Corporate Social and Responsibility (CSR)

This article discusses legitimacy theory and voluntary disclosure requirements for CSR reporting. It also compares CSR reporting in annual reports of AGL Limited for year 2015 and 2017. Additionally, it explores CSR reporting on AGL Energy Limited's corporate website.

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Corporate Social and Responsibility (CSR)

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Contents
Part 1: Legitimacy Theory and Voluntary disclosure requirements................................................3
Part 2: Comparison of CSR reporting in annual reports of AGL Limited for year 2015 and 2017 4
Part 3................................................................................................................................................6
References........................................................................................................................................8

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Part 1: Legitimacy Theory and Voluntary disclosure requirements
Legitimacy can be defined as the generalized perceptions or set of assumptions that
provides that actions of an entity must be desirable, appropriate and designed within the social
norms, beliefs, values and other important definitions so that it can adhere with the corporate
social responsibility required to be fulfill mandatory. In other words it can be said that legitimacy
theory highlights the extent to which disclosures of corporate social and environment disclosures
are impacted by the boundaries made by the society in order to be safe and not be adversely
impacted by the communities in which the entities operate in (Guthrie and Ward, 2006). The
corporate social responsibility is completely dependent upon the legitimacy theory and it can be
said that it is highly significant for the disclosures of social and environment related matters by
businesses. As per the Legitimacy theory, the organizations must regularly check their business
for evaluating their social and environmental impact. In order to comply with these requirements
it has been made compulsory for all the organization to disclose their CSR practices in their
annual report briefly and also prepare sustainability report if it has been required to do so by the
regulatory bodies (Tilling, 2004).
As legitimacy theory is adopted by mostly all the organization and according to this
theory it is voluntary that companies should report on the activities that impact the social
communities in which company operates and also provides steps taken to control the issues and
framework developed to control all such activities. There is saying that the theory of legitimacy
is dependent on presence of social contract between the company and society (Idowu, Capaldi,
Zu and Gupta, 2013). So to make compliance to this contract, business entities are required to
deliver the socially responsible outcomes and also disclose information relating to economic,
social or political benefits realized from their operational activities. The voluntary requirements
to disclose the corporate social responsibilities in their annual report will provide the brief
overview to the society on the practices followed by the company in relation to CSR and what
steps are taken to control the impact on society through their business operations. So, legitimacy
theory makes it compulsory for the organization to voluntary disclose about their social and
environmental performance in the annual report so that people can be information about the CSR
practices followed by the entities (Aluchna and Idowu, 2017).

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Part 2: Comparison of CSR reporting in annual reports of AGL Limited for year 2015 and
2017
All the business corporations listed on ASX need to disclose the issues relating to
Corporate Social Responsibility (CSR) within their annual report for improving the transparency
and accountability of their business operations. In this context, AGL Energy Limited also
provides information related to the corporate social responsibility issues in its annual reports as
analyzed of the year 2015 and 2017. As analyzed from the annual report of the company for the
year 2015, it has disclosed information relating to its greenhouse gas policy, sustainable business
strategy and energy policy uncertainty. The greenhouse gas policy of the company is developed
as per the NGER Act and has stated the information about its annual emission of greenhouse
gases. The sustainable business strategy has discussed about the measures adopted by the
company at present and to be adopted in future for promoting its sustainable growth. The energy
policies adopted by the company for promoting its long-term growth have also been discussed in
the annual report for the year 2015. The sustainability performance of the company is measured
against 12 material issues on the basis of established targets and commitment. The performance
of the company against each target is disclosed in the sustainability performance section of the
annual report for the financial year 2015. The material issues used for evaluation of the
sustainability performance are achieving customer satisfaction, employee commitment , health
and safety, profit earned, legislative issues, ethical behavior, corporate governance, talent
management , community development, public policy, energy policy and water conservation
(Annual Report: AGL Energy Limited, 2017).

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(Source: https://www.agl.com.au/-/media/DLS/About-AGL/Documents/Investor-Centre/
150826_AnnualReport_1466512.pdf?
la=en&hash=7B0EE3991CE2F09590FA82C73852B8972F2740BF)
On the other hand, the annual report of the company or the year 2017 has not provided
significant formation relating to the CSR issues. The company has only discussed only little
information relating to sustainability in the Chairman report under the strategic imperatives
driving performance. It has only disclosed some highlights of the sustainability performance of
the company in the year 2017 that ahs been provided in detail in its sustainability report. Thus,
unlikely of the year 2015, the sustainability performance of the company against each
performance target is not disclosed in the annual report. However, it has discussed information
related to its corporate governance policies under the section Corporate Governance that is not
present in the annual report of the company 2017. Thus, it can be said that as the company has
stated to develop and disclose its sustainability report, it has largely reduced the amount of
information published about CSR issue sin the annul reports (Annual Report: AGL Energy
Limited, 2015).

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(Source: http://agl2017.reportonline.com.au/sites/agl2017.reportonline.com.au/files/
full_financial_annual_report.pdf)
Part 3
AGL Energy Limited also discloses information relating to its sustainability issues on its
corporate website to seek the interests of the investors. The section entitled ‘What We Stand For’
on the company website has disclosed detailed information relating to the company
commitments towards the customers, sustainability issues, corporate citizenship and sponsorship
and its approaches to establish long-term relations with the communities through the program of
Energy for life. Thus, the company website also encloses the sustainability report of the company
for gaining more detailed information about the sustainability issues. The CSR reporting on the
company website is largely different from that in its annual report in the year 2017 on account of
the theme and content (AGL Energy Limited, 2018). There is specific theme on the company
website for discussing the matters relating to sustainability. Also, the content is organized into
separate sections that make it relatively easier to understand the company performance on
different sustainability matters. On the other hand, the annual report does not enclose a specific
theme for discussing CSR issues and the content is also not adequately organized. Thus, the

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company website provides more information about the CSR strategies of the company in
comparison to its annual report of the year 2017 (Annual Report: AGL Energy Limited, 2017).

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References
AGL Energy Limited. 2018. [Online]. Available at: https://www.agl.com.au/about-agl/what-we-
stand-for/energy-for-life [Accessed on: 9 April 2018].
Aluchna, M. and Idowu, S.O. 2017. Responsible Corporate Governance: Towards Sustainable
and Effective Governance Structures. Springer.
Annual Report. 2015. AGL Energy Limited. [Online]. Available at:
https://www.agl.com.au/-/media/DLS/About-AGL/Documents/Investor-Centre/
150826_AnnualReport_1466512.pdf?
la=en&hash=7B0EE3991CE2F09590FA82C73852B8972F2740BF [Accessed on: 9 April 2018].
Annual Report. 2017. AGL Energy Limited. [Online]. Available at:
http://agl2017.reportonline.com.au/sites/agl2017.reportonline.com.au/files/
full_financial_annual_report.pdf [Accessed on: 9 April 2018].
Guthrie, J. and Ward, L. 2006. Legitimacy Theory: A Story of Reporting Social and
Environmental Matters within the Australian Food and Beverage Industry. [Online]. Available
at: http://www.csringreece.gr/files/research/CSR-1290000469.pdf [Accessed on: 9 April, 2018].
Idowu, S.O., Capaldi, N., Zu, L. and Gupta, A.D. 2013. Encyclopedia of Corporate Social
Responsibility. Springer Berlin Heidelberg.
Tilling, M.V. 2004. Refinements to Legitimacy Theory in Social and Environmental Accounting.
[Online]. Available at: http://www.flinders.edu.au/sabs/business-files/research/papers/2004/04-
6.pdf [Accessed on: 9 April, 2018].