A Journey in Social and Environmental Accounting, Accountability and Society [1 ed.] 9781527547469, 9781527546233

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A Journey in Social and Environmental Accounting, Accountability and Society

A Journey in Social and Environmental Accounting, Accountability and Society Edited by

Maria-Gabriella Baldarelli and Mara Del Baldo

A Journey in Social and Environmental Accounting, Accountability and Society Edited by Maria-Gabriella Baldarelli and Mara Del Baldo This book first published 2020 Cambridge Scholars Publishing Lady Stephenson Library, Newcastle upon Tyne, NE6 2PA, UK British Library Cataloguing in Publication Data A catalogue record for this book is available from the British Library Copyright © 2020 by Maria-Gabriella Baldarelli, Mara Del Baldo and contributors All rights for this book reserved. No part of this book may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, without the prior permission of the copyright owner. ISBN (10): 1-5275-4623-3 ISBN (13): 978-1-5275-4623-3

TABLE OF CONTENTS

Preface .............................................................................................. vii Editors ............................................................................................... ix List of Contributors ........................................................................... xi Chapter 1 ............................................................................................. 1 Corporate environmental sustainability best practices Caterina Aura, Francesca Aura, Franco Rubino Chapter 2 .......................................................................................... 17 Solid waste management in Albania: does accountability matter? Valbona Dudi Chapter 3 .......................................................................................... 49 “Gaming”, accounting and accountability: experimenting in higher education Maria-Gabriella Baldarelli Chapter 4 .......................................................................................... 71 The development of assurance services for sustainability reporting: a challenge and an opportunity for accounting professionals Ingrid Shuli, Linda Gjika Chapter 5 .......................................................................................... 87 New categories for a sustainable and spirituality-based company: insights from the Economy of Communion Maria-Gabriella Baldarelli, Mara Del Baldo, Sabrina Vieira Lima Chapter 6 ......................................................................................... 113 Global reporting initiative disclosures for oil and gas companies Athanasios Mandilas, Stavros Valsamidis, Dimitrios Kourtidis

PREFACE

The goal of our research is to present a referred selection of chapters from the present academic discussion about social, environmental, and sustainable accounting and accountability. In the past the importance of accounting for the construction of social reality (Gray, Bebbington, and Walters, 1993; Gray, Owen, and Adams 1996; Gray, Adams, and Owen, 2014) and the need for cultural change to drive movement towards a new and better world have been stressed. The authors consider the subject of environmental problems and at present how to manage these problems and to face the challenges that derive from them. So, the economic measurement process requires rigid system orientation. Then there can be a transition phase and in the other changing contexts, such as civil economy, new dimensions can be created. Civil economy requires new elements to measure and to account for. This matter engages current literature in this field because there is an urgent need to find decision-making tools to help managers to respect environmental and social problems (see, for example, Bebbington et al. 2017; Bebbington and Unerman, 2018). The selected papers, deriving mainly from the 7th Italian Centre for Social and Environmental Accounting Research (CSEAR) conference–Urbino in 2018 and blind reviewed, want to contribute to the discussion about social and environmental accounting and reporting in academic and practitioner contexts, involving different sectors and both for-profit and not-for-profit companies of different sizes. The authors who published their chapters are very grateful to the numerous anonymous referees that contributed to improving the papers.

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Bibliography Gray, Rob, Bebbington, Jan, and Dave Walters. 1993. Accounting for the environment. London: Chapman Publishing. Gray, Rob, Own, Dave, and Carol Adams. 1996. Accounting and accountability. Changes and challenges in corporate social and environmental reporting. London: Prentice Hall Europe. Gray R. U., Adams C., Owen D. 2014. Accountability, Social Responsibility and Sustainability: Accounting for Society, Pearson. Bebbington, Jan, and Jeffrey Unerman. 2018. “Achieving the United Nations Sustainable Development Goals: An enabling role for accounting research.” Accounting, Auditing & Accountability Journal 31(1): 2-24. Bebbington, Jan, Shona Russell, and Ian Thomson. 2017. “Accounting and sustainable development: Reflections and propositions.” Critical Perspectives on Accounting 48, 21–34. https://doi.org/10.1016/j.cpa.2017.06.002.

EDITORS

Mara Del Baldo is Associate Professor of Small Business Management, Financial Accounting and Economics of Sustainability and Accountability at the University of Urbino Carlo Bo, Urbino, Italy. Her main research interests include entrepreneurship and small businesses management; corporate social responsibility; sustainability and business ethics; SMEs and networking strategies; accountability; financial and integrated reporting; and social and environmental accounting research (SEAR). She is a member of the European Council for Small Business, CSEAR, the SPES Forum, the Global Corporate Governance Institute (GCI), and the European Business Ethics Network (EBEN) Italian Chapter. She is an editorial board member and reviewer of several international scientific journals. She is also the author of numerous scientific publications, including articles in Italian and foreign journals, book chapters, conference proceedings and books. She has given numerous lