Best Practice in Sustainability Reporting. Comparing Sustainability Performance Reports among International Hotel Chains

An Investigation on the Social Dimension


Bachelorarbeit, 2014
62 Seiten, Note: 1,4

Leseprobe

Table of contents

ABSTRACT

LIST OF TABLES

LIST OF FIGURES

LIST OF APPENDICES

LIST OF ABBREVIATIONS

1 INTRODUCTION
1.1 Justification and Currency of the Topic
1.2 Aim of the Thesis and Research Objectives
1.3 Target Audience

2 LITERATURE REVIEW
2.1 Sustainable Development
2.1.1 Sustainability Awareness
2.1.2 Definition of Sustainability
2.1.3 TBL – Triple Bottom Line
2.1.4 Nine Principles of Sustainability Performance
2.1.5 Corporate Social Responsibility
2.1.6 Benefits and Values
2.2 Stakeholders of a Business
2.2.1 Internal Stakeholders
2.2.2 External Stakeholders
2.2.3 Core & Fringe Stakeholders
2.3 Marketing Tools of Business
2.3.1 Marketing & Sustainability
2.3.2 Integrated Marketing Communication
2.4 Sustainability Reporting
2.4.1 Purpose of Reporting
2.4.2 History of Sustainability Reporting within the Hospitality Industry
2.4.3 Elements of Sustainability Reports
2.4.4 Reactions and Criticism towards Sustainability Reporting
2.5 Standardization of Sustainability Reports
2.5.1 Global Reporting Initiative
2.5.2 International Organization for Standardisation
2.6 Chapter Summary

3 RESEARCH METHODOLOGY
3.1 Research Philosophy
3.2 Research Process
3.2.1 Research Design
3.2.2 Data Collection Method
3.2.3 Comparative Framework
3.2.4 Qualifying Sample
3.2.5 Limitations and Bias
3.2.6 Evaluation of Chosen Methodology

4 CONTENT ANALYSIS OF THE SOCIAL DIMENSION
4.1 Introduction to the Hotel Companies
4.1.1 InterContinental Hotels Group PLC
4.1.2 Hilton Worldwide Holdings Inc.
4.1.3 Marriott International, Inc.
4.1.4 Wyndham Worldwide Corporation
4.1.5 Accor S.A.
4.1.6 Choice Hotels International, Inc.
4.1.7 Starwood Hotels & Resorts, Inc.
4.1.8 Best Western International, Inc.
4.1.9 Home Inns & Hotels Management Inc.
4.1.10 The Rezidor Hotel Group, AB
4.2 Comparison of Social Indicators

5 RESEARCH FINDINGS
5.1.1 Labor Practices
5.1.2 Human Rights Disclosures Comparison
5.1.3 Society Disclosure Comparison
5.1.4 Product Responsibility Disclosure Comparison

6 DISCUSSION

7 CONCLUSION

LIST OF REFERENCES

APPENDICES

ABSTRACT

This thesis investigates the reasons of sustainability reporting on the social dimension of the biggest hotel companies worldwide and examines their utility from a marketing perspective. The usefulness and comparability of sustainability reports published by these companies is assessed using a content analysis of seven reports. The findings of the research, together with a review of existing reporting frameworks, lead to the conclusion that reporting on the social dimension lies behind the other dimensions. As there is still room for improvement, the communication of the sustainability efforts taken works very well. To reach the full potential of sustainability reporting on the social dimension sector-specific guidance for the hospitality industry and commonly social indicators are suggested.

Keywords: sustainability reporting, hospitality, Global Reporting Initiative, social dimension

