CSR Reporting Role in Organizations Essay

Introduction

CSR (Corporate Social Responsibility) is a conception that allows various companies and organisations define and address particular needs of a certain audience by taking responsibility for different factors of their professional activities that might have a significant impact on other firms, stakeholders, and the society in general. Such a duty is not required by the law, which means that the companies that follow the CSR strategy are doing it at their own will. The development of any organisation in the sphere of CSR implies only personal interests of its owners or corporate managers to improve the living standards of this firm’s employees, their families, and other members of the purposive audience. Once any corporation takes responsibility for the features described above, it is obliged to maintain its reporting activity regularly. The following paper is intended to explain why various firms engage in CSR/sustainability reporting and discuss the interests of specific stakeholders with the help of the chosen organisation’s website and the framework performed by Mitchell et al.

Why Do Firms Engage CSR Reporting?

One of the reasons why various companies should provide CSR reporting to their employees or other audiences is their primary duty to share the results of their work aimed at the improvement of other individuals’ lives. Any impact on the society or environment should be monitored and accepted by the local population as its representatives know what actions must be taken to increase such factors as their wealth, health, and happiness (Arevalo & Aravind 2015, p. 203). The following discussion will use both legitimacy and stakeholder theories to find an accurate answer to the question in the title of this section. Moreover, there are a plethora of opportunities that firms might receive when engaging in corporate social responsibility reporting.

The CSR reporting practise remains one of the most criticised topics in business and society in general. People who support this strategy claim that there is an economic interest in CSR reporting as global or local organisations aim at benefits that they can gain due to their perspective projects (Birkey et al. 2016, p. 147). Some of such companies’ leaders stress that corporate social responsibility reporting unites regular people and businesses. Also, professional managers say that the corporations that engage the reporting strategy described above do not think about their immediate profits. Instead, they find new ways to make their organisations more stable in the future.

As it is mentioned above, many critics have multiple controversies as to the implementation of CSR reporting by transnational corporations as such activity does not support the fundamental economic function of business (Chen et al. 2015, p. 54). In fact, some experts claim that corporate social responsibility is nothing more than the embellishment of reality, whereas other professionals believe that these actions imply multiple attempts to replace the government’s role by authoritative, popular, and powerful companies (Cheng, Ioannou & Serafeim 2013, p. 17). There are many opinions as to the CSR engagement in the world of business. Therefore, it is necessary to form an independent and objective point of view on the question of the possible benefits that multinational corporations might gain by using this strategy in different countries.

Legitimacy Theory

The primary idea of the legitimacy theory is to stick to particular laws, moral rules, and values common in a certain society, which makes the company strategies acceptable by the purposive audience. It is clear that any business should adhere to the principles and the main ideas that are prevalent among its regular followers and potential clients. Although CSR reporting does no aim at attracting new customers to a particular company’s products or services, it is essential to understand what the majority of people want to change or improve in their environment and everyday lives.

Legitimacy theory is one of the most appropriate methods to analyse and perceive the thoughts of any social group as it is intended to study people’s habits, concerns, behaviours, and other factors that might influence their consciousness (Crifo & Forget 2014, p. 125). According to the theory mentioned above, the social system cannot exist without a certain core subject that the society’s members discuss or use on a regular basis. For instance, employees of some firms are concerned about various conditions that they are obliged to work and cope with for an extended period. On the other hand, managers of diverse companies focus their minds on the markets and their most significant competitors. All these concerns describe the legitimacy theory and its role in the organisation of certain business activities.

As it is discussed above, the legitimacy theory’s main point is to address people’s major concerns. CSR reporting is also intended to satisfy various individual’s needs with the primary purpose of gaining more authority and popularity. For instance, the subject of corporate social responsibility reports might vary. It can be any practise, organisation, and structure that follows the initial principles of legitimacy. The standards of such a strategy refer to the mentioned theory’s laws, rules, and other norms prevalent in a particular society.

Stakeholder Theory

Stakeholder theory implies the main ideas and concerns of various corporations’ stakeholders. The main goal of these people is to raise their firms’ values and respect among their clients or other members of the society. In order to discuss the given theory effectively, it would be proper to explain the main functions and roles of stakeholders. By the word stakeholders, people usually refer to individuals who have particular interests in some profitable or non-profitable organisations (Hörisch, Freeman & Schaltegger 2014, p. 333). These interests might be financial, ideological, and beneficial for their daily activities, careers, and other actions or phenomena that are supposed to satisfy them as people who invest certain resources in various companies. Such individuals as employees, suppliers, the government, different banks’ representatives, customers, and other figures that somehow relate to the manufacturing or selling processes of diverse corporations can be defined as stakeholders.

