Responsibility and Governance: David Crowther Shahla Seifi Tracey Wond Editors

Approaches to Global Sustainability, Markets, and Governance
Series Editors: David Crowther · Shahla Seifi
David Crowther
Shahla Seifi
Tracey Wond Editors
Responsibility
and
Governance
The Twin Pillars of Sustainability
Approaches to Global Sustainability,
Markets, and Governance
Series editors
David Crowther, Faculty of Business and Law, De Montford University, Leicester,
UK
Shahla Seifi, University of Derby, Derby, UK
Approaches to Global Sustainability, Markets, and Governance takes a fresh and
global approach to issues of corporate social responsibility, regulation, governance,
and sustainability. It encompasses such issues as: environmental sustainability and
managing the resources of the world; geopolitics and sustainability; global markets
and their regulation; governance and the role of supranational bodies; sustainable
production and resource acquisition; society and sustainability.
Although primarily a business and management series, it is interdisciplinary and
includes contributions from the social sciences, technology, engineering, politics,
philosophy, and other disciplines. It focuses on the issues at a meta-level, and
investigates the ideas, organisation, and infrastructure required to address them.
The series is grounded in the belief that any global consideration of sustainability
must include such issues as governance, regulation, geopolitics, the environment,
and economic activity in combination to recognise the issues and develop solutions
for the planet. At present such global meta-analysis is rare as current research
assumes that the identification of local best practice will lead to solutions, and
individual disciplines act in isolation rather than being combined to identify truly
global issues and solutions.
More information about this series at http://www.springer.com/series/15778

David Crowther Shahla Seifi
•
Tracey Wond
Editors
Responsibility
and Governance
123
Editors
David Crowther Tracey Wond
Faculty of Business and Law University of Derby
De Montford University Derby, UK
Leicester, UK
Shahla Seifi
University of Derby
Derby, UK
ISSN 2520-8772 ISSN 2520-8780 (electronic)

Approaches to Global Sustainability, Markets, and Governance
ISBN 978-981-13-1046-1 ISBN 978-981-13-1047-8 (eBook)
https://doi.org/10.1007/978-981-13-1047-8
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Acknowledgements
The editors would like to acknowledge the Social Responsibility Research network
and all participants at the 16th International Conference on Corporate Social
Responsibility and 7th Organisational Governance Conference held in Buxton, UK
during September 2017.
v
Contents
Responsibility and Governance: The Twin Pillars of Sustainability . . . . 1

David Crowther, Shahla Seifi and Tracey Wond
Part I Challenging the Routine

Walking Away from Omelas . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
David Crowther
Blue Accounting: Looking for a New Standard . . . . . . . . . . . . . . . . . . . 27
Rute Abreu, Fátima David, Luís Lima Santos, Liliane Segura
and Henrique Formigoni
The Concept of Business Legitimacy: Corporate Social Responsibility,
Corporate Citizenship, Corporate Governance as Essential Elements
of Ethical Business Legitimacy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
Jacob Dahl Rendtorff
Three Important Words: Corporate Social Responsibility—How and
Where to Say Them . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
Khosro S. Jahdi
Evaluation for What Purpose? Findings From Two
Stakeholder Groups . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
Tracey Wond
Part II Insights for Industry

The Sustainability of Post-crisis Management
on Flooding Prevention . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89
Linne Marie Lauesen
The Importance of Corporate Social Responsibility in the
Development of Sustainable Tourism . . . . . . . . . . . . . . . . . . . . . . . . . . . 113
Ermelinda Oliveira
vii
viii Contents
Should We Expect Exemplary Integrated Reporting to Increase

Organisational ESG Ratings? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 135
Elaine Conway
A Content Analysis of CSR Research
in Hotel Industry, 2006–2017 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 163
Abdul Moyeen, Shahnawaz Kamal and Mohammad Yousuf
Part III Empirical Studies

Business Excellence Models and the Plight of Contract Workers . . . . . . 183
Prabir Kumar Bandyopadhyay and Denis Leonard
Discovering New Traits of the European Buycotter . . . . . . . . . . . . . . . . 197
Matilde Schwalb-Helguero and Iñaki García-Arrizabalaga
Social and Environmental Accounting (SEA) Research in the Public
Sector: The Portuguese Case . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 215
Verónica Paula Lima Ribeiro and Sónia Maria da Silva Monteiro
An Investigation into the Sustainable Actions
of Micro- and Small Businesses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 237
Stacey Marshall and Sarah Williams
Contributors
Rute Abreu Guarda Polytechnic Institute/UDI-IPG/CICF-IPCA, Guarda, Portugal

Prabir Kumar Bandyopadhyay Symbiosis Institute of Business Management,
Symbiosis International University, Pune, India
Elaine Conway Derby Business School, University of Derby, Derby, UK
David Crowther De Montfort University, Leicester, UK
Sónia Maria da Silva Monteiro Centre for Research in Accounting and
Taxation—Polytechnic Institute of Cávado and Ave, Barcelos, Portugal
Fátima David Guarda Polytechnic Institute/UDI-IPG/CICF-IPCA, Guarda,
Portugal
Henrique Formigoni Universidade Presbiteriana Mackenzie, São Paulo, Brazil
Iñaki García-Arrizabalaga University of Deusto, San Sebastián, Spain
Khosro S. Jahdi Bradford Business School, Bradford, UK
Shahnawaz Kamal World University of Bangladesh, Dhaka, Bangladesh
Linne Marie Lauesen Independent Researcher, Roskilde, Denmark
Denis Leonard Business Excellence Consulting LLC, Racine, USA
Stacey Marshall University of Bedfordshire, Luton, UK
Abdul Moyeen Federation University Australia, Ballarat, Australia
Ermelinda Oliveira Instituto Politécnico da Guarda, Guarda, Portugal
Jacob Dahl Rendtorff Roskilde University, Roskilde, Denmark
Verónica Paula Lima Ribeiro Centre for Research in Accounting and
Taxation—Polytechnic Institute of Cávado and Ave, Barcelos, Portugal
Luís Lima Santos Leiria Polytechnic Institute/CiTur Leiria, Leiria, Portugal
ix
x Contributors
Matilde Schwalb-Helguero University of Pacífico, Lima, Peru

Liliane Segura Universidade Presbiteriana Mackenzie, São Paulo, Brazil
Shahla Seifi University of Derby, Derby, UK
Sarah Williams University of Bedfordshire, Luton, UK
Tracey Wond University of Derby, Derby, UK
Mohammad Yousuf Federation University Australia, Ballarat, Australia
Responsibility and Governance:
David Crowther, Shahla Seifi and Tracey Wond
Abstract Responsibility possesses a dual role within our twin pillars of sustain-
ability. Not only does it stand as a pillar in itself, but, responsibility is central to the
notion of good governance. This chapter expands on previous efforts to define the
role of responsibility in this twin pillar construct and posits it as a pivotal construct
(Aras and Crowther in Journal of Business Ethics, 87(supp 1), 279–288, 2008a,
Journal of Social and Environmental Accounting, 2(1), 19–35, 2008b; in: Crowther
et al. (eds) The goals of sustainable development: responsibility and governance,
Springer Nature, Singapore, 2017). In this chapter, the concept of the pillars of
sustainability is explored by first acknowledging the Brundtland pillars and then
proposing a different set of pillars. In this proposal, the suggestion is made of only
two pillars: those of governance and responsibility. We argue that focusing on these
two leads to an understanding of the needs of sustainability. In doing so, this
chapter outlines the focus and argument of the book and introduced the subsequent
chapters.
Keywords Sustainability Corporate social responsibility Governance

Responsibility
1 Introduction
Our society has continued to act in a way that is not sustainable. This is manifested
in the overshoot of our planet’s sustainable limits. Despite warning that our eco-
logical footprint was, and still is, growing at a vast and unsustainable rate, we have
pursued the ‘business-for-usual’ scenario outlined in ‘The Limits to Growth’
(Meadows et al. 1972), taking little action to address these concerns. Indeed
D. Crowther (&)
De Montfort University, Leicester, UK
e-mail: [email protected]
S. Seifi T. Wond
University of Derby, Derby, UK
© Springer Nature Singapore Pte Ltd. 2019 1

D. Crowther et al. (eds.), Responsibility and Governance,
Approaches to Global Sustainability, Markets, and Governance,
https://doi.org/10.1007/978-981-13-1047-8_1
2 D. Crowther et al.
President Macron in his 2018 speech to US Congress1 made this point and
emphasised that there is no Planet B. A post-mortem of how this happened and who
is culpable might blame greedy shareholders, perceptions of economic wealth,
consumerism, and ineffective political and policy intervention. Such theorising has
occurred, in plenty, yet, as others have observed, what is needed now is not words
and rhetoric, but collective action from citizens, organisations and governments
(Komiyama 2014; Milne et al. 2009).
Corporate social responsibility (CSR) has been in mainstream existence for
around 65 years and over this time has attracted much attention from practitioners
and scholars (Wang and Gao 2016). Indeed, it is difficult to find another concept that
has been as pervasive or potent as CSR. CSR has crept from the concern of business
leaders as a strategic activity concerned with marketing, and accounting and finance,
into a much broader concept influencing many other aspects of business (e.g. supply
chain and operations management) and other sectors (e.g. justice/law).
However, some have professed that ‘CSR is dead’ (famously, Peter Bakker, the
President of the World Business Council for Sustainable Development). Instead,
concepts such as sustainability have prevailed. Whilst CSR, as a label, appears to be
losing popularity, and concepts such as sustainability appear to be prevailing, CSR
has brought us a long way and some may argue we are seeing more of a relabelling—
old wine in new bottles (Rasche et al. 2017). CSR has provided a platform for
the legitimisation of corporate and government action (as Rendtorff discusses in
Chap. 4), leading to much-needed criticism that corporations have engaged with
CSR for the wrong reasons (strategic legitimacy, reputation, etc., over values), as
opposed to ‘actually exhibiting…concern through actions taken’ (Crowther and
Martinez 2004, p. 104). More recently, CSR can be observed to have provided a
foundation for the extension of other sustainable development activity, including the
growing notion of cradle-to-cradle product lifecycles, the circular economy, greater
integration of sustainability into supply chains, and focus on design for sustainability.
This chapter explores the role of responsibility within our twin pillar construct
(which views responsibility and governance as the twin pillars of sustainability).
Given these concepts are pivotal to our book series (see Crowther et al. 2017), we
elaborate and develop the meaning of responsibility in the evolving sustainability
context. Finally, we conclude with several directions for the future of sustainable
development and our twin pillars. The evolution of society towards sustainability is
appreciated in this chapter.
2 Sustainability
One of the most used words relating to corporate activity at present is the word
sustainability. Indeed, some would argue that it has been so heavily overused, and
with so many different meanings applied, to it that it is effectively meaningless.
1
25 April 2018, reported by the BBC news and most newspapers worldwide.
Responsibility and Governance: The Twin Pillars of Sustainability 3
Thus, the term sustainability currently has a high profile within the field of cor-
porate activity. Indeed it is frequently mentioned as central to corporate activity
without any attempt to define exactly what sustainable activity entails. This is
understandable as the concept is problematic and subject to many varying defini-
tions—ranging from platitudes concerning sustainable development to the deep
green concept of returning to the ‘golden era’ before industrialisation—although
often it is used by corporations merely to signify that they intend to continue their
existence into the future.
The ubiquity of the concept and the vagueness of its use mean that it is necessary
to re-examine the concept and to consider how it applies to corporate activity. In this
chapter, therefore, we do just this—examining what is meant by sustainability—
and looking at the various aspects of sustainability. For us, there are two aspects to
this—corporate actions and their consequences; and the distribution of the benefits
accruing from such corporate activity. Furthermore, both have to be set not just
within the sphere of the corporation itself, or even the wider context of its stake-
holders but also within the widest geospatial context—that of the global
environment.
There is a considerable degree of confusion surrounding the concept of sus-
tainability: for the purist sustainability implies nothing more than stasis—the ability
to continue in an unchanged manner—but often it is taken to imply development in a
sustainable manner (Marsden 2000; Hart and Milstein 2003) and the terms sus-
tainability and sustainable development are for many viewed as synonymous. For us
we take the definition as being concerned with stasis (Aras and Crowther 2008a, b);
at the corporate level if development is possible without jeopardising that stasis then
this is a bonus rather than a constituent part of that sustainability. Moreover, sus-
tainable development is often misinterpreted as focusing solely on environmental
issues. In reality, it is a much broader concept. Sustainable development policies
encompass three general policy areas: economic, environmental and social. In
support of this, several United Nations texts, including the 2005 World Summit
Outcome Document, refer to the ‘interdependent and mutually reinforcing pillars’
of sustainable development as economic development, social development and
environmental protection.
For over 30 years now, the prime document detailing sustainability and sus-
tainable development has been the Brundtland Report (WCED 1987) because there
is general acceptance of the contents of that Report and because the definition of
sustainability in there is pertinent and widely accepted. Equally, the Brundtland
Report is part of a policy landscape being explicitly debated by the nation states and
their agencies, big business supra-national bodies such as the United Nations
through the vehicles of the WBCSD2 and ICC,3 (see, for example Beder 1997; Gray
and Bebbington 2001). Its concern with the effect which action taken in the present
has upon the options available in the future has directly led to glib assumptions that
2
World Business Council for Sustainable Development.
3
International Chamber of Commerce.
sustainable development is both desirable and possible and that corporations can
demonstrate sustainability merely by continuing to exist into the future (Aras and
Crowther 2008a). It is important, therefore, to remember, the Brundtland
Commission’s (WCED 1987: 1) definition of sustainable development that is the
most accepted by everyone and used as the standard definition of sustainable
development:
…development that meets the needs of the present without compromising the ability of
future generation to meet their own needs.
This is the standard definition of sustainable development which has been taken
up by everyone subsequently. This report makes institutional and legal recom-
mendations for change in order to confront common global problems. More and
more, there is a growing consensus that firms and governments in partnership
should accept moral responsibility for social welfare and for promoting individuals’
interest in economic transactions (Amba-Rao 1993).
At a similar time, all corporations are becoming concerned about their own
sustainability and what the term really means. Such sustainability means more than
environmental sustainability. As far as corporate sustainability is concerned then the
confusion is exacerbated by the fact that the term sustainable has been used in the
management literature over the past 30 years (see for example Reed and DeFillippi
1990) to merely imply continuity. Thus, Zwetsloot (2003) is able to conflate cor-
porate social responsibility with the techniques of continuous improvement and
innovation to imply that sustainability is thereby ensured. Consequently, the tra-
jectory of all of these effects is increasingly being focused upon the same issue.
Sustainability is, of course, fundamental to a business and its continuing exis-
tence. It is equally fundamental to the continuing existence not just of current
economic activity but also of the planet itself—at least in a way which we currently
understand. It is a complex process, as we have discussed. Moreover, it is a process
which must recognise not just the decision being made in the operational activity of
the organisation but also the distributional decisions which are made. Only then can
an organisation be considered to be sustainable.
Others have tended to assume that a sustainable company will exist merely by
recognising environmental and social issues and incorporating them into its
strategic planning. According to Marrewijk and Werre (2003) there is no specific
definition of corporate sustainability and each organisation needs to devise its own
definition to suit its purpose and objectives, although they seem to assume that
corporate sustainability and corporate social responsibility are synonymous and
based upon voluntary activity which includes environmental and social concern.
Sustainability, therefore, implies that society must use no more of a resource
than can be regenerated. This can be defined in terms of the carrying capacity of the
ecosystem (Hawken 1993) and described with input—output models of resource
consumption. Thus, the paper industry, for example has a policy of replanting trees
to replace those harvested and this has the effect of retaining costs in the present
rather than temporally externalising them. Similarly, motor vehicle manufacturers
have a policy of making their cars almost totally recyclable. Viewing an
organisation as part of a wider social and economic system implies that these effects
must be taken into account, not just for the measurement of costs and value created
in the present but also for the future of the business itself.
Such concerns are pertinent at a macro level of society as a whole, or at the level
of the nation state but are equally relevant at the micro level of the corporation, the
aspect of sustainability with which we are concerned in this work. At this level,
measures of sustainability would consider the rate at which resources are consumed
by the organisation in relation to the rate at which resources can be regenerated.
Unsustainable operations can be accommodated for either by developing sustain-
able operations or by planning for a future lacking in resources currently required.
In practice organisations mostly tend to aim towards less unsustainability by
increasing efficiency in the way in which resources are utilised. An example would
be an energy efficiency programme.
There have been various descendants of Brundtland, including the concept of the
Triple Bottom Line (Aras and Crowther 2008b). This, in turn, has led to an assumption
that addressing the three aspects of economic, social and environmental is all that is
necessary in order to ensure not just sustainability but to also enable sustainable
development. Indeed the implicit assumption is one of business as usual—
add some information about environmental performance and social performance to
conventional financial reporting (the economic performance) and that equates to triple
bottom line reporting. And all corporations imply that they have recognised the
problems, addressed the issues and thereby ensured sustainable development. This
implication is generally accepted without questioning—certainly without any rigorous
questioning. One is the Triple Bottom Line—the 3 aspects of performance:
• Economic performance
• Environmental performance
• Social performance
It is recognised in the financial world that the cost of capital which any company
incurs is related to the perceived risk associated with investing in that company—in
other words, there is a direct correlation between the risk involved in an investment
and the rewards which are expected to accrue from a successful investment.
Therefore, it is generally recognised that the larger, more established companies are
a more certain investment, and therefore, have a lower cost of capital. This is all
established fact as far as finance theory is concerned and is recognised in the
operating of the financial markets around the world. Naturally, a company which is
sustainable will be less risky than one which is not. Consequently, most large
companies in their reporting mention sustainability and frequently it features
prominently. Indeed it is noticeable that extractive industries—which by their very
nature cannot be sustainable in the long term—make sustainability a very promi-
nent issue. The prime example of this can be seen with oil companies—BP being a
very good example—which make much of sustainability and are busy redesignating
themselves from oil companies to energy companies with a feature being made of
renewable energy, even though this is a very small part4 of their actual operations.
This relates also to governance as there is increasing evidence that corporations
with strong governance have a sustainable advantage which translates financially
into benefits in the form of a lower cost of capital. It is, therefore, reasonable to
argue that these two factors of responsibility and governance form the twin pillars
of sustainability and it is the purpose of this book to explore this argument. This is
achieved through the various contribution which are contained within.
3 Responsibility
3.1 The Dual Role of Responsibility—Both Governance

and Pillar
In this book, we raise the question of the triple pillars of sustainable development
and look at an alternative. Previously in this book series (Crowther et al. 2017; see
also Aras and Crowther 2008a, b), four components of good governance and their
significance to sustainability were highlighted:
• Responsibility;
• Transparency;
• Accountability;
• Fairness.
Most organisations whether public, private or not-for-profit have structures that
distribute power, responsibility, oversight and ultimately accountability (Steger and
Amann 2008)—i.e. governance structures. Whilst discussion on corporate gover-
nance has prevailed (Brennan and Solomon 2008; Tuan 2012), particularly in the
CSR discourse, the rationale for governance in other settings is similar.5 There have
certainly been different catalysts towards governance, in the private sector, ensuring
shareholders’ interests are protected, and responses to corporate scandals are some
of these. In the public sector, public reform (such as new public management), and
a heightened emphasis on the notion of ‘the taxpayers’ money’ have impacted on
the governance systems and structures that we see in many countries today.
Corporate governance has become a ‘vehicle for integrating social and envi-
ronmental concerns into the business decision-making process’ (Tuan 2012,
p. 548). There is greater recognition that shareholders do not solely seek to max-
imise their personal wealth. Indeed, several studies have explored how social
4
It needs a very careful reading of the annual report to discover this.
5
Although corporate governance recognises the economic motivations of business, and, the pursuit
of profit prospers, whereas other forms of governance such as clinical, and public governance are
not likely to prioritise profit.
concerns attract investment (Johnson and Greening 1999; O’Neill 2017; Crowther
and Seifi 2017).
Good governance is important for trust and confidence in both corporate and
political contexts (Crowther and Seifi 2017, p. 434). However, the failings of
governance systems are all too often observed (and usually at the fault of misuse of
the systems, see Rampersad and Hussain 2014). This has resulted in a great deal of
governance discourse, much of which adopts agency theory and looks critically on
the role of managers (in the case of scandals often seeing managers and other senior
organisational actors as deviant and self-interested) (Brennan and Solomon 2008).
Responsibility enjoys a role in both the pillar of governance concept (Crowther
et al. 2017), but also as a pillar in itself, indicating a dual role inside and outside of
governance structures. As a result, responsibility in its numerous guises is explored
here.
At its simplest, responsibility concerns a person or entity being responsible to
another, for a particular purpose. Responsibility is embedded, literally, in the
CSR concept, and relates to the responsibility that a company has for ‘their impact
on society’ (European Commission 2018). Yet, responsibility is complicated, open
to interpretation, subjective, and operates with a ‘nebulous quality’ (Schlenker
1997, p. 242). Touching on psychological contributions, responsibility is recog-
nised to be both formal (actual) and felt (i.e. perceived) (Cummings and Anton
1990).
3.2 Six Constructs of Responsibility
To develop an understanding of responsibility as a pillar of sustainability, an

exploration of the various meanings and constructs of responsibility is worthwhile.
We use Bergsteiner and Avery’s (2010) six constructs of responsibility to explore
responsibility further.
Role or task responsibility results from defined social roles and tasks. Role/task
responsibility resembles traditional organisational/corporate governance arrange-
ments. Leaders have defined roles in respect of ensuring an organisations survival,
success or other outcomes (such as social impact), and become accountable for such
performance.
Normative responsibility is ‘the requirement by others to make actions, beha-
viours, and decisions subject to legal, ethical or normative roles of conduct’
(Bergsteiner and Avery 2010, p. 12). Normative responsibility is represented in
CSR by mechanisms such as regulatory intervention, and environmental and social
disclosure. Whilst coercive, such external intervention reinforces governmental
priorities around specific social and environmental concerns and supports these
priorities to become embedded in roles and tasks (role/task responsibility).
Moral responsibility is becoming an increasing area for study in sustainability,
particularly in the context of leaders driving more pro-social activity as a result of
their own personal standards. Moral responsibility relates to the perpetuation of
personal values through activities, decision and behaviour. Bergsteiner and Avery
(2010), observe that moral responsibility may be exerted even when role/task
responsibility is absent, demonstrating an interesting dynamic between the
responsibility constructs.
Causal responsibility occurs ex-post, looking back on the activity or event to
explore causality and responsibility, and occurs a great deal (Bateman and
O’Connor 2016). Public inquiries6 are one such example of an attempt to establish
causal responsibility. Examples which are imminent involve social media platforms
such as Facebook and Google which have caused worldwide concern. Whilst cause
for claims that this is a ‘too little too late’ approach, retrospective activity such as
this can be powerful. The recent images of a ‘sea of plastic’, plastic waste, in the
Caribbean oceans were shared across the world and have prompted significant
responses from individuals, organisations and governments, pledging to reduce and
reuse plastic packaging and products.
Judged responsibility relates to the perceptions that others have of a party being
responsible for something (an action or outcome for instance). For instance, if we
take our plastic pollution example above, some may judge this the responsibility of
suppliers or retailers for over-packaging items, others may blame governments for
not intervening to oppose single-use plastics. Others may look to hold consumers
responsible for their preferences towards convenient pre-packaged food or con-
sumption of shopping bags. Who is responsible is, therefore, a matter of judgement
and demonstrates the diversity of stakeholder interests, values and expectations.
Felt responsibility represents the responsibility and sense of personal obligation
that entities feel towards particular tasks and activities. This mirrors long-standing
debate in sustainability about attitude–behaviour gaps. The notion of felt respon-
sibility supports us to understand why individuals act in pro-social ways. Bateman
and O’Connor (2016) explore felt a responsibility towards climate change mitiga-
tion and adaption, and citizen belief in global warming.
3.3 Consequences for Governance and Sustainability
Several characteristics emerge from these various responsibility constructs that are
particularly relevant to sustainable development:
• First, there is recognition that responsibility can be ascribed through formal
responsibility or self-ascription. There are organisational implications here for
the way in which sustainable behaviours are formally assigned (through ‘role/
task responsibility’), and the need to strategically assign these and embed these
as legitimate organisational concerns. The self-ascription of responsibility (‘felt
6
These are a regular feature of the British system (e.g. the Windrush problem; air pollution
enquiry) but possibly less common elsewhere. In the USA, for example enquiries tend to focus on
political issues such as Russian involvement in election manipulating.
responsibility’) prompts consideration for the way in which private and public
organisations recognise the personal values of staff, leaders, customers, and
citizens.
• Second, these responsibility constructs, and particularly judged responsibility,
demonstrates the wildly varying perceptions that stakeholders may have with
regards to who is responsible, and indeed culpable, for certain activity.
• Third, responsibility sits both inside and outside of governance structures.
Whilst role/task, normative and causal responsibility types are manifest in the
approaches to governance structures, rule-settings, regulation and reporting not
all types of responsibility can be as easily managed. Felt and moral responsi-
bilities result from values and perceptions that individuals may self-ascribe.
Figure 1 illustrates where these various responsibility types may emerge within
the pillars of governance and responsibility.
• Fourth, responsibility is fluid and can be transferred from individual concern or
belief into the governance/organisational domains. This may have implications
on the way in which organisations foster the concerns and self-determination of
employees and other stakeholders.
The appreciation of normative responsibility is mimetic of accountability con-
cerns in our model of good governance, and mechanisms later designed to ensure
transparency.
There are growing pressures on firms to clearly demonstrate their approach (both
in terms of governance and activity) to social and environmental concerns. Such
pressures are born not just from investors but from customers, all showing
increasing interest in sustainability metrics (Tamimi and Sebastianelli 2017).
Reporting and disclosure practice is apparent in a range of social and ethical
concerns from carbon emissions to modern slavery (for instance, in the UK context
affected by the Modern Slavery Act). Environmental and sustainability reporting
encourages transparency and represents the shift to a more stakeholder-oriented
approach in accounting (Brennan and Solomon 2008). Transparency through
reporting ensures that firms make an outwardly facing commitment to sustain-
ability. The use of environmental–social–governance (ESG) metrics supports
transparency and accountability of organisations towards many several environ-
mental and social concerns to be understood. Conway (Chap. 9) explores ESG
ratings and reporting later. Ribeiro and Monteiro (Chap. 13) explore the use of
social and environmental accounting and reporting in the public sector context.
However, transparency and the mechanisms of corporate reporting and disclosure
do not necessarily result in ethical and sustainable practice and strategic legitimacy
recognises a certain degree of ‘game-playing’ in this respect.
So far, ‘fairness’ has been absent from our discussion. Fairness comprises of
consistency, the subdual of bias, accuracy of data, freedom of individual voice,
ethicality and the opportunity for the overturn of unfair decisions (Leventhal 1980).
The notions of moral and felt responsibility denote a more personal and subjective
representation of actors (employees, leaders, citizens) in organisations and society.
Fig. 1 Responsibility within the twin pillars construct Source Authors’ own
This echoes the subjective notion of fairness and related concepts such as equality
and rights.
4 The Future for Sustainability
4.1 The Changing Sustainability Landscape
The sustainability landscape continues to evolve and the role and activities of
governments, sectors, organisations and citizens are changing, and so are the judged
responsibilities each has of the other.
We are witnessing greater approaches to embedding sustainability within sector
and organisational practice. The recognition of sustainability through ISO standards
and EU directives have supported organisations to strive to achieve such standards.
Normative forms of responsibility are therefore apparent. Such pressures have
reinforced social and environmental concerns across business-to-business rela-
tionships. This is evident as we see companies requiring their suppliers to achieve
the necessary sustainability standards too, and has led to greater consideration for
how sustainability can be embedded in supply chains (see Kauppi and Hanibal
2017; Nakamba et al. 2017), and a greater consciousness of sustainable resource
use. Moyeen, Kamal and Yousuf (Chap. 10) investigate the hotel industry to show
the important factors involved and how these change over time.
The role of small and medium enterprises (SMEs) in supporting sustainable

development is also receiving greater recognition. There is increasing interest in
SMEs, as a population for study, in sustainability discourse. This is exemplified by
Marshall and Williams in Chap. 14, as they investigate the sustainable actions of
micro and small businesses. Marshall and Williams’ study finds that not only are
SMEs interested in behaving sustainably but many already are acting in an
eco-friendly manner. The moral and felt responsibilities of business leaders appear
to influence the way in which business is being done, and the convergence of leader
and entrepreneur pro-social interests with their business activity prompts further
research.
The notion of the circular economy signals more restorative approaches to
resource use. The circular economy concept is based on attempts to eliminate waste
and, as opposed to linear models which see disposal as the end point of a product’s
life, the circular economy embeds a ‘cradle to cradle’ philosophy. An emphasis on
design- and systems-thinking and the cooperative engagement of stakeholders is
central to the success of this philosophy. This moves social–environmental concern
in organisations from the dominant roles of accountants, marketers and strategist
into more operational functions (e.g. research and development; procurement). At
an intra-organisational level, judged responsibilities may shift or extend to these
newer organisational actors requiring uncertainty. On a sector level, there is
recognition that ‘inter-organisational and inter-sectoral’ governance can be chal-
lenging in circular economy settings (Korhonen et al. 2018, p. 45). The intercon-
nected and complex nature of sustainability (Crowther et al. 2017) reinforces this
logic. The implications of responsibility on such inter-organisational/sector issues
are vast, requiring leadership, new (co-)governance arrangements and enhancing
the complexity of judged, moral, role/task, and normative aspects of responsibility.
Collaboration emerges as a key theme from the above, also echoed in Jahdi
(Chap. 5) and Wond’s (Chap. 6) contributions.
As can be seen in the chapters of this book, there is a distinct need for oversight
of sustainability at macro levels. Lauesen (Chap. 7) considers the tensions of
managing growing flood risks and the strains of public organisations in supporting
flood prevention. Similarly, Abreu et al. (Chap. 3) explore blue accounting and
marine sustainability, calling for greater awareness of this important public good.
At an individual level, there is a greater acknowledgement of citizens and
consumers being more aware of their behaviours, and the increasing embedding of
sustainability in social norms and values (moral responsibility). Oliveira (Chap. 8)
emphasises the role of residents and socially responsible practice of entrepreneurs
towards sustainable tourism. Schwalb-Helguero and García-Arrizabalaga (Chap. 12
) explore the concept of ‘buycotters’, consumers who reward organisations for their
socially responsible activity (through a recommendation for instance).
Bandyopadhyay and Leonard (Chap. 11), in exploring ‘the plight of contract
workers’, remind us of the social concerns towards employees, specifically
regarding worker rights. Bandyopadhyay and Leonard’s contribution prompts us to
emphasise that sustainability is not merely concerned with the future protection of
our environment and plant but involves acting responsibly in the short term, for
social reasons, too.
5 Conclusions
This chapter has sought to explore responsibility as a pivotal pillar of our twin
pillars construct. It has also introduced some of the concerns underpinning chapters
in this book. Chapter contributions by international researchers prompt thought for
matters such as sustainable decision-making within government, larger corporations
and SMEs, specific technical ecological concerns, approaches to reporting and
measuring social and environmental concerns, and institutional processes to legit-
imise sustainability endeavours.
Whilst CSR, as a concept or label, appears to be losing popularity, the foun-
dations of governance and responsibility support sustainability to continue the
important call for action.
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Part I
Challenging the Routine
Walking Away from Omelas
David Crowther
Abstract In the short story “The Ones Who Walk Away From Omelas” published
in 1973, the author Ursula Le Guin described a world in which happiness and
contentment of the majority was predicated in the unmitigated suffering of one
individual. In this chapter, this story is used as a parable to consider sustainability
and the actions which the world is taking to ensure that sustainability, or at least to
mitigate the current unsustainability. Although the parable is primarily about
morality and ethics, and an attack upon the Utilitarian foundations of modern
economic and social moves, there are several lessons which can be extracted. All
are considered in this chapter.
Keywords Utilitarianism Ethical decisions Social contract Individualism

Ethical dilemmas
1 Introduction
In her short story, published more than 40 years ago, LeGuin (1973) poses an
ethical dilemma which had subsequently been used extensively by university lec-
turers to discuss the merits and deficiencies of Utilitarianism. In this short story, Le
Guin describes the utopian city of Omelas during the Festival of Summer. The city
is characterised by its happiness and beauty underscored by its close proximity to a
sparkling sea. For the festival, the entire population of Omelas joins together in
various processionals through the city. Boys and girls in the Green Fields exercise
their horses in preparation for the festival race.
This is, however, just a picture of life above ground in Omelas. Beneath the city
lives a nameless child who knows only darkness and squalor. This child, of
unspecified gender, is chosen from the population to exist as a living sacrifice that
allows the rest of the city to live in peace and happiness. The child lives in a tiny,
D. Crowther (&)
De Montfort University, Leicester, UK

18 D. Crowther
windowless room underneath one of the beautiful municipal buildings in the city,
without any comforts or social interaction save the occasional people who come to
gawk at it. Each person in the city learns of the child’s existence at some point in
their lives, and most come to peer at the child at least once, though some come for a
return visit. The happy existence of everyone in Omelas depends upon the child’s
miserable condition, and the knowledge of this creates a conflict within the minds
of some of the people of Omelas. Most citizens eventually overcome their guilt and
continue to live happily. Directly above the child’s locked room, people go about
their daily business, choosing to ignore the child’s suffering by accepting it as a
mere fact of life. To most, the beauty and richness of their lives justify the sacrifice
of the child.
There are, however, some who cannot reconcile the child’s wretched existence
with the comforts of their lives. These people leave Omelas. Some leave when they
first learn of the child’s existence and others leave after months or years of wrestling
with their guilt. The ones who leave simply slip out of the city quietly and embark
on solitary journeys out of the city. Though these people come from all walks of
life, they all never return to Omelas, and their paths and fates are unknown.
From this very short story, a complex ethical puzzle is created and the dilemma
is concerned with whether it is ok to know about the child and accept it or whether
it is better to simply walk away. This, of course, goes directly to the fundamental
issue of Utilitarianism and whether utilities can be summed to arrive at the greatest
good for the greatest number.
2 Utilitarianism
Classical Liberal Theory started to be developed in the seventeenth century by such

writers as John Locke (1690) as a means of explaining how society operated, and
should operate, in an era in which the Divine Right of Kings to rule and to run
society for their own benefit had been challenged and was generally considered to
be inappropriate for the society which then existed. Classical Liberalism is founded
upon the two principles of reason and rationality: reason in that everything had a
logic which could be understood and agreed with by all, and rationality in that
every decision made was made by a person in the light of what their evaluation had
shown them to be for their greatest benefit. Classical Liberalism, therefore, is
centred upon the individual, who is assumed to be rational and would make rational
decision, and is based upon the need to give freedom to every individual to pursue
his/her own ends. It is, therefore, a philosophy of the pursuance of self-interest.
Society, insofar as it existed and was considered to be needed, was, therefore,
merely an aggregation of these individual self-interests. This aggregation was
considered to be a sufficient explanation for the need for society. Indeed Locke
argued that the whole purpose of society was to protect the rights of each individual
and to safeguard these private rights.
Walking Away from Omelas 19
There is, however, a problem with this allowing of every individual the complete
freedom to follow his/her own ends and to maximise his/her own welfare. This
problem is that in some circumstances this welfare can only be created at the
expense of other individuals. It is through this conflict between the rights and
freedoms of individuals that problems occur in society. It is for this reason,
therefore, that de Tocqueville (1840) argued that there was a necessary function for
government within society. He argued that the function of government, therefore,
was the regulation of individual transactions so as to safeguard the rights of all
individuals as far as possible.
Although this philosophy of individual freedom was developed as the philoso-
phy of Liberalism it can be seen that this philosophy has been adopted by the
Conservative governments throughout the world, as led by the UK government in
the 1980s. This philosophy has led increasingly to the reduction of state involve-
ment in society and the giving of freedom to individuals to pursue their own ends,
with regulation providing a mediating mechanism where deemed necessary. It will
be apparent, however, that there is a further problem with Liberalism and this is that
the mediation of rights between different individuals only works satisfactorily when
the power of individuals is roughly equal. Plainly this situation never arises
between all individuals and this is the cause of one of the problems with society.
While this philosophy of Liberalism was developed to explain the position of
individuals in society and the need for government and regulation of that society,
the philosophy applies equally to organisations. Indeed Liberalism considers that
organisations arise within society as a mechanism whereby individuals can pursue
their individual self-interests more effectively than they can alone. Thus firms exist
because it is a more efficient means of individuals maximising their self-interests
through collaboration that is possible through each individual acting alone. This
argument provides the basis for the Theory of the Firm, which argues that through
this combination between individuals the costs of individual transactions are
thereby reduced.
The concept of Utilitarianism was developed as an extension of Liberalism in
order to account for the need to regulate society in terms of each individual pur-
suing, independently, his or her own ends. It was developed by people such as
Bentham (1789) and Mill (1863) who defined the optimal position for society as
being the greatest good of the greatest number. They argued that it was govern-
ment’s role to mediate between individuals to ensure this societal end. In
Utilitarianism, it is not actions which are deemed to be good or bad but merely
outcomes. Thus, any means of securing a desired outcome was deemed to be
acceptable and if the same outcomes ensued then there was no difference, in value
terms, between different means of securing those outcomes. Thus, actions are value
neutral and only outcomes matter. This is, of course, problematical when the actions
of firms are concerned because firms only consider outcomes from the point of view
of the firm itself. Indeed accounting, as we know, only captures the actions of a firm
insofar as they affect the firm itself and ignores other consequences of the actions of
a firm. Under Utilitarianism, however, if the outcomes for the firm were considered
to be desirable then any means of achieving these outcomes were considered
20 D. Crowther
acceptable. In the nineteenth and early twentieth centuries, this was the way in
which firms were managed and it is only in more recent times that it has become
accepted that all the outcomes from the actions of the firm are important and need to
be taken into account.
The development of Utilitarianism led to the development of Economic Theory
as means of explaining the actions of firms. Indeed the concept of Perfect
Competition is predicated on the assumptions of Classical Liberal Theory—and the
arguments for the unregulated Free Market are based upon the concept of such
Perfect Competition.1 From Economic Theory, of course, both Finance Theory and
accounting developed as tools for analysis to aid the rational decision-making
assumed in Economic Theory. This is a problem because it encourages selfish and
exploitative behaviour. So we can either believe that the market will mediate in an
optimal way—which is complete nonsense—or we can suggest that ethical
understanding will compensate—also nonsense. Or we must look for an alternative.
In 1762 Jean-Jacques Rousseau produced his book on the Social Contract which
was designed to explain—and therefore legitimate—the relationship between an
individual and society and its government. In it, he argued that individuals vol-
untarily gave up certain rights in order for the government of the state to be able to
manage for the greater good of all citizens. Nevertheless, the idea of the Social
Contract has been generally accepted. More recently the Social Contract has gained
a new prominence as it has been used to explain the relationship between a com-
pany and society. In this view, the company (or other organisation) has obligations
towards other parts of society in return for its place in society.
Most people would argue that the extension of the Social Contract to corpora-
tions provides some kind of answer to current problems, through a voluntary giving
up by firms of some autonomy for the greater good and the subjection to regulation.
It is doubtful, however, if this will provide the answer.
Classical liberal philosophy is important for the situating of debates concerning
corporate social responsibility within the discourse of both the social contract and
of the globalisation phenomenon. As a philosophy, it places an emphasis upon
rationality and reason, with society being an artificial creation resulting from an
aggregation of individual self-interest, and with organisations being an inevitable
result of such aggregations for business purposes. Thus, Locke (1690) viewed
societies as existing in order to protect innate natural private rights while Bentham
(1789) and Mill (1863) emphasised the pursuit of human need. Of paramount
importance to all was the freedom of the individual to pursue his2 own ends, with a
tacit assumption that maximising individual benefits would lead to the maximisa-
tion of organisational benefits and also societal benefits. In other words, societal
benefits can be determined by a simple summation of all individual benefits.
1
This is despite the fact that the concept of Perfect Competition is an elementary assumption in
foundation-level economics which is recognised as never existing, and is an assumption which is
speedily relaxed in more advanced economics.
2
The use of the term his here is intentional as these writers were only concerned with a certain
section of society, who were of course all male and relatively prosperous and privileged.
Classical liberal economic theory extended this view of society to the treatment of
organisations as entities in their own right with the freedom to pursue their own
ends. Such theory requires little restriction of organisational activity because of the
assumption that the market, when completely free from regulation, will act as a
mediating mechanism which will ensure that, by and large, the interests of all
stakeholders of the organisation will be attended to by the need to meet these free
market requirements. This view, however, resulted in a dilemma in reconciling
collective needs with individual freedom. De Tocqueville (1840) reconciled these
aims by suggesting that government institutions, as regulating agencies, were both
inevitable and necessary in order to allow freedom to individuals and to protect
those freedoms.
Thus classical liberal arguments recognise a limitation in the freedom of an
organisation to follow its own ends without any form of regulation. Similarly,
Fukuyama (1992) argued that liberalism is not in itself sufficient for continuity and
that traditional organisations have a tendency to atomise in the pursuance of the
ends of the individuals who have aggregated for the purpose for which the
organisation was formed to fulfil. He argued that liberal economic principles pro-
vide no support for the traditional concept of an organisation as a community of
common interest which is only sustainable if individuals within that community
give up some of their rights to the community as an entity and accept a certain
degree of intolerance. On the other hand, Fukuyama considered the triumph of
liberal democracy as the final state of history, citing evidence of the breakup of the
eastern block as symbolising the triumph of classical liberalism.3
Hobbes (1651) is well known for discussing the concept of the social contract. In
his work, citizens would agree to vest absolute power in a sovereign power as the
only way to avoid anarchy. In doing so citizens give up their individual rights,
including control of liberty and property, and possible life. He argued that human
self-interest is such that we would be willing to wage war on each other, the end
result being a short and unpleasant life for all. This tradition accords with a utili-
tarian position: the pursuit of maximum welfare, and this can be considered to
provide the basis for the capitalist systems and its reliance upon the market and
individual endeavour. This, therefore, provides the test for whether the corporate
behaviour is morally right or wrong. Utilitarianism regards the corporate activity as
morally good if it increases human welfare, and collective welfare may override
individual welfare.
During the era of individualism in the 1980s, however, a theoretical alternative
was developed in the USA, which became known as Communitarianism, although
the concept goes back to the earlier work of such people as Tonnies (1957) and
Plant (1974). Communitarianism is based upon the argument that it is not the
individual, or even the state, which should be the basis of our value system. Thus,
3
Fukuyama presents these arguments as the end of history, which he does not celebrate. In actual
fact, it is his critique of classical liberalism which is the most significant contribution of his work.
This aspect of his work is almost universally ignored in favour of his end of history argument.
22 D. Crowther
the social nature of life is emphasised alongside public goods and services. The
argument is that all individuals, including corporations have an obligation to
contribute towards the public nature of life rather than pursuing their own
self-interests. Underpinning the theories of communitarianism is the assumption
that ethical behaviour must proceed from an understanding of a community’s tra-
ditions and cultural understanding. Exponents argue that the exclusive pursuit of
private interest erodes the network of social environments on which we all depend,
and is destructive to our shared experiment in democratic self-government.
A communitarian perspective recognises both individual human dignity and the
social dimension of human existence and that the preservation of individual liberty
depends on the active maintenance of the institutions of civil society where citizens
learn respect for others as well as self-respect where we acquire a lively sense of our
personal and civic responsibilities, along with an appreciation of our own rights and
the rights of others.
3 Walking Away as an Ethical Choice
Although the implication of the story is that if an inhabitant does not like the
situation and the treatment of the child it seems that most people accept the resultant
benefits, a few, however, choose to walk away from Omelas and the implication is
that these people find the situation impossible to accept. In the story a few people
find the situation impossible to accept and, therefore, just walk away from the city.
The story does not, however, give any indication of where they go. The story is
powerful and has been adopted by many academics as a way to discuss ethical
behaviour—and the benefits and problems with living in such a situation. It can
been readily seen how this can be adapted to many real-life situations such as
discussed by Trevino and Youngblood (1990), Kitchener (1984), Harris (2007),
Bolman and Deal (2017).
Naturally, there is a temptation to categorise one alternative as good and the
other as bad as the situation in the book is so extreme that is leads towards such
binarism. In reality ethical choices are, of course, never as simple as this and tend
towards a sense of greyness. While this binarism is possibly unrealistic it enhances
the teaching qualities of the story and enables vigorous discussion. It seems to me,
however, that the binary choice which is portrayed in the story, and may well have
been the intention of the author is not sufficient. In this case, the death of the author
thesis (Derrida 1978) is not relevant and there is a further course of action which is
never considered by is also vitally important. Derrida (1976) also stated that it is
only possible to criticise the discourse from within. From this, it can be seen that
there is a different choice which is never considered and that is to remain and seek
to bring about change.
This option is of particular significance to those of us who are concerned with
social responsibility and with governance. In the modern world, it is possible to
walk away by dropping out and relocating but the danger of this is that that status
quo becomes more established and accepted. The alternative is to challenge the
dominant view and seek to bring about change. Unfortunately, this is often por-
trayed as heroism, particularly by the media and within Hollywood where there is a
tendency to turn it into an act of heroism and bravery—with the implication of an
epic story. The idea of the epic story is one which permeates history (Campbell
1949, 1991) to such an extent that it can be considered to be omnipresent. Campbell
is the most significant student of epic stories and myths in a world context; he
described his work (see Cousineau and Brown 1990) as an attempt to tell the story
of humankind as the ‘One Great Story’. By this, he meant the saga of the spiritual
awakening of mankind and the subsequent development of society. He believed that
the many differing mythical and religious beliefs which are present throughout the
world and throughout history, while seeming to be disparate, are neither discrete
nor unique. Instead, each is simply a cultural or ethnic manifestation of the ele-
mental ideals which have forever transfixed the human psyche. Campbell adopted a
comparative historical approach to mythology, religion and literature but, unlike
most scholars, rather than concentrating upon differences he concentrated upon
similarities. He was convinced that common themes and images could reveal
mankind’s common psychological roots. He argued that the recognition we have of
images from primal cultures, contemporary work and from different cultures reflects
the common spiritual ground from which all human life springs.
Although old myths were a way of explaining the origins of the world and of
humanity they also played a vital role in uniting a society. Campbell argued that this
cohesive role remains crucial today and so myths remain relevant to us today.
Indeed, he demonstrates that these myths continue to be reinvented in modern form.
For individuals, these myths provide a source of strength and a sense of roots and
values; they offer a mirror to reveal the source of our anxieties and the means by
which they might be resolved. In this respect, his work parallels that of Jung and of
Bruno Bettelheim concerning fairy stories. Campbell argues that the function of
ritual is to give a form to human life and to mark the passage from one part of that
life to the next. He states that the reservation of such ritual for exceptional occasions
in modern society is one source of neuroticism and contrasts the present with the
way ritual was embedded in all social occasions in older more stable societies. He
also identifies the common archetypes prevalent in myth and compares them to the
archetypes revealed in psychoanalytic writings and in dreams. His concern, how-
ever, is with the relevance of all of this to present day life.
It can be argued that the present is an age of the instantaneous organisation,
where speed is of the essence, life revolves around the signs and symbols of culture.
At least it might be argued that this is the nature of the present. But as space and
time become compressed into irrelevance what emerges is a different form of
atemporality. This takes the form of the myth. As Nietsche (1956: 156) states,
‘Only a horizon ringed about by myth can unify a culture’.
Spaciality and temporality are compressed in the eternal present which must
ignore the past and focus on a future which will be even better. Thus, the concept of
speed provides an idea of progress towards that better future but in reality is simply
a statement which privileges a future that is separate from and more important than
24 D. Crowther
the present. This disconnection between the present and the future relies upon a
notion of time but a corollary to this is the notion that self is more important than
the other. This is when speed becomes dangerous—when self is privileged over the
other—for speed is not dangerous when self is turned towards other.4 But the
acceleration of the pace of life only raises, alongside it, the need to seek solace in an
atemporal present and thereby a need to reinvent and refocus the universal myths
and epic stories, particularly those involving ‘the hero’. The epic story involving the
hero has been summarised by Campbell (1988: xii) as:
A hero ventures forth from the world of common day into a region of supernatural wonder:
fabulous forces are there encountered and a decisive victory is won: the hero comes back
from this mysterious adventure with the power to bestow boons on his fellow men.
Such heroes are present throughout history and we are all familiar with people
such as Mahatma Gandhi and Martin Luther King (and also Martin Luther) as
people who have brought about change. We are possibly less familiar with Rosa
Parks or the Tolpuddle Martyrs and few of us have heard of Dave Morris and Helen
Steel. Even fewer of us know of the many people who strive to bring about change
and what they consider to be a more just society. What is important though—
certainly for increasing social responsibility is that we are all willing to stand up and
state what is wrong and needs to be changed. It is insufficient to walk away. In this
chapter, therefore, the argument is that the options presented by this story are
insufficient and that we all have a responsibility not to walk away from situations
which we are unhappy with. Instead, we have a duty to seek change and this is the
essence of social responsibility.
References
Bentham, J. (1789). An introduction to the principles of morals and legislation; many editions.
Bolman, L. G., & Deal, T. E. (2017). Reframing Organizations: Artistry, choice and leadership.
Hoboken, NJ: Jossey Bass.
Campbell, J. (1949). The Hero with a thousand faces. Princeton, NJ: Princeton University Press.
Campbell, J. (1988). Historical atlas of world mythology vol 1 Part 2 mythologies of the great
hunt. New York: Harper & Row.
Campbell, J. (1991). Reflections on the art of living. New York: HarperCollins.
Cousineau, P., & Brown, S. (Eds.). (1990). The Hero’s journey: The world of Joseph Campbell.
New York: Harper & Row.
Derrida, J. (1976). Of Grammatology (trans G C Spivak). Baltimore: John Hopkins University
Press.
Derrida, J. (1978). Writing and difference. Chicago: University of Chicago Press.
Fukuyama, F. (1992). The end of history and the last man. New York: The Free Press.
Harris, J. (2007). Enhancing Evolution: The ethical case for making better people. Princeton, NJ:
Princeton University Press.
Hobbes, T. (1651). Leviathan; many editions.
4
See www.changeworks.org.uk for the work of Crowther and Hosking in this area.
Kitchener, K. S. (1984). Intuition, critical evaluation and ethical principles: the foundation for
ethical decisions in counselling psychology. The Counselling Psychologist, 12(3), 43–55.
LeGuin U K (1973, 2012). The ones who walk away from Omelas; in U K LeGuin, The Real and
The Unreal: Selected Stories Vol 2. London: Orion Publishing; pp. 1–8.
Locke, J. (1690). Two treatises of Government; many editions.
Mill, J. S. (1863). Utilitarianism, liberty and representative Government; many editions.
Nietsche, F. (1956). The Birth of tragedy. New York: Doubleday.
Plant, R. (1974). Community and Ideology. London: Routledge & Kegan Paul.
De Tocqueville, A. (1840). Democracy in America; many editions.
Tonnies, F. (1957). Community and society. Trans. Loomis C P; Harper & Row; New York.
Trevino, L. K., & Youngblood, S. A. (1990). Bad apples in bad barrels: A causal analysis of
ethical decision- making behaviour. Journal of Applied Psychology, 75(4), 378–385.
Blue Accounting: Looking
for a New Standard
Rute Abreu, Fátima David, Luís Lima Santos, Liliane Segura

and Henrique Formigoni
Abstract This research explores the framework of the marine knowledge, in

general, and the blue accounting, in particular. On the one hand, the seabed, the
ocean floor, and the subsoil allow to promote several activities to explore these
resources. On the other hand, the pollution and degradation of the marine envi-
ronment due to human intervention which damage and harm the marine life and
produces strong risks and threats to this environment. In this context, marine
resources are a public good which is available to everybody, at all time, but without
payment or compensations to this collective pressure of human activity. In order to
reinforce the marine knowledge, the blue accounting will provide to the citizen, to
the organization and to the society valuable information based on accounting
standards that identify, measure, value, and report this blue growth that is the ocean
strategy with new opportunities for marine and maritime sustainability. The fast
evolution of the marine knowledge demands profound accounting researches that
will study the increasing impact on the use, the management, the associated costs,
and the new report opportunities of these resources and its value. This research will
reduce the negative effect of politics and Governments that forget the blue
accounting as essential to support the blue economy and ocean strategy, because
sciences are interdependent and scarcity of marine resources demands knowledge to
emerge these first insights and then mitigate uncertainties and risks.
Keywords Blue accounting Marine knowledge Maritime resource

Valuation Measurement
R. Abreu (&) F. David

Guarda Polytechnic Institute/UDI-IPG/CICF-IPCA, Guarda, Portugal
L. L. Santos
Leiria Polytechnic Institute/CiTur Leiria, Leiria, Portugal
L. Segura H. Formigoni
Universidade Presbiteriana Mackenzie, São Paulo, Brazil