LIST OF TABLES

Table 1: Mission and Vision Statement

Table 2: G 3.1 Sector Supplements

Table 3: Indicator categories and dimensions of the GRI framework

Table 4: Labour practices and decent work disclosures

Table 5: Human Rights Disclosure

Table 6: Society Disclosure Comparison

Table 7: Product Responsibility Disclosure Comparison

LIST OF FIGURES

Figure 1: External and Internal Stakeholders

Figure 2: Promotion Tools

Figure 3: A Generic and Quantifiable Model for the Social Dimension of TBL

Figure 4: Length of sustainability report

Figure 5: Literature Sources available

LIST OF APPENDICES

Appendix A: CSR isues in reports: what stakeholders want to see

Appendix B: Top 10 of worldwide hotel groups

Appendix C: Number of topics identified by business activity groups -1/2

Appendix D: Number of topics identified by business activity groups 2/2

Appendix E: Key motivation to CSR reporting

Appendix F: GRI reports 1999-2010

LIST OF ABBREVIATIONS

Abbildung in dieser Leseprobe nicht enthalten

1 INTRODUCTION

The issue of sustainability reporting in the hotel industry is a controversial topic. First, the trend of sustainable behaviour in the society, the fear of the consequences of thoughtless consuming and the increased communication between hotel companies and their stakeholders through improved technology led many corporations to the situation of disclosing their sustainable practices. Secondly, investors of hotel chains are no longer only interested in financial information, but rather in a combination of financial and non-financial information. None but this combination provides a comprehensive view on the company´s management, its performance, its public image and practices. Not disclosing a sustainability report can lead to the assumption of disguising certain matters. Thus, the hotel company will lose potential investors by not publishing its sustainability activities. However as not only investors but also other stakeholders gather information from the sustainability reports, a report serves simultaneously as a marketing communication tool e.g. for potential employees. At present times, we live in an information-overflowed society. Which sources can be trusted and who reports best on their practices? This thesis will address these questions, investigating on the social dimension of the world´s biggest hotel companies.

1.1 Justification and Currency of the Topic

Today, sustainability is a rather known topic in the business world. The hospitality industry is heading towards this particular trend especially publicly traded companies which are obligated to publish financial and non-financial facts about their operating period. This includes sustainability development, too. Unfortunately, the hotel industry is in its baby steps towards sustainability reporting. Some embrace sustainability reporting as a marketing tool and include all fats and figures, including planned activities; other hospitality companies indicate rather basic to useless information about their ‘Corporate Social Responsibility’. Due to their known brands, the greatest ten hotel companies need to be examined in order to develop an understanding of their sustainability´s seriousness.

1.2 Aim of the Thesis and Research Objectives

The main research objective of this thesis is to gain information on the social dimension of sustainability reporting in order to evaluate its status within the triple bottom line and give further recommendations on its measurement. The hotel industry is barely known for their quality of work. Pittances, unpaid overtime hours and a high staff turnover are not unusual. However, these working conditions cannot be generalized and not be applied to every single hotel business. Once the bad image of the working conditions in the hotel industry is consolidated, it can hardly be changed. The ten largest hotel companies in the world, currently holding more than 4,000,000 hotel rooms, may have the force to change the general negative perception. Based on their sustainability performance reports, one can seek evidence on their efforts in the social dimension. This thesis builds on the bachelor thesis “Sustainability reporting in international hotel chains”, written by Eric B. Hügel in 2012. Hügel used a scope of six hotel chains; Carlson Rezidor Hotel Group, Hyatt, InterContinental Hotels Group, Marriott International, Shangri-La Asia, Six Senses Resorts and Spas; for his research. At least three of these companies will also be covered in this thesis. Moreover, in his thesis Hügel compares the companies on a general base whereas the author places more emphasis on the social dimension and its marketing aspect.

The author intends to assess which of the examined social key performance indicators in the sustainability performance reports of the hospitality chains are – in terms of their completeness and quality – the most applicable to the reporting guidelines by GRI.

This will be accomplished by reaching the following objectives

- Develop an understanding of the added value by these reports.
- Revise all the reports in order to understand their structure
- Measure the information on the social dimension given in these reports
- Classify the level of disclosure of the reports.

1.3 Target Audience

The thesis` primary target audiences are the public relations and sustainability departments of hotel companies. They can use this thesis as feedback for their sustainability performance reports and base their future enlargement of their reports, as well as their strategy on the sustainability´s social dimension on it. Hereby helps the adjustment of the findings to their particular needs. A secondary target audience is the stakeholders of the hotel companies investigated in this thesis, particularly (employees and investors). The third audiences are academics and researchers who investigate in the field of sustainable hotel operations and, especially, in sustainability reporting.

2 LITERATURE REVIEW

In the literature review the author will give a broad overview about sustainability and its origin, stakeholders of a business and marketing tools of a business. Moreover the themes sustainability reporting and their standardisation are illustrated.

2.1 Sustainable Development

The advantages of corporate sustainability cannot be denied. Cost-efficiency, an improved image and sometimes even premiums for the implementation of renewable energy sources are only some reasons for managers to adapt sustainability practices in their corporation. Chapter 2.1 illustrates why this topic is nowadays so important.

2.1.1 Sustainability Awareness

Nowadays, in nearly every industry it is important to recognize and to follow the different results of the operational business in order to avoid unpleasant surprises. Especially in the hospitality sector it is essential not to shed a bad light on the company. A current challenge is that a company´s responsibility is not limited to its direct impacts, but rather extends beyond that. (KPMG International, 2008) Thus, it is necessary to look beyond the borders of its own enterprise. The stakeholders must be included, too. According to Elkington (1999) sustainable development, as proposed by governments and influential business leaders, is a solution for a broad range of problems the world is facing today. As a consequence - not only the business world is preparering for it. Schools and universities adapt their curriculum in order to fit the graduates better for an activity in the field of sustainabality. Indeed, this has led to an opening of a sustainability faculty at the Arizona State Universiry. (Parker, 2011) But not only in North America has the notion of sustainability become an important issue. Already in the year 1995, the Japan´s Asahi Glass Foundation send out questionnaires, asking 2500 experts about the environmental problems and the survival of mankind. The evaluation said the average answer on how concerned they were on a 12-hour-scale, was 8.49. (Elkington, 1999)

