Critical Review of Research Papers on Corporate Accountability and Environmental Reporting

This critical review analyzes four research papers on corporate accountability and environmental reporting, focusing on the Samarco chemical sludge disaster, Australian firms, BHP, and legitimacy theory. The review also examines BHP's 2017 sustainability report.

Critical Review
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Table of Contents
Part A.........................................................................................................................................3
Research Paper 1........................................................................................................................3
Research Paper 2........................................................................................................................4
Research Paper 3........................................................................................................................5
Research Paper 4........................................................................................................................6
Part B..........................................................................................................................................8
The sustainability report of BHP 2017.......................................................................................8
References................................................................................................................................10
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Part A
Research Paper 1
Karen in his article “Corporate accountability in the Samarco chemical sludge disaster” has
majorly focused on the corporate accountability during the time of disasters. The author has
discussed this topic by taking the example of the Samarco chemical sludge disaster that took
place in Brazil, in the year 2015. The author has identified the national efforts taken during
the time of disaster and the international guidelines that make organizations liable towards
their corporate accountability. This article can be utilized by the businesses that find
themselves stuck in such situations that demand their responsibility towards corporate
accountability during the time of disasters. The author has further mentioned about the
different chemical tragedies that have taken place worldwide apart from the Samarco
incident. After providing the facts related to the disaster, the author went ahead to describe
the term disaster used in this context. Disaster can be understood as an event that has
negatively impacted a society, which can be prevented in future with the adoption of right
efforts (Perry, 2007). The author has drawn a clear link between the expectations from the
“states” at the time of such disasters, and the “non-state actors” like organizations that are not
expected to show any responsibility towards such disasters (Bantekas & Oette, 2016). But, it
is believed that when the activities of these organizations pose harm over the society, then it
should be their responsibility as well to take the accountability of such mishap and try to
compensate to the society. Since last few decades’ efforts are being taken at international
level to make organizations perform their corporate social responsibility towards the society
in order to improve the society’s position. This case study has mentioned that how along with
the national efforts Samarco has also taken efforts towards the affected communities to
provide them relief (Telesetsky, 2015). According to the guidelines of Organization for
Economic Cooperation and Development (OECD), the organizations apart from voluntary
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commitments are obliged towards the protection of human rights and environment. The CSR
norms adopted by organizations are largely voluntary in nature. On the other hand, corporate
accountability deals with the responsibility towards the human beings and society as a whole.
The guidelines released by OECD are the most promising international standards in the field
of corporate accountability, which includes about human rights, environment, labour
standards, etc. (Amao, 2011). In the end, the author has concluded by suggesting that these
international norms can be used in order to reflect the responsibilities of businesses at the
time of disasters that have taken place because of their mistake (Costa, 2017).
Research Paper 2
Kathyayini and others in their article “Corporate governance and environmental reporting: an
Australian study” has discussed about the relationship between the environmental reporting
and corporate governance of the Australian firms. The authors have included the regulators of
organizations in Australia as well as the strategies adopted by the organizations towards the
protection of the environment. The authors in this article has discussed about the corporate
governance principles released by the Australian Stock Exchange, which is mandatory to be
followed by the Australian organizations. This is so because the authors have revealed that
the composition of the board of directors, which is an important principle of the corporate
governance by ASX, has a direct impact on the environmental information being disclosed by
the companies. This is important because today almost every organization across the globe is
providing environmental information related to their social or environmental activity (Gibson
& O'Donovan, 2007). Corporate governance is a very wide concept and it extends to involve
the interest of shareholders as well as stakeholders because of which, the organizations
accountability as well as responsibility both increases (Jamali, Safieddine, & Rabbath, 2008).
The author has discussed that when the corporate governance is effective, then the
environmental information is reflected in the company’s statements whether it is mandatory
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or voluntary improving the disclosing behaviour of the organizations (Laidroo, 2009).
