Voluntary Corporate Social Responsibility Research Articles

Corporate Sustainability Due Diligence

Ever since the concept of Corporate Social Responsibility (CSR) be-gan to take off in the 1970s, multinational corporations (MNCs) and international organizations have attempted to implement a variety of voluntary initiatives to detect and prevent human rights and environ-mental abuses within corporate supply chains. Despite these voluntary initiatives, however, human rights violations and environmental dam-age have continued to occur frequently within the supply chains of MNCs, leading to increased calls for binding, “hard law” remedies. The adoption of the United Nations’ Guiding Principles on Business and Human Rights (UNGPs) in 2011 catalyzed efforts to adopt domestic mandatory human rights due diligence (mHRDD) laws, and since 2017, a growing number of nations have passed more comprehensive human rights and environmental due diligence (HREDD) laws that recognize the connection between human rights and the environment. The most ambitious HREDD proposal thus far is the European Union’s proposed Corporate Sustainability Due Diligence Directive (CS3D), which, when enacted, will impose mandatory human rights and environmental due diligence requirements on corporations that conduct business in the European Union. This Note assesses the feasibility and desirability of adopting domes-tic HREDD legislation in the United States based on the framework provided by the EU’s proposed CS3D. The predominant reliance in the U.S. on voluntary CSR initiatives and limited disclosure regulations is insufficient to prevent human rights and environmental abuses in the supply chains of US-based MNCs. This Note argues that the proposed CS3D provides a promising model for how Congress could take strong-er action in this area. Although it would not completely prevent adverse impacts and could be initially challenging to implement because of the ambiguity surrounding its scope, comprehensive federal HREDD legislation based on the CS3D framework would be a significant step towards filling in the gaps in U.S. corporate accountability.

Performance gap and the timing of corporate social responsibility disclosure‐A trust repair perspective

AbstractBased on the theory of firm behavior, we explain the voluntary corporate social responsibility (CSR) disclosure behavior of firms from the perspective of trust repair and regard the process of firms' response to the CSR institution as an important way to trust repair for firms' management. We adopt an event history approach with a sample of Chinese firms listed on the A‐share market from 2008 to 2020 and find that faster engagement in CSR disclosure is one of the important trust repair methods for management when firms face performance gaps, and performance gaps positively incentivize firms to voluntarily engage in CSR disclosure. In addition, managers consider the total costs, risks, and benefits of different trust repair methods, there is a substitution effect between different trust repair methods, and the disclosure of internal audit reports and philanthropic donations negatively moderates the relationship between performance gap and CSR disclosure. Our study has important implications for understanding how firm performance affects CSR strategic decisions.

Evaluating the UN Global Compact Communication on Progress as a CSR Benchmarking Tool

Corporate social responsibility (CSR) extends beyond mere profit-seeking to encompass the ethical behavior of a company toward society, mitigating negative and generating positive impacts on the environment, consumers, employees, communities, and all stakeholders. The UN Global Compact (UNGC) is the world’s largest voluntary CSR initiative, and its Communication on Progress (CoP) requirement is a key reporting mechanism that allows participating companies to transparently showcase their progress and efforts regarding CSR. As more and more companies are reporting CSR practices, it is crucial to establish a global, standardized, trusted, accessible, and useful database that can be used by different stakeholders, including the companies themselves in the benchmarking process. This paper examines whether the UNGC CoP can be used as a sustainability benchmarking tool, based on well-established criteria, and compares it with other existing reporting frameworks. Results indicate that the UNGC CoP can be considered a benchmarking tool, being applicable to nearly all phases of the benchmarking process. The study also shows that the CoP stands out regarding other frameworks due to ample coverage of the sustainable development goals (SDGs), number of reporting companies, accessibility to all stakeholders, and consolidation of the information into one platform.