28 R. Abreu et al.
1 Introduction
Dacin et al. (2007) states that legitimacy is the central concept of organizational
institutionalism, i.e., Higher Education Institutions as part of the education system
need not only to promote the technical studies and information about their envi-
ronment, but also to increase the credibility and the acceptance of knowledge in the
society. So, researchers are indispensable to transfer knowledge to the society and
to the organizations, in order to consolidate the teaching-learning process and
thereby to justify to the society, in general, and to the organizations, in particular,
new areas of researches, such as: Blue Accounting.
This research explores the framework of the marine knowledge (Appeltans et al.
2012), in general, and the blue accounting, in particular. Blue accounting will develop
with an unprecedented urgency, because is associated much more than financial
accounting and management accounting, because it deals with valuation and reporting
itself that seek to assist specialists in certain aspects of the process of degradation,
reuse, and damage with tremendous acceleration process of destruction over the past
years (Boonstra et al. 2018). These information needs to be accountable to be reported
and “it demands innovations that can increase human well-being and at the same time
enhance the capacity of ecosystems to produce services” (Moberg 2016).
As Georgeson et al. (2017) argues the green economy has emerged as an
important policy framework for sustainable development in both developed and
developing countries. It presents an attractive framework to deliver more resource
efficient, lower carbon, less environmentally damaging, more socially inclusive
societies (UNEP 2013; van der Ploeg and Withagen 2013). The same defines the
World Bank (2017) that explains in relation with blue economy that it is the
sustainable use of ocean resources for economic growth, improved livelihoods and
jobs, and ocean ecosystem health. The blue economy encompasses many renewable
energy, tourism, climate change, fisheries, waste management, and maritime
transport (UNEP 2015).
This first publication aims to promote the new accounting research that starts, in
2015, with this main idea born in a Conference promoted by the Global Business and
Technology Association, held at School of Tourism and Maritime Technology of the
Leiria Polytechnic Institute. Indeed, the main objective of this conference was to
explore possibilities for sustainable future growth in Business and Technology
Management. For this reason, the discussions had been around the sea and maritime
resources in order to prepare for the future development of the blue economy.
Since 2015, this research has been discussing new opportunities in order to find
other sources related with maritime field to provide a positive contribution to
Europe Economic Future (EC 2012b). Moreover, these new insights in education
and research for marine and maritime resources will led to increase the sustainable
development and will meet successfully the demands of unique marine environment
that will satisfied the dynamic and competitive management for future generations.
The European Commission publishes the blue growth (EC 2012a). Opportunities
for marine and maritime sustainable growth as a communication from the
Blue Accounting: Looking for a New Standard 29
Commission to the European Parliament, the Council, the European Economic and
Social Committee and the Committee of the Regions to stimulate the long-term
growth and jobs in the blue economy, such as
• Blue energy has the potential to enhance the efficiency of harvesting the
European energy resource, minimize land-use requirements of the power sector
and reduce the European greenhouse gas emissions (EC 2012a: 6);
• Aquaculture has the potential to impacts on wild fish stocks and water quality
due to the lack of available maritime space for aquaculture activities, compe-
tition in the global market and administrative constraints in particular con-
cerning licensing procedures (EC 2012a: 9);
• Maritime, coastal and cruise tourism has the potential due to the extraordinary
beauty and diversity of Portugal, Europe and World’s coasts, as well as, the
wide range of facilities and activities (EC 2012a: 9);
• Marine mineral resources have the potential to exploitation and mining of
minerals, other than sand and gravel, because it is financial and economically
feasible to extract minerals (EC 2012a: 10);
• Blue biotechnology has the potential to underwater world and sea biodiversity
(EC 2012a: 11).
The European Commission (EC 2012b) announces the Marine Knowledge 2020
—From seabed mapping to ocean forecasting as a communication from the
Commission to the European Parliament, the Council, the European Economic and
Social Committee and the Committee of the Regions. Later, the European
Commission (EC 2013) promotes the action plan for a Marine Strategy in the
Atlantic Area.
The Marine Knowledge 2020 (EC 2016) brings together marine data from dif-
ferent sources with the aim to help organization, public authorities and researchers to
find data and make more effective use of them to develop new products and services;
improve the understanding of how the seas behave. Also, the authors found essential
to promote the knowledge of blue accounting and looking for a new standard,
because the growing relevance of sustainability as a market influence demands that
presentation of items in the financial statements of all organizations with three dif-
ferent aspects of measurement and disclosure: (a) the nature; (b) the amount; and
(c) the reason for the classification of each item or class of items (EC 2008).
The global valuation standards detail that this new accounting standard is
developed within a conceptual framework so that elements of financial statements
are identified and treated in a manner that is universally applicable (RICS 2017a). In
furtherance to reinforce the marine knowledge, the blue accounting will provide
valuable information to the citizen, to the organization and to the society based on
the new accounting standard that identify, measure, value and report this blue
growth that is the ocean strategy with new opportunities for marine and maritime
sustainability.
The EMODnet data infrastructure (EMODnet 2018) is developed through a
stepwise approach in three major phases which are
30 R. Abreu et al.
• Phase I was the development, from year 2009 to the year 2013, of the prototype
called ur-EMODnet with coverage of a limited selection of sea basins, param-
eters and data products at low resolution;
• Phase II was the development, from the year 2013 to the year 2016, of the
prototype to an operational service with full coverage of all European seabasins,
a wider selection of parameters and medium resolution data products;
• Phase III will be works, from the year 2016 to the year 2020, towards providing
a seamless multi-resolution digital map of the entire seabed of European waters
providing highest resolution possible in areas that have been surveyed, including
topography, geology, habitats and ecosystems; accompanied by timely infor-
mation on physical, chemical and biological state of the overlying water col-
umn, as well as, the oceanographic forecasts.
Since the United Nations Conferences on the Law of the Sea held at Geneva in
1958 (UN 1958a, 1958b, 1958c, 1958d) and 1960 (UN 1961) have accentuated the
need for a new and generally acceptable Convention on the Law of the Sea. In
1992, the United Nations conclude the Law of the Sea, but only 1994 has been put
in force. This Law of the Seafocus on the territorial sea and contiguous zone, straits
used for international navigation, archipelagic states, exclusive economic zone,
continental shelf, high seas, regime of islands, protection and preservation of the
marine environment, marine scientific research, development and transfer of marine
technology, settlement of disputes and final provisions (UN 1994).
There is a long way of research, because the maritime policy promotes growth and
development strategies that exploit the strengths and address the weaknesses of each
large sea region in the European Union, from the Arctic’s climate change to the
Atlantic’s renewable energy potential, to problems of sea and ocean pollution, to
maritime safety. These new insights promoted by the World Ocean Council
(WOC) had been called in 2013 as “Ocean 2050: the Ocean Business Community and
Sustainable Seas (WOC 2013) and, in 2016, “Ocean 2030: Sustainable Development
Goals and the Ocean Business Community (WOC 2016), because of the adoption of
the “2030 Sustainable Development Agenda”, a specific goal #14 for oceans and seas.
Therefore, the European initiative on international ocean governance provides a
strong framework for improving ocean health, protecting the marine environment
and encouraging the sustainable development of the blue economy (Pearce et al.
1989). Indeed, the WOC is developing a new area of research that is the Corporate
Ocean Responsibility, due to the international business leadership alliance of the
WOC on the Ocean focus.
As resume of the paper, this first section presents an introduction that discusses
the marine knowledge over the time and shows the expectations of the society, in
general, and the citizen, in particular.
The second section presents from the literature review to the first insights of the
blue accounting that influence the legitimacy in the business and political context
that it is responsible for developing the new standard, in response to growing
market demands.
The third section explores from the literature review to the new standard of the
blue accounting explaining the concepts of the blue accounting based on the
international accounting standard (EC 2008), international financial reporting
standards (IASB 2018) and global valuation standards (RICS 2017a, IVSC 2017;
TEGoVA 2016).
The fourth section explores from the blue accounting to the analysis of the blue
economy explaining the idea of using the sea and oceans for economic gain,
because it is new of the economy which create the economic value in a sustainable
way that preserves and protects the sea’s resources and ecosystems (WWF 2016a).
The last section presents the final remarks with the discussion and the conclusion
of the blue accounting as the main concern of the organization for the growth of the
blue strategy has the main objective of relations between all stakeholders to pro-
mote the economic, social and environmental sustainability.
2 From the Literature Review to the First Insights

of the Blue Accounting
From the literature review, Hopwood (1992) defends that accounting is used from
the active construction and transformation of organizational and social truths,
associated economic truths, and, consequently, political truths. Indeed, the marine
knowledge depends on the marine policy to be efficient and effective, but the data
need to be publicly available, interoperable and reliable. Further than this and to
promote the first insights of the blue accounting to explain the main objective and to
refocus attention on the social accounting which involves the communication of
information concerning the impact of the maritime assets and its activities on the
society (Gray et al. 1996). In this multiple function, the blue accounting is based on
the creation of marine knowledge that starts with the sea and oceans as an asset with
blue economy behind (UNDESA 2014). Consequently, this knowledge can be
applied to deliver smart sustainable growth and to assess the health of the marine
ecosystem due the need to protect coastal communities (EC 2012b).
In this context, the marine asset is only possible to provide future economic
benefits associated with the asset will flow to the entity; and the fair value or cost of
the asset can be measured reliably. In the recognition and measurement of the blue
asset, the main difficulty is due the need of the entity controls the asset as a result of
past events. Indeed, there are a strong uncertainty in knowledge of the oceans and
the seas which could be reduced in order for managing future changes.
The need of the recognition and the measurement of the blue asset starts with
wasting water (Laughlin and Varangu 1991; Rodrigues et al. 2014; Santos et al.
2005). Indeed, wasting assets are defined by RICS (2017b: 1): “an asset with finite
life which, when consumed, cannot be renewed in the existing physical location in
which they occur.” Generally, the theory of value is divide between the value in
exchange and the value to the holder. But, as Fishman et al. (2007) details
32 R. Abreu et al.
“the appropriate standard of value is often dictated by circumstance, objective,

contract, operation of law or other factors.” So the main aspect is the meaning of
that standard of the value, which it is less clear and regards to the assumptions,
methodologies and techniques that must be used to value. In the case of waste
water, it is the value to an investor that added value to the owner of the water (if
exists an owner) or as purchaser.
The main question of the blue assets is that in the last examples there are no
willing buyer neither willing seller. The gap between the demand of clean sea water
and their availability is completely different when compare the dirty sea water.
Following Grey and Sadoff (2007) and Bakker (2012) the sea water balance
demands livelihood, human well-being and the ecosystem function.
Numerous insights have been made by Royal Institute of Chartered Surveyors
(RICS), based on United Kingdom, that publishes annually the valuation standards
since 1974. It is important to recognize that due to the scarcity and high dynamic of
the needs and, in accordance, with climatic change with the variability and the vul-
nerability that are both time-dependent phenomena. So, the market value is essential
to understand that following the IVS 104, paragraph 30.1 as (IVSC 2017: 170) “the
estimated amount for which an asset or liability should exchange on the valuation date
between a willing buyer and a willing seller in an arm’s length transaction, after
proper marketing and where the parties had each acted knowledgeably, prudently and
without compulsion.” This measurement could be related with clean sea water or dirty
sea water and other examples, such as: damage made by vessels, pollution for petrol
platforms, fishing fishes, and shellfish (WOC 2013, 2015a, b).
Several other insights could be based on the valuation supported by the
European Valuation Standards (TEGoVA 2016), where the most important defi-
nitions are
• Basis of value that the fundamental assumptions for assessing a maritime val-
uation to help fish farmers and fisheries product processors and other organi-
zations, public authorities, professional bodies and consumers;
• Valuation approach is the fundamental way in which, considerable marine and
maritime resources are available, the valuer considers how to determine the
value of the sea, ocean, water, and all the blue economy;
• Valuation method based one several approaches uses a valuer to assess the value
of the sea (Baltic, Black, Mediterranean and North) and the ocean (the Atlantic
and Artic Ocean) and other marine resources.
Indeed, as the European Valuation Standards (EVS) details “the valuation must
be researched, prepared and presented in writing to a professional standard.”
(TEGoVA 2016) With this contribution, it is no surprise that a huge effort demands
to save the marine and ocean resources that belong to the entire world. Also, EVS
explains that “the work undertaken must be sufficient to support the opinion of
value reported” (TEGoVA 2016) that it is related to projected ocean economic
activity and realities, risks and opportunities to share knowledge towards on the
corporate ocean responsibility.
3 From the Literature Review to the New Standard

of the Blue Accounting
The scientific understanding of the blue accounting will reduce the uncertainty of
the marine knowledge (EIU 2015; FAO 2018). The recognition of the past, present
and future forecast on the marine resources generate the strengths and weaknesses
of the accounting. Knowing that resources are certainly not unlimited and there is
an opportunity from these maritime resources to explore with human intelligence
and with energy can generate progress with properly rules and standards promoted
by organizations (Crowley 2013).
The objective of the blue accounting standard is to prescribe the accounting
treatment and the disclosure related with maritime activity. This standard will
answer
• What is a blue asset, liability, and expenses?
• How is the blue asset, liability, and expenses to be recognized?
• How is the blue asset, liability and expenses to be measured?
• Which entity develops an ocean and maritime activities?
• How ocean and maritime activities disclosure on the entity’s financial
statements?
The insights based on the accounting supported on the International Accounting
Standards (EC 2008), the most important definitions are
• A gain or loss arising on initial recognition of a blue asset at fair value less costs
to sell and from a change in fair value less costs to sell of a blue asset shall be
included in profit or loss for the period in which it arise (IAS 41, § 26)
• An unconditional government grant related to a blue asset measured at its fair
value less costs to sell shall be recognized in profit or loss when, and only when,
the government grant becomes receivable. (IAS 41, § 34).
• An understanding the data on the marine environment, because it is a valuable
asset and observations cannot be repeated can facilitate the accuracy of the
measurement. Also, long-term trends can only be distinguished from seasonal
changes.
The absence of a specific international accounting standard weakens the relia-
bility and the comparability of the data about the sea and the maritime resources of
the blue accounting. This has led the EU to publish the Recommendation 2001/453/
EC (EC 2001a) on recognition, measurement and disclosure of environmental
issues in the annual accounts and annual reports of EU companies. However, this
Recommendation follows the contents of several International Accounting
Standards (IAS) and was endorsed by the UN Working Group on International
Standards of Accounting and Reporting—which submitted a paper on environ-
mental reporting in 1998 (EC 2001a).
34 R. Abreu et al.
3.1 Recognition of the Blue Asset
In this section, the recognition of the blue asset is established to recognize and to
measure the ocean and maritime items as an asset based on the valuation process.
Blue expenditures can be considered assets if they have been made to avoid or
reduce future damage or to preserve resources, provide future economic benefits,
are intended to serve the company in a durable way and meet one of the following
two conditions: if the expenditures are related to anticipated future economic
benefits which are expected to benefit the company and which extend the life,
increase the capacity or improve the safety or efficiency of other assets owned by
the company; or if expenditures allow to reduce or avoid environmental contami-
nation that may occur as a result of the company’s future activities. For example,
pollution control or prevention facilities and machinery acquired to comply with
environmental laws and regulations and rights or similar elements acquired for
reasons associated with the impact of business activities on the environment, such
as patents and pollution rights (Kovel 2002).
When the book value of an asset considered a loss in economic benefits because
of environmental reasons, may incur expenditure to restore the future economic
benefits to its original standard of performance; in this case, expenses may be
considered as an asset, as long as the resulting book value does not exceed the
recoverable amount of the asset. In all cases, the cost of blue expenditures con-
sidered as assets must be distributed systematically over its expected life.
It may happen that certain factors of an environmental nature lead to a decrease
in the value of certain existing assets, such as the contamination of a manufacturing
site. In view of this situation, if the recoverable value of the use of the factory site
has become lower than its book value, it is necessary to correct this amount and to
charge it to the statement of profit and loss for the year; but this correction should
only be carried out if the situation of the decrease of value is lasting.
3.2 Recognition of the Blue Liability
In this section, the recognition of the blue liability is established to recognize

liabilities justified by the ocean and maritime resources. The recognition of a blue
liability is conditioned on the existence of an obligation—to avoid, to reduce or to
repair ocean and maritime damages—that can be legal or contractual and implicit
(EC 2008; RICS 2017a; IFAC 2018; IASB 2018). In other words, ocean and
maritime damage caused on oceans or seas all over the world and it is related with
an organization or citizen that in respect of which there is no legal, contractual or
implicit obligation to repair, cannot be recognized as a blue liability. As a rule, the
organization is responsible for the total of blue liability. However, it may be
responsible only for the part of the obligation attributable to itself.
Therefore, a blue liability is recognized when it is probable that an outflow of

resources embodying economic benefits will result from the settlement of a present
environmental obligation as a result of past events, and the amount at which the
settlement will take place can be measured reliably. The reliability of the assess-
ment means that a reliable estimate of the costs arising from the underlying obli-
gation can be made; in other words, if at the balance sheet date there is an obligation
whose nature is clearly defined and which is liable to result in an outflow of
resources embodying economic benefits, but of uncertain amount and date, a
technical provision should be recognized if it is possible to estimate the amount of
that obligation.
If it is not possible to make a reliable estimate of the amount of the obligation, a
contingent liability should be recognized. The contingent liabilities are not recog-
nized in the balance sheet, but in the notes to the annual accounts; is what should
occur when there is an unlikely likelihood that ocean and maritime damage will
have to be repaired in the future and that obligation depends on the occurrence of an
uncertain event. If the obligation to incur a blue expense is unlikely or insignificant,
there is no need to recognize any contingent liabilities. If it is expectable that one or
more expenses related to a blue obligation will be reimbursed by a third party, such
reimbursement will be recognized as an asset only when it is practically certain that
it will be received in case the company fulfills its obligation.
As a general rule, an expected reimbursement of a third party should not be used
as compensation for a blue liability. It should be shown separately as an asset for an
amount not exceeding the amount of its technical provision. The exception rule, the
recognition as compensation of an environmental liability, occurs when there is a
legal right to compensation that the company intends to use; in those circumstances,
where it is appropriate to recognize such compensation, the total amounts of the
liability and of the expected reimbursement must be shown in the notes to the
annual accounts.
Similarly, the expected proceeds from the sale of related assets should not be
used to offset an environmental liability; moreover, that revenue should not be taken
into account in calculating a provision, even if it is linked to the event giving rise to
the provision
3.3 Measurement of the Blue Liability
The blue liabilities are recognized when it is possible to make a reliable estimate of
expenditure to meet the underlying obligation. The amount of the liability depends
on the appropriate estimate of the expense required to settle, at any date, the present
obligation at the balance sheet date, even if the events have ceased; adequacy is
achieved by taking into account the present situation and future developments in
technical and legislative terms. If it is not possible to determine an adequate esti-
mate with sufficient reliability, then that amount should be considered as a con-
tingent liability.
36 R. Abreu et al.
In the assessment of a blue liability, the marginal direct costs of the repair effort
must be considered, the costs of remuneration and charges paid—for workers—
which are likely to be imputed to the repair process, the control obligations after
repair of the damage and the progress technology, in so far as public authorities are
likely to recommend the use of new technologies.
For blue liabilities that will not be settled in the near future, they should be
measured at the present value (as an alternative to the current cost, which is also
acceptable if the time value of the money is not relevant), if the obligation, the
amount and date are either predetermined or can be determined reliably. The
method chosen to the measurement should be disclosed in the notes. The undis-
counted estimated cash flows should be the estimated amounts expected to be paid
at the dates of settlement and should be computed using explicit assumptions
derived from the clean-up and/or remedial plan, such that a knowledgeable party
could review the computation and concur with the estimated cash flows.
3.4 Recognition of the Blue Expenses
In this section, the recognition of the blue expenses is supported on the adaptation
of the Recommendation 2001/453/EC (EC 2001a) that presents several definitions
that may help to the new accounting standard. The first example could be the
environmental or the blue expenses which “includes the costs of steps taken by an
undertaking or on its behalf by others to prevent, reduce or repair damage to the
environment which results from its operating activities. These costs include,
amongst others, the disposal and avoidance of waste, the protection of soil and of
surface water and groundwater, the protection of clean air and climate, noise
reduction, and the protection of biodiversity and landscape (EC 2001a). Only
additional identifiable costs that are primarily intended to prevent, reduce or repair
damage to the environment should be included. Costs that may influence favorably
the environment but whose primary purpose is to respond to other needs, for
instance to increase profitability, health and safety at the workplace, safe use of the
company’s products or production efficiency, should be excluded. Where it is not
possible to isolate separately the amount of the additional costs from other costs in
which it may be integrated, it can be estimated in so far as the resulting amount
fulfills the condition to be primarily intended to prevent, reduce or repair damage to
the environment».
Another definition of the Recommendation 2001/453/EC (EC 2001a) is the
“costs incurred as a result of fines, or penalties for noncompliance with environ-
mental regulation, and compensation to third parties as a result of loss or injury
caused by past environmental pollution are excluded from this definition, as dis-
cussed in paragraph 6(f) of Sect. 4 of this Annex. While related to the impact of the
company’s operations on the environment, these costs do not prevent, reduce or
repair damage to the environment”.
The recognition of blue expenses is conditioned upon the period in which they
are incurred, except in the event that such expenses meet the criteria necessary to be
recognized as an asset. Blue expenses are related to losses that occurred in a
previous year must be recorded in the year in which they are recognized and cannot
be considered as adjustments of that previous year; that is the case when envi-
ronmental expenditure relates to current or past activities or to the restoration of
environmental conditions in the state in which they were before contamination, for
example, environmental expenditure of an administrative nature; environmental
audits; debugging related to operational activities; waste treatment; and repair of
losses verified in previous years. The recognition of the expenses that an organi-
zation is required to bear in respect of the recovery of contaminated sites and the
operations of decommissioning or dismantling of fixed assets comply with the
recognition foreseen for environmental liabilities at the estimated value for total
liabilities, either totally or progressively.
4 From the Blue Accounting to the Analysis

of the Blue Economy
From the blue accounting to the analysis of the blue economy is justified on the
growing interest of the citizen and the organization for the sea and oceans that could
be emphasize in the wave energy, coastal protection, fisheries, aquaculture, waste
management and, even, the blue sky (WOC 2016a). Thus, this research is supported
on the argument that blue accounting must be used for public disclosure through
accountability as a legitimizing tool (Deegan 2002). The importance of this new
area of research will ensure accounting and financial stability to the overall
objectives of the marine knowledge.
Furthermore, the authors defend that the blue accounting is critical, especially at
this stage, in defining strengths and weakness to all the stakeholders of the seas and
maritime resources that must be always informed on an ongoing basis that it will
allow each one to take an early recognition, timely involvement and carefully
judgment of each investment and financing decision, to measure and then disclosure
this data as information to take decision based on the financial statements.
This research promotes the sustainability of these marine resources, especially,
the database systems, such as: Policy-oriented marine Environmental Research in
the Southern European Seas (PERSEUS), which helps to detect and monitor illegal
and suspicious activities at the sea and oceans (HCMR 2015). This insight gives
additional consistence that enhanced the innovative capabilities for the information
sharing, assessment of resources and assets valuation (vessels, fishes, and other
resources) as response to accounting pressures to improve its common under-
standing and public image across countries.
This research will develop the blue accounting, in general, and the measurement
issues based on Maritime and Marine issues, in particular. So, despite the strong
38 R. Abreu et al.
limitation of literature, the authors defend that the blue accounting will be very
helpful, to all the stakeholders that must be always informed and on an ongoing
basis that it will allow each one to take an early recognition, timely involvement
and carefully judgment of each investment decision. Then, transparency is strongly
encouraged by the authors who will promote more blue governance to reduce the
gaps and risks aggravated by the new challenges.
In addition, this research concerns with the financial report that gives explana-
tions to stakeholders. The authors defend that it does not exists one solution as it
appears insufficient for the level of activities involved, then public authorities have
to play a more prominent role and demand for the payment of the use of the
maritime and marine resources will became inevitable (sea surface, sea water use,
waves, salinity, gravel extraction, aquaculture, between other). At least, an objec-
tive is the understanding of the marine and maritime resources to all the society, in
general, and the citizen, in particular, because, the promotion of the accountability
will impact on the CSR principles of transparency, accountability, sustainability and
social contract based on the Annual Report (Crowther and Rayman-Bacchus 2004).
The Marine Knowledge 2020 will demand a new paradigm.
In line with the advances resulting from the Sustainability Reporting Guidelines
(GRI 2002), it is a growing practice to voluntarily publish environmental infor-
mation in the annual accounts and corporate governance reports. Despite this, the
high costs of preparing information or the information confidentiality have been
invoked as the inhibiting factors for their publication in the context of the financial
information provided by companies and support the widespread view that com-
panies support increasing environmental costs, in particular those operating in
sectors with a significant impact on the environment.
The area of the marine and maritime resources is complex and there will be
much data not in the scope of Marine. The blue accounting must rely on the
European Maritime and Fisheries Fund (EMFF), 2014–2020 as it presents Fig. 1.
Indeed, EMFF will helps fishermen in the transition to sustainable fishing, supports
coastal communities in diversifying their economies, finances projects that create
new jobs and improve quality of life along European coasts and makes it easier for
applicants to access financing (EMFF 2016).
The European Maritime and Fisheries Fund (EMFF 2016) in European Union
for 2014–2020 aims at achieving key national development priorities along with the
EU’s “Europe 2020” objectives. The six main priorities are sustainable fisheries
(26.9% of the Budget), sustainable aquaculture (21% of the Budget), implementing
the CFP with improvement of the data collection, scientific knowledge, control and
enforcement of fisheries legislation (19,1% of the Budget), marketing and pro-
cessing (17.6% of the Budget) to improve market organization, market intelligence
and consumer information in the world’s largest seafood market, Employment and
territorial cohesion (9% of the Budget) and integrated maritime policy (1.2% of the
Budget).
At the end, there are the possibility that “scientists and researchers receive
funding for studies of immediate interest to the industry, in fisheries management,
ocean management, marine environment, climate change, coastal protection, social
Fig. 1 Total European Union allocation of the European Maritime and Fisheries Fund (EMFF),
2014–2020 Source EMFF (2016)
science and maritime economy.” (EMFF 2016). Indeed, this is the starting point to
promote the research of the blue accounting.
The closing recommendation states that the term “environment” refers to the
natural physical surroundings and includes air, water, land, flora, fauna and
non-renewable resources such as fossil fuels and minerals (OECD 2011, 2014).
5 Final Remarks
As a final remark, the authors agree with WWF (2016b) that create a sustainable
green economy on land (Cato 2009) also requires a sustainable blue economy in the
sea. Visions, strategies, goals, targets and actions are urgently need for sea-based
economies. Indeed, corporate ocean responsibility should be central in the
40 R. Abreu et al.
development of the laws of the nature, because the seas and Maritimes resources are
not central on the market economy, neither in government laws and regulations.
To accomplish all of this, the blue accounting presents in this research a new
vision of well-known concepts related with sea and marine resources, but it
demands interdisciplinary research knowing that faces challenges related with the
complexity of biodiversity (Jones 2003). A clear definition of the sustainable blue
economy demands new interrelationship between vulnerability, risk and resilience
across sectors of the marine and see resources, with different scales in the context of
limited predictability.
In addition to the accounting rules, environmental aspects must be published as
they are of significance for the organization’s performance or financial situation;
even if the publication of a separate environmental report is considered—and is
welcomed by consumers—this information should be disclosed in the following
financial statements: annual (individual) management report; consolidated annual
management report; attached to the annual (individual) accounts; and annexed to
the consolidated annual accounts.
Despite these insights, there are several limitations. The first limitation is criti-
cally examined in this research and it is related with role played by several
stakeholders, such as: Portuguese Government, Politicians, Society and each citi-
zen. This is result of the role of basic skills of accounting illiteracy and innumeracy
has become ubiquitous. So, it is important to widespread accounting literacy to the
health of a modern society.
The second limitation is the existence of an enormous body of laws, regulations,
and codes that have emerged and enforced reform that are necessary, but the
challenge is to devise a true regulatory framework that enables the blue accounting
to be more resilient absorber of shocks. Probably for the Portuguese government
and European Union is now time to control the financial system, more than create
more legislation.
Finally, the third limitation is the lack of empirical evidence in this subject,
because it does not exists any similar research. So, it is better to have less evidence
that could be improved the marine knowledge than not knowing at all of the reality.
But as Riley et al. (2001: 20) defends “facts, research methods and research data do
not speak for themselves; they are interpreted by researchers and others”.
Future investigation will be necessary to provide definitions that permit the
accurate measurement of water and marine resources on a common and consistent
basis and with the blue accounting produce the access to accounting information
that will allow to make valuation, management and report explaining the basis of
value, to assess each asset and liability and then report that is suitable for specialist
applications which provides advice to accountants. However, other stakeholders
will be responsible to decide that then they need professional measurements with
not mislead, intentionally or unintentionally, information that required degree of
accuracy in terms of the final reported figures is dependent upon the site-specific
conditions and circumstances (RICS 2017a).
The authors have a future development that is the strong commitment with the
effectiveness and efficiency of the blue strategy that must respond quickly to the
needs of the society and successfully to risks involve with the maritime resources.
The use of this blue strategy demand the need of the blue accounting as funda-
mental science to develop the blue revolution that will bring a new world order.
There is a long way of the research to empower the blue accounting as an important
the measurement and disclosure approach, but it demands more research to record
and report with new methodologies and sources of data.
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The Concept of Business Legitimacy:
Corporate Social Responsibility,
Corporate Citizenship, Corporate
Governance as Essential Elements
of Ethical Business Legitimacy
Jacob Dahl Rendtorff
Abstract This chapter discusses corporate social responsibility, corporate gover-

nance, and corporate citizenship in relation to business legitimacy as a basic con-
cept in the philosophy of management. Corporations must take into the
consideration of legitimacy to be able to exist and prosper in a society: legitimacy is
a precondition of business license to operate in society, and of the supply of
necessary resources—ranging from investments, committed employees, business
partners, and sales/consumption, to political support and support from an increasing
range of diverse stakeholders. However, the interrelation between business and the
rest of society changes with the evolution of society and mediates by changing
legitimacy processes. Today, businesses’ ethical, social, and societal responsibility
moves towards broader value orientations expressed in business ethics and the triple
bottom-line, which balances social, environmental, and economic considerations
and in societal commitment, where businesses assume tasks that were previously
reserved for the state. Business legitimacy follows fluid, ambiguous norms so that
ethics, communicative competences, and practices are a fundamental precondition
for navigating in a society that grows increasingly dynamic and diverse. Indeed, the
contents as well as the rationality of legitimacy and the types of legitimacy conflicts
have changed and this is an important challenge for developing sustainability in the
intersection between corporate social responsibility, corporate citizenship, and
corporate governance.

Keywords Legitimacy Corporate social responsibility Business ethics

Institutional theory Management philosophy
J. D. Rendtorff (&)
Roskilde University, Roskilde, Denmark

46 J. D. Rendtorff
1 Introduction
In this chapter, I discuss corporate social responsibility and corporate governance in

relation to business legitimacy as a basic concept in philosophy of management
(Rendtorff 2013). A company must take into consideration legitimating notions to
be able to exist and prosper in a society: legitimacy is a precondition of the
company’s license to operate in society, and of the supply of necessary resources—
ranging from investments, committed employees, business partners, and sales/
consumption, to political support and support from an increasing range of diverse
stakeholders. However, the interrelation between a company and the rest of society
changes with society’s evolution and is mediated by changing legitimating notions
and processes.
The company’s ethical, social, and societal responsibility is reformulated toward
broader value orientations expressed in the triple bottom-line, which balances
social, environmental, and economic considerations; in societal commitment where
the company assumes tasks that were previously reserved the state. Formerly, the
room for legitimate decision-making rested relatively stable and indisputably on
notions of shared, taken-for-granted norms. Today, legitimacy has grown discursive
and subject to continuous negotiation in communicative processes between a long
range of positions.
A company must justify itself in legitimizing processes characterized by fluid,
ambiguous norms, and ethics statements to an extent so that communicative
competences and practices are a fundamental precondition for navigating in a
society that grows increasingly dynamic and diverse. The prioritization of legiti-
macy and legitimization has grown from the periphery and today they are at the
center of a company’s existence and prosperity, including its ethical and political
profile. Only a few decades ago, a company’s legitimacy was more or less given by
common norms, by control, and by central regulation via law. Today, legitimacy
and legitimization are basic mechanisms in fundamentally new forms of political
governance that rely on mutual reflections and continuous tests of legitimacy.
These can be identified in most regions characterized by the specific structures,
ethics, and values of the modern society, which emerged with the social differen-
tiation in Europe in the seventeenth century and today dominate Western-oriented
regions. However, different societal, political, and cultural forms foster different
notions, ideas, and ideals as to the interrelation between society and company.
As globalization increases the interdependence between previously separated
societal forms, conflicts between legitimating notions are activated. Globalization
not only poses a challenge for companies to navigate in a diversity of inherent
conflicts of legitimacy. It also requires the ability to relate to different and even
conflicting perceptions of legitimacy at the same time in a globalized public space.
This is a growing trend with the rise of social media, which entails global
connectivity.
Accordingly, the contents as well as the rationality of legitimacy, the way of
legitimization as well as the weighting of legitimacy and of legitimization, and the
The Concept of Business Legitimacy: Corporate Social … 47
types of legitimacy conflicts have changed and this is an important challenge for
developing sustainability in the intersection between the two pillars of corporate
social responsibility and corporate governance.
2 The Aim of Business Legitimacy Research
The aim of this approach to legitimacy is to develop a theory of business ethics and
corporate citizenship through the processes of legitimation. Now, we can propose
an argument taking up some of the aspects of legitimacy from the point of view of
institutional theory. Essential questions to ask in relation to legitimacy are: (1) What
are the challenges of business ethics confronted with increased complexity and new
social expectations to corporations in an age of globalization? (2) What are the
principles of values-driven management and corporate social responsibility
(CSR) that should be used by firms to respond to these challenges? (3) What is a
theory of corporate legitimacy and how should we define the relations between
good corporate citizenship and business ethics?
These questions relate to different aspects of the general problem of the social
legitimacy of corporations, which can be seen in the perspective of institutional
theory. The foundation of such analysis may be the search for legitimacy in cor-
porations as it has been proposed by Suchman (1995). He defines legitimacy as an
effort to adapt to the internal and external environment of the organization. The
discussion of legitimacy has been marked by a tension between a strategic and an
institutional definition and there has been very little dialogue between the two
theoretical traditions. With these forms of legitimacy, legitimacy can be conceived
as a “process where the organization justifies to a peer or subordinate system its
right to exist” or as a “congruence between the social values associated with or
implied by (organizational) activities and the norms of acceptable behavior in the
larger social system.” Or it can be determined as a “generalized perception or
assumption that the actions of an entity are desirable, proper, or appropriate within
some socially constructed system of norms, values, beliefs and definitions”
(Suchman 1995; Rendtorff 2009).
We can say that following Suchman legitimacy is a multilevel construct. This
implies to look at legitimacy judgments at the individual and collective level.
Moreover, it is important to remember that legitimacy is a concept from institutional
theory. Indeed, Suchman distinguishes between three fundamental aspects of
legitimacy: Cognitive, moral, and pragmatic legitimacy, where legitimacy is iden-
tified as generalized perceptions and expectations to the business firm (Suchman
1995; Rendtorff 2009, 2010, 2018).
The response to the problem of business legitimacy is the search for a com-
prehensive theory of responsibility, ethics, and legitimacy of corporations in a
globalized society. The focus is the idea of corporate citizenship. This approach to
values-driven management and business ethics is based on a concept of republican
48 J. D. Rendtorff
business ethics including the four ethical principles of protection of the human
person: autonomy, dignity, integrity, and vulnerability.
Such a normative theory of business ethics and corporate citizenship implies an
approach to ethics at different levels of society, individuals, organizations, and
market institutions. The idea is that business ethics and corporate social responsi-
bility should not only be applied at the level of human personal choices. Rather, it is
indeed necessary to construct common values and concepts of responsibility for
business organizations and institutions in order to justify the old saying that “good
ethics is good business” as a reaction to the opportunistic challenge of economic
theories of individualist utility maximization.
3 Business Legitimacy and Critical Hermeneutics
The concept of the methodology of business ethics for such a study of business
legitimacy can be conceived as “critical hermeneutics” combined with an inter-
disciplinary institutionalist approach to economics and social sciences (Rendtorff
2009, 2014). Critical hermeneutics mediates between structural and intentionalist
explanations of causalities of actions in institutional theory. However, it is also
important to go beyond mere institutional analysis and propose a normative per-
spective of applied ethics and analysis of ethical argument as a basis for a legiti-
macy approach to business ethics.
Ethics can here be defined as a normative study about what norms should guide
decision-making and corporate social responsibility in business and economics. The
normative study of business ethics applies simultaneously at the micro- and
macro-levels of organizational behavior, business systems, and market structures
and influences the political economy of different societies or states. Business ethics
applies a critical evaluation of formulations of guidelines and codes of conduct for
companies at national and international markets.
This broad approach to business ethics does imply a critical evaluation of the
neoclassical economics of efficiency and utility, and it implies a broader interdis-
ciplinary, institutional, and historical perspective on the norms and values of cor-
porations. Although it recognizes the explanatory potential of this tradition, critical
hermeneutics does not think that descriptive positivist economics is sufficient. We
need a discussion about goals and values, and business ethics emerges as a kind of
normative economics to accomplish the insights of business economics. Business
ethics, therefore, agrees in considering normative economics as a science of con-
versation based on theoretical arguments about ethical principles, values, and good
business practice.
4 Business Legitimacy and Integrative Economic Ethics
In this context, it is possible to adopt the concept of “integrative economic ethics”

in order to mediate between ethics, political, and economic rationality (Ulrich
2008). This integrative approach can be considered as the application of “republican
business ethics” and critical hermeneutics as the basis for ethical reflection on the
foundations of economics as a truly value-creating science. In this perspective,
business ethics based on legitimacy integrates the rationalities of law, economics,
and politics in order to promote sustainability and the good life of humanity.
Integrative business ethics is not only about external limitations on business
activity, but it also implies internal guidance for economic value-creation. It implies
not only a deontology of correct business rules but also an argument for the
morality of just institutions of free economic markets. Thus, integrative business
ethics aims at formulating principles for corporate social responsibility of the good
citizen corporation. Business ethics is defined as a critical practical rationality
integrating ethics in the disciplines of economics and the social sciences.
Such a discussion of the relation of economics and ethics in the perspective of
critical hermeneutics aims at a justification of the rationality of values-driven
management in business institutions. It is possible to perceive the emergence of a
close link between ethics and economics in the new strategies of corporate social
responsibility and values-driven management. However, there remains a tension
between ethics and economics. Therefore, there is a need for external political and
legal constraints on economic markets. Ethics is the foundation of economic action.
At the same time, we should admit that there is an ethical dimension within
economic notions of utility and efficiency, which should be taken into account when
dealing with the ethics of economic markets. Therefore, there may be an economic
dimension to ethics and ethics and economics are in a “dialectical relation” where
they mutually shape one another. (Neuman 2003; Rendtorff 2014)
In the light of economic anthropology, this implies a critical examination of the
concept of “Homo Economicus” of egoistic utility maximizing individuals in tra-
ditional economic theory (Sen 1987). Economic anthropology should rather be
considered as based on interactions between individuals in complex networks of
reciprocity in social community. In this perspective, economic action is based on
the vision or aim of the “good life with and for the other person in Just institutions”
(Ricœur 1990, 202).
This vision is evaluated in the Kantian perspective of universal rules of the
categorical imperative. Utilitarian welfare analysis is only possible in the per-
spective of this framework of deontological limitations of action. It is the task of
Kantian determinate and reflective judgment as the bridge between micro and
macroeconomic rationality to make the convenient application of ethical theories
and principles to concrete situations of choice and decision-making in business
organizations (Paine 1994).
This is the basis for the concept of the rationality of values-driven management
in the perspective of “republican business ethics”. Therefore, business ethics is not
50 J. D. Rendtorff
only about internal market behavior but also about finding external principles of
political governance to regulate economic markets. Accordingly, it is possible to
adopt John Rawls’ concept of “justice as fairness” as the ultimate horizon of
business ethics (Lütz and Lux 1979; Ulrich 2008).
5 Business Legitimacy and Economic Rationality
Taking into account the classical Weberian perspective of the relation between
legitimacy and economic rationality, legitimacy theory focuses on the impact of
different views of the firm and economic life in different theories of management
and economics in the twentieth century. It is important to analyze the views of
legitimacy in some of the most influential theories of economics and management
in order to promote an institutionalist and stakeholder-oriented view on corporate
legitimacy, which is based on the idea of the good citizen corporation. This
approach can be distinguished from other possible views on the legitimacy of the
firm in modern society. From the point of view of communicative rationality,
stakeholder dialogue can be viewed as the normative basis of the concept of good
corporate citizenship (Habermas 1981).
These ideas make it possible to escape the “Weberian iron cage” of instrumental
rationality opening for market regimes based on “integrative business ethics” with a
broader social basis. Legitimacy is founded on the social community and the human
lifeworld based on views of justice as fairness, protection of rights, and the pro-
motion of the common good for society (Ulrich 2008, 416). Thus, according to this
alternative view of the legitimacy of business in society, responsibility, integrity,
and accountability emerge out of the idea of republican business ethics where the
license of operating and good business of the firm is to be a good servant of society.
With this approach, analytical approaches to legitimacy must study the fact that
many modern corporations have introduced ethics and compliance programs and
values-driven management taking all the firm’s stakeholders into account. In many
cases, reporting procedures and accountability programs for corporate and social
values are introduced into the organization. The corporate boards see them as a
means to ensure not only the responsibility and integrity of the organization, but
also efficient management, competitiveness, and legitimacy of the firm in a complex
democratic society.
6 Business Legitimacy and Business Politics
Political and legal developments confirm the emergence of a new concept of cor-
porate citizenship. Considering the United States, we can see that the US govern-
ment and legal system, US corporations and researchers from the different fields of
economics, law, philosophy, and political science have, in particular, contributed to
the institutionalization of ethics and compliance programs in US companies. In the

United States, the 1991 Federal Sentencing Guidelines for Organizations were very
important for developing a policy framework for corporate citizenship, corporate
ethics, and corporate social responsibility (CSR). These guidelines have been
confirmed by a lot of legislation (SOX) following the Enron and World Com
scandals and the guidelines were much needed after the financial crisis.
The legal requirements of the 1991 US Federal Sentencing Guidelines for
Organizations imply a concept of responsibility where not only individuals are held
responsible for their actions, but also where the board of the firm and managing directors
as representatives of the firm have a responsibility to institutionalize ethics and com-
pliance programs in the corporation. The use of criminal law to make ethics regulation
can be interpreted as an effort to ensure ethical behavior in the institutions of US
business life, so that institutional norms can support individuals in complying with the
laws and custom of society (United States Federal Sentencing Guidelines 1995, 2017).
In Europe, the European Community has also introduced important policy ini-
tiatives concerning corporate citizenship, for example, we can mention the ethics,
politics, and legal regulation implied in the EU recommendations on CSR as have
been proposed in the European Commission’s Green Paper Promoting a European
Framework for Corporate Social Responsibility published in 2001 (European
Commission 2001 and later). In the policy of the European Union, it is argued that
CSR should be of a “voluntary nature” and the concept of “stakeholder” is seen as
very important in the efforts to include different parties in European stakeholder
forums concerning CSR decision-making. This has led to increased focus on
business ethics and many corporations work to integrate CSR in their methods of
values-driven management and corporate governance.
These developments in the US and Europe have had a global impact. As a
normative basis for international business conduct, integrative business contributes
to the establishment of such international regimes of good norms for values-driven
management and multinational business practice. We are moving towards the
creation of a cosmopolitan view of business ethics considering the firm as a world
citizen (Rendtorff 2018). Many international organizations and corporations have
contributed to the establishment of such an international regime of business ethics.
The Caux Round Table discussions involving businesses from most continents
were concluded with a proposal for international guidelines for multinational
business (Caux Principles 1999).
The principles of UN Global Compact initiated by Kofi Annan in 1999 have
been essential for setting norms of good corporate citizenship at the global arena.
Today, we also have the program of business and human rights by the United
Nations and the different principles find a common expression in the UN
Sustainability Goals from 2015. In addition, most European governments and
business leaders now look at developments in America in order to formulate
appropriate guidelines and compliance programs for ethics and values-driven
management in European business life.
Following a number of international guidelines and recommendations, the UN
has with the business for human rights principles and the sustainable development
52 J. D. Rendtorff
goals gathered to agree about principles and rules of conduct with regard to the
respect for human rights in multinational corporations (Rendtorff 2018). These
policy developments can be interpreted as efforts to contribute to the institution-
alization of corporate ethics, citizenship, and CSR as a central element in the
agency and governance of the firm. We may say that the firm is not only conceived
as an economic and legal subject but also as an ethically responsible actor.
7 Business Legitimacy as Moralization of the Firm
In this process of the institutionalization of corporate citizenship and business ethics

in US, EU, and UN and the whole world—a moralization of the firm—it is possible
to distinguish between: (1) economic responsibilities, (2) legal responsibility, and
(3) ethical responsibilities (Carroll 1979; Carroll and Schwartz 2003; Carroll and
Buchholtz 2002). The relation between the different kinds of responsibilities should
be conceived not as a pyramid (Carroll 1991), but as an integrated concept (a Venn
diagram) and it should not be isolated to one single domain (Carroll and Schwartz
2003). The different responsibility should be integrated into an integrity strategy for
organizational leadership and governance. With the three-dimensional perspective
on business performance including economic, legal, and ethical (philanthropic)
responsibilities, corporate citizenship emerges the good management of the tensions
and requirements of the different kind of responsibilities (Fig. 1).
We can illustrate the development of corporate responsibility toward corporate
citizenship in by emphasizing different features of behavioral activities of corporate
legitimacy (Carroll 1979, Carroll and Schwartz 2003; Jensen 2000; Verstraeten
2000; Rendtorff 2009, 2018). There is a development from an economically and
legally sound organization toward the ethically and morally responsibly corporation
that seeks to act as a good corporate citizen with a proactive attitude toward the
common good in society.
Fig. 1 The two presentations of CSR

8 Types of Business Legitimacy I: The Economically

and Legally Responsible Corporation
The original concept of the firm, as ideal type can here be named the economically
and legally responsible corporation (Jensen 2000). This is a company that sees the
market as the defining value of the corporation. The aim of this business is defined
as economic success on the basis of minimum compliance with legal regulations.
The focus of management is defined as rational strategic planning in relation to
economic markets. The focus of search for legitimacy is here based on economic
and legal criteria with strict reference to business economics criteria. This business
model follows the ethical norms of the economic market and its values as neutral
and the business model is based on objective scientific economics (Rendtorff 2018).
The social understanding of this concept of the firm is that it conceives actions as
limited to what stakeholders and owners can accept. This model of economic
legitimacy emphasizes that the requirement of legitimacy means that the company
should not go beyond the limit of action. At the level for strategy of action, the
company should here seek economic profits and search to be committed to
defensive adaptation by cost externalization and economic management
(Jensen 2000).
With regard to social pressure, this model of legitimacy includes that the com-
pany maintains a low profile if the action of the corporation is criticized, uses PR in
order to improve image and avoid criticism. Information is only published, when it
is legally demanded by the external environment of the firm. Moreover, the firm
tries to stay away from the public spotlight. In addition to this with regard to its
attitude to legal and political activities, the firm that follows this model of legiti-
macy wants to maintain status quo, and in addition, this firm is actively engaged
against legislation that internalizes costs and is critical toward increased tax burden.
The firm tries to keep lobby activities secret. With regard to the concept of
corporate citizenship and the broader view of corporate citizenship, the firm that
follows the model of being an economically and legally responsible corporation
does not have any comprehensive social responsibility programs. This kind of firm
only contributes to social responsibility, when the corporations have a direct
advantage of philanthropy. And in this context, this firm is most likely to consider
contributions to philanthropy not as an institutional responsibility, but rather as the
responsibility of individual employees (Jensen 2000).
This kind of firm is a good example of the traditional and dominating idea of the
business firm as a legal and economic institution and instrument of transaction
without any cultural or institutional substantial content.
54 J. D. Rendtorff
9 Types of Business Legitimacy II: The Ethically

and Socially Responsible Corporation
The model of the ethically and socially responsible corporation in contrast to the
ideal type of the economically and legally responsible corporation seeing both the
market and the state as important agents, who define the values of legitimacy of the
corporation and its activities (Jensen 2000). The aims and means of the business
corporation are considered to be an economic success with respect for the economic
market and legal regulations but also for the ethical custom of society.
The management focus is, therefore, broader than a purely legal and economic
approach and the implied rationality is based on traditional strategic and economic
methods. This involves an openness toward new methods of ethics and rationality. In
this model of search for legitimacy, the company is marked by an increasing will-
ingness to search legitimacy beyond market criteria. This involves a focus on ethical
norms and this means that the company is aware of a necessity of a definition of
legitimacy norms in a socially oriented perspective. This company seeks to avoid
doing things that are contradictory to prevailing social norms (Rendtorff 2018).
This ideal type of the business corporation in search for legitimacy accepts legal and
economic demands, but is also willing to go beyond those demands and related to the
stakeholders that are affected by those actions. We can say that the involved strategy
for action that is proposed by this company includes a strategy of reactive adaptation.
This means that if possible, externalized costs are identified and there is a beginning
effort to compensate for such costs (e.g., environmental costs) (Jensen 2000).
With regard to acceptance of social pressure, the company accepts responsibility
for solution of concrete problems. Moreover, the business firm admits errors in
earlier practices and makes an effort to convince the public that the corporation
works to find a better practice. With regard to the concept of legal and political
activities, this model of a business firm expresses willingness to work with external
partners to improve legislation and adaptation to social norms and laws. Less
secrecy with regard to pressure and lobby activities.
The company has some conception of philanthropy going beyond individual
responsibility. Accordingly, the business contributes to noncontroversial and
well-established aims that also employees support. In addition, the business firm
has a tendency to consider philanthropy as a kind of advanced sponsorship
activity (Jensen 2000).
10 Types of Business Legitimacy III: The Proactive

Corporation Searching for Corporate Citizenship
At a more advanced level, the conception of business firm as The proactive cor-
poration searching for corporate citizenship searches for corporate citizenship
based on ethical and responsible political business legitimacy (Jensen 2000).
This model of the firm defines the important agents who define the values of the
corporation as involving democratic activities at market, state, public discussions,
and institutionalization of stakeholders (Rendtorff 2018).
The aims and means of the legitimacy strategy of this company are based on a
search for economic success, legal responsibility, proactive search for legitimacy,
and for respect as a good citizen in society. This requires a broad management focus
going beyond rational strategic planning in relation to economic markets with use
of values-driven management, CSR, business ethics, and management based on the
triple bottom-line.
In its search for legitimacy, this business model accepts its role as a good
corporate citizen as it has been imposed by the social and political system. The
ethical norms imply that the company uses ethics and moral thinking to have
reflectively conscious opinions about social and political issues in society.
Concerning the social acceptance of the actions of the corporation, it is here con-
sidered important to conceive good citizenship as a willingness to be held
accountable for its actions with regard to other groups than those groups that are not
affected by the actions of the corporation (Rendtorff 2018).
The strategy for business action is a proactive adaptation (Jensen 2000). The
company activity takes leading positions in evaluation of products and procedures.
Actions and activities of the company are evaluated from an ethical perspective and
the company anticipates social changes. The strategy for response to social pressure
involves that the company communicates openly and self-critical with government
and political publics. Moreover, the company works for the improvement of
existing legislation and company practice and this model involves that the proactive
business firm protests critically against situations that do not serve the common
good.
In its conception of legal and political activities, this model of the proactive
company search for good corporate citizenship does not mix directly in politics
regard laws, where the corporation has direct individual interests. Instead, the
company helps as oriented toward good citizenship the legislator and the state to
make relevant laws that contribute to the common good. Indeed, this company tries
to be open and honest about lobby activities. Concerning contribution to philan-
thropy, this company contributes to topics of great importance for society and
supports groups and organizations that are not likely to give any benefits in return to
the corporation. This company considers philanthropy as an important social
activity (Jensen 2000; Rendtorff 2018).
We see accordingly how the business corporation can move from a pure eco-
nomic instrument to a complicated and bureautic institution with little real content
based on field experience.
56 J. D. Rendtorff
11 Business Legitimacy as Stages of Development
These different business models of stages of development toward business legiti-

mation show that recent developments of corporate citizenship are the convergence
between the different responsibilities of the firm. Arguing for a selective use of
elements of different political theories as major steps toward the concept of the good
citizen corporations there is a common ethical framework for decision-making,
while at the same time respecting the fundamental differences between the ethical
theories.
The movement from rational choice theory over stakeholder theory, virtue
ethics, Kantian universalism, and integrated contract theory to the republican theory
of business ethics may be viewed as steps toward a framework for judgment in
business ethics as the basis for good corporate citizenship in modern complex
societies. This social responsibility and responsiveness is in the forefront of the
license to operate of the firm (Rendtorff 2009; Crane and Matten 2016). Responding
to expectations of different stakeholders the good citizen corporation is involved in
public reasoning and deliberative public communication. Republican business
ethics aims at making democratic values the core of values-driven management of
responsible corporations.
After having discussed values-driven management and business ethics, there is
an established basis for dealing with the concept of the good citizen corporation.
This issue concerns the ethical and legal foundations of the idea of corporate social
responsibility considered in the framework of an institutional concept of corporate
identity and personhood. In this context, we can propose a collectivist and con-
structivist concept of corporate identity as the foundation of the organizational
integrity of the good citizen corporation (Rendtorff 2018).
At the institutional level, organizational integrity can be considered as a result of
efforts to establish successful strategies of values-driven management. This is also
the basis for trust and accountability of corporations and it makes it possible to
formulate an institutional and communicative concept of social legitimacy of cor-
porations. Accordingly, we can propose a meditative concept of corporate inten-
tionality finding a way to overcome the oppositions between the collectivist and the
nominalist view on corporate social responsibility.
This position can be considered as an institutional concept of corporate social
responsibility, which constitutes the theoretical foundation of the concept of the
“Good Citizen Corporation”. This view on corporate social responsibility represents
a criticism of a concept of responsibility, where it is not possible to ascribe any
institutional ethical responsibility to corporations (Laufer 1996). Such a concept of
institutional responsibility can be considered as an expression of good intention and
high standards of integrity.
12 Business Legitimacy as Organizational Integrity

and Good Corporate Citizenship
Thus, the notion of organizational integrity is defined on the basis of the ideas of
values-driven management and corporate social responsibility. This is conceptu-
alized as the foundation of good corporate citizenship. The analysis can be pro-
posed as the theoretical justification of the moral and legal professional
responsibility of management.
The notion of integrity emerges as the foundation of the idea of a virtuous and
responsible organization. It may be emphasized that there is a close connection
between individual and organizational integrity. Integrity strategies should be dis-
tinguished from compliance strategies because they deal with values and ethics
rather than rules and regulations.
We realize that instruments of values-driven management constitute an impor-
tant institutional dimension of this responsibility. There should be formulated
strategies for implementation of organizational values program according to
specific values, histories, and contexts of specific firms. Moreover, integrity
expresses organizational commitment to justice and fairness with regard to different
stakeholders (Carter 1996). Indeed, there is also a close link between leadership,
ethical judgment, triple bottom-line management, and the evolvement of organi-
zational integrity. Establishment of organizational integrity and managerial judg-
ment contributes to formulate a framework for coping with organizational dilemmas
in the daily practice of leadership. Organizational integrity in judgment is aiming at
the ideals of openness, honesty, wholeness, and thoughtfulness.
We may say that programs of values-driven management are useful tools in
order to promote a culture of integrity, accountability, and trust in organizations. It
is important that genuine trust relations should be considered as important results of
values-driven management and ethics in organizational culture. Due to globaliza-
tion and greater public awareness, there has been established a stronger link
between accountability, trust, and social expectations of corporations.
The need to build trustworthy business practices includes management of
problems of corporate governance, accountability, and transparency as a deep crisis
of public trust and social acceptance of corporations (DiPiazza and Eccles 1997).
Therefore, it is necessary to discuss the significance of trust in order to restore
corporate image, develop good corporate governance, and to get social acceptance
of business in democratic society (Bidault 2002). Trust should not only be con-
sidered as an instrument of economic action, but also rather seen as an important
social glue and informal lubricant of business organizations.
To consider business practices as based on ethical values moves trust in the
center of corporate social responsibility as the background for accountability and
integrity of corporations (Solomon and Flores 2001; Hartman and Desjardins
2008). This is due to the fact that generalized mistrust and opportunistic behavior
constitutes the limits of fair business practice and cannot be considered as the basis
for internal unity and external legitimacy of business corporations.
58 J. D. Rendtorff
Therefore, an ethical definition of trust considering that what is trustworthy is

based on the accountability and responsibility of the firm. To trust someone implies
means to hold that person or organization accountable over time believing that they
will perform actions of integrity and honesty. Moreover, trust may be developed out
of mutual expectations and promises for reciprocity and collaboration in the future.
Thus, there is a close connection between integrity and the accountability of
transparent business institutions.
13 Business Legitimacy as Self-reflective Corporate

Citizenship
An application of the theory of corporate citizenship is possible in the different

fields of business ethics. Here, business legitimacy can be defined as self-reflective
deliberation about values and ethics. We can analyze the concepts of corporate
social responsibility and sustainable development based on the triple bottom-line as
a framework for justice and basic ethical principles. Corporate social responsibility,
business ethics, values-driven management, and social and ethical accounting were
presented as strategies to include different stakeholders.
This framework can be applied in relation to internal and external constituencies
of the firm. Internal constituencies include owners, investors, management, and
employees. Among external constituencies emerge relations to other businesses,
consumers, marketing, and public relations and to local community. Moreover, in
the perspective of sustainable development and concern for a triple bottom-line of
economic, social and environmental responsibility the relations of the firm to the
environment as a stakeholder need to be included into the ethics of the firm.
Concepts of corporate social responsibility, stakeholder justice, and sustainable
development emerge as a practical application of the concept of the good citizen
corporation in business ethics. The idea of “justice as fairness” is an appropriate
framework for inclusion of stakeholders in corporate decision-making. Basic ethical
principles of autonomy, dignity, integrity, and vulnerability can be seen as
important expressions of the concept of justice as fairness. These basic ethical
principles are directed toward protection of human persons in organizational
structures. Here, it is emphasized that the principles of business ethics should have
concrete application in corporations. Therefore, it is considered important to move
from corporate social responsibility (CSR1) to corporate social responsiveness
(CSR2) (Frederick 1994).
Corporate social responsiveness lays emphasis on the company’s practical
contribution to social management rather on its capacity to talk about it. Corporate
social responsiveness is not only about government initiative to make incentives for
social responsibility, but also proposals for corporations to make concrete
contributions to social betterment. Business ethics is not only about ideal theory,
but also about realizing in concrete practice and make a difference for good man-
agement strategy.
14 Conclusion
To sum up, the stages of developments of different levels of corporate citizenship

responsibility in firms show that the contents as well as the rationality of legitimacy,
the way of legitimization as well as the weighting of legitimacy and of legit-
imization, and the types of legitimacy conflicts have changed. We can say that the
development of the concept of responsible and proactive corporate citizenship
includes the stages of cognitive, moral, and pragmatic legitimacy, where legitimacy
is considered a generalized perception of an organization.
This implies an interdisciplinary perspective with comparative integration of
sociological, politological, philosophical, theological, ethical, economic, legal,
linguistic, and communication theoretical approaches. Such research on business
legitimacy with focus on responsibility, ethics, and society aims at clarifying how
the interrelation between company and environment is mediated by legitimating
notions in public spaces and public relations. Moreover, it searches to understand
how and why notions of legitimacy have changed radically and how these trans-
formations strike on the epistemological as well as practical dimension of business
companies; and the problems involved in these transformations at the macro-,
meso-, and microlevels.
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Three Important Words: Corporate
Social Responsibility—How and Where
to Say Them
Khosro S. Jahdi
Abstract Corporate Social Responsibility (CSR) has been growing in popularity

and importance over the last decades. The speed of that expansion appears to be
gaining further momentum, extremely good news to CSR devotees. However, any
organisation’s CSR strategies have to be communicated to stakeholders, as well as
larger audiences. Due to the existence of blatant advertising of company CSR
policies and the increasing cynicism amongst recipients of such messages, many
organisations look to alternative communication vehicles. Notable amongst these
are Cause-Related Marketing (CaRM), collaborations with NGOs, socially
responsible gift giving, sustainability and/or ethical ratings and sponsorships to
name a few. This article attempts to find the most effective vehicles for CSR
communications and to investigate their impact on sceptical audiences who are
continuously showered with similar messages.
Keywords CSR Communications vehicles Media Stakeholders
1 Introduction
Dean 2003, (Pirsch et al. 2007; Van de Ven 2008) state that the manner in which
consumers decode CSR communications positively or adversely requires further
investigation. Parguel et al. 2011, p. 15, (quoting Hutton et al. 2001) assert that: ‘…
consumers’ responses …more specifically to CSR communication…has gained
greater importance, because CSR communication expenses have grown to become
the third largest budget item for corporate communication departments in large
companies’. Furthermore, ‘…increasingly socially conscious shoppers …account
for more than 90% of shoppers internationally…’, writes (Brooks 2013 as cited in
Plewa et al. 2015, p. 796). van Halderen et al. (2016, p. 567) write: ‘society is
increasingly putting pressure on companies to act in ways that enhance social and
K. S. Jahdi (&)
Bradford Business School, Bradford, UK