2.1.2 Definition of Sustainability

So far, in the academic world s, there is not really a definition for the term “Sustainability” - It is often said that it shouldn´ no t be rigidly defined but rather show indicat ions orsand descriptions. This is shown by the United States Environmental Protection Agency (EPA) which states that Sustainability “creates and maintains the conditions under which humans and nature can exist in productive harmony, that permit fulfilling the social, economic and other requirements of present and future generations” (2014). However, by digging deeper and striving for the desirable situation, one cannot get around of the term “Sustainable Development” . There is an interpretation in the so called “ Brundtland report ” , where it states that : “ Sustainable development is development that meets the needs of the present without compromising the ability of future generations to meet their own needs ” (World Commission and Environment , p. 41 ) is popular and widely accepted among leading researchers in the field of sustainability. Potts (2004), puts it simply by stating that sustainability is about doing things better and improving our environment, our society and our economies. Regardless of how strong these attempts to describe the term differ; nearly all of them apply the definition to three factors, which are as follows: social dimension, environmental dimension and economic dimension. These are often named as the “three P´s”: people, planet, profit. They are the Triple Bottom Line.

2.1.3 TBL – Triple Bottom Line

The triple bottom line is an “expanded baseline for measuring performance, adding social and environmental dimensions to the traditional monetary benchmark” (Sloan, Legrand, & Chen, 2013, p. 363). It was derived by John Elkington in 1994 from the “traditional” bottom line of the firms´ profit and loss account. With the introduction of this term, not only the issue of economic accountability could be answered, but also the aspects of social and environmental responsibility. Thus, with the TBL it is much easier to identify socially and environmentally responsible organisations (The Economist, 2009), although, different challenges appear when adopting Elkington´s TBL-approach. Is one able to value each of the dimensions equally? In which units can the results of the TBL be measured? Unlike the economic dimension, the social and environmental dimensions can´t be measured in a currency like the dollar. There have been discussions about using only dollars as a unit to measure the three dimensions (Slaper & Hall, n.d.) e.g. converting environmental damage of a property into the costs for its recreation. Holcomb, Upchurch and Okumus (2007) suggested calculating the TBL in form of an index. Though, given a standardised scale, it still does not improve the handiness of the TBL´s application to distinct organisations. Notwithstanding, the description of Elkington (1980) in Potts (2004, p.1) that the TBL is “used as a framework for measuring and reporting corporate performance against economic, social and environmental parameters”, more detailed rules and regulations need to be implemented, and individually adapted in order have a feasible index to work with. In the end “the set of measures will [...] be determined by stakeholders and subject matter experts and the ability to collect the necessary data (Slaper & Hall, n.d., p. 5). Other names and abbreviations for the TBL are “The Three Pillars”, “3BL” and “People, Planet, Profit” (Investopedia, n.d.).

2.1.4 Nine Principles of Sustainability Performance

To be able to fully understand the concept of corporate sustainability, Epstein and Roy (2003), authors of “Improving Sustainability Performance” present nine principles of sustainability performance (retrieved from Epstein, 2008,). These principles cannot define the terminology of sustainability entirely, however, they “make the definition more precise.” (Epstein, 2008, p. 37) Furthermore, they can be monetized and quantified and, most importantly, they can be integrated into day-to-day management and capital investment decisions. The nine principles are:

1. Ethics
2. Governance
3. Transparency
4. Business relationships
5. Financial return
6. Community involvement / economic development
7. Value of products and services
8. Employment practices
9. Protection of the environment

Sustainability does not mean adapting only the principles convenient to a company. Rather by implementing all of the pillars in the business activities, internally and externally, a business performs sustainably (Epstein, 2008)

2.1.5 Corporate Social Responsibility

The European Commission defines Corporate Social Responsibility (CSR) as “the responsibility of enterprises for their impacts on society and outlines what an enterprise should do to meet that responsibility.” In addition, the Dow Jones Sustainability Index (2014) has a different denotation for corporate sustainability:

Corporate Sustainability is a business approach that creates long-term shareholder value by embracing opportunities and managing risks deriving from economic, environmental and social developments. Corporate sustainability leaders achieve long-term shareholder value by gearing their strategies and management to harness the market's potential for sustainability products and services while at the same time successfully reducing and avoiding sustainability costs and risks.