Does environmental credit affect bank loans? Evidence from Chinese A‐share listed firms

AbstractWe investigate the effect of government‐initiated enterprise environmental credit ratings on firms' bank loans. While prior research indicates that companies with superior environmental performance tend to secure more bank loans, it is crucial to acknowledge that these performance metrics predominantly rely on voluntary corporate social responsibility or environmental, social, and governance disclosures made by the firms themselves or evaluated by third‐party agencies. Consequently, the evaluation results could be biased due to incomplete information disclosure, methodologies, or systems, raising concerns among scholars about potential “greenwashing” or symbolic environmental actions. In contrast, we employ a dataset comprising 27,388 observations from 2009 to 2021, applying propensity score matching and a time‐varying difference‐in‐difference model to better discern the relationship between firms' environmental credit ratings and their ability to obtain bank loans. Our findings highlight that firms participating in environmental credit evaluation can secure more bank loans compared to non‐participating firms. This effect is especially pronounced in regions with advanced green finance development. Further analysis shows that non‐state‐owned enterprises with excellent or good environmental credit ratings receive more loans, thus mitigating ownership bias in loan distribution. Overall, our results demonstrate that mandatory government environmental credit ratings mitigate information asymmetry by enabling lenders to better understand firms' environmental information.

Core charitable purpose and voluntary CSR activities in charity organisations: do they conflict?

Purpose A charity’s core purpose is legally mandated and delivery thereof is not a corporate social responsibility (CSR) activity which, by definition, is voluntary in nature. Any CSR activity not required by law should be “incidental” and be an outcome of a core purpose/object and not a focus of activity. The purpose of this study, therefore, is to address the lack of research into voluntary CSR activities conducted by charities so that charities might have a clearer operating platform and do not involuntarily contravene legislation. Design/methodology/approach This was an exploratory investigation using purposive sampling of senior leaders in UK charities. This study uses a case study approach to identify pragmatic areas of concern and also identify practical actions. Findings The conventional hierarchical ordering of Carroll’s CSR pyramid (1991) for profit-focussed organisations were found to be inconsistent with those for charitable organisations which were: ethical, legal, economic and philanthropic/voluntary/incidental. Research limitations/implications This was an exploratory study and would benefit from further investigation. Practical implications Corporate social responsibility actions undertaken by charities need to be carefully evaluated to ensure that they comply with the core charitable purpose or are incidental. Social implications Many employees in charities are motivated by social justice; however, they need to be cautious that they do not exceed the core purpose of the charity. Originality/value To the best of the authors’ knowledge, no research was identified which has addressed the fundamental issue of charities’ core purposes and the extent to which charities might legally undertake CSR activities.

A comparison of analysts’ and investors’ information efficiency of corporate social responsibility activities

Purpose This paper aims to examine the extent to which sell-side analysts efficiently incorporate firms’ corporate social responsibility (CSR) activities into their earnings forecasts. In addition, this paper also investigate the CSR information efficiency of analysts vis-à-vis that of investors. Design/methodology/approach This paper measures CSR activities by using CSR strength and CSR concern scores from the Morgan Stanley Capital International Environmental, Social and Governance database. This paper uses analysts’ earnings forecast errors and dispersion as proxies for their information efficiency. To compare the CSR information efficiency of analysts to that of investors, this paper uses the Vt/Pt ratio, which is the equity value estimates inferred from analysts’ earnings forecasts (a proxy for analysts’ CSR information efficiency) to the stock price of the focal company (a proxy for investors’ CSR information efficiency). Findings The regression analysis indicates that analysts’ earnings forecasts are optimistically biased and more dispersed for firms with positive CSR activities. The paper also finds that analysts’ forecasts are more optimistically biased than investors in interpreting CSR activities. Practical implications The lack of standardized protocols in CSR reporting and activities has raised the risk of mispricing by analysts, threatening the stability of sustainable investments. This paper suggests that regulators and standard-setters should establish a uniform framework governing firms’ CSR activities, along with their reporting and measurement, to ensure more consistent and reliable evaluations of CSR practices. Social implications Analysts’ mispricing of CSR activities may distort sustainable investing, as it can overly focus on the positive impacts of stakeholder theory, overlooking agency theory’s warnings about managerial self-interest. Investors need to assess CSR efforts with a dual perspective, acknowledging their societal value but also examining their alignment with shareholder interests. Originality/value To the best of the authors’ knowledge, this research is the first to assess the efficiency of analysts versus investors in processing CSR information amidst growing sustainable investment interests. Furthermore, building on Dhaliwal et al. (2012), which found that voluntary CSR disclosures correlate with more accurate analyst forecasts, this research provides fresh perspectives on the evolving nature of how analysts assimilate CSR information over time.

