Abstract
This chapter reviews the literature on social and environmental reporting and it empirically analyzes three case studies on reporting practices. To date, it appears increasingly relevant to examine the social and environmental disclosure and manner of presentation that companies with diverse sizes select. Indeed, disclosures not only improves firms’ transparency and visibility but also enables firms to evaluate their wide range of social and environmental issues’ impacts, resulting in more accurate predictions about the risks and opportunities they face. To this end, the chapter first introduces the movements towards increased social and environmental disclosure, especially at the European level with Directive 2014/95/EU. It then shows the choices concerning social and environmental reporting of three Italian companies in the food and beverage industry. The scope is to understand whether there are significant burdens that impede small/medium companies—compared to the larger counterparts—to prepare such disclosures or whether, regardless of their smaller size, these types of firms can successfully respond to the growing stakeholders’ expectations of corporate disclosure with regard to social and environmental impact.
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Notes
- 1.
Gray (2010: 5) argues that: “(…) social accounting can embrace any possible way in which we can imagine that individuals/groups/organisations might choose to request, give and receive accounts from one another… Even if we draw our boundaries a little tighter, we will still find that social accounting is a complex, diverse, amorphous and constantly changing craft... Social accounting is not precise or definable, and this imprecision is very likely to remain the case until such time as social accounting is subject to demanding international regulation—and even then evolution may still produce the new and the unexpected. To a considerable extent, it is the voluntary—one might even say willful—nature of much of social accounting practice that produces the diversity and the lack of any systematic or organised development”.
- 2.
The authors acknowledge that sustainability reporting can be used as a synonym of other terms related to non-financial information, such as corporate social responsibility (CSR) reporting, environmental, social, and governance (ESG) disclosure, and more. Generally, social and environmental reporting is also an innate component of integrated reporting, which combines the disclosure of financial and non-financial performance. To this end, triple bottom line reporting can well include all these terms, more generally recalling the idea that a firm should not only consider its financial performance but also consider people’s lives and the planet. In 1994, John Elkington coined the term “triple bottom line” to underline that firms should handle these three bottom lines simultaneously:
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1.
Profit, which is the traditional measure of corporate financial performance and derived from the profit and loss (P&L) account.
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2.
People, measuring how socially responsible an organization has been throughout its actions and operations.
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3.
Planet, measuring how environmentally responsible the firms’ activities are.
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1.
- 3.
The database is available at: https://database.globalreporting.org/search/. Last accessed 1 October 2019.
- 4.
Note that there are several major providers of sustainability reporting guidance including, amongst others:
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The GRI (GRI’s Sustainability Reporting Standards);
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The Organisation for Economic Co-operation and Development (OECD Guidelines for Multinational Enterprises)
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The United Nations Global Compact (the Communication on Progress)
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The International Organization for Standardization (ISO 26000, International Standard for social responsibility)
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- 5.
Table 4.6 in Appendix 2 reports a detailed analysis of the trend of organizations releasing triple bottom line reports over the period 2007–2016 divided amongst the three categories of small/medium (Panel A), large (Panel B), multinational (Panel C) enterprises and amongst all the European countries.
- 6.
See https://www.imf.org/external/pubs/ft/weo/2019/01/weodata/index.aspx. Last accessed October 2019.
- 7.
See https://www.cia.gov/library/publications/resources/the-world-factbook/fields/239rank.html#IT. Last accessed October 2019.
- 8.
See https://www.cia.gov/library/publications/resources/the-world-factbook/geos/it.html. Last accessed October 2019.
- 9.
The classification of enterprises as small/medium, large, and multinational is based on the GRI Sustainability Disclosure Database Data Legend, which follows the EU definitions. Therefore, the European Commission defines small/medium enterprises as having less than 250 employees and an annual turnover of up to 50 million euros or a balance sheet total of no more than 43 million euros. Large enterprises have more than 250 employees and an annual turnover higher than 50 million euros or a balance sheet total of more than 43 million euros. A multinational enterprise is a large enterprise that, furthermore, produces goods or deliver services in more than one country.