In 2007, Holcomb, Upchurch and Okumus published one of the first researches on the subject of CSR in the hospitality industry paper named “Corporate social responsibility - what are top hotel companies reporting?” in the International Journal of Contemporary Hospitality Management. They found out, that the hotel industry is aware of the topic and the businesses show responsibility towards their stakeholder. Nearly two thirds of the hotels that they analysed reported a diversity policy, the remaining part, at least, mentioned the CSR in their vision or mission statement. Since this research was conducted seven years ago and including the statement of White (2005) in Holcomb et al. (2007) “CSR is not an opinion it is reality”, the author can start from the premise that the results of the hotels have improved. Moreover the concept of CSR seems to be popular in the US as well. More than three-quarter of the respondents indicated the importance of their employer´s commitment to CSR as “important” or “very important” (Statista, 2014). The examined hotel chains in this thesis partly overlap with the hotels examined back then. Other names for CSR are social responsibility (SR), corporate citizenship and corporate sustainability. (Holcomb et al., 2007)

2.1.6 Benefits and Values

Epstein (2008) argued that there is more than one reason to put one´s focus on sustainability. His four main reasons are:

1. Regulations: Through growing regulations passed by government and industry, it is hard to “escape” them by maintaining a strategy and/or a corporate policy that does not take a sustainability aspect into account. Non-compliances can lead to penalties which harm the business financially and damage their image.
2. Community Relations: A business does not operate in isolation. Building and retaining a good relationship with its stakeholders is quite important for a business. Nowadays, where everything is becoming more and more transparent and the general public is aware of sustainability, sustainable operating principles can encourage and support the relations to internal and external stakeholders.
3. Cost and revenue imperatives: By process improvements costs can be lowered and through an improved corporate reputation sales can be increased, hence revenue also be boosted.
4. Societal and moral obligations: Businesses do not only have an impact on the markets they are operating in. They, likewise, have to bear in mind the results of their activity on society and environment.

Bertoneche and van der Lugt (2013) extended in their research the list of benefits above, and clustered them into the following seven benefit areas: (1) brand value and reputation, (2) employees and future workforce, (3) operational effectiveness, (4) risk reduction and management, (5) direct financial impact, (6) organisational growth and (7) business opportunity. As these areas start with the most cited ones, one can conclude the benefit of brand value and reputation as the benefit with the highest degree of correlation linked to sustainability. This assumption leads to the same result the Economist Intelligence Unit found out in 2011. Another interesting aspect is delivered by researcher from Harvard. They found out that the ROI by investing in a value-weighted portfolio of sustainable firms would have grown 30 % greater than by investing in a weighted portfolio of “low sustainability companies”. The time range of this research was 17 years, starting with an original investment of $ 1, leading to an end value of $ 22 (sustainable firms) and $ 15.4 (low sustainability companies). (Bertoneche & van der Lugt, 2013, p. 11)

2.2 Stakeholders of a Business

A stakeholder is a person or organisation or company, which can affect and/or can be affected by a company´s action. Since stakeholders represent different interests, one can categorize them into different groups, internal and external stakeholders, according to their characteristics. Hohnen (2012) stresses the importance of stakeholders for a business - their actions are pivotal for the reporting business to decide on its practices and frameworks of sustainability reporting.

Abbildung in dieser Leseprobe nicht enthalten

Figure 1: External and Internal Stakeholders (Wikispaces, n.d.)

2.2.1 Internal Stakeholders

Owners/shareholders, managers and employees are considered to be internal stakeholders (IS). They have in common that they either work for or own the company, thus they are affected by wages and job stability. The internal stakeholders are the ones who feel it first when the business does well. Vice versa, they also suffer first if the business goes through a crisis or makes a loss (Boundless, n.d.). Hence, internal stakeholders are the most sensitive ones.

2.2.2 External Stakeholders

The number of external stakeholders (ES), which typically consist of suppliers, customers, the government, local community, partners and society, surpass the group of the IS by far. The interests of the ES are diverse. The supplier is interested in making deals with the business, thus generating revenue, while the business´ competitor is more interested in the business´ failure as they could calliper more potential customers. (Boundless, n.d.) Furthermore, the ES apply pressure in different ways (legal, political, economic) on the business.

2.2.3 Core & Fringe Stakeholders

Another differentiation among stakeholders is brought by Hart and Sharma (2004). In their article “Engaging fringe stakeholders for competitive imagination” they distinguish between core stakeholders and fringe stakeholders. Core stakeholders can be seen as the above mentioned internal and external stakeholders merged. They “gain a seat at the table by virtue of their power, legitimacy, or the urgency of their claims”. (Hart & Sharma, 2004, p. 10) On the other hand fringe stakeholders, or peripheral stakeholders, are characterised as weak, poor, disinterested and isolated. They have little or no interaction with the company, but may still be affected by it. Fringe stakeholders are in the company´s interest as they “may hold knowledge and perspectives that are key both to anticipating potential future sources of problems and to identifying innovative opportunity (Hart & Sharma, 2004, p. 10)

2.3 Marketing Tools of Business

In Chapter 2.3 the author outlines principle marketing disciplines and concepts which influence the sustainability activities and the company´s image. The aspect of corporate communication will be discussed. This includes the outline of the different stakeholders as well as the reason for a mission and vision statement.