62 K. S. Jahdi
environmental welfare and to provide more information about their corporate

responsibility efforts’. KMPG (2013) asserts that companies’ understanding of CSR
and sustainability topics as part of their business is on the rise. Their survey
involving 4,100 companies revealed that over 70% undertake CSR reporting, a
major improvement in comparison with around 2/3rd doing so in 2011. A similar
research carried out by the MIT Sloan Management Review and BCG (Kiron et al.
2015) showed that sustainability communication (an off-shoot of CSR communi-
cation) has increased over the past 4 years. Furthermore, it is often communicated
and measured using clear Key Performance Indicators (KPIs) and firmly placed on
the senior management agenda. With the growing popularity of CSR, every
organisation worth its salt has embarked on taking steps to formulate relevant
policies and strategies, if not fully or partly engaged already. However, it is the
manner in which such initiatives manifest themselves, in addition to the medium/
media that will be under investigation in this paper. Many may be viewed merely as
cosmetic exercises, window dressing, or a PR stunt, while a few could come across
as genuine and truthful. However, it can be argued that CSR does have the potential
to offer a number of benefits. Epstein and Roy (2003) state that CSR is not only
good for just society but also the business itself, while, Porter and Kramer (2006)
claim that the demand for CSR amongst stakeholders is an indication of a potential
growth for companies to explore whether engaging in CSR pays dividends. This
issue combined with the stakeholders’ higher expectations brings about increased
and widespread dissatisfaction with organisations engaged in and communicating
CSR, raising public scepticism towards company CSR messages. Christensen et al.
(2013) believe the public feels such messages may be separate/isolated from cor-
porate practices. Habermas (1984, p. 95) writes: ‘…CSR communication…would
entail persuading others about the ‘good’ actions or using the language as a
medium of self-presentation of the organisation as responsible and sustainable’.
Minor and Morgan (2011) assert that for many organisations, the most precious
assets lie not on the balance sheet, nor the capital of the employees, but rather in
company reputation. They further warn of the fragility of the nature of reputation,
i.e. once tarnished extremely it is difficult to repair. Minor and Morgan’s paper sees
CSR as some form of an insurance policy against reputational risk. They further
state that although CSR is generally speaking thought of a tool for ‘doing good’,
(citing a variety of examples), ‘not doing harm’ is indeed more important. They
warn of doing ‘good’ while also doing harm, as this can result in ‘…reputational
consequences that are worse than simply doing nothing at all’ p. 41). In short, CSR
as reputation insurance can only be effective when an organisations behaviour is
consistent: doing ‘good’ will not automatically erase ‘bad’ behaviour. Chernev and
Blair (2015) report that CSR is commonly regarded merely as a vehicle for
improving corporate reputations and engendering good will amongst customers.
They base this on a survey of over 300 CFOs, investment analysts and CSR
specialists (McKinsey and Company 2009). Their research aimed to illustrate the
extension of CSR beyond PR and goodwill to include customer evaluation of the
firm’s products and/or their performance. Another survey attempting to gauge the
impact of FedEx’s CaRM efforts (Lachowetz and Irwin 2002) indicated that over
Three Important Words: Corporate Social Responsibility … 63
75% of the respondents would be more willing to use the company’s services in the
light of its support for charities. Green et al. (2016, p 29) research which focused on
a unique form of CSR behaviour considered ‘gift giving’ by companies. Depth
interviews with 30 consumers resulted in some unexpected outcome. In ‘…some
instances consumers actively avoid purchasing products from socially responsible
organisations and do so with the intention of managing their impressions with the
gift recipients’. CSR affects and influences all management disciplines, some more
than others perhaps. It is worthwhile to state that: ‘forays into CSR by the marketing
discipline have proved to be the exception rather than the rule…a major paradigm
shift (could enable) CSR initiatives driven by marketing (to be) taken more seri-
ously’, (Jahdi 2014, p. 676). That said, finance, HR and production have
undoubtedly all been researched from a CSR perspective as each has the potential to
go astray, as it were.
2 Perspectives on CSR
Basu and Plazzo (2008) suggest three fundamental lines of CSR inquiry prevalent
in academic literature, as follows:
1. Stakeholder-driven—this is a reaction to the demands of external stakeholders
that might include NGOs, governments and pressure groups. Perhaps if it was
pro-action rather than reaction, this approach might have more of an impact and
higher chances of being accepted.
2. Performance-driven—the concept of ‘good ethics is good for business’; or to
cite Carroll (1998, p. 1) ‘What is business expected to be or to do to be con-
sidered a good corporate citizen?’ This perspective tends to focus on image
creation and maintenance as opposed to what drives the firm to be ethical and
socially responsible.
3. Motivation-driven—either extrinsic motives such as corporate image improve-
ment, pre-empting legal penalties and risk management; or intrinsic motives
such as virtue ethics and Kantian duty ethics and so forth. This is perhaps better
than the other two perspectives but only in the ‘intrinsic driven’ motives part.
Although some research indicates that communicating about CSR activities does
not necessarily reflect positively on a company (Sen and Bhattacharya 2001), others
show that organisations conveying a socially responsible image are perceived more
positively and trusted more with respect to their integrity and credibility (Swaen and
Vanhamme 2004). The Co-operative Bank in the UK used to be a prime example of
such an organisation and one that survived in the aftermath of the 2008 global financial
catastrophe while many banks and building societies lost more than just money. Sadly
following some unfavourable revelations about the Co-op’s senior management and
the emergence of other negative news, that position and the image have been severely
tarnished. Indeed at the time of writing in the spring of 2017, the Bank is in an even
64 K. S. Jahdi
more precarious position. What is becoming more evident is that companies that
highlight their CSR credentials become under increased scrutiny lest they err.
Meanwhile those not making such claims are less under the spotlight (Fig. 1).
Approach CSR type, outcomes and examples
Posthumous CSR applied for damage limitation purposes; a death mask

Seib and Fitzpatrick (1995) referred to the Exxon Valdez incident that
involved a tanker tearing itself open on a reef in Alaska’s Prince William
Sound on March 24, 1989 and spilling more than 10 million gallons of
crude oil. A combination of international media coverage, Exxon’s
apparent lack of preparation and hesitancy to tackle the media effectively
and efficiently exacerbated the situation.
Instead, Exxon could have gone beyond mere damage repair and
regulatory compliance by admitting to having created an environmental
disaster, investing in a complete clean- up operation and formulation of
relevant CSR strategies that would make Exxon the future industry CSR
champion.
Pantomime Superficial play-acting dressed up as CSR: a masque

British arms manufacturer, BAE systems are not only the global suppliers
of lead free eco-bullets (since ‘lead used in ammunition can harm the
environment and pose a risk to people’), they in addition developed a
whole host of ‘green’ munitions such as less noisy warheads (to reduce
noise pollution), smoke free hand grenades, and armoured vehicles fitted
with hybrid engines (New Internationalist, November, 2006). The company
has a Director of Corporate Social Responsibility who rather
philosophically explained: “Weapons are going to be used and when they
are, we try to make them as safe for the user as possible, to limit the
collateral damage and impact as little as possible to the environment”.
What the Director of BAE Systems overlooks is the fact that the
company’s core products are designed to harm people. Two major
tobacco companies. Two major tobacco companies, JTI and BAT which
are banned from advertising in the UK have long-standing lucrative
corporate membership deals with the British Museum and the Royal
Academy of Arts, etc. (The Observer, 1st May, 2016).
Piecemeal Token gestures in application of CSR: masking mosaic

Certain petroleum companies have also attempted to jump on the CSR
bandwagon by publicising their investment in alternative fuel research and
development (usually a fraction of their overall investment) while
maintaining the status quo and producing conventional fuels attracting the
largest part of their investment. When John Browne -a former CEO of BP
and Nick Butler (Financial Times, 2007) called for government action on
climate change, they were talking about a carbon trading scheme likely to
profit BP without the company having to make any great effort to reduce
emissions. In addition, critics, such as Dreisen (1998) also identified the
adverse impact of such schemes on developing nations.
Public Relations
Communicating CSR intent to stakeholders: word masks
CSR helps to ‘greenwash’ a company's image, cover negative impacts
with positive images of its CSR credentials in a barrage of targeted media
releases. Stauber (2007) webpage,
http://www.prwatch.org/taxonomy/term/110 lists a number of ‘front groups’
such as the SUV owners’ Association, whose board is composed of
industry representatives and which paid $400,000 to a PR firm
Stratacomm to lobby the US senate against proposed higher fuel
economy standards legislation.
Fig. 1 The 10 Ps of marketing approaches to CSR (Jahdi and Cockburn 2007)

Parsimonious Frugal CSR spend: modesty masks

This may occur when an organisation is under legal or regulatory pressure
to formulate and implement CSR policies. No more financial or non-
financial resources are invested in such activities, policies, operations etc.
beyond compliance with requirements. Although the company may wish to
convey a socially responsible image due to adherence to the laws of the
land and communicate a clean cut image. BusinessWeek ran an article
entitled The New Netrepreneurs - Dot-com veterans are creating smarter
startups for a chastened world (October, 2001) and argued that following
the dot com bubble bursting entrepreneurs were being more financially
prudent and closely monitoring costs and expenditure (accessed 30/11/07
at http:// www. sparkpr. com/ client _news/ 2001/
10/the_new_netrepreneurs _dotcom_ v. shtml).
Parrot fashion Follows competition blindly: ‘me too’ masks

Sometimes this sort of thing occurs accidentally. At other times, there is a
deliberate campaign of ‘tit for tat’ copycat marketing as recently discussed
by C. Turner in Marketing Week (August 9th 2007,last accessed on 30th
November,2007 at http:// www. marketingweek. co. uk/item/ 57443/pg _dtl
_art _news/pg_hdr_art/pg_ftr_art when reviewing the dispute between
Npower and EoN about their respective advertising campaigns.Each
accuses the other of a copycat campaign and Npower has admitted using
one but argued that Eon did it first in their Go Green campaign.
Profit driven CSR for economic gains only: Midas mask
Some companies seek a CSR path due chiefly to their anticipated
financial rewards. In June 2007 General Electric, for instance, announced
how it was profiting from its environmentalism efforts and was on track to
double its earnings from clean technology to £20 billion over five years
(Marketing Week, 31st May 2007).
Partnership Collaborative CSR paradigm: sharing unmasked
The Co-operative Bank in the UK, despite the fairly recent negative
publicity, and dire health, still uses such an approach as it consults its
customers on major issues the results of which are then published in its
Partnership Reports (see Jahdi and Cockburn, 2007). This is where the
communication arm of the marketing mix could be effectively used to
contribute to company CSR. In marketing parlance, this approach could
be applicable at the highest level of CRM (Customer Relationship
Management) and KAM (Key Account Management).
Proactive Anticipation of possible CSR benefits: Unmasked vision
Zadek (2003) writes that some organisations could find that taking
advantage of certain opportunities may be beyond their reach as
individual firms. To remedy this, competencies and capacities can be
stretched by means of tri-partite partnerships, involving business, ‘civil-
society’ organisations and government agencies. Although alliances such
as this pose particular challenges as they aim to bring together diverse
interests, philosophies and organisational cultures, they are also capable
of offering mutually beneficial outcomes, if managed effectively and
efficiently. However, the main focus of these partnerships tends to be on
business generation rather than CSR application
Philanthropic Welfare of fellow humans: Altruism unmasked
Nan and Heo (2007, p 64) warned that: “while these research findings are
encouraging to companies using cause-related marketing, the absolute
nature of the measures makes it difficult to quantify the amount of positive
effects that cause-related marketing has on consumer responses.”
Fig. 1 (continued)
66 K. S. Jahdi
The table above suggests a wide variety of approaches employed by organisa-

tions to communicate their CSR. The first seven approaches above, as individually
explained, are often regarded by many consumers as the ‘business as usual’ way
that companies do CSR. That complaint thereby justifies some of the consumers’
own inconsistent or hypocritical approaches to purchasing. The last three Ps above
may provide a scaffold for future marketing patterns of a more socially responsible
type. The latter is premised on more economically and socially advantaged societies
taking the lead for two reasons. First, an economic surplus in household income and
security of employment or availability of a ‘safety net’ is usually a pre-requisite for
consumers to even consider themselves as fortunate enough to have a choice.
Second, as a sign of goodwill to demonstrate to hesitant companies and govern-
ments in emergent economies that they will not be drawn into any competitive
‘ambush’ that some feel occurs with carbon trading proposals as mentioned above.
For any communication to be successful source reliability and credibility are
essential requirements. H&M the global retailer, launched a World Recycle Week
on 18 April, 2016 aimed at capturing 1,000 tons of unwanted clothes during that
week; so far, so admirable and ethical. However, recycled yarn is used in a small
percentage of new garments. Using publicly available figures and average clothing
weights, it would take 12 years for H&M to use up 1,000 tons of fashion waste
(Siegel 2016). Similarly, at the 2015 annual meeting BP promised to be open about
its impact on climate change; a resolution that received 98% shareholder approval.
However, ShareAction, the responsible investment group states that BP has fallen
well short of the commitments it made last year. In addition management’s targets
and pay incentives continue to encourage the replenishment of fossil fuel reserves
(the Guardian, 11 April, 2016).
An important point must be taken into consideration. As well as controllable
CSR communications there invariably is a whole host of uncontrollable CSR
despatching/conveying of information that simply adds further to consumer con-
fusion. Therefore, the nature of industry and the company’s perceived image and
reputation can play crucially important parts in the transmission of such messages.
The media employed for communication could also play an important role.
Illustrated below is an integrative model of corporate identity composed of five
distinct facets (Fig. 2).
The last two concerns are the ones that the company should really focus on; that
said, ‘what the brand stands for’ now and in the past also plays a very important
role in planning for the future. Communication could certainly have a major role in
not only improving the current image, but also enhancing the future one.
Furthermore the company must also walk the talk, i.e. put words into action,
empty CSR-related rhetoric will simply not do. As for the industry/company nature
mentioned above, Elkington (1997) suggests four company types as follows:
• Butterflies: low impact, regenerative
• Honeybees: high impact, regenerative
• Caterpillars: low impact, degenerative
• Locusts: high impact, degenerative
Critical Concern Identity Type Concept Time Frame
What we really Actual corporate identity Present

are
What we say we Communicated corporate Past/Present
are communications
What we are Conceived corporate image Past/Present
seen to be
What the brand Covenanted corporate brand Past/Present
stands for
What we ought to Ideal corporate Future
be strategy
What we wish to Desired CEO vision Future
be
Fig. 2 The ACID test of corporate brand management (Balmer and Greyser 2003)
The first two categories refer to companies that are in the business to create and
offer benefits to their stakeholders, and obviously to make a profit. The first with
low impact be it on the environment and/or society, while the second’s high impact
could have long-term implications. However, the degenerative categories, espe-
cially the high impact type amongst which certain mining and extractive companies
may appear—would find it extremely difficult to convey a socially responsible
image/message. When Union Carbide (infamous for the 1984 Bhopal disaster in
India) attempted to sponsor the 2012 London Olympics, there was public uproar
and the company withdrew its offer.
Benjamin Franklin the great American inventor once commented that: ‘glass
china and reputation are easily cracked but never well mended’. Snider et al.
(2003) warn of the considerable growth in corporate communications with CSR
reports ‘filling web pages and brochures’ mainly in reaction to stakeholder
demands. While Sims and Brinkmann (2003, p. 243) cite the case of Enron which
‘looked like an exceptional corporate citizen with all the corporate social
responsibility and business ethics tools and status symbols in place.’ Therefore, it
comes as no surprise that many stakeholders do not readily accept CSR-related
messages from companies.
3 Public Relations (PR)
Public relations as a communications tool has been invariably viewed with suspi-
cion in its oft-ridiculed guise of ‘spin doctoring’. Ewen (2003) said that the history
of PR is one of a battle for what is reality and how people will see and understand
reality. PR can be employed as a major marketing communications tool to convey
an organisation’s CSR policies to its stakeholders. However, if one is to cite the
models below perhaps the ‘two way symmetric’ approach would be an ideal choice,
68 K. S. Jahdi
Model Type of Characteristics

communication
Press agent One way Uses persuasion and manipulation to
or communication influence audiences or behave as the
publicity organisation desires.
Public One way Uses press releases and other one way
information communication communication techniques to distribute
model organisational information. The PR
practitioner is often referred to as the in-
house journalist.
Two way Two way Uses persuasion and manipulation to influence
asymm- communication audiences to behave as the organisation desires.
etrical model (imbalanced) Does not use research to find out how stake-
holders feel about the organisation.
Two way Two way Uses communication to negotiate with the public,
symmetrical communication resolve conflict and promote mutual
model understanding and respect between the
organisation and its stakeholders.
Fig. 3 Four Models of PR, Grunig and Hunt (1984)
where dialogue takes place and both sides are to treat each other as equals and with
open minds. If one party’s argument appears logical then the other would be willing
to embrace it. Anecdotal evidence suggests that the large majority of CSR com-
munications seem to be in the form of one or more of the first three models (Fig. 3).
4 PR and Astroturfing
Mellahi and Wood (2003) state that marketing managers (to whom advertising
managers might be answerable) have collectively gained the power to shape the
choices and lifestyles of large numbers of consumers. Such power could also be
used to alter existing ethical norms and/or manipulate them in the company’s
interest. John Stauber of PR Watch warns of the use of the so called ‘astroturf
campaigns’ as ‘the appearance of democracy bought and paid for with millions of
dollars from wealthy special interests’ (www.corporatewatch.org.uk). According to
the Guardian newspaper (4 June, 2014), a pro-Kremlin group funded a vast network
of online activists to create the illusion of widespread support for Vladimir Putin
which seemed rather bizarre considering the restrictions imposed by that authori-
tarian state. Multiple online identities and fake pressure groups are used to mislead
the public into believing that the position of the astroturfer is the commonly held
view. The practice is not unique to Russia and is practised throughout the globe.
The same newspaper also reports that a number of large organisations now employ
sophisticated ‘persona management software’ to create armies of virtual astrotufers,
complete with fake IP (Internet Protocol) addresses, no-political interests and online
histories. Authentic looking profiles are generated automatically and developed for
months or years prior to being used for political or corporate campaigns. With the
continuous improvements of software, the identification of these astroturf armies

will become extremely difficult to do, thus undermining efforts to conduct open
debates online. Needless to say some organisations would be keen to try this
approach to publicise or authenticate their CSR policies. Fallin et al. (2013) pub-
licise the fact that commencing in the 1980s, tobacco companies (in the US)
endeavoured to create the appearance of broad opposition to tobacco policies by
means of attempts to create a so-called grassroots smokers’ rights movement.
Simultaneously, funding was offered to third party groups, such as Citizens for a
SoundEconomy (predecessor of FreedomWorks, and more recently Tea Party
organisations, etc. intent on accomplishing economic and political agendas. Until
fairly recently the UK also possessed FORREST that acted as a mouthpiece for
smokers. On a lighter note, David Hockney, the world-famous artist, continues his
efforts in a similar manner. A quick glance at British American Tobacco
(BAT) website includes sections on sustainability, CSR and Ethics&Governance.
Its ‘Business Principles and Framework for CSR states: ‘…we recognise that a
reduction in the health impact of tobacco consumption is a legitimate public health
objective. However, tobacco products are legal, significant demand for them exists
and seems likely to continue and informed adults have rights to consume them…’
The term ‘informed adults’ is used in almost every sentence on their website. The
question is: informed about what and how? The billions of people throughout the
world that smoke are not really all informed of the harmful and fatal impact of
smoking. If such an organisation boasts about its CSR, how seriously can con-
sumers believe other companies’ similar claims? Similarly, major tobacco com-
panies, in an attempt to escape the impact of the ban on advertising their products in
the UK, use sponsoring some of London’s most respected arts institutions. This is
an attempt to promote the ‘spurious idea that they are responsible corporate citi-
zens’. JTI pays almost £40,000 per annum to the Royal Academy for a premier
membership package that sees the organisation listed in all exhibition catalogues.
The same company is also a corporate supporter of the Southbank Centre on whose
website its logo appears. Furthermore, British American Tobacco is an associate
member of the Royal Academy of Arts and a corporate sponsor of the London
Symphony Orchestra (the Observer, 1 May, 2016).
In order to attend the January 2015 World Economic Forum in Davos, where the
topic under discussion was climate change, world leaders arrived separately in
1,700 private jets, unintentionally perhaps sending a very confusing message
(Elving et al. 2015). According to the Guardian newspaper (1 March 2016), Paddy
Power, the bookmaker, encouraged a problem gambler to continue betting until he
lost five jobs, his home as well as access to his children. Once the Gambling
Commission pointed this out to the company, as a gesture of goodwill, Paddy
Power donated £280,000 to a ‘socially responsible’ cause. With actions such as
these, scepticism towards CSR related communications can only be intensified.
70 K. S. Jahdi
5 Cause-Related Marketing (CaRM)
Sheikh and Beise-Zee (2011, p. 28) write: ‘… given that the communication of a
firm’s commitment to CSR is a vital motivation, CSR is often practised via the
support of causes […]. In a marketing campaign a cause can help in communi-
cating a favourable message to a specific segment of the market, e.g. those cus-
tomers who hold dear the same or similar cause’. Adkins (Adkins 1999, p. 11)
defines cause—related marketing as: ‘…activity which businesses and charities or
causes form a partnership with each other or market an image, product or service
for mutual benefit’. The North American Sponsorship Spending vis-à-vis ‘causes’
was $1.92 billion in 2015, a 4.0% growth on the previous year (www.
causemarketingforum.com/site).
This at a glance illustrates the growing importance of cause-related marketing.
Sheikh and Beise-Zee (2001) state: ‘CaRM is not to be viewed as a synonym, but a
manifestation of CSR; indeed a dimension of it termed specificity or cause speci-
ficity of CSR’, (as cited in Jahdi 2014, p. 675). Chang and Cheng (2015) cite
American Express as being the first high profile cause-related marketing promotion
which in 1983 announced it would donate one cent per transaction made with the
card for the restoration of the Statue of Liberty. Other companies that have applied
cause-related marketing include the US based FedEx which as part of its CSR
philosophy supports its employees and the communities in which they live. This
takes the form of corporate donations, in-kind services and employee volunteerism.
It also collaborates with charitable organisations such as the International Red
Cross. A survey aimed at measuring the impact of FedEx’s CaRM efforts indicated
that over 75% of respondents would be more willing to use the company’s services
based on its support for charities. Amongst further examples using CaRM can one
could refer to the American Arthritis Foundation’s partnership with the publishers
of the Reader’s Digest and RxRemedy in order to help create awareness of the
disease, and portray the publication as socially responsible (Jahdi 2014, p. 4).
A more recent example is Body Shop’s advertising boards using technology
company Airlabs in pollution hot pots of London. People seeking respite from the
capital’s air pollution can take a deep breath at one of London’s three new bus
stops. The system works by trapping harmful particles (PM2.5), via a filtration
systems before gas pollutants, such as NO2, are absorbed, delivering clean air to
bus stop users (Lucy Siegle, the Observer, 11 June, 2017). Anecdotal evidence
perhaps suggests that there is still a great deal of mileage left in Cause-Related
Marketing as a means of conveying an organisation’s socially responsible image.
However, as with many other communications tools, the task of convincing the
various stakeholders is not getting easier either.
6 Conclusion
Sheldrake (2011) cited in Waddington (2012, p. 8) writes: ‘No organisation is an

island. Everything it does occurs within the context of a changing world, in a
dynamic interplay with every entity around it. The revolution in information and
communication techniques has made this …increasingly transparent, immediate
and global. If ‘perception is reality’ characterised 20th century marketing and PR,
‘reality is perception’ is the 21st century axiom…’
This paper attempted to highlight the various forms of CSR-related communi-
cations as well as their pros and cons however, as mentioned in a number of
occasions it is becoming extremely difficult to convince an increasingly suspicious
and distrusting groups of stakeholders of the CSR intentions of organisations.
A famous and ancient Persian saying goes: ‘if there’s a person in the house, one
word is sufficient!’ That obviously depends on who that person is, what word is
actually spoken, by whom and for what purpose. One golden marketing commu-
nications rule is that if the sender of the message lacks credibility and reliability,
then it will not have the desired effect.
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Evaluation for What Purpose? Findings
From Two Stakeholder Groups
Tracey Wond
Abstract A host of reasons exist for the pursuit of evidence in the public sector,
including to support good governance and policy development. As the expectations
for evaluation from policymakers have evolved, so too has evaluation practice and a
great deal of experimentalism has ensued. There is a risk that these developments,
and the inherent complexity within them, may lead to conflicting expectations about
why evaluation is done or even a loss of purpose. This prompts the meso-level
analysis of two types of stakeholders in a governance network, explored in this
chapter. This chapter presents the findings of an ongoing study which explores the
perceptions of evaluators and policy implementers towards the purpose of evidence.
The findings suggest evaluators and policy implementers have divergent expecta-
tions of why and how evaluation data might be used. The findings suggest that
evaluators aspire to make a change and enhance the policy domains they serve,
whereas policy implementers perceive evaluation as serving a more governance-/
management-orientated role. The use of evaluation as a symbolic or structural
mechanism also emerges, prompting opportunity for further research, for instance,
to explore legitimacy and evaluation. The chapter demonstrates the complexity of
both evaluation and policy, and may have implications for the twin pillars of
governance and responsibility at the heart of the book. If governance and respon-
sibility are the twin pillars of sustainability, then the complex networks of rela-
tionships, expectations, values and outcomes may need to be considered.
Keywords Evaluation utilisation Governance Evidence-based policy and

practice Complexity
T. Wond (&)
University of Derby, Derby, UK

74 T. Wond
1 Introduction
The growth of evaluation has been heavily linked to public reform and the emer-
gence of the New Public Management (NPM) ideology (Shaw 1999).
Through NPM, public sectors across the world have engaged heavily with evi-
dential mechanisms such as evaluation (Taylor 2005). Evaluation provides a means
to ensure good governance, assuring value for money, efficiency, and accountability
(Boaz and Nutley 2003; Bovaird and Loeffler 2007; Stern 2008).
Tension over the purpose of evidence and role of evaluators has mounted over
several decades. Adelman (1996, p. 295) acknowledges the tense and contradictory
relationship between evaluation and policymakers: ‘evaluators want to influence
policy-making, but few were willing to participate in the process of
decision-making; that was the responsibility of policymakers’. Others have noted
‘growing disagreement and confusion about what constitutes sound evidence for
decision-making’ (Donaldson et al. 2009, p. 12). The extensiveness of the evaluation
concept can be problematic and confusing (Weiss 1972; McKie 2003), and this has
heightened as evaluation has evolved with sophisticated methodologies emerging to
demonstrate responsible public spending, demonstrate success and identify what
works (Bristow et al. 2015). This chapter, and the research underpinning it, responds
to recognition that a dearth of studies explores the practice of evaluation (Fitzpatrick
et al. 2009). A decade earlier, Pawson and Tilley (1997, p. 24) suggested that a
synthesis of evaluation theory was necessary, given that evaluation had been ‘tossed
back and forth on a sea of favourable and ill tides’, but still little exploration has
come (with the exception of much methodological contributions). Seppanen-Jarbela
(2003, p. 76) asserts that ‘there is an obvious need to rethink why, what for and who
for evaluation data is collected’, and this chapter explores the ‘what for’ part of this
assertion.
Further, there is increasing acknowledgement that public policy, governance
arrangements and evaluation coexist in complex environments (Walton 2016). It is
reasonable to assume that as models of public administration become more poly-
centric and more stakeholders become involved in policy development,
decision-making and governance, this complexity will intensify (Evers and Ewert
2012). This chapter acknowledges these complex systems.
The study on which this chapter is based sought to identify and compare the
perceptions of evaluators and policy implementers towards the purpose and use of
evidence. It is based on semi-structured interviews with 19 evaluators (internal and
external) and 10 policy implementers (managers and senior personnel of publicly
funded programmes) in the UK. The study, therefore, explores evidence used at the
meso-level in a governance network context.
The twin pillars construct, central to this book, supposes a relationship between
governance, responsibility and sustainability. Evaluation and the role of evidence
have been linked heavily to the concepts of responsibility and governance repre-
sented in these twin pillars, particularly within public administration and evaluation
Evaluation for What Purpose? Findings From Two Stakeholder Groups 75
sciences literature (Berk and Rossi 1990; Newcomer 1997; Davies 1999; Taylor
2005; Hansson 2006; Bovaird and Loeffler 2007; Stern 2008). The findings pre-
sented herein encourage those exploring the twin pillars construct to consider the
changing modes of governance and to acknowledge the increasingly complex
systems in which evaluation and policy concerns such as environmental sustain-
ability reside.
2 Literature Review
2.1 Introducing Evaluation
Evaluation is the ‘systematic study of the behaviour of groups of individuals in

various kinds of social settings, using a variety of methods (Christie and Fleischer
2009, p. 21). Evaluation extends several disciplines, attracting the label of a
‘metadiscipline’ (Picciato 1999, p. 7) and ‘transdiscipline’ (Scriven 1996, p. 402).
These labels provide an example of the breadth of the evaluation definition and the
scope for evaluation to be misunderstood by the multiple stakeholders engaged with
it. Stecher and Davis (1988, p. 23) summarise this position, ‘there is no single,
agreed upon definition of evaluation… there are a number of different conceptions
about what evaluation means and how it should be done’. The extensiveness of the
evaluation concept results in several varying purposes of evaluation emerging and
there have been some attempts to characterise these in the literature (Husbands
2007; Shaw and Faulkner 2006; Berk and Rossi 1990).
2.2 Purposes of Evaluation
Chelimsky and Shailesh (1997) identify that evaluation can serve purposes of
‘accountability’, ‘knowledge’ and ‘development’. Others have broadly supported
these categories, identifying the need for evaluation to support policymakers to
learn (Husbands 2007; Shaw and Faulkner 2006) and to assure governance (Shaw
and Faulkner 2006).
2.2.1 Evaluation for Governance
Governance has become a catchall term (Frederickson 2005) and it is important to

define what it is, in order to understand what is implied by the notion of ‘evaluation
for governance’ described here. Klijn (2008, p. 507) identifies the following four
main definitions of governance:
76 T. Wond
• Governance as ‘good/corporate governance’, relating to the fair and proper

operation of government;
• Governance as ‘new public management’, including embedding performance
measurement and accountability mechanisms for those delivering public
services;
• Governance as ‘multi-level’ and/or ‘inter-governmental’, embracing the multi-
ple layers and hierarchies of public organisations;
• Governance as ‘network governance’, which implies the need to manage across
networks and complex systems, that often cross boundaries are involve multiple
actors.
Emerging from these four definitions of governance, it appears that governance
extends beyond denoting an activity (i.e. something that is done), in a single
organisation (ensuring fairness, evaluating). Governance by Klijn’s (2008) defini-
tions appears more pervasive, difficult to bound and scalable. This is typical of a
complex system (CECAN 2018).
Crowther et al. (2017) identify good governance as comprising four parts,
‘transparency’, ‘accountability’, ‘responsibility’ and ‘fairness’. This appears to
integrate Klijn’s (2008) notion of new public management, which was kept separate
in Klijn’s definitions. The role of evaluation in supporting each of these four
principles is well supported, as Table 1 demonstrates.
Public management reform has driven much of the evaluative activity that we
observe today (Hansson 2006; Head 2008; Henkel 1991; Taylor 2005). Efficiency,
control, value for money and accountability were central components of ‘New
Public Management’ (NPM) (Hansson 2006), and evidence to demonstrate the
achievement of such outcomes was necessary (Davies 1999; Bovaird and Loeffler
2007; Stern 2008). Evaluation became a ‘key entry in the lexicon of new public
management (Taylor 2005, p. 602) and a measurement-driven culture ensued in
public services in many parts of the world (Kettl 2005; Klijn 2008; Taylor 2005).
Table 1 Evidence for governance

Evidence for Transparency Evidence for Accountability
• To demonstrate where public funds are spent • To demonstrate that public funds have been
(Glendinning et al. 2002; Clarke 2004; Jones spent well and provided value for money
et al. 2007). (Barbier 1999; Davies 1999; Huebner and
Betts 1999; McCoy and Hargie 2001).
• To substantiate results, outcome, impact, and
outputs (Berk and Rossi 1990; Newcomer
1997; Sanderson 2000).
Evidence for responsibility Evidence for fairness
• To demonstrate that public funds have been • To demonstrate that processes deemed fair
spent responsibly. have been followed in spending public
• To develop/improve/learn in order to more funds.
effectively allocate future spend (Stecher and • To demonstrate distributive and procedural
Davis 1988; Patton 1997; Shaw 1999; Shaw equity in who came to benefit from public
and Faulkner 2006). funds (Tompa et al. 2008)
Source Author’s own
Attempts by public services to be more responsible, strategic and efficiency have

reinforced the evidence-based policy and practice concept, and the need for eval-
uation for evidence ‘to promote accountability and control’ (Sanderson 2000; Shaw
1999). Further, evaluation has played a key role in embedding and legitimising
neoliberalism (Giannone 2016). Greater public voice and media scrutiny have also
pressured public services to demonstrate responsible stewardship of ‘taxpayers’
money’ (Barbier 1999, p. 378).
2.2.2 Evaluation for Learning
The potential for evaluation to serve a learning or developmental purpose are also
well acknowledged (Weiss 1972; McCoy and Hargie 2001; McKie 2003; Shaw and
Faulkner 2006; Fitzpatrick et al. 2009). This includes development programme
theory, influencing the design of policy interventions, providing ongoing feedback
and influencing future interventions. Indeed, several evaluation constructs have
emerged to distinguish this learning purpose. Scriven’s (1980, p. 6) formative/
summative dualism identifies the provision of feedback ‘to improve something’, and
the provision of knowledge to decision-makers as central to formative evaluation.
Many have contended this learning purpose (Bovaird and Davis 1996; Iriti et al.
2005), in particular, questioning the impartiality and independence of evaluation.
The expansive nature of evaluation (extending to audit, performance measurement,
process evaluation, etc.) compounds such contention:
When we had no interest in changing anything we had less need to explain—it would
suffice to assess performance…evaluation has moved upstream to become involved in
policy analysis and programme design and downstream towards implementation and
change management (Stern 2008, p. 251)
The movement of evaluation ‘downstream’, towards development and imple-

mentation is not necessarily a new role for evaluation and resonates with its historical
roots in supporting US reform. However, it does represent scope for confusion and
conflicting expectations (Weiss 1972; McKie 2003; Donaldson et al. 2009).
2.3 Challenges Facing Evaluation and Evidence Use
The under-utilisation and effectiveness of evaluation findings have frustrated both

evaluation communities and those who fund them, expounding criticism that
evidence-based policy and practice (as a mechanism that evaluation feeds) is ide-
ological, flawed and failing (Parkhurst 2017). Despite significant public expenditure
being committed to construct such evidence bases (see for instance National Audit
Office 2013), the use of evidence to inform policy intervention is sporadic, and
there are increasing accounts of the underuse and misuse of such evidence (Weiss
1993; Wond 2017). EBPP has endured a great deal of criticism and despite
78 T. Wond
maturing as a concept, in practice, it has struggled to become fully institutionalised

or legitimated in many areas of public policy. The failure of negative evaluation
reports, including Brexit impact assessments, to be disclosed in a timely manner are
examples of this.
The changing face of the public sector and form that governance takes may also
have implications on evaluation. Greater private–public partnerships have stimu-
lated a fundamental rethink on how governance is assured and the notions of
‘co-governance’ and ‘new public governance’ have emerged as a result (Osborne
2000; Theisens et al. 2016). ‘New forms of horizontal governance’ (Klijn 2008,
p. 506) have embedded more polycentric and participative forms of public sector
decision-making and are structured around greater citizen involvement. Evaluation
has responded with more participative methodological approaches (Plottu and
Plottu 2009). As more stakeholders become involved in governance and evaluation
there is a risk that it becomes increasingly difficult to satisfy the expectations and
stakeholder claims of the many. Stakeholder identification and salience theory
suggest that not balancing the claims of various stakeholders (after assessing var-
ious attributes to determine salience) may result in harm to the organisation (Neville
et al. 2011).
A host of elaborate methodologies and perspectives of what makes good evi-
dence have emerged (reigniting the quantitative/qualitative paradigm war in doing
so), and have further alienated policymakers from the evidence bases meant to help
them (Bristow et al. 2015). Walton (2016) suggests that as policy systems become
more complex, buy-in across governance networks, rather than further technical
sophistication is necessary.
2.4 Complexity Theory
Whilst this study does not seek to explore complexity theory in detail, nor make it a
key feature of this chapter, the theory does acknowledge the complex systems
underpinning the setting for this study, and is therefore worthy of some
introduction.
Complexity is ‘a form of order that emerges when certain sets of things interact
in certain ways with one another’ (Castellani and Hafferty 2009: 123). Complexity
theory began in the physical sciences (Walton 2016) and gradually expanded into
fields including management, organisation and public administration sciences.
Complexity has been described as very many things including a methodology,
philosophy and theory (Haynes 2008; Walton 2016).
There are many characteristics inherent in complex systems including the
cross-boundary nature of activity and issues (Meek 2014), non-linearity (Gilbert
2017), boundlessness (CECAN 2018), uncertainty and unpredictability (Meek
2014; CECAN 2018). According to Gilbert (2017, p. 5): ‘the characteristics of a
complex system, using the term in its technical sense, are that it consists of many
units that interact and that as a result, the behaviour of the system as a whole is
more than just the aggregation of the behaviours of the units’.
There have been several attempts to explore and apply complexity theory to
evaluation settings, both as a methodological to evaluate and to study evaluation
(Haynes 2008; Morrell 2010; Walton 2016; Gilbert 2017), and there is increasing
awareness that the complex policy systems in which evaluation operates require
such an approach (Walton 2016; CECAN 2018). As co-governance arrangements
proliferate public organisations in the UK, New Zealand and farther afield, further
consideration for the increasing complexities and approaches to manage these may
be necessary (Duncan and Chapman 2012; Walton 2016).
3 Methodology
The study explored in this chapter provides a meso-level exploration of two types of
communities (evaluators and policy implementers) participating in governance
networks. Klijn (2008, p. 511) defines governance networks as ‘public
policy-making and implementation through a web of relationships between gov-
ernment, business and civil society actors’. Both policy implementers and evalu-
ators were considered to be actors participating in decision-making in these
governance networks. Prior studies have supported the notion of evaluation residing
within governance networks (Walton 2016).
The study involved semi-structured interviews with 19 practising evaluators
(9 female and 10 male) who undertake evaluation in various capacities (academics,
evaluation consultants, internal evaluators undertaking programme evaluation).
Interviews with 10 policy implementers were also conducted. Both groups repre-
sented a range of policy areas (e.g. health, education, foreign aid and enterprise
support). The interviews were undertaken as part of a wider study and looked to
understand respondents wider experiences of evaluation, challenges they felt lim-
ited evidence use, and how they used or perceived the use of evaluation evidence.
Interviews were administered via telephone, face-to-face and Skype. A subset of
this data, which related to the purpose and perceived use of evaluation is analysed
here.
The researcher’s own involvement with evaluation societies and networks in the
UK and Europe supported access to evaluators. Further networking and involve-
ment in project settings led the researcher to access policy implementers for this
research. A semi-structured, informal interviewing approach, without a strict
interview guide (Brinkmann 2013), was adopted. Interviews were transcribed
contemporaneously in the most part, although in the case of some face-to-face
exchanges these were undertaken retrospectively with the use of paraphrasing. Data
was analysed using NVIVO.
The findings presented below are abridged, since the wider study focused on
many more aspects of evaluation perceptions and practice.
80 T. Wond
4 Findings
4.1 Making the World Better?
Many evaluators emphasised that they hoped their work would be used to ‘make a
difference’ and there was a strong association with evaluation for improvement and
learning. Evaluators closely associated their work with enhancing outcomes for
beneficiaries: ‘to improve the lives of beneficiaries’, ‘to provide learning on what
worked to make future activity better’, and ‘to make a difference’. Therefore, a
strong moral purpose was evident amongst evaluators. In contrast, only two of the
ten policy implementers referenced the potential for evaluation to be used for
improvement (‘feed(ing) the evidence-base’ and ‘showing us what works’). There
was clear disparity between how evaluators hoped their work would be used, and
how policy implementers perceived the use of evaluation.
4.2 Evaluation for Governance
The majority of policy implementers perceived that evaluation should play a heavy
governance and monitoring role, and they spoke of evaluation as instrumental in
proving targets and assuring responsible spending, for instance: ‘to capture how
many beneficiaries there were and if we hit our targets’; ‘to report that the money
was spent properly’; ‘so we can monitor what we do’’, and ‘(evaluation)…allows us
to draw down the next lot of funding’. Evaluators also recognised this governance
role and the pursuit of ‘the usual monitoring ‘stuff’ (data)’ emerged in 11 of the 19
interviews (and more so amongst internal evaluators).
4.3 Product of Evaluation
There was recognition by both groups that evaluation reports were under-utilised:
Evaluators spoke of evaluation reports ‘gathering dust’, ‘abandoned’ and ‘lost’ in
office drawers, and ‘unread in an inbox somewhere’. Policy implementers spoke
less of ‘evaluation reports’, as a product of evaluation. Instead, the importance of
monitoring data repeatedly emerged, as did evaluation as a mechanism to break
through key stage-gates (to borrow from project management terminology). For
instance, to ensure the continued release of funding (‘to draw down the next lot of
funding’) and demonstrate targets had been met within particular reporting periods.
4.4 Evaluation as Symbolic
Evaluation was frequently spoken of as supporting programmes/policy interven-

tions to be ‘seen to’ deliver, achieve certain outcomes or act in particular ways.
Similarly, several policy implementers spoke of evaluation as a ‘tick-box’ exercise
that needed to be done (one evaluator also recognised that evaluation was perceived
in this way). As such, a symbolic role for evaluation was also recognisable.
5 Discussion
There are several implications from the findings presented, particularly given the
contradictory perceptions of the use of evaluation.
5.1 Divergence in Perceptions
An incongruence between the supply of evaluation (by evaluators) and demand for
evaluation (by policy implementers) echoes concerns in the literature that evalua-
tion and policy are evolving away from one another (Donaldson et al. 2009).
Misaligned action and intention between evaluators and policy implementers may
affect the position, legitimacy and overall effectiveness of the evaluation function.
The implications of such incongruence are outlined in both stakeholder identi-
fication and salience, and complexity literature. Stakeholder theories acknowledge
that cooperation and collective action supports the salience of particular stake-
holders (Ali 2017). Policy implementers and evaluators in this study appeared to
differ on matters such as the use of evaluation reports, and the purpose of evaluation
as a whole. From a complexity lens, a ‘divergence in the values and assumptions’ of
stakeholders is typical of a complex policy system (Walton 2016, p. 76; Meek
2014). Walton (2016) suggests that network governance arrangements could be
introduced to address conflicts in complex systems, although it seems somewhat
ironic given the governance purpose that evaluation serves that additional gover-
nance is required to govern it (meta-governance).
The moral mission of evaluators, seen in the findings, prompts discussion about
the motivation of evaluators to fulfil a moral or social mission and the implications
of this. Evaluators overwhelmingly felt they served to, in the words of one
respondent, ‘make the world a better place’. This finding associates evaluation with
utility, and ultimately the end-users and the policy implications of evaluation evi-
dence. This is despite much literature and acknowledgement in this study (by both
policy implementers and evaluators) that evaluation is often under-utilised; this
moral position could, therefore, be considered ideological. Further study to explore
the motivations of evaluators could be valuable.
82 T. Wond
5.2 Implications for Governance
Evaluation for accountability and transparency emerged through many of the

interviews and a clear governance role for evaluation was recognised by policy
implementers. This supports evaluation discourse which suggests that evaluation
has a role in assuring governance. Albeit, many of the responses referred to the
basic monitoring function underpinning evaluation, as opposed to more elaborate or
technical modes of evaluation. The evaluation community may be disappointed to
note such findings, since such perceptions (by policy implementers) appear to
oversimplify the knowledge and skills needed to undertake evaluation. Since the
study was conducted across a range of sectors and with no fixed definition of
‘evaluation’ set to aid responses this finding should be taken cautiously and requires
further exploration. The confirmation of an evaluation for governance role also
supports the decision to consider the two communities under study here as par-
ticipating in ‘governance networks’.
It was interesting to note that equity or fairness despite being a component of
governance (Crowther et al. 2017) did not feature in any of the 29 interviews.
5.3 Symbolic Versus Structural Use of Evidence
The metaphorical use of ‘pillars’ (of responsibility and governance) central to this
book are particularly relevant to the discovery that evaluation appeared to be treated
symbolically, almost aesthetically—a tick-box exercise. Within architecture, fea-
tures such as pillars (‘pilotis’,‘columns’) carry significance beyond their initial
structural function, and may also carry aesthetic (Sparrow 2017) or symbolic rel-
evance (Thacker 2000). The same appeared true in this study.
Reference was made to evaluation making programmes and policy interventions
‘be seen’ in a particular way (successful, meeting targets, etc.). There is resonance
here to legitimacy theory, and in particular strategic legitimacy that recognises
organisations exaggerating or even falsifying claims of compliance in order to be
seen to act in accordance with societal norms. Much attention has been paid to
strategic legitimacy in respect of social or environmental reporting for instance.
The symbolic use of evaluation sits in contrast with the functional and structural
potential for evaluation evidence to be used to inform learning, policy development
and policy decision-making. Such challenges in the pseudo/symbolic use of evi-
dence for governance exposes potential vulnerabilities in the triadic relationship
between sustainability, governance and responsibility at the heart of this book.
6 Conclusions
Despite evaluation existing for many years and evidence of its evolution, there is
still a notable absence of boundaries, maturity or clear identity. The findings just
explored demonstrate such issues with the identity, purpose and use of evaluation.
The expansive nature of evaluation, and the immense expectations of stakeholders
in the complex policy systems it resides may hamper its utilisation.
These study findings have implications for practitioner and scholarly commu-
nities. For evaluation practitioners, they prompt a rethink for how evaluators and
the evaluation function respond to recognition that evaluation and policy systems
are becoming increasingly complex. For a number of reasons (austerity,
neo-liberalism) new public governance and notions of co-governance are further
complicating the meso-level policy and governance communities. Put simply, more
parties are becoming involved in policy concerns and could influence evaluation.
Few tactics to overcome this have been suggested, but network theory and network
governance arrangements may be worthy of further exploration (Walton 2016). The
motivations of evaluators to fulfil a ‘moral mission’ emerged as an interesting
finding worthy of further exploration. However, since there was a lack of recog-
nition of this by policy implementers, a starting point for realising this motivation,
may be greater communication of this aspiration to effect change. For the scholarly
community, these findings are in many respects confirmatory, continuing to link
legitimacy and evaluation, and complexity and evaluation.
Finally, the study has implications for the twin pillars of responsibility and
governance at the heart of this book. It serves a reminder that governance, and the
wider concerns for sustainability are based in complex systems where even those
functions set to enhance affairs (such as evaluation) can in themselves become
complex and confused.
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Part II
Insights for Industry
The Sustainability of Post-crisis
Management on Flooding Prevention
Linne Marie Lauesen
Abstract The climate change has in the past decades given more extreme rain
events, both in terms of intensity and duration, and recurring storm related sea-level
rises happen these years almost annually according to different weather cycles
around the World. The public policies and management of these events and the
initiatives taken to prevent the damages from them have changed during these few
decades mainly because of the recession following the financial crisis in 2007/2008.
Before the financial crisis, municipalities and their water companies built large
capacity basins in order to store stormwater masses in the sewer systems. After the
crisis, on-ground rainwater management has become the new best management
practice trying to prevent extreme water masses from the sewer system. The new
use of the landscape; the green spaces as well as the city roads and parking lots for
rainwater storage and transportation is claimed to be less costly than sewer/basin
solutions. At the same time, costs for coastal security is rising, and small com-
munities are lacking funds for building floodgates and -walls to protect the coastal
cities from the sea-level rises. This turn in BMP is happening worldwide in
countries and states struggling with extreme water events. Seemingly, it is all
initiated from political pressure on minimizing public expenditure in general, and
therefore also on infrastructure and security. This chapter reviews the international
literature on flooding prevention and its relation to public policies and management
and as an example shows the history of climate adaptation in Denmark. With cases
from Denmark, the chapter shows that on-ground flooding prevention risk being
even costlier than earlier, because the new ex-sewer solutions are not (necessarily)
cheaper than traditional sewer systems especially in the highly paved cities, where
the problem is most urgent. These findings supports the UNEP 2014 forecasts of
tripling the costs for flooding prevention by 2050 compared to earlier estimates
from 2010.
Keywords Flooding Finance Politics Security Stormwater management

Sustainability
L. M. Lauesen (&)
Independent Researcher, Roskilde, Denmark

90 L. M. Lauesen
1 Introduction: Sustainability and Climate Adaptation
1.1 Climate Change and Adaptation
The debate concerning the climate change seems to have divided the World pop-
ulation into believers or non-believers, especially regarding certain political per-
suasions flourishing these days. Despite these political debates, the trend of water
catastrophes related to hydrological and meteorological events from 1900–2016
shows a clear picture of more frequent water extremes and catastrophes. Figure. 1 is
an extraction from The International Disaster Database EM-DAT created by the
Centre for Research on the Epidemiology of Disasters at the Université catholique
de Louvain in Brussels, Belgium.
According to the extraction from the EM-DAT,1 the rising occurrences of floods,
landslides (excl. rockfalls) and storms, which peaked in 2005 with 341 catastrophes
(including the Hurricane Katrina, New Orleans2), have affected up to 325 million
people alone in 1998 (including the Yangtze River flood3), and have recently costed
up to 200 Billion US$ in 2005 in total, pivoting around and in the first decade of the
Millennium.
The very recent 2017 Hurricane Harvey in Texas indicates that these weather
phenomena are recurring on a yearly basis, and although the trend in Fig. 1 shows a
small decline in events, deaths and impacts, as well as costs during the last
10 years, UNEP, the Intergovernmental Panel on Climate Change (IPCC) and
others foresee even worse situations than we have seen before (UNEP 2016; IPCC
2014) (Fig. 2).
The SYR [The Synthesis Report] confirms that human influence on the climate system is
clear and growing, with impacts observed across all continents and oceans. Many of the
observed changes since the 1950s are unprecedented over decades to millennia. The IPCC
is now 95 percent certain that humans are the main cause of the current global warming.
(IPCC 2014, p. v)
As a consequence of these hydrological and meteorological occurrences,

ongoing processes of climate adaptation are taking place Worldwide. Estimates are
being continuously calculated by intergovernmental organizations as to which level
they may expect the costs for climate adaptations to be.
1
The extraction from the database includes hydrological and meteorological events: all registered
floods—coastal, flash, riverine and miscellaneous—landslides including avalanches, subsidence
and miscellaneous, but not rockfalls—and convective, tropical, extra-tropical and miscellaneous
storms—from 1900–2016.
2
>1800 people were killed, around 5.8 million people were affected, more than 800,000 houses
were flattened, and the economic losses over $160 billion US (2005) (Petterson et al. 2006). See
also http://www.hurricanescience.org/history/studies/katrinacase/impacts/ accessed 5th Sept 2017.
3
1320 people were killed, 223 million people were affected, about 4,970,000 houses were flat-
tened, and the direct economic losses amounted to 166,600 million Yuans (£12,815 million) by the
Yangtze river floods in 1998 (Zong and Chen 2001).
The Sustainability of Post-crisis Management … 91
Water catastrophes - hydrological and metereological

400 Katrina Hurricane,
2005
350
Yangtze River, 1998 Occurences
300
250
Katrina
Total
200 damages,
150 billion US$
Deaths and
100
affected, mio.
50
0
1900
1905
1910
1915
1920
1925
1930
1935
1940
1945
1950
1955
1960
1965
1970
1975
1980
1985
1990
1995
2000
2005
2010
2015
Fig. 1 Source: EM-DAT. The Emergency Events Database—Universite catholique de Louvain
(UCL)—CRED, D. Guha-Sapir—www.emdat.be, Brussels, Belgium Created on September 05,
2017
Fig. 2 Climate Adaptation Finance Need for the Developing Countries. Source The World
Resource Institute. http://www.wri.org/blog/2015/04/costs-climate-adaptation-explained-4-
infographics accessed 5th Sept 2017
For the developing countries, the UNEP estimated in 2014 the costs to go up to
300 billion USD in 2050, which is three times as high as the World Bank’s estimate
in 2010 of 100 billion USD. These estimates of costs for climate adaptation make
the issue of climate adaptation one of the most important ones concerning the
sustainability of the World.
92 L. M. Lauesen
1.2 The Connection Between Sustainability and Climate