Hence, this reveals that there is a positive relationship between the corporate governance and
the environmental disclosures done by the organizations. The authors in the end have
concluded that 96 out of the 100 Australian companies selected showcased a strong and
positive relationship between corporate governance and environmental reporting. Hence, this
reveals that the Australian organizations are very much enlightened about the fact that
protection of environment is an important concerns for the organizations as well and hence,
the efforts towards this is being reflected in the annual statements of the organizations.
Though, it has been mentioned that there is a need for explicitly mentioning the role of the
organizations towards environmental reporting in order to make this mandatory. This article
has taken large Australian organizations into consideration, leaving scope for future research
which may include small and medium Australian organizations, in order to draw a link
between corporate governance and environmental reporting (Rao, Tilt, & Lester, 2011).
Research Paper 3
Craig and others in their article “An examination of the corporate social and environmental
disclosures of BHP from 1983-1997 A test of legitimacy theory” has discussed about the
social and environmental disclosures within a stipulated time of BHP, one of the well reputed
Australian organizations. This article has focused on how there has been a change in the
reflection of environmental information in the annual statements of the company with time.
The article has also focused on the impact of different factors on the disclosure of
environmental and social information by the company. The authors have focused on proving
the legitimacy theory with the example of BHP ltd. Legitimacy theory is believed to take
place when there is congruence between the society’s expectations from the organization and
the belief that the organization is fulfilling those expectations. It has been mentioned in the
article that, there are different factors that have an impact on the perceptions developed by the
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community. On the basis of these factors, it is decided that whether the organization is
complying with the expectations or not (Solomon & Lewis, 2001). It has been mentioned in
the article that as a response to the communities’ expectations, the organizations tend to
disclose their corporate social and environmental information. The authors have also included
a different view in this article that covers the role played by media in shaping the concerns of
the community with the help of media agenda and media framing. Media has given a
direction to the communities to think in a specific direction. This has enlarged their
knowledge about the corporate social responsibilities and the role organizations need to
perform towards the society and environment as a whole. Media has increased awareness
among people which have resulted in increased expectation from them, because of which,
organizations need to take necessary steps in order to remain competitive enough in the
market (McCombs, 1995). The authors have concluded that the legitimacy theory is directly
linked with the survival of organizations. It has also concluded that the higher the level of
awareness among the communities the higher is the level of social and environmental
disclosures among the organizations. Hence, a positive relationship is developed between
community awareness and environmental disclosures (Deegan, Rankin, & Tobin, 2002).
Research Paper 4
Gary in his article “Environmental disclosures in the annual report: Extending the
applicability and predictive power of legitimacy theory” has discussed about the disclosure of
environmental information in the annual reports as a result of the outcome of legitimacy
theory since 1980’s. According to this theory, organizations act in the boundary framed by
the society on the belief that the organizations should act within its limitations. On the basis
of the interview, it has been found that the legitimacy theory is one of the most influential
factors for the environmental disclosures by organizations. Legitimacy theory has helped to
draw a direct link between the society, its expectations and the organization fulfilling its role.
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This article has included the gaps that may arise in the legitimacy theory because of the
reasons such as increased expectation from customers and no change from the organization;
change in the organization but no change in the expectation of the customers. This gap has a
strong negative impact on the organizational performance and is reflected in the annual
reports of the organization. This article has covered about the legitimation tactics that are
used by the organization either to extend their legitimacy or to repair their legitimacy
(Ashforth & Gibbs, 1990). The author has also mentioned that in order to immediately save
the legitimacy of the organization, the corporations should make use of media releases or
advertising in order to reach the customers and should not wait for the annual reports to
publish. The organization’s annual report is analyzed by the shareholders as well as the
stakeholders of the organization. Hence, it has become a trend to reflect the social as well as
environmental information in the annual reports of the organization. The author has disclosed
the fact that the organizations find the need to disclose environmental information in the
annual reports, in order to reflect a positive image of the company in the society. Disclosing
the information in annual reports is a legitimacy tactic that is used by the organizations in
order to change the perception of the community. Hence, it is believed that annual reports are
considered as a public relations document, which is used by the managers of the organization
to showcase the social and environmental performance progress achieved by the company
(Merkelsen, 2011). This article has focused on only the legitimacy factor as an explanation
behind the disclosure of the environmental information. Hence, it has left a scope for future
studies to investigate other factors that have an impact on the environmental disclosures
(O’Donovan, 2002).