2.3.1 Marketing & Sustainability

Marketing is not only about advertising. According to Kotler, Armstrong, Wong, and Saunders (2008) marketing is a “social and managerial process by which individuals and groups obtain what they need and want through creating and exchanging products and values with others”. Understanding what the customers want is essential when trying to understand the concept of marketing. In this chapter, the author will illustrate marketing concepts which are essential to comprehend when talking about sustainability performance reports.

2.3.2 Integrated Marketing Communication

In the present day, where information technology continuously increases and improves, the ways of communication also have multiplied: As a matter of fact, Kotler et al. (2008) state that given the changing communications environment, marketers must rethink the roles of various media and promotion tools in communicating customer value and building lasting customer relationships. One of the most important aspects for companies in the marketing department is the implementation of the concept of Integrated Marketing Communications (IMC). In doing so, the company integrates all its communication channels so as to deliver one clear message about the organisations and its products. Furthermore it strengthens the Corporate Identity (CI) and builds customer relationships. According to Kotler et al. (2008) The most important promotion tools are: advertising, personal selling, public relation, direct marketing and sales promotion, as seen in Figure 2 which all support the idea of IMC. However, the only relevant promotion tool for this thesis will be “Public Relations”.

Abbildung in dieser Leseprobe nicht enthalten

Figure 2: Promotion Tools, (Kotler et al., 2008)

2.3.2.1 Internal and External Communication

Since communication in business is not only talking to each other and can differ in the meaning and the information content, depending on who is the sender and who is the receiver, the author distinguishes between Internal Communication (IC) and External Communication (EC)

- Internal Communication takes place inside an organisation and is used for the exchange of information between employees of an organisation. Some companies also name it employee communication or employee relations. The medium can vary from personal speaking over telephone to intranet or e-mail. (Financial Times, n.d.)
- External communication however, is defined as an exchange between an organization and people or organizations outside its formal structure. (QFinance, n.d.) The communication channels can, also, vary from face-to-face conversations over PR meetings to electronic sources. Also the one-sided communication through website information and published reports, which can be accessed by the stakeholders, loom large in EC. QFinanceoutlines that PR and media relations are included in the field of EC.

2.3.2.2 Mission and Vision Statements

Nearly every company has a mission statement and a vision statement. These two terms both talk about the company´s goals and objectives, but are often confused with each other. However, they serve different purposes. Ebben (2005) explained the different objectives:

- The mission statement outlines what makes the company special and how it distinguishes itself from other companies. The timeframe in which the mission statement is written starts in the present and leads to the future. The simple question leading to this statement is: “What we are doing, why are we doing it and for whom are we doing it?”
- The vision statement, in contrast, shows where the company wants to be in the future. The vision statement is rather inspiring and motivational in order to encourage the employees and other stakeholders to achieve the (realistic) goals set up in the future.

Out of the ten hotel companies this thesis deals with, seven publish their mission statements and their vision statements. These statements are ranked upon the size of the hotel companies, starting with largest.

Abbildung in dieser Leseprobe nicht enthalten

Table 1: Mission and Vision Statement (Hotel companies´ sustainability reports)

2.4 Sustainability Reporting

In chapter 2.4 the author gives an overview about sustainability reporting. Next to its history, and the purpose of reporting the sustainability´s dimensions (1) economic, (2) environmental and especially (3) social will be illustrated. Moreover criticism and its connection to marketing will be discussed.

2.4.1 Purpose of Reporting

“Let everyone know how you are doing” (Epstein, 2008, p. 226) and “What gets measured gets done” (Drucker, n.d.) are only two of many indicatory statements that stand for the motivation of many businesses and organizations to go the way of corporate transparency. Epstein (2008) adds that organizations see increasing pressure for greater transparency, mandatory or voluntary. As many corporations react to the demands of their stakeholders they are being pushed towards a higher extent of disclosure and communication. However, one must not overlook the businesses which have been acting sustainably ever since their founding. Acting sustainably but not reporting their sustainable practices could backfire on these businesses and lead to a disadvantage towards their competitors. (Sloan, Legrand, & Chen, 2013)

