Enhancing Corporate Image - Essay Example

MAIN MOTIVATION FOR CORPORATE REPORTING By Location Main motivation for corporate reporting Corporate reporting refers to the process through which business organizations avail information about their economic, social, and environmental governance. In the past corporate reporting was a thing of a few organizations. However, of late most business organizations have adopted this practice. There has always a common argument on the main motives of corporate reporting. Some economists believe that the main motive of corporate reporting, especially the social and environmental aspects is aimed at enhancing corporate image and credibility with stakeholders. This is an assertion that can be said to be very true and reasons will be given herein. The quest for social and environmental friendly organizations is slowly becoming more and more popular. Many business organizations fromall over the world are struggling so that there can come into terms with these improvements. People are expecting business organizations to show more social responsibility in their activities. People are also expecting business organizations to make sure that their operations are environmental friendly. It has come to the point whereby business organizations have no option but to make sure that they match the sustainability expectations of their stakeholders. This is the reason as to why business organizations have to do sustainability reports (Gray 2006, p. 812). Through these reports business organizations are able to convince their stakeholders that they have been involving themselves in socially and environmental sustainable activities. A research that was carried out in the year 2011 about the influence of corporate reporting on corporate reputation found that many business organizations were using corporate reporting to reveal the positive thing that they have been involving themselves in in terms of social and environmental sustainability. In accordance to a study that was carried out by EY and Boston College Center for Corporate Citizenship more approximately 50% of the stakeholders usually change their perception of business organizations after going through their sustainability report (Kolk 2004, p. 54). If a business organization have stakeholders who are sensitive about corporate social and environmental sustainability they will benefit by letting them know the things that they had been doing to make sure that their activities are both socially and environmentally sustainable. It has also been observed that one of the main reasons why business organizations have adopted sustainability reporting is the need to meet the expectations of their employees. In accordance to a study that was carried out by GreenBiz in the year 2011 employees are always very important audiences of sustainability reporting. More than 18% of the reports asserted that the employees were their main audience. One thing that makes employees important audiences of corporate reporting is the fact that it is of high importance to have loyal importance. If employees have trust in the things done by the organization to make sure that their welfare is taken care of then they will remain loyal to the organization. Therefore, it can be concluded that corporate reporting is usually aimed at making sure that a business organization is able to earn the trust and loyalty of their employees (Blowfield 2013, p. 201). With trust and loyalty business organizations are at a lower risk of losing their most valued employees to their competitors. At the moment most investor would not consider investing in business organizations that are not environmentally and socially sustainable. In order to remain attractive to such investors companies must find a way of convincing them of their environmental and social sustainability. Therefore, corporate reporting can be said to be a way through which organizations can prove to their stakeholder, investors included that they are in a sustainable. Many NGOs and other international bodies are piling pressure on business organizations to adopt greener practices. In fact more sustainable organizations are also more appealing in the market. This is an indication that most investors will always prefer to invest in business organization which have already adopted greener practices because they are sure of the stability (Brown, de Jong & Levy 2009, p. 578). Investors who are also concerned about environmental conservation and sustainability will also be more attracted to business organizations that have shown commitment toward having greener operations. It is only through corporate reporting that business organizations can be able to reveal to their investors and potential investors the extent to which they are environmentally sustainable. Corporate reporting is a way through which a business organization can be able to show accountability andresponsibility. The government as one of the stakeholders is always much concerned with the sustainability of business organization within its territories. Things are highly changing and sustainability is not as optional as it was in the past. The government usually expects business organization to show social and environmental sustainability to some level. Therefore, whenever a business organization is preparing their sustainability reports they always have it in mind that they need to convince the government that their operation are of minimal negative effect to the environment and of maximum positive effect to the society. Since the government has the responsibility of regulating and controlling business activities