Comparative Research Implementation of CSR (Corporate Social Responsibility) in Various Sectors of the Indonesian Stock Exchange

Purpose: Up until now, no study has compared how CSR (Corporate Social Responsibility) is implemented across different business sectors. This article's purpose is to close this knowledge gap by examining how businesses across many industries modify and incorporate social responsibility into their fundamental business practices to draw in both domestic and foreign investors.
 Design/Methodology/Approach: The study employs a descriptive quantitative research design, utilizing secondary data collecting via examination of annual reports or company sustainability reports from the three primary industries that are listed on the Indonesian Stock Exchange (BEI) and frequently engage in voluntary corporate social responsibility.
 Findings: The analysis's findings demonstrate how the three sectors embrace the idea of social responsibility, albeit with various implementation strategies. The major consumer sector is more focused on the environment, the technological sector focuses on social issues, and the finance sector prioritizes corporate social responsibility from an economic perspective.
 Implications/Originality/Value: Offers a global perspective on corporate social responsibility (CSR), pertinent data and analysis for investors from different nations, and the potential to grow into a significant global resource for the community at large for comprehending how CSR affects sustainable investment choices in the global market.

The Effect of CEO Career Horizon on Voluntary Corporate Social Responsibility (CSR) Disclosure Decisions

The Effect of CEO Career Horizon on Voluntary Corporate Social Responsibility (CSR) Disclosure Decisions

The Association of Board Characteristics and Corporate Social Responsibility Disclosure Quality: Empirical Evidence from Pakistan

Earlier research has shown that the makeup of the corporate board is a crucial predictor in meeting stakeholder accountability expectations through voluntary Corporate Social Responsibility (CSR) disclosure. Though scholars have identified substantial relationships between board composition and CSR disclosure, the majority of their focus has been on the ‘quantity’ of CSR disclosure rather than the ‘quality’. Therefore, the present study considers the association of board characteristics (such as gender diversity, independence, female chairperson or/and female CEO, and board size) and the quality of CSR disclosure of the top 100 Pakistan Stock Exchange (PSX)-listed companies. We conducted content analysis of secondary Corporate Governance (CG) and CSR data extracted from the annual reports of PSX-listed companies across ten industrial sectors from the period 2017 to 2018. Our empirical investigation through univariate and multiple regression analysis with ordinary least squares (OLS) techniques revealed that all the board characteristics potentially had a significant association to lower CSR disclosure quality. Using the 2SLS regression model, we addressed the endogeneity issue of board characteristics and found robust results. One of the important implications of our findings is that policymakers and regulators in developing countries like Pakistan should review the value of board qualities as outlined in CG principles and develop stronger mechanisms to improve numbers of female directors and nonexecutive directors’ independence. We acknowledge several research limitations, including the study time period and selected board characteristics. While our study has provided some understanding of the association of board characteristics with CSR disclosure quality of PSX-listed companies, several research gaps still need to be addressed. Future investigators should examine this association through the pre-COVID-19 and post-COVID-19 contexts and the inclusion of a systems theory perspective.

