Sustainability reporting based on the practical example of Finance in Motion


Academic Paper, 2021

21 Pages, Grade: 1


Excerpt

Index

Glossary/Abbreviations

List of figures

List of tables

1. Introduction

2. Regulation on sustainability reporting

3. Presentation of the practical example ‚Finance in Motion‘

4. Analysis of the sustainability reporting

5. Conclusion

Bibliography

Glossary/Abbreviations

CC Corporate Citizenship

CSR Corporate Social Responsibility

CSV Corporate Social Value

DKN Deutsche Nachhaltigkeitskodex

FIM Finance In Motion

GC Global Compact

GRI Global Reporting Initiative

GSC German Sustainability Code

EFFAS European Federation of Financial Analysts Societies

ESG Environmental Social Governance

OECD Organisation for Economic Co-operation and Development

MSME Micro, small, and medium enterprise

UNSDG United Nations Sustainable Development Goals

UN United Nations

WCED World Commission on Environment and Development

List of figures tables

Figure 1: Carroll’s CSR Pyramid

Figure 2: The Three Domain Model of CSR

Figure 3: UNSDGs

List of tables

tbd

1. Introduction

Corporate Social Responsibility (CSR) is a concept defined in such diverse ways that Votaw (1972, p. 25) remarked that “the term is a brilliant one, it means something but not always the same to everyone.”

It is also changes over time, for instance ancient Greeks considered integrity to be associated with philanthropy and decency, whilst shareholders of the British East India company rated the business a success, despite the depletion of scarce resources and the use of slave labour in foreign countries, practices perceived as unethical in 21 century (Karageorgiou and Selwood, 2020). Contemporary CSR might be associated with socially responsible behaviours, legal responsibility, liability, philanthropy, corporate legitimacy or superior standards of business practice, and social conscience (Votaw, 1972).

CSR has also become inextricably linked with sustainability and sustainable development as defined by the World Commission on Environment and Development (WCED) (WCED, 1987), and more recently with Environmental Social Governance matters (ESG) which has greater focus on legal compliance for firms and investors (Pollman, 2021). The Chartered Finance Institute (CFA, 2021) emphasizes the increasing importance of these non-financial ESG factors to investors selecting growth opportunities, but requiring strong evidence of responsible behaviour by the firms in which they are prepared to invest. ESG is not a mandatory requirement in financial reporting but has been adopted by many organizations as an integral part of their Annual Report, and disclosed in relation to globally recognized standards, which have been developed for instance the United Nations Social Development Goals (UNSDGs), the Global Report Initiative (GRI) or the Task Force on Climate-related Financial Disclosures (TCFD) (CFA, 2021). National sustainability codes have also emerged such as the Deutscher Nachhaltigkeitskodex (DNK), German Sustainatibilty Code (GSC) (DNK, 2021).

These developments demonstrate the importance of sustainability initiatives in the contemporary business context and the reason why asset management companies such as Finance in Motion (FIM, 2021) have emerged, which differentiate their business strategy by focusing on developing sustainable investment funds and sustainable investment advice.

The purpose of this paper is critically appraise how these concepts of sustainability have been applied in the context of a case study relating to FIM, focusing on: the non-financial reporting, how this was undertaken, which of the standards evaluated in Chapter 3 have been selected to measure sustainabilty and how well these measurements align with those made by independent sources.

Therefore, this study comprises:

- this introduction
- a critical appraisal of the fundamental meaning of corporate responsibility
- an evaluation of the main standards for measuring sustainabitliy
- a case study of the asset management firm FIM
- conclusion

2. Regulation on sustainability reporting

Social responsibility associated with commercial firms is not a new concept, but has origins in ancient Roman Law (Chaffee, 2017), is in evidence in English law relating to academic, religious and public sector organizations in the Middle Ages and promoted by reigning English monarchs, who were instrumental in disseminating it globally as the British Empire evolved.

In Germany, the Fürst Fugger Privatbank is an example of a financial institution practising social responsibility by funding the first social housing complex for disadvantage citizens in Augsburg in 1521. This now offers 150 poor citizens accommodation for an annual rent of € 0.88 (Janis 2021).

CSR began to gain substantial importance in the 20th century, with the growth of huge business empires referred to as conglomerates, and the social responsibilities associated with them. The publication of the Social Responsibilities of the Businessman by Bowen (1953) is one of the first evaluation of the concept, but new models continue to develop with changes in the business environment (Chandler, 2019).Corporate responsbility is generally perceived from two extreme positions, as defined by Friedman (1970) and as directed by Carroll (1979). The stance on corporate responsbility promoted by Freeman (1970) is that a company’s management responsbiltiy is solely profit generation for the owners, by means of operations that remain within current legislation and ethical customs. The justification for this approach is that managers are employed by the owners of the company to optimise their investment according to their instructions. However, Freeman (1970) acknowledges that some organizations are not profit motivated but offer services, for instance schools and hospitals, in which their duty is optimize the quality of service, and that a private owrner of a firm may wish to donate profits to some cause as is his/her right.