It would be proper to mention that CSR or sustainability reports are a means of managing stakeholders about entity activities. This means that the needs or concerns of every stakeholder, who invests one’s money, time, and other valuable resources in a certain organisation, are addressed and resolved by the given firm (Luo, Wang & Zhang 2016, p. 343). Therefore, people are likely to contribute to various activities offered by the corporation with the opportunity to benefit from such collaborations. The model of the theory mentioned above can be met by any modern organisation. For instance, when companies hire their employees, these people have interest in the development of the place that they work at to receive more bonuses and other additional payments in the future (Pérez 2015, p. 16). Therefore, it is necessary for them to perform corporation social responsibility/sustainability reports to increase their firms’ ratings among the society that they live in on a regular basis. According to Mahoney et al. (2013, p. 355), such reports are used to satisfy information demands of stakeholders. It is a well-known fact that every person wants to know how the resources invested by him or her are allocated and managed.

There are only two stakeholder classifications: internal, which includes managers, workers, and owners, and external that consists of the society, various suppliers, customers, politicians, and shareholders (Arevalo & Aravind 2015, p. 206). As the majority of the groups mentioned above remain the parts of the external category, it would be proper for internal stakeholders to address the needs of other people. Managers, who work for various organisations, understand the fact that their companies should focus on the information needs of key stakeholders. Such demands might vary and depend on the industry that a certain firm is involved in on a regular basis and the wide range of services or products provided by these companies to their clients (Marano, Tashman & Kostova 2017, p. 401). To conclude the discussion of the stakeholder theory regarding corporate social responsibility reports, it would be proper to state that different people, who contribute to the variety of organisational processes of particular companies, deserve to know how the corporation spends the earned finances to improve their environment and living standards.

Monsanto CSR Policies

The following section of the paper is intended to identify different types of stakeholders and discuss their specific interests in the Monsanto firm’s policies, practises, and performance with the help of Mitchell et al.’s (1998, p. 872) framework. To answer this question properly, it is necessary to use such sources as the organisation’s website and CSR/sustainability records. However, before analysing the chosen company, it is necessary to explain its activities, primary goals, and achievements.

Monsanto is a transnational corporation that is involved in multiple industries. Also, it is considered to be the first firm in the world among other businesses that specialise in the plants’ biotechnology. The company gains its profit by selling genetically modified seeds of such crops like corn, soybeans, cotton, and other species that are used by farmers all over the world (Patten & Zhao 2014, p. 140). The most popular product produced by Monsanto is also known as “Roundup”. The corporation was established by John Francis in 1903 as a firm that specialised only in the production of chemicals. Since then, it grew into a high-profitable concern that now owns other small firms as well. Nowadays, Monsanto employees are involved in the development of innovative technologies in the sphere of agriculture. Monsanto makes annual sustainability reports for its customers, partners, employees, and other people that somehow might be contributed to the firm’s activities to see all the things that the company has done to improve the environment and other factors that have a significant influence on the planet’s population’s living standards. The transnational company’s managers are obliged to develop plans and set particular goals that are supposed to be reached by the corporation at the end of each year.

Monsanto Stakeholders

According to the table of stakeholders salience performed by Mitchell et al. (1998, p. 872), the company of Monsanto has only one type of people interested in its activities. The dimension of dormant stakeholders is supposed to consist only of environmental activists. Therefore, it is possible to see that such categories as discretionary and demanding stakeholders do not have any influence on the company’s activities and sustainability reporting. It would be proper to mention that Mitchell et al. (1998, p. 872) give the type of stakeholders (chosen by the firm) the characterization of power, whereas other categories are described as legitimate and urgent. According to the same classification, it is possible to see that only latent stakeholders collaborate with Monsanto. Usually, the representatives of this dimension have only one attribute and low salience. Also, managers of the company are not supposed to meet these people’s demands or needs as their role is almost passive.

However, expectant stakeholders have two attributes and moderate salience. Therefore, Monsanto employees are obliged to address their interests and adjust the firm’s activities in accordance with their desires (Pérez 2015, p. 16). This category consists of shareholders, customers, mass media, local population, and other people that might be influenced by various strategies and actions performed by Monsanto. In the end, definitive stakeholders have all three attributes and high salience. Usually, these individuals are concerned with certain urgent issues and have powerful legal support. Therefore, managers are supposed to know this audience’s demands and solve all the emerging problems immediately.

The latest sustainability report released by Monsanto has a list of its stakeholders in different spheres. For instance, such organisations as Academy for Nutrition and Dietetics and American Society for Nutrition are included in the list of advocacy and professional groups (Arevalo & Aravind 2015, p. 208). The group of industry stakeholders includes Global Sourcing Council, Grocery Manufacturers Association, and many other organisations as well.