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Part B
The sustainability report of BHP 2017
In order to disclose the social and environmental information, organizations have moved
towards the publication of sustainability report apart from annual report. Sustainability report
is wholly dedicated to the social and environmental efforts and contributions taken by an
organization. The BHP sustainability report 2017 aims to reflect the social and environmental
contribution made by the organization that has helped in making a positive difference in the
society. In the sustainability report, BHP has focused on disclosing the sustainability
achievements of the organization, how the organization manages its sustainability,
organizations efforts to improve safety and efforts towards well-being of workforce, acts
towards community building, etc. The organization has revealed in its report that they have
successfully reduced the rate of injuries taking place within the organization, which reflects
that the organization has taken efforts towards the safety of their employees. The organization
has mentioned that 1 per cent of the pre tax profits are invested by the organization towards
the community benefit. The organization has adopted sustainability in its corporate
governance standards and principles so that sustainability can be practiced in everything done
by the organization. Sustainability committee is developed by the company to monitor the
sustainable performance of the company. The organization has included facts that reflect that
how the organization is setting international sustainable targets since a decade. Ethics and
integrity are one of the most important factors that are required in the organization to run the
business smoothly. In order to ensure this, the organization has adopted Code of Business
Conduct as well as anti corruption compliance so that the company does not deviate from its
track and a check is maintained. In order to ensure sustainability in supply chain, risk- based
approach is adopted by the company to assess their suppliers. With respect to the
environmental considerations that company has adopted “Our Requirements for Environment
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and Climate Change standard”. This provides necessary guidelines to the company towards
the protection of the environment. Hence, it can be said that the sustainability report of BHP
Company has included all the relevant points and sections that will help the company to have
a positive influence over the community and to build trust of people over the operations of
the company (BHP, 2017).
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References
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Corporations in developing countries. Taylor & Francis.
Ashforth, B. E., & Gibbs, B. W. (1990). The double-edge of organizational legitimation.
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Bantekas, I., & Oette, L. (2016). International human rights law and practice. Cambridge
University Press.
BHP. (2017). BHP Sustainability Report 2017. BHP.
Costa, K. d. (2017). Corporate accountability in the Samarco chemical sludge disaster.
Disaster Prevention and Management, 26(5), 540-552.
Deegan, C., Rankin, M., & Tobin, J. (2002). “An examination of the corporate social and
environmental disclosures of BHP from 1983-1997 A test of legitimacy theory”.
Accounting, Auditing and Accountability Journal, 15(3), 312-343.
Gibson, K., & O'Donovan, G. (2007). Corporate governance and environmental reporting: An
Australian study. Corporate Governance: An International Review, 15(5), 944-956.
Jamali, D., Safieddine, A. M., & Rabbath, M. (2008). Corporate governance and corporate
social responsibility synergies and interrelationships. Corporate Governane An
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Laidroo, L. (2009). Association between ownership structure and public announcements'
disclosures. Corporate Governance An International Review, 17(1), 13-34.
McCombs, M. (1995). The agenda-setting role of the mass media in the shaping of public
Opinion. Retrieved from www.infoamerica.org:
http://www.infoamerica.org/documentos_pdf/mccombs01.pdf
Merkelsen, H. (2011). The double‐edged sword of legitimacy in public relations. Journal of
Communication Management, 15(2), 125-143.
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O’Donovan, G. (2002). Environmental disclosures in the annual report: Extending the
applicability and predictive power of legitimacy theory. Accounting, Auditing &
Accountability Journal, 15(3), 344-371.
Perry, R. W. (2007). What Is a Disaster? Handbook of Disaster Research, 1-15.
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Solomon, A., & Lewis, L. (2001). Incentives and disincentives for corporate environmental
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Telesetsky, A. (2015). Beyond Voluntary Corporate Social Responsibility: Corporate Human
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