2.4.2 History of Sustainability Reporting within the Hospitality Industry

Sustainability measurement is not a new trend but rather quite the opposite is the case. Ricaurte (2011) states in his report “Developing a Sustainability Measurement Framework for Hotels” that “hotels have long been monitoring and measuring items now associated with sustainability, and it would be highly inaccurate to insinuate that sustainability performance measurements in the hotel industry are a new concept” (Ricaurte, 2011, p. 8) Ricaurte indicates measurements and benchmarks in the fields of indoor air quality, noise, water, energy, waste and greenhouse gases (GHG) emissions for nearly 100 years. GHG is defined as “a gas that contributes to the greenhouse effect by absorbing infrared radiation, e.g., carbon dioxide and chlorofluorocarbons.” (Oxford Dictionaries, n.d.). However, measuring and reporting are two different things. Since measuring is defined as “ascertain the size, amount, or degree of (something) by using an instrument or device marked in standard units”, reporting includes within its definition of “giving [...] account of something that one has observed, heard, done, or investigated” the issue of giving information to a third party. (Oxford Dictionaries, n.d.) Thus, certain dimensions were measured but not reported to external stakeholders. The reason for that was the senior management´s mistrust in the ability of outsiders to handle corporate information responsibly. (Epstein, 2008) This becomes apparent when investigating the individual accounting programs of the big hotel chains. In 1990 InterContinental tracked their utility use against company benchmarks using spreadsheets. Eight years later, in 1998 Accor introduced an environmental guide for measuring and tracking energy consumption against performance benchmarks for their Hotel Managers. Starwood started to use an energy accounting system for all its brands in North America in the year 2000. (Ricaurte, 2011) Despite these efforts of the big hotel companies to account for their impacts on the triple bottom line, their communication with their stakeholders was delayed. In his report, Ricaurte (2011) also notes concomitant to the usage of the environmental standard ISO 1400. This standard is elucidated in chapter 5.2.2. Starting only in the 21st century, some hotel companies have now in 2014 announced the release of their second or third sustainability performance reports. Another big player, Starwood is only publishing their first report now. The decision for an enhanced communication with their stakeholders can be deduced from a survey by Ernst &Young from 2005. At that time Ernst & Young identified investors to weight communication with stakeholders as an important aspect to observe before investing in the company (as cited in Epstein, 2008, p.226). Concluding, Hohnen (2012) notes that the concept of sustainability reporting, across all sectors, is 24 years old.

2.4.3 Elements of Sustainability Reports

Generally, a company should give out information that is relevant to its stakeholders. Pleon (2005) investigated in its report “Accounting for Good: the Global Stakeholder Report 2005” the topics stakeholders want to be disclosed. Among the 30 answers the highest-ranked results are “Human rights”, “Energy-/eco-efficiency”, “Health & safety”, “Climate protection” and “Environmental management of the production process”. Hence, the answers on the first and third place can be placed on the social pillar. The remaining results of the top five can be assigned to the environmental pillar. Although there were answers from the economic dimension named, none of them ranked in the top ten results. Moreover, the answer “Basic business/financial information” only achieved the third to last place. Please see Appendix A for all results. Zadek and Merme (2003) provide a tool in order to find out which information should be disclosed in a corporate report. This tool is composed of five parts to cover the following areas:

1. Direct, short term financial impacts
2. Policy-based performance – e.g. how the company wants to treat their employees
3. Business peer-based norms – the company reveals information about its peers acting in the same market
4. Stakeholder behaviour & concerns – how far the corporate report influences the stakeholders
5. Societal norms (regulatory & non-regulatory) – regulations/norms that the company currently could not regulate, but might regulate – or implement a regulation in the future

This tool determines which information is material that can be used in the interest of stakeholders and corporate managers. (Zadek & Merme, Redefining Materiality, 2003). In order to address the form on how the content is delivered, it demands objectives that can be measured. To administer these measures, it is very easy in terms of financial performance, but more difficult in the environmental dimension. Here environmental key indicators help, such as cubic meters of total waste consumption, metric tons of carbon dioxide emission per square meter or kilograms of waste produced per overnight stay. (Legrand, Sloan, & Huegel, 2013) Regarding the social dimension it is still more complicated since there are no standardised metrics and recognized key performance indicators.

2.4.3.1 Economic Performance

The economic dimension, usually found in the corporate´s annual statements, represents the profit and loss of a company. As a positive performance in this sector is essential for the well-being of a company, the economic performance is the most important key indicator for a business. To confirm this aspect Dale and Oliver (2000) state that although “organizations may state many objectives, we must recognize that profit is essential to them all” and that the primary objective “profit maximization [...] is essential for all private organizations” (p.83). Since the economic dimension has existed longest it is the most standardized among the triple bottom line. The cost of externalities, “ a cost that arises when the social or economic activities of one company has an impact on another company or group of people whereby that impact is not fully accounted, or eventually compensated for” (Sloan, Legrand, & Chen, 2013, p. 359) is not considered in the economic dimension. The association of Australia’s senior finance executives from the nation’s business enterprises, namely group100 (n.d.) affirms that point of view by stressing financial performance as the primary consideration in assessing a business success in terms of corporate performance. However, the information deducted from the economic performance “is provided to illustrate the economic relationships and impacts, both direct and indirect, that the company has with its stakeholders and the communities in which it operates” (group100, n.d., p. 12).

