardddon (2008) evidence suggested that positive disclosures do produce positive investment reactions in the case of competing alternative investments.

Point on Sustainability

Reduction in Hector’s Dolphins by 30,000 to 7000 over 30years is the reason that demand of these dolphins is 10 times more than the sustainable level and the rate of reproduction is very slow. (Slooten, 2008) This statement relates to Legitimacy theory that the other Fishing Companies has started making disclosures on Dolphins and other mammals and sea-bird by catch.