Ben Puhl

July 22, 2010

Background

Empirical Environment and Approach

Content Analysis of Sustainability Reports

Results and Discussion

Conclusion

Compliance vs. Voluntary Reporting

Development of Voluntary Standards around Sustainability

Motivations for Sustainability Reporting

Efficacy of Reporting

CSR and Institutional Theory

Corporate reporting started in U.S. within financial field

Spread to encompass environmental aspects

Mandatory reporting in many countries including the UK, Canada, and Japan

Environmental reporting in U.S. required under Regulation S-K, as well as TRI and EPCRA

Move towards CSR – avenue to place emission data

GRI – standardize reporting for comparison.

Pro Con

Further relationships with stakeholders

Risk reduction

Provide legitimacy and transparency

Develop corporate image

Expensive Market demand may be

weak Higher risk to company

Blackburn, 2007

Mixed◦ Positive relationship between reporting and financial

performance (Stanwick and Stanwick, 2000)

◦ No correlation (New Economics Foundation, 2000)

◦ Only a ploy to deceive stakeholders (Gray, 2001)

◦ Positive correlation between stock price and sustainability index inclusion (Curran and Moran, 2007)

◦ No correlation (Moneva and Ortas, 2008)

Firms offering voluntary environmental reports has increased since the 1990’s (Kolk, 2005)

Growth of CSR is concurrent with growth of rating/ranking schemes (Porter and Kramer, 2006)

Too many schemes for cross-comparison (Brown et al., 2009)

GRI created to provide unification (Willis, 2003)

0

200

400

600

800

1000

1200

1400

1998 2000 2002 2004 2006 2008 2010

Nu

mb

er

of

Rep

ort

s

Year

Number of Sustainability Reports Following GRI Guidelines

“The GRI has achieved a single, global guidance on sustainability reporting that just about everyone now believes in,” (Hussey et al., 2001)

“Global Reporting Initiative is arguably the best known set of guidelines for producing such reports worldwide,” (Brown et al., 2009)

GRI has become the de-facto standard for producing CSR

GRI has attempted to promote Sustainable Development

Hart’s stages of Sustainable Development (1997)◦ Pollution Prevention

◦ Product Stewardship

◦ Clean Tech

GRI, DJSI, and NGR as Legitimacy and Reputational Signals

Sampling Scheme

GRI – standardization and institutionalization provide legitimacy – still lacks comparisons

DJSI and NGR – provide relative standing outwardly to stakeholders via rankings/ratings◦ Favorable position can be a reputational benefit

H1: Firms reporting more sustainability activities are more reputable

H2: Firms reporting more aggressive sustainability activities are more reputable

H3: Firms conforming to legitimate CSR guidelines are more reputable

41 publically available CSR documents analyzed

Hierarchical◦ Fortune 500 companies

◦ Sectors: Electronics, Retail, PetroChemical

◦ DJSI inclusion

◦ Published sustainability report

◦ Matched control group of non-DJSI firms based on descending firm size

Code Book Development

Data Environment for Quantitative Analysis

Content analysis good at finding themes in text (Bowman, 1978)

Grounded Theory (Glaser and Strauss, 1967)◦ Coding based on Hart’s Corporate Greening Stages

Pollution Prevention

Product Stewardship

Clean Technology

NVIVO 8 – transformed qualitative data (text) to quantitative data (coverage statistics)

Coverage statistics aggregated in Excel and exported to SPSS

Also included firm-level and document statistics in SPSS◦ Fortune rank, DJSI inclusion, NGR rank, GRI

use, page length, report year, etc.

General statistics – mean, std. dev.

Binomial Logistic Regression - DJSI

Linear Regression - NGR

Descriptive statistics

Binomial Logistic Regression

Linear Regression

Electronics Retail PetroChemical

Electronics Retail PetroChemical

Attribute n Mean Std. Dev.

Corporate 38 0.007 0.014

Electricity 38 0.027 0.035

Air/Water Emissions 38 0.072 0.082

Solid Waste 38 0.020 0.024

Upstream Sourcing 38 0.016 0.026

Product Design 38 0.014 0.023

Use Impacts 38 0.023 0.038

End-of-Life 38 0.011 0.018

Metrics 38 0.014 0.048

Clean Tech 38 0.009 0.022

Environmental Pages 38 14.618 17.059

NGR Green Score 38 78.236 9.833

DJSI 38 0.474 0.506

Dependent Variable: DJSI Inclusion (Inclusion = 1, Exclusion = 0)

Variable B Wald Sig. Exp (B)

Pollution Prevention

-11.058 2.516 0.113 0.000

Prod. Stew. 3.658 0.398 0.528 39.845

Clean Tech 53.436 2.380 0.123 1.654E+23

Elec. Ind. 0.066 0.004 0.947 1.068

Retail Ind. 0.907 0.527 0.468 2.476

GRI 0.922 1.118 0.290 2.514

Environmental Pages

0.035 1.150 0.284 1.035

Constant -0.710 0.330 0.566 0.492

Model Chi-Square = 13.832 (df = 7, sig. = .054). Model correctly categorizes 68% of companies.

Coefficient Estimations for Newsweek’s Green Rankings

VariableCoefficient

Est.SE Sig.

Constant 67.988 3.537 0.000

Pollution Prevention -24.811 12.971 0.065

Prod. Stew. 15.618 18.592 0.408

Clean Tech 23.924 56.685 0.676

Elec. Ind. 10.854 2.965 0.001

Retail Ind. 7.899 3.735 0.043

Environmental Pages 0.176 0.076 0.028

GRI 4.488 2.679 0.028

Adjusted R Sq. - .519,

Most discussions surround lowest-tier Pollution Prevention

DJSI is a weak measure of reputation

CSR content is related to third-party ranking

Amount of env. info positively related to reputation

Use of GRI guidelines can improve NGR ranking

Mixed results of hypotheses◦ Indicates that reputation and legitimacy are not yet

institutionalized

Future research could expand to more recent CSR and broaden breadth of companies.◦ Provide longitudinal example of changes and make

more robust sample

Testing across different theoretical frameworks

Background

Empirical Environment and Approach

Content Analysis of Sustainability Reports

Results and Discussion

Conclusion

Thanks!