2.4.3.2 Environmental Performance

Elkington (1999) describes two kinds of natural capital, namely “critical natural capital” and “renewable, replaceable, or substitutable natural capital”. While the first one “embraces natural capital which is essential to the maintenance of life and ecosystem integrity” (Elkington, 1999, p. 79), the latter one includes any kind of natural capital that is as mentioned in the name, recoverable.

Agreeing on a standard framework, respectively key performance indicators to measure the environmental performance as a whole is quite difficult as different opinions on the categories to be measured exist. Next to the popular carbon footprint blown up by the mass media, other categories exist. In his research on a development for a sustainability framework for hotels Ricaurte (2011) collected data for the following points:”

1. “Energy usage
a. Fuels burned on-site
b. Electricity
c. Municipal Steam
d. Renewable Energy Certificates
2. Water usage
a. Municipal water
b. Municipal chilled water
c. Well water
3. Waste tonnage
a. Diverted
b. Non-Diverted
4. Refrigerant usage for refilling of cooling equipment
5. Carbon Offset purchased” (p.16)

Compared to the environmental categories set up by Holcomb et al. (2007) cultural heritage, energy management, pollution control, recycle, waste management and water conservation the reader can observe that the overall direction of environmental reporting is similar, however, there will always be aberrations. To be able to locate a company´s environmental report on the same scale as its competitors, tools like ISO 14001 and GRI help to standardize those.

2.4.3.3 Social Performance

The social dimension of sustainability performance reports is the most controversial and, by far, the most difficult to measure. Already Pott (2004) discussed the key challenge of identifying indicators and supporting data in order to measure the social dimension and put in a proper TBL framework. In terms of the corporate sustainability´s history the social dimension wasn´t weighted as strongly as the economic or environmental dimensions (see chapter 4.1). According to Ricaurte (2011) the social aspect, compared to the environmental and the economic, can so far not be seen on the same level and, hence, has yet to gain acceptance in the industry. Miller, Buys and Summerville (2007) obtain approval from Ricaurte (2011). They discuss that the social dimension is often seen as a PR exercise based on their limited accountability, consistency or comparability. Moreover, they indicate validity and comparability as the two main limitations of social reporting. Zadek et al. (1997), however already, mentioned in the end of the 20th century an emergence of social accounting. Their justification can be split up into three dimensions: One perspective is investigating the company´s endurance “by knowing and influencing the perception of its actions by the society” (Huegel, 2012). The second dimension looks at the pressure and demands a company has to face from the public interest and needs and the requirements gathered from these needs, e.g. accountability and disclosure. Last, the third dimension concentrates on the organisations´ values, impelled by managers who are “searching for an expanded repertoire of explanations and measures of success provided by the bottom line” (Zadek et al., 1997, p.20)

According to Salvaris (2000) the reporting of the TBL can facilitate certain social issues:

- New local participatory approaches;
- Emphasis on social inclusion;
- Holistic ‘community health’ approach;
- Building meaningful and cooperative governance tasks that build social trust and strong communities;
- Creating increasingly open and democratic processes and forums, greater

accountability and extending opportunities for citizen participation.

Vanclayd (2004) argued that “a push to a language of accounting or economics is likely to ignore many of the truly social issues” Therefore, the experience of Social Impact Assessment (SIA) “has shown that there needs to be a focus on the things that count, not the things that can be counted” (as cited in Miller et al., 2007, p. 10). SIA “includes the processes of analysing, monitoring and managing the intended and unintended social consequences, both positive and negative, of planned interventions [...] and any social change processes invoked by those interventions.” (Impact Assessment Wiki, 2010) Therefore the application of the SIA is not easy as there are endless factors gathering together. The Impact Assessment Wiki provides social impact categories: (1) people´s way of life, (2) their culture, (3) their community, (4) their political system, (5) their environment, (6) their health and wellbeing, (7) their personal and property rights and (8) their fears and aspirations. All these issues could affect people directly or indirectly and therefore are suitable to SIA. Impact Assessment Wiki (2010) argues that having a limited view on SIA “creates demarcation problems about the social impacts to be identified.” Going on, Miller et al. (2007) stressed that not every aspect in the social dimension can be measured. However, a quantifiable approach is needed to achieve a higher acceptance and validity for a corporate´s stakeholders. They developed a framework (see figure 3). It consists of a socio-demographic profile as well as the “four key elements of social wellbeing” Miller et al. (2007) : individual wellbeing, community wellbeing, employment experience and industry impact.