Adaptation
The literature of Sustainability as well as the literature of Climate Adaptation often

take each other for granted, and thus both concepts were until recently rarely
mentioned in each other’s literatures.
For instance, the concept of Sustainability mentioned in the Brundtland Report
(1987), Our Common Future, describes “Sustainability” in its very first paragraph as
1. Sustainable development is the kind of development that meets the needs of the present
without compromising the ability of future generations to meet their own needs.4
Terms such as the “climate change” or “climate adaptation” were not mentioned
in this UN-document, however, multiple times “water” is mentioned as a resource
to care about as well as an impact to prepare people against.
Hence, the Intergovernmental Panel on Climate Change IPCC was created in
19885 set up by the World Meteorological Organization as a consequence of the
above, and therefore it spoke specifically about the climate change, but did not take
the word “sustainability” into its vocabulary although it mentions several things in
line with the UN policies on sustainability. In 2007, the IPCC panel addressed this
issue (Yohe et al. 2007, IPCC, AR46):
Definitions of sustainability vary across sectors, but their common theme is to change the
way resources are exploited or hazards are managed so that adverse impacts downstream or
for subsequent generations are reduced. Climate change is, however, seldom listed among
the stressors that might influence sustainability.
Lately, The World Bank took a lead in connecting the two together conclusively
in a 2014 blog by Rachel Kyte7:
Climate change is the most significant challenge to achieving sustainable development, and
it threatens to drag millions of people into grinding poverty.
Thus “Climate Adaptation”—although it in principle has taken place since the

first drainage systems were established by farmers as well as since the first sewer
was put into the ground in Rome during the Viking Era (Robinson 2003, p. 73)—
has more or less always been considered done—in agriculture as well as in city
design.
4
http://www.un-documents.net/ocf-02.htm#IV.
5
https://www.ipcc.ch/organization/organization_history.shtml.
6
See also https://www.ipcc.ch/publications_and_data/ar4/wg3/en/ch2s2-1-3.html.
7
http://www.worldbank.org/en/news/speech/2014/01/15/climate-change-is-challenge-for-
sustainable-development.
1.3 Traditional Stormwater Management
Stormwater management is an old,8 but evolving field, especially because of the

climate changes, which often means heavier rain, more draught, and more frequent
sea-level rises as further complications. Stormwater events often result in flooding,
erosion, destroyed low-lying buildings, poor traffic safety, and poor water quality.
Historically, rain- and stormwater management was, and still is, transported in
sewer systems consisting of drains and pipe-systems with open or closed retention
basins to store the water masses until the system is capable of further transportation
to the wastewater plants or directly into local water recipients (EEA 2012, p. 42).
Depending on the quality of the rainwater, retention basins are designed as open,
large ponds in natural, grassy areas for rainwater separated from sewerage, and in
closed concrete constructions to manage combined sewer overflow (CSO).
According to more extreme weather, improvement of traditional sewer systems
has become increasingly more expensive. Especially in smaller towns, the
municipalities and water companies do not have the financial capability to ensure
and secure the citizens completely against damages from flooding with CSO.
Balancing the tariffs on water and wastewater management in order to meet the
citizens’/ consumer’s expectations and willingness to pay for this service has with
the exposure to more extreme weather events and in order to meet the citizens’/
consumer’s expectations and willingness to pay for this service, the balancing the
tariffs on water and wastewater management has become more difficult. Many
towns have old combined sewer systems, which are extremely expensive to enlarge
to store more rainwater. Considering that large basins often remains empty most
time of the year, and are only filled in case of stormwater events, makes the
balancing of high security and low cost tariff policies very difficult.
In 1997, the US Environmental Protection Agency enforced the Clean Water Act (1972)9
and mandated the water department to update their long-term control plan for combined
sewer overflow. (Uittenbroek et al. 2016, p. 10)
In Philadelphia, the water department looked at enlarging the traditional sewer

systems with larger pipes, basins and more pumping stations, and compared the
costs for it with alternative costs for storing rainwater on ground, in the terrain, etc.
The costs were estimated to being able to be lowered with 2 billion US dollars if the
rainwater was to be separated from the sewer system and managed alternatively in
“detention ponds, permeable pavements, water crates, tree trenches, and green
roofs” (Uittenbroek et al. 2016, p. 10; Maimone 2013).
8
In Denmark, the first closed sewer line was established in the city of Odense in 1866 (Vested
1999, p. 25, In Danish).
9
https://www.epa.gov/sites/production/files/2017-08/documents/federal-water-pollution-control-
act-508full.pdf.
94 L. M. Lauesen
1.4 New Methodologies for Stormwater Management
Several experiments in the US during the first decade of the Millennium were
established to gather knowledge on the costs and the environmental effects of the
green alternatives for urban stormwater management, amongst others in
Philadelphia, Ohio, San Francisco, Georgia, Virginia, Oklahoma, Seattle and North
Carolina (Levy 2008; Shuster et al. 2008, 2010; Thong 2011; Narayanan et al.
2012; Lucas and Sample 2014; Vogel et al. 2015; Page et al. 2012).
In Seattle, the term green stormwater infrastructure (GSI) was used to design
systems, of the maximum extent feasible to
be fully implemented, constrained by the opportunities and physical limitations of the site,
practical considerations of engineering design, and reasonable consideration of financial
costs and environmental impacts (Tackett 2008, cited from Fletcher et al. 2015, p. 532).
The United Nation’s Framework Convention on Climate Changes in 2008 had

the same issue on the agenda advocating for the green alternatives in order to reduce
the publics’ exposure to the negative effects of the climate changes. It encompassed
restoring the mangrove forests to dissipate the energy from storm surges and
buffering effects of floods and erosion on human communities; the protection of the
groundwater aquifers and the floodplains from as well flooding and droughts; and
enhancing the urban green infrastructure to reduce the heat island effects and reduce
urban flooding disasters (Geneletti and Zardo 2016, p. 38).
The European Environment Agency started a project in 2011 to support urban
climate adaptation strategies, and adopted the green infrastructure principles for
mitigating the climate changes in 2012, where its first report was made10:
Adaptation also relates strongly to using and expanding green infrastructure such as parks,
forests, wetlands, green walls and roofs, wherever feasible and sustainable (EEA 2012,
p. 7).
The three main principles in the EEA 2012 report was not a fully transformative
approach away from “gray” (traditional sewer systems) to “green”, but rather a
balanced initiative combining both and adding “soft” approaches, such as
“design and application of policies and procedures and employing, interalia, land-use
controls, information dissemination and economic incentives to reduce vulnerability,
encourage adaptive behaviour or avoid maladaptations. They require careful management
of the underlying human systems”. (EEA 2012, p. 16)
With regard to flooding, the EEA listed five different terms or causes for
flooding: River floods (caused by heavy rain), flash floods (run-off melting or rain
water from mountains), coastal floods (from sea-level rises), urban drainage floods
(caused by heavy rain), and groundwater floods (from groundwater level rises).
One of the main cases in this first EEA report regarding flood disasters was the
flooding of the Capital of Denmark, Copenhagen, July 2, 2011 (EEA 2012, p. 43).
10
https://www.eea.europa.eu/publications/urban-adaptation-2016 Accessed 8th June 2017.
During a 2 h period over 150 mm rain fell in the city centre. This constituted the biggest
single rainfall in Copenhagen since measurements began in the mid-1800s. The city’s
sewers were unable to handle all of the water and as a result many streets were flooded and
sewers overflowed into houses, basements and onto streets thereby flooding the city […]
Insurance damages alone were estimated at EUR 650–700 million. Damage to municipal
infrastructure not covered by insurance, such as roads, amounted to EUR 65 million.
The flooding incident was not the first of its kind in Denmark. The cities of
Odense (from 200211), Kolding (from 200512), Greve (200813), and other low-lying
cities had experienced similar events years before. However, the focus on climate
adaptation plans as well as stormwater management plans and the gaze for alter-
native ways to ensure the cities was peaking in Denmark after the Copenhagen
stormwater flooding—and continues to be the primary issue in the Danish water
sector.
However, the EEA report from 2012 was only showing cases and guiding local
governments in the same direction as the EPA in the US—urging them to begin
planning for worse climate events. It did not recommend any Best Management
Practices (BMP) yet.
The recent update came in 2016 (EEA 2016), and this report had gathered a little
more information about the effect and efficiency of green infrastructure technologies
and the policies, that local governments were working with all over Europe since
the 2012 report
Gaps in awareness, knowledge, political support, sectoral procedures and legislation still
pose many barriers to municipalities that want to apply a broadly systemic approach and
use unconventional measures to solve problems. (EEA 2016, p. 10)
Since the barriers had been identified and in many cases amended in the local
nations, the EEA report focused on three other issues (EEA 2016, p. 7): coping,
incremental and transformative action towards climate adaptation. The report had now
included the state-of-the-art knowledge of instruments feasible for the climate
adaptation with links to BMPs in different countries within the EU (EEA 2016, p. 69).
2 Methodology Used in This Chapter
This chapter is written based on a literature review of case studies with GSI pilot
studies from the Millenium and till now concerning rain- and stormwater man-
agement. The literature review contains international case studies published in
English-speaking journals as well as Danish case studies reported on the Internet in
specific water-sectorial fora, which are not published in academic journals.
Furthermore, it contains policy-making documents from the EPA in the US and the
11
https://samvirke.dk/artikler/klimaforandringer-aegtepar-matte-flytte-efter-5-skybrud (In Danish).
12
http://www.jv.dk/kolding/Skybrud-Store-dele-af-Kolding-under-vand/artikel/171915 (In Danish).
13
https://ing.dk/artikel/greve-utopisk-gardere-sig-mod-ekstreme-skybrud-89726 (In Danish).
96 L. M. Lauesen
EEA in the European Union to illustrate the consensus of the new best stormwater
management practices, and show the history of this evolvement. The academic
literature is referred to in the text as journal references, and the non-academic
literature is referred to in the notes.
The search for relevant case studies took place using Google Scholar as primary
source (Haddaway et al. 2015) with the search for the different cue words (also
mentioned on page xxx)
• Water Sensitive Urban Design (WSUD) and Stormwater Quality Improvement
Device (SQID) regarding cases from Australia;
• Low Impact Development (LID) and Low Impact Urban Design and
Development (LIUDD) regarding cases from the USA and New Zealand;
• Sustainable Urban Drainage Systems (SUDS) and Sustainable Drainage
Systems (SuDS) regarding cases from the UK;
• Best Management Practice (BMP), Stormwater Control Measures (SCM),
Source Control (SC) regarding cases from North America and Canada;
• Alternative Techniques (AT) regarding cases from France;
• Lokal Afledning af Regnvand (LAR) regarding cases from Denmark;
• Lokalt omhändertagande av dagvatten (LOD) regarding cases from Sweden;
and
• Alternativen zur Regenwasserableitung (AZR) regarding cases from Germany
(Fletcher et al. 2014, 2015)
These specific names, especially the ones used in the English-speaking coun-
tries, were typically also used in case studies from other countries in Asia, South,
and Latin America, elsewhere in Europe, and in Africa although these case studies
may have other names in their mother language (Fig. 3).
Fig. 3 Google Scholar Search 29th August 2017—without patents and quotes. Decades chosen as
xxY0–xxY9
Specifically for the Danish case studies, the following water-sectorial fora on the
Internet were used:
• http://www.klimatilpasning.dk/cases-overview—most cases are also referred in
English (http://en.klimatilpasning.dk/)
• http://www.laridanmark.dk/lar-anlaeg-i-danmark/26509—most cases are also
referred in English (http://wsud-denmark.com/wsud-systems-in-denmark/34590)
Thousands of international case studies were identified through Google Scholar
search; however, only a minuscule excerpt of these is shown in this chapter con-
sidering the limited space of the chapter. The criteria for the ones mentioned here is
based on its publication of sustainability measurements such as total costs (econ-
omy) and environmental impact regarding hydraulic capacity as well as pollution
reduction to the water environment. The social impacts were also preferable to have
measured, however, most case studies did neither have any qualitative nor quan-
titative measures that could be compared between cases, although most case studies
had described the social impacts of GSI in words—all mainly positively.
Especially, the environmental part was reported in most case studies. However,
many pollutants and impacts were measured differently or with different substances,
which made comparison hard. Also biodiversity was mentioned in many of the case
studies, however, again, a comparison was not possible because of the case studies
used different measures or described the biodiversity in words rather than in con-
crete measurements.
3 Post-crisis Politics and Public Management
In order to understand why this change in BMP has taken place, we must under-
stand why it was a problem to continue the tradition sewer system method to take
care of rainwater management, and why this tendency has spread globally during
the last few decades.
Historically, rainwater was managed by the local governments in the munici-
palities more or less everywhere. Rainwater management is recognized and “born”
as a social, environmental and common interest in society and these institutions
took care of both the delivering fresh water and management of sewerage and
rainwater for the local citizens the best way possible according to the municipali-
ties’ and water companies’ financial capabilities (Lauesen 2011, 2014, 2015).
However, with the rise of the neo-liberal ideas of New Public Management in the
late 1980s initiated by the US and UK governments, it was assumed that private
companies were to be more efficient in managing water, wastewater, and rainwater
services for the public than the municipalities. The argument was that business
management in general was much more effective in keeping price levels down on
these as well as many other public services (Lauesen 2014, 2015).
98 L. M. Lauesen
During the 1990s many changes happened especially in the UK, Australia, and
the USA regarding the privatization of the former public services such as the postal,
oil/gas, transportation, electricity, and also the water services.
Other countries and states later adopted many of these principles, and below is
shown the development in Denmark as one of the latest adopters of privatization of
the water sector.
3.1 An Example of the Political Developments Regarding

Water Services: Denmark
Denmark was a late adopter of the New Public Management ideas regarding water
services, because the politicians wanted to gather information on how these man-
agerial practices from the privatization worked out in the other areas such as postal,
oil/gas, transportation and especially electricity services before they would enroll
the water sector into these practices as well.
However, in 2003, the Danish Competition Authorities made a report comparing
the experiences from the electricity sector and the UK experiences on water
management with the Ofwat regulation principles, and suggested that the Danish
Government should enroll the water sector into a model more or less similar to that
of the Ofwat administration—with a few exceptions.
Thus, in 2007–2009 water management was segregated from the municipality
offices and publicly owned water companies were established—albeit fully owned
by the local governments, and thus not fully privatized, but quasi-privatized leaning
towards the UK model (Lauesen 2011, 2014).
After the first 5 years, the New Public Management strategies for water man-
agement were to be evaluated in Denmark, and in a hearing with the branch
organization DANVA, which speaks for the publicly owned Danish water com-
panies, quite some changes were required in order to secure both the environmental
and the social protection, since the financial regulation had already proven its effect.
The economic models and calculations used in the Benchmarking of the water
companies, which were used in order to set the Price Cap for each of the companies,
had an unequal and sometimes inadequate effect. Water companies had tried dif-
ferent strategies to ensure environmental protection in order to comply with the
regulations with various results.
For instance, some water companies had for many years dedicated a certain
amount of money for afforestation, however these funds were not accepted in the
new regulation as investments. That gave these companies a great disadvantage in
terms of their Price Cap level (Lauesen 2014). Similarly, water companies that
wanted to cooperate with farmers and benefit those that would avoid field spraying
near the groundwater extraction wells, would not get these investments approved by
the Competition Authorities.
Furthermore, water company cooperatives regarding the protection of a large

groundwater aquifer across municipality borders could not find ways in the regu-
lation to split the costs in fair amounts. All in all these environmental protection
activities were disregarded in the regulation—mainly because they did not fit into
the economic model, the authorities had set up (Lauesen 2014).
The Competition Authorities then accepted the critique by setting up a new law
called “Co-funding of Climate Adaptation Strategies” in 2013 allowing water
companies to include these environmental initiatives in the Price Cap calculations,
if they received a decree from the City Council regarding the issue.
The water companies must in the application for the Competition Authority
show a calculation of the probability that an applied climate adaptation project is
cost-effective compared to what it would cost the companies to achieve the same
level of service with conventional sewage technology solutions (BEK no 89 of 30/
01/2013, §2–614)
Climate adaptation projects, which use GSI techniques, thus shall be approved
by the Competition Authorities, because they are not standard practices in Denmark
yet, and many of these include green elements other than normally calculated in the
economic models used for Price Cap setting. These alternatives must then prove
cost efficiency compared to traditional sewer systems.
Hence, it seems more convenient for water companies to get standard practices
approved such as sewer systems, concrete retention basins, pumping stations and
similar constructions and machinery, which the regulating system knows of and can
calculate according to costs, value, depreciation, etc.
However, things have become even more complicated in the municipalities of
Denmark: citizens do no longer accept to pay more for public services neither do
they accept their obligations to renew their own sewer systems on their private lots.
Whenever the municipality and the water company suggest to renew the sewer
system going from a combined system with frequent unhygienic overflows to a
separated sewer systems, where rainwater and sewerage is transported in a
two-string system, the citizens do form alliances to combat the solution politically,
because they do not want to pay for separating their own private sewers.
Local politicians seem to be afraid of imposing costs on their voters, which is
why many municipalities and water companies in Denmark nowadays avoid tra-
ditional separate sewer systems. Instead, they have found interests in the new green
14
https://www.retsinformation.dk/Forms/R0710.aspx?id=145200. The latest updated version of
the Note is BEK nr 159 af 26/02/2016, https://www.retsinformation.dk/Forms/R0710.aspx?id=
177793. Accessed 6th June 2017 (In Danish).
100 L. M. Lauesen
alternative practices, such as rain gardens and infiltration plants, which are much
cheaper for the private citizens to install to manage the rain falling on roof tops and
driveways.15
However, the question is: are these green alternatives useful for the munici-
palities and water companies, whose requirements for stormwater management are
included in their public service obligations?
4 Flooding Prevention in an International Perspective
Urban stormwater management is a field within transition into new alternative

practices away from the traditional sewer systems. Research has investigated sev-
eral different ways of rainwater management in detached and decentralized systems
as a way to fulfill the need for more capacity for rainwater storage (Fletcher et al.
2014).
Since the 1980’s experiments, infiltration plants, rain gardens, green roofs, road
beds, swales, wadis, bio-retention and wetland ponds, depressions or channels in
the terrain, for instance in parks or other urban green areas, permeable pavements
and retention tanks (e.g., rain barrels) have been installed worldwide in order to
gain knowledge of how rainwater storage can be effectuated in the ground or on the
terrain instead of in the constantly undersized sewer systems.
These alternative techniques are called different names around the World. Water
Sensitive Urban Design (WSUD) in Australia; Low Impact Development (LID),
Low Impact Urban Design and Development (LIUDD) in the USA and New
Zealand; Stormwater Quality Improvement Device (SQID) also in Australia;
Sustainable Urban Drainage Systems (SUDS) or Sustainable Drainage Systems
(SuDS) in the UK; Best Management Practice, Stormwater Control Measures
(SCM), Source Control (SC) in North America and Canada; Alternative Techniques
(AT) in France; Lokal Afledning af Regnvand (LAR) in Denmark, Lokalt
omhändertagande av dagvatten (LOD) in Sweden; Alternativen zur
Regenwasserableitung (AZR) in Germany and similarly in other European coun-
tries (Fletcher et al. 2015).
Despite these different names, the concepts behind also vary from place to place.
For instance
WSUD is the integration of the natural water cycle with the urban environment. It
encompasses water supply, sewerage and stormwater management. (Wong 2006; Gaffney
2013, pp. 1–2; Fletcher et al. 2015)
15
https://www.bolius.dk/kommuner-kloakseparerer-paa-livet-loes-35101/?utm_campaign=week23&
utm_source=S%C3%B8ndagsavisen&utm_medium=referral&utm_term=3tingduskalvideomkloaks
eparering. Accessed 6th June 2017 (In Danish).
And
Low Impact Development (LID) was piloted in Maryland (Prince George’s County 1999)
as a way to mitigate the negative effects of increasing urbanization and impervious surfaces.
The preservation of the pre-development hydrology of a site is the overall goal of LID.
(Dietz 2007, pp. 351–352)
In this chapter, these concepts are referred to as the category of Green

Stormwater Infrastructure (GSI), which nowadays are used to frame such tech-
niques in conjunction with general urban stormwater management policies.
GSI is based on the issue that more and more terrain is covered in impervious
materials caused by the urbanization (Jia et al. 2013; Fletcher et al. 2015). Thus it
also involves general and more careful urban design (Jia et al. 2013, p. 714), which
more and more municipalities and water companies are interested in changing in
order to create more sustainable cities all over the world (Fletcher et al. 2015).
Below is shown an excerpt of some of the published results from GSI demon-
stration projects regarding efficiency and effect
GSI demonstration projects have typically collected different data, which means
that it is often hard to compare one case with another (Jia et al. 2013). The excerpt
is thus from projects, which are published in English-speaking journals, and which
comes closest to a comparison between two different variables: Hydraulic reduction
and content/pollutant reduction.
All case studies included in Fig. 4 encompasses different GSI practices and
installations in different catchment areas from 0,015–425 hectares. The installations
range from rain barrels, rain gardens, bio-retention ponds, swales, infiltration plants,
and green roofs. Some of the projects show a relatively high hydraulic reduction
(>50%) of the annual rain volume (e.g., Shuster et al. 2008, 2010; Wu et al. 2014;
Narayanan et al. 2012; Stovin et al. 2013; Fryd et al. 2012) whereas others have a
low hydraulic reduction (<50%) (e.g. Thong 2011; Jia et al. 2014; Chaosakul et al.
2013). Some cases have not measured reduction of content/pollutants (e.g., Levy
2009; Pathirana et al. 2013; Jia et al. 2012; Gaffney 2013), whereas others have.
It is not the purpose of this chapter to dig more into the different studies of GSI
or make any claims of statistical relevance out of the sample other than with this
simple comparison to highlight the need for more standardized and comparable
measurements in order to gain further knowledge of these technologies for decision
makers to decide the Best Management Practices based on as much knowledge and
comparativeness as possible.
The GSI technologies that have been introduced as sustainable tools to manage
rain locally where it falls instead of accumulating it in the sewer systems are in
many cities designed too small for stormwater management. Some GSI technolo-
gies have positive side effects, for instance contributing to urban greening,
improving local biodiversity, and improving social communities in local areas,
where they are managed locally by the residents (Fryd et al. 2012).
Despite differences in GSI practices and the general lack of quantitative esti-
mates of the climate adaption potential (Geneletti and Zardo 2016), research mainly
agrees on that all technologies do reduce the impact of stormwater events to some
102 L. M. Lauesen
Reduc on with GSI per year

(% of annual precipita on)
100%
90%
80%
70%
60%
50%
40%
30%
20%
HYD RED
10%
0% CONT RED
Fig. 4 Excerpt from demonstration projects of GSI technologies regarding measurements of

hydraulic reduction (HYD RED) and reduction of content/pollutants (CONT RED) such as
nitrogen, phosphor, suspended substances etc.)
degree, although they are rarely designed to handle more than peak flows (Gaffney
2013, np., abstract; see also Chaosakul et al. 2013). They are mainly designed for
the management of daily rain events.
5 Flooding Prevention in Denmark
The Danish Environmental Ministry had in 1991–1992 released a few reports with
special subjects related to local rainwater management: Lokal afledning af regnvand
(Local rainwater drainage); Faskiner (Infiltration plants); Lokal rensning af regn-
vand (Local rainwater treatment); Natur I byen (Urban nature).16
These reports were a few years later, these reports were integrated into the
Danish concept of Lokal Afledning af Regnvand (LAR), which today is translated
into the internationally recognized concept of Low Impact Development (LID) with
regard to rainwater management. It was formally introduced in 1994 by the Danish
Ministry Housing as an official publication called Brug regnvandet i Gården (“Use
the rainwater in the back yard”). With its special focus on rainwater management, it
16
The Danish Environmental Ministry, reports no. 36, 47, 49 (In Danish). See the complete
literature list in Lützen and Søllested (1994, pp. 63–64).
was aimed at engineers, architects and public officers working with public building
and housing renewal (Lützen and Søllested 1994).
The publication came in conjunction with a then updated Urban Renewal Law,
which re-initiated a large national co-funding of urban regeneration in Denmark.
Not only did a large stock of public and private housing facilities require renova-
tion; the new initiatives were also aimed at renovating the inner or back yards of the
housing facilities with added elements of urban greening and rainwater manage-
ment to the overall agenda of the law and funding requirements.17
The publication refers In its introduction, the publication refers to other
European countries’ experiences with LID preceding the Danish initiative. The
publication concludes speculatively
Many years ago, methods for local infiltration [of rainwater] have been developed in order
to avoid unnecessary environmental impact and costly sewer renovations. Especially
Switzerland, Germany and Sweden have many years of experience with LID. The Danish
reluctance may be explained by highly developed experience with wastewater transport and
treatment, but also that we do not need infiltration in order to support our groundwater
aquifers. (Lützen and Søllested 1994, p. 8)
The Danish water companies, who are responsible for executing the municipal plans
for climate adaptation, are increasingly facing political expectations of them basing
their strategies and decisions on holistic solutions, which besides economics include
environmental as well as social consequences of their activities (Lauesen 2014).
However, new issues have risen concerning its long-term effects on existing
water bodies such as groundwater basins and natural surface water bodies. If
authorities allow private and public GSI technologies to infiltrate rain water into the
natural water bodies, it may affects the water balance of different water bodies
inappropriately as seen in Odense, Denmark (Jeppesen and Jacobsen 2014).
In the city of Odense in Denmark, for instance, the groundwater level is very
high in critical urban spaces, and although the municipality and the water company
has introduced GSI in a pilot project, the issue is that infiltration is either impossible
or at least inappropriate in the city.
A report from 2016 made by the Danish National Geological Surveys for
Denmark and Greenland (GEUS) specifically warned the municipality of Odense
about the effects on the climate changes with regard to the already high ground-
water level in Odense.
Some of the positive–negative effects on the high level of groundwater com-
bined with an old, leaking sewer system is that the sewer system somehow regulates
the groundwater level through its unintended permeability (leakages). However, if
the existing sewer network is to be sealed, it is then predicted that the groundwater
level will rise up to the surface-level of the terrain, which will have negative
consequences on buildings and infrastructure (Sonnenborg and Kidmose 2016,
p. 40).
17
http://denstoredanske.dk/Mad_og_bolig/Bolig/Boligforhold/byfornyelse, (In Danish), accessed
30th May 2017.
104 L. M. Lauesen
Groundwater level, present

0 -- 0.5 meter below the terrain (mbt)
0.5 -- 1.0 mbt
1.0 -- 2.0 mbt
> 2.0 mbt
Fig. 5 Groundwater level, present in Odense. Sonnenborg and Kidmose (2016), p. 22
Furthermore, GSI techniques involving infiltration will not be possible most

places in Odense, or if installed, it may enhance the risk of rising groundwater level
even further, according to public geologists Gert Laursen (Municipality of Odense)
and Johan Linderberg (Vandcenter Syd) (Fig. 5).18
Another issue is that we do not have enough experience on how the private
management of local GSI works in conjunction with public management of rain-
water. A third issue is how to get good results on a broader scale with GSI when
private owners are involved in formerly public management.
The complexity of this appears in the mandatory and municipality-led climate
adaption plans. It is shown, for instance, in the Stormwater Management Plan of the
18
Presentation at the South Denmark Network Meeting, 30th April 2017.
Municipality of Copenhagen from 2012, in which an essential issue is the coop-

eration between the water utility and the traffic department of the municipality
regarding pathways for stormwater transportation via roads in connection with the
risks induced on the general traffic (Københavns Kommune 2011, p. 8).
Thus, the Stormwater Management Plan points to a solution, where Copenhagen shall be
safe in case of stormwater events through the combination of solutions that makes the city
more green and blue by draining the rainwater on the terrain as well as through tunnels in
areas, where no surface solutions are available.
6 On-Ground Flooding Prevention as the New Best

Practice
Several cities around the World has now embraced GSI as a tool for flooding
prevention and general climate adaptation purposes (for an overview, see
Uittenbroek et al. 2016).
Public strategies on flooding prevention from either stormwater events or
sea-level rises have changed during the last decade. Today, the Best Management
Practices (BMP) is to control rainwater on-ground instead of in the sewer systems,
which these days tend to become too small over a short timespan to handle more
and more extreme water masses and urban run-off.
Filters, swales, infiltration trenches, wetlands, rainwater ponds and even
high-profiled roads designed to transport extreme water masses are among those
new installations that during the last decade have and are being installed and tested
in the cities of many countries (Wong 2006, Shuster et al. 2008; Levy 2009;
Maimone 2013; Shuster et al. 2010; Thong 2011; Fryd et al. 2012; Jia et al. 2012;
Narayanan et al. 2012; Chaosakul et al. 2013; Gaffney 2013; Pathirana et al. 2013;
Stovin et al. 2013; Jia et al. 2014; Demuzere et al. 2014; Wu et al. 2014;
Uittenbroek et al. 2016).
Not only are these GSIs designed against the risk of flooding; the risk of pol-
luting the environment is also a concern.
However, several newer studies of GSI projects have shown that this is not
cheaper than traditional sewer management for the water companies (see Moore
et al. 2016) according to climate adaptation strategies.
For the local landowners, who may have requirements for a reduced installation
on their properties, it seems to be a good solution, however.
Different costs for rainwater retention in public areas with GSI calculated in
Denmark are
106 L. M. Lauesen
Sewer solution Ex-sewer solution Costs/ m3

storage capacity
Road beds with trees or plants 22,000–24,000
(Frederiksberg) DKK
¼ 2,750–3,000
GBP
Ø2500 mm pipe basin 20,000 DKK
tunneled (Hvidovrea) ¼ 2,500 GBP
Permeable road with bricks/asphalt 6,500–14,000
(Frederiksberg,b Odense,c Østerbro,d DKK
Aalborge) ¼ 800–1,750
GBP
ø2500 mm pipe basin 10,000–12,000
(Odense + Svendborg) DKK
¼ 1,250–1,500
GBP
School yard—depreciated playfield, etc. 9,500 DKK
(Frederiksbergf) ¼ 1,200 GBP
Closed square CSO basins 2,000–7,000
(300–20,000 m3) DKK
¼ 250–875
GBP
ø1600 mm pipe basins 5,000 DKK
(Svendborg) ¼ 625 GBP
Infiltration wells (HydroSystems) 5,000 DKK
¼ 625 GBP
Infiltration plants (HydroSystems) 3,500 DKK
¼ 450 GBP
Rain gardens (HydroSystems) 3,000 DKK
¼ 375 GBP
Permeable parking lotg with infiltration 2,800 DKK
plants (Odense) ¼ 350 GBP
Wadis and swales (Hydrosystems) 1,500 DKK
¼ 200 GBP
T100 Stormwater-profiled road w/outlet to 1,100 DKK
sea (Svendborg)h ¼ 140 GBP
Rainwater lakes in green areas (Svendborg 400–800 DKK
+ Viborgi + Vallensbækj) ¼ 50–100 GBP
a
http://www.licitationen.dk/article/view/293724/forsyningsselskab_foran_anlaeg_af_skybrudstunneler_
for_milliarder_i_hovedstaden# and https://www.arkil.dk/cases/2-infrastruktur/et-underjordisk-
regnvandsbassin
b
http://www.klimatilpasning.dk/cases-overview/ny,-sugende-vejbelaegning-paa-frederiksberg-i-
stedet-for-dyre-kloakroer.aspx and http://www.klimatilpasning.dk/aktuelt/nyheder/2014/september-
2014/permeabel-klimabelaegning-afvaerger-oversvoemmelse-paa-frederiksberg.aspx
c
http://www.laridanmark.dk/agerlandvej-odense/om-ideen/35676,2 and http://www.evanet.dk/wp-
content/uploads/2017/06/2015_01_EVA_blad.pdf
d
http://www.klimatilpasning.dk/cases-overview/groen-skybrudsloesning-skaber-nyt,-flot-byrum-paa-
oesterbro.aspx estimated 40 cm permable drain with 30% water volume, 4,300 m2, 516 m3 volume
e
http://www.klimatilpasning.dk/cases-overview/innovativ-asfaltvej-i-aalborg-opsuger-regnvandet.
aspx
f
http://www.klimatilpasning.dk/cases-overview/lavtliggende-skole-paa-frederiksberg-beskyttes-mod-
nye-skybrud.aspx150 m3 boldbaner + 135 m3 faskiner http://info.frederiksberg.dk/Dagsordner/
Dagsordner/Kommunalbestyrelsen/20-04-2015/Attachments/2605333-2794901-1.pdf
g
http://www.klimatilpasning.dk/cases-overview/stor-parkeringsplads-i-odense-suger-regnvand.aspx
h
6.825.000 DKK/ 6.045 m3 (T100)
i
http://www.klimatilpasning.dk/cases-overview/kreativ-klimasikring-skaber-spaendende-bypark-i-
viborg.aspx
j
http://www.klimatilpasning.dk/cases-overview/nye-regnvandssoeer-i-hoeje-taastrup-renser-og-
rummer-mere-regnvand.aspx
From the above list of costs of different traditional “grey” sewer solutions versus
new “green” ex-sewer solutions, we can see that the greener the areas and the larger
the basins, the cheaper the solution.
As long as there is hard surfaces, for instance in road areas, ex-sewer solutions
often costs more than traditional sewer solutions.
Permeable roads; road beds either with trees or low plants, or making infiltration
plants below school yards is more expensive than traditional CSO basins.
However, if a green area is available for making rainwater lakes or wetlands,
wadis, swales, open grassy basins, etc., the green ex-sewer solutions are very much
cheaper.
The most expensive solutions are excavating/tunneling pipe basins in inner cities
such as in the Capital of Copenhagen. The “Damhusledningen”, for instance, in the
suburb Hvidovre, which consists of 3 km of large ø1.5–ø2.5 m concrete pipes,
costs around 20,000 DKK per m3 water volume. It needs to be made primarily by
tunneling and has pumping stations, regulation plants and masses of urban pipe
restructuring, which makes it difficult and costly to establish in the populated, and
heavily trafficked city.
However, ex-sewer solutions such as building road beds with trees or plants in
Frederiksberg—also a part of greater Copenhagen, costs the same.
7 Discussion: The Sustainability of the New

“Best Management Practice” for Flooding Prevention
The question is—how much urban green space do we have in our cities available
for stormwater storage?
Inner Copenhagen has around 2,000 ha urban green space including lakes and
streams corresponding to almost 25% of the city’s geometry, which is rather a large
amount for a city of its size.
108 L. M. Lauesen
The second largest city in Denmark, Aarhus, has less—around 20%, the third
largest city, Odense has a little more (31%), and the fourth largest city Aalborg has
approximately the same (23%) as Copenhagen.19
Smaller rural towns such as Svendborg, Herning, and Holbæk does not have
much more urban green space than the four largest cities in Denmark—from 25–
28%.
Few towns have larger amounts of urban green space (e.g., Gentofte (46%),
Rødovre (42%) and Herlev (39%)), whereas many smaller villages have even less
urban green space (e.g., Tønder (4%), Læsø (3,5%) and Fanø (3,4%)), but these
small villages are so close to rural areas that it is easier for them to direct urban
stormwater management into the green rural spaces.20
Rural areas outside the cities are where it is most possible to establish large
rainwater basins are the most efficient ex-sewer solutions.
However, since many towns—at least in Denmark—have around 25% urban
green space, the opposite—around 75%—is most likely what is “paved” with
bricks, asphalt, concrete and roof tops, from which most stormwater volume masses
derive from in typical Danish towns.
Thus, taking the costs for establishing non-green, ex-sewer systems in urban
paved areas are rather expensive and oftentimes more expensive than traditional
sewer solutions unless tunneling is the only option.
Some cities may have the luck, as in Svendborg, to have roads with a long and
continuous fall towards the coast, which is feasible to use to transport up to a
100-year stormwater event without disturbing the neighbors’ lots. There, there has
been built an ex-sewer solution in terms of a stormwater road that steers the
rainwater from the top of the road in the right direction down to the coast for just
around 1,100 DKK per cubicmeter—the second-cheapest solution next after a rural
rainwater basin.
However—Frederiksberg and Odense—do not have neither road fall nor a coast
line surrounding the city: in their case, the stormwater road costs ten times as much
to build per cubicmeter of rainwater.
8 Conclusion
The Danish cases show the financial costs of the new ex-sewer solutions as con-
temporary “Best Management Practice” within urban stormwater management. It
appears from this study that on-ground flooding prevention may be a good and
sustainable solution, however, the costs cannot be said to be lower than the tradi-
tional sewer solutions especially in the highly paved cities.
19
http://ign.ku.dk/formidling/publikationer/andre-publikationer/2014-filer/Rapport-groen-by-13-5-
F.pdf (In Danish).
20
https://issuu.com/danmarksnaturfredningsforening/docs/sll_talomnaturen_2016_web (In Danish).
GSI is only efficient if many more citizens in the country supports and enacts the
new politics on changing the rainwater management practices. Most garden owners
must take part in delaying, steering, and directing the rain to its natural water bodies
in conjunction with the systems built in the paved parts of the cities, because the
urban green spaces mainly consist of private lawns and remote water storage areas.
As long as it is voluntary for most Danish citizens to partake in this scenario—
mainly 10–20% shown in pilot areas in several towns, there is a long way to go
before stormwater management becomes sustainable financially, socially as well as
environmentally at the same time.
Future research should therefore continue to follow and publish results from the
many pilot projects going on Worldwide, both regarding the environmental, social
and financial parts of them.
What is clearly missing at the moment is the financial comparison between
“gray” sewer solutions and “green” ex-sewer solutions, where entire costs for
projects—all included—is vital in order for the global audience to understand the
fully picture of the sustainability of the Green Stormwater Infrastructure versus the
Gray Stormwater Infrastructure.
The overall idea that Green solutions are cheaper than Gray has in this Danish
study proven questionable. A clearer picture on environmental, social as well as
financial effects of GSI would therefore be preferred in order for the urban
stormwater managers to be able to make the right decisions.
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The Importance of Corporate Social
Responsibility in the Development
of Sustainable Tourism
Ermelinda Oliveira
Abstract For the potential grown of the economy of one country, the tourism has
been the leading player because it is one of most important activities of Portuguese
economy, being assumed as economic development weapon for its region.
Although, in agreement with the territorial paradigm, the fact of an area to be
endowed with resources it is not synonymous of growth and development. On the
one hand, it remembered the identity of different areas; the resources of a region
only become development factors when in that same region there is protagonist
capacity that allows them to be operational. On the other hand, a single develop-
ment strategy do not exists, but several development strategies in accordance with
the space contexts, where all the local participants should assume an active role and
the local resources should be valued integrating the several aspects of the devel-
opment. Among the different local stakeholders, entrepreneurs, and residents
become important stakeholders in tourism activity, influencing the development
process of different tourist destinations. Thus, given the strategic importance of
tourism in sustainable regional development and the crucial role that residents play
in their development process, the present research presents the main perceptions of
residents regarding the role of entrepreneurs in the practice of socially responsible
acts of development sustainable tourism.

Keywords Tourism Residents Development Corporate social responsibility

Sustainability Impacts
1 Introduction
The local community is an important agent that can influence the success or failure
of tourism development, showing, direct and indirect, effects on the sustainable
development of countries and regions (Haley et al. 2005). Through its opinions,
E. Oliveira (&)
Instituto Politécnico da Guarda, Guarda, Portugal

114 E. Oliveira
comments and suggestions, the population is transformed into a local agent with an
active voice, obtaining, therefore, an instrument that can serve as a basis for tourism
planning in the territory under study.
From the theoretical point of view, the analysis of residents’ perceptions and
attitudes towards tourism, regional, and national authorities, public and private,
with responsibility in the area of tourism, may draw lessons to be taken into account
in the implementation of measures that maximize benefits and minimize develop-
ment losses Tourism. Several researchers, such as: Byrd et al. (2009), Hunter
(1997), Nicholas et al. (2009), Richards and Hall (2000) recognize that the role of
residents is vital to achieving the sustainable development of tourism and territories.
However, if this goal is to be achieved, it is necessary to analyze and understand its
perceptions and attitudes towards tourism and to carry out comprehensive planning
that can lead to the sustainable development of both tourism and territories.
From the theoretical point of view, the empirical study, through the validation of
a proposed model, the relations between the perceptions and the attitudes of the
residents of Beiras and Serra da Estrela are analyzed, in view of the development
of tourism, thus bringing the resident population to the center of the current dis-
cussion on the development of tourism and its effect on sustainable regional
development. Indeed, the development of the tourist activity evidenced the
importance of the analysis and the understanding of the residents’ perceptions and
attitudes (Jackson 2008; Scalabrini et al. 2014). The focus of this empirical analysis
was local centred having a low number of participants of the Beiras and Serra da
Estrela. Therefore, it was not possible to generalize our findings. Moreover, future
research should increase the number of participants to increase the power of
explanation and would help to confirm the results in this paper.
2 Tourism as a Weapon to the Local Development
In a context of globalization and restructuring of the global economy, tourism has

shown great resilience and capacity for economic expansion. Its structure and
connection with other activities such as transport, construction, trade, among others,
make this sector responsible for a multiple set of impacts on the economy, the
environment and society as a whole. Tourism is a complex economic activity that
affects the lives of millions of people around the world (SaeR 2005), which leads
many countries to develop tourism-related development strategies because they
believe it can make an important contribution to The resolution of economic and
social problems faced by countries and regions (Oliveira and Manso 2011).
According to Artesi (2007), due to its intrinsic characteristics, tourism is an ade-
quate economic activity to foster development processes.
In Portugal, as in many other countries, because of its growth potential and its
intrinsic characteristics, tourism is a powerful instrument to support growth and
economic development. The National Strategic Tourism Plan (PENT) stresses that
The Importance of Corporate Social Responsibility … 115
the “importance of tourism in the economy must be increasing, constituting one of

the engines of social, economic and environmental development at regional and
national level” (GP 2012: 7). Faced with a globalized world and in a scenario of
economic and financial crisis, the XIX Government Program emphasizes the
importance of tourism (GP 2011: 51), which states that
Tourism’s strategy is based on the differentiation and authenticity of the service and the
product, with presence in a combination of markets that reduce the current weaknesses of
concentration in markets and products, through the incorporation of elements of innovation,
efficiency in the management of Financial resources and regulation of activity, with a view
to strengthening the competitiveness and critical mass of economic agents on the inter-
national scene
The concept of sustainable tourism has been similar to that of the very concept of
sustainable development, which has led to its widespread acceptance (Saarinen
2006; Hardy and Beeton 2001; Hunter and Green 1995; Bramwell and Lane 1993;
Inskeep 1991). For a long time, no negative impacts were pointed out to tourism.
Currently they are quantified in positives and negatives, being even distributed by
economic, social, environmental and cultural level. Given the existence of these
impacts resulting from development, it was essential to transpose the concept of
sustainable development for tourism (Oliveira and Manso 2010). According to
Clarke (1997), the concept of “sustainable tourism” was born in the 1980s as an
opposition to mass tourism. Giving to Goodall and Stabler (1997), since the late
1980s, sustainable tourism has become a desirable goal in all types of existing
passenger cars, irrespective of the scale of tourism activity. Table 1 lists the causes
of the sustainable tourism as an adaptation of Heras (2004: 34).
In the literature review, there are several definitions of sustainable tourism
(Swarbrooke 2002; Clarke 1997; Butler 1999; Garrod and Fyall 2001). Although it
is a topic that involves a strong debate, both in terms of its conceptualization and its
operationalization, there is still no consensus definition (Moniz 2006; Cernat and
Gourdon 2005; Hunter and Green 1995). For Swarbrooke (2002), sustainable
tourism is one that seeks to minimize negative environmental and sociocultural
impacts and, at the same time, promotes economic benefits for local communities.
According to Partidário (1998), sustainable tourism is a concept that seeks to
Table 1 Causes of the • There is an increasing awareness of existing environmental

sustainable tourism problems;
• In the face of conventional tourism that seeks maximum
profitability in the smallest space and time possible, tourists
began to realize their impact on the environment;
• Visitors demand more and more quality in the places they
visit. The very competitiveness of tourist destinations makes
opting for higher quality enclaves;
• Environmental groups are beginning to worry about the
impact of tourism on the environment, putting pressure on
public opinion.
Source Adapted from Heras (2004: 34)
116 E. Oliveira
reconcile the economic objectives of tourism development with the maintenance of

the resource base indispensable to its existence. For Butler (1999), sustainable
tourism is one that is developed and maintained in an area, in such a way and at
such a scale, that it guarantees its viability for an indefinite period of time without
degrading or altering the environment (human and physical) In which it exists and,
lastly, without jeopardizing the development of other activities.
For OMT (1993) sustainable development of tourism only happens when three
crucial aspects are addressed: (i) the promotion of a quality experience for the
visitor; (ii) the maintenance of the quality of the environment for the community
and visitors; (iii) improving the quality of life of the community of tourist desti-
nations. The World Tourism Code of Ethics, created by the OMT, in addition to
designating principles that reinforce the need to develop tourism in a sustainable
way, also establishes that it is the duty of all stakeholders involved in tourism
development to safeguard the environment and natural resources In the perspective
of sound, continuous and sustainable economic growth, capable of equitably sat-
isfying the needs and aspirations of present and future generations (OMT 1993).
As SaeR (2005: 96) points out, “it is inevitable that in the years to come tourism
will be one of the structuring sectors of Portugal’s economic development model”
and that the development strategy must adapt to the continuous changes in tourism.
However, it is imperative that tourism develops in a sustainable way, being nec-
essary that the entrepreneurs act in the tourist destiny according to the principles of
social responsibility.
3 The Tourism Sector and Socially Responsible Practices
The need to implement sustainable, efficient, effective, and conducive development

models in companies for a balanced evolution of our society has been focusing the
attention of researchers on Corporate Social Responsibility (CSR). Corporate Social
Responsibility is currently an instrument to promote the sustainable development of
companies, in particular, and of society in general. Since CSR is a complex and
dynamic concept, there has been growing concern on the part of companies to
understand it and to understand its different dimensions.
Over the last few years, both between researchers and entrepreneurs, there has
been growing interest in corporate social responsibility (CSR). This is not without
prejudice to the publication in 2001 by the Commission of the European
Communities of the Green Paper: Promoting a European framework for Corporate
Social Responsibility. Despite the increasing dissemination of CSR, both through
the numerous meetings organized on this subject and through the publication of
articles by the academic community, it is concluded that there is still a lack of
definition regarding its concept, its fundamental characteristics and its operability.
Being a complex and dynamic concept, Corporate Social Responsibility, when
assuming different meanings in different contexts, requires a deep reflection (Silva
2004). According to the European Commission, CSR (CCE 2001: 7) is
Companies in their operations and in their interaction with other stakeholders.
Thus, in a European view, CSR corresponds to a set of voluntary actions by parts

of the companies, where their function overflows the production of goods and the
provision of services. For a company to be socially responsible, it should not be
restricted:
Compliance with all legal obligations - means going further through greater investment in
human capital, the environment and relations with other stakeholders and local commu-
nities (CCE 2001: 7).
According to Bueno (2006: 2), “social responsibility is the planned and sys-
tematic exercise of actions, strategies and their implementation of channels of
relationship between an organization, its employees”, its stakeholders and its own
society in order to
(a) contribute to social development, respect for the human being, regardless of
their beliefs, appreciation of cultural diversity and unrestricted defense of
freedom of thought and expression;
(b) provide ideal working conditions for its employees, in addition to fair remu-
neration, professional training, personal fulfillment and encouragement of
dialogue and participation in the decision-making process;
(c) to assume transparency and ethics as fundamental attributes, taking collective
interest as the major reference in the conduct of business;
(d) to preserve the environment, privileging the management of resources and the
supply of non-aggressive products to nature;
(e) to practice excellence in the manufacture of products and the rendering of
services, in view of the interests, expectations of its consumers or users;
(f) implement projects aimed at scientific and cultural, sporting, educational and
community development.
In this sense, a socially responsible company is not restricted to fulfilling legal
obligations, in that it implies going beyond them. A new way of thinking and acting
is required for companies, where it is no longer enough to consider exclusively the
strictly commercial, financial and organizational variables, but rather to define
strategies that are based on
Three pillars: environmental, economic and social. These three areas will have to act
interactively, and the company’s sustainable economic development will occur in the
interception of the interests of each of the pillars (Beja 2003: 7).
CSR is forcing companies to rethink their role in society, future generations, and
how they have to conduct their business. Thus, changes in mentalities and attitudes
have led to the practice of socially responsible actions by companies from being an
optional management, to become a strategic issue. Companies should not view
social responsibility as a burden but as a medium- and long-term investment, and
the more quickly they take this position, the greater the benefits they will get.
Companies in the tourism sector, especially the dynamic and expanding ones, are
no exception to this rule. Porter (1994) even considered this sector among the
118 E. Oliveira
priorities to help carry out the sustainable development of Portugal. If, on the one
hand, tourism issues are generally analyzed in economic and market terms, to the
detriment of social and environmental aspects, on the other hand, it is indisputable
the need for companies in this sector to carry out socially responsible and Strategies
for the implementation of Corporate Social Responsibility.
4 The Importance of Residents’ Views
The success of tourism depends on the support of the local community, as it

produces impacts (positive and negative) that affect it, directly or indirectly.
Residents are therefore one of the most affected by the implementation of policies
and the implementation of measures aimed at the development of tourism. Their
participation in tourism development processes has played a crucial role, since their
perceptions and attitudes are a real guide for the development of tourist destina-
tions, guaranteeing the sustainability and success of tourism in the territories
(Andriotis 2005). Thus, the study of residents’ perceptions and attitudes toward
tourism has become increasingly important in the literature (Archer and Cooper
2002; Cañizares et al. 2014; Cui and Ryan 2011; Geneletti and Dawa 2009;
Inbakaran and Jackson 2006; Nunkoo and Ramkissoon 2011; Remoaldo et al.
2012; Richie and Inkari 2006; Vargas-Sànchez et al. 2011; Lee 2013; Zhou and Liu
2008). So understanding the perceptions and attitudes of these residents is indis-
pensable to tourism planning and the sustainable management of any tourist
destination.
The identification of the impacts of tourism perceived by residents has been the
central object of studies carried out by sociologists, psychologists, managers and
economists, being an issue addressed in different approaches. In the literature
review it is verified that there is consistency in the type of impacts that must be
considered: impacts perceived in the economic, environmental, cultural, and social
domain. In terms of economic impacts, studies indicate that residents often perceive
more positive than negative impacts (Andriotis and Vaughan 2003; Byrd et al.
2009; McDowall and Choi 2010).
Some studies conclude that residents perceive that tourism has contributed to
increased investment (McGehee and Andereck 2004; Nunkoo and Ramkissoon
2010; Sharma and Dyer 2009; Tosun 2002), employment create jobs (McGehee and
Andereck 2004; Sharma and Dyer 2009; Tosun 2002), to diversify and improve the
productive structure of the regions and to create more local wealth by increasing the
tax revenue and income of the population (Andereck and Vogt 2000;
Haralambopoulos and Pizam 1996; Tosun 2002). As for the negative impacts, the
most mentioned in the studies on the perceptions of the residents is the increase of
the prices of the goods and the services (Akis et al. 1996; Brunt and Courtney 1999;
Haralambopoulos and Pizam 1996; Tovar and Lockwood 2008).
Of the positive and negative sociocultural impacts perceived by the residents of
the tourist destinations, highlighting the valorization and promotion of cultural,
religious, and sporting events, the valorization and preservation of the built
heritage, the valorization and preservation of local traditions, the exchange Cultural
and the creation of new services and infrastructures that serve the local population
(McGehee and Andereck 2004; Andriotis and Vaughan 2003; Byrd et al. 2009;
Nunkoo and Ramkissoon 2010). The increase in crime, a decrease in security and a
change in the normal behavior of the resident population are, among others, the
negative impacts perceived at the sociocultural level (Andereck et al. 2005; Gursoy
and Rutherford 2004; Sharma and Dyer 2009).
At the environmental level, in the various studies conducted, residents identify
that tourism development contributes to nature conservation, increased population
awareness of environmental and natural heritage protection, increased pollution and
destruction of biodiversity (Amuquandoh 2009; Andereck et al. 2005; Andriotis
and Vaughan 2003; Ko and Stewart 2002) of any tourist destination.
5 Case Study and Results Analysis
This research focuses on the study of corporate social responsibility as the engine of
sustainable tourism development. The spatial unit or territory that is based on
empirical application, the Portuguese region of Beiras and Serra da Estrela, faces
economic, sociocultural and environmental fragilities and lacks a sustainable
development strategy that does not compromise the future of the residents of this
region and that leverages development Territorial cohesion.
5.1 Research Questions
Despite some tourism development that this region already has, the tourist potential
of this territory leads us to think that the tourist activity can present itself with
greater dynamism and assume the driving role number one of its economic and
social development. Thus, through the use of appropriate scientific methodology,
research seeks to answer the following three research questions (Table 2).
Table 2 Empirical research questions

Question 1 • What is the overall perception of residents about the impact of tourism on the
region?
• What factors influence the overall perception of residents regarding the impact of
tourism on the region?
Question 2 • What are the economic, sociocultural and environmental (positive and negative)
impacts of tourism most perceived by residents?
• What factors influence residents’ perceptions regarding the impacts of tourism
on economic, sociocultural and environmental levels?
Question 3 • What is the overall perception of residents of Corporate Social Responsibility in
the tourism sector?
120 E. Oliveira
5.2 The Touristic Destination “Beiras E Serra Da Estrela”
The tourist destination is a component of the tourist system, considering in this

relevant investigation its conceptualization. Its conceptualization involves some
complexity because, given the particular characteristics of each one, there is a great
diversity of tourist destinations. However, several authors (Ashworth and Voogdt
1991; Cooper et al. 2008; Laws 1995; Lundberg 1990; Mill and Morrison 1992)
have defined the concept of tourist destination.
Ashworth and Voogdt (1991) define it as a place of consumption of a diversified
set of goods and services. According to Cooper et al. (2008) a tourist destination
comprises a set of elements (planned equipment and services) combined to attract
visitors. Mill and Morrion (1992) emphasize that the success of a tourist destina-
tion, coupled with the existence of a set of services and attractions, depends on its
attractiveness to visitors. For Lundberg (1990) the tourist destination can be thought
of as a geographic unit that can be identified as having a common image.
In this research, Eusébio (2004) considers that a tourist destination is “a geo-
graphic space where there are coexisting natural elements (climate and landscape),
constructed elements (constructed attractions, support infrastructures and tourist
services) and Sociocultural elements (culture and hospitality of the residents) that
interact with one another and are constantly changing (Eusebio 2006: 24). All these
elements, integrated, influence visitors in choosing the tourist destination.
The definition of tourist destination region can be made by the researcher in
accordance with the research objectives. In this research, a contiguous geographic
area, defined by tourism development agencies or by researchers, has a tourist
destination and a set of characteristics (physical, cultural and social, among others)
and Important for the development of tourism. The territory of study of this research
occupies a total area of 6 305 km2, corresponding to 22.4% of the Central Portugal
area and 7.1% of Continental Portugal (Fig. 1).
The territory where this empirical investigation takes place, includes the current
NUT III Beiras and Serra da Estrela, fully integrated in NUT II Center of Portugal.
Although the territory under study corresponds in its entirety to NUT III Beiras and
Serra da Estrela, where it is considered pertinent, the territory will be disaggregated
Fig. 1 The tourist destination “Beiras and Serra da Estrela”

in sub-regions coincident with the previous NUTS III: Beira Interior Norte (BIN),
Cova da Beira (CB) and Serra da Estrela (SE). In this context, the reasons for
choosing this territory, the region of Beiras and Serra da Estrela, were as follows:
(1) The territory corresponds to that of the extinct Tourist Development Complex
of Serra da Estrela;
(2) The territory is located in the interior of mainland Portugal, is underdeveloped
and urgently needs clear and viable strategies for sustainable economic and
social development;
(3) The territory, consisting of the three sub-regions grouped together, has a clear
geographical continuity;
(4) The territory is referred to as a tourist destination with its own unique char-
acteristics, associated with a reference mark, the well-known “Serra da Estrela”;
(5) The territory lacks studies focusing on tourism as a motor for sustainable
development.
Geographic location is another reason for choosing this territory. As Silva and
Ribeiro point out (2013: 1), “the empirical literature has long emphasized the
asymmetric socioeconomic reality that Portugal presents”, and this asymmetry is
evident in the coastal and interior contrasts. The study area, located in the eastern
part of the interior center of mainland Portugal, presents poor levels of socioeco-
nomic development compared to other parts of the country. Given its socioeco-
nomic reality, it is imperative to know this region well and to implement measures
with the potential to promote and leverage its development on a sustainable basis.
The mean density of the population in 2011 was about 37.4 inhabitants per km2,
much lower than the Central Region (82.5 inhabitants per km2) (Table 3).
The phenomenon of the double aging of the Portuguese population, character-
ized by the increase of the elderly population and the reduction of the young
population, is an unquestionable reality that is very evident in the 2011 Censuses.
The age structure of the studied territory is characterized by a proportion of young
people inferior to National mean and an index of aging higher than the national
mean. However, the phenomenon of aging is more pronounced in the more rural
counties compared to the more urban counties. In all of the three sub-regions more
than 25% of the population is 65 or more years old (Table 4).
Table 3 Resident population, population density and rate of change of BSE resident population
(2011)
Sub-regions Resident population Density population Rate of change
of resident population
2011 (N.º) 2011 (Hab./km2) 2011/2001 (%)
Beira Interior Norte 104 417 25.7 −9.46
Cova da Beira 87 869 63.9 −6.10
Serra da Estrela 43 737 50.4 −12.34
122 E. Oliveira
Table 4 Resident Population in Beiras and Serra da Estrela by gender and age group (2011)
Sub-regions Resident Gender Age Group
population M F 0–14 15–24 25–64 65
Beira Interior Norte 104 417 49 558 54 859 12 009 9 987 52 526 29 895
Cova da Beira 87 869 42 558 45 311 10 611 8 596 46 482 22 180
Serra da Estrela 43 737 20 609 23 128 4 792 4 306 22 030 12 609
5.3 Universe of Study and Final Sample
The universe of the study is part of the population, aged 15 years or over, resident
in the tourist destination “Beiras and Serra da Estrela” (Table 5). The choice of
residents, among the various stakeholders, is justified by the fact that they are key
players in the development process of the territories
The universe did not affect the total resident population, but only the resident
population aged 15 years or more. The decision to make this selection, also used in
other studies (Barros 2011; Guerreiro et al. 2008), is based on the fact that children
under 15 years of age have little knowledge or have not yet formed an opinion at
the process level The development of tourism activity in the region, and the fact that
older people (aged 15 and over) are better able to perceive the impacts of tourism in
the territory under study.
For the determination of the final sample, the two most commonly used
non-probabilistic procedures (convenience sampling and quota sampling) were
chosen by quota sampling. This decision is justified because it is presented as the
most appropriate method for the present investigation and is the one in which the
damages to the representativeness in the characteristics of interest are less visible,
insofar as the subjectivity, the convenience and interference of the investigator are
reduced of the respondent and in the selection of the sample. In the application of
the quota sampling technique, the following criteria were taken into account: the
municipality of residence, the gender and the age group of the residents. The first
criterion to apply was the municipality of residence (Table 6).
The questionnaire survey was the data collection tool selected in the scope of
this research, presenting itself as the most appropriate when the universe of analysis
is large and geographically dispersed. In this investigation the universe of study is
Table 5 Study universe according to age group and gender (2011)

