Corporate social responsibility, Assignments of Management Theory

Download Corporate social responsibility and more Assignments Management Theory in PDF only on Docsity! Running Head: Corporate responsibility 1 Corporate responsibility Student’s name Name of the course Name of the instructor Name of the college Date Running Head: Corporate responsibility 2 Introduction In the last couple of decades the business landscapes have shown substantial transformation and many new trends have altered the way business used to operate. One of such transforming factor is the increased demand for sustainability due to which several multinational firms switched to the corporate social responsibility and started publishing their annual sustainability reports along the annual reports (Berns, Townend, Khayat, & Kruschwitz, 2009). But recently, some new guidelines have been introduced and corporate social responsibility initiatives have been taken such as the Global reporting imitative 2014. This initiative has imposed new responsibilities on the firms positioning themselves as committed to CSR and sustainability. Global reporting initiative (GRI) is an independent global reporting standards that is aimed at enabling the businesses, and governments to incorporate the accurate process and understand the importance of sharing their impacts on environment, on human rights, corruption etc. As per the data of 2015, about 7500 corporations are using Global reporting initiative for publishing their sustainability reports and it reflects how broadly this initiative is being adopted (EcoBusiness, 2015). FTSE 100 is an index based on 100 corporations listed on the London Stock Exchange that tend to have the highest level of market capitalization. These successful corporations are engaged in CSR and as per the data of last 6 years, massive number of firms have started the CSR reporting. in 2011 a study was conducted which revealed that 97% of the FTSE 100 corporations are reporting on CSR , some are sharing information within their annual reports and some are publishing their separate sustainability reports every year (The guardian, 2011). The underlying report is aimed at analysis the CSR reporting and accountability of British Petroleum which is Running Head: Corporate responsibility 5 It has been revealed by a research that only 90 companies are causing about two-third of the man made global warming emissions and BP is declared to be one of the most responsible companies since the dawn of industrial age. The research has shown that carbon footprint of BP is quite high and it has caused 2.5% of the global emission till date. This statistical evidence has raised the eye brows towards the sustainability commitment of BP and it is a huge and material sustainability risk in front of BP to manage (Goldenberg, 2013). b) The stakeholder is basically a party that holds an interest in and impact on a business and it performance and these stakeholders tend to have direct impact on success or failure of any corporation. For conducting comprehensive stakeholder analysis, the underlying report has selected the model of Primary and secondary stakeholders by Stake, 1991. According to this primary and secondary stakeholders model the primary stakeholders are the ones having direct and significant economic interest or stake in the company and that stake could be in the form of finances, resources or services. These primary stakeholders are consisting of a company’s vendors, customers, management, employees as well as some key strategic partners and firms. On the other hand, the secondary stakeholders under this model are the ones who makes contribution and that is important but without their participation the company can still operate successfully including government, media, associations, competitors etc. The model not only differentiates the primary and secondary stakeholders, but it is based on an idea that each organization has to operate in alignment with its stakeholders in order to ensure that it is staining in complete compliance with social responsibility requirements and standards. Primary stakeholders Running Head: Corporate responsibility 6 Customers One of the primary stakeholder groups is the customer group. The company is engaged in building enduring relations with the customers in all of the countries in which it operates. The company is not engaged in directly selling to the customers, but its customers are belonging to different industries and business sectors all over the globe. Its products and services are ranging from BP gas/petrol stations, Fuel cards and credit cards, Aral, Lubricants, etc, in these entire product and service agents; the company is having many customers who are having direct interest in its sustainability performance (BP, 2018). Employees The second most important stakeholder group is the employees. This stakeholder group is also very important because these are the companies’ employees who eventually have to keep the customers satisfied. As per the data of 2017, British Petroleum was having 74,000 employees. this large employee base is providing it the intellectual capital, but being socially sustainable towards all of them is a significantly challenging task for BP. It has to stay responsive towards the employees’ concerns when designing and executing the Hr policies and practices, and also has to stay responsive and in compliance with all legal requirements and labor laws governing the industry (Statista, 2017). Vendor BP is depending substantially on the performance of its suppliers as it is having a multi-supplier ecosystem. It is outsourcing the services across business and working with partners at massive level. Due to the increased emphasis of the social sustainability, now BP is also responsible for the sustainable supplier relationship management in order to have a collaborative supplier Running Head: Corporate responsibility 7 ecosystem. It is in need of keeping all of its vendors on the edge in order to get the best work out of them (Flinders, 2011). Secondary stakeholders Associations and government The government and associations plays central role and leaves drastic impact on the performance of companies and BP is no exception (Brock, Chu, Shi, Wong, & Liu, 2014). After the company’s oil spill the government has issued some new rules in order to prevent any such issues taking place again. The government has introduced