Towards improved corporate social and environmental reporting in South Africa.
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Date
2007
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Abstract
This thesis contributes towards improving corporate social and environmental
reporting (CSR) in South Africa, by determining what about CSR would need to be
and could be improved. The sources of information for this were twofold. A
comprehensive literature review, besides providing the background to the study,
determined what specific criticisms have been levied against existing CSR disclosure
and CSR systems. This thesis argued that many of these limitations arise out of the
many primarily rule-based systems in existence and use, and that CSR should rather
be based on sound fundamental principles and a conceptual framework, and be an
enforceable standard i.e. with legal backing to ensure compliance. The second source
of information on possible areas of improvement was from the users and or the
stakeholders. In Part I of the thesis, these users or stakeholders were surveyed to
determine which areas of reporting were important, and which needed to be better
reported. What was important was that significant expectation gaps were found in
CSR specifically regarding reporting the impacts on employees, the public and
consumers and the physical and biotic environment. This provided evidence for the
need for improvements in actual reporting in these traditional CSR areas, and hence
il, .
justification for the work ofthis thesis.
Having identified areas of weakness and potential improvement in current CSR, an
analysis was required to be performed to determine how these areas could be better
reported. An assessment would need to be made if in fact these areas could be
measured (and hence reported), which was undertaken in Part 2 of the thesis. The
thesis revealed the need for improved CSR, and a greater degree of accountability and
transparency by business that improved CSR could provide. It was argued that
reporting, other than financial, which includes CSR should be prepared using a
conceptual framework of principles, similar to that used in financial reporting, and
thus a principle-based approach to CSR should be used as opposed to a rule based
one. It was noted that such a principle-based approach would address many of the
qualitative criticisms levelled against CSR practices, and current rule based systems.
Using a systems based approach, a framework of interactions and impacts caused by
businesses on social and physical systems was developed, which was used as the basis
for a suggested CSR model. The model was validated using a peer and expert review process, and by comparison to the Global Reporting Initiative (GRI), which was used
to represent international and South African best practice. However, it was noted that
potential measurement difficulties would be encountered if the proposed model were
used.
It would also need to be determined what practical barriers would exist to
implementingthese CSR models in business, which was the objective of Part 3 of this
thesis. When the practical implementation of a comprehensive CSR system was
evaluated in industry, both the proposed model and the GRI were considered.
An important part ofthe measuring process was noted to be company risk assessment,
often undertaken by the company's insurers. Where environmental impacts, health
and safety, or other potential impacts (e.g. accidents or spills in the transport industry
having significant impacts on other road users), were noted to be a significant risk,
measurement systems and control procedures had been put in place by most
companies. Perhaps the most significant part of risk, besides the potential loss in
earning capacity, is potential litigation. Common law litigation would encourage
companies to monitor and protect the health of their workers and consumers.
Legislation e.g. National Environmental Management Act and Air Quality Act, would
encourage companies to monitor their environmental impacts. Thus a combination of
risk and legislation encourages monitoring and measurement. The findings of the third
part of the thesis suggest that increased pressure should be placed on companies to
become IS014001 certified as this would facilitate increased CSR reporting, however,
this in itself is unlikely to occur unless increased pressure is placed on companies by
(legal of customer). The author suggests that IS014001 certification would be more
effective in ensuring environmental protection, than simple CSR disclosure.
Significant challenges exist to the possible implementation of many of the key areas
identified in the proposed CSR model (specifically where measurement problems
exist), and no companies were found to be in a position to report on these aspects
comprehensively.
The findings of this thesis include that existing legislation and financial imperatives
influenced measurement and recording of certain impacts and influences. At the same time, many managers suggested that lack of financial (and other resources), as well as
the absence of legal requirements were some of the reasons why other impacts and
influences were not measured. Thus it could be concluded that legislation enforcing
CSR, together with financial incentives (or penalties for failure to meet such
standards), could play a significant role in improving CSR in South Africa.
Description
Thesis (Ph.D.)-University of KwaZulu-Natal, Pietermaritzburg, 2007.
Keywords
Social responsibility of business., Industries--Environmental aspects., Theses--Environmental science.