CORPORATE RESPONSIBILITY REPORTING Introduction This crisis did not happen solely by some accident of history or normal turn

of t he business cycle, and we wont get out of it by simply waiting for a better day to c ome, or relying on the worn-out dogmas of the past. We arrived at this point due to a n era of profound irresponsibility that stretched from corporate boardrooms to the hal ls of power in Washington, DC. (Barack Obama economic speech on January 8, 2009; source : Hechtkopf, 2009). The above speech clearly shows unethical and reckless behaviors of senior manage rs and executives, which contributed greatly to this global financial crisis and its prevalent impact worldwide over billions of peoples lives. The present situ ation has fuelled the ongoing process of encompassing companies to behave ethica lly and take into account of interests of other stakeholders like communities an d environment in their strategies and operations highlighted in a well-structure d CSR report. Government and other related institutions are attempting to bring CSR reporting into legislation form and make it mandatory as they perceive this practice benef icial both for the companies and for the society as a whole. Denmark has made i t mandatory to its largest 1,100 enterprises to include CSR reports into their a nnual financial reports. Companies are expected to show their socially responsi ble investment decisions, their actual implementations depicting the results ari sing from this practice. In the current financial crisis, it is more urgent than ever to promote greater transparency, especially in the field of environmental, social and governance pe rformance, said Donald MacDonald, chair of the UN Principles for Responsible Investments (Business & Environment, 2009). GRI (Global Reporting Initiatives) Amsterdam-based non-profit organization has d eveloped a global framework for CSR reporting and encouraging organizations to p roduce a well structured CSR report so as to allow comparison and create a place of disclosure similar to financial reports of the companies. The GRIs spokesperson said in a recent interview that what you can measure, you ca n manage; what you can manage, you can change. The sustainability reporting proc ess helps a company better understand itself and its relationship with the wider world. This is often where the real value of the process is unlocked. It is unl ocked not just through increased cost savings associated with sustainability or being more attractive to external stakeholders. It is unlocked through the bette r definition of corporate strategy and the identification of new markets. Unders tanding this often helps corporate managers see the benefits in the process" (Re ad, 2009). However in 1970, when Milton Friedman argued that there is one and only one soci al responsibility of business- to use its resources and engage in activities des igned to increase its profits and Henry Miller in The Miami Herald that business es do not have responsibilities, but people do (Redman, 2005). Background & Definitions

Most people think CSR should extend beyond shareholders to much wider stakeholde rs. Key features of CSR include reporting on being responsible for upholding ag reed social, environmental and ethical corporate standards.14 CSR is also descri bed in terms of a company considering, managing and balancing the economic, soci al and environmental impacts of its activities (Anderson et al, 2006). The World Business Council on Sustainable Development also provides a definition : Corporate [social] responsibility is the commitment of business to contribute to sustainable development, working with employees, their families, the local commu nity and society at large to improve their quality of life (WBCSD, 2009). However, it would not be an easy task to define CSR in a form that would be acce pted globally given the sheer size of industries, businesses, social and cultura l differences among countries. The intention of CSR reporting was primarily to stimulate those multinationals active in Asia and developing countries to instal l acceptable labor conditions for the workers in the manufacturing plants of the ir overseas subsidiaries and to avoid child labor in sweatshops (Klein, 2000) an d there is a significant operational differences between multinational which has many stakeholders and high visibility while most small to medium organizations have limited visibility and resources, thus it arises conflicts in interests bet ween small and large organizations.

CSR REPORTING BENEFICIAL FOR COMPANIES Many executives from different companies treat environmental integrity and healt hy communities as means to achieve greater profits. These companies choose to b e socially responsible for variety of profit related reasons, for example, incre ased sales, greater innovation, decreased production inefficiencies, and decreas ed future risks (Redman, 2005). Many indicators suggest that 21st century busin esses view social and environmental excellence as strategic business tools: from 1995 to 2003, assets put into in social investments grew 40 percent faster than all professionally managed investment assets in the United States (Social Inves tment Forum, 2003). In response, companies are developing CSR departments, rewriting their mission s tatements to include ethical goals, and developing codes of conduct that extend to employees and contractors worldwide, to the point that by the end of 2003, mo re than 2,000 companies had issued CSR reports (Redman, 2005). The trend of CSR is on the rise because majority of the executives believe it ca n help them attract new customers or boost sales. Whether they use CSR as a stra tegic marketing tool to capture a niche market or believe their good works will be recognized and rewarded later, CEOs often cite reputation as their most valua ble intangible asset. US Bank does not specifically market its community outrea ch, executive Linda Wright asserts that, when you give back to the community, it comes back to you. Accounts have been opened with US Bank because of the respect people have for the company (Wright, 2003). CSR also helps in focusing on more customer end and increasing the market share. Microsoft, where CSR is all about bottom line extensively focuses on pushing com pliance with vendor codes and re-examine the environmental rules as Microsoft re alized that Xbox customers were very concerned about labor and environmental iss ues (Redman, 2005).