Identification of Stakeholders’ Characters

As it is mentioned above, there are several categories of stakeholders involved in the professional activity of the Monsanto Company. Each group has its certain characters that will be identified and enumerated in the list below:

• Shareholders: power and legitimacy. This category of shareholders has power in the Monsanto Company because they are allowed to make different changes in its various business processes, strategies, and ideologies. I would be proper to mention that a person who has power in any company has an ability to implement certain actions that lead to one’s desired outcomes. As major shareholders have a legal right to bring innovations into the transnational corporation, they can be claimed its powerful part. As to the aspect of legitimacy, it may be combined with power, which will lead to an object’s authority. Since every shareholder’s thought and idea is considered by other employees, they are legitimate members of the given organisation.
• Employees: power and legitimacy. Employees have less power than the previous group. However, this factor depends on the positions of workers. Some employees have enough power to manage the production process of Monsanto, whereas their colleagues might be allowed only to choose the most beneficial way to accomplish their own tasks. Although some scholars claim that legitimacy and power cannot exist separately, there are cases when employees might not be powerful but legitimate. For instance, when workers perform all the required job without any blemishes, they follow the accepted system of moral rules, values, and ideas of the corporation. Hence, they might be considered legitimate.
• Farmers/Customers: power and legitimacy. Farmers (the majority of Monsanto’s customers) have power and legitimacy because the corporation adjusts its products according to the needs of the buyers. These people set standards of quality and show their attitudes towards one or another product. Although they do not have a right to make any interventions in the business, their desires and demands are always considered by the managers of Monsanto.
• Community: legitimacy. Every member of the worldwide community can be claimed a legitimate stakeholder of Monsanto. People are interested in the organisation’s strategies and impacts on their lives. Therefore, their desires are also taken into account by the corporation’s managers.
• Interest groups (academic, environmental, and legal): power and legitimacy. Academic, environmental, and legal interest groups can also be claimed legitimate stakeholders of the Monsanto Company. To prove this statement, it is necessary to mention that this category of people sets particular standards of work in the corporation. Therefore, their recommendations are essential for every employee and manager of the organisation.
• Suppliers: power. Suppliers have power as their services are necessary for the production process. These people can set their own collaboration requirements as they know that their help is crucial for the global corporation. Nevertheless, suppliers do not have authority among Monsanto’s employees because their primary responsibility is to give appropriate materials for manufacturing operations.
• Media: power. Mass and social media remain the most powerful stakeholders as they can manipulate the company to gain particular desired results. For instance, journalists might present some information from different perspectives, which might have an adverse or positive impact on the reputation of Monsanto. Moreover, some media resources maintain their independence of side organisations. As a result, they may tell their audience all the advantages and disadvantages of a particular corporation.

Stakeholders’ Specific Interests

Every stakeholder has his or her interest in various campaigns or activities of different companies. People who have their benefits from working or supporting the Monsanto Corporation are concerned with the environment and health of the planet’s population. As it is mentioned above, there are several dimensions of stakeholders who insist on their needs’ satisfaction (Michelon, Pilonato & Ricceri 2015, p. 60). For instance, latent Monsanto stakeholders are interested in the fact that the transnational corporation is functioning properly and all its processes remain profitable and beneficial for the society. Usually, these people invest their finances in the development of the firm and hope that their money will be allocated appropriately.

The interests of the expectant group vary and depend on these individuals’ wishes (i.e., dominant, dependent, and dangerous stakeholders). As Monsanto is an active company that invents innovative technologies in agriculture, this category of employees is interested in implementing the firm’s products in the environment to be useful to other society members (Patten & Zhao 2014, p. 141). It would be proper to mention that the Monsanto Company’s existence is almost impossible without different stakeholders. As the transnational corporation’s resources are allocated among farmers around the entire world, some people are interested in collaboration with the discussed firm as such a partnership might make them successful agriculturalists, businesspeople, and so on.

The last group of stakeholders is definitive. Their interests imply the accuracy of Monsanto’s legal activities. Also, these people demand all urgent issues to be resolved. They make various complaints about the agricultural organisation’s production or other business processes, whereas their needs are always taken into account and addressed immediately (Skilton & Purdy 2016, p. 102). Despite the differences among categories described above, all stakeholders are interested in the development of Monsanto and the quality of services it provides. However, every stakeholder has different approaches to the achievement of the same goals as he or she looks at the situation from one perspective, whereas Monsanto managers are obliged to evaluate every person’s needs (Arevalo & Aravind 2015, p. 209). Nevertheless, there are partners and individuals that are only interested in separate factors. Some care only about profits, and other people aim at the improvement of the environment and the company’s rating.

