AAAT 21,3 362 Avec ar ‘The curren ise and full ext archive of hs juma i aval at ‘www-emeraldinsight.com0951-3574.htm Strategic reputation risk management and corporate social responsibility reporting Jeffrey Unerman Royal Holloway, University of London, London, UK Abstract Purpose ~ The purpose ofthis paper to provide a commentary on *Corporate social reporting and reputation risk management by Bebbington, Larinaga- Gonzales andl Moneva, published in Aczountng, Auditing & Accowntaiity Journal, Vol 21 No. 8 Design/methodology/approach ~ A personal viewpoint is articulated onthe potential contribution and importance of Bebbington ef als insights forthe development of both theory and practice in corporate social responsibility reporting. Findings ~ This commentary reinforces the importance of Bebbington et al’s theoretical propesitions on reputation rsie management as an explanatory framework for CSR reporting, and Suggests three areas for further refinement. Originality/value ~ Makes suggestions for three areas where Rebbington ef al's framework and insights can be further refined Keywords Risk management, Corporate social esponsibility, Corporate image Paper type Viewpoint Commentary Many of us who have engaged with practitioner debates about corporate social responsibility (CSR) reporting over the past few years will have frequently heard that a prime motive for corporations to report on issues of social responsibility isa desire to minimise risks to their reputations (see, for example, [new KPMG survey). A corporation's reputation among its economically powerful stakeholders is a valuable asset which needs to be protected and developed, and a key aspect of this reputation is stakeholders’ perceptions of the corporation's CSR — or, more precisely, perceptions of how well the corporation's CSR policies, practices and outcomes meet stakeholders? social and environmental values and expectations. Within this context, CSR reporting sa potentially powerful medium which corporations can use to try to influence these perceptions, thereby contributing towards maximising the earning potential of their reputation. CSR reporting plays this role either when opportunities to develop a CSR reputation in a new area arise through a change in stakeholders’ social_or environmental values (witness, for example, the number of corporations currently seeking to build positive reputations in relation to their carbon footprints), or when negative incidents occur that expose CSR shortcomings of particular corporations or industries. Although common in practitioner discourse, this reputation risk management (RRM) motive has not yet explicitly been addressed to any great extent in the academic CSR reporting literature. Bebington ef al (2008) therefore make a long overdue and ‘welcome contribution to advancing academic insights into motives underlying CSRreporting. While some aspects of the RRM thesis are encompassed within other CSR reporting theories (most notably, as Bebbington ef al highlight: legitimacy and stakeholder theories), RRM theory provides a more refined explanatory framework. than these existing, well used and developed, theories. This isnot to criticise past use of these theories, which have helped provide many valuable insights. But in many social science fields, broad theories which provide innovative perspectives in yonic fields of study become progressively less insightful as the field develops and as many more studies are based on the same broad theoretical perspectives. In these circumstances, narrower and more refined theories are needed to help researchers delve deeper and thereby continue making substantive contributions. In the field of motives underlying CSR reporting such refinements have recently been provided by institutional theory, and RRM similarly provides a refined, nuanced, theoretical perspective which’ may help future studies make innovative and significant contributions. ‘As one of the first papers to begin theorising motives underlying CSR reporting from a RRM perspective, Bebington etal (2008) is necessarily wide ranging within its narrowerdeeper theoretical perspective. In part, it acts as a scoping paper to identify key issues in a RRM research agenda, each of which could be the subject of future in-depth research, However, some of the potential RRM factors raised by Bebington et al seem intuitively more plausible than others, and the remainder of this commentary will outline three issues that may add to the development of the RRM theoretical perspective. First, it is important to distinguish between financial/economic and social and environmental aspects of reputation. Where RRM is a motive underlying CSR reporting, it seems likely that corporations will be seeking to use CSR reporting to build or maintain the social and environmental dimensions of their reputation by demonstrating how their corporate actions meet the social and environmental expectations of key stakeholders, As a social and environmental reputation is likely to have (or likely to be perceived by managers to have) economic value, reporting, to financial/economic stakeholders about how well the corporation has built and maintained its social and environmental reputation may help in building and ‘maintaining the corporation's economic reputation among its financial stakeholders, In this context, disclosures in the annual report about a corporation’s reputation (including its ranking in various reputation indices) may be aimed more at building economic reputation among investors than addressing the social and environmental expectations of a broad range of stakeholders. As such, itis questionable whether they could be classified as CSR reporting, as is implied by Bebington ef ak Furthermore, as acknowledged by Bebington ef al. seeking to build a social and environmental reputation by stating how good your reputation is might be regarded as potentially counterproduective as it could be interpreted by readers as rather unsubtly telling them ‘what their opinion about the corporation's social and environmental reputation should be — rather than giving the impression of allowing them to form this opinion themselves. Second, while certain CSR disclosures might appeal to executives’ ethical selfimage, itis difficult to see how reporting about the strength of a corporation's reputation could help convince executives that they were working for an ethically good organisation — especially ifthey were consciously using RRM strategically to selective Strategic reputation risk management 363AAAT 21,3 364 report on CSR issues. This questions Bebbington et al’s tentative suggestions on the “ethics of narcissus” as a RRM motivating factor. Finally, on a more speculative note, my feeling from observing corporate discourse on RRM asa strategic motive for CSR reporting is that tradeoffs between costs of CSR reporting and reputation risks are very crudely assessed, Rather than attempts being made to quantify the likely economic value of reputation risks and carefully weighing these against the costs of reporting, my perception is that executives are aware that the economic value of a good reputation in areas that are of social and environmental concern to their economically powerful stakeholders (or, more often, the potential economic damage to this reputation by failing to demonstrate that the corporation meets these expectations) is likely to be so vast that the costs of producing a CSR report (or making CSR disclosures in other reports) are insignificant by comparison — akin to a relatively small insurance premium to help protect the value of an asset. Thus, RRM may be used strategically in a somewhat blunt manner, rather than elements of CSR reporting being carefully weighed in terms of their precise likely impact on a corporation's reputation. Hopefully, the above points will contribute towards the development of a potentially powerful RRM stream of CSR reporting research, Reference Bebington, KJ. Larrinaga-Gonzales, C. and Moneva, J. 2008), “Corporate socal reporting and reputation risk management’, Accounting, Auditing & Accountability Journal, Vol.21 No.3, pp. 357-62 Corresponding author Jeffrey Unerman can be contacted at Jefirey.anecman@rhulacuk ‘To purchase reprints of this article please emai: reprints@emeraldinsight.com Or visit our web site for further details: www.emeraldinsight.com/reprints