the updated well blowout prevention rule to ensure the safety of the living beings in the surroundings. Not only these but there are many other impacts of governmental and the associations such as human right associations on the BP and they are the secondary stakeholders that can leave significant impact on the company without playing any major role in it operations (VALENTINE, 2016). Attention from the public media Another major secondary stakeholder is the pubic media. The media has always impacted the companies in the most drastic manner especially in the incidents that can invoke the human emotions or get the hype. Same has happened with British Petroleum in the past when it has experienced massive attention and critics by the public media. After the incident of oil spill in Mexico, the company made many apologies and paid much compensation and suffered substantial financial loss but the speculations in media were very hard to control despite the company’s effort for damage control (Warner, 2010). There is no wonder that it was huge incident but the public media made substantial contribution in damaging the image of the BP and it also caused several speculations regarding its Running Head: Corporate responsibility 10 preventing any such incidents in the future. It has been claimed that the company is under consultation which will make contribution to reduce the companies’ environmental and social impact. The risk of social sustainability is also covered in both annual and SR report where the company has claimed that it is staying in compliance with the human rights and there is a constant ban on trafficked and child labor. The unacceptable carbon footprint has damaged the company’s reputation and in this regard, the sustainability report has focused on discussing how company is trying and using most effective processes to make its operations fit for the low carbon future (BP, 2017). d) Several factors including the internal as well as external factors influence the method under which information is reported into the financial statements, annual reports and CSR reports (Ioannou & Serafeim, 2017). The most impactful internal factor is that internal resources that can transform the input into most desired output. The resources includes technical, financial as well as HR which collectively enables firms to avail the CSR opportunities (Darus, Mad, & Nejati, 2015). In addition to the resources another major internal factor having significant impact on the reporting is the competency of the management. The exposures of the management influence the ability of the companies to maintain quality of their CSR reporting (Lassala, Apetrei, & Sapena, 2017). When it comes to the impact of these factors on BP, it can be witnessed that the company is having enough resources and well-trained and experienced top management but few areas have been omitted due to the inappropriate inferences that can be gained from mentioning the past adverse incidents in the reports. But its top management must incorporate some initiatives that could maintain the company’s creditability while, providing all necessary information and Running Head: Corporate responsibility 11 that could be done by presetting the plans that have been introduced to address the previously encountered issues of CSR. In addition to the internal factors, there are many external factors which also influence the quality of CSR reporting (Jaimes-Valdez & Jacobo-Hernandez, 2016). These external factors includes the governmental pressures, customers expectations, stakeholders’ concerns etc. But in case of BP, the most impactful factor is the attention of media. In the past, Media has played a dominating role in managing their reputation of BP in case of oil spill in Mexico. After such negative media coverage the company has to incorporate some international standards and had to publish proper reports to inform all stakeholders about its initiatives and that consumed a lot of time, cost and efforts. The governmental bodies also influenced the company’s operations and CSR processes and initiatives because, many rules were changed and mad some extensive and the company had to pay the huge sums in the form of compensations. After the detailed examination of all internal and external factors influencing the CSR reporting of BP, it has been revealed that there are many factors leaving drastic influence and company is in need of staying responsive to all these factors to sustain its strong position into the industry. e) Conclusion The underlying study has adopted a critical and comprehensive approach of analyzing the CSR reporting of British Petroleum which is a STSE 100 company listed on the London Stock Exchange. This study has revealed many important implications. It has been revealed that the company has witnessed several material sustainability and CSR risks including the high carbon footprint poor operating procedures challenging sustainability, claims against the company for poor social sustainability, lack of alliance between climate change risk and the company’s model Running Head: Corporate responsibility 12 and ineffective level of transparency. The stakeholder analysis model has been adopted where the companies’ internal stakeholders are declared to be its customers, employees and vendors, whereas the external stakeholders are the government, associations operating petroleum industry and the public media which can played its role in increasing the speculations regarding poor CSR initiatives and ineffective sustainability commitment by BP. The analysis of the CSR reporting has revealed that company is effectively addressing most of the stakeholders and most of the material sustainability risks, but there are still many discrepancies that need more attention for the improvements. Several internal and external factors are influencing the way the information is reported. After this detailed analysis, it can be concluded that on the whole, that British petroleum is activity involved in CSR reporting and trying to stay in compliance with all associated guidelines, standards and laws. Despite few incidents, it accountability and consistency with the VSR standards as well as policies and responsiveness to stakeholders and material risk, is effective and efficient. The company is trying hard to maintain the quality of CSR reporting and preventing the risk of any unsustainable incident in the future.