Corporate social responsibility reporting and investment: Evidence from mergers and acquisitions

AbstractWhile corporate social responsibility (CSR) has played an increasingly important role in corporate decision‐making, the role of CSR disclosure in a firm's investment activities remains poorly understood. This study investigates the impact of CSR disclosure on mergers and acquisitions (M&As), which are pivotal investment activities. We find that firms disclosing voluntary CSR reports experience significantly stronger market reactions to M&A announcements than those that do not disclose such reports. Specifically, acquisitions by voluntary CSR disclosers achieve 1.2% higher returns upon acquisition announcements, leading to a substantial increase in shareholder value. Our findings are consistent across a series of robustness tests. Additional analyses suggest that the positive market reactions are especially tied to voluntary disclosures concerning the protection of employees and customers, and that the quality and financial materiality of voluntary CSR disclosures amplify positive market responses. We also find that voluntary CSR disclosers exhibit better long‐term post‐acquisition market and operational performance. Collectively, our findings suggest that voluntary CSR disclosures bolster acquisition returns by mitigating stakeholder resistance. Additionally, by leveraging the unique conditional CSR disclosure regulation in China and using a staggered DID design, we observe a diminished market reaction for acquirers following mandatory CSR disclosures. Overall, this research provides new insights into the contrasting effects of voluntary and mandatory CSR disclosures, emphasizing the vital role of effective stakeholder CSR communication in the success of M&As.

Holding Retail Corporations Accountable for Food Waste: A Due Diligence Framework Informed by Business and Human Rights Principles

AbstractRetail corporations orchestrate much of what happens in today’s food supply chains. From setting sky-high cosmetic standards for fresh produce to bundling off close-to-expiry products at discounted prices, retail’s contribution to food waste often extends beyond its in-store numbers. By occupying a powerful position in a globalised food system, these corporations enable chronic overproduction and consequently, the removal of surplus food from supply chains. This, in turn, contributes to the unfair distribution and overexploitation of food resources, further exacerbating the globally pervasive problem of food insecurity. To realise the right to food and the United Nations’ Sustainable Development Goal of halving global per capita food waste by 2030, we argue that retail corporations must be held accountable for their direct and indirect contribution to food waste. We posit that to make a tangible difference, they must move away from the current voluntary corporate social responsibility approach to food waste reduction and instead invest in robust due diligence mechanisms and transparent reporting systems in line with the UN Guiding Principles on Business and Human Rights and the upcoming EU Corporate Sustainability Due Diligence Directive. Based on Pillar II of the Guiding Principles, we propose a five-step approach to accountability for food waste that may lead to serious actions towards the relaxation of cosmetic standards, abolition of unfair trading practices, and improvement in demand forecasting, thereby reducing the volume of food that ends up as waste.

Mandatory CSR disclosure and stock liquidity: Evidence from Chinese listed firms

This paper examines how and when mandatory corporate social responsibility (CSR) disclosure impacts stock liquidity by using a quasi-natural experiment in China. We find that mandatory CSR disclosure significantly increases stock liquidity compared to voluntary CSR disclosure. Furthermore, the positive effect is stronger for firms with better corporate governance, higher profitability, and more QFII ownership. Our paper is a supplementary argument to information asymmetry theory and social capital theory.

INFLUENCE OF FAMILY OWNERSHIP, BOARD AND TOP MANAGEMENT CHARACTERISTICS ON THE QUALITY OF WEBSITE CORPORATE SOCIAL RESPONSIBILITY DISCLOSURE IN INDONESIA

Background and Purpose: This study aims to investigate the effect of family ownership, board characteristics (board foreign experience and board accounting expertise), and top management characteristics (management education level) on the quality of website Corporate Social Responsibility (CSR) disclosure via corporate website among the top companies listed in the Indonesia Stock Exchange (IDX). This study adds to the body of literature by examining the moderating effect of family ownership towards the relationship between board characteristics and website CSR disclosure, which is useful for investors who might have concerns on the level of CSR disclosure as a gauge of firm ethics, particularly in respect to family-owned firms.
  
 Methodology: Sample of this study consisted of 100 non-financial companies listed in Indonesia Stock Exchange (IDX) for the year of 2019. To test the study’s hypothesis, multiple linear regression analysis was applied.
  
 Findings: Empirical results from this study have shown that family ownership is negatively related to the quality of website CSR disclosure. Board foreign experience has a positive effect on CSR disclosure practices in their respective corporate websites. Meanwhile, top management education level was found to have a negative and statistically significant relationship with the quality of voluntary website CSR disclosure. Lastly, this study demonstrated that family ownership moderates the relationship between board accounting expertise and the quality of CSR disclosure on corporate websites.
  