CSR also builds connection with the community and for companies; communities are very important stakeholders. Companies operate in an open market, not on islan d as they are not isolated from the world; thus their businesses also depend lar gely on the networks, links, and connections in and around communities. Communi ty involvement and activism help companies garner the good will of politicians a nd regulators in ways that may help the business later (Redman, 2005). From employees perspective, if a company is engaged in practicing and reporting corporate social responsibility, which in turn enhances its brand value and garn er reputed image. This practice also bolsters recruitment, selection, and furth er retention of quality workforce. Numerous psychological studies have found th at job satisfaction correlates with greater commitment to a company and greater business success. A 2004 survey reveals that more than three-fourths of MBA grad uates would forgo financial benefits to work for an organization with a better r eputation in CSR and ethics (Ethical Corporation, 2009). Employees also wants companies to spend (invest) for their safety, security, and welfare, which may also sound similar to human resource objective; and many NGO s follow corporate engagement (CE) and engage companies to take appropriate meas ures to behave socially responsible with their employees. The International Lab or Organization (ILO) estimates that on the job accidents and illnesses annually take some two million lives and cost the global economy an estimated 1.25 trilli on, or four percent of annual global GDP(DCOMM, 2003). So mitigating accidents a nd fewer sicknesses would otherwise lead to higher productivity and healthy work force. GAP, Starbucks, Patagonia, and Adidas are the examples of some companies who hav e partnership with the NGOs. NGOs help them garner knowledge about working cond itions of workers, site information, risks of environmental damage, and other re lated information. However, more companies in only developed countries are providing information on their sustainability performance (corporate responsibility) than those in emerg ing market. KMPG, which has studied corporate sustainability disclosure since 1 993, provides a series of data that demonstrates the evolution of sustainability reporting in developed countries. KPMGs most recent findings, released in 2005, found that 52 percent of the Global 250 (a subset of the largest companies in th e Fortune 500) provide a separate corporate responsibility report, while 68 perc ent provide sustainability information in their corporate reporting (KPMG, 2005) . However, only strategic venturing into social and environmental dimension would not be sufficient, and focus should be on transparency and comparable and compre hensive reporting standards of CSR. Though the debate is always about the effec tiveness of mandatory CSR reporting involving costs and other related risks (Red man, 2005). Reporting can be an effective measure to evaluate their programs in number of areas and serves as a way for the other organizations to monitor thei r progress. SOCIALLY COMMITTED COMPANIES There are companies, which have committed their efforts in the welfare of societ y and environments without expecting anything in terms of shareholders wealth max imization. It is unfortunate that growth is measured in economic terms only irr espective of deteriorations it may have caused. But, there are few companies, w hich also measure their progress and growth in terms of its contribution to soci ety and environment and they do not consider their socially responsible behavior

and acts as means to strengthen their marketing or brand strategies, rather the y perceive them as an important end in and of itself. However, it is not clear whether those companies who are truly socially committed are successful and will be successful in the future. CSR REPORTING ISSUES After the financial crises, it is more evident that more and more companies are taking initiatives towards social and environmental causes and reporting them in standard formats. Multinationals companies are ahead in this race and other co mpanies are hiring specialists and consultants to produce extensive special repo rts on their CSR initiatives. However, critics and debate over CSR reporting be ing subjective is going on as many companies largely rely on self-written report s on CSR supplemented with their own perceptions and impressions and some compan ies only publish official documents and information on websites and give only pa rtial information. It does not mean that some big companies a guarantee about their true commitment do not produce the reports. One should y has a policy does not always mean that who produce some nice CSR reports gives for CSR compared to small companies who bear in mind that just because a compan it is implemented (Perrini 2006).

Small to medium enterprises do already report separately on social matters and o n various environmental issues such as water usage and gas emission to the appro priate official institutions in charge of monitoring. Many SMEs consequently fi nd themselves subjected to unjustified attacks whereas, in fact, many SME leader s have a very social approach with their people, even if they do not use or even do not know the term CSR. They often have long-term continuity as their first pri ority: the survival of the firm, often with the objective of passing the busines s to their children (Bridge et al. 1998:129131). The smaller organizations have other issues like cost and time related to required administrative structure to achieve some CSR concepts. Hooghiemstra (2000) argues and as it can be seen from the first part of this rep ort as well that CSR is mostly used as a mean of communication to influence peop les perception of the company. Many companies use them to promote their brand am ong people, enhance their profit margins, and to gain legitimacy from shareholde rs. So it can be argued that the companies who are engaged in social responsibi lity compliance; but do not wish to go for reporting for many other issues such as cost, bureaucratic process, time, lack of media coverage, etc. must be allowe d to do so rather being pressurized to follow certain set of rules and regulatio ns made without taking account their views on it. CSR can also be used to destroy local industry by any multinational company. If a multinational company establishes itself with good CSR publicity, which ultim ately drains the local employees towards itself from other local industries who do neither have resources nor time to implement and publicize their CSR initiati ves. Thus, CSR can also be transposed by any big organization for its sole bene fits without caring much about its relationships with small suppliers and other small stakeholders and also their issues related to CSR. An international CSR standard may not necessarily fit to all contexts and may re quire tailoring due to different nature of businesses, industries, economic envi ronment, social structures, etc. There is a growing concern that social audits done to check the compliance of CSR reporting fail to uncover internal and hidde n problems such as discriminations, harassments, the standard of labors, etc (Ja mison & Murdoch 2005).