In conclusion, it would be proper to state that the majority of Monsanto stakeholders are farmers and different small firms that buy and use the transnational corporation’s products As these people are interested in their harvest, they are also concerned about the organisation’s CSR policies, practises, and performance. All the data provided by Monsanto managers to the broad audience is intended to explain all the processes aimed at the environment improvement (Skilton & Purdy 2016, p. 102). The last sustainability report of the firm also contains particular information as to various strategies that might help private farmers in their business. Therefore, some stakeholders’ quality of life and profits depend on the practical and useful data they receive from Monsanto. Moreover, some people participate in the global campaigns initiated and promoted by the agricultural organisation. As stakeholders invest their finances in the development of business all over the world, they want to see how their money is allocated.

CSR Reporting Motivations Explanation

As it is mentioned in the first question, stakeholders of any firm strive to increase its value and prestige among other competitors on the same market. The following section is intended to demonstrate how stakeholder accounting theory describes the motivations for CSR/sustainability reporting for the Monsanto Company. As Monsanto produces various products that influence people’s health and lifestyle in general, it is supposed to be respected and trusted among its primary clients and partners (Skilton & Purdy 2016, p. 104). To remain a trustworthy organisation, it is essential to have and maintain close relationships with people who pay and consume the corporation’s production. Such a strategy makes the firm more reliable and creditworthy, which raises its significance among other similar businesses.

Also, it is essential to remember that every business is dependent on people who provide finances for its existence (Patten & Zhao 2014, p. 144). In the case of Monsanto, these individuals are customers and global partners. According to the stakeholder theory, it is necessary to share all the information about progress and goals achieved by the organisation for a certain period.

Conclusion

Various firms engage CSR reporting because it raises their reliability and prestige among customers and competitors. Monsanto is an agricultural firm that releases annual sustainability reports to demonstrate its achievements and improvements to different partners. Every stakeholder is interested in his or firm’s reputation. Therefore, it is necessary to conduct and share all the set goals and their progress with the help of regular CSR reports.

Reference List

Arevalo, JA, & Aravind, D 2015, ‘Strategic outcomes in voluntary CSR: reporting economic and reputational benefits in principles-based initiatives’, Journal of Business Ethics, vol. 144, no. 1, pp. 201–217.

Birkey, RN, Michelon, G, Patten, DM & Sankara, J 2016, ‘Does assurance on CSR reporting enhance environmental reputation? An examination in the U.S. context’, Accounting Forum, vol. 40, no. 3, pp. 143–152.

Chen, L, Srinidhi, B, Tsang, A & Yu, W 2015, ‘Audited financial reporting and voluntary disclosure of corporate social responsibility (CSR) reports’, Journal of Management Accounting Research, vol. 28, no. 2, pp. 53–76.

Cheng, B, Ioannou, I & Serafeim, G 2013, ‘Corporate social responsibility and access to finance’, Strategic Management Journal, vol. 35, no. 1, pp. 1–23.

Crifo, P & Forget, VD 2014, ‘The economics of corporate social responsibility: a firm-level perspective survey’, Journal of Economic Surveys, vol. 29, no. 1, pp. 112–130.

Hörisch, J, Freeman, RE & Schaltegger, S 2014, ‘Applying stakeholder theory in sustainability management’, Organisation & Environment, vol. 27, no. 4, pp. 328–346.

Luo, XR, Wang, D & Zhang, J 2016, ‘Whose call to answer: institutional complexity and firms’ CSR reporting’, Academy of Management Journal, vol. 60, no. 1, pp. 321–344.

Mahoney, LS, Thorne, L, Cecil, L & LaGorge, W 2013, ‘A research note on standalone corporate social responsibility reports: signaling or greenwashing?’, Critical Perspectives on Accounting, vol. 24, no. 4-5, pp. 350–359.

Marano, V, Tashman, P & Kostova, T 2017, ‘Escaping the iron cage: liabilities of origin and CSR reporting of emerging market multinational enterprises’, Journal of International Business Studies, vol. 48, no. 3, pp. 386–408.

Michelon, G, Pilonato, S & Ricceri, F 2015, ‘CSR reporting practises and the quality of disclosure: an empirical analysis’, Critical Perspectives on Accounting, vol. 33, no. 1, pp. 59–78.

Mitchell, RK, Agle, BR & Wood, DJ 1998, ‘Toward a theory of stakeholder identification and salience: defining the principle of who and what really counts’, The Corporation and Its Stakeholders, vol. 22, no. 4, pp. 853–886.

Patten, DM & Zhao, N 2014, ‘Standalone CSR reporting by U.S. retail companies’, Accounting Forum, vol. 38, no. 2, pp. 132–144.

Pérez, A 2015, ‘Corporate reputation and CSR reporting to stakeholders’, Corporate Communications: An International Journal, vol. 20, no. 1, pp. 11–29.

Skilton, PF & Purdy, JM 2016, ‘Authenticity, power, and pluralism: a framework for understanding stakeholder evaluations of corporate social responsibility activities’, Business Ethics Quarterly, vol. 27, no. 1, pp. 99–123.