Abbildung in dieser Leseprobe nicht enthalten

Figure 3: A Generic and Quantifiable Model for the Social Dimension of TBL, (Miller et al., 2007, p.28)

Summing up the social dimension as it seen by the society and in relation to sustainability, Stuart Heart, director of the Corporate Environmental Management Program at the University of Michigan concludes: “Those who think that sustainability is only a matter of pollution control are missing the big picture” (Elkington, 1999, p. 71)

2.4.4 Reactions and Criticism towards Sustainability Reporting

Proper corporate reporting procedures are only one side of the coin. On the positive side, by releasing a sustainability report there are certainly affirmative reactions by the corporate stakeholders such as the media and NGO. On the negative side, especially if a corporation has not been known for undertaking sustainability initiative, the call of corporate greenwashing could arise. Greenwashing “bezeichnet den Versuch von Unternehmen, durch Marketing- und PR-Maßnahmen ein „grünes Image“ zu erlangen, ohne allerdings entsprechende Maßnahmen im Rahmen der Wertschöpfung zu implementieren. Bezog sich der Begriff ursprünglich auf eine suggerierte Umweltfreundlichkeit, findet dieser mittlerweile auch für suggerierte Unternehmensverantwortung Verwendung. “ It defines “the businesses´ attempt to gain a “green image” through marketing and PR actions without implementing the proper actions within the scope of added value. The term was originally related to a suggested ecological friendliness; meanwhile it is also used for simulated corporate social responsibility. (Lin-Hi, 2014) In 2012, Wal-Mart was accused of performing greenwashing in terms of their produced GHG amount. The Institute for Local Self-Reliance (ILSR) found out, that “Walmart’s heavily-promoted sustainability initiatives have done more to improve the company’s image than to help the environment” (Environmental Leader) In order to achieve their aim to use 100 % renewable energy set by Wal-Mart in 2011, the corporation would need around 300 years, ILSR estimated. (Environmental Leader, 2012). Greenwashing is a risky action. According to Sloan, Legrand, & Chen (2013 the action of greenwashing “can ruin relationships with any stakeholder of a business” (p.205) and may result in destroying the company´s trustworthiness. Pleon (2005) found out in its survey that every tenth employee indicated PR reasons as their main motivation for CSR reporting. However, every third respondent indicated “Creating business value to shareholders through CSR” (see Appendix E) as their preferenced motivation. Moreover, Hohnen (2012) discussed preceived weaknesses of SR frameworks in quantitave and qualitative dimensions, as e.g. too much or too little data as well as its accuracy, completeness and comparability on the important points. Another point of criticism comes from the US Department of Commerce: In 1979 they said that “given the enormous costs of regulation, some argue that the short-term costs of greater corporate concern for the social consequences of business activities will result in a greater profitability in the longer term” (as cited in Huegel, 2012, p.15 as cited in Zadek et al., 1997). Norman & MacDonald (2003) argue on the missing proposition of a way to calculate the social bottom line. They even claim that it would be impossible to set up a methodology to calculate a social bottom line which is relatively sound and uncontroversial. To critics on sustainability as a whole, Sloan, Legrand, & Chen (2013) state: “Sustainability is not a panacea for all the ills of the world though some consider it a quick-fix solution” (p.23).

2.5 Standardization of Sustainability Reports

While there are companies publishing their sustainability performance within their corporate annual reports, there are a growing number of businesses which produce separate sustainability reports next to the financial ones. The length of the reports can vary significantly as seen in figure 4 (Pleon, 2005). However, many businesses content themselves with publishing their CSR activities on their website.

Abbildung in dieser Leseprobe nicht enthalten­­

Figure 4: Length of sustainability report, (Pleon, 2005)

[...]

Ende der Leseprobe aus 62 Seiten

Details

Titel
Best Practice in Sustainability Reporting. Comparing Sustainability Performance Reports among International Hotel Chains
Untertitel
An Investigation on the Social Dimension
Hochschule
Internationale Fachhochschule Bad Honnef - Bonn
Note
1,4
Autor
Jahr
2014
Seiten
62
Katalognummer
V441249
ISBN (eBook)
9783668802957
ISBN (Buch)
9783668802964
Sprache
Deutsch
Schlagworte
Sustainability Reporting, Hotel, Social Dimension, TBL, GRI
Arbeit zitieren
Jonas Lutz (Autor), 2014, Best Practice in Sustainability Reporting. Comparing Sustainability Performance Reports among International Hotel Chains, München, GRIN Verlag, https://www.grin.com/document/441249

Kommentare

  • Noch keine Kommentare.
Im eBook lesen
Titel: Best Practice in Sustainability Reporting. Comparing Sustainability Performance Reports among International Hotel Chains


Ihre Arbeit hochladen

Ihre Hausarbeit / Abschlussarbeit:

- Publikation als eBook und Buch
- Hohes Honorar auf die Verkäufe
- Für Sie komplett kostenlos – mit ISBN
- Es dauert nur 5 Minuten
- Jede Arbeit findet Leser

Kostenlos Autor werden