The concept of CSR proposed by Carroll (1979) is allied to stakeholder theory in which a stakeholder is perceived as any person affected directly or directly by the firm’s operations (Freeman, 1984). The inference is that every member of society is a stakeholder in the organization, and that firms should adopt a stakeholder perspective when developing its strategy (Chandler 2019). The CSR model attributed to Carroll (1979), figure 1, displays firms as having four major responsbiltities.

Figure 1: Carroll’s CSR Pyramid

Source: Carroll (1991, p.42)

The firm’s basic responsibility is economic, generating a profit is essential but in doing so it should ensure its practices remain withing the law. The firm should also operate in an ethical manner, which means complying with current and emerging social norms, and exhibiting corporate integrity and ethical behaviours, not merely those defined by the law; the firm should be a good corporate citizen. The philanthropic responsibilities are those that align with charitable expectations that stakeholders require, such as encouraging employees to participate in charitable activities in local communities so that quality of life for all is improved (Carroll, 1991). The limitation of this pyramid is that the responsibilities do not appear integrated and seem to form a hierarchy that will evolve as the firm grows. It also neglects the possibility that the firm’s ethical and philanthropical activities may be focused on gaining legitimacy to operate and to enhance profits, rather than being society orientated (Suchman, 1995; Schwartz & Carroll, 2003). Hence, this original pyramid design was modified to better represent the intention of overlapping responsibilities in the three main domains, figure 2, with CSR optimized when all three were integrated and implemented in practice (Schwartz & Carroll, 2003). Therefore, it is particularly noticeable that ethical and economic may overlap without any CSR focus by the company

Figure 2: The Three Domain Model of CSR

Abbildung in dieser Leseprobe nicht enthaltenSource: Schwartz and Carroll (2003, p.509)

In addition, certain actions that appear to be corporate citizenship and documented in company publications are often espoused rather than implemented, and referred to corporate hypocrisy (Wagner, Lutz & Weitz, 2009) or greenwashing (Snierson & Cherry, 2011).

From a financial accounting perspective, the reporting of CSR in Annual Reports began to emerge in the form of the social and responsibility elements practised by the organization being reported on an equal par with economic outcomes, and referred to by Elkington (1999) as triple bottom line accounting.

This concept is of particular importance to this research, and it is necessary to critically appraise corporate documents to determine the defined espoused CSR objectives, and to gather independent evidence of the degree to which they have been implement in practice (Chandler, 2019).

3. Presentation of the practical example ‚Finance in Motion‘

The most important of the standards developed for measuring sustainability, which are likely to be employed by companies wishing to demonstrate CSR, are evaluated in this section of the research.

[...]

Excerpt out of 21 pages

Details

Title
Sustainability reporting based on the practical example of Finance in Motion
College
University of Frankfurt (Main)
Grade
1
Author
Year
2021
Pages
21
Catalog Number
V1030175
ISBN (eBook)
9783346468130
ISBN (Book)
9783346468147
Language
English
Notes
Corporate Social Responsibility (CSR) is a concept defined in such diverse ways that Votaw (1972, p.25) remarked that “the term is a brilliant one, it means something but not always the same to everyone.” It also changes over time, for instance the ancient Greeks considered integrity to be associated with philanthropy and decency, whilst shareholders of the British East India company rated the business a success, despite the depletion of scarce resources and the use of slave labour in foreign countries, practices perceived as unethical in the 21st century (Karageorgiou and Selwood,2020).
Tags
Corporate Citizenship, Sustainability reporting, Corporate Social Responsibility, Corporate Social Value, Deutsche Nachhaltigkeitskodex, Global Compact, Global Reporting Initiative, German Sustainability Code, European Federation of Financial Analysts Societies, Environmental Social Governance, Organisation for Economic Co-operation and Development, United Nations Sustainable Development Goals, United Nations, World Commission on Environment and Development, Regulation on sustainability reporting, CSR, No poverty, Zero hunger, Good health and well-being, Gender equality, Clean water and sanitation, Affordable and clean energy, Decent work and economic growth, Industry Innovation and Infrastructure, Reduced inequalities, Sustainable cities and communities, Responsible consumption and production, Climate action, Life below water, Life on land, Peace Justice and Strong Institutions, Partnership for goals
Quote paper
Vjollca Berisha (Author), 2021, Sustainability reporting based on the practical example of Finance in Motion, Munich, GRIN Verlag, https://www.grin.com/document/1030175

Comments

  • No comments yet.
Read the ebook
Title: Sustainability reporting based on the practical example of Finance in Motion



Upload papers

Your term paper / thesis:

- Publication as eBook and book
- High royalties for the sales
- Completely free - with ISBN
- It only takes five minutes
- Every paper finds readers

Publish now - it's free