Sub-regions Age group Gender Total
15–24 25–64 65 M F N %
BIN 9 987 52 526 29 895 43 432 48 976 92 408 44.30
CB 8 596 46 482 22 180 36 535 40 723 77 258 37.03
SE 4 306 22 030 12 609 18 181 20 764 38 945 18.67
Total 22 889 121 038 64 684 98 148 110 463 208 611 100.00
Table 6 Number of surveys Sub-region Surveys to be applied

to be applied by sub-region
N %
Beira Interior Norte 170 44.27
Cova da Beira 143 37.24
Serra da Estrela 71 18.49
Total 384 100.00
208.611 residents, geographically dispersed by fifteen counties covering a total area

of 6 305 km2.
5.4 Research Results
Regarding the first question of the investigation, the results obtained allowed
concluding that, in relation to the perception of respondents of the impact of
tourism at a global level, the perception is positive, with 71.4% of the respondents
responding in the options “satisfactory”, “quite Satisfactory “or” very satisfactory”.
At the economic level, it was also possible to conclude that the respondents’
perception of the impact of tourism is positive, since 61.2% considered the tourism
effect to be “satisfactory”, “very satisfactory”, or “very satisfactory”. At the
sociocultural level, the perception of impact is also very positive, with 82% of the
respondents responding “satisfactory”, “very satisfactory”, or “very satisfactory”.
Lastly, the study showed that the perception of the impact of tourism is very
positive, as 89.1% of residents surveyed scored the “satisfactory”, “very satisfac-
tory”, or “very satisfactory” options (Table 7).
Thus, the results of the data analysis have confirmed that respondents consider
the impact of tourism to be positive, both globally and economically, sociocul-
turally, and environmentally, also in a global analysis. However, it should be noted
that it was at the environmental level that the most positive perception of the
impacts of tourism was highlighted. In view of the above, it is concluded that, for
the residents surveyed in the region of Beiras and Serra da Estrela, tourism is a
motor activity of sustainable development at global, economic, environmental, and
sociocultural levels.
Table 7 Perception of the Perception of the impact of Negative Positive

impact of tourism on a global, tourism impact impact
economic, sociocultural and
N % N %
environmental level
Globally 110 28.6 274 71.4
At the economic level 149 38.8 235 61.2
At the sociocultural level 69 18.0 315 82.0
At the environmental level 42 10.9 342 89.1
124 E. Oliveira
The factors influencing the overall perception of the residents in relation to the
impact of tourism on the region, there were significant differences, attributable to
respondents’ gender, in the perception of the impact of tourism at the environmental
and sociocultural level. The study showed that women show greater satisfaction
with the global impact of tourism at these two levels. The study also showed
significant differences in the overall perception of the impact of tourism at the
environmental level attributable to the existence of professional contact with a
related activity as tourism. Respondents who have already had professional contact
with tourism have expressed a higher level of satisfaction with the environmental
impact of tourism.
At the environmental level there are significant differences in the perceptions of
the respondents according to the sub-region of residence, the gender and the
existence of professional contact with the tourism area. Finally, at sociocultural
level there are statistically significant differences according to gender. The issues
related to age structure, literacy, professional status, the habit of enjoying vacations
and the existence of family members working in tourism did not show statistically
significant differences in the perception of the impact of tourism at a global, eco-
nomic, sociocultural level and environmental.
Regarding the second question of the investigation, the questionnaire was
applied to the residents of Beiras and Serra da Estrela, and it was observed that, in
general, residents consider that tourism has more positive than negative impacts,
whether in economic, sociocultural or environmental terms.
In the perception of the economic impacts of tourism, respondents were ques-
tioned about the degree of agreement in relation to fourteen affirmations (12 pos-
itive impacts and 2 negative impacts), and the answers should respect the Likert
scale of five points (1—strongly disagree with 5—completely agree). From the
analysis of the data, it can be seen that, at economic level, the positive impacts most
perceived by the respondents are that tourism has contributed (i) to increase the
consumption of goods and services produced in the region, (ii) to create new
opportunities for (iii) for the external valuation of the region’s products, (iv) to
generate locally more tax revenue, (v) to boost the development of existing
activities, and (iv) to enhance the endogenous resources of the region, Generating
more income. In terms of economic costs, the most perceived by the respondents
was the rise in the price of goods in general (Table 8).
Regarding the sociocultural impacts of tourism, respondents were asked about
the degree of agreement in relation to fifteen statements, 11 of which refer to
positive impacts and 4 to negative impacts. Most respondents “agree” or “fully
agree” that tourism has contributed to (i) the conservation of the built heritage,
(ii) the creation of new services that serve the region’s residents, (iii) the quanti-
tative and qualitative increase Infrastructure and basic services, and (iv) the
preservation and dissemination of local culture and traditions. The perception of the
respondents is that the development of tourism activity has not caused great
sociocultural costs, especially regarding levels of insecurity and crime, nor loss of
cultural identity (Table 9).
Table 8 Perceived economic impacts of tourism
Economic impacts N Degree of agreement (%)* Descriptive statistics
1 2 3 4 5 Mean Mode Median Standard
deviation
Positive impacts
Contributed to increase public investment in tourism 384 4.7 37.0 20.1 31.2 7.0 2.99 2 3.00 1.074
Contributed to create more jobs for the resident population 384 3.4 22.9 20.1 44.5 9.1 3.33 4 4.00 1.033
Contributed to increase consumption of goods and services produced 384 1.3 8.3 15.9 63.0 11.5 3.75 4 4.00 0.814
in the region
Contributed to increase production of goods in the region 384 2.1 19.3 26.6 40.5 11.5 3.40 4 4.00 0.991
Contributed to the external valuation of the region’s products 384 1.3 17.4 20.1 46.1 15.1 3.56 4 4.00 0.989
Contributed to the creation of new business opportunities in the 384 2.3 13.3 16.1 54.2 14.1 3.64 4 4.00 0.959
region
Contributed to locally generate more tax revenue 384 2,3 15.8 24.2 45.1 12.6 3.50 4 4.00 0.983
The Importance of Corporate Social Responsibility …
Boosted the development of existing activities 384 2.1 14.6 26.8 44.5 12.0 3.50 4 4.00 0.953
Generated wealth, because the money spent by tourists is in the region 384 3.6 15.1 28.4 40.9 12.0 3.42 4 4.00 1.004
Attracted national investments in the region 384 8.3 34.1 20.7 32.0 4.9 2.91 2 3.00 1.090
Attracted foreign investment in the region 384 11.5 46.0 20.1 18.8 3.6 2.57 2 2.00 1.035
Valued the endogenous resources of the region, generating more 384 2.9 15.1 24.0 45.0 13.0 3.50 4 4.00 0.995
income
Negative impacts
Raised the price of goods in general 384 8.3 48.3 23.4 16.1 3.9 2.59 2 2.00 0.984
Contributed to lower public investments in other sectors, due to 384 12.0 61.2 14.8 9.1 2.9 2.30 2 2.00 0.897
public investment in tourism
a
1—I strongly disagree; 2—I disagree; 3—I do not agree or disagree; 4—I agree; 5—I completely agree
125
126 E. Oliveira
From the above it is concluded that, at sociocultural level, the negative impacts
are less perceived than the positive ones, presenting the tourism as a dynamic of the
historical-cultural potential of the territory. This conclusion may be related to the
fact that in the BSE territory, to date, there has been no mass tourism, nor is it
expected that this will occur in the future, which may justify the perceptions of the
respondents at sociocultural level.
In the perception of the environmental impacts of tourism, residents were asked
about the degree of agreement in relation to nine environmental impacts, three of
which were positive and six negative. Although the respondents did not perceive
large negative environmental impacts (mode and median value 2 and mean always
less than 3), the data present a great dispersion of responses. At the environmental
level, the positive impact of the most perceived tourism is its contribution to
improving the image of the region and the negative impact most perceived by the
respondents is the increase in the amount of garbage caused by tourism (Table 10).
The reading of the data leads to the conclusion that although global environ-
mental perception is very positive, when the environmental impacts are individu-
alized, respondents do not show such a positive perception. However, it should be
noted that respondents did not attribute to tourism many of the negative impacts
reported in the literature.
This study allowed to identify which factors influence residents’ perceptions
regarding the economic, sociocultural, and environmental impacts resulting from
the tourist activity. Regarding the economic impacts of tourism, there are statisti-
cally significant differences in the residents’ perceptions according to the age group,
literacy levels, occupational situation, habit of enjoying vacations, and, finally, the
existence of family members working in the area of tourism. Thus, of the analyzed
variables, there were no differences in perceptions of the economic impacts of
tourism according to the gender of the respondents and the existence of professional
contact with tourism. However, it should be noted that the differences only occurred
in relation to some positive economic impacts and never in relation to the negative
impacts.
Regarding the age of the respondents, the analysis of the data showed, on the one
hand, that respondents aged between 25 and 64 years showed a greater degree of
agreement regarding the economic benefits of tourism and, on the other hand, Who
were the respondents aged 65 or over who least recognized the economic benefits of
tourism. According to the educational qualifications, it was possible to conclude
that the respondents with higher educational qualifications were the ones that
showed the highest level of agreement regarding the positive economic impacts of
tourism. According to the professional situation, it was found that the respondents
were workers (who work effectively) who most perceived the positive economic
impacts of tourism. However, respondents who are out of work were the ones who
showed a lower level of agreement regarding the positive economic impacts of
tourism. Still in relation to the economic impacts of tourism, it was found that those
who habitually enjoy vacations perceived more positive economic impacts than
those who usually do not take vacations. Finally, it was the respondents who have
relatives working in the tourism area who most perceived the positive economic
Table 9 Perceived sociocultural impacts of tourism
Sociocultural impacts N Degree of agreement (%)a Descriptive statistics
deviation
Positive impacts
Contributed to the qualification of human resources 384 2.8 20.1 23.2 47.4 6.5 3.35 4 4.00 0.965
Contributed to improving the quality of life of residents by the income 384 2.6 16.4 24.7 46.9 9.4 3.44 4 4.00 0.960
generated
Contributed to the creation of new services that serve the residents of 384 2.1 11.4 21.4 51.6 13.5 3.63 4 4.00 0.928
the region
Contributed to the quantitative and qualitative increase of 384 2.6 11.4 23.2 52.9 9.9 3.56 4 4.00 0.912
infrastructures and basic services
Contributed to the conservation of the built heritage 384 3.1 9.3 18.8 56.3 12.5 3.66 4 4.00 0.923
Contributed to increase the offer of cultural events 384 3.1 16.6 21.4 49.5 9.4 3.45 4 4.00 0.979
Contributed to increase the offer of religious events 384 7.0 30.7 30.0 28.1 4.2 2.92 2 3.00 1.016
The Importance of Corporate Social Responsibility …
Contributed to increase the offer of sporting events 384 2.9 15.1 25.5 46.1 10.4 3.46 4 4.00 0.966
Contributed to the preservation and dissemination of local culture and 384 1.8 10.4 24.2 54.5 9.1 3.59 4 4.00 0.863
traditions
Contributed to the social development of the resident population 384 4.4 15.9 23.2 48.7 7.8 3.40 4 4.00 0.991
Contributed to the rejuvenation of the region’s traditional arts and 384 5.7 22.7 26.6 37.2 7.8 3.19 4 4.00 1.053
crafts
Negative impacts
Contributed to increase insecurity and crime 384 15.6 52.1 17.7 12.0 2.6 2.34 2 2.00 0.967
Created urban problems 384 13.3 51.2 25.0 8.9 1.6 2.34 2 2.00 0.874
Decreased quality of services provided 384 16.7 55.5 19.5 5.7 2.6 2.22 2 2.00 0.882
Caught to the loss of cultural identity of the region 384 15.6 52.1 17.7 12.0 2.6 2.17 2 2.00 0.838
a
1—I strongly disagree; 2—I disagree; 3—I do not agree or disagree; 4—I agree; 5—I completely agree
127
128
Table 10 Perceived environmental impacts of tourism

Environmental impacts N Degree of agreement (%)a Descriptive statistics
deviation
Positive impacts
Contributed to a greater awareness of the population for the preservation 384 6.0 36.2 24.2 28.4 5.2 2.91 2 3.00 1.043
of the natural heritage
Contributed to better use/creation of basic infrastructures, thus causing 384 8.3 27.2 35.4 25.5 3.6 2.89 3 3.00 0.998
less negative environmental impacts
Improved the image of the region 384 3.9 27.6 20.5 35.2 12.8 3.25 4 3.00 1.111
Negative impacts
Cause the scarcity of local natural resources 384 27.9 40.4 18.2 10.9 2.6 2.20 2 2.00 1.005
Decreased the quality of the environment 384 14.1 59.6 15.4 8.6 2.3 2.26 2 2.00 0.886
Created landscape problems 384 14.3 52.4 22.1 8.3 2.9 2.33 2 2.00 0.921
Responsible for the destruction of biodiversity 384 13.3 52.3 24.2 7.6 2.6 2.34 2 2.00 0.894
Responsible for increasing the amount of waste 384 10.9 54.2 18.0 13.5 3.4 2.44 2 2.00 0.971
Decreased cleaning of the counties of the region 384 12.5 56.6 20.8 7.8 2.3 2.31 2 2.00 0.873
a
1—strongly disagree; 2—I disagree; 3—I do not agree or disagree; 4—I agree; 5—I completely agree
E. Oliveira
impacts of tourism, in relation to those who do not have family members working in
the tourism area.
Regarding the sociocultural impacts of tourism, there are statistically significant
differences in the perceptions of respondents in the age group, literacy levels,
occupational status, holiday habit, and, finally, the existence of family members
working in the tourism area. There were no differences due to gender and the
existence of professional contact with tourism.
The results indicated that respondents aged 15–24 were most in agreement that
tourism contributes to increasing infrastructure and basic services in the region.
Among the different levels of literacy, the results allowed to conclude that the
respondents with higher education were the ones who most perceived the fact that
tourism contributes to improve the quality of life of the residents, by the income
generated. The results also allowed us to conclude that the respondents who
habitually take vacations showed a greater degree of agreement about the positive
effect of tourism on the qualification of human resources. Finally, it was found that
respondents with family members working in the area of tourism perceived, at
sociocultural level, more positive than negative impacts.
In relation to the environmental impacts of tourism, this study allowed us to
conclude that there are statistically significant differences in the perceptions of the
respondents according to age group, literacy, professional situation and the habit of
enjoying vacations. It also revealed that, due to the gender, the existence of pro-
fessional contact with tourism, and also the existence of family members working in
the tourism area, there were no differences in the perceptions of the respondents in
relation to the environmental impacts of tourism.
It was also found that according to the age group, literacy, professional status
and, finally, the habit of enjoying vacations, there are only differences in the per-
ceptions of the respondents in relation to positive environmental impacts. For each
of the analyzed variables, it was noticed that those who perceived the positive
environmental impacts were the residents surveyed (i) aged 25–64, (ii) who had
higher education qualifications, (iii) who work and, lastly, (iv) who usually take
vacations.
Regarding the third question of the investigation, the questionnaire was applied
to the residents of Beiras and Serra da Estrela, and it was observed that, in general,
residents consider that businessmen in the tourist sector are socially responsible,
since approximately 74.5% of the respondents answered affirmatively (Table 11).
In a more detailed analysis, according to the respondents, it is in the environ-
mental dimension where entrepreneurs in the tourism sector practice more socially
responsible acts, followed by the sociocultural dimension and, lastly, the economic
level. According to the respondents, tourism entrepreneurs in the BSE region are
socially responsible actors that contribute to the sustainable development of
tourism.
130 E. Oliveira
Table 11 Perception of corporate social responsibility

Perception of corporate social responsibility Yes No
N % N %
Globally 286 74.5 98 25.5
At an economic level 194 50.5 190 49.5
At sociocultural level 236 61.5 148 38.5
At the environmental level 290 75.5 94 24.5
6 Final Considerations
The region of Beiras and Serra da Estrela is deeply influenced by its geographical
situation and internal weaknesses, both in terms of its productive structure, human
resources, and infrastructure. In order to achieve sustainable development, a
structured strategy that takes account of its specific characteristics is essential. Thus,
it is considered that tourism can contribute to the social and territorial cohesion of
Beiras and Serra da Estrela. In spite of the tourist potentialities of the Beiras and
Serra da Estrela, tourist tourism activity can influence, in a positive way, or in a
negative way, the sustained development of the region.
Residents recognize that Beiras and Serra da Estrela have different realities and
dynamics, perceive the positive and negative impacts of tourism development,
economically, sociocultural, and environmental. In order to maximize the benefits
of tourism and minimize the negative impacts of tourism on an economic, socio-
cultural, and environmental level, residents positively perceive the role of corporate
social responsibility in the development of sustainable tourism in the BSE region.
Despite the importance of the first research that present results in the area of
tourism and CSR, this research has two important limitations. One limitation is
related with the sample, because the results could not be generalize due to the fact
that is small sample with specific characteristics which presents a sample bias. The
other limitation is the sample itself, due to the fact is collect in Beiras and Serra da
Estrela that could show geographical bias.
With respect of this and apart from highlighting the tourist potential of the region
of Beiras and Serra da Estrela, namely from its most attractive resources, the
research intends to give an answer to the main question, which lies in the impact
that planning and a proper management of the tourist resources can have in the
process of economic and social transformation of this region. Regardless the lim-
itations, the authors agree that is the only way to promote the discussion and to
improve better results.
In view of the results obtained in this research, and in view of this reality in the
region, residents recognize the need to join efforts towards an integrated strategy for
the region. The development challenges facing the Region of Beiras and Serra da
Estrela require a proper space for understanding what their human resources, their
cultural values, their environmental values, their endogenous resources, their
exogenous relations are without risk their own identity. In this development sce-
nario corporate social responsibility plays a very important role.
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140–156.
Should We Expect Exemplary
Integrated Reporting to Increase
Organisational ESG Ratings?
Elaine Conway
Abstract The aim of this chapter is to assess whether firms which have been
recognised for exemplary integrated reporting (<IR>) should see an increase in their
Environmental, Social and Governance (ESG) ratings, or indeed, whether firms that
rate highly for their ESG performance manage to produce exemplary integrated
reports. Studying 111 firms worldwide recognised for their excellent <IR>, the
number of accolades awarded was estimated against their ESG ratings over six
years from 2012–2017. The reverse relationship was also explored, together with
regressions using the determinants of the CSR score; environmental, social and
governance. Finally a necessary condition analysis (NCA) was carried out to
ascertain whether having a good ESG score is a prerequisite for producing an
exemplary integrated report (and vice versa). There appears to be no correlation
between companies producing exemplary <IR> and their ESG ratings; nor
indeed the reverse. However, there was some evidence that firms producing
exemplary <IR> have higher governance scores and in turn, higher governance
scores appear linked to more exemplary <IR>. There were no findings for the other
two determinants of ESG (environmental and social). There was also no indication
that having a good ESG score is a prerequiste for producing an exemplary inte-
grated report based on the NCA. This chapter is of interest to practitioners and
academics since it is the first study to consider whether there is a link between
exemplary <IR> and highly rated ESG scores. It is also the first study to use the
novel methodology of NCA in this arena to determine whether one (<IR> or high
ESG scores) is a prerequisite for the other. Given the relative low numbers of firms
using <IR> the results may lack generalisability, however the results are positive in
that firms are not constrained by having to produce an exemplary integrated report
in order to increase ESG ratings, should this be a corporate objective.

Keywords Integrated reporting Environmental Social and governance

reporting Corporate social responsibility Necessary condition analysis
E. Conway (&)
Derby Business School, University of Derby, Derby, UK

136 E. Conway
1 Introduction
Traditional corporate reporting has primarily focused on the historic financial

results and performance within an organisation, based on the disclosure require-
ments mandated by legal or financial market regulations. This has necessarily
tended to focus attention almost exclusively on the economic or financial results of
the organisation. However, over time there has been a shift in perception that
organisations should also consider the broader impacts of their activities (both input
and output related) on the wider environment, as there have been significant
changes in the way business is carried out in the modern world (Bonner 2012; de
Villiers et al. 2014; IIRC 2011). This changing business environment has been the
result of increased globalisation, greater expectations about corporate accountability
and transparency and concern over the environment (IIRC 2011). The traditional
form of corporate reporting does not adequately address these concerns, and hence
one response has been the growth of sustainability and additional narrative cor-
porate reports. Undoubtedly, they have addressed some of the weaknesses of purely
financial reporting, but they are not without their critics (Buhr 2007; Milne et al.
2009).
It is a stock exchange or legal requirement in some countries for companies to
provide a management commentary on the financial results or to disclose material
environmental or social metrics, such as greenhouse gas emissions or health and
safety incidents (for example, through the Companies Act in the UK (UK
Government 2017)). However these reports are largely unaudited, are highly
selective in content and vary considerably in both content, format and consistency,
making comparisons between organisations very challenging. Whilst there are a
number of international standards on some elements of non-financial reporting,
such as the Global Reporting Initiative (GRI) on environmental reports (GRI 2017),
these are by no means universally adopted.
Equally, these reports, like the financial reports, tend to be largely historically
focused on the results or outputs of the previous year; investors find that this makes
financial decision-making on the basis of historic results alone difficult (Barth et al.
2016; IIRC 2013a). They also find that despite the provision of additional infor-
mation about the environmental, social and governance (ESG) performance of the
organisation, it is not always clear how these metrics fit in with the strategy of the
organisation in the longer term.
This has paved the way for the development of integrated reporting (hereinafter
abbreviated to the commonly adopted acronym of <IR>). <IR> has been spear-
headed internationally by the International Integrated Reporting Council (IIRC)
which was established in 2010 by bringing together a coalition of representatives
across the globe from industry, investors, financial securities and regulatory bodies,
as well as academics, standard setters and broader society (IIRC 2017b). The aim of
this coalition is to encourage a greater focus on value creation in organisations and
to consider the performance of the organisation in broader terms than financial
alone (IIRC 2017b).
Should We Expect Exemplary Integrated Reporting … 137
The IIRC’s stated vision is ‘to align capital allocation and corporate behaviour to
wider goals of financial stability and sustainable development through the cycle of
integrated reporting and thinking’ (IIRC 2017b). Within this vision, the IIRC’s
International <IR> Framework defines an integrated report as ‘a concise commu-
nication about how an organisation’s strategy, governance, performance and pro-
spects, in the context of its external environment, lead to the creation of value in the
short, medium and long term’ (IIRC 2017b). The emphasis is on integrated thinking
which is designed to encourage firms to consider how they create value over time
and what their key value drivers are. Whilst not providing a definitive guide on how
to produce an integrated report, the IIRC promotes the concept of six capitals which
firms utilise in differing ways in order to create their own ‘value’. These capitals
include: Financial, Manufactured, Intellectual, Human, Social and relationship and
Natural (IIRC 2017b). They are intended to be the reserves of value that underpin
the value creation of the organisation. In common with the more traditional concept
of financial capital, all six capitals can be depleted, transformed or enhanced within
organisations (IIRC 2011), but at the very least they should be maintained if the
resources of the organisation are to be sustained long term. Clearly, there is a lot of
interconnectivity between the capitals, as expenditure on one capital may lead to the
depletion of another, at least in the short term (for example spending financial
capital on manufactured capital when purchasing a production machine). However,
the focus of <IR> on the ability of the organisation to create value over multiple
time frames of short, medium and long term accepts this flow between capitals in
one time period with the expectation that it should (ideally) result in an enhance-
ment of overall capital and value in the longer term (IIRC 2013b).
Currently, the adoption of <IR> globally is voluntary, with the exception of listed
companies in South Africa, for whom <IR> became mandatory from 2010 (IRCSA
2014). This has meant that beyond the group of around 100 ‘pilot programme’
organisations (IIRC 2013a) who have voluntarily adopted <IR> elsewhere in the
world, most organisations have not sought to develop <IR>. This is because it is seen
as potentially providing more information than some firms would be comfortable
with, such as their strategy and business model, having to trade off different stake-
holder interests against each other and being perceived as ‘more’ reporting on top of
what firms already do (van Bommel 2014).
This concern of ‘more’ reporting has in all likelihood stemmed from the
explosion of requirements to disclose more company information about sustain-
ability metrics and actions in recent years. Corporate Social Responsibility (CSR),
ESG or sustainability reports have increased the length of corporate reports sub-
stantially over the past decade, but often without sufficient consideration of the
meaning, contextualisation or linking of this additional data to the core strategy of
the firm (de Villiers et al. 2014). The content of these reports is largely intended to
respond to the growing concerns about the wider impacts and responsibilities of
organisations to the environment, their workforce and community and their stew-
ardship role, in the same way that <IR> is also concerned with the wider impacts of
the organisation through its six capitals approach.
138 E. Conway
Arguably, the target audience of ESG or Sustainability/Governance reports

(where they are separate reports) is different to that of <IR>, since the focus of ESG
reporting is to publicly disclose specific metrics and performance on the environ-
mental, social and governance issues which are material to the company, largely
historically based. <IR> takes this reporting further by focusing on longer term
value creation in a more holistic manner by incorporating both the risks and
opportunities posed by the ESG issues in the Sustainability and Governance reports
within the normal operating cycle of the business. It demonstrates how these issues
are relevant in terms of strategy, risk management and should ideally present how
the myriad of issues are traded off against each other through the discussion of the
six capital impacts and materiality. Clearly, this level of discussion is aimed at the
shareholder or capital provider (Adams 2015a, b; Flower 2015), rather than a
general stakeholder, such as employees, environmental interest groups or for
statutory bodies. Indeed, the level of detail covered in some ESG reports would not
be considered material in <IR>. This may stem from legal requirements to make
certain disclosures in ESG reports, which would still doubtless need to be addressed
were a company to adopt <IR>. So it is perhaps more likely that the key strategic
ESG issues will be highlighted in an integrated report, whilst the strictly ‘com-
pliance’ (and more detailed) data will reside in a supplementary ESG report on a
corporate website. Even though produced and directed at different stakeholders,
nonetheless the ESG report may still be of interest to some capital providers as an
assessment of risk or if they are specifically interested in socially responsible
investing.
Many of these ESG reports are the basis for organisations’ ESG disclosure
ratings. To enable investors and analysts to understand how organisations are
performing in the three areas of environment, social and governance, firms inde-
pendent of the organisations being rated take source data such as the Sustainability/
ESG reports, plus additional other disclosures, reports, questionnaires and publicly
available information and grade or rate organisations on all three areas, and then
provide an overall score. The precise weighting of the various elements of the
sub-components of ESG and their composition in the overall rating varies from
rating firm to rating firm and is generally proprietary information. However, the aim
of these ratings firms is to provide investors and analysts with additional metrics on
which to base their investment decisions.
With all of these similarities and divergences between <IR> and ESG reports in
mind, could we expect an organisation which is able to formulate a good integrated
report, addressing the wider impacts of the business on its six capitals, to perform
better on their ESG metrics? Or indeed, the converse: is an organisation which rates
highly on ESG issues more likely to produce an exemplary integrated report? This
chapter seeks to address these questions and investigate why they might do so, but
equally, why they might not. It is supported by some empirical evidence on
exemplary <IR> reports produced by organisations in comparison with their ESG
ratings.
2 Mapping <IR> to ESG: The Overlaps
As stated earlier, the <IR> framework developed by the IIRC sets out the concept
of the six capitals as Financial, Manufactured, Intellectual, Human, Social and
relationship and Natural (IIRC 2017b). These are defined in Table 1.
Given the experience that organisations already have in reporting on financial
performance, the metrics used in early <IR> reports in regards to Financial Capital
(and to a lesser extent, Manufactured Capital) were little different to the financial
reports of non-integrated reports (IIRC 2013a).
The IIRC deliberately avoided suggesting metrics to measure the capitals,
including the less familiar capitals (Natural, Human, Social and relationship and
Intellectual), because they explicitly wanted organisations to develop more narra-
tive or an explanatory ‘story’ around them (Adams et al. 2013; Alia et al. 2013). As
acknowledged by Adams (2015a), ‘telling a value creation story around multiple
capitals involves more than metrics, but the GRI (Global Reporting Initiative)
Table 1 Definitions of the six capitals (IIRC 2013b)

Capital Definition
Financial capital The pool of funds that is available to an organisation for use in the
production of goods or the provision of services, or obtained through
financing, such as debt, equity or grants, or generated through
operations or investments
Manufactured capital Manufactured physical objects (as distinct from natural physical
objects) that are available to an organisation for use in the production
of goods or the provision of services, including: buildings and
equipment, infrastructure (such as roads, ports, bridges, and waste and
water treatment plants)
Intellectual capital Organisational, knowledge-based intangibles, including: intellectual
property, such as patents, copyrights, software, rights and licences
and “organizational capital” such as tacit knowledge, systems,
procedures and protocols
Human capital People’s competencies, capabilities and experience, and their
motivations to innovate, including their: alignment with and support
for an organisation’s governance framework, risk management
approach, and ethical values, ability to understand, develop and
implement an organisation’s strategy, loyalties and motivations for
improving processes, goods and services, including their ability to
lead, manage and collaborate
Social and The institutions and the relationships within and between
relationship capital communities, groups of stakeholders and other networks, and the
ability to share information to enhance individual and collective
well-being. Social and relationship capital includes: shared norms,
common values and behaviours, key stakeholder relationships, and
the trust and willingness to engage with external stakeholders. It also
includes intangibles associated with the brand and reputation that an
organisation has developed
140 E. Conway
Table 2 Metrics used by IIRC pilot programme organisations to measure capitals (IIRC 2013a)
Capital Metrics used by pilot programme organisations
Natural capital • CO2 emissions • Energy consumption per energy source • Amount
of waste • Environmental accidents • Recycled waste •
Environmental protection investments • Animals purchased for
trials
Human capital • Number of employees • Diversity • Total investment in training •
Employees in corporate e-learning • Average age • Average training
days per employee • Employee survey results • Injuries per million
working hours • Rate of absenteeism • Severance rate • Minimum
wage ratio
Social and • “Great place to work” ranking • Number of volunteers • Claims/
relationship capitals lawsuits • Involvement in social actions • Involvement in cultural
projects • Customer satisfaction index • Provision for social projects
• “Social investment” (money spent on philanthropy)
Intellectual capital • Number of patent applications filed • Money spend on R&D •
Number of tests with new technology • Brand awareness • Others
might include: • Number of new products developed • Expenditure
on organisational change/process development • Expenditure on
software development for internal systems • Sales generated by
R&D-derived products’
indicators could be, and very often are, used by organisations to inform their
approach to (i) the stewardship of human capital, social and relationship capital and
natural capital and (ii) reporting on these capitals in accordance with the IIRC’s
International <IR> Framework.’ Indeed, an analysis of the reports in the early
adopting companies in the IIRC Pilot Programme highlighted a number of metrics
used to quantify their progress (IIRC 2013a). These are included in Table 2.
Many of these metrics do map to the constituents of sustainability reports across
the three elements of Environmental, Social and Governance, whilst the
Manufactured Capital and Financial Capital are largely addressed through the
financial reporting in non- <IR> reports. This overlap might suggest therefore that
if a firm was able to articulate its corporate performance across the six capitals
through <IR>, then there might well be a resultant or corresponding increase in the
organisation’s ESG scores. The increased development and use of international
standards on metrics to record and manage progress in such areas as ESG could
create a considerable overlap between <IR> and ESG scores. Indeed, the
International Standards Organisation (ISO) has established international standards
(for example, ISO 26000) for the social responsibility of corporate and public sector
organisations, and within the standards it sets out seven core areas which address
many of the same issues as <IR>, albeit some couched in different terminology:
• Organisational governance
• Community involvement and development
• Human rights
• Labour practices
• The environment
• Fair operating practices
• Consumer issues
Equally, the Global Reporting Initiative (GRI) has created guidelines to support
the measurement of sustainability progress through the GRI G4 Sustainability
Reporting Guidelines with a range of metrics. These and other standard setting
bodies encourage firms to measure and monitor their activities in a standardised,
and hence comparable way (GRI and ISO 2014).
This drive to standardise reporting in the ESG arena has undoubtedly supported
an increase in the number of firms disclosing data, as organisations have more
guidance on the practicalities about what they should measure. Whether this is
indeed merely selective ‘greenwashing’ (Lyon and Maxwell 2011) is a moot point
and certainly most reports fail to provide a link between the ESG metrics they
provide and the importance of them to the success of the business (de Villiers et al.
2014). However, this has also been one of the criticisms of <IR> since its adoption
(IIRC 2013a).
The increased level of broader corporate reporting globally might lead us to
expect a link between a well-conceived integrated report and ESG metrics, given
the consideration of the organisation for the wider group of stakeholders its interacts
with. Indeed, many academic papers have been written extolling the virtues of both
ESG (usually referred to as CSR in academic literature) and <IR> and the benefits
they bring to an organisation’s financial performance (Orlitzky et al. 2003; Barth
et al. 2016; Lee and Yeo 2016 are just some of the many examples). ESG per-
formance and <IR> have also both been linked to the theory of ‘good manage-
ment’: companies that perform well at ESG/CSR are exemplifying the engaged,
considerate management which will bring long-term financial success (Waddock
and Graves 1997), and incorporating all salient business issues into a rounded,
integrated report is a demonstration of the quality of management (Churet and
Eccles 2014). So whilst this might well suggest one could impact the other, there
are also notable differences between the two forms of reporting which may suggest
the lack of such a link.
3 Mapping <IR> to ESG: The Divergences
There are a number of different perspectives within the ethos of <IR> which may
result in a divergence away from ESG score improvements. For example, the scope
of conventional reporting is much more focused on the organisation, and whilst
there may be reference to the wider organisation in some of the narrative man-
agement commentary sections, this is often quite narrow in focus. The intent
of <IR> is to be much more inclusive of the wider inputs and outputs of the
organisation on the wider environment, hence the scope is both the internal and
external environment (IIRC 2013b).
142 E. Conway
Equally, the time horizon of these management commentaries and the data
behind them (whether financial or ESG) is virtually always backward-looking from
the reporting date, whereas the intent with the six capitals is to have more of a
longer term, future orientation. This is likely to affect the scores which ratings firms
might give to <IR> organisations, since the ratings firms are much more focused on
an evaluation of what organisations have actually achieved and the progress they
have made in ESG matters, usually supported by hard metrics as evidence, rather
than a general discussion of their future intentions (Sharfman 1996).
Given the expectation that <IR> will be more concise (which few organisations
have managed to achieve thus far IIRC (2013a), this may well necessitate a change
in the level of detail provided in reports. Whilst investors have criticised the current
level of reporting which has provided a mass of detailed data about issues such as
greenhouse emissions (GHGs), the relevance and level of materiality of this data to
the success (or otherwise) of the business is lacking in both <IR> (IIRC 2013a;
Slack and Campbell 2016) and more traditional reporting (de Villiers et al. 2014).
With <IR>, the intended focus on conciseness may well result in less data but more
narrative explanation about the firm. This is something that may be poorly inter-
preted by companies who rate organisations about their performances in areas such
as GHGs, with the effect that they reduce the ratings of organisations who actually
reduce the quantity of metrics that they currently report if they move to an adoption
of <IR>. This may be a particular issue for firms who report on certain metrics
currently, but which do not actually have a large impact on them (low materiality).
Therefore these firms may reduce the amount of detailed reporting provided on the
basis of the requirement to be more concise and consider the level of materiality as
a guideline to reducing the amount of data presented. This issue might be alleviated
if more links were provided back to corporate websites with more detailed infor-
mation not otherwise disclosed in the main report (Promethium Carbon and The
Climate Disclosure Standards Board 2013).
Another area of divergence between <IR> and traditional corporate reporting is
the focus on strategy and the business model in <IR>. The expectation is
that <IR> should explain the longer term strategy of the organisation and its
(material) reliance on the six capitals within this longer term viewpoint. <IR> is
equally expected to clarify the interconnectivity within the six capitals as a richer
explanation of value creation specific to that organisation (IIRC 2013b; IRSCA
2011). In contrast, there is no requirement to make such links within financial and
ESG reporting, albeit some organisations may choose to disclose this, and many are
required to address business risks in their management commentary (Financial
Reporting Council 2014).
Hence there is both evidence to suggest that good <IR> reporting may translate
into improved ESG ratings and vice versa, and also evidence to the contrary.
Figure 1 summarises these key areas of scope, boundary, time horizon, metrics and
interconnectivity with <IR> and conventional financial-sustainability-ESG report-
ing in a mapping diagram.
The next section of the chapter will set out the methods used to empirically test
whether good <IR> affects ESG ratings and vice versa.
Fig. 1 Overlaps and divergences between conventional corporate reporting and integrated
reporting: boundary, scope, interconnectivity and time horizons
4 The Hypotheses: The Overlap or Divergence

Between <IR> and ESG Ratings
As seen from the previous sections, there are both reasons why good <IR> may
translate into improved ESG ratings, and vice versa, but also reasons why it may
not. Therefore the next section of this chapter will test the two hypotheses
empirically. These hypotheses are
H1: Organisations which produce exemplary <IR> will see improved ESG
ratings;
H2: Organisations which have higher ESG ratings will produce
exemplary <IR>.
Within these two hypotheses the sub-components of ESG as well as the com-
bined score will be tested.
5 <IR> and ESG—An Empirical Assessment
In order to investigate more fully whether organisations which produce excellent

integrated reports experience an improvement in their ESG ratings or indeed,
whether a high ESG score is more likely to lead to an exemplary integrated report, a
small empirical study was carried out.
144 E. Conway
The sample for the study was taken from those firms whose <IR> have been
‘recognized as leading practice by a reputable awards process or through bench-
marking’ (IIRC 2017a) and were listed on the IIRC Recognized Reports Examples
Database on their website as at the end of September 2017. The various awards
bodies included the:
• Australasian Reporting Awards
• EY Excellence in Integrated Reporting Awards
• PwC’s Building Public Trust ‘Excellence in reporting’ awards
• CSSA Integrated Reporting Awards
• WICI (Japan) Awards for Integrated Reporting
• Nkonki State-Owned Company Integrated Reporting Awards
• Sijthoff Prize
• SAFA Awards
• Nikkei Annual Reporting Award.
At the end of September 2017 there were 184 companies credited as having
their <IR> recognised either by an awarding body or by benchmarking. As by their
nature, recognitions of reports occur typically up to one year after their issue,
recognitions were counted for years 2012–2017, whereas the corresponding
financial data was taken from 2011–2016 inclusive as these were the results on
which the reports were judged. Due to the lack of availability of financial data for
some of these firms across the chosen period, the sample was reduced to 111, of
which 108 were listed on a stock exchange and three were unlisted.
The awards criteria between the different awarding bodies are necessarily dif-
ferent, but aim to recognise firms who have demonstrated excellence through
their <IR> in areas such as the ability to ‘provide a balanced and reasonable picture
of their economic, environmental and social performance; facilitate comparability,
benchmarking and assessment of performance; and address issues of concern to
stakeholders’ (Australasian Reporting Awards 2017) or for conciseness, reporting
of performance against strategy, risk disclosure, strategic focus, focus on value
creation and for innovation (EY 2015). Some also reward organisations for the
adoption of GRI standards, including the use of their metrics (Australasian
Reporting Awards 2017).
Each organisation was given a score of 1 for each time they have been
‘recognised’ either with an award or a commendation for best practice in a par-
ticular area of <IR> for use in benchmarking with other organisations. This meant
that an organisation could be recognised by several different awarding bodies in the
same year and therefore the only theoretical upper limit to the number of recog-
nitions which could be given was the number of awarding bodies awarding
recognitions in any given year, for each of the 6 years of the study.
Against this score a multivariate linear regression (ordinary least squares—OLS)
was estimated using the ESG scores (including the sub-components of
Environmental, Social and Governance in separate regressions) as obtained from
the Bloomberg Professional Database, which is a database on organisations across
the world with respect to their financial and ESG data. To determine whether there
was a particular relationship with any of the shared metrics across <IR> and
conventional financial and ESG reporting, a range of additional variables were also
included in the regressions. These were largely based on the closest metrics
available to map against the metrics used by the <IR> pilot programme partici-
pants. These variables were:
5.1 Independent Variables
• ESG score (ESG): Total ESG (Environmental, Social and Governance)

Disclosure Score: a summarised Bloomberg score of environmental, social and
governance scores, ranked between 0–100;
• Recognitions (Recognition): Total number of recognitions/awards given to the
organisation over the six year time period under study;
• Environmental score (ENV): a Bloomberg measure of the environmental per-
formance of a firm, ranked between 0–100;
• Social score (SOC): a Bloomberg measure of the social performance of a firm,
ranked between 0–100;
• Governance score (GOV): a Bloomberg measure of the governance performance
of a firm, ranked between 0–100;
5.2 Dependent Variables
• Type (TYPE): this denotes whether the organisation is listed on a stock

exchange or unlisted;
• Region (REGION): geographic region of the organisation;
• Employees (EMPS): number of employees in the organisation and measure of
Social or Human Capital;
• Return on assets (ROA): percentage based measure of efficiency of asset utili-
sation, based on net income divided by average total assets, also a measure of
Financial Capital;
• Total assets (TOTASSET): proxy for firm size and Manufactured Capital;
• Industry (IND): variable based on Bloomberg’s Global Industry Classification
(GICs);
• Total equity (TOTEQY): total shareholders’ funds in the organisation and
measure of Financial Capital;
• Cash flow from operations (CFOPS): the cash flow from operations of the
organisation and a measure of Financial Capital;
146 E. Conway
• Accounting standard adopted (ACSTD): whether financial metrics were reported

using local General Accepted Accounting Principles (GAAP) or International
Financial Reporting Standards (IFRS), and a measure of reporting quality;
• Auditor (AUD): the auditor of the organisation; a general measure of reporting
quality if a firm has their financial statements audited by a ‘Big4’ auditor
(namely PWC, Ernst and Young, KPMG or Deloitte Touche Tohmatsu);
• Inventory (INV): the closing inventory figure and a measure of Manufactured
Capital;
• Change in tangible assets (CHGTANG): the change (as a percentage) of tangible
non-current assets from one year to the next and a measure of Manufactured
Capital;
• Change in intangible assets (CHGINTANG): is the change (as a percentage) of
intangible non-current assets from one year to the next and a measure of
Intellectual Capital;
• Debt to equity (DEBTEQY): a measure of financial structure (leverage) and risk
of a company, measured as total debt/total equity. This is of relevance due the
concern of <IR> to address organisational risk.
These variables were then used to test the two hypotheses in the following panel
models:
Hypothesis 1: Organisations which produce exemplary <IR> will see
improved ESG ratings
• ESG ¼a þ b Recognitionit þ b EMPSit þ b DEBTEQYit þ
T T T
bT TOTEQYit þ bT CFOPSit þ bT ROAit þ bT INDit þ bT Regionit þ

bT TOTASSTit þ bT ACSTDit þ bT AUDit þ bT INVit þ bT CHGTANGit þ
bT CHGINTANGit þ eit ;
where i is a specific organisation for time/year t, and bT are the

slope coefficients for the variables of interest in the study and Ɛ is
the error term.
Hypothesis 2: Organisations which have higher ESG ratings will produce
exemplary <IR>
• Recognition ¼a þ b ESGit þ b EMPSit þ b DEBTEQYit þ
T T T
bT TOTEQYit þ bT CFOPSit þ bT ROAit þ bT INDit þ bT Regionit þ

bT TOTASSTit þ bT ACSTDit þ bT AUDit þ bT INVit þ bT CHGTANGit þ
bT CHGINTANGit þ eit
where i is a specific organisation for time/year t, and bT are the slope coefficients for
the variables of interest in the study and Ɛ is the error term.
Additionally, the separate sub-components of ESG (Environmental, Social and

Governance) were estimated in place of the combined ESG score to determine
whether there are any specific effects from these on the reporting excellence of the
organisation.
6 Results and Discussion
The correlation matrix for all variables is presented in Table 1.

None of the variables are highly correlated with other with the exception of those
within the ESG group—where there is clearly correlation between the individual
sub-component scores of ESG (Environmental, Social and Governance) and the
total ESG combined score, but these are not used in the same regressions (Table 3).
Table 4 shows the variety of organisational summary statistics in the study.
Whilst all firms had to have at least one recognition to be in the study, the average is
2, demonstrating that once firms have established ‘good’ <IR> that they are likely
to be recognised multiple times, either by the same awarding body or by a different
one. The highest number of recognitions in the study was 7 over the 6-year time
period, hence at least in one year, the organisation was recognised more than once
(by different awarding bodies).
Firms are also of differing sizes in the study, as shown by the employee, total
equity and total asset figures. As organisations are in different sectors, some may
have more physical assets than others (e.g. manufacturing businesses versus service
companies), and to assess whether the manufactured and intellectual capitals of
firms affects recognitions (or ESG scores) the total assets figure has been further
analysed into inventory and changes in both tangible and intangible assets. Here
again there is a wide variety of levels in the different organisations. Equally there is
a variety of different levels of financing (debt to equity) and financial performance
amongst the firms (as evidenced by cash flow from operations and return on assets).
In terms of ESG performance, again there is a wide dispersion of results, from
zero to some very exemplary upper scores. Overall, it would appear that environ-
mental scores are the lowest, which could be a reflection of the mixture of industries
in the study, as clearly environmental scoring is of more relevance to some sectors
such as basic materials and energy, than the financial sector.
Overall, these summary statistics indicate the wide variety of business types and
sizes of organisations in the study; there is not a particular bias to smaller or larger
firms or indeed specific sectors.
In Table 5, the sectors of organisations in the study as determined by the
Bloomberg Global Industry Codes (GICS) are shown. The study has incorporated a
wide variety of different sectors. Some studies omit financial sector organisations
due the often complicated nature of their financial reporting. However, as the topic
of the study was to determine whether producing exemplary <IR> would result in
higher ESG scores, then whilst industry may be a factor, it is not a reason to exclude
a particular sector in this study, as <IR> by its very nature will be tailored to the
148
Table 3 Correlation matrix of variables

Recognition EMPS DEBTEQY TOTEQY CFOPS ROA TOTASST ESG ENV SOC GOV INV CHGTANG CHGINTANG
Recognition 1
EMPS −0.1075 1
DEBTEQY −0.0672 0.1411 1
TOTEQY −0.0417 0.3485 0.2135 1
CFOPS 0.0070 0.1397 0.0100 0.3295 1
ROA 0.1397 −0.1261 −0.0840 −0.1416 0.0194 1
TOTASST 0.0005 0.2694 0.3791 0.7915 0.1061 −0.1815 1
ESG 0.0663 0.0522 −0.0949 0.2361 0.1263 −0.0774 0.0996 1
ENV 0.0261 0.0484 −0.0787 0.2708 0.1504 −0.0813 0.1074 0.9329 1
SOC 0.0804 0.0369 −0.0776 0.1232 0.0842 −0.0790 0.0307 0.8692 0.6851 1
GOV 0.0876 0.0560 −0.1127 0.1520 0.0571 −0.0232 0.0851 0.8152 0.6075 0.7254 1
INV −0.0825 0.2856 −0.0648 0.4061 0.2519 −0.0309 −0.0036 0.2072 0.2725 0.0823 0.1027 1
CHGTANG −0.0251 −0.0341 0.0397 −0.0252 0.0304 0.2592 −0.0362 −0.1272 −0.1223 −0.1212 −0.0774 −0.0523 1
CHGINTANG −0.0355 −0.0273 −0.0317 −0.0250 −0.0131 0.0334 −0.0206 0.0020 0.0163 −0.0237 −0.0030 −0.0242 0.1394 1
Where EMPS is number of employees, DEBTEQY is debt to equity ratio, TOTEQY is total shareholders’ equity in the organisation, CFOPS is the cash flow generated from operations, ROA is the return on assets, TOTASST
is the total assets of the organisation, ESG is the combined weighted score of the three subcomponents of Environmental Disclosure Score, Social Disclosure Score and Governance Disclosure Score from Bloomberg, assessing
CSR rating, ENV is the Environmental Disclosure Score, SOC is the Social Disclosure Score, GOV is the Governance Disclosure Score, INV is the total inventory, CHGTANG is the change (as a percentage) of tangible
non-current assets from one year to the next, CHGINTANG is the change (as a percentage) of intangible non-current assets from one year to the next
E. Conway
Table 4 Summary statistics
Recognition EMPS DEBTEQY TOTEQY CFOPS ROA TOTASST ESG ENV SOC GOV INV CHGTANG CHGINTANG
Min 1 156 0 −759 −81,206 −24.98 82 0 0 0 0 0 −1.00 −1.00
1st Quartile 1 9,947 33 2,202 471 1.08 5,336 36.02 24.03 38.60 55.36 2 −0.04 −0.07
Median 1 25,929 58 6,727 1,726 3.69 17,480 46.42 37.21 49.12 62.50 235 0.03 0.01
Mean 2 53,829 111 19,704 3,451 4.98 149,281 43.62 35.45 47.14 57.99 1,400 0.04 1.39
3rd Quartile 2 73,223 126 21,711 3,421 7.60 76,939 53.72 48.06 57.89 66.07 1,233 0.12 0.12
Should We Expect Exemplary Integrated Reporting …
Max 7 648,254 2,536 199,978 90,841 64.83 2,692,500 73.21 73.79 88.33 85.71 21,371 1.22 459.08
Std dev 1 87,769 159 32,188 10,971 7.58 406,823 15.38 17.27 17.89 16.48 2,999 0.16 23.57
149
150 E. Conway
Table 5 Number of firms, average recognitions and ESG disclosure scores by industry sector
Number of Average Average Average Average Average
firms recognitions ESG ENV SOC GOV
Basic materials 19 2.16 46.33 39.11 47.15 62.12
Communications 5 2.00 43.14 31.37 52.38 59.46
Consumer, 10 1.90 39.98 31.03 42.69 55.77
Cyclical
Consumer, 24 1.71 40.85 33.69 43.47 54.69
Non-cyclical
Diversified 1 1.00 49.17 38.37 60.53 62.50
Energy 6 2.50 56.34 53.40 59.48 59.57
Financial 23 2.57 43.48 32.40 48.97 60.33
Industrial 11 1.45 43.73 37.76 44.21 57.01
Technology 4 1.75 35.37 24.39 43.06 52.83
Utilities 8 1.50 44.48 37.43 50.23 55.36
111 1.99 43.62 35.45 47.14 57.99
business model of the organisation, rather than a specific sector. Interestingly, the
financial sector tends to have the highest average number of recognitions; which
may in part be due to the need for financial institutions to clarify their business
model and increased transparency requirements since the global recession of 2008–
2009. Therefore the focus on <IR>’s need to explain the business model will be of
interest to that sector; this may not result in higher ESG, since some of these
elements, such as environmental may be of lesser relevance to the financial sector.
Indeed, the financial sector does not have overall the highest average ESG scores as
seen in Table 5.
Whilst there was only one organisation in the diversified sector, it is difficult to
extrapolate further insight from their performance as the lowest number of recog-
nitions, although the utilities sector is better represented and performs also quite
low in terms of recognitions. Overall, the energy and basic materials sectors have
tended to have among the higher average recognitions for <IR> and for ESG
disclosure scores. Their focus on their place and dependence on their wider envi-
ronment for resources and their impact on those resources may well be an under-
lying factor to this, as they will need to justify their organisational behaviour and
longevity on the basis of both inputs to and outputs from the organisation on the
wider environment. These two industry sectors have often a much higher profile
than other sectors in terms of their environmental impacts and the resultant pres-
sures that encourage these types of industry to demonstrate their environmental
credentials and risk management. In terms of <IR> reporting, it is crucial that this
inherent risk and importance of the wider environment to the long term strategy of
the organisation is adequately explained, and the higher than average number of
recognitions suggests that these firms are engaged in this agenda.
Table 6 shows the relative results by geographical region. This table illustrates
that whilst the largest number of organisations recognised emanate from Europe,
Table 6 Number of firms, average recognitions and ESG disclosure scores by geographic region
Number Average Average Average Average Average
of firms recognitions ESG ENV SOC GOV
Africa 22 2.95 41.35 29.98 48.39 58.70
Asia 17 1.35 38.05 32.08 37.02 52.03
Australasia 3 3.67 49.00 40.89 56.12 59.82
Europe 59 1.76 46.06 38.24 48.99 60.30
North 6 1.50 41.34 33.24 45.49 56.45
America
South 4 2.25 43.21 38.01 51.54 46.21
America
111 1.99 43.62 35.45 47.14 57.99
they are not the most recognised overall. Since <IR> has been made mandatory for
listed companies in South Africa since 2010, it is not surprising that there are many
recognised organisations in the African region, and indeed by having to report in
this way has necessarily caused firms to develop both their understanding
of <IR> but its implementation and reporting. This experience shows in the higher
than average number of recognitions; in most areas (except environmental), these
African organisations also present higher than average ESG (combined and indi-
vidual) scores also. Again, this could be a reflection of their greater recognition of
wider stakeholders and the need to address them in their reporting. The Australasian
region, whilst having only three organisations in the sample scored both highest in
terms of recognitions but also above average in ESG individual and combined
scores. Again this is possibly the result of integrated thinking addressing the needs
of the wider stakeholders in the organisation, and being able to demonstrate that to
investors through their reporting. The weakest scoring region was Asia, followed by
North America. Whilst firms in these areas are being recognised at an individual
level for their <IR>, their ESG scores also appear among the weakest; perhaps
demonstrating a lack of engagement with the wider stakeholder agenda relative to
other regions; an observation which has been found in other research (de Villiers
et al. 2014).
The first observation in Table 7 which shows the results of regressing ESG
against Recognition and vice versa is that there is no apparent relationship between
the two: in other words, highly scored ESG activities do not appear to result in
highly regarded <IR> reporting and highly regarded <IR> reporting does not result
in improved ESG scoring. This hence means that H1 and H2 hypotheses are
rejected. Whilst a good quality <IR> report may address the greater interconnec-
tivity between the strategy and multiplicity of elements present in business, this
does not appear to be reflected in an improved rating in the overall firm ESG
performance.
Hence it would appear that reporting on what the management deem the most
important business issues and risks (beyond simply the financial) as per the ethos
of <IR> is not recognised by the ratings firms such as that used by Bloomberg for
152 E. Conway
Table 7 Regression results Recognition ESG

of recognitions versus ESG
ratings and ESG ratings ESG 0.002
versus recognitions –0.003
Recognition 0.34
–0.474
TypeUnlisted −0.815** −0.694
−0.345 −4.119
RegionAsia −1.227*** −4.488
−0.24 −2.902
RegionAustralasia 0.504 9.522**
−0.315 −3.736
RegionEurope −1.225*** 5.785***
−0.15 −1.857
RegionNorth America −3.504*** −9.317
−0.48 −5.932
RegionSouth America −0.907*** 7.465**
−0.286 −3.419
EMPS 0 −0.00001
0 −0.00001
DEBTEQY −0.0001 −0.013***
−0.0003 −0.004
INDCommunications −0.918*** 1.533
−0.266 −3.186
INDConsumer, Cyclical −0.123 −4.357*
−0.221 −2.617
INDConsumer, Non-cyclical −0.552*** −3.794*
−0.179 −2.141
INDDiversified −1.906*** 7.523
−0.518 −6.217
INDEnergy 0.244 8.159***
−0.254 −2.999
INDFinancial 0.31 −2.183
−0.19 −2.264
INDIndustrial −0.970*** −1.986
−0.201 −2.436
INDTechnology −0.024 −10.617***
−0.292 −3.451
INDUtilities −0.265 0.794
−0.239 −2.848
CFOPS 0 0.0001
0 −0.0001
ROA 0.035*** −0.059
−0.007 −0.087
(continued)
Table 7 (continued) Recognition ESG