- 10.
See http://dati.istat.it/. Last accessed October 2019.
- 11.
Data retrieved from http://dati.istat.it/. Last accessed October 2019.
- 12.
The analysis and monitoring of all suppliers and ingredients ensuring their origins and compliance are necessary to build consumer trust, prevent food fraud, and manage legal complexity across different countries.
- 13.
The database is available at https://database.globalreporting.org/search/. Last accessed 11 October 2019.
- 14.
Their commitment was and still is to “ensure a glass of healthy milk every day to all children”. These were the words of the Mayor of Florence, Giorgio La Pira.
- 15.
The company history has been retrieved from the company website https://www.mukki.it/storia/. Last accessed on 11 October 2019.
- 16.
See https://www.mukki.it/certificazioni/bilancio-di-sostenibilita/. Last accessed on 11 October 2019.
- 17.
The A level of compliance with the G3.1 requires that the company reports all the numbered elements envisaged in the guidelines, that the company gives a particularly transparent disclosure on the methods of economic, social, and environmental management and that there is a full answer—motivating all omissions—to all key indicators.
- 18.
Last accessed on 11 October 2019.
- 19.
The authors’ free translation of page 16 of Mukki’s Annual Report 2015.
- 20.
The authors’ free translation of page 18 of Mukki’s Annual Report 2015.
- 21.
The authors’ free translation of page 13 of Mukki’s Annual Report 2015.
- 22.
The authors’ free translation of page 38 of Mukki’s Annual Report 2015.
- 23.
Authors’ free translation of page 54 of Mukki’s Annual Report 2015.
- 24.
Mukki adheres to the following laws and standards: UNI EN ISO 9001:2008 for the quality management system; UNI EN ISO 22000:2005 for the food safety management system; Food Safety System Certification—FSSC; Global Standard for Food Safety—BRC; International Food Standard; UNI CEI EN ISO/IEC 17025:2005 for analysis laboratory management systems; BS OH SAS 18001:2007 for the Occupational Health and Safety Management System; UNI EN ISO 14001:2004 for the environmental management system; and SA 8000:2008 for corporate social responsibility management.
- 25.
Amongst the laws and standards within the international framework, the following are worth mentioning: the United Nations (UN) Declaration (1948), “Universal Declaration of Human Rights”—the United Nations (UN) Convention (1966), “International Covenant on Civil and Political Rights”—the United Nations (UN) Convention (1966), “International Covenant on Economic, Social, and Cultural Rights”, 1966—the United Nations (UN) Declaration (1986), “Declaration on the Right to Development”—the United Nations (UN) Declaration (2007), “United Nations Declaration of the Rights of Indigenous Peoples”—the International Labour Organization (ILO) (1977), “Tripartite Declaration of Principles Concerning Multinational Enterprises and Social Policy”—the United Nations (UN) Convention (1979), “Convention on the Elimination of all Forms of Discrimination against Women (CEDAW)”—the International Labour Organization (ILO) Declaration (1998), “Declaration on Fundamental Principles and Rights at Work”—the Organisation for Economic Co-operation and Development (OECD) (2011), OECD Guidelines for Multinational Enterprises.
- 26.
For the sake of completeness, the authors list all the social indicators that are listed in the G4 Guidelines outside the scope of Mukki’s sustainability report by category:
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Labour practices and decent work: Workers with high incidence or high risk of diseases related to their occupation; health and safety topics covered in formal agreements with trade unions; percentage of employees receiving regular performance and career development reviews, by gender and by employee category; percentage of new suppliers that were screened using labour practice criteria; significant actual and potential negative impacts for labour practices in the supply chain and actions taken; number of grievances about labour practices filed, addressed, and resolved through formal grievance mechanisms.
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Human rights: Total number of incidents of violations involving rights of indigenous peoples and actions taken; total number and percentage of operations that have been subjected to human rights reviews or impact assessments; significant actual and potential negative human rights impacts in the supply chain and actions taken; number of grievances about human rights impacts filed, addressed, and resolved through formal grievance mechanisms.