 Contributions: This study contributes to the literature on CSR disclosure by introducing a set of index measuring the quality of voluntary website CSR disclosure, which captures not only the variety, but also the richness of CSR information. The moderating role of family ownership on such relationships, which is rarely investigated in the context of developing countries, was also explored by this study.
  
 Keywords: CSR disclosure, voluntary disclosure, family ownership, board characteristics, top management.
  
 Cite as: Melati, I., Arshad, R., Ahmad Nadzri, F. A., Nair, R., & Hermawan, A. A. (2023). Influence of family ownership, board and top management characteristics on the quality of website corporate social responsibility disclosure in Indonesia. Journal of Nusantara Studies, 8(TI), 351-381. http://dx.doi.org/10.24200/jonus.vol8issTIpp351-381

Corporate Reporting, Corporate Governance Mechanisms and Tax Aggressiveness: Evidence from Indonesia

This study aimed to empirically analyze the relationship between corporate reporting, both mandatory (financial reporting) and voluntary (Corporate Social Responsibility (CSR) disclosure) reporting, three corporate governance mechanisms (board size, independent board, and CEO duality), and tax aggressiveness in Indonesia. The study used a collected dataset of 121 public companies listed on the Indonesian stock exchange from 2016 to 2020. The data was collected from annual and sustainability reports published on the IDX and the company websites. The data was categorized based on classifications of non-financial industries because different characteristics and business cycles may influence tax aggressiveness decisions. Using the panel OLS approach, the research found that, in most industries, aggressive financial reporting positively relates, while CSR disclosures were negatively related to tax aggressiveness. The results also found that corporate governance mechanisms significantly related to tax aggressiveness in most industries. The findings suggest that board members, particularly independent boards with tax expertise and experience, can influence aggressive tax decisions. This study is the first to extract testing by industry classification, using mandatory financial reporting and voluntary CSR disclosures in Indonesia as indicators of corporate tax aggressiveness. The findings provide knowledge on company governance strategies to reduce aggressive tax actions. Keywords: aggressive financial reporting, corporate social responsibility, corporate governance mechanisms, tax aggressiveness

Post privatization of high-speed rail with corporate social responsibility (CSR) in an international transportation market: Mandatory CSR versus voluntary CSR

This study considers an international transportation market wherein a high-speed rail (HSR) firm engaging in corporate social responsibility (CSR) competes with both domestic and foreign airlines with differentiated services. We investigate and compare two CSR types, mandatory CSR, imposed by the government, and voluntary CSR, chosen by the HSR operator, and show that mandatory CSR can be lower or higher than voluntary CSR, depending on the transportation subsidy types offered. With uniform subsidies, mandatory CSR together with a higher subsidy is lower than voluntary CSR, which yields higher profits for domestic firms and higher social welfare, while the opposite result can be found with discriminatory subsidies. We further explore the welfare effect of HSR privatization policies with CSR activities. We find that irrespective of the CSR types and subsidy types, privatization with subsidies always improves social welfare; however, privatization with mandatory (voluntary) CSR improves (reduces) social welfare in the absence of subsidies. These findings suggest that post-privatization with CSR activities may be harmful to society without an appropriately designed subsidy policy and should be monitored by antitrust agencies.

CEO career concerns in early tenure and corporate social responsibility reporting

AbstractThe literature on corporate social responsibility (CSR) disclosure focuses on its economic consequences, but little is known about motivations—especially CEO personal incentives—behind such disclosure. Using an array of CSR reporting measures, we find that career concerns of CEOs early in their tenure motivate them to use voluntary CSR reporting as a signaling mechanism. The negative association between CEO tenure and CSR reporting is more pronounced in firms with stronger information intermediaries—that is, a higher level of socially responsible investors, a higher number of analysts following, and a higher level of media coverage. We also find that CEOs early in their tenure receive more personal benefits after voluntary CSR reporting, in terms of higher total compensation, better reputation, and less turnover, than CEOs later in their tenure. Taken together, the findings of our study lend support to the conjecture that CEO career concerns early in their tenure can be an important determinant of firms' voluntary CSR reporting.