TOTASST 0 0.00001***
0 0
ACSTDIAS/IFRS 0.964* 6.217
ACSTDUS GAAP 3.152*** 13.665
−0.688 −8.298
AUDAZSA −1.504*** −1.609
−0.556 −6.643
AUDDeloitte −1.876*** −7.295
−0.511 −6.131
AUDERNSTYOUNG −2.020*** −2.020***
−0.536 −6.437
AUDGRANT THORNTON −1.960*** −22.381***
−0.689 −8.193
AUDKPMG −1.253** −7.897
−0.511 −6.094
AUDPWC −1.311** −9.309
−0.519 −6.188
INV 0.00001 0.001***
−0.00002 −0.0002
CHGTANG −0.009 −6.904*
−0.325 −3.855
CHGINTANG −0.002 −0.01
−0.002 −0.024
Constant 3.547*** 43.165***
−0.767 −9.111
Observations 666 666
R2 0.387 0.211
Adjusted R2 0.35 0.163
F Statistic (df = 38; 627) 10.438*** 4.407***
Note *p < 0.1, **p < 0.05, ***p < 0.01
measuring ESG. This may suggest that these reports too brief or too interwoven
with strategy for the ESG elements to be assessed by the ratings firms. It is also
possible that the <IR> reports themselves address issues outside that which is
measured under ESG by such firms, perhaps tending to focus on strategy and future
thinking, rather than the traditional historic reporting on which a lot of ESG data is
based, since it would clearly be inappropriate to rate a firm on its intentions rather
than its actions.
Equally, having a higher score for ESG which is aimed at evaluating the ability
of the firm to address more than purely financial figures does not get reflected in
154 E. Conway
the <IR> reports. Again, this could be a reflection of the way in which ESG data is
collected and how <IR> is reported. Whilst there is no suggestion that there is a
complete overlap between ESG rating and <IR>, as per the earlier discussion, it is
perhaps surprising that there is not at least a small link between the two. This is
especially unexpected given the theory that companies who engage well in ESG
tend to be better managed (Waddock and Graves 1997) and <IR> is again expected
to reflect a more engaged and joined up (integrated) thinking from management
across the plethora of business issues, not just the financial (Churet and Eccles
2014).
The results of the regression did indicate other factors which have some apparent
influence on the number of times a firm’s <IR> may be recognised. The require-
ment for South African companies (which make up the majority of the Africa
sample) to practice <IR> in years since the end of 2010 does appear to mean that
their reports are recognised more frequently than those of some other regions, for
which there are some negative and significant results (e.g. Asia, Europe and North
America (Africa is the default region against which the other regions are assessed in
the regression)). As was seen from the earlier analysis in Table 5, whilst there are
more European companies being recognised for good <IR>, African companies
still tend to perform better over the 6-year period. Whether this will later change as
other companies learn from these exemplars and build on this best practice in the
coming years as more companies adopt <IR> remains to be seen. One criticism
of <IR> is that there are no ‘rules’ dictating what should be covered in the reports,
only guidelines. Whilst advocates (including the IIRC) state that this is because
each company is different and has its own issues which it should choose to
emphasise in its reporting, critics of this lack of rules state that this leads to a lack of
comparability (IIRC 2013a) and standardisation. Perhaps by building on the
experience of the exemplar companies in this study as more firms choose to
adopt <IR>, a form of best practice may well emerge over time.
Other influences for gaining recognition appear to be size as expressed by total
assets (positive and significant) and return on assets (ROA) (positive and signifi-
cant). This is perhaps not surprising in a sense, since few small companies have
adopted <IR>, although even amongst those who have adopted it, it appears the
larger companies (with more resource, in terms of asset or returns) have been able
to invest in good quality <IR> which is recognised. It could also be argued that
these larger companies are more visible to investors and other stakeholders, which
may render them more likely to scrutinised than smaller ones.
There are also a few industry effects, such as Communications, Consumer
Non-cyclical, Industrial and Diversified, relative to the default industry sector of
Basic Materials. As there was only one company in the Diversified sector, it is not
possible to draw any meaningful conclusions with regards to this finding. However,
it would appear that the firms in the Basic Materials industry sector are more likely
to produce exemplary <IR>. This is possibly because of their visibility in terms of
impact on the broader environment and necessity to ‘manage’ investor perceptions
of their governance around it.
Other variables, such as the number of employees (another reflection of size),

cash flow from operations, inventory or changes in tangible and intangible assets
did not appear to affect the recognition of the firm’s <IR>.
The R squared of this first model is reasonably high at 0.387, since some
authors, such as Falk and Miller (1992) regard a value of at least 0.10 for the
construct to be adequate and Cohen (1998) suggests 0.13 or above to be a moderate
level of explanation of variance within a model. Other authors regard higher levels
of R squared such as above 0.19 (Chin 1998) or 0.25 (Hair et al. 1998) to provide a
weak explanatory power only. What this level of R squared does indicate is that
there are other factors which influence whether or not a company may be recog-
nised for producing good <IR>. These factors may include the quality of the
management team, the composition and skills of the board and, given the com-
petitive nature of being recognised for an award (although less so for those firms
who were recognised through a benchmarking process), sheer luck. However, this
study has not used any ranking of firms as to whether they won first prize or third
prize in any awards, only that they were recognised for being particularly good
examples of <IR> according to the measures in the awarding process. Hence by
using a wide range of different awarding and benchmarking recognising bodies over
a number of years, being recognised for exemplary reporting, for example, for
providing the information required in the spirit of <IR> should indicate reporting
quality. For example, as reported in the Barth et al. study (2016), the EY awards,
although they have changed slightly over the course of the years of their awards,
have a robust method (normally proprietary, but disclosed to the authors of the
Barth et al. study) to assess reporting quality.
Looking at the influence on ESG scores (ESG) in Table 7, as noted earlier,
exemplary <IR> does not appear to affect ESG scores. Influencing variables for
good ESG include being larger as expressed by total assets and some regions are
also more likely to have higher ESG scores, such as Australasia, Europe and South
America. This could reflect the relative maturity of ESG in different regions, or
indeed a lack of information for the raters to assess ESG performance in some
countries. Whilst the primary source of data for ESG ratings comes from public
sources, such as corporate reports, there is still some individual contact between the
rating firms and the individual firms, and the quality and quantity of these responses
will undoubtedly affect the scoring in some way.
There were also some industries which tended to have differing ESG scores,
relative to the default industry of Basic Materials, such as Cyclical and Non-cyclical
Consumer (negative and significant effects) and Energy (positive and significant to
p < 0.01). This finding is also supported in other literature where some industries
(like Basic Materials and Energy sectors) are more visible on key issues such as the
environment and hence are more subject to environmental legislation than other
sectors, who can score a much more limited rating on such issues as their impacts
are by the nature of their industry, much lower.
One intriguing finding from this model is that having the financial reports
audited by certain auditors appears to have a negative effect on ESG. Whilst many
sustainability and similar non-financial reports are in the main not audited and
156 E. Conway
Table 8 Regression results of recognitions versus sub-component ESG ratings (Environmental,

Social and Governance)
ENV SOC GOV
1 2 3
Recognition 0.265 0.25 0.497
−0.502 −0.563 −0.532
TypeUnlisted −2.834 5.626 −2.174
−4.358 −4.885 −4.616
RegionAsia −1.113 −10.381*** −5.041
−3.07 −3.442 −3.252
RegionAustralasia 14.278*** 9.448** 1.213
−3.953 −4.431 −4.187
RegionEurope 7.792*** 3.928* 3.538*
−1.964 −2.202 −2.081
RegionNorth America −14.179** −0.947 −4.026
−6.276 −7.036 −6.648
RegionSouth America 13.530*** 10.049** −8.515**
−3.618 −4.055 −3.832
EMPS −0.00001 0 0
−0.00001 −0.00001 −0.00001
DEBTEQY −0.013*** −0.012** −0.015***
−0.004 −0.005 −0.005
INDCommunications −1.622 9.229** −0.513
−3.371 −3.779 −3.571
INDConsumer, Non-cyclical −5.06 −0.936 −4.025*
−2.264 −2.539 −2.399
INDDiversified 5.49 16.437** 3.352
−6.577 −7.373 −6.967
INDEnergy 12.036*** 12.095*** −4.736
−3.173 −3.557 −3.361
INDTechnology −13.828*** −3.474 −10.650***
−3.651 −4.092 −3.867
INDUtilities 1.56 6.535* −6.895**
−3.013 −3.378 −3.192
CFOPS 0.0001 0.0001 0.0001
−0.0001 −0.0001 −0.0001
ROA −0.044 −0.154 0.0003
−0.092 −0.104 −0.098
TOTASST 0.00001*** 0 0
0 0 0
ACSTDIAS/IFRS 10.434 12.960* −10.296
−6.68 −7.488 −7.075
(continued)
Table 8 (continued)
ENV SOC GOV
1 2 3
ACSTDJP GAAP 5.638 17.230** −10.175
−7.713 −8.647 −8.17
ACSTDLK GAAP 12.46 19.924** −7.842
−8.615 −9.658 −9.126
AUDERNSTYOUNG −13.558** −13.558** 4.425
−6.81 −7.635 −7.214
INV 0.001*** 0.0003 0.0004
−0.0003 −0.0003 −0.0003
CHGTANG −7.500* −8.348* −3.774
−4.078 −4.572 −4.32
CHGINTANG −0.005 −0.025 −0.006
−0.025 −0.028 −0.027
Constant 38.091*** 31.332*** 66.942***
−9.639 −10.806 −10.21
Observations 666 666 666
R2 0.3 0.18 0.137
Adjusted R2 0.257 0.13 0.085
F Statistic (df = 38; 627) 7.064*** 3.613*** 2.616***
Note *p < 0.1, **p < 0.05, ***p < 0.01
therefore at first sight the link between auditor and ESG rating may not appear an
obvious one, being audited by a certain auditor (usually the big 4 of PWC, Ernst
and Young, Deloitte Touche and Tohmatsu or KPMG) is sometimes seen as a
proxy for reporting quality in many studies. Therefore, this might infer that if the
financial reports are of ‘good’ quality, then the other non-financial reports on which
a lot of the ESG rating will be derived from, should be also of ‘good’ quality
(whether audited or not) and a reasonable reflection that the firm actually does what
it says it does in ESG areas (rather than ‘greenwashing’). Hence one might expect
to see that reflected in higher ESG scores. Equally, as one determinant of ESG is
governance, one might anticipate that a board which reports using a big 4 auditor
should operate to higher governance standards than one that does not, and hence see
that filter through to a higher ESG score. The sub-components of ESG such as
governance are regressed in further models below.
The R squared of this second model is weaker at 0.211 than the first model,
hence suggesting the overall variance of the fit and hence explanatory power of the
model is weaker and therefore there are additional variables not captured in this
model which have an influence on ESG scores.
The explanatory power of the next three models as presented in Table 8 vary
from 0.137 (Governance), 0.18 (Social) and 0.3 (Environmental), which again
suggest the lack of all explanatory variables in the models concerned. These models
158 E. Conway
take each of the three subcomponents of ESG, Environmental (ENV), Social

(SOC) and Governance (GOV) and assess whether they influence the
good <IR> reports.
In many ways, these models reflect similar relationships to the combined ESG
score as discussed above. There are some differing regional and industry differences
which affect whether or not a firm may produce exemplary <IR>, but none of the
sub-components appear to impact on <IR>. This is perhaps not surprising since by
definition each of the sub-components are focused on only one facet of the business
(albeit they individually can address a number of key issues within that focus),
whereas ‘good’ <IR> is supposed to address the multi-faceted nature of the whole
business.
Additional models were also estimated, such as assessing whether
good <IR> affects the individual subcomponents of ESG, but there was no sig-
nificant change in the results and hence for brevity the full results table has not been
included in this chapter.
7 Additional Empirical Approach: Necessary Condition

Analysis
It is thus far evident that being a producer of exemplary <IR> does not appear to
affect ESG scores and having good ESG scores does not appear to suggest that
organisations would be likely to produce exemplary <IR> as the approaches to
reporting required are too different. One final piece of analysis was carried out to
test whether, whilst not causal in nature, one is a necessary precondition for the
other, otherwise known as necessary condition analysis (NCA).
This novel methodology pioneered by Dul (2016), utilises a conventional
scatterplot between two variables (although multivariate models are also possible)
to determine whether one variable (being an exemplar in <IR>) is a necessary
condition for the other (higher ESG scores). The inference is not that that condition
(being good at <IR>) is the only condition necessary to increase ESG scores, but
that it is nonetheless necessary: indeed one could argue that low R squared metrics
suggest other variables may be required for better explanatory power in any case.
Each dot in the scatterplot corresponds to an observation in the data, but what NCA
does is to look for the existence and size of the empty space in the upper left-hand
corner of the scatterplot. The inference is that the empty space indicates that Y is
constrained by X, and that X constrains Y (Dul 2016).
In order to calculate the size of any effect, NCA draws a ceiling line at the top of
the scatterplot where there are no longer any observations called the ‘ceiling zone’
(Dul 2016). The size of this ceiling zone relative to the rest of the scatterplot is a
measure of the effect size. The larger the empty space in comparison with the rest of
the scatterplot, the larger the effect size of the necessary condition.
Fig. 2 Necessary condition analysis scatterplot of ESG score versus number of recognitions (Dul
2016)
In terms of the relationship between exemplary <IR> and ESG scores as can be
seen in Fig. 2, the effect size is 0.01 which is a very small effect. Therefore
exemplary <IR> is not a necessary condition for increased ESG scores (which is
perhaps quite intuitive) but neither is having good ESG scores necessary to produce
exemplary <IR>, hence confirming the view that the two approaches to corporate
reporting are totally different.
8 Conclusion
Whilst the direction of travel is for more companies to engage with <IR> and
indeed report on ESG issues, whilst there are apparent overlaps between them, there
appears to be no improvement of ESG scores in companies who produce
exemplary <IR> reports, nor an increased ESG score resulting from a higher
quality of <IR> reports produced.
Clearly, <IR> and ESG reporting have evolved from different perspectives and
origins, <IR> being more overtly targeted at the ‘capital providers’ of the organi-
sation, whereas ESG reporting has evolved to address concerns from a broader
stakeholder standpoint. That said, there is clearly much overlap between <IR> and
ESG reporting. Indeed, as noted by the IIRC, ‘an integrated report provides insight
into the organisation’s relationships with its key stakeholders and how and to what
extent the organisation understands, take into account and responds to their needs’
(IIRC 2011 p. 13).
Where <IR> does differ from ESG reporting is in the scope (including materi-
ality), system boundary, emphasis on a longer time frame, interconnectedness
160 E. Conway
between capitals with the underpinning of a longer term strategic focus. The aims of
both <IR> and ESG reporting are not dissimilar, in that they both extend the scope
of financial reporting beyond the purely financial. This broadening of scope has
made a genuine improvement to corporate accountability (Adams 2015a, b;
International Integrated Reporting Council 2013). It really is perhaps then this
‘integrated’ emphasis and integrated thinking approach of <IR> which sets it apart
from conventional financial reporting and which is the unique success factor for
organisations which have embraced it.
In a sense, the findings from this research are positive, since those organisations
who have not yet adopted <IR> are not prevented from improved ESG ratings just
because they have not produced either an exemplary integrated report, and one is
not a prerequisite for the other. Whilst there are apparent financial benefits from
adopting <IR> (Barth et al. 2016), organisations can still leverage their ESG
activities to improve their ratings should they wish to do so. However, clearly the
direction of travel for corporate reporting is for more narrative explanation about
the organisation, with possibly fewer metrics (unless material to the organisation’s
long term value creation). Without some guidelines, it is clear that organisations
will struggle to make large changes to adapt to newer forms of corporate reporting,
as many have done through the adoption of <IR> (International Integrated
Reporting Council 2013), but hopefully by highlighting the activities of the
exemplary integrated reports, this process will be improved by those using such
reports as benchmarks.
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A Content Analysis of CSR Research
in Hotel Industry, 2006–2017
Abdul Moyeen, Shahnawaz Kamal and Mohammad Yousuf
Abstract Despite the progress of the field of corporate social responsibility

(CSR) in recent decades, the knowledge of CSR has been very limited in hospitality
and tourism industry in general and in hotel industry in particular. A literature
search revealed that scholarly research in the area of CSR in hotel industry began in
mid-2000 and it has grown in recent years. However, there has been no review of
literature conducted covering CSR issues exclusively in hotel industry. Given the
growth of publications in CSR research in hotel industry, it was felt that a content
analysis of research would be valuable to scholarship. The present study aims to
contribute to this end by presenting a review of articles published in scholarly
journals until mid-2017. The findings suggest that the initial focus of CSR research
in hotel industry was in the area of CSR practices (economic, social and environ-
mental), impact and importance of CSR, perceptions of CSR by consumers and
managers. Interestingly, with the growth of research in recent years, the focus has
shifted more towards CSR communication/reporting, green/environmental respon-
sibility and sustainability area. This paper is perhaps the first content analysis of
CSR research in hotel industry—an industry that is often blamed for irresponsible
use of environmental resources and hence responsible for environmental
un-sustainability. It is envisaged that this paper will stimulate further research into
CSR in hotel industry and therefore to contribute to advance the field.
Keywords Corporate social responsibility (CSR) Hotel industry

Content analysis CSR in hotel industry
A. Moyeen (&) M. Yousuf

Federation University Australia, Ballarat, Australia
S. Kamal
World University of Bangladesh, Dhaka, Bangladesh

164 A. Moyeen et al.
1 Introduction
Whilst the focus of corporate social responsibility (CSR) studies have prominently
been in the area of generic management (Basu and Palazzo 2008; Gjølberg 2009),
the knowledge of CSR has been very limited in hospitality and tourism industry in
general and in the hotel industry in particular. Although CSR seems to be a fairly
new area in hospitality research, a growing interest in CSR research within the
hospitality and tourism industry has been emerged over the last few years
(Bohdanowicz et al. 2011). The interest in CSR has risen due to the increased
expectations and awareness of various stakeholders of the responsibility the hos-
pitality industry could discharge particularly in improving the natural environment
or at least by reducing the degradation of it.
The hotel industry is one of the world’s fastest growing sectors and a key
contributor to the growth of tourism business globally (de Grosbois 2012). Whilst
the hotel industry contributes significantly to global economy by supporting the
leisure and business travel and creating employment opportunities; the industry is
often blamed for imposing numerous negative impacts on the natural, social and
economic environments (de Grosbois 2012). Kirk (1995) further argued that many
hotels in major cities are situated near cultural or natural heritage sites. These hotels
attract increasing number of travellers, which often poses additional risk of
increasing ecological footprint.
As per the ‘product service continuum’ suggested by Lundgren (1995), hotel is
perceived to be an industry that does not cause recognisable air and/or water
pollution in the way that a conventional factory/plant (such as coal) does. The
perception that the hotel industry causes only little or no harm to the natural
environment, thereby having no major risk for sustainability, may have played a
role in placing little emphasis on hotel industry in academic and policy research.
Despite this perceived role of hotel industry in comparison with other
heavy-pollution causing sectors such as mining, chemical and manufacturing;
policy makers and other stakeholders in recent times has demonstrated growing
interest in CSR and sustainability strategies that the hotel companies are adopting to
mitigate their negative impacts to the economy, society and natural environment (de
Grosbois 2012). Further, with the emergence of environmentally conscious clients
groups (Kang et al. 2012), the hotel/tourism industry now encounters additional
challenges to attract these customer groups and satisfy their social and environ-
mental demands (ETN 2009).
Given the economic and social importance of the hotel industry and the
emerging challenges that the industry is encountering in mitigating environmental
risk as well as attracting and satisfying emerging group of environmentally con-
scious clients many hotel companies have now appeared to integrate CSR in their
business strategies and report the initiatives and performance of their CSR/
sustainability-related activities to various stakeholder groups. Academic research
investigating CSR practices and issues by hotel companies has also been on the rise
in recent years (for example, Kang et al. 2012; Xiao et al. 2017; Zizka 2017).
A Content Analysis of CSR Research in Hotel Industry, 2006–2017 165
Despite the growth of publications in the area of CSR, no review of literature has
yet been conducted covering CSR issues exclusively in hotel industry. Hence, it is
felt that a content analysis of research would be valuable to scholarship. The present
study aims to contribute to this end by presenting a review of articles published in
scholarly journals until mid-2017.
2 Literature Review
Over the last few decades, governments, academics and various stakeholders and
pressure groups have demonstrated growing concern about the social and envi-
ronmental impact of human action in general and business operations in particular.
This concern and resulting awareness of various groups including businesses
themselves has influenced the idea of sustainability and its three pillars of eco-
nomic, environmental and social action receiving wider public support. It is
important that the businesses recognise their social and environmental responsi-
bilities, integrate strategies to mitigate negative impacts of their operations, and
positively contribute to improve the economic, social and environmental conditions
(Juholin 2004). Accordingly, businesses now consider the importance of social and
environmental impact of their operations, integrate CSR into their business process,
engage with local communities, extend their support to various global initiatives,
build partnerships with various multilateral and bilateral development agencies
and report their social and environmental performance (Fryans 2005; Zu and
Song 2009).
It is now widely accepted that businesses must remain competitive, while, at the
same time, they should be acting in a socially responsible way to benefit the larger
society (Rodriguez-Fernandez 2016). Accordingly, one major issue in CSR and
sustainability discourse today is about how businesses can integrate CSR in a
strategic and planned manner considering its impact on all three pillars of sus-
tainability (Wang et al. 2016). In supporting businesses’ to achieve their economic,
social and environmental goals, a number of frameworks and guidelines have been
developed in recent years (de Grosbois 2012).
Although there is now an extensive CSR literature, a conclusive definition of the
concept of CSR is yet to emerge. Various terms have been used to capture the
meaning of CSR. They include corporate citizenship, corporate sustainability or
social responsibility of business. The popular but early belief that implies CSR
largely as the voluntary and philanthropic contributions has significantly changed
over time (Meehan et al. 2006). CSR conceptualizations have been largely influ-
enced by stakeholder theory (Freeman 1984), which suggests that companies have
an obligation to try to satisfy the expectations of a wide group of stakeholders. The
European Commission’s definition that views CSR as ‘a process to integrate social,
environmental, ethical, human rights and consumer concerns into their business
operations […] with the aim of maximizing the creation of shared value for
their owners/shareholders and for their other stakeholders and society at large’
(European Commission 2011), aligns perfectly with the stakeholder theory

approach that considers CSR as an extension of corporate governance, whereby a
business is expected to perform duties to a broader group of stakeholders
(Theodoulidis et al. 2017). Further, with the recognition of contribution that CSR is
intended to make in addressing social, economic and environmental problems, CSR
can be viewed as a vehicle for sustainable development (Moyeen 2018).
As a multidimensional construct (Dahlsrud 2008), CSR is often cited as ‘the
continuing commitment by business to behave ethically and contribute to economic
development while improving the quality of life of the workforce and their families
as well as of the local community and society at large’ (WBCSD 1999, p. 3). This
view has widened the scope of CSR by toning down its unwarranted focus on
philanthropic responsibility—which many consider as a desirable business
responsibility today - and established that CSR is an integral part of sustainable
development. As per this view, CSR is categorised into the same three main
dimensions of sustainable development as environment, economy, and society.
Whilst several attempts were made to narrate what constitutes CSR activities in the
management literature (e.g. Carroll 1979; Wood 1991), very little progress is made
in this regard within the hospitality context (Levy and Park 2011). Accordingly,
CSR researchers in hospitality and tourism industry are reliant to use the main-
stream CSR concepts and frameworks in conducting their research.
The hospitality is developed as one of the largest and fastest growing industry in
the world (Choi et al. 2009; de Grosbois 2012). Earlier estimates indicated that the
hospitality industry employed 120 million employees and earned revenues
exceeding $3.8 trillion (Enz and Siguaw 1999; Goodman 2000). More recent data
show that as the largest service industry, directly and indirectly hospitality con-
tributes around 9% of the world’s GDP (UNWTO 2015).
Although early examples of CSR in different forms were evident in various
writings, Carroll (1979) argued that the modern age of CSR only began in 1953.
Whilst much of the research on CSR has covered issues relating to generic man-
agement (Basu and Palazzo 2008; Gjølberg 2009), and in so-called heavy-polluting
industries such as mining, chemical or manufacturing (Garay and Font 2012);
research interest in issues relating to CSR in hospitality industry has grown in the
last few decades. Despite the potential value that the industry can add to local
destinations, the hospitality industry, particularly the hotel industry can also have
enormous negative social and environmental impacts. The hotel industry is being
criticised, for example, for their irresponsible consumption of environmental
resources (such as water) and imposing of numerous impacts on the natural, social
and economic environments, including contribution to climate change; air pollu-
tion; noise pollution; biodiversity loss; waste generation; and other social and
economic issues (de Grosbois 2012). Due to such criticism, the industry now
encounters challenges in satisfying a growing group of environmentally conscious
clients (ETN 2009). In addressing such challenges, many businesses in this industry
have integrated CSR in their business strategies and reported the practices and
outcomes of their CSR programs.
Academic interest has been increased in recent years in investigating various

CSR issues and topics relating to hospitality industry (for example, da Silva et al.
2014; de Grosbois 2012; Kasim 2007). Research suggests that CSR adoption by
hotel industry is driven by factors such as profit motives, brand positioning, ethical
considerations of managers and owners, stakeholders’ pressure and employee
relations (e.g. Butler 2008; Han et al. 2011; Tzschentke et al. 2008). The CSR
research in hotel industry focused on various issues such as customer’s and man-
agerial perceptions of hotel industry’s CSR activities, particularly of their envi-
ronmental practices (Kang et al. 2012; Xiao et al. 2017; Holcomb and Smith 2015;
Njite et al. 2011; Choi et al. 2009), importance of CSR (Bohdanowicz and Zientara
2009; Boluk 2013; Kasim 2007; Radwan 2015), its reporting and communication
(de Grosbois 2012; Zizka 2017), green practices (Kasim 2007; Kleinrichert et al.
2012; Lin 2016; Robin et al. 2017), and challenges to implementation of CSR
(da Silva et al. 2014). Despite the growth of publications in the area of CSR in
tourism industry and particularly in hotel industry, no review of literature has yet
been conducted covering CSR issues exclusively in hotel industry. Hence, it is felt
that a content analysis of research would be valuable to scholarship. The present
study aims to contribute to this end by presenting a review of articles published in
scholarly journals until mid-2017.
3 Research Method
Suitability of certain research method depends on the research aims and objectives
(Jennings 2010). This research adopts content analysis technique for reviewing the
existing research articles on CSR focusing on the hotel industry. Content analysis is
a systematic method of coding published information into various groups based on
preselected criteria (Guthrie et al. 2004). Disaggregating of data into different
groups helps to identify any significant pattern and can provide new insights and
practical understanding. This research selected summative content analysis as being
appropriate content analysis technique. The summative content analysis is a flexible
approach and unlike other content analysis technique (such as manifest, conceptual
and relational) focusing on an understanding of the underlying perspective of the
pattern emerged from the contents (Hsieh and Shannon 2005).
This research used ‘Google Scholar’ (GS) to identify the related articles. GS has
the largest database of published materials and also easy to access (Kousha and
Thelwall 2007). Moreover, it has been used as a data source in a number of other
content analysis (Griffin 2013; Xiao and Smith 2008; Yousuf and Backer 2015).
Different keywords were used but the keyword ‘CSR in hotel industry’ generated
the highest number of search results. However, this study collected data only
published in the hospitality and tourism journals and GS returned 242 articles.
However, 33 articles that met the following criteria included in the study:
1. CSR had to be the focus of the study. Studies that merely mentioned or dis-
cussed the CSR concept or considered it as one of many variables were not
included.
2. Only peer-reviewed journals were included
3. Only articles that were available online and accessible.
4. The articles written in English.
The use of the above selection criteria provided consistent coding of data and
helps maintaining face and content validity of data. The progression of CSR
research in hotel industry is tapped through recording the number of publications in
different years. The topic of interest was identified based on the CSR elements
covered by the studies. For example, any study that focused on the CSR programs
and initiatives in the hotel industry were categorised as ‘CSR practices’. Likewise,
studies that looked at reporting and communication of CSR programs adopted and
outcomes of the programs were considered under ‘CSR communication and
reporting’. MS Excel 2010 software was used for data entry and analysis purpose.
The frequencies of the number of publication by year, topic of interest and by
research method were calculated, and the findings are presented in tables and
graphs.
Table 1 presents the categorisation of articles reviewed according to the topic of
interests identified.
4 Results and Discussion
As mentioned previously in the method section, the journal articles that were
published until July 2017 and that met the inclusion criteria for this study were
identified, and accordingly, 33 journal articles were selected. Table 2 presents the
details of the articles included in this research. The extent of progress of CSR
research relating to hotel industry is presented through disaggregating the 33
selected articles by their year of publications (Fig. 1). Following this, Table 3
presents the pattern of CSR research that has been evolved over the years, while
Table 4 indicates the research approach adopted in CSR studies in hotel industry.
4.1 The Progression of CSR Research in Hotel Industry
As can be seen from Fig. 1, articles on hotel industry CSR was very limited during
the early years (2006–2008). Gradually, it gained increased attention by the aca-
demics, which was evidenced by the number of journal publications in 2009. The
positive trend of publications continued with some variations until 2017, when it
reached to the highest in number in any given year, with a total of six publications
in the first half of 2017. This data may indicate the potential for further growth of
Table 1 Classification of Studies According to the Topic of CSR Research Identified

Topics of CSR Research Narration of Topics
CSR Practices CSR practices (also includes social entrepreneurship)
Impact and Importance of CSR Hotel companies’ (including ‘Fair Hotels’ scheme) role
in improving the quality of life of local communities and
the well-being of their employees
Green (environmental) practices Wider adoption of environmental responsibility/green
practices and communication
Consumer Perception of CSR Consumers’ perception about the importance of various
dimensions of CSR (economic, legal, ethical
philanthropic, environmental) and their willingness to
pay for environmentally responsible behaviour
Hotel Managers/Owner’s Hotel managers’ (and owners) perceptions of company’s
Perceptions of CSR CSR culture, and motivations and ways of CSR
engagement
CSR Communication and The methods, degree of information, and the audiences
Reporting targeted in communicating/reporting CSR activities
Sustainability Innovation- Sustainability adoptions, innovations and eco-friendly
Sustainable Development hotels
Challenges for the Practices of Challenges in developing an organisational culture for
CSR the practices of CSR
Consumer responses to Consumer response to discontinuation of CSR activities
discontinuation of CSR by hotels
CSR Decision-Making Process The decision-making processes of managers in small-
and medium-sized enterprises toward CSR
Stakeholder’s Roles/Initiatives in Stakeholders-broadcasting role and initiatives in
Promoting Rural Tourism promoting rural tourism and thereby sustainable
development
CSR and Financial Performance Relationship between stakeholder management,
expressed as CSR activities, firm strategy and Corporate
financial performance (CFP)
Sustainable Behaviour and Sustainability (triple bottom line) and potential
Competitiveness synergetic benefits for competitiveness
CSR research in hotel industry in future. Of note, the tourism and hospitality
journals are identified as the major vehicles for publishing CSR research relating to
hotel industry. The absence of mainstream CSR/Sustainability journals such as
Journal of Business Ethics or Social Responsibility Journal in publishing CSR in
hotel industry related articles may, therefore, contributed to the limited advance-
ment of the field (Table 2).
Table 2 Articles Focusing CSR Issues in Hotel Industry

Year Authors Article Journal
2006 Kasim, A. The need for business International journal
environmental and social of hospitality &
responsibility in the tourism tourism
industry administration
2007 Kasim, A. Towards a wider adoption of International Journal
environmental responsibility in of Hospitality &
the hotel sector Tourism
Administration
2008 Bohdanowicz, P., & Corporate social responsibility in Scandinavian Journal
Zientara, P. hospitality: Issues and of Hospitality and
implications. A case study of Tourism
Scandic
2009 Gard McGehee, N., Corporate social responsibility Journal of Hospitality
Wattanakamolchai, S., within the US lodging industry: & Tourism Research
Perdue, R. R., & Onat An exploratory study
Calvert, E.
2009 Bohdanowicz, P., & Hotel companies’ contribution to Tourism and
Zientara, P. improving the quality of life of Hospitality Research
local communities and the
well-being of their employees
2009 Choi, G., Parsa, H. G., Consumers’ environmental Journal of Quality
Sigala, M., & Putrevu, S. concerns and behaviours in the Assurance in
lodging industry: A comparison Hospitality &
between Greece and the United Tourism
States
2009 Han, H., Hsu, L. T. J., & Empirical investigation of the International Journal
Lee, J. S. roles of attitudes toward green of Hospitality
behaviours, overall image, Management
gender, and age in hotel
customers’ eco-friendly
decision-making process
2010 Holcomb, J., Okumus, F., Corporate social responsibility: Worldwide
& Bilgihan, A. what are the top three Orlando Hospitality and
theme parks reporting? Tourism Themes
2011 Levy, S. E., & Park, S. Y. An analysis of CSR activities in Journal of Hospitality
the lodging industry and Tourism
management
2011 Ergul, M., & Johnson, C. Social entrepreneurship in the Consortium Journal
hospitality and tourism industry: of Hospitality &
an exploratory approach Tourism
2011 Njite, D., Hancer, M., & Exploring corporate social Journal of Quality
Slevitch, L. responsibility: A managers’ Assurance in
perspective on how and why Hospitality &
small independent hotels engage Tourism
with their communities
(continued)
Table 2 (continued)
2012 Kang, K. H., Stein, L., Consumers’ willingness to pay International Journal
Heo, Y. J., & Lee, S. for green initiatives of the hotel of Hospitality
industry, Management
2012 Kleinrichert, D., Ergul, M., Boutique hotels: Technology, Journal of Hospitality
Johnson, C., & Uydaci, M. social media and green practices. and Tourism
Technology
2012 de Grosbois, D. Corporate social responsibility International Journal
reporting by the global hotel of Hospitality
industry: Commitment, initiatives Management
and performance
2012 Garay, L., & Font, X. Doing good to do well? International Journal
Corporate social responsibility of Hospitality
reasons, practices and impacts in Management
small and medium
accommodation enterprises
2013 Boluk, K. Using CSR as a tool for Journal of Quality
development: An investigation of Assurance in
the fair hotels scheme in Ireland Hospitality &
Tourism
2013 Jayawardena, C., Pollard, Trends and sustainability in the Worldwide
A., Chort, V., Choi, C., & Canadian tourism and hospitality Hospitality and
Kibicho, W. industry Tourism Themes
2013 Sandve, A. & Øgaard, T. Understanding Corporate Social Scandinavian Journal
Responsibility Decisions: Testing of Hospitality and
a Modified Version of the Theory Tourism
of Trying
2013 Ponnan, R. Broadcasting and socially Worldwide
responsible rural tourism in Hospitality and
Labuan, Malaysia. Tourism Themes
2013 Boley, B. B., & Uysal, M. Competitive synergy through Tourism and
practicing triple bottom line Hospitality Research
sustainability: Evidence from
three hospitality case studies
2014 Rosalind Jenkins, N., & Do hotel companies Worldwide
Karanikola, I. communicate their environmental Hospitality and
policies and practices more than Tourism Themes
independent hotels in Dubai,
UAE?
2014 da Silva, D. L. B., Ferreira, Corporate social responsibility Journal of Tourism
L. B., & da Cruz Andrade, (CSR) in the hospitality industry: and Hospitality
D. A. Challenges and practices in São Management
Luís, Maranhão, Brazil
2015 Hailu, F. K., & Practices and challenges of Journal of Tourism
Nigatu, T. F. Corporate Social Responsibility and Hospitality
(CSR) in the hospitality industry:
the case of first level hotels and
lodges in Gondar city, Ethiopia
(continued)
Table 2 (continued)
2015 Radwan, H. R. I. The Impact of Corporate Social International Journal
Responsibility on Employees in of Tourism &
the Hotel Sector Hospitality Reviews
2015 Holcomb, J. L., & Smith, Hotel general managers’ Tourism and
S. perceptions of CSR culture: A Hospitality Research
research note
2016 Fatma, M., Rahman, Z., & Measuring consumer perception Journal of Hospitality
Khan, I. of CSR in tourism industry: Scale and Tourism
development and validation Management
2016 Lin, S. S. Waste stream analysis of European Journal of
all-you-can-eat buffet restaurants Hospitality and
in tourist hotels–the study of the Tourism Research
influence of current restaurant
practices on their foodservice
waste
2017 Xiao, Q., Yoonjoung Heo, How do consumers’ perceptions Journal of Travel &
C., & Lee, S. differ across dimensions of Tourism Marketing
corporate social responsibility
and hotel types?
2017 Robin, C. F., Pedroche, M. Revisiting green practices in the Journal of Cleaner
S. C., & Astorga, P. S. hotel industry: A comparison Production
between mature and emerging
destinations
2017 Zizka, L. The (mis) use of social media to Journal of Hospitality
communicate CSR in hospitality: and Tourism
Increasing stakeholders’(dis)
engagement through social media
2017 Horng, J. S., Liu, C. H., From innovation to International Journal
Chou, S. F., Tsai, C. Y., & sustainability: Sustainability of Hospitality
Chung, Y. C. innovations of eco-friendly hotels Management
in Taiwan
2017 Theodoulidis, B., Diaz, D., Exploring corporate social Tourism
Crotto, F., & Rancati, E. responsibility and financial Management
performance through stakeholder
theory in the tourism industries
2017 Li, Y., Fang, S., & Huan, Consumer response to International Journal
T. C. T. discontinuation of corporate of Hospitality
social responsibility activities of Management
hotels
4.2 The Pattern of CSR Research in Hotel Industry
This study considered that the topic of CSR research and the incidence of inves-
tigation, rather than merely reporting the number of articles published, would be a
useful information for current and potential researchers intending to advance the
Number of Publications (n=33) 7
0
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Year of Publication
Fig. 1 CSR research in Hotel Industry Publications by Year
field of CSR in hotel industry. Overall, the analysis revealed that the majority of
articles focused on a single topic, while only six articles considered more than one
topic of CSR as their research focus. Table 3 presents the results by grouping the
years into two different periods: 2006–2011 and 2012–2017. The data indicates that
the major focus of CSR research in early stage centred on CSR practices by hotel
companies, followed by the importance and impact of CSR to the hotel industry and
the wider community, and the perception of consumers towards CSR practices/
responsible behaviour by hotels. Although the research interest largely remained the
same in the later stages, researchers in recent years, however, started demonstrating
their interest more towards environmental responsibility/green practices, CSR
reporting and CSR–financial performance relationship. The areas in which only a
limited interest was recognised include CSR decision-making process, role of
stakeholders in promoting local tourism, and sustainability practices-business
competitiveness nexus.
Table 4 presents the research approach that various CSR studies in hotel
industry adopted. The data reveals that most of the research integrated qualitative
approach in studying issues relating to CSR in hotel industry. This seemed to be
particularly true when the researchers intended to explore the practices of CSR
including environmental responsibility practices and the impact of CSR on local
communities. Given the CSR research in hotel industry is still undeveloped,
particularly in the area of environmental responsibility, it is expected that
researchers adopt a more in-depth approach for an overall knowledge development
in the field.
Table 3 The Evolution of CSR Topics of Interest

Topics of CSR 2006-2011 2012-2017 Total
Research Frequency % Frequency % Frequency %
CSR practices 5 41.7 6 22.2 11 28.2
Impact and 3 25.0 2 7.4 5 12.8
importance of CSR
Consumer perception 2 16.7 3 11.1 5 12.8
of CSR
Green 1 8.3 3 11.1 4 10.3
(environmental)
practices
Hotel managers’ 1 8.3 2 7.4 3 7.7
perception of CSR
CSR communication 2 7.4 2 5.1
and reporting
Sustainability 2 7.4 2 5.1
innovation/
Sustainable
development
CSR and financial 2 7.4 2 5.1
performance
Challenges for the 1 3.7 1 2.6
practices of CSR
Consumer responses 1 3.7 1 2.6
to discontinuation of
CSR
CSR decision-making 1 3.7 1 2.6
process
Stakeholder’s roles/ 1 3.7 1 2.6
initiatives in
promoting rural
tourism
Sustainable behaviour 1 3.7 1 2.6
and competitiveness
Total 12 100 27 39 100
5 Conclusions
As a content analysis paper, this research has contributed new insights and direction
for CSR research. This research has identified a burgeoning area of research related
to CSR. The content analysis of this research confirms that in comparison to the
mainstream research, CSR in hotel industry remains an under-researched area.
A total of 33 journal publications were identified across the entire period that CSR
research in hotel industry has been undertaken since its inception in 2006. Given the
increased recognition of hotel industry’s role in realising sustainability goals, the
number of CSR research in the hotel industry is still low compared to the research
Table 4 The Relationship between CSR Topics of Interest and Choice of Research Method
Topics of CSR Quantitative Qualitative Mixed
Research Frequency % Frequency % Frequency %
CSR practices 4 30.8 6 27.8 1 25
Impact and importance 4 18.1 1 25
of CSR
Consumer perception 4 30.8 1 4.5
of CSR
Green (environmental) 4 18.1
practices
Hotel managers’ 2 15.3 1 4.5
perception of CSR
CSR communication 1 7.7 1 4.5
and reporting
Sustainability 1 7.7 1 4.5
innovation/
Sustainable
development
CSR and financial 1 7.7 1 4.5
performance
Challenges for the 1 4.5
practices of CSR
Consumer responses 1 4.5
to discontinuation of
CSR
CSR decision-making 1 25
process
Stakeholders’ role/ 1 25
initiatives in
promoting rural
tourism
Sustainable behaviour 1 4.5
and competitiveness
Total 13 100 22 100 4 100
undertaken in the conventional ‘high-pollution’ causing’ sectors such as mining and

chemical industries. Although, a significant growth of CSR in hotel industry
research was observed over the last five years, which has contributed mainly by the
publications in tourism and hospitality journals. The absence of CSR research in
mainstream CSR journals reflects an underestimation of hotel industries among
CSR researches. As the hotel industry is being increasingly recognised as an
important sector for contributing to sustainable development, researchers should
consider publishing in the mainstream CSR journals. This strategy can be highly
effective in sharing CSR knowledge relating to hotel industry with a wider group of
readers and stakeholders, which will, in turn, contribute to advance the overall field
of CSR and sustainability.
Despite the relatively limited number of journal publications, the analysis of this
research captured the trend and evolution of CSR research in hotel industry and
provided direction for future research. Although the major focus of CSR research
remains in the area of CSR practices, increased research interest towards envi-
ronmental responsibility/green practices, CSR reporting and CSR- financial per-
formance relationship is on the rise. Moreover, as a relatively new area of research
in hotel industry, majority of the CSR research in this area is qualitative research
focusing on understanding the practices, importance and impact of CSR in hotel
industry. The small number of quantitative research is focused on examining the
perception of hotel managers and consumer. More quantitative research based on
the findings of existing qualitative research would be valuable to scholarship. This
may include issues such as challenges for CSR implementation, CSR
decision-making, role of stakeholders in promoting local tourism, and sustainability
practices-business competitiveness nexus where no quantitative research is con-
ducted yet.
This research only analysed those CSR articles that are available online, and met
the other selection criteria, mentioned in the research method section of this paper.
There might be other sources (such as book chapters, conference paper and thesis)
of publication exists but those are outside the scope of this study. Thus in the future,
a broader content analysis including other sources of publication would provide a
comprehensive understanding of this significant area.
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Part III
Empirical Studies
Business Excellence Models
and the Plight of Contract Workers
Prabir Kumar Bandyopadhyay and Denis Leonard
Abstract Collective bargaining protects workers from abuse of economic power

and contributes to economic performance and to social progress. The role of trade
unions in collective bargaining is a pivotal tool to improve working conditions and
solve labour disputes as well as to achieve social justice, decent work, economic
development and stability in societies. Collective bargaining help achieve a
wage-led recovery strategy that ensures a sustainable consumption pattern and
reverses the growth of inequality. Realising the importance of freedom of associ-
ation and collective bargaining in achieving economic and sustainability of
organisation and society United Nations has launched a voluntary initiative on 26
July 2000, United Nations Global Compact, based on CEO commitments to
implement universal sustainability principles to encourage businesses worldwide to
adopt sustainable and socially responsible policies, and to report on their imple-
mentation. These Principles are derived from: the Universal Declaration of Human
Rights, the International Labour Organization’s Declaration on Fundamental
Principles and Rights at Work, the Rio Declaration on Environment and
Development, and the United Nations Convention Against Corruption. The global
trend suggests that large organisations are engaging contract workers even for
perineal jobs. Despite the efforts of ILO and UN it is also evident that rights of the
contract workers are grossly violated by the formal organised sector both private
and public. Even those organisations that are participating in Business Excellence
award and in some cases award/prize winners are not different. This paper examines
the provisions kept in the EFQM Model of Business Excellence to alleviate the
plight of contract workers. Evidence suggests that neither the organisations nor the
assessor community are sensitive enough to this issue. It is argued that as Business
Excellence models aim to satisfy the needs and expectations of all stakeholders,
the rights of the contract workers must also be considered while designing the
P. K. Bandyopadhyay (&)
Symbiosis Institute of Business Management,
Symbiosis International University, Pune, India
D. Leonard
Business Excellence Consulting LLC, Racine, USA

184 P. K. Bandyopadhyay and D. Leonard
processes and during the assessment process. It is argued that in promoting the
cause of the contract workers the Business Excellence models must address such
issues not covertly but rather directly by incorporating the obligations of meeting
the ILO standards and UN Global Compact principles within the standards. This is
also required for maintaining the credibility of the model.

Keywords CSR Business Excellence Model EFQM CII-EXIM bank

ILO UN Global Compact Contract workers
1 Introduction
The objective of this paper is to examine adequacy of the provisions kept in the
EFQM Model to alleviate the plight of huge number of contract workers in large
Organizations including some of the Award or Prize Winning Organizations and to
suggest measures for improvement.
At present there are 100 Business Excellence models (BE Models) being used in
82 countries (Talwar 2011). The Deming prize, MBNQA and EFQM models are
considered to be the mother models for most BE Models (Marwa 2008; Talwar
2011). With the exception of the Deming Prize, all models have two sets of factors/
criteria: Enablers and Results. It is the enablers that drive an organisation towards
desired results. The weighting of different criteria varies from model to model.
Talwar (2011) has presented criteria and their respective weights of 20 publicly
available models. Other than the Deming Award, all the models cover the following
nine criteria either at the Criteria level or in the sub criteria level: Leadership,
strategic planning, people, supplier/partner, customer, knowledge and information
management, processes, society and business results.
For award assessment purposes, the majority of these models require the sub-
mission of a self-assessment report ranging from 50 to 75 pages to the award/model
custodian which is assessed off site by trained assessors followed by on-site
assessment. A feedback report is provided by the assessors, aligned to the criteria
with sub and total numerical scores, and identifying strengths and opportunities.
Others use a Questionnaire format, for example the Singapore Award follows a
Questionnaire format which is first assessed by the Assessors and those who get
above 400 become eligible for site visit and scores are validated in the site visit
assessment (Mann 2007). The objective of all these models is to ensure sustainable
balanced results for all stakeholders (Lee 2001).
Scoring is done by following a rubric given band width corresponding to defined
maturity level of approach and deployment of enabling criteria and also for results
criteria.
The India Confederation of Indian Industries (CII) and the Export Import Bank
of India (EXIM) have jointly launched CII-EXIM Bank Award for Business
Excellence, in 1994, for promoting excellence among Indian Industry. The EFQM
Excellence Model has been fully adopted in CII-EXIM Bank Excellence model.
Business Excellence Models and the Plight of Contract Workers 185
Four levels of recognition are given: Award, Prize, Significant Achievement on the
journey towards Excellence and Strong Commitment to Excel on the journey
towards Excellence. As per CII, “CII-EXIM Bank Award for Business Excellence
is presented to Organizations judged to be ‘Role Models’. Prizes are awarded to
Organizations that demonstrate Excellence in the management of Quality as their
fundamental process for continuous improvement—the leaders in their respective
category…” (Industries 2017).
This paper mainly refers to the EFQM Model as the framework to discuss the
issue of contract workers’ plight, while cases are presented from CII-EXIM Bank
Award/Prize winning companies.
The EFQM Business Excellence Model (Criteria) states that ‘Excellent
Organizations achieve and sustain outstanding levels of performance that meet or
exceed the expectations of all their stakeholders’ and represent ‘Global Role
Models’. Therefore, we can expect that those who are adopting the Business
Excellence Model and scoring at different levels of recognition must work towards
becoming Role Model at the Global level. The EFQM Model has given emphasis
on Sustainability, Inclusiveness and Corporate Governance because of the growing
importance of issues related to sustainable business and society. Therefore, it is also
expected that excellent organisations shall imbibe the essence of the UN Global
Compact voluntarily and promote the same among its supply chain. Those working
with the model should have the intention to follow the same in a planned manner.
Contractualisation as such is not an issue for the Business Excellence Model.
What matters in this context is the deprivation of the rights of the contract workers
by the formal organised sector, both private and public, resulting from the violation
of one of the core International Labour Standards-Freedom of association
and effective recognition of the right to collective bargaining, which are also part of
UN Global Compact Principles, listed below. These Principles are derived
from the Universal Declaration of Human Rights, the International Labour
Organization’s Declaration on Fundamental Principles and Rights at Work, the Rio
Declaration on Environment and Development, and the United Nations Convention
Against Corruption. The ten principles are presented below (ILO 2017).
1.1 Ten Principles of UN Global Compact
1.1.1 Human Rights
Businesses should:
• Principle 1: Businesses should support and respect the protection of interna-
tionally proclaimed human rights; and
• Principle 2: make sure that they are not complicit in human rights abuses.
1.1.2 Labour
• Principle 3: Businesses should uphold the freedom of association and the

effective recognition of the right to collective bargaining;
• Principle 4: the elimination of all forms of forced and compulsory labour;
• Principle 5: the effective abolition of child labour; and
• Principle 6: the elimination of discrimination in respect of employment and
occupation.
1.1.3 Environment
• Principle 7: Businesses should support a precautionary approach to environ-

mental challenges;
• Principle 8: undertake initiatives to promote greater environmental responsi-
bility; and
• Principle 9: encourage the development and diffusion of environmentally
friendly technologies.
1.1.4 Anti-corruption
• Principle 10: Businesses should work against corruption in all its forms,
including extortion and bribery.
The United Nations Global Compact is a voluntary initiative based on CEO
commitments to implement universal sustainability principles to encourage busi-
nesses worldwide to adopt sustainable and socially responsible policies, and to
report on their implementation, founded on 26 July 2000. It expects that the
companies shall incorporate the Global Compact principles into strategies, policies
and procedures, and establish a culture of integrity.
It will be appropriate to have a look into the eight Fundamental ILO
conventions:
ILO Convention 87 on Freedom of Association and Protection of the Right to
Organize.
ILO Convention 98 on the Right to Organize and Collective Bargaining.
ILO Convention 29 on Forced Labor.
ILO Convention 105 on the Abolition of Forced Labor.
ILO Convention 138 on Minimum Age (of Employment).
ILO Convention 182 on the Worst Forms of Child Labor.
ILO Convention 100 on Equal Remuneration.
ILO Convention 111 on Discrimination (Employment and Occupation).

