Key Motivating Factors for CSR reporting - Essay Example

1. Introduction In the current environment of rapid globalization and fast transforming technology, the businesses across the globe have undergone tremendous changes. The inter-dependency of resources has increasingly become important paradigms of social consciousness, significantly impacting relationship between civil society and business institutions. Indeed, the role of sustainable business practices has become key component of corporate governance that incorporates social aspect within the broader framework of business goals and objectives. GRI (2010), is important institution that helps to develop the framework of sustainability reporting that has major impact on people. The various imperatives and drivers of changes motivate business to develop corporate social responsibility and sustainability report as intrinsic part of business strategy. The paper would primarily identify and evaluate key factors that motivate companies to publish CSR/ sustainability report. The paper would also examine Worley Parson’s sustainability report in relation to these factors. 2. Key Motivating Factors for CSR reporting Jones and Jones, (2010), state that CSR actions are initiatives of companies to ‘further some social good beyond its own interests’ that have long term impact on their performance. The following factors significantly influence business outcome and motivate CSR reporting: 2.1 Globalization and increasing global competition Globalization influenced business decisions. Sirgy et al. (2004: 253) assert that globalization is ‘the diffusion of goods, services, capital, technology, and people (workers) across national borders’. This has resulted in more competition and require good image for companies. 2.2 Corporate governance and need for transparency To stop scandals like Enron and WorldCom, transparency in corporate governance is needed. Corporate governance emphasize accountability, responsibility and transparency through good practice in business. Turnbull Report, (1999a, para. 8) also says that risk management, internal control etc. are extremely important issues as they reflect ‘sound business practices’. 2.3 Climate change and environment conservation Nature has limited resources like air, water, land and mineral resources. The indiscriminate use of natural resources resulted in fast depletion and therefore businesses must use technology and processes that promote environment conservation and preservation. 2.4 Changing needs of the customers In the current times, people have become more aware of environment, social issues and about other brands. Companies need become more active in responding to social issues like environment, diversity and contribute towards socio-economic development of society which is helping them to do business. 3. Key features of sustainability report 3.1 Ethical considerations Ethically delivered business goals help companies to survive in global business environment. They must use following ethical issues: 3.1.1 Diversity Globalization has redefined societies where people come from different race, culture, color and nations. Hence business must recruit people from different cultures. 3.1.2 Market sustainability The core strategy of business focuses on producing goods and services that meet the needs of people. Marketing being central to a business must help to understand the needs of the people. Hence, promoting sustainable business practices is important to be successful. 3.1.3 Compliance of law Globalization has helped the businesses to expand across the world. Hence adopting flexible business strategy to work within the broader ambit of local laws has become important. 3.2 Environmental imperatives that promote conservation and preservation of natural resources To reduce adverse impact on environment through various business activities, business develop new ways to meet the needs of environment conservation and preservation. They promote resource efficiency by using recycled goods, carbon footprints and energy efficient tools and processes to save natural resources. 3.3 Welfare programs for workforce and society at large The organizations need to invest in the personal and professional growth by creating an environment of continuous learning. They should also have welfare programs that take care of their medical needs and create environment that is non discriminatory. 3.4 Ethical considerations in business negotiation and strategic plans It is important for businesses to be ethical in their business dealings with others, especially in their partnerships and business negotiations. Cheating and unfair practices are harmful as they destroy their market credibility. 4. Worley Parsons’ sustainability report Worley Parsons has been a leadership company in the area of hydrocarbon which later diversified into power, infrastructure and environment, and mineral and metal sector. It offers wide ranging technical, operational and support consultancy to its clients in the various areas. Initially an Australian consultancy company, it was acquired by American based engineering company with huge experience in offshore drilling and oil exploration. It is listed in Australian stock exchange and has expanded across geographical boundaries through acquisitions and partnership. Its leadership initiatives in promoting a culture of value, integrity and ethics have been supported by its sustainable business practices (worleyparson.com). 4.1 Key features that corroborate with the essential components of sustainability report Worley Parsons are highly conscious of the social responsibilities and promote corporate social responsibilities in all areas of their business activities. They have distinct organizational culture that creates value for their customers through ethically delivered business goals. They have 30 office having more than 3000 people working across the globes. In recent times they have diversified from hydrocarbons to energy, infrastructure and environment, power and metals and minerals mainly through acquisition and business partnerships. They provide technical projects and operational services in their areas of expertise throughout the world. As a global company, the onus of producing effective CSR reports becomes integral part of their corporate governance. The key features of their sustainability report broadly agrees with the modules of sustainability reports as mentioned previously. The company meets the high standards of safety, performance and governance. It follows the guidelines of good corporate governance and meets the requirements of Corporation Act 2001 and other statuary bodies as required within the policy framework of national and international laws. Through transparency and disclosure policies, it promotes increased productivity and confidence building among various stakeholders. As per its CSR sustainability report 2009 and Corporate Governance report 2011, it ensures human rights and creates a facilitating environment for the betterment of its workers. It offers equal opportunities and promotes work and life balance policy. It also ensures ethics and defined code of conduct for its people, including management and board of directors. They have risk management system they reduces risks to the various stakeholders. The transparency in work and fair business practices, it has gained good market reputation worldwide. Through various programs and social activities, it supports community and contributes towards the development of society. The follows zero harm policies through safety measures in workplace and also that of environment. The company also uses best practices for improved performance in delivery of their projects to customers across the world. The sustainable business practices are part of its business processes. It is proud of ‘profitable sustainability’ through its leadership efforts in environment conservation, commitment to people and high ethics in business. 5. Conclusion All businesses need to be socially responsible because they are linked to people and therefore, their welfare also becomes part of their responsibility. White (2005) asserts that CSR. Sustainability reporting was literally non existent in 1980s but by 2000s, it had become intrinsic part of business. In the current environment of globalization and technology, corporate social responsibility becomes very crucial issue for building good image amongst the people. Today it has become very important for companies to be ethical and become accountable for their actions to the society at large. Various issues like environment, diversity and inclusion, education etc. are important for businesses to include in their business goals as part of their business strategy and processes. Worley Parsons is good examples which ensure CSR practices and bring it to the public through CSR Reporting. (words: 1252) Reference GRI Guidelines – The reference sheet. (2010) Retrieved from: http://www.globalreporting.org Jone and Jones. Corporate social responsibility reporting: The growing need to input from the accounting profession. CPA Journal. February, 2011. Sirgy, M. J., D.J. Lee, C. Miller and J. E. Littlefield. The impact of globalization on a country’s quality of life: toward an integrated model. Social Indicators Research, 68, 251-298, 2004. The Turnbull Report. (1999a). Internal Control: Guidance for Directors on the Combined Code. ICAEW; London. para 8. White G. How to report a company’s sustainability activities? Management Accounting Quarterly 7(1): 36–43. 2005. Worley Parsons. Corporate Responsibility Statement. Retrieved from: http://www.worleyparsons.com/InvestorRelations/Documents/2009/Corporate%20Responsibility%20Rev4.pdf Read More