THE IMPLEMENTATION OF MANDATORY OR VOLUNTARY FOR CORPORATE SOCIAL RESPONSIBILITY: A SYSTEMATIC LITERATURE REVIEW

CSR (Corporate Social Responsibility) is the responsibility of a company for the impact of their decisions and activities on society and the environment through open and ethical behavior. The existence of companies in the midst of society contributes to the national problem of unemployment. The implementation of CSR in Indonesia is still not transparent whether it is voluntary or mandatory. However, this research does not only discuss the Indonesian side, but globally in several countries from 2007-2023. Therefore, this research aims to find out the implementation of mandatory or voluntary CSR in Indonesia and some countries. The method used is systematic literature review. The result of this research is voluntary CSR is still commonly used in various countries, including developing countries, even though some countries have regulated mandatory CSR by law. However, voluntary CSR is still practiced because the law is not enough for companies to implement mandatory CSR. Companies will be more stable if they implement mandatory and voluntary CSR in a balanced way in order to consider the interests of stakeholders, the company, the environment and society.

Дагестанский государственный университет

The article analyzes the practical steps of UAE state institutions to encourage the development of tourism in the country, while observing a compromise between the forced liberalization of certain spheres of social life under the pressure of external and internal circumstances, and the preservation of Islamic canons as a dominant in the ideological and practical field. It is noted that the development of the tourist sector in UAE economy became possible due to the achievement of a balance between global trends and preserving a conservative way of life in the society based on the principles of Islamic ethics. The latter reveals itself in the corporate culture – voluntary corporate social responsibility, and a strict migration policy, known as kafala, which is a component of the industrial relations between the employer (contractor) and the migrant worker. The reduction of potential socio-cultural tensions as a result of the influx of tourists from a foreign cultural environment is achieved by the state not only through the implementation of various state programmes aimed at maintaining Islamic canons in the socio-economic and spiritual spheres of the country, but also through the achievement of broad awareness of those entering the country of the presence of a wide range of prohibitions and restrictions. The author concludes that the Islamic factor combined with a nationally oriented domestic policy can lead to impressive results in travel activities, as has been achieved in the UAE.

Executive communication with stakeholders on sustainability: the case of Poland

Sustainability reporting is rapidly developing in the European Union – from voluntary Corporate Social Responsibility (CSR) disclosure over to mandatory non-financial reporting (NFR), then over to Economic, Social and Governance (ESG) – with the ambition of becoming as important as financial reporting. This paper investigates whether executives act as change agents in this process by setting a tone at the top, and how their communication changes as time progresses. We use methods from computational corpus linguistics to analyze commentaries by companies listed at the Warsaw Stock Exchange between 2017 and 2021. Results show how top managers are not aligned with the sustainability transition. Their commentaries are bluntly positive and lack performance information. Over time, change and environmental challenges gain attention. In sum, executives appear to respond primarily to investor needs. While showing respect to stakeholders, they avoid setting goals and reporting effects. Effective regulation may bring about the necessary change.

What explains the spread of corporate social responsibility? The role of competitive pressure and institutional isomorphism in the diffusion of voluntary adoption

AbstractThis study provides a new perspective on the determinants of the spread of voluntary corporate social responsibility (CSR) adoption by incorporating the potential role of its adoption by industry competitors. We find supportive evidence that firms make CSR adoption decisions in response to competitive pressure as well as institutional mimetic pressures. Based on an event history analysis of longitudinal data from a sample of 711 Korean publicly traded firms over a 12-year period, our findings suggest that the CSR behavior of competitors is positively associated with a focal firm's earlier adoption of CSR, leading to the diffusion of CSR across firms. Specifically, this study shows that the pure rivalry-driven pressure from non-leader competitors has a stronger positive relationship with earlier CSR adoption. The results also indicate that a firm's CSR adoption decision is accelerated by competitive rivalry as well as social pressures arising from institutional mimetic isomorphism.