Of all these 8 conventions India has not ratified Convention 87 and 98, the
Government of India has decided to ratify the International Labour Organisation
(ILO) Convention 182 on the worst forms of child labour and Convention 138 on
Minimum Age of Employment (Parliament 2017).
The right to association and collective bargaining is restricted within the
framework of the Trade Union Act 1926 and the Industrial Disputes Act 1947. As
this paper will show these regulations are weak in implementation.
2 The Economic and Sustainability Argument of Freedom

of Association and Collective Bargaining
Research carried out by ILO shows that ‘enterprises and societies can grow and
thrive with and through mature industrial relations. The successful practice of many
companies shows the value of social dialogue and collective bargaining’ (Gernigon
2009). Collective bargaining protects workers from abuse of economic power and
contributes to economic performance and to social progress. The role of trade
unions in collective bargaining is a pivotal tool to improve working conditions and
solve labour disputes as well as to achieve social justice, decent work, economic
development and stability in societies. Collective bargaining helps achieve a
wage-led recovery strategy that ensures a sustainable consumption pattern and
reverses the growth of inequality. ILO consider, ‘Collective bargaining is not only
about wages and working conditions; it is fundamentally about respect and dignity
at the workplace and in societies generally’ (ibid).
It should be mentioned that of the eight fundamental conventions C. 87 and 98
remain the least Ratified. The following five countries, members of G20, have not
ratified C 87 (Freedom of Association and Protection of the Right to Organise) and
C 98 (Right to Organise and Collective Bargaining Convention 1949):
China
India
United States of America
Korea
Saudi Arabia.
3 Contract Workers—India
Contract labour generally refers to ‘workers employed by or through an interme-

diary on work of any establishment’. ‘Contractualisation of work has become a
pervasive feature of both public and private sectors in all three major sectors, and is
particularly marked in mining, manufacturing industry and some services’

(Chandrasekhar and Ghosh 2014).
In 2013 The Associated Chambers of Commerce and Industry of India
(ASSOCHAM) conducted a survey entitled, ‘steep rise of permanently temporary
workers—India’s workforce goes casual’, which reported that ‘telecom sector
scoring the worst with up to 60% of its staff on contract, followed by automobiles
(56%) and other sectors such as education (54%), manufacturing (52%), FMCG
(51%), IT, BPO (42%), hospitality & travel (35%), pharma and health care (32%).
Contract labour is increasingly being used in smaller and larger Indian companies
as well as multinationals’ (Aditi 2014). Though the Contract Labor (Regulation and
Abolition) Act, 1970 prohibits the utilisation of contract workers in perennial work,
there are ample examples of using contract workers in regular work. The cost
reduction is one of the main objectives and the reduction of cost is achieved through
exploitation of contract workers. In some cases, the percentage of contract workers
may go as high as 80% (Kumar 2015).
The low penetration of Trade Unions among contract workers deprives them of
the collective bargaining process. The accountability to pay compensation and other
benefits in the result of accidents to contract workers while doing regular work
under the supervision of principal employer are with the contractor who is paying
the wages too (ibid).
The key findings, of a study of working conditions by the contract workers in
Petroleum Refineries and Oil fields in 2009–2011 conducted by Labour Bureau
Ministry of Labour & Employment Government of India, Chandigarh are given
below (Bureau 2009–2011):
(1) The proportion of contract workers to the total employment at all-India level
was 18,165 (76.94%) in Oil Fields and 73,499 (80.12%) in Petroleum
Refineries. It can be summarised that proportion of direct workers was less than
contract workers.
(2) Contractors made less payment to contract workers by various means though on
paper they comply with the Minimum Wage Act, which is much less than the
wages of the permanent workers, except in some cases where the workers were
organised and had strong bargaining power.
(3) Both direct workers and the contract workers were found to be employed on
similar jobs in the same unit in most of the establishments. Direct workers were
getting significantly higher wages and other welfare benefits as compared to the
contract workers.
It may be mentioned that as per The Contract Labour (Regulation and Abolition)
Act, 1970 further provides that the rates of wages payable to contract workers
should not be less than the rates prescribed under the Minimum Wages Act, 1948
for such employment and in cases the workmen employed by the contractor per-
formed the same or similar kind of work as the workmen directly employed by the
principal employer of the establishment, the wage rates, holidays, hours of work
and other conditions of work of the workmen of the contractor shall be the same as
applicable to the workmen directly employed by the principal employer of estab-

lishment on the same or similar kind of work.
The situation in the Electronics manufacturing sectors is no better. A MNC in
electronics manufacturing is using apprentice workers. The ITI apprentices con-
stitute about 50% of the workforce (Pratap 2013). There is a significant difference in
wages of regular workers and apprenticeship. Other similar industries are engaging
22 to 60% of their workforce as contract workers. The working conditions are also
bad. At the same time the firm takes up several Corporate Social Responsibility
(CSR) initiatives to promote brand image. Such a firm if it goes for assessment for
Business Excellence will probably get a good score under Society Results ironi-
cally, as treating internal people is also a part of societal responsibility as mentioned
in EFQM document. The old saying: charity begins at home must be kept in mind
while assessing a firm.
4 What Is Happening in Prize/Award Winning

Companies
Let us a take a look at couple of cases from the CII- EXIM Bank award/prize
winning companies:
Parry (2013) has described lucidly the plight of the contract workers in an Indian
Steel Plant. The number of Contract workers is quite high, arguably varies from 19
to 40%, and they get much lower wages than the permanent workers but doing the
jobs which were done earlier by permanent employees. This has happened as
management of the plant gradually shifted the ‘grimiest and most grueling tasks—
manual labour’ to the contract workers from the permanent workers circumventing
the law. Here the contract workers are bonded by payment of arrears violating ILO
convention 29 & 105 which India ratified in 1954 and in 2000 respectively. The
issue is so grave that Parry commented: ‘It is difficult to avoid the conclusion that
their rather generous wages and benefits, their rather relaxed work regime and
the company’s impressive profits are sustained only by cheap contract labour.’ The
plant won CII-EXIM Bank Prize in 2015.
The Indian automobile manufacturing sector is another example of using large
number of contract workers, approximately 70% of workers are on contract, work
on a very low level of wages compared to the permanent workers doing the same
work. Large multinational companies have frequent incidences of strikes and labour
unrest (Kumar 2016). There are several incidences of industrial dispute with wage
issues, outsourcing, contract workers in different plants of Bosch India, CII-EXIM
Bank Award Winner of 2009 and 2013.
Much acclaimed organisation, Tata Steel is not completely free from the prob-
lems mentioned above. The company has signed UN Global Compact and its report
—Communication on progress, November 2016’ does mention compliance with the
principles including principles related to Labour but it seems the report covers the
steps taken towards permanent workers. Dealing with contract workers are absent in
the report except for the mention of engaging contractors who follow Principle 2,
‘Make sure they are not complicit in human rights abuses, of UN Global compact’.
But the ground reality is different (International 2016). Tata Steel employs 16
thousand regular workers and 30 thousand contract workers engaging in perennial
and non-perennial types of work. There are instances where semi-skilled workers
doing skilled work such as welding, rigging, but get only the minimum wage, that is
Rs. 203, which is much less than the wage of permanent workers doing the same
type of job. No trade union looks involved among contract workers. Contract
workers not able to continue any organised movement and their frustration came
out in some sporadic violence. The company has not recognised any union for
contract workers (Kumar 2015). Tata Iron & Steel Co. Limited won the CII- EXIM
Bank award in 2000. It seems company is working around the law though not
violating the law. It is expected that Excellent organisation, Global Role Model,
will act towards improving workplace practices beyond legal compliance.
India has not ratified the ILO convention on Freedom of Association and
Protection of the Right to Organize 1948 (C. 87) and the Right to Organize and
Collective Bargaining Convention, 1949 (C. 98). The right to association and
collective bargaining is restricted within the framework of the Trade Union Act
1926 and the Industrial Disputes Act 1947. But excellent organisations should take
these basic international standards as their social obligation and this can happen
only when excellence models like EFQM makes explicit reference to these stan-
dards which will sensitise the Organizations and the assessors to these fundamental
rights of the worker. This will not solve the problem but hopefully will be a good
beginning.
5 Situations Have Not Changed but a Beginning

Has Set in
After the violent incidence on 18 July 2012, in Maruti’s Manesar plant, Maruti,
terminated pacts with labour contractors at the Manesar plant and hires workers
directly. Instead of contract workers they recruit temporary workers who get sal-
aries of entry level permanent worker which is around Rs. 37,800 per month (Layak
2013).
CII has taken up a pilot project with the objective to provide recommendations to
Government and industry to change the lot of the contract workers. The supporting
companies are Tata Steel, Mahindra & Mahindra Group, Hindustan Unilever,
Larsen & Toubro, Godrej & Boyce and Thermax. It is still in working stage (ibid.).
6 Some Examples from Other Parts of World
In her paper, The case for Ensuring Supplier Social Responsibility (Stepniowski
2016) Stepniowski has given examples of labour abuse in several countries some of
which are presented below:
The Kathie Lee Gifford clothing line sold at Wal-Mart was being made by 13-
and 14-year-olds working 20 h days in factories in Honduras. In 2006, a factory fire
in Bangladesh caused injuring and killing hundreds of workers producing textiles
for top-name global companies. Employees were at the factory 74–90 hour per
week and paid 10–14 cents per hour. In 2010, 18 employees attempted suicide at
Foxconn in China. This resulted in Apple joining the Fair Labor Association and
subsequently Apple started conducting hundreds on-site audits in an attempt to
assess and improve worker conditions. The same manufacturer was also supplying
to Microsoft, Samsung, Dell, Nokia, Sony, and others. In 2013, more than 1,100
workers died in a garment factory collapse in Bangladesh. A detailed investigative
report found multiple building-code violations and identified five factory owners
guilty of urging workers to return (ibid).
7 What Is There in Business Excellence Model/EFQM

Model to Assess Company’s Intention Towards Meeting
Global Standards—Human Right
Business Excellence models like, EFQM and MBNQA have given a focus on
Corporate Social Responsibility for many years now. The CSR agenda includes
issues related to workplace, employees, customers, suppliers, community, ethics,
human rights, corporate sustainability (Leonard and McAdam 2003). Vision and
mission set by the leaders of a company should focus not only to financial gain but
also to its employees, local communities and society as a whole (ibid). Baldrige
core values included social responsibility and it was covered in clause 1.2, ‘social
responsibility’ and under clause 7.6,’ governance and social responsibility’
(Leonard and McAdam 2003).
In its Fundamental Concepts of Business Excellence, EFQM (2013b), it has
covered the people aspect in three items: Succeeding through the Talent of People;
Creating a Sustainable Future and Sustaining Outstanding Results.
In ‘Succeeding through the Talent of People’, the model suggests that ‘Excellent
Organizations value their people and create a culture of empowerment for the
achievement of both organisational and personal goals’ and in ‘Creating a
Sustainable Future’, it suggests that ‘Excellent Organizations have a positive impact
on the world around them by enhancing their performance whilst simultaneously
advancing the economic, environmental and social conditions within the commu-
nities they touch’. ‘‘Creating a Sustainable Future’’ is mapped with criteria 1a, 1c,
1e, 2c, 4b, 4c and 5b and the corresponding results will be assessed in criteria 8.
‘Succeeding through the Talent of People’ is mapped with 3b, 3c, 3d and 3e. The
corresponding results are assessed in criterion 7 (EFQM 2013b).
By looking at these criteria we may realise that the issue of the contract workers,
the focus of the paper, may be examined by assessing the criteria: 1a, 2a & 4a (both
not mapped against the concept ‘Creating Sustainable Future’), 3a and 3e, 7 and 8.
In 1a we may expect that the organisation’s top management recognise the issues
of Human Rights in general and more specifically rights of the contract workers
under values and ethics, in 2a we may expect the organisation has considered
contract workers as a stakeholder and considered their expectations while formu-
lating strategy. In 4a, we may expect that the Organisations are not only upholding
the Human Rights issues in their own organisation but insure that the same is
followed by the whole of its supply chain.
Under the result criteria, in Criteria, 7a and 7b under People results, the
organisation should capture perception of people through various methods to
measure how People feel about themselves, their job and about the organisation. It
should also measure how well People are performing. The issues related to Contract
workers may be assessed if results specific to Contract workers are presented,
anecdotal evidence suggests this is hardly the case, in many circumstances this is
not on the radar of the assessors.
Criterion 8, Society Results, needs more discussion. To address the ‘Society
Results-Excellent Organizations design and manage processes and systems that
enable them to understand, monitor and assess their engagement with Society
Stakeholders. Collecting and analyzing Society Results is a crucial part of the way
they operate’ (EFQM EFQM 2013c, d). Anecdotal evidence suggests that the
Organizations present the Corporate Social Responsibility (CSR) initiatives which
they include in 2a while formulating the strategy by considering the needs and
expectations of external stakeholders. Limited experience from carrying out
assessment for Business Excellence Award suggests that applicant companies lar-
gely understand CSR primarily as a set of programmes regarding the community/
society. This is also supported by literature (Patrus et al. 2013).
It should also be mentioned that the ministry of corporate affairs (MCA),
Government of India, has notified Section 135 and Schedule VII of the Companies
Act, 2013, which relate to corporate social responsibility (CSR) effective from April
1, 2015 as part of the new Companies Act. The norms will apply to companies with
at least INR 5 crore net profit or INR 1,000 crore turnover or INR500 crore net
worth.
These companies will have to spend 2% of their 3-year average annual net profit
on CSR activities in each financial year, starting from FY15. Schedule VII men-
tioned the activities those can be considered as CSR activities, where the stake-
holders are external parties of different categories.
8 Workers as a Stakeholder of CSR
In EFQM, 2013 CSR was included as a Fundamental Principle: Creating a sus-

tainable future: ‘Excellent Organizations have a positive impact on the world
around them by enhancing their performance whilst simultaneously advancing the
economic, environmental and social conditions within the communities they touch.’
As per EFQM stakeholders have the influence or interest in the performance of
the organisation (EFQM 2013a). Therefore, an organisation’s people are a stake-
holder as they influence the performance of the organisation where they work at the
same time they have the interest as their future both economic and social depends
on the success of the organisation. The model considers People as a differentiating
resource for an organisation. Therefore, motivation and satisfaction of people are an
important factor for the success of the organisation. Definition of society in EFQM
is quite broad in nature. Employees when they are out of the factory premises
become a part of the organisation’s society. The model points out a much broader
aspect: ‘There is an ‘Internal Society’ too, which is inside the organisation, between
different employees’ (EFQM 2013c, d). The definition also includes the flora and
fauna surrounding an organisation’s place of work. EFQM appreciates that some
Organizations have gone much further than financial performance, employee and
customer satisfaction, ‘they have extended their definition of Excellence to an
examination of the extent to which they conduct their business ethically and coexist
in harmony with different groups in Society’. Legal Responsibilities are getting
more and more importance, so the Organisations need to obey the law.
The Global Compact Agenda of United Nations has made CSR more inclusive
by charting 10 principles as mentioned earlier. Strategic advisory group on CSR of
The International Organization for Standardization, known as ISO, describes it as ‘a
balanced approach for organisations to address economic, social and environmental
issues in a way that aims to benefit people, communities and society’ (Leonard and
McAdam 2003). Joan Marques stressed that labour practices in CSR is not only
restricted to in-company practices, it shall be extended to the subcontractor level
(Marques 2016). ISO 26000: 2010-Guidance on social responsibility, which is
prepared by consulting all the global social responsibility guidelines declares that in
the wake of increasing globalization, environmentally harmful production, child
labour, dangerous working environments and other inhumane conditions are
examples of issues being brought into the open. And ‘All companies and organi-
sations aiming at long-term profitability and credibility are starting to realize that
they must act in accordance with the norms of right and wrong’ (Stepniowski
2016).
Therefore, a more responsible assessment is required while assessing companies
for business excellence to insure organisations take conscious examination of
internal processes, as well as those of entities to which the company outsources
production, to ensure that people are not deprived of the fundamental human rights.
9 Conclusion
We feel the EFQM Model can address any issues related to Human Rights, but the
cases of Human Right violations even by award/prize winning organisations as
mentioned earlier suggests that there is a gap among organisations to understand the
requirement of the model and also the assessing community needs to be more aware
of these issues so that they can play a constructive role in upholding the rights of the
deprived sections of our society within the Organizations they work.
We also feel, considering the gravity of the situation that the EFQM may con-
sider specifically including, as appropriate, the core International Labour Standards
of ILO and the principles of UN Global Compact and standards like ISO 26000
within the model. This is also necessary for maintain the future credibility of the
model.
Scope of future research An in depth empirical study may be undertaken to understand the
perception of the Business Excellence Model assessors and the practicing organisations on the role
of CSR in BE Models and what steps may be taken to make the models more explicit in addressing
the human rights issues of the people working within the organisation.
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Discovering New Traits of the European
Buycotter
Matilde Schwalb-Helguero and Iñaki García-Arrizabalaga
Abstract Buycotting is one of the most common expression of political con-

sumption, a kind of non-conventional political participation that is increasingly
replacing more traditional forms of political activism. However, despite the
growing importance and interest in buycotting, mainly in Europe, little is still
known about the European buycotter profile. Most studies on the European buy-
cotter show inconclusive results. Buycotters are consumers that, over the past year,
have considered rewarding a socially responsible company by either buying their
products or speaking positively about the company to others. GlobeScan allowed us
to use data from representative samples of France (n = 502), Germany (n = 500),
Spain (n = 400) and United Kingdom (n = 501). With these secondary data, an
ordered logistic regression was performed to determine which variables were sig-
nificant to explain buycotting behavior. Regarding socio demographic variables, no
significant differences were found in gender. Age reveals a significant inverse
relation to buycotting in the United Kingdom. In Spain and the UK significant
differences are also found in education: the higher the education, the higher the
probability of being a buycotter. Environmental concern is the variable that most
contribute to explain the European buycotter profile in all countries studied but
Spain. This research is important for the new studies that are carried out in other
countries, mainly in Latin America. It is also relevant for companies, because
having a clear image of those who buycott their products, marketers can develop
different strategies to address them.
Keywords Political consumerism Political consumption Buycott

Environmental concern
M. Schwalb-Helguero
University of Pacífico, Lima, Peru
I. García-Arrizabalaga (&)
University of Deusto, San Sebastián, Spain

198 M. Schwalb-Helguero and I. García-Arrizabalaga
1 Introduction
The role of consumer in influencing the way businesses act is gaining increasing
attention. In a new era of information accessibility, consumers have an opportunity
to make deliberate choices in a marketplace, basing their purchasing decisions
according to their values and beliefs. Consumers act as political consumers when
they use their purchasing power to change institutional or market practices that
collide with their own values and principles. When consumers “vote with their
dollars” to influence society and the environment, they “act as political consumers
[…] to make their voice heard and […] to act as citizens” (Austgulen 2016: 444).
Particularly in Western democracies, political consumption or political con-
sumerism (PC) is regarded as a new and increasingly important form for citizens to
express political engagement (Boström et al. 2005; Dalton 2008; Neilson 2010;
Newman and Bartels 2011; Austgulen 2016).
The sustainability-related issues are also gaining momentum. Scholars and
policy makers are giving more attention to the concept of sustainable consumption
and it is becoming an important issue for legislators. As posited by Austgulen
(2016: 443) in a study about environmentally sustainable textile and clothing
industry, the challenges this sector is facing “serve as a good example of an area
where the regulatory role of businesses and consumers has become especially
important”.
Political consumerism (PC) is an “umbrella” concept that shelters two different
expressions: boycotting and buycotting. Boycotting is a free consumer choice to
avoid specific products, while buycotting means to deliberately seek or promote
specific products. Boycott is conflict and punishment oriented while buycotting is
cooperative, reward oriented (Copeland 2014). The motivation for these consumer
choices is social, political or ecological. Even though all these motives play a role,
ethical or green products play an increasingly important role in the people’s pur-
chasing behavior (Quintelier 2014).
Ethical consumerism—the consumers concern about the impact of their pur-
chasing decisions on humans, animals and the environment (Bonini and Oppenheim
2008; The Co-operative Group 2012)—is an expression of PC that has increased
considerably in the last decade (Burcke et al. 2014). Based on the 2013 Nielsen
pool applied to 58 countries, more than half of the consumers polled declared they
were prompt to pay more for products made by socially responsible companies
(Burcke et al. 2014). According to these authors, although ethical products are still
a small proportion of total sales, ethical spending has significantly increased in the
last decade in some European countries as in the UK, where this segment represents
a market value of £47.2 billion (The Co-operative Group 2012).
Environmental problems are an increasingly accepted norm shared by a signif-
icant proportion of society (Grünbaum and Stenger 2015). However, according to
these authors, results of the studies that have intended to characterize the envi-
ronmentally conscious consumer have not succeeded in discovering which vari-
ables are the best suited to describe him. Moreover, the same authors contend that
Discovering New Traits of the European Buycotter 199
the environmentally consumer behavior cannot be explained by fixed segmentation

criteria but by a complex mix of traditional and political values.
Therefore, there is a need for research on discovering the factors that explain the
European buycotter behavior. The objective of this paper is to find out what other
variables, in addition to the socio-demographics, contribute to explain the behavior
of the European buycotter. To fill this gap, we will use the data provided by
GlobeScan Radar 2015 for France, Germany, Spain and the United Kingdom. The
study includes some traditional demographic variables (gender, age and level of
education) and the environmental concern trait, measured with five items on a
five-point Likert scale.
2 Political Consumerism and Buycott
The concept of political consumerism (PC) was first introduced in Denmark by the
Copenhagen Institute for Future Studies and then it was broadly accepted by
economists, marketers and politicians (Micheletti 2003). In the last years, PC has
gained increasing attention.
PC is an unconventional form of political activism that is replacing other forms
of more traditional political participation. According to Shaleeva (2015), the most
common definition of PC refers to the consumer decision to deliberately reject or
chose specific products or services based on social, political, ethical or environ-
mental considerations (Stolle et al. 2005; Copeland 2014).
Stolle et al. (2005) and Shaleeva (2015) argue that for the consumerism to be
political three conditions have to be fulfilled
• Behavior: for a citizen to be considered a political consumer, he/she must
actually make consumer decisions; in this case, the decision to buycott or
boycott certain products on the market;
• Awareness and motivation: behind the purchases there have to be social,
political, environmental or ethical incentives. The choice of particular products
over other options must reflect personal beliefs, views, or moral positions.
Differentiation of consumer motivation plays a very important role. For exam-
ple, if a consumer buys a fair trade coffee only because it tastes good, it does not
imply he/she is a political consumer;
• Frequency and habit: to incite any political consumerism movement it is not
enough just one act or occurrence; the consumer has to execute repeated buy-
cotting or boycotting actions.
The goal of PC is to bring about changes in the marketplace regarding practices
that are objectionable according to the consumer’s values. PC is a new way for
people to express their environmental concerns such as climate change (Copeland
2014), a strategy used by individuals and organizations to promote social
movements as the reduction of environmental impacts (Carfagna et al. 2014).
The motivation for PC activism is social, political or ecological, but ethical or green
products are playing an increasingly important role in the consumer’s purchasing
behavior (Quintelier 2014).
Boycotting and buycotting are two popular expressions of PC. Boycott expresses
disapproval and involves the deliberate abstention from purchasing certain products
for ethical, social, environmental or political reasons (Newman and Bartels 2011;
Neilson 2010; Quintelier 2014). Buycotting, on the other hand, is more associated
with “engaged citizenship norms” (Copeland 2014: 172), and is an act of intentional
purchasing motivated by specific social, ethical, political or environmental reasons
(Micheletti et al. 2004; Newman and Bartels 2011; Neilson 2010; Stolle et al.
2005). Both “boycotting and buycotting allow underrepresented groups such as
women and young people to have their views heard in the political marketplace”
(Wicks et al. 2014: 217), but they have different motivations: boycotting means
“questioning the ethical credibility of companies”, while buycotting means
“searching for ethical alternatives” (Quintelier 2014: 345). Thus, buycott is the
highest expression of the so-called “consumption as voting” (Shaw et al. 2006),
when money is referred to be a vote which people can use when they make any of
their buying decisions. In this sense, “the most effective way to be political today is
not to cast your vote at the ballot box but to do so at the supermarket” (Hertz 2001:
190). Political consumerism wants consumers to be challenged and vote: “buying
cheap clothes which have been made in sweatshops is a vote for worker
exploitation. Buying a gas guzzling 4X4, especially if you are a city dweller, is a
vote for climate change. Factory farmed animals, meanwhile, may make cheap meat
but it comes at a price on the quality of life of the animal” (Ethical Consumer
Research Association 2009: 3). When a citizen takes this ethical consideration into
account while shopping, he can make his own contribution to the development of a
more ethical society. Thus, supporting organic products is a vote for environmental
stability, and fair trade is a vote for human rights (Shaleeva 2015).
Even though buycotting is a more widely expression of PC than boycotting,
there is much less research on buycotting than boycotting (Grünbaum and Stenger
2015). Moreover, according to Echegaray (2016), the classical definition of PC
overstates the boycott expressions and understates the buycott responses.
Additionally, the studies on buycotting are mainly about the European experience
and more specifically about the Scadinavian countries (Grünbaum and Stenger
2015). While the concentration of research on political consumerism in Europe is
undeniable, in Latin America PC research is scarce. However, there is an increasing
interest in Latin America to learn more about this phenomenon, and some studies
are currently appearing that address the reality of the political consumerism in Latin
America (Echegaray 2015, 2016; Kotzur et al. 2017; Portilho 2010; Goerg et al.
2014; Dalcin et al. 2014; Schwalb and García-Arrizabalaga 2015, 2016; Barbosa
et al. 2013). Nevertheless, the results of these studies are inconclusive and do not
allow a clear conclusion regarding the buycotter profile in Latin America. In this
global context, Hoffmann and Müller (2009) assert that the factors which stimulate
individuals to buycott still remain largely undiscovered.
Most of the studies about PC try to characterize the political consumer in terms
of socio demographic variables: gender, age, income and education (Quintelier
2014; Copeland 2014; Echegaray 2015, 2016; Kotzur et al. 2017). According to a
segmentation study, PC becomes “the result of certain socio-economic factors,
rather than individual, context related factors, which play a role in everyday life”
(Grünbaum and Stenger 2015: 290). On the other hand, there is much less research
on political consumption focused on nontraditional variables more related to
political, social and environmental values as appreciation, tolerance and protection
of the welfare of people and nature (Kotzur et al. 2017). According to Grünbaum
and Stenger (2015: 290), “there seems to be a lack of consensus surrounding what
characterizes environmentally friendly and environmentally conscious consumers”.
Recently, new studies are emerging that address nontraditional variables like
environmental concern, and most of them are European: Hutter and Hoffmann
(2013), Copeland (2014), Quintelier (2014), Grünbaum and Stenger (2015),
Chipulu et al. (2016), and Kotzur et al. (2017). However, the results in terms of the
buycotter consumer profile are not conclusive.
Following are the main conclusions that arise from the literature review
regarding the influence of demographics and environmental variables on buycotter
behavior.
2.1 Gender
Most of the studies addressing the buycotter profile suggest that women are more
likely than men to participate in some kind of PC (Stolle et al. 2010; Neilson and
Paxton 2010; Neilson 2010; Stolle and Hooghe 2011; Ferrer and Fraile 2013;
Copeland 2014; Quintelier 2014). Young women are more likely to boycott than
their male counterparts (Quintelier 2014), and German women residing in rural
areas reported significantly higher mean buycotting compared with males living in
these areas (Kotzur et al. 2017). Neilson (2010) reports that women tend to buycott
more than boycott, and they are more likely to participate in “dualcotting” (boy-
cotting and buycotting) than men do, but there are not significant differences among
boycotters and buycotters (Copeland 2014).
However, other studies contradict these results: Gallego (2008), Shaleeva
(2015), Austgulen (2016), and Kotzur et al. (2017) in Europe; Echegaray (2016),
and Schwalb and García-Arrizabalaga (2016) in Latin America. These authors
found no significant differences between men and women regarding the probability
to behave as political consumers. According to Gallego (2008), gender has only
limited direct effect today on political activism because “the political disadvantage
due to gender and ethnicity in Europe is mainly attributable to the different avail-
ability of resources” (Gallego 2008: 21).
2.2 Age
Studies results about the influence of age on political participation are mixed. Some
authors contend that PC increases with age and decreases at the end of the life cycle
(Gallego 2008; Micheletti et al. 2014). Others argue that is more probable to find
PC among young adults (Quintelier 2014; Echegaray 2016) and middle-aged
individuals (25–44) than among younger and older citizens (Echegaray 2016).
Finally, others posit that no significant differences were found in age groups as to
the likelihood of engaging in PC (Copeland 2014). A recent study about the Latin
America buycotter found no significant association to buycotting in some countries
but direct significant association in others (Schwalb and García-Arrizabalaga 2016).
2.3 Education
Education is the sociodemographic variable that shows the strongest correlation

with political activism. The politically motivated activities are explained, mainly,
by the level of education (Gallego 2008; Copeland 2014). One explanation is that
education is linked to political interests, it raises the level of political information
sought by citizens, as well as the awareness of the main issues that affect society
(Austgulen 2016). In general, it can be said that higher levels of education increase
the probability of engaging in PC (Copeland 2014). Kotzur et al. (2017) found that
PC is widely spread among university students in Germany.
However, a recent study on the textile and garment sector in Europe reports that
the variable education is only significant in England and France (Austgulen 2016).
According to this author, this limited effect of education on political activism may
be due to the general restricted knowledge of the consumer about the environmental
impacts of consumption of textiles and clothing.
On the other hand, another study in Latin America (Schwalb and
García-Arrizabalaga 2016) found that only in some of the analyzed countries,
highly educated consumers are more prone to buycott than the less educated.
Nevertheless, in other countries, the results do not confirm this relationship. Finally,
studies regarding the differences between boycotting and buycotting behavior in
terms of education are of mix results. Copeland (2014) found no significant dif-
ferences between buycotting and boycotting, but Baek (2010) reports that people
with less than a high school degree are more likely to buycott than boycott.
In general, it can be said that the higher the education and the income (which are
partially correlated), the higher the political activism. Moreover, “social class and
occupational variables have almost no independent effect” (Gallego 2008: 18).
2.4 Environmental Concern
Concern for the environment is no longer a marginal worry of the population but
rather a norm increasingly accepted and shared by a growing proportion of society
(Grünbaum and Stenger 2015). Recent studies show that consumers are increas-
ingly considering social and ethical goals when they take purchase decisions.
Consumers are looking for responsible companies with the intention to exercise
their purchasing power politically, even though they do not link all their buying
decisions with this political power (Grünbaum and Stenger 2015).
The main political motivation of the PC seems to be more related to environmental
issues and the lifeworld (family life, culture and informal social interaction) than the
conventional political engagement (Baek 2010). Literature reports that the predominant
forms of buycotting are decisions that favor organic products, those associated with
eco-labeled, certified and fair trade (Echegaray 2016). However, there is no consensus
about the characteristics of environmentally conscious consumer (Grünbaum and
Stenger 2015). It seems that the consumer environmental behavior cannot be explained
with fixed segmentation variables. According to a segmentation study, PC would be
“the result of certain socio-economic factors, rather than individual, context related
factors, which play a role in everyday life” (Grünbaum and Stenger 2015: 290).
In order to understand the motives driving the green consumer behavior,
Austgulen (2016) argues that consumers whose behaviors respect the environment-
actively seek information or show a low level of consumption—are more likely to
behave as political consumers. In the same sense, Thøgersen (2002) based on the
postulates of the theory of cognitive dissonance to conclude that ecological con-
sumers tend to seek consistency between their attitudes and behaviors, as well as
between their behaviors. Some authors prevent not to assume that, when buycotting
organic food, environmental aspect be considered a political motive by itself,
“because it can be linked to personal motives” (Grünbaum and Stenger 2015: 285)
and, consequently, it can lead to wrong conclusions as to believe that PC is a more
prevalent phenomenon than it is really is.
Other authors conclude that while ethical and psychological reasons have a
moderate influence on certain types of buycott activism as carrotmobs, social
motivations are the strongest motives for this political participation. That would
mean, for example, that an individual sensitive to environmental factors would only
participate in a carrotmob if he sees that others—a significant number of individuals
—will participate in the mobilization (Hutter and Hoffmann 2013).
3 Methodology
This study was based on data for France, Germany, Spain and United Kingdom
kindly provided by GlobeScan. Data were originally collected in each country by
surveying individuals aged 18 or more, as part of a wide research called GlobeScan
Radar 2015. Field research started on late January 2015 and ended on mid-February
2015. Telephone interview was the survey method in the four countries (see
Table 1).
The original sample sizes were 1,006, 1,000, 800 and 1,001, respectively.
Unfortunately, the relevant question about buycotting was randomly asked to just
half of each sample. After analyzing the reasons pro and against weighting the
dataset in these four countries (see Kish 1990), we finally decided not to do it.
Lastly, we work in each country with the real sample size of the relevant question
about buycotting (France 502, Germany 500, Spain 400, and United Kingdom 501).
Buycotting (the dependent variable) was measured with the following question:
“Over the past year, have you considered rewarding a socially responsible company
by either buying their products or speaking positively about the company to oth-
ers?” The three ordinal possible responses were “I have not considered doing this”,
“I have considered this, but didn’t actually do it”, and “I have actually done this in
the past year”.
Age (covariable) was measured on years. Gender (factor) was a dichotomic
variable. Level of education (factor) was an ordinal variable (“Some/Completed
elementary school”, “Some/Completed secondary school”, “Some of college uni-
versity”, and “Completed university degree or post graduate”).
The environmental concern (covariable) was measured with a five-item,
five-points Likert scale (“Item 1: Whenever possible, I try to share the use of a
product rather than buying a new one for myself because I am trying to reduce my
impact on the environment”, “Item 2: I regularly purchase locally produced food
and other local products”, “Item 3: I encourage others to buy from socially and
environmentally responsible companies”, “Item 4: I am willing to pay more for
products produced in a socially and environmentally responsible way”, and “Item 5:
I believe we need to consume less to preserve the environment for future
generations”).
Reliability results for this scale are shown in Table 2. Cronbach’s alpha value
(0.722) meets the standard for studies of this exploratory nature (Hair et al. 2009).
The possible elimination of an item does not improve the reliability of the scale,
while it would restrict the information provided. Corrected item-total correlations
also meet the standard of being greater than 0.40 (Hair et al. 2009).
Table 1 Technical details of the surveys

Information France Germany Spain United Kingdom
Field dates (in 2015) February Jan. 26–Feb. 9 February Jan. 27–Feb. 1
5–18 5–13
Survey methodology Telephone interview
Sample frame Individuals aged 18 or more
Type of sample National
Sample size (unweighted) 1,006 1,000 800 1,001
Source GlobeScan (2015)
Table 2 Reliability analysis for the “Environmental concern” scale

Cronbach’s alpha: 0.722
Item Mean if Variance Corrected Cronbach’s alpha if
the item if item item-total correlation item deleted
deleted deleted
Item 1 3.01 13.203 0.455 0.687
Item 2 2.65 14.452 0.434 0.693
Item 3 3.28 11.933 0.573 0.635
Item 4 3.06 13.044 0.501 0.667
Item 5 2.61 14.303 0.449 0.688
Source Own research
Table 3 Principal Component Initial eigenvalue

component analysis for the
Total % of variance Cumulative %
“environmental concern”
scale. Total variance 1 2.373 47.464 47.464
explained 2 0.784 15.673 63.137
3 0.712 14.232 77.369
4 0.632 12.641 90.010
5 0.500 9.990 100.000
Source Own research
A principal component analysis (PCA) was performed with these five items to
check the dimensionality of the scale (see Table 3). It was found that the first factor
explained 47.464% of the variance. As we can see, this first factor of the PCA
explains much more variance than the second, and this second not much more than
the third. In addition, the first factor of the PCA is the only one that has an
eigenvalue greater than one.
As shown in Table 4, factor loadings in this first factor (with no rotation) were
greater than in any other factor, with values greater than 0.6. All these findings
confirm (Carmines and Zeller 1979) that this “Environmental concern” scale is a
reliable and unidimensional scale. Its values would extend from −10 to +10
Table 4 Principal Item Component

component analysis.
1 2 3 4 5
Component matrix
1 0.662 0.335 0.610 −0.115 0.252
2 0.638 0.515 −0.403 0.403 0.041
3 0.769 0.062 −0.064 −0.380 −0.505
4 0.712 −0.363 −0.347 −0.285 0.400
5 0.655 −0.520 0.228 0.480 −0.137
Extraction Method: Principal Component Analysis (no
rotation)
Source Own research
(after ranking with −2, −1, 0, +1 and +2 the “Strongly disagree”, “Somewhat
disagree”, “Neither agree nor disagree”, “Somewhat agree”, and “Strongly agree”
answers, respectively).
4 Results
For each of the four countries involved in the study, Table 5 presents the relative
frequency distribution of “Buycott” (dependent variable), “Gender” and “Level of
Education” (independent factor variables), as well as the main descriptive measures
of “Age” and “Environmental Concern” (independent covariables).
Given the ordinal nature of the dependent variable, an ordered logistic regression
model was proposed. This model can be thought of as an extension of the logistic
regression model that applies to dichotomous dependent variables, allowing for
more than two (ordered) response categories.
The link function used in our regression model was not the standard Logit f
(x) = log(x/(1 − x)), because it assumes evenly distributed categories of the
dependent variable. Instead, for Germany, a negative log-log f(x) = −log(−log(x))
Table 5 Relevant descriptive information from the samples

Variable/Categories France Germany Spain United
Kingdom
Buycott (Dependent variable)
Not considered 37.8% 71.5% 42.0% 25.7%
Considered, but didn’t actually do it 21.2% 16.2% 14.0% 23.5%
Have actually done this in the past year 41.0% 12.3% 44.0% 50.8%
Gender (Factor)
Male 48.4% 51.2% 43.5% 52.5%
Female 51.6% 48.8% 56.5% 47.5%
Level of Education (Factor)
Completed university degree or post 34.8% 13.4% 31.3% 43.7%
graduate
Some of college university 4.4% 1.4% 15.9% 12.4%
Some/completed secondary school 51.2% 72.6% 19.7% 42.5%
Some/completed elementary school 9.6% 12.6% 33.1% 1.4%
Age (Covariable)
Mean 48.5 44.5 51.1 49.5
Standard deviation 19.1 14.8 15.7 17.8
Environmental Concern (Covariable)
Mean 5.0 −0.2 5.7 4.4
Standard deviation 3.6 3.8 3.6 4.2
Source Own research
was used, as it is recommended when lower categories of the dependent ordinal

variable are more probable than higher categories (in Germany the lower category
“I have not considered doing this” represented 71.5% of the sample, while the
higher category “Have actually done this in the past year” represented only 12.3%).
For the other three countries, a complementary log-log f(x) = log(−log(1−x)) was
used, as it is recommended when higher categories of the dependent ordinal vari-
able are more probable than lower categories.
After running the model, Table 6 shows the main results of the applied ordered
logistic regression. For each country, the following information (from left to right)
is shown:
• Estimate: the ordered log-odds regression coefficients.
• Standard errors of the individual regression coefficients.
• The Wald chi-square test value used to test the null hypothesis that the estimate
equals 0.
• Significance: the p-values of the coefficients.
As we can see from Table 6, there is no a unique common pattern across the four
countries:
• Age. Results about its influence on buycotting are mixed. As found by Copeland
(2014), age shows no significant association to buycotting in France
(p = 0.909), Germany (p = 0.206) and Spain (p = 0.729). However, the United
Kingdom has a significantly negative regression coefficient (p = 0.070). This
suggests an inverse relation between age and boycotting in this country: the
older the consumer, the lower the probability of being a buycotter. This finding
is contradictory with the studies of Gallego (2008), and Micheletti et al. (2014),
who stated that Political Consumerism increases with age.
• Environmental concern. This covariable reveals a significant direct association
to buycotting in France (p = 0.000), Germany (p = 0.087) and the United
Kingdom (p = 0.000). In these three countries, the higher the environmental
concern of the consumer, the higher the probability of being a buycotter. Spain
shows no significant association (p = 0.267), although its regression coefficient
is also positive. The importance of these findings supports the theory of
Grünhaum and Stronger (2015) about the growing acceptance of environmental
concern by citizens to take purchase decisions. Our findings also support the
ones obtained by Austgulen (2016): citizens whose behaviors respect the
environment are more likely to behave as political consumers.
• Gender. Having the “male” category as reference, in the four countries there are
no significant differences between men and women regarding the probability of
being a buycotter. However, results are somewhat opposite: while the regression
coefficient for women is negative in France, Spain, and the United Kingdom, it
is positive in Germany. In Europe, this lack of influence of gender on Political
Consumerism is also supported by several authors: Gallego (2008), Shaleeva
(2015), Austgulen (2016), and Kotzur et al. (2017). Our findings, then, do not
support the theory that, in Europe, buycotting is mainly female oriented (Stolle
208
Table 6 Results of the ordered logistic regression model

Country France Germany Spain United Kingdom
Variable/ Estimate Standard Wald Significance Estimate Standard Wald Significance Estimate Standard Wald Significance Estimate Standard Wald Significance
Category error error error error
Age 0.000 0.003 0.013 0.909 0.008 0.006 1.60 0.206 −0.002 0.005 0.120 0.729 −0.007 0.004 3.28 0.070
(covariable)
Environmental 0.091 0.016 30.25 0.000 0.040 0.024 2.92 0.087 0.022 0.019 1.23 0.267 0.117 0.015 58.94 0.000
Concern
(Covariable)
Gender −0.079 0.120 0.434 0.510 0.175 0.177 0.968 0.325 −0.066 0.144 0.212 0.645 −0.030 0.136 0.048 0.827
Female
Education 0.125 0.229 0.299 0.585 −0.466 0.334 1.94 0.164 0.367 0.190 3.72 0.054 1.49 0.453 10.87 0.001
Completed
university
degree or post
graduate
Education −0.127 0.349 0.133 0.715 −0.164 0.751 0.048 0.827 0.020 0.212 0.009 0.925 1.05 0.474 4.93 0.026
Some of
college
university
Education −0.216 0.220 0.968 0.325 −0.479 0.256 3.50 0.061 −0.072 0.203 0.126 0.722 0.977 0.444 4.83 0.028
Some/
completed
secondary
school
Reference categories for the factors: Gender (“Male”), Education (“Some/completed elementary school”)
Source Own research
M. Schwalb-Helguero and I. García-Arrizabalaga
et al. 2010; Neilson and Paxton 2010; Neilson 2010; Stolle and Hooghe 2011;
Ferrer and Fraile 2013; Copeland 2014; Quintelier 2014).
• Level of education. Having the “Some/completed elementary school” category
as reference, results are somewhat opposite. In Germany, all the regression
coefficients are surprisingly negatives. This suggests an inverse relation between
level of education and buycotting. And what’s more: the regression coefficient is
significant for the “Some/completed secondary school” category (p = 0.061). In
Germany, consumers with the highest level of education have a strong negative
regression coefficient. These results do not support the generally accepted theory
that education is the main socio demographic predictor of political activism
(Gallego 2008; Copeland 2014). In France, there are no significant differences
across categories, but consumers with the highest level of education also have
the highest probability of being buycotters. In Spain, however, consumers of the
two categories with the highest level of education have positive regression
coefficients. Further, in the case of the “Completed university degree or post
graduate” category, this positive regression coefficient is also significant
(p = 0.054). A similar finding is reported by Kotzur et al. (2017) in their
research with German students. The United Kingdom has significant positive
coefficients for all the categories, evidencing clearly that in this country the
higher the level of education of the consumer, the higher the probability of being
a buycotter. In general, results for France (weakly), Spain (moderately) and the
United Kingdom (strongly) support the idea that buycotting activities can be
partially explained by the level of education.
5 Conclusions
Consumption is one of the main features of modern society. Decisions on “what to

buy” or “not to buy” are what really define people as consumers, even more so than
their ideology, hobbies, or tastes. It is in this context that we must understand
Political Consumerism. As far as consumers cannot avoid buying products, they
can implement their influence by consuming some special items and ignoring others
to achieve their moral, social or political goals (Schudson 2007). Citizens act as
political consumers when they use their purchasing power to change market
practices that collide with their own values, beliefs and principles (Austgulen
2016), This kind of non-conventional political participation has two main ways of
expression: boycott and buycott. Boycott is conflict and punishment oriented, while
buycotting is cooperative, reward oriented (Copeland 2014).
Even though buycotting is a more widely expression of political consumerism
than boycotting, and despite the growing importance and interest in buycotting in
Europe, there is much less research on buycotting than boycotting (Grünbaum and
Stenger 2015), and little is still known about the European buycotter profile. Most
research on the European buycotter shows inconclusive results.
The present study has the goal of analyzing the European buycotter profile. In
addition to measuring the influence of several classic socio demographic variables
(age, gender and education), it seeks to determine the importance of the environ-
mental concern of the consumers on their buycotting behavior.
GlobeScan allowed us to use data from national representative samples of France
(n = 502), Germany (n = 500), Spain (n = 400) and United Kingdom (n = 501).
With these secondary data, an ordered logistic regression was performed to
determine which variables were significant to explain buycotting behavior.
Regarding socio demographic variables, no significant differences were found in
gender. Age revealed a significant inverse relation to buycotting in the United
Kingdom. In Spain and the UK significant differences were also found in education:
the higher the education, the higher the probability of being a buycotter.
But clearly, environmental concern of the consumer is the variable that most
contribute to explain the European buycotter profile in all countries studied but
Spain. Our findings are fully in line with this main idea stated by Austgulen (2016):
environmental problems are an increasingly accepted norm shared by a significant
proportion of society.
For the academic community, it is recommended to deepen in the study of the
impact of the “Environmental Concern” on the buycotting behavior. It seems as if
the explanatory power of traditional demographic variables began to be exhausted
to predict the buycotting behavior of the modern consumer. It is true that in the
early studies on the European buycotter profile, gender, age, and level of education
explained many differences between consumers. But nowadays only education
seems to resist the emergence of new explanatory variables. The results of the study
on the European buycotter profile will be a benchmark for the still incipient but
rapidly increasing studies on the Latin American buycotter profile. In addition, the
inclusion of the “environmental concern” variable adds an extra value to the study
to the extent that this variable is being widely accepted and because the most
common forms of buycotting are decisions that favor organic, eco-labeled, certified
and fair trade products not only in the European countries but also in Latin America
(Schäfer et al. 2011; Zhao et al. 2014). Modern consumer’s buycotting behavior
cannot be anymore explained by fixed segmentation criteria but by a complex mix
of nontraditional and political values. And environmental concern seems to be one
of them. This apparent change in the explanatory power of the traditional
socio-demographic variables, and the emergence of new explanatory ones, needs
more academic research.
In terms of managerial implications, the argument “business as usual” is no
longer valid in today’s society. Traditional models and methods of operating, where
business exists only for generating and maximizing its profit, have been changed
significantly. Today’s marketers are expected to be active participants in solving
world’s global and local social and environmental issues. In this sense it is a
common practice for consumers to judge firms grounding on social responsibility
criteria. People “vote” and buycott companies that consider “good citizens”. Firms
that “behaving good” often derive encouragement from consumers for being
socially responsible. Due to this recent explosion of consumers’ interest in social
responsibility issues, companies’ and brands’ reputations are becoming more sus-
ceptible to external influences, which underscore the important role of consumer
buycott cognition in marketing strategy-making. Within the market economy,
business behavior is not independent from consumer behavior and consumer
acceptance. Companies should not underestimate the role of political consumers.
They should regard them as potential actors who may be mobilized under certain
conditions based on corporate performance seen in relation to the international
debate on corporate social responsibility. Through making every single purchasing
decision consumer thinks about matters of corporate responsibility, which in its turn
affects the behavior and politics of company, providing stimulus to be more caring
and responsible (Shaleeva 2015).
Managers should appreciate the fact that consumers derive high levels of product
and life satisfaction from “good” behavior. People appear to be more interested in
buying brands that align with their values. They consider that companies should
take action to address the important issues facing society, because they think that
corporations have the power to influence social change. Hence, companies should
become more ethically oriented in their production methods, marketing approaches,
and products offered to the market (Holland 2016). Research and knowledge on the
socio-demographic profile of those who buycott is then relevant for marketers,
because it can help them to understand what motivates these political consumers to
make a deliberate choice of ethical brands and products. Thus, a deeper under-
standing of the characteristics of political consumers gives marketers an advantage
in developing a successful ethical marketing program led to this growing segment
of the market. Business community should also pay closer attention to this growing
importance of environmental concern in explaining buycotting. And not only from
a market-opportunity point of view, but as a proactive behavior to manage potential
regulatory restrictions, as policy makers and legislators are giving more attention to
environmental issues.
Acknowledgements This research has used the database of GlobeScan Radar 2015 for the
countries included in this study. The authors thank GlobeScan representatives.
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Social and Environmental Accounting
(SEA) Research in the Public Sector:
The Portuguese Case
Verónica Paula Lima Ribeiro and Sónia Maria da Silva Monteiro
Abstract Research on environmental accounting and reporting practices has been

centred on private corporations (Mathews 2004; Parker 2005; Milne and Gray
2007). In public sector organisations only little research has been carried out (Ball
and Grubnic 2007; Ball and Bebbignton 2008; Farneti and Guthrie 2009; Gray et al.
2009; Guthrie et al. 2010). Literature shows there is a lack of empirical research on
public social and environmental accounting (SEA) and most studies are largely
focused on an Anglo-Saxon context and more specifically on countries such as
Australia, New Zealand and the United Kingdom (Gibson and Guthrie 1995; Burritt
and Welch 1997; Frost and Toh 1998; Frost and Seamer 2002; McElroy et al. 2005;
Qian et al. 2011). Within the Portuguese context, little evidence is available related
to public SEA (Verónica 2007; Ribeiro and Guzman 2010. Ribeiro et al. 2016a). In
fact, there is no tradition of such empirical research in Portugal, particularly in the
public sector. Thus, our study aims to enrich the international literature on SEA in
public entities by providing a snapshot of Portugal’s situation, where empirical
evidence is still relatively unknown. Some studies suggest that accountants are
involved in the SEA process in public entities, but there is still some room for
improvement (Williams et al. 2010; Williams 2015). This paper also examines the
ways in which professional accountants can encourage and support public entities
to increase the low-level of sustainability accounting and reporting practices.

Keywords Social and Environmental Accounting (SEA) Sustainability reporting

Environmental reporting Empirical research Public sector Portugal
Accountants
V. P. L. Ribeiro (&) S. M. da Silva Monteiro

Centre for Research in Accounting and Taxation—Polytechnic
Institute of Cávado and Ave, Barcelos, Portugal

216 V. P. L. Ribeiro and S. M. da Silva Monteiro
1 Introduction
Corporate social responsibility and sustainability are on the agenda of corporations,

governments and individual citizens throughout the world (Crowther and
Ortiz-Martinez 2016). There has been a growing debate on the issue of social and
environmental accounting (SEA) within public institutions, partly because social
and environmental responsibility is central for the functioning of such institutions.
Environmental and social matters are regarded as strategic issues that go beyond
mere compliance of regulations. Thus, integrating social and environmental
accounting into mainstream corporate accounting is essential. Therefore, the
potential value of accounting and accountability in promoting sustainability in
public sector organizations has been stressed (Guthrie et al. 2010).
In the public sector, the need for accountability is justified by the greater con-
sumption of resources and their consequent environmental impact, but also by its
importance as a role model (Farneti and Guthrie 2009). In this sense, given their
size and influence, public entities are expected to lead by reporting their activities to
promote sustainability publicly and transparently (GRI 2005).
The emergence of the Reporting Sustainable Development concept (Abreu and
David 2013) has led to the gradual incorporation of the social and environmental
dimensions into financial reports. These days sustainability reporting tends to fol-
low the guidelines of the Global Reporting Initiative (GRI), which proposes a series
of sustainability indicators. In 2005, the pilot version of the ‘Sector Supplement for
Public Agencies’ was published to be used by public agencies at all levels of
government.
Despite the growing importance of social and environmental responsibility in the
public sector, this issue has not been widely addressed by researchers (Ball and
Bebbington 2008; Ball and Grubnic 2007). Literature shows there is a lack of
empirical research on public social and environmental accounting (SEA) and most
studies are largely focused on an Anglo-Saxon context, and more specifically on
countries such as Australia, New Zealand and the United Kingdom (Gibson and
Guthrie 1995; Burrit and Welch 1997; Frost and Toh 1998; Frost and Seamer 2002;
McElroy et al. 2005; Qian et al. 2011). Some studies examine information about
social responsibility/sustainability in the public sector, published in the annual
reports and/or sustainability reports and recently, on web pages.
Within the Portuguese context, little evidence is available related to public SEA
(Ribeiro 2007; Ribeiro and Guzman 2010. Ribeiro et al. 2016a, b and c). In fact, there is
no tradition of such empirical research, particularly in the public sector. Thus, our
study aims to enrich the international literature on SEA in public entities by providing a
snapshot of Portugal’s situation, where empirical evidence is still relatively unknown.
Some studies suggest that accountants are involved in the SEA process in public
entities, but there is some room for improvement (Lewis 2008; Williams et al. 2010;
Williams 2015). This paper also examines the ways in which professional
accountants can encourage and support public entities to increase the low-level of
sustainability accounting and reporting practices.
Social and Environmental Accounting (SEA) Research … 217
The rest of the paper is organized as follows: the next section presents the
accounting framework of the public sector in Portugal; The second section presents
an overview of the main regulatory actions related to environmental disclosure not
only at the international and European level but also in our country, Portugal. In the
third section, we carry out a literature review examining the main lines of empirical
research in environmental/sustainability accounting and reporting in public entities.
The Portuguese empirical studies were analysed in the fourth section, including
their objectives, methodology, samples and main results. The involvement
of accountants and the development of regulation/guidelines concerning
environmental/sustainability disclosure, particularly applied to the public sector,
can play a vital role in the SEA in public entities. Finally, the last section presents a
short reflection on the need of revitalizing the accountant’s role to promote sus-
tainability accounting and reporting practices.
2 The Public Sector in Portugal: Accounting Framework
The Portuguese public sector includes the administrative activity of the State-
Administrative Public Sector—and its ‘business’ activity, as a producer of goods/
services—Enterprise Public Sector (Caiado and Calado 2002).
The Administrative Public Sector treats the subjects of general interest of the
country, aiming at the maximum satisfaction of collective needs and not for profit.
This sector includes the Central Administration (ministries, etc.), Local
Administration (municipalities) and Social Security.
The Enterprise Public Sector may result from the formation of companies by the
State itself, with public capital, or may result from legal and political processes, as
happened with the nationalization processes, which began after 1974 (implemen-
tation of the Republic in Portugal). However, in recent years, the weight of the
public sector in Portugal’s economy has declined due to the privatization
processes.1
Following the commitments undertaken by the Portuguese State under the
Financial Economic Assistance Program, there was a need to intensify the control
of the Enterprise Public Sector. In this context, Decree-Law nº 133/2013, of
October 3, was approved, which created a new regime for the Enterprise Public
Sector, which governs the relationship between the State and its companies, pur-
suing objectives of good management, transparency and control of public finances.
The concept of the public enterprise sector is to integrate the Enterprise Public
Sector and the Enterprise Local Sector, including: (a) public enterprises: companies
1
The most significant privatizations took place in banking, insurance, interurban road transport,
telecommunications, oil, etc. Revenues from privatizations have helped to reduce public debt.
in which the State or other state public entities may individually or jointly exercise,
directly or indirectly, a dominant influence; (b) subsidiaries enterprises: where there
is a permanent participation of the State.
About the accounting framework of the Portuguese public sector, until the
1990s, the State and its public bodies have relied on the cash accounting. After
Portugal’s entry into the European Union, and to modernize the accounting system,
there was a process of reform of Public Accounting, with the approval of the
Official Plan of Public Accounting (POCP)—Decree-Law nº 232/97 of 3
September. This plan aimed at integrating three accounting systems—budgetary,
financial and cost accounting—into a modern public accounting as a tool to support
public managers. The POCP was based on the Official Private Accounting Plan
(POC) of the private sector, and it moved from a cash basis of accounting to the
accrual basis of accounting in the public sector.
However, in a context of globalization, information on the performance and
financial situation of public bodies should be comparable. According to the
European Commission (2013), the IPSAS are currently the only set of public sector
accounting standards internationally recognized that ensures comparability. In
Portugal, in 2010, the POC was revoked and the Accounting Standards System
(SNC) came into force, based on IASB’ standards (IAS/IFRS).2 This regulation was
applicable to the public business sector, and the public sector continued to apply the
POCP, which made it difficult to consolidate accounts in the public sector.
Thus, the need to implement a system of public accounting normalization was
felt, based on the SNC, as happened with the POCP that followed the POC. The
Decree-Law nº 192/2015, of September 11, approved the Accounting
Standardization System for Public Administrations (SNC-AP)—with entry into
force in 2018. In this sense, Portugal has an accounting framework in line with the
best international practices in Public Accounting.
However, about the accounting treatment of environmental matters, only the
entities that apply the SNC have a standard for this subject—the Financial
Reporting and Accounting Standards (NCRF) 26—Environmental Matters, which
is part of the SNC. This is an issue neglected by public accounting, particularly by
the SNC-AP. In fact, the concern that Portugal always had with the approximation
of public accounting to business accounting has not been felt regarding to envi-
ronmental matters. We do not know the reason for the non-acceptance in the public
sector of an accounting standard like the NCRF 26.
2
The EU’s approach to the IASB came about through the adaptation of EU directives to the IASB
standards, starting a path towards international harmonization that culminated in 2005 with the
adoption of IAS/IFRS by listed companies in the EU (Regulation 1606/2002/EC of the European
Parliament and the Council).
3 Social and Environmental Accounting and Reporting