within their territories and to make sure that business organizations do not make profits at the expense of the society and environment (Adams & McNicholas 2007, p. 399). Therefore, it is highly important for a business organization to convince the government that they pose minimal or no threats to social wellbeing and environmental conservation. As the sensitization on green business and environmental conservation is increasing, consumers have become keener on the products and services that they consume. There are various questions of that consumers usually ask themselves in this context. For instance, they ask themselves if the production of the product or service that they intend to pay for had any negative influence to the environment and if there is anything the producers are doing to minimize the influence (GrüNewäLder 2009, p. 123). This proves that business organizations needs to use corporate reporting as a way through which they can convince their consumer of their commitment towards making the society a better place and conserving the environment. Given the increase in competition and globalization businesses have to do so or they risk losing their customers to their competitors. Many business organizations do not work in isolation. They have to partner with other firms so that they can make sure that they are in a position to perform well in the market. Some of the firms that a business organization has to partner with include their distributors, creditors, and suppliers. It is of importance for a business organization to convince these partners that the business will offer them a good partnership. Partnering with a business organization that is known to have high standards of social responsibility and environmental accountability is a dream for most of these firms. When suppliers or creditors are determining whether or not to work with a business organization they are likely to choose those known to have high levels of social responsibility and environmental accountability as compared to those with no such popularity (Chvatalová, Kocmanová & Dočekalová 2011, p. 252). Therefore, it can be said that corporate reporting can be used in luring stakeholders such as supplier, distributors, and creditors. A business organization usually owe allot to the society and the communities in the localities where they exists. For instance, it is a common scenario to see business organizations to do things aimed at making quality of life of the local communities better. This is something that might not be of any direct benefit to the business organization but it helps in making sure that a company remains popular in the society. For instance, a company that has the policy of only employing people from the local communities is likely to be popular with people from the local community (Adams & Frost 2008, p. 289). Other activities such as developmental projects And offering scholarship are also used by business organizations as a way of giving back to the society. When a company includes such information in their corporate report they mostly aim at making sure that the society is aware of the extent to which they have been giving back to the society. This will lead to the increase in the popularity of such companies. It is clearly evident that the primary reason as to why companies do corporate reporting is to enhance corporate image and credibility with stakeholders. This is because in a way all these activities that relate to social and environmental sustainability. In most cases social and environmental sustainability does not have anything to do with the profitability of a business organization but their ability to operate while having the society and environment. There has been increased push by various stakeholders for business to enhance their corporate responsibility and accountability. As much as corporate reporting is voluntary most business organizations do it because they know just how much they need to convince their stakeholders of their social and environmental sustainability. Therefore, it can be concluded that the main reason why business organization do corporate reports is to enhance corporate image and credibility with stakeholders. Bibliography Adams, CA & Frost, GR 2008, “Integrating sustainability reporting into management practices” In Accounting Forum (Vol. 32, No. 4, pp. 288-302). Elsevier. Adams, CA & McNicholas, P 2007, “Making a difference: sustainability reporting, accountability and organisational change” Accounting, Auditing & Accountability Journal, 20(3), 382-402. Blowfield, M 2013, Business and sustainability, Oxford University Press, Oxford. Brown, HS, de Jong, M & Levy, DL 2009, “Building institutions based on information disclosure: lessons from GRIs sustainability reporting” Journal of Cleaner Production, 17(6), 571-580. Chvatalová, Z, Kocmanová, A & Dočekalová, M 2011, “Corporate sustainability reporting and measuring corporate performance” In Environmental Software Systems. Frameworks of eEnvironment (pp. 245-254). Springer Berlin Heidelberg. Gray, R 2006, “Social, environmental and sustainability reporting and organisational value creation?: Whose value? Whose creation?” Accounting, Auditing & Accountability Journal, 19(6), 793-819. GrüNewäLder, A 2009, Integrating Environmental Sustainability into the Companys strategy A study of contributing factors to overcome barriers between sustainability and shareholder demands, GRIN Verlag GmbH, München. Kolk, A 2004, “A decade of sustainability reporting: developments and significance” International Journal of Environment and Sustainable Development, 3(1), 51-64. Read More