Dawson International Plc. sustainability reporting.
De Silva (2010) states that “Every organisation has some level of environmental impact and has an obligation to understand, identify and report information about such impacts to their stakeholders.”. This implies that corporations have accountability over their operations and interactions with the community.
As an evidence of De Silva’s statement, Bob Langert (McDonald’s Vice president) states that “over the last several years, the role and purpose of the business sector has shifted… leaders of many companies see that doing well and doing good are not mutually exclusive “.
Having said that, it will be now be key to understand why Dawson International Plc. should develop sustainability reporting, to whom it is interesting and of course what would be the corporate sustainability programme to report against.
Reasons to incorporate sustainability reporting into the business?
Unerman, Bebbington and O’Dwyer (2007) show that from 1993 to 2003, the number of Corporate Sustainability Reports globally increased from less than 100 to more than 1,500, Japan being seen as a leading country.
They also demonstrate that mainly large and very large corporations are reporting with as consequence that it does not, once consolidated, a representative picture of the situation.
There multiple reasons why companies should do sustainability reporting. White (2009) explains that there are both internal and external benefits to sustainability reporting. Internally this can be seen as a management tool to monitor performance against sustainability targets the company sets for its operations. Gathering all the needed information to build this report will facilitate the internal reporting of the balanced scorecard if sustainability is part of the company’s strategy.
From an external perspective, going for sustainability reporting enhance the corporation’s reputation and image. That enhancement will thus also re-enforce the trust with all the different stakeholders as it also shows a competitive edge. Closer links with consumers and other stakeholders may lead to greater awareness of their needs, which could result in the firm becoming more competitive in terms of product quality. The result of these impacts are an increased value of the company.
Developing a sustainability programme and subsequently the reporting will also improve other aspects of the company. Transparency of governance and policies will inevitably not only push the company to better comply to these but also improve them.
As it is now explained why Dawson should implement such a programme and report against it. It is also clear that not doing it will also make the company run risks. The first risk would be to miss the “sustainability train” and therefore miss the advantages listed here above and end-up with an image of a follower more than a leader.
Another group of risks is about Health Safety and Environment, BP Deep Horizon is a good example. This demonstrates the impact of such an accident on the reputation and the value of a company. As per their website, “BP wants to be recognised as a great company – competitively successful and a force for progress. We have a fundamental belief that we can make a difference in the world.
We help the world meet its growing need for heat, light and mobility. We strive to do that by producing energy that is affordable, secure and doesn’t damage the environment. BP is progressive, responsible, innovative and performance driven.” And we can see as per The Telegraph article from Mason, Quinn and Ebrahami that the following strategic issues occurred implying a lack of mitigation actions to decrease the potential impact of such risks:
• “But unbeknown to management, engineers had already begun to raise concerns about a troublesome well at the frontier of BP’s exploration map”
• “to cause the world’s worst accidental oil spill, crippling BP’s reputation and finances
• “The ensuing corporate catastrophe has fractured trust in the global oil industry, stained the environmental record of a US President and tarnished the name of British business abroad”
• “The markets were only calmed when President Barack Obama toned down his public attacks after forcing BP to set aside its dividend and put $20bn into a compensation fund.”
• “The consensus seems to be that BP’s accident has dented trust in the oil industry and called into question its level of preparation for major disasters”
Reading these issues it becomes obvious that BP faces major strategic issues including at corporate and network levels as the 3 paragraphs of their values are clearly hit by the Deep Horizon oil spill. This example also shows that when not properly mitigated that type of risks can have critical consequences.
Incorporating this reporting in the business is an important step forward but it is also important to define the target audience in order to develop an adequate reporting.
Which stakeholders would be interested in their sustainability profile?
The Global Reporting Initiative who developed the G3 guidelines for Corporate Sustainability Reporting defines in the Development Process who are the major stakeholders to be interested: “reporters and information-seekers from business, investors, labour, civil society, accountants, and others – from all around the world”. We can detail “others” by adding the medias, the academics and the regulators to that list.
This means that externally all stakeholders are being interested in the sustainability profile of a company but internally this profile is also important as it may also be a greater motivation for the employees to work in a company with a high profile in terms of sustainability. The benefits of this for the company can be seen as increased productivity, higher retention, better loyalty and also ease the hiring process as the company may be more in demand due to a better profile.
Courtney Pratt, former CEO of Toronto Hydro summarises this in his following statement: “Business has a responsibility beyond its basic responsibility to its shareholders; a responsibility to a broader constituency that includes its key stakeholders: customers, employee, NGO’s, government – the people of the communities in which it operates.” (Devalia, 2008)
How could Dawson establish a suitable sustainability agenda?
As defined by the World Commission on Environment and Development (1987), the goal of sustainable development is to “meet the needs of the present without compromising the ability of future generations to meet their own needs.”. So Dawson will have to start first by defining what these current and future needs are.
A compelling business case with benefits is essential to convince senior management to support a sustainability agenda. In addition to the benefits detailed above, it is key to demonstrate that new business can be brought to Dawson by having a CSR agenda.
Regular engagement with key stakeholders like customers, employees, suppliers, investors and communities to really understand what they expect from Dawson around CSR and also to assess the impact of our performance. These engagements will enable to embed CSR into company’s core operations.
Once the definition is clear and the business case endorsed, Dawson can use different guidelines as Global Reporting Initiative (GRI), International Standards Organization (ISO), Social Accountability International (SAI), Impact Reporting and Investment Standards (IRIS), UL Environment or B Corporation (B Corp). These will provide practical rules regarding how corporate social responsibility can be implemented within business organisations in an international context and create long-term stability and persistence of organisations.
As next step, the development of the Triple Bottom Line to manage “the balance among the economic, ecological and social dimensions of organisational performance, rather maximising profits or growth.” (Ikerd 2005). This will enable monitoring and reporting to demonstrate that having a sustainability agenda brings added value to the stakeholders as explained here above. The GRI guidelines will help to comparably report on the social impact of a business.
A communication plan has also to be developed to effectively and efficiently communicate with the stakeholders. As stated by Morsing and Schultz (2006), one way communication with stakeholders is not enough for Corporate Sustainability reporting. This “propaganda” like of communication is not appropriate in this case, therefore from the three strategies that have been developed:
• The stakeholder information strategy; one way communication focusing on informing the stakeholders about decisions and actions.
• The stakeholder response strategy; two ways asymmetric communication that will focus on how the corporation responds to the stakeholders concerns.
• The stakeholder involvement strategy; two ways symmetric communication involving pro-actively the stakeholders on regular basis.
The latter is the best to be implemented even if there is little evidence that such strategy has been practised. It is indeed key to build the Corporation Sustainability Reporting agenda with the stakeholders. This will subsequently develop a sense of ownership from the stakeholders and so increase the impact of the agenda on the developed corporation ecosystem. It also makes sense to use the three strategies starting by informing top-down to the environment and then once the audience is identified with the asymmetric communication, Dawson will be able to build the relationship with the relevant stakeholders.
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http://www.bp.com/sectiongenericarticle.do?categoryId=9002630&contentId=7005204 [Accessed 21 February 2011]
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GLOBAL REPORTING INITIATIVE, 2011. Development Process. [online]. Amsterdam, The Netherlands: Global Reporting Initiative. Available from:
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http://www.telegraph.co.uk/finance/newsbysector/energy/oilandgas/7908512/Oil-spill-BP-plans-for-life-after-Deepwater.html# [Accessed 21 February 2011]
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