Regulation for the Public Sector
3.1 International Initiatives
There are several international initiatives concerning the approval of environmental

accounting standards or other guidelines related to environmental disclosure. Even
though the International Accounting Standards Board (IASB) has not released any
International Accounting Standard (IAS) dedicated exclusively to the treatment of
the environmental issues, it presents several IAS that report to this subject (such as
IAS 37, 38 and 39).3 In the public sector context, the International Federation of
Accountants (IFAC) has not published any International Public Accounting
Standard (IPSA) either, referring to environmental issues.
At international level, we highlight the Global Reporting Initiative (GRI) that
promotes some guidelines towards the elaboration of sustainability reports, with the
goal of improving the quality, rigour and usage of the economic, social and envi-
ronmental information published voluntarily, by private, public and non-profit
entities, in all dimensions, sectors and places. This information may assume several
configurations, be disclosed in writing, on the Internet and being presented inde-
pendently (as separated information), or as part of annual reports (GRI 2006). The
first guidelines were released in 2000 and revised in 2002. In 2006, the GRI released
an enhanced version of the ‘G3’ guidelines and later, in March 2011, an updated
version: G3.1. The G4 guidelines were released in May 2013 (Adams et al. 2014).
With the purpose of supporting the usage of these guidelines by several organi-
zations in all sectors, the GRI has developed sector supplements to complement the
general guidelines with interpretations that can bear the specificity of each sector and
propose a few indicative performance evaluations. In the public context, in
September 2003, the GRI began the development of the sector supplement for public
agencies,4 in response to the need of management for the elaboration of reports,
considering that the general guidelines were unsuitable or would not cover some
specific aspects, relevant in the public sector (GRI 2004). In March 2005, the GRI
published the Sector Supplement for Public Agencies—Pilot version 1.0, meant for
3
The only specific standard related to environmental issues was released in December 2004 by the
International Financial Reporting Interpretations Committee (IFRIC) of IASB, under the desig-
nation of IFRIC n. º 3—“Emission Rights”, referring to the accounting of CO2 emission rights.
However, this interpretation was removed in July 2005, after the negative opinion of the European
Financial Reporting Advisory Group (EFRAG), and no other standard or interpretation of this
subject has been released yet.
4
According to GRI “the term ‘public agency’ refers to any rule and policies provider entity, acting
at different levels: regional, central, federal, state or local. This does not include companies that are
controlled by the State, nor companies or other entities that perform investigation and education
tasks or foundations” (GRI 2004: 7).
the ‘public agencies’ at all governmental levels,5 considering that the same supple-
ment may be used by International entities (for example, the Environmental Program
of the UN). This supplement may be a starting point for environmental disclosure in
the public sector, by providing a general model that favours the comparison between
entities and organizations (GRI 2005; CPASR 2005). To sum up, according to the
Centre for Public Agency Sustainability Reporting (CPASR 2005), the GRI sup-
plement for public agencies acts upon some new information that is going to be
disclosed. Effectively, what separates the public sector from the private one is the
need of explaining to all citizens the way how all public policies were elaborated and
performed. These public policies are related to the commitment of the public
administration to sustainable development, within their jurisdiction.
In our opinion, the trend of the future model of reporting is the Integrated Report
(IR),6 a single report that should be the organization’s primary report. The core
objective of the IR Framework is to demonstrate the relationships between an
organization’s strategy, governance and financial performance and the social,
environmental and economic context within which it operates (IIRC 2011).
At European level, we underline the Recommendation of the European
Commission (EC 2001), referring to the recognition, measurement and disclosure
of environmental information in the annual accounts and annual reports of
European companies, embraced by the IV and VII Directives, as well as banks,
other financial institutions and insurance entities. This recommendation directly
follows the document of the Accounting Advisory Forum (AAF 1995) and the
Interpretive Communication, by fitting in the EU’s strategy concerning accounting
harmonization, considering the different standards from IASB that refer to envi-
ronmental issues (such as IAS 37, 38 and 39). This recommendation considered by
the Directive 2003/51/CE of the European Parliament and Council, of 18th July
2003 (applicable since 2005), that changed Directives IV and VII, in the sense that
annual reports of EU’s societies include not only the financial statements of a
company but also the environmental issues.
Even though the European Recommendation was not mandatory, it considered
the establishment of accounting standards at the national level, so that the State
members could follow the guidelines contained in that document. In this sense,
different countries such as Denmark, Finland, France, Spain and Portugal have
introduced some elements of the European recommendation in their accounting
legislation (KPMG and UNEP 2006; Criado-Jiménez et. al. 2008). This recom-
mendation is therefore the main impulse in the normalization process of environ-
mental accounting within the European State members. We highlight that the
European Recommendation (EC 2001) does not include public entities.
5
Including ministries, federal agencies, regional government organisms (such as the European
Committee), state agencies, local governments, departments, etc.
6
The International Integrated Reporting Council is a global coalition of regulators, investors,
companies, standard setters, the accounting profession and NGOs. These members share the view
that communication about value creation should be the next step in the evolution of corporate
reporting (IIRC 2011).
Concerning the accounting of CO2 emitting rights until the present time, this
matter lacks accounting regulation in Europe, as much as in the other continents.
Nevertheless, the European greenhouse gas emissions trading scheme, part of the
Directive 2003/87/CE of 13th October, plans to establish an accounting to apply to
rights of emission. This has led some State members (such as Portugal, Spain,
Belgium, France and the United Kingdom) to issue applicable accounting standards
on this subject in their geographic contexts.
In the public context, the first initiative at European level to promote the
introduction of the environmental accounting belongs to the Parliament of the
European Council, which published the Recommendation 1653 ‘Environmental
accounting as a sustainable development tool’ in 2004. It was based on the infor-
mation by the Environment, Agriculture and Territorial Issues Commission, which
considers that it is important for State members of EU to get familiar with the term
Environmental Accounting and to start (or continue) applying it at all levels of
Administration, particularly at local level. This document underlines the importance
of introducing Environmental Accounting at all levels of the Government (national,
regional and local), presenting a general framework for environmental accounting at
European level, in which several standards, international agreements and some
experiences in national environmental accounting are reflected, as well as envi-
ronmental accounting initiatives developed locally. Within these initiatives, we
highlight the Italian Project CLEAR, which is the first Italian project for environ-
mental accounting applied to local authorities (Giovanelli 2003).
4 Portuguese Initiatives
Concerning our country, Portugal, the European Recommendation (EC 2001) may
be considered the major driving force of the environmental accounting regulation in
Portugal. The non-existence of a specific accounting regulation for environmental
issues has led the Accounting Normalization Commission (‘Comissão de
Normalização Contabilística’) to ensure that the orientations in the EU recom-
mendation should be applied at national level. In this context, the Accounting
Standard (AS) number 29—Environmental Issues was approved on 5th June 2002.
Another important step in the Portuguese accounting regulation related to the
environment was the approval of the Technical Interpretation Number 4—
Greenhouse Gas emission rights on 25th May 2006: accounting of emission
licences. In the absence of an accounting reference on this subject, Portugal, in
accordance to other EU State members, issued this interpretation that is applicable
to companies that include the Official Accounting Plan.
However, following the accounting harmonization process in the EU, a new
Accounting Standards System (SNC) emerged in January 2010. This reform of the
Portuguese accounting system approximated the Portugal accounting standards—
the Financial Reporting and Accounting Standards (NCRF)—to the International
Accounting Standards (IAS) and International Financial Reporting Standards
(IFRS). Related to environmental issues, the NCRF 26—Environmental issues that

replaces AS 29 and Technical Interpretation n.º 4 has been published, but its content
is identical.
The regulatory disclosure requirements set by the NCRF 26 cover a range of
environmental issues (environmental investments, expenses, provisions and con-
tingent liabilities, etc.) and present their definitions, as well as the criteria for their
recognition, valuation and disclosure in financial statements.
The NCRF 26 is applicable to the environmental information that is presented in
the annual report (individual or consolidated) and in the management report of all
Portuguese companies (from the private sector) which are covered by the new
Accounting Standards System. Therefore, the NCRF 26 does not apply to financial
or insurance entities nor to public organizations, since the accounting normalization
is not a competence of the Accounting Normalization Commission. Until now, the
Accounting Normalization Commission of the Public Administration has not issued
a specific accounting standard concerning the environmental information, so the
entities that disclose any environmental information in their accounting documents
do it voluntarily.
In Portugal, public entities should submit information for the elaboration of the
national accounting according to the European System of National and Regional
Accounting (ESNRA) and the aggregated macroeconomics of Statistics Portugal
(Ribeiro and Monteiro 2015). We believe that the introduction of a classification by
environmental categories in public entities, both in their budget and cost account-
ing, would not only provide more reliable information, but would also improve the
decision-making on the environmental management policies and environmental
disclosure.
5 Empirical Research on SEA in the Public Sector
In parallel with the increasing attention concerning environmental issues by orga-

nizations and regulators, the interest in Social and Environmental accounting
(SEA) amongst academics has grown significantly. In this respect, several empirical
studies have analysed the role of accounting connected to business behaviour
towards environmental protection.
Nevertheless, despite the overall trend towards increasing research in this area, it
is also recognized that the research focused on environmental accounting in public
entities is still far from the number of studies about environmental accounting that
have been conducted in private companies.7 In effect, several authors (Gray and
Haslam 1990; McElroy et al. 2005) have stated that our knowledge and
7
Regarding research in environmental accounting in private companies, authors as Gray et al.
(1995); Mathews (1997, 2000, 2003 and 2004); Berthelot et al. (2003) and Parker (2005) have
carried out a revision of research in social and environmental accounting.
understanding of environmental accounting and reporting practices in public

organizations is still limited.
However, in the last years, we have attended to the extension of research in the
scope of SEA in the public sector (Mathews 1997). Therefore, the number of
studies whose object of analysis is the public entities has clearly increased. In this
regard, we highlight the studies in the following geographical areas: Australia
(Gibson and Guthrie 1995; Burritt and Welch 1997; Frost and Toh 1998; Frost and
Seamer 2002; McElroy et al. 2005; Qian et al. 2008; Bowrey 2008; Sciulli 2009),
Italy (Marcuccio and Steccolini 2005; Pilcher et al. 2008), the United Kingdom
(Gray and Haslam 1990; Ball 2004; Lewis 2005), Canada (Cormier and Gordon
2001), Sweden (Burström 2000; Fortes 2002), Norway (Andersen 2003), Malaysia
(Joseph and Taplin 2011; Joseph 2010, Pilcher et al. 2008), Spain (López 2002;
Larrinaga and Chamorro 2008), etc. Regarding the type of the public entities that
were analysed, most of these studies focused on public companies (Cormier and
Gordon 2001; Fortes 2002; Andersen 2003; Rahaman and Lawrence 2001;
Rahaman et al. 2004; Larrinaga and Chamorro 2008), universities (Gray and
Haslam 1990; Moneva and Martin 2012), protected natural areas (López 2002) and
local entities (Burström 2000; Lewis 2005; Marcuccio and Steccolini 2005;
McElroy et al. 2005).
Some studies analysed the adoption of environmental accounting practices by
public entities obtaining evidence from the postal survey (Frost and Toh 1998; Frost
and Seamer 2002) and through case studies (Ball 2005; Moore and Peter 2015;
Qian et al. 2011). They observed a limited adoption of environmental accounting
practices by public entities.
The motivating factors of the development of environmental accounting prac-
tices were also a matter of interest in some studies (Frost and Toh 1998; Cormier
and Gordon 2001; Frost and Seamer 2002; McElroy et al. 2005; Qian et al. 2011),
which examined several organizational attributes and other factors that could
potentially lead public entities to adopt such practices. Most of the times it has been
found that the regulatory context (specifically the existence of compulsory envi-
ronmental reporting guidelines, standards or regulations) and those characteristics
related to political visibility (mainly the entity size and the environmental sensi-
tivity of the entity’s activities) have an influence on the development of environ-
mental accounting practices by public sector entities (Frost and Toh 1998; Frost and
Seamer 2002; Qian et al. 2008; Qian et al. 2011). It was also found that other
internal and external factors influence the extent to which public entities develop
environmental accounting and reporting practices, including variables such as
location of the entity (McElroy et al. 2005), source of funding (Burritt and Welch
1997; Frost and Seamer 2002), management attitudes towards environmental pro-
tection (Frost and Toh 1998), the community’s expectations regarding the local
entity’s environmental performance (Qian et al. 2011), the development of envi-
ronmental management practices (Frost and Seamer 2002) and the complexity of
environmental management operations (Qian et al. 2011).
Most of the studies in the public sector focused on social and environmental
disclosure practices in annual reports (Gibson and Guthrie 1995; Burritt and
Welch 1997; Cormier and Gordon 2001; Frost and Seamer 2002; McElroy et al.
2005; Ribeiro 2007; Moneva and Martin 2012; Mucciaroni 2012; Sciulli 2011), and
the main results indicate that: private companies show a major propensity to dis-
close information than the public ones; the predominant form of disclosure is
qualitative and the information of monetary character focuses on environmental
expenses and income.
Several studies focus on the Sector Supplement for Public Agencies issued by
the Global Reporting Initiative (GRI) in 2005, which contains recommendations on
sustainability evaluation based on performance indicators grouped into economic,
environmental and social categories. Some studies related to sustainability reporting
suggest that: reporting practices are diverse (the documents used for environmental
disclosure vary according to the entities) and sustainability reporting increases the
visibility (external and internal) of the entity’s activities, its performance and status
(Marcuccio and Steccolini 2005 and 2009; CPASR 2005; Mack and Power 2006;
Guthrie and Farneti 2008; Sciulli 2009; Sanchez et al. 2011; Tort 2010).
Nowadays, more than ever, information can be provided to a bigger range of
stakeholders and interest groups through the Internet (Crowther 2012). Throughout
the process of the public sector reform and administrative modernization, some
studies (Moon 2002; Brewer et al. 2006) reveal that public entities usually use ICT,
on websites, as a means of showing that they have become more transparent
through the disclosure of more information about management to citizens (Jorge
et al. 2011). Hence, the recent studies have applied methodologies for analysing
sustainability information on organizational web pages (Joseph 2010; Joseph and
Taplin 2011; Martins 2011; Moneva and Martin 2012; Navarro et al. 2010, 2014,
2016 and 2017; Piltcher et al. 2008, Ribeiro et al. 2016a–b).
The Legitimacy Theory is considered one of the dominant theories in the study
of social and environmental information disclosure (Deegan et al. 2002, Mussari
and Monfardini 2010; Eugénio et al. 2013 and 2015). In fact, organizations tend to
make a lot of effort, through the public disclosure of information, to ensure that
their operations are viewed as legitimate. Thus, according to this theory, organi-
zations use published information to be considered acceptable and legitimate by
society. However, because community expectations change, organizations should
be adaptable, and more importantly, should communicate the changes and develop
information strategies in response to the legitimacy crisis they are facing at that time
(Dias 2010). Consequently, both the intensity and the approach to information
disclosure vary depending on whether an administration intends to increase,
maintain or defend its legitimacy.
Rayman-Bacchus (2006) states that government or administration legitimacy
proceeds from the consistency of their organizational outputs, societal values and
expectations, i.e. the values of the citizens they govern. Legitimacy is reaffirmed
throughout the electoral process. Magalhães et al. (2012), argue that trust in gov-
ernment leaders tends to increase when more information is disclosed on govern-
ment websites, and therefore increases the interaction with citizens.
Several authors consider legitimacy to be the central axis of the Institutional

Theory (Deegan et al. 2002; Joseph 2010; Sánchez-Fernández 2012). For
Sánchez-Fernández (2012, p. 6), achieving legitimacy involves ‘the fulfilment of
rules and beliefs and the adoption of certain organizational practices and strategies
that fulfil needs, values and established standards’. Moll et al. (2010) report that
researchers in the field of the public sector accounting attribute greater importance
to the Institutional Theory than to other theories. The authors argue that this focus is
understandable given that public sector entities should demonstrate accountability,
and accounting is viewed as an avenue through which public sector entities can
legitimize their operations.
Online information disclosure has played a significant role in the public sector,
as the approach increases engagement between public entities and citizens.
Magalhães et al. (2012: 10) state that ‘it is possible to understand that the adoption
of information e-disclosure practices by public sector organizations seems to derive
from the mechanisms of isomorphism of DiMaggio and Powell (1983). A public
organization may adopt the Internet as a means of financial disclosure by legal
enforcement (coercive isomorphism), to resemble other public organizations of the
same sector (mimetic isomorphism), or because of the influence that the bodies
related to the accounting profession set (normative isomorphism)’.
There are several studies which adopt the Institutional Theory alone or in
combination with other approaches, such as the Legitimacy Theory, to explain the
implementation of sustainability and reporting practices (Ribeiro 2007; Ribeiro
2016c; Marcuccio and Steccolini 2005; Pilcher et al. 2008; Joseph 2010;
Mussari and Monfardini 2010; Lodhia 2010; Joseph and Taplin 2011; Mucciaroni
(2012).
6 Empirical Research on SEA in Portuguese Public

Entities
In Portugal, as far as we know, the first study on environmental accounting applied

to local authorities was developed in Ribeiro’s doctoral thesis (2007).8 In the
Portuguese context, municipalities are the public entities that are the closest to
citizens. The dissemination of social and environmental information by public
entities may allow such entities to grow closely aligned with citizens by demon-
strating a willingness and ability to serve citizens. This study has been conceived in
two different phases, using different research methodologies and objectives:
8
Part of the thesis was published in some scientific journals (Ribeiro and Aibar 2010 and 2011;
Ribeiro et al. 2012).
• the content analysis of environmental information disclosed in annual reports by

the Portuguese local entities in 2004, with the aim of knowing the location, type
and extent of environmental disclosure carried out by them, as well as the
possible factors that may have influenced such disclosure.
• semi-structured questionnaire for a sample of Portuguese local entities, in order
to obtain data about their situation, regarding the use of environmental man-
agement and accounting practices, that is, to know the development degree of
such practices and their possible explanatory factors.
The sample of this study included large and medium Portuguese city councils as
well as municipal companies belonging to these councils. Generally, the obtained
results at the first stage of the study, connected to environmental disclosure in
annual reports (in a total of 102 entities, 71 councils and 31 municipal companies,
representing 51,3% of the population), reveal that:
• most entities disclose environmental information, particularly in the manage-
ment report. This information is exclusively presented in a positive way and
mainly with a narrative character.
• the items about environmental investments, measures of environmental pro-
tection, education and training are those which are disclosed by a larger number
of entities and also present a larger extension in the annual reports.
• although most entities disclosing environmental information are city councils, the
results indicate that, on average, municipal companies tend to have a greater number
of references in relation to the environment when compared to city councils.
• however, it has not been proved that the type of the accounting plan applied to
local entities, as well as their geographical location, are determinants factors of
the environmental information disclosed in the annual report by Portuguese
local entities.
On the second part of the study, a questionnaire to analyse the use of envi-
ronmental accounting and management practices was implemented (in a total of 62
entities, of which 51 are city councils and 11 are municipal councils) and the main
results indicate that:
• the financial accounting (85.5%) and the budgetary accounting (75.8%) are the
two main areas which consider environmental issues.
• the management report is the main document to disclose environmental information.
• the number of entities that deal with environmental costs is limited, which is
explained by the fact that only 25.8% of the entities have a cost accounting system.
• the main reasons that lead entities to disclose environmental information is the
need to ensure environmental responsibility through their image promotion.
• the degree of development of environmental management practices is low,
however it is higher in city councils compared to municipal companies.
Additionally, entity size, the adoption of proactive environmental strategies and
the implementation of Local Agenda (LA) 21 are explaining factors of the
degree of development of such practices.
Proceeding with this study in Portuguese municipalities, Ribeiro et al. (2016a)

intended to identify the main factors which might explain the degree of develop-
ment of environmental accounting and reporting practices, based on an
Environmental Accounting and Reporting Practices Index (EARPI). This index was
created considering a set of eight environmental accounting and reporting practices
that could be implemented by the entities included in the sample. Three variables
were considered in this study as potential determinants of the development of
environmental management practices by local entities, namely the entity size, the
Accounting Framework and the degree of development of environmental man-
agement practices. The results reveal that:
• the degree of development of environmental accounting and reporting practices
in Portuguese local entities is low;
• however, municipal companies present a higher degree of development of
Environmental Accounting Practices when compared to city councils, once they
apply the private accounting plan and consequently the Portuguese
Environmental Accounting Standard 26;
• accounting regulation and the degree of development of environmental man-
agement practices are explaining factors of the degree of development of
environmental accounting practices in Portuguese local entities;
• therefore, the hypothesis concerning the influence of the size variable was
rejected.
In the public context, it has been proved that the Internet is an important means
of communication because of its interactivity and the ability to disseminate infor-
mation, bringing institutions closer to citizens. Recently, some studies were
developed to analyse online information disclosed by Portuguese public entities,
because websites are considered an adequate means for studying published infor-
mation on sustainability. Ribeiro et al. (2016b and c) studies aimed to analyse the
extent of online social responsibility (SR) information disclosure by Portuguese
municipalities and to identify related determinant factors, based on Institutional and
Legitimacy Theories. The sample included the 60 top Portuguese municipalities,
based on the efficient use of financial resources (Carvalho et al. 2012). A content
analysis was performed on web pages, and it was created an information disclosure
index (Total Disclosure Index—TDI) that was subdivided into four subindices:
Generic Information (GDI), Economic Information (EcDI), Social Information
(SDI) and Environmental Information (EnDI). Several tests have been conducted
using previously formulated hypothesis, via univariate and bivariate analyses.
A regression model that uses the Total Disclosure Index (TDI) as the dependent
variable was also developed. The results reveal that:
• descriptive statistics indicate average levels of SR disclosure. The Total
Disclosure Index (TDI) value was 0.46. The Economic Information subcategory
presents the highest value (0.66), followed by the Social and Environmental
information categories (0.61 and 0.36, respectively).
• univariate and bivariate analyses show that certain variables can explain the
degree of information disclosure. The Size (SIZE2) (measured by the number of
inhabitants), Education Level (EDUC) and Tax Burden (TAX) variables posi-
tively influenced all indices, while the Unemployment Rate (UNEMP) variable
does not influence the indices. Political Competition (POLCOM) only influ-
enced Environmental Information Disclosure Index (EnDI), and the remaining
variables influenced at least four out of the five indices studied;
• the multivariate analysis results indicate that the implementation of the Local
Agenda 21 (LA21), the existence of tax burdens, the characterization of a
municipality as an urban one and the environmental/SR certification application
positively influence the degree of SR information disclosure. The Total
Disclosure Index (TDI) is negatively affected by the existence of an inactive
population (i.e. the percentage of individuals 19 and 65 years of age).
7 Accountants’ Role to Promote SEA in Public Sector
The extent to which accountants have been involved in environmental reporting

practices has been investigated by some authors (Gray et al. 2009; Deegan et al.
1996; Kuasirikun 2005). Williams et al. (2010) mentioned numerous studies that
have examined the role of the accountant from a private sector perspective in
environmental accounting. However, studies focusing on the role of the accountant
from a public sector perspective are limited (Ball 2002, 2005; Telford 2005; Farneti
and Guthrie 2009; Williams 2015). The results usually indicate that accountants are
not as involved as they could be in the environmental accounting practices of their
organizations.
Williams (2015) focused on the accountant’s current and potential role in the
sustainability reporting process in the Australian local government, exploring fac-
tors that influence the further development of the accountant’s role. Findings
indicate that accountants are supportive of involvement in sustainability reporting,
but their actual level differs significantly from the level of involvement they believe
they should have, pointing to the existence of an execution gap. Potential factors
were investigated, highlighting the limited integration of sustainability beyond the
organizational level, the lack of understanding of sustainability by accountants and
the current need for further upskilling by them. The research has indicated that the
public sector accountants have a minimal level of involvement in the preparation of
sustainability reports. Burritt et al. (2009) argued that the lack of training, educa-
tion, knowledge and experience of accounting personnel is acting as an obstacle to
the development of sustainability accounting in the public sector.
Williams et al. (2010) argue that accountants themselves need to engage more in
issues of sustainability if they intend to broaden their involvement and role in
sustainability accounting. This can only happen if accountants are aware, under-
stand and fully appreciate the value of sustainability accounting and reporting.
Lewis (2008) analyses the accountant’s role related to public sector sustain-
ability reporting. According to this author, the accountancy profession has a clear
opportunity to play a leading role in developing sustainability reporting in the
public sector context.
A report of the Accounting for Sustainability Group by the Prince of Wales
(2004) affirmed that it is important for accountants to be aware of sustainability
issues in their work. In fact, the accountancy profession has an important role in
defining how sustainable development is measured and in influencing how gov-
ernments report such issues.
The Association of Chartered Certified Accountant’s guide about the role of
accountants in sustainability (ACCA 2008), although mainly private sector focused,
is also relevant for government and public sector accountants. ACCA (2010)
mentions some areas where accountants can contribute to sustainable development
and government sustainability reporting: budget and strategy development; audit;
performance measurement, monitoring and management; accountability and gov-
ernance and standards setting. Accountants have skills to understand the regulatory
and voluntary reporting environment in which businesses and governments operate,
to manage risk; to develop efficient frameworks to measure financial and
non-financial information and to provide clear and reliable sustainability
information.
8 Conclusion
The international panorama of environmental disclosure is characterized by a

diversity of voluntary or mandatory standards/guidelines, which are predominating
in the private sector. At European level, only a few countries such as Portugal,
Spain, France, Denmark and Finland have included some elements of the European
Recommendation on environmental matters in their regulations.
Before the accounting regulations that establish requirements for the environ-
mental disclosure in the annual reports of public entities, the environmental
information published has mainly been voluntary. In consequence, it would be
primordial to promote environmental accounting legislation in the public sector, not
only with the goal of revitalizing the environmental disclosure in the public sector
but also to be followed as an example by the private sector.
While research on SEA in the private scope has acquired an even greater
importance throughout the last decades (Gray 2006), in the public sector the
research has only started to take its first steps. For instance, some countries like
Australia are pioneers in the investigation of this matter.
Although several authors (CPASR 2005; Guthrie et al. 2010) have highlighted
the need to understand public entities’ current sustainability reporting practices,
little research has been conducted in this field (Ball and Grubnic 2007; Guthrie and
Farneti 2008; Farneti and Guthrie 2009). Moreover, understanding the determinant
factors of public sector organizations to adopt SEA practices may help promote the
disclosure of such practices (CPASR 2005; Qian et al. 2011).
The empirical research literature review on environmental accounting shows that
most studies concerned to environmental disclosure are particularly focused on
private organizations. However, in the last years, we have witnessed an increasing
focus on Environmental Accounting research in the public sector. This is high-
lighted by a further development of empirical studies in the public sector.
Actually, the empirical research of SEA in the public sector is far from reaching
the level of research in the field of the private sector. The research on public
environmental accounting is limited to a few papers, most of them focused on
environmental (and/or sustainability) disclosure practices, although others analyse
the environmental accounting practices from an internal perspective. An overview
of the empirical literature concerning environmental accounting in the public sector
outlines that some of the studies have investigated: (a) the reasons that led public
entities to adopt environmental accounting practices as well as their degree of
development and; (b) the type and extent of environmental disclosures made by
public entities.
In Portugal, although there is some empirical investigation in the private sector,
the empirical research including public entities is restricted. As far as we know,
there is no tradition of this kind of empirical research in Portugal; there are only a
few studies, described on this paper.
Our paper tried to enrich this literature by providing a general overview and
analysis of the current state of SEA in Portuguese local entities. In general, evidence
indicates that the extent to which those entities have developed social and envi-
ronmental reporting practices is low. The incidence of such practices is lower in the
local sector in Portugal than in other countries, such as Australia and the UK.
Therefore, we can conclude that Portuguese local entities are lagging behind other
countries in the development of SEA practices. However, we believe that their
results can be considered as a starting point for future investigations.
In our opinion, reasons like the lack of environmental accounting regulation in
the Portuguese public sector can explain the scant development of the environ-
mental accounting and disclosure practices in the public sector. Thus, this area of
interest is lacking appropriate attention from accounting researchers. In this sense,
we argue that there is a need to revitalize the empirical research in the environ-
mental accounting field, regarding the public sector, both on the international and
Portuguese contexts.
Finally, we consider that the environmental disclosure harmonization requires a
concerted work of regulatory entities, accounting and auditing professionals, as well
as researchers to get better solutions when elaborating and presenting environ-
mental information, to ensure a bigger transparency and comparability. In fact, we
share the opinion of Soloman and Lewis (2002) that the environmental disclosure
regulation should be accompanied by an educational strategy, which should include
corporate management, stakeholders and professionals’ associations.
SEA is a field which raises challenging issues for the accounting profession:
social and environmental accounting and reporting involves a deeper understanding
of the interdependence of social, environmental and economic issues; it demands
long-term and future-focused accounting practices; and it requires accountants to
work alongside other professionals.
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An Investigation into the Sustainable
Actions of Micro- and Small Businesses
Stacey Marshall and Sarah Williams
Abstract Although much is written about the approach of larger companies

towards their environmental responsibilities, there is much less concerning smaller
companies. This gap in research is particularly apparent within micro-businesses. If
the sustainability actions of a business are related to the perceived drivers and
barriers of the leader, then this should be even more apparent in very small com-
panies where the leader is closer to the firm. This paper contributes by investigating
the current sustainability behaviours of UK-based micro-and small businesses, with
a specific emphasis on the drivers and barriers of their environmental activity. In
order to achieve this, an empirical, cross-sectional study was carried out using a
mixed-methods approach in partnership with the UK-based Federation of Small
Businesses (FSB). The results find a surprising number of eco-friendly activities
carried out by micro-and small business with a strong desire for support to over-
come resource and capability barriers.

Keywords Micro-and small business Eco-friendly behaviour

Drivers and barriers Environmental engagement Environmental actions
1 Introduction
The purpose of this paper is to investigate the sustainable, environmental actions of

UK-based micro- and small businesses and in particular their perceptions of the
drivers and barriers to engagement. For the purposes of this paper, a micro-business
is defined as a company who employs fewer than 10 people (Mitchell 2014) and a
small business is a company who employs between 10 and 50 people (EUR-lex
2007). Micro-and small businesses account for 99.3% of all private sector busi-
nesses in the UK (DBIS 2015), with over 19 out of 20 businesses in the UK
employing less than ten people (Young 2015).
S. Marshall S. Williams (&)

University of Bedfordshire, Luton, UK

238 S. Marshall and S. Williams
Although each individual business is small, it is their collective impact that is

significant with micro-and small firms contributing up to 70% of global pollution
(Halberstadt and Johnson 2014; Johnson 2013; Hillary 2000). Additionally, the UK
Environment Agency (2003) has estimated that micro-and small businesses account
for around 60% of commercial waste and nearly 80% of pollution incidents. This
makes the collective engagement of micro-and small businesses fundamental to any
effort to reduce carbon emissions and improve resource use.
However, despite the collective need and importance of micro-and small busi-
nesses to the sustainability agenda, the majority of micro- and small business
managers have yet to engage with eco-friendly activities (Johnson 2013: Revell and
Blackburn 2007). This makes understanding how to support engagement a signif-
icant and legitimate imperative. While there is little research that focuses specifi-
cally on micro-and small business environmental behaviour (Bos-Brouwers 2010;
Lee 2009), there is some evidence that micro- and small business owners would like
to engage with improved environmental practices, yet lack the ability to do so.
Certainly, Lobel (2015) found that 90% of micro- and small business managers
would be more energy efficient if they could. This suggests there is a lack of
knowledge about the pro-environmental behaviour of very small firms and a need to
understand their perceptions of the drivers and barriers to engagement in order to
support them with current and forthcoming sustainability challenges (Halberstadt
and Johnson 2014; Johnson 2013; FSB 2007).
In order to address the apparent gap in understanding argued here, this paper
reports on empirical research which was carried out in 2016 with the support of the
East of England regional group of the UK-based Federation of Small Businesses
(FSB). The FSB is the largest direct business membership organisation in the UK
with over 210,000 members.
The research set out to analyse the drivers and barriers of pro-environmental
behaviour in micro-and small businesses and to evaluate the environmentally
pro-active actions taken by a sample of business owners. In addition, this paper will
offer an assessment of what micro-and small businesses could be doing to improve
their environmental sustainability and the support they may need to achieve this.
1.1 The Importance of Business Sustainability
While sustainability is increasingly a core business concern (Johnson 2013; Revell

et al. 2010), it will never be fully accomplished unless all companies, especially the
smallest, are involved (Hillary 2000). Pilot (2014) suggests the role of companies
within the sustainability agenda is changing, with it becoming increasingly
important for businesses to go beyond their core business activities to protect
society and the environment. However, it is clear that companies of different sizes
and competencies will react differently to the same environmental challenges and
opportunities; with micro-and small businesses different from larger corporations in
terms of their capabilities and resources (Parry 2012; Hammann et al. 2009; Biondi
An Investigation into the Sustainable Actions of Micro- … 239
et al. 2000; Gerrans and Hutchinson 2000). This means that while smaller firms
may be more agile, they may still take a reactive (rather than pro-active) approach
towards sustainability and may experience the drivers and barriers to environmental
engagement differently to medium and large companies.
However, the significance of sustainability specifically for micro-and small
businesses is contested, with Samujh (2011), arguing that survival overpowers
sustainability concerns for the majority of very small firms. In addition to Samujh
(2011), Kloviene and Speziale (2015) also emphasise that in order for micro-and
small businesses to contribute towards economic growth and stability, short-term
survival issues will need to trump longer term considerations. This suggests that
environmental actions may not bring micro-and small companies sufficient eco-
nomic benefits, for example from resource cost savings or enhanced reputation, and
that market intervention/network support maybe needed to facilitate such adoption
and enhance the links between sustainability and enhanced survival rates (Samujh
2011; Kloviene and Speziale 2015).
1.2 Drivers and Barriers to Sustainable Behaviour
There are a number of drivers to pro-environmental engagement identified in the

literature for small to medium (SMEs) and larger firms, with varying evidence
linked specifically to micro-and small companies. In many cases, the literature does
not specifically relate to these very small companies and the relevance is untested
and assumed. This is significant because support to engage SMEs with the envi-
ronment was initially based on what was known about the engagement of larger
firms yet this proved to be inadequate or misleading (e.g. Spence 2007). Indeed,
Bansal and Roth (2000) claim that drivers may vary in accordance to the business
context, the business size and the situations that lead to their particular motivation.
This may imply that micro-and small businesses are likely to encounter several
barriers that prevent them from more fully engaging (Al Zaabi et al. 2013).
A number of drivers identified from within the literature as potentially relevant
to micro-and small business will be discussed in the following sections, including
personal ethical beliefs, cost savings, legislation/regulation and resource
constraints.
1.3 Ethical Beliefs
Ethical and ecological beliefs have been identified as a major driver for sustainable
actions (Williams and Schaefer 2013; Kehbila et al. 2009; FSB 2007). This was
also demonstrated by Lobel (2015) who claimed that 70% of SME owners state that
protecting the environment is highly important to them. However, Parry (2012) and
Spence (2007) observed that although ethical motivations have attracted much
attention from business researchers, it is not clear how this relates to very small
companies where the owner is not considered to be an eco-preneur, or specifically
setting up a ‘green’ business.
1.4 Cost Savings
Small businesses often have limited access to capital and limited cash flow, so it is
understandable that cost savings may be identified as an important driver for sus-
tainable actions (Lobel 2015; Pilot 2014). However, there is limited evidence that
very small businesses make savings significant enough to warrant the investment in
time and effort (Williams and Schaefer 2013; Fineman 2000), suggesting that cost
savings may be part of a mix of motivations or less significant than for larger
companies (Parry 2012). In addition, it has been observed that SME owners can
believe that introducing environmental practices will initially cost money (Williams
and Schaefer 2013; Revell and Blackburn 2007). Apart from the 2007 FSB survey
(FSB 2007), that investigated social and environmental responsibility approaches
by members, there is limited evidence that seeks to understand this conundrum
from the perspective of the micro-or small business. Although the FSB survey (ibid)
had a greater focus on social rather than environmental aspects and did not separate
micro-and small from SME, the report did find that perceived cost, along with lack
of time and lack of capacity, were barriers to small business engagement.
1.5 Legislation and Regulations
Blundel et al. (2011) argue that legislation to protect the environment has increased
with Governments in different areas introducing policies to limit the damaging
activity of organisations. As a result of this, micro-and small businesses in Europe
and the UK at least, are all subject to at least some environmental compliance.
However, SMEs have been known to comply through accident rather than design
(Petts et al. 1998) and it is unclear how far micro-and small business are affected
(directly or indirectly through the supply chain) or recognise compliance as a
general motivation. Certainly, Al Zaabi et al. (2013) argue that legislation can be
considered as both a driver and barrier, as compliance can reduce innovation in
favour of meeting minimal requirements. Indeed Spence (2007) supported by
Williams et al. (2017) argued that compliance limits engagement and acts as a glass
ceiling: If compliance is the motivation, once compliance is fulfilled, no further
action is required.
1.6 Resource Constraints
Verboven and Vanherck (2015) argued that most small businesses have consider-
able resource limitations that prevent them from integrating sustainable practices
into their business as well as time constraints. It is also suggested that sustainability
implementation costs can be relatively high (Butler, Henderson and Raiborn 2011)
and that the majority of micro-and small businesses are hesitant to spend the money
to become sustainable as it is not seen as a cost that can be transferrable to cus-
tomers in terms of added value (Taylor et al. 2003). On the other hand, Condon
(2004) argues that SMEs at least have an advantage when addressing ecological
issues because their size enables them to respond more quickly to changes in the
business environment in comparison to large and global organisations. It is not clear
whether micro-and small businesses per se recognise or act on this agility.
1.7 Other Drivers
There have been many other drivers and barriers of sustainable activities that have
been identified by business researchers but it is not clear how far these relate to
micro-and small companies. For instance, it has been found that implementing
environmentally and socially responsible practices can create competitive advan-
tage (Matthews 2015; Miller 2010; Alzawawi 2014) but it is not clear how far this
is achieved or perceived to be the case for micro-and small businesses—apart from
those starting up as ‘green’ businesses. There is also a lack of knowledge relating to
both consumer demand (Matthews 2015) and supply chain pressure as drivers for
engagement by micro-and small businesses.
1.8 Literature Summary
While it is clear that sustainability is of growing concern for business (Pilot 2014;
Johnson 2013; Parry 2012; Revell et al. 2010), it is not clear how far existing
research on SME pro-environmental engagement relates to micro-and small busi-
nesses. Certainly a number of SME researchers suggest that more could be done to
understand and support the smallest companies (e.g. Lobel 2015; Revell and
Blackburn 2007) to take steps to reduce their collect environmental impacts. While
a mix of motivations are recognised within SME research as potential drivers for
business engagement, it is not clear how far these apply, or are perceived to apply,
and to be experienced as benefits by micro-and small businesses.
1.9 Methodology
In order to analyse the drivers and barriers of pro-environmental behaviour in

UK-based micro-and small businesses and to evaluate the eco-actions taken within
such companies, an exploratory research approach was used. This allowed the
primary researcher to understand the issues more thoroughly (Mirazee 2014) and to
address ambiguity in a research area that was fairly new (Blumberg et al. 2011). In
addition, a cross-sectional research design enabled the collection of data on several
micro-and small businesses at a particular time so the research could be examined to
detect patterns of association (Bryman and Bell 2011).
This research was conducted through a mixed-methods approach using both
qualitative and quantitative techniques (White and Rayner 2014). Quantitative
research was carried out through the use of online self-completion questionnaires
and qualitative data was collected through semi-structured interviews. Validity and
reliability were addressed through triangulation of methods and peer feedback.
1.10 Data Collection
For this research, simple random sampling (probability) was used as this is the only
method of sampling without bias and was the most representative sample of the
population involved in this research, due to the different sizes and natures of micro/
small businesses (White and Rayner 2014).
White and Rayner (2014, p 65) define a questionnaire as “a series of questions,
each one providing a number of alternative answers from which the respondents can
choose.” Questionnaires generate data in a well organised fashion and the responses
can then be measured, categorised and subjected to analysis so the researcher can
understand the data collected (White and Rayner 2014). The use of a questionnaire
enabled the researcher to ask participants about the sustainable activities imple-
mented within their businesses, along with their reasons for undertaking such
actions and what may prevent actions that are desired but not carried out.
Participants had the opportunity to add additional comments under each question
The questionnaire was created online and promoted through social media. In
addition, the primary researcher was particularly grateful for the support of the East
of England Federation of Small Businesses (FSB) who distributed the questionnaire
to micro-and small business members. A total of 65 responses were received
allowing some generalisation of the quantitative findings. The East of England was
chosen both out of convenience and due to the region being the driest and most
low-lying area of the UK and particularly vulnerable to environmental change.
The UK Climate Impacts Project (UKCIP 2003) expects the East of England to be
affected by climate change through drought, heat waves, flooding and sea level rise
with an increasing risk of physical damage from high winds. The region is also
promoted as the ‘ideas region’ of the UK (EEDA 2011, p. 22) and as highly
innovative in developing agile, creative solutions. The region is linked with the
supply of UK energy via European gas pipelines from the North Sea; renewable
energy from the UKs largest off shore wind farms in the North Sea and nuclear
energy from Sizewell in Suffolk. Environmental issues specific to the region include
congestion from a poor east-to-west transport infrastructure and high transport load
to and from the container ports of Felixstowe and Harwich.
In addition to the questionnaire, five in-depth semi-structured interviews were
carried out. These used a similar format to the questionnaire and enabled the
primary researcher to explore the questionnaire results in greater depth by
encouraging participants to expand on their answers. Indeed, both the questionnaire
and the semi-structured interviews were divided into two sections. The first section
asked questions about business, for example how long the business had been
trading and the nature of the business; whereas section two focused solely on
environmental engagement and asked the business owner about environmental
behaviour, drivers and barriers.
As both the questionnaires and the interviews contained similar questions
regarding the nature of the business, the relevance of sustainability, perceptions of
the business as sustainable, drivers and barriers to sustainability and environmental
actions undertaken, the data was analysed by taking an iterative case by case
approach to each individual question. This enabled the researcher to explore
answers in depth while reflecting on how widely ideas were found in the
questionnaire.
2 Findings
2.1 Business Information
The first four questions were designed to understand more about the nature of the
business. Of the 65 completed questionnaires, 83% were from small companies
with between 10–50 employees and 17% were from micro-business with less than
10 employees. This indicates that the research collected is relevant to micro-and
small businesses. In addition, all five of the semi-structured interviewees were from
micro-businesses in order to add depth specifically to the most under-researched
group. Of the respondents, nearly three out of four were the company owners from
the initial start-up, meaning that environmental approaches introduced since start-up
had been based on their actions. Additionally, the researcher asked the nature of the
business so they were able to identify any connections between the activities they
did and the type of business in question however there were over 33 different
businesses questioned, a list of these business can be seen in Table 1.
Table 1 Breakdown of Nature of business No.

business by activity
Strippers 1
Sales 3
Painter and decorator 2
Joinery and manufacturer 7
Shop fitting 6
Commercial property maintenance 2
Security alarm installers 1
Sports team/Training class 3
Tree surgeon 1
Electrician 3
Plumbing and air conditioning installation 2
Cleaning 3
Mechanics and engine tuning 1
Hairdresser/Beauty salon 6
Plastering 2
Quarrying stone 1
Haulage 2
Book publisher and shop 3
Talent management 1
Phone answering service 2
Florist 2
Building and construction 3
Audio visual consultancy 1
Event production 1
Fashion shop 2
Nightclub 1
Solicitors 1
Photographer 1
Taxi firm 1
Total 65
2.2 Relevance of Eco-Friendliness to the Business
The aim of this question was to explore the owner’s initial position on the relevance
of the environment to their business and how far they believed their business had
the ability to be sustainable. Just over two-thirds (68%) of the questionnaire sample
and all five of the interviewees, believed that being eco-friendly was relevant to
their business and achievable for them. Example comments included:
The improvement in our environment and the strive towards a more sustainable lifestyle is
relevant to all, particularly with increasing global pollution and the race of economic
growth among nations (Design & project management, retail sector)
Yes although it is given that we are only a very small company it can prove difficult at
times. I am aware of the availability of timber products that have been sourced from
reliable/renewable sources through FSC and PEFC schemes and would ideally purchase
materials bearing these trademark stamps. We would consider wherever possible the seg-
regation of waste materials generated by our business (Shop fitting & Joinery
Manufacturing).
Eco-friendly is relevant to all businesses, and yes, to ours too. Eco-friendly is not only
beneficial to the environment but can provide cost savings to businesses too. (Event
Production).
Nevertheless, this means that the remaining one-in-three questionnaire respon-

dents did not believe that being eco-friendly was relevant to their business or
believed they were unable to implement eco-friendly activities. Here comments
emphasised the potentially contrary views highlighted in the literature regarding
cost and cost benefit. This suggests that, similar to recent research on SMEs
(Williams et al. 2017), the cost-based business case can be confusing and does not
always stack up for smaller companies. For example:
There are environmentally friendly paints but they cost more and there is an environ-
mentally alternative to white spirits but it doesn’t work. If it was possible to be more
environmentally friendly I would be (Painter & Decorator).
Investing in LED lighting and solar panels would make us far more eco-friendly but we do
not have the money to invest (Auto Electronics & Engine Tuning).
Nearly half of respondents (43%) considered their eco-friendliness as ‘average’

in comparison with other small firms. The remaining respondents were evenly
divided between perceptions of their company as more or less eco-friendly than
others. In the interviews, three out of the five interviewees rated their company as
‘average’ whereas the other two rated theirs ‘very’. The first comment points
towards the complexity and confusion that small business owners can experience in
trying to do the right thing and the need for actors to understand the different levels
at which they can respond (Williams and Schaefer 2013). It is also clear that small
businesses are restricted by the limitations of their business premises. These
restrictions can come from the capital costs needed to make improvements but may
also be from a lack of power to make changes with restrictions due to lack of
(rented premises) and/or regulatory requirements. Comments from the interviewees
included:
No one can win, because if we use computers then we are using an immense amount of
electricity whereas if we use paper then we are killing trees. There is no absolute sus-
tainable option to whatever we do and therefore we cannot win. Business C. Self-rated
‘Average’.
We try to be eco-friendly by recycling paper and that, using LED light bulbs, reducing
electricity and water usage but we are based in an old listed building that we lease which
has poor insulation and single glazing so we can’t really do a lot there. Business B, ‘very’.
I believe that we do as much as we possibly can to be sustainable and to reduce our
environmental impact by implementing eco-friendly activities in all that we do. We make
sure that all equipment is fully turned off when not in use and we do not print as many
documents as we used to as all communication is now done through e-mail. Also, instead of
travelling to conferences and meetings, we use Skype so that we are able to reduce
emissions through travel. Business D, ‘very’.
2.3 Sustainable Eco-Friendly Actions Carried Out

in the Business
This question was designed to explore the actions that respondents were already
carrying out in their businesses which they considered to be eco-friendly and
sustainable. Questionnaire respondents had a number of options to select from as
well as the opportunity to add additional activities. Interviewees were encouraged to
reflect in depth on their company behaviours.
Table 2 summarises the key questionnaire answers. It is clear from this that four
actions are considered to be the most significant for micro-and small businesses—
each reduced energy and resource use, were easy to implement, usually with no cost
outlay and offered some potential cost savings. Williams and Schaefer (2013)
similarly found that while SME managers can be critical of cost saving messages,
the environmental actions carried out by them first did save money. However, cost
Table 2 Questionnaire summary of environmental actions

savings were found to a by-product of actions not the motivation for undertaking
them.
The four highest answers found in this current research were; ‘ensuring all
equipment and lights are turned off when not in use’ (84.6%); ‘recycling’ (72.3%);
‘printing fewer documents’ (70.8%); and ‘communicating technologically’ (61.5%).
However, it is clear that micro-and small business are involved with a surprisingly
broad range of actions and this clearly indicates the potential for encouraging and
supporting very small firms with stronger sustainability. Indeed, it was clear from
the interviews that the infrastructure and support needs to be in place for these
businesses to engage with environmental actions. For example:
We would like to do more to be more sustainable but because we are based in an old listed
building with very little insulation, we need to have the heating on all the time to make sure
it is warm so we are using a lot of electricity Business B.
The only reason that we make sure our lights are turned off is because it saves us money on
bills, and then printing double-sided is because it saves money on paper and we only
recycle because we have the bins available to do so Business E.
2.4 Drivers Towards Environmental Sustainability
Although the potential savings may be relatively small, ‘saving costs’ was seen to
be the strongest motivator for initiating environmental behaviours, with 81.5% of
questionnaire respondents selecting this option. Interestingly, ‘ethical/ecological
beliefs’ was the second strongest motivator at 44.6% and ‘legislation and regula-
tions’ was third with 38.5%. This suggests that the mix of motivations highlighted
in the literature review is largely relevant to micro-and small businesses even
though the research did not, in the main, focus on this group of very small busi-
nesses. It also supports recent work with SMEs (e.g. Williams et al. 2017; Cassells
and Lewis 2011) that emphasises the importance of personal values in both how
sustainability messages are received and how the mix of motivations is prioritised.
The interview responses were also quite reflective of the need to save money
with each of the interviewees suggesting that ‘saving costs’ did encourage them to
be more sustainable. However, interestingly, there was an emphasis on efficiency
rather than saving cost to necessarily maximise profit. This suggests that respon-
dents are trying to run the best business they can. For example:
I do what I do because it saves money and as a micro business, have little spare funds to be
shedding out on bills etc. so I try to keep my costs to a minimum Business A
I would say that saving costs is the biggest driver for me because being such a small
business, we do not have a lot of money to be spending out and therefore we try to reduce
costs wherever possible Business C.
2.5 Barriers Towards Environmental Sustainability
While cost savings was perceived as a driver, the perception of ‘high initial costs’
was the biggest barrier (57%) for respondents to implementing sustainable activi-
ties. Additionally, ‘resource constraints’ at 52% was the second strongest barrier
perhaps suggesting that respondents are not engaging in eco-friendlier activities
because the business does not have the resources or capabilities to do so.
A perceived ‘lack of support’ was highlighted by 30% of respondents. These
findings were developed and supported through the interviews where Business C, in
particular was passionate about the need for support:
There is a huge lack of support from the Government that helps micro and small businesses
become eco-friendlier. If there were more Government funding/schemes available, then I
would be more inclined to be sustainable as it would mean I would be able to do more to
save costs, like install solar panels to reduce my electricity bills Business C.
The same need for support and for help with capital investment was also
reflected in the questionnaire responses. For example:
My business produces a lot of wood waste as offcuts not suitable for use in projects.
However, should funding or carbon grants become available again, I would invest in a
furnace to burn all non-usable cut offs to heat the workshop rather than using diesel heating
(Joinery & Manufacturer).
We would like to invest more in using recycled materials but the cost of these are too high
at the moment (General Shop Fit & Maintenance).
The perceived barriers become particularly significant when the proportion of

business owners who aspired to be more engaged with sustainability is considered.
Indeed, 78% of the respondents said they would like to become eco-friendlier but
the perception of, largely, cost prevented them. If the perception of cost is greater
than the actual costs involved, then it is a lack of knowledge (what to do/how to
manage) and support that is can be implied to be key. The remaining 22% who did
not aspire to become eco-friendlier believed they were already doing as much as
they could. However, if ‘business’, as a social actor, is to fully embrace sustain-
ability and move beyond quick wins and cost savings, then there needs to be greater
understanding of what very small businesses can achieve. There was some sug-
gestion that the supply chain could play a greater role in facilitating such aspira-
tions. The revised international environmental management standard
ISO14001:2015 encourages engagement with tier 2 and tier 3 suppliers (as well as
immediate suppliers and customers) and this may, in time, encourage greater
innovation and support to micro- and small businesses.
3 Discussion
3.1 The Drivers and Barriers of Being Engaging

with Sustainability for Micro- and Small Businesses
The results of the empirical research reported in this paper posit the prime motivator
of sustainable activity as ‘saving costs’ and the second biggest driving factor is
‘ethical/ecological beliefs’. However, it is unclear how different motivations are
perceived as inter-related to each other and this research did not fully explore what
was meant by ethical/ecological beliefs. Certainly, a number of authors have
recently emphasised the importance of ethical beliefs within SMEs (e.g., Williams
and Schaefer 2013; Kehbila et al. 2009; Lobel 2015) and how cost savings are
achieved as a by-product of actions made for other reasons. This is slightly con-
tradictory to the findings from this current research and points towards a need to
explore the ethical beliefs of micro- and small business owners with regards to
sustainability in more depth. It is also possible that the greater emphasis on cost
savings found in this research supports the survival over sustainability argument of
Samujh (2011) and Kloviene and Speziale (2015) for unlike the traditional business
case of ‘save money, save the planet’ (Revell 2003), very small businesses need to
maximise any opportunity for efficiency in order to survive. Certainly, Parry (2012)
argued that micro- and small business owners would only implement sustainable
activities if they could see definite benefits of doing so.
It is an apparent contradiction that ‘saving costs’ can be seen as an important
driver towards eco-friendlier behaviours yet, ‘high initial cost’ can also be per-
ceived as the most significant barrier. This emphasises again that the perception of
cost and motivation is not as clear as some early SME writers suggested and may be
more complex for micro- and small businesses as well. The contradiction may also
reflect ‘saving cost’ as quick win, no initial outlay efficiency savings versus ‘high
initial costs’ actions that go beyond these quick wins and do require some
investment. This may therefore reflect the perception and aspirations of business
owners and their definition of sustainability and warrants further investigation.
Previous research (e.g. Verboven and Vanherck 2015; Butler et al. 2011; FSB
2007) demonstrated the importance of resource and time constraints in small
companies where the owner-manager often requires a very broad set of skills to
fulfil a number of roles within the company. This was a finding supported by this
current research in the context of environmental sustainability. Over half of micro-
and small business owners said that they do not have the resources and compe-
tencies required to implement desired environmental improvements.
3.2 Evaluating the Sustainable Actions Taken

by Micro- and Small Business Owners
The research found a surprisingly broad array of actions carried out by the micro-
and small businesses questioned. However, many of the actions can be considered
relatively simple and included ‘ensuring lights and equipment are turned off when
not in use’, ‘recycling’ and ‘printing fewer documents’ along with ‘communicating
technologically’. However, it was clear that respondents had the potential to go
beyond simple actions with a small number beginning to introduce renewable
energy sources and looking to reduce electricity and water usage. Additionally, the
questionnaire results demonstrated that around half of the respondents had been
implementing the sustainable activities over time and the other half had looked to
be eco-friendly from the beginning. The existing literature does not provide detailed
insight into the actions that micro- and small businesses carry out in order to be
sustainable but instead tends to emphasise the importance of sustainability across all
businesses and within every economy. Reflecting on the actions, as well as the
drivers and barriers, of sustainability for micro- and small businesses is a therefore a
clear contribution of this paper.
Interestingly while the majority of respondents in both the questionnaire and the
interview had been sustainable from the beginning, it is worth noting that most had
been trading for less than five years. This reinforces and potentially supports the
suggestion that sustainability in micro- and small businesses is a current issue with
new start-ups increasingly recognising sustainability as a growing concern and
opportunity for all businesses (Johnson 2013; Revell et al. 2010).
4 Conclusion
While notions of sustainability within business are complex (Farley and Smith
2014; Johnston et al. 2007), it is clear that the concept is very firmly on the business
agenda. However, there has been limited research exploring the experience of
sustainability from the perspective of micro- and small businesses, and it is that gap
which the current research has aimed to address. Environmental engagement is
increasingly relevant to all businesses, in all industries (Williams et al. 2017;
Johnson 2013; Revell et al. 2010) and this position has been supported by the
micro- and small businesses in this research: Sustainability and eco-friendly aspi-
rations are relevant to very small businesses. This is an important finding because
while micro- and small businesses tend to have a limited individual environmental
impact, their collective impact is significant (Halberstadt and Johnson 2014;
Johnson 2013; Hillary 2000). Engaging this group with actions that reduce their
environmental impact and improve their overall sustainability should be a key goal
for business support.
While there are many different drivers and barriers to environmental engage-
ment, it is clear that the individual perception of the different micro- and small
business owners is important. This suggests that, in terms of engagement, ‘one size
does not fit all’ (Williams et al. 2017) and social actors looking to engage with this
business sector need to understand the particular nuances of the mix of motivations
and, potentially, how that links with the values and motivations of the individual
business owner (Williams et al. 2017). After all, each business is different and each
business owner will have different characteristics and personalities that impact on
what motivates them to become more sustainable (Bansal and Roth 2000). From
both the interviews and the questionnaire used in this research, ‘saving costs’ and
‘ethical beliefs’ were found to be the strongest drivers. However it is not clear how
different motivations weigh against each other within each business or indeed, fit
with additional drivers, such as, supply chain compliance and legislation to form a
whole picture. It was also clear from this research that some concepts, such as costs
and legislation, can act as both a driver and a barrier and this goes to emphasise the
importance of the individual as the unit of engagement.
It is important to emphasise that this research found that micro- and small
businesses are already carrying out a number of eco-friendly actions. This supports
the research into social and environmental responsibility carried out by the FSB
nationally in 2007. However, the finding is still significant because current research
still largely maintains that sustainability is of little interest to very small businesses,
who need to focus on survival (Samujh 2011; Kloviene and Speziale 2015). It can
however be suggested, based on the findings of this research, that micro- and small
businesses are engaging with sustainability and in doing so, actually increase their
chances of survival: this is because the eco-friendly actions reported by respondents
helped to improve the overall efficiency and competitiveness of the business.
Looking forward, social actors engaging micro- and small businesses with sus-
tainability might look to explore sustainability in terms of organisational resilience
and the potential threats and opportunities that might encourage a deeper, longer
term and more strategic view of environmental issues.
It was clear from this research that micro- and small businesses need support to
more fully engage with sustainability. A clear desire was demonstrated to engage
with the agenda but explicit calls for ‘how to’ knowledge and support were made.
At the micro- and small business level, it is clear that there is still market failure
without drivers clear enough to encourage deep change. Certainly, the UK Labour
Government during the 2000’s, with support from the European Union, invested
heavily in support to engage SMEs with improved environmental performance. For
example, the UK government invested £240 million between 2005 and 2008 under
the Business Resource Efficiency and Waste Programme (BREW) to encourage
businesses to voluntarily improve their environmental performance through
resource efficiency (NAU 2010) and directed a proportion of Landfill Tax to
encourage business in this way (£214 million 2008–10). Respondents to this current
research were clear that if there was Government funding/funded support it would
help them to overcome initial costs and resource constraints. Working together to
develop and share best practice and overcome common issues, such as rented
premises and access to renewable energy, would be likely to improve the survival
and economic growth of these companies in the long term.
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Approaches to Global Sustainability, Markets, and Governance

Series Editors: David Crowther · Shahla Seifi

More information about this series at http://www.springer.com/series/15778

ISSN 2520-8772 ISSN 2520-8780 (electronic)

© Springer Nature Singapore Pte Ltd. 2019

Printed on acid-free paper

Responsibility and Governance: The Twin Pillars of Sustainability . . . . 1

Part I Challenging the Routine

Part II Insights for Industry

Should We Expect Exemplary Integrated Reporting to Increase

Part III Empirical Studies

Rute Abreu Guarda Polytechnic Institute/UDI-IPG/CICF-IPCA, Guarda, Portugal

Matilde Schwalb-Helguero University of Pacíﬁco, Lima, Peru

David Crowther, Shahla Seiﬁ and Tracey Wond

Keywords Sustainability Corporate social responsibility Governance

© Springer Nature Singapore Pte Ltd. 2019 1

3.1 The Dual Role of Responsibility—Both Governance

3.2 Six Constructs of Responsibility

To develop an understanding of responsibility as a pillar of sustainability, an

3.3 Consequences for Governance and Sustainability

4 The Future for Sustainability

4.1 The Changing Sustainability Landscape

The role of small and medium enterprises (SMEs) in supporting sustainable

Amba-Rao, S. C. (1993). Multinational corporate social responsibility, ethics, interactions and

Keywords Utilitarianism Ethical decisions Social contract Individualism

© Springer Nature Singapore Pte Ltd. 2019 17

Classical Liberal Theory started to be developed in the seventeenth century by such

3 Walking Away as an Ethical Choice

Rute Abreu, Fátima David, Luís Lima Santos, Liliane Segura

Abstract This research explores the framework of the marine knowledge, in

Keywords Blue accounting Marine knowledge Maritime resource

R. Abreu (&) F. David

© Springer Nature Singapore Pte Ltd. 2019 27

2 From the Literature Review to the First Insights

“the appropriate standard of value is often dictated by circumstance, objective,

3 From the Literature Review to the New Standard

3.1 Recognition of the Blue Asset

3.2 Recognition of the Blue Liability

In this section, the recognition of the blue liability is established to recognize

Therefore, a blue liability is recognized when it is probable that an outflow of

3.3 Measurement of the Blue Liability

3.4 Recognition of the Blue Expenses

4 From the Blue Accounting to the Analysis

Santos, L. L., Mouga, T., & Viana, A. S. (2005). Protecçãoambiental e informaçãoﬁnanceira:

Jacob Dahl Rendtorff

Abstract This chapter discusses corporate social responsibility, corporate gover-

© Springer Nature Singapore Pte Ltd. 2019 45

In this chapter, I discuss corporate social responsibility and corporate governance in

2 The Aim of Business Legitimacy Research

3 Business Legitimacy and Critical Hermeneutics

4 Business Legitimacy and Integrative Economic Ethics

In this context, it is possible to adopt the concept of “integrative economic ethics”

5 Business Legitimacy and Economic Rationality

6 Business Legitimacy and Business Politics

the institutionalization of ethics and compliance programs in US companies. In the

7 Business Legitimacy as Moralization of the Firm

In this process of the institutionalization of corporate citizenship and business ethics

Fig. 1 The two presentations of CSR

8 Types of Business Legitimacy I: The Economically