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Society: Communication and training on anti-corruption policies and procedures; total number of legal actions for anti-competitive behaviour, anti-trust, and monopoly practices and their outcomes; percentage of new suppliers that were screened using criteria for impacts on society; significant actual and potential negative impacts on society in the supply chain and actions taken; number of grievances about impacts on society filed, addressed, and resolved through formal grievance mechanisms
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Product responsibility: Total number of incidents of non-compliance with regulations and voluntary codes concerning the health and safety impacts of products and services during their life cycle, by type of outcomes; total number of incidents of non-compliance with regulations and voluntary codes concerning product and service information and labelling, by type of outcomes; results of surveys measuring customer satisfaction; sale of banned or disputed products; total number of substantiated complaints regarding breaches of customer privacy, and losses of customer data
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- 27.
For the sake of completeness, the authors list all the environmental indicators that are listed in the G4 Guidelines outside of the scope of Mukki’s sustainability report by category:
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Materials: Energy intensity; reductions in energy requirements of products and services
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Water: Water sources significantly affected by the withdrawal of water
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Biodiversity: Total number of IUCN Red List species and national conservation list species with habitats in areas affected by operations, by level of extinction risk
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Emissions: Other indirect greenhouse gas (GHG) emissions; GHG emissions intensity; reduction of GHG emissions; identity, size, protected status, and biodiversity value of water bodies and related habitats significantly affected by the organisation’s discharges of water and runoff
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Supplier environmental assessment: Percentage of new suppliers that were screened using environmental criteria; significant actual and potential negative environmental impacts in the supply chain and actions taken
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Environmental grievance mechanisms: Number of grievances about environmental impacts filed, addressed, and resolved through formal grievance mechanisms.
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- 28.
The first advertising slogan of the Lavazza mixture stating “Lavazza Paradise in a mug” appeared in newspapers and was broadcast on the radio already in 1950. This slogan still inspires Lavazza’s television advertising campaign.
- 29.
The authors retrieved company history from the company website https://www.lavazza.com/en/about-us/history.html. Last accessed on 23 October 2019.
- 30.
Available at https://insights.reputationinstitute.com/reptrak-reports/italy-reptrak-awards-2019 and https://insights.reputationinstitute.com/reptrak-reports/global-reptrak-2019. Last accessed on 20 October 2019.
- 31.
In this discussion, the authors refer to the English version of the 2018 sustainability report.
- 32.
These awards celebrate “the brand’s excellence and the commitment of those who continue to invest in brand values, making respect and sustainability the focus of its growth strategies” (Lavazza Sustainability Report 2018).
- 33.
The authors highlight that this part related to the internal controls is not extensively dealt with, which is also noted in the independent auditor’s report suggesting “to strengthen the reporting and control system, also in view of a future extension of the reporting perimeter to other Group companies, in order to facilitate the availability and verifiability of quantitative data”.
- 34.
For further information on Campari Group’s history, refer to the corporate website.
- 35.
In this discussion, the authors always refer to the English version of Campari’s sustainability report.
- 36.
CONSOB stands for Commissione Nazionale per le Società e la Borsa translated in English to the Italian Companies and Exchange Commission, which is an Italian government authority responsible for regulating the Italian securities market.
- 37.
In the sustainability report we read as follows: “Although it started reporting socio-environmental information in 2013 on a voluntary basis, Campari Group has verified that the information produced so far complies with the recent regulatory provisions. For this reason, with the support of external advisers, a gap analysis was performed in 2017 with the involvement of the management of six corporate departments, which led to an action plan being drawn up indicating areas for improvement, in order to adapt the reporting system and the existing documentation to the provisions of Legislative Decree 254”.
- 38.
Campari, in the process of identifying material topics, carried out a benchmarking comparison with competitors and distributed a sustainability questionnaire to the Group’s entire management.
- 39.
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Ghio, A., Verona, R. (2020). Social and Environmental Reporting. In: The Evolution of Corporate Disclosure. Contributions to Management Science. Springer, Cham. https://doi.org/10.1007/978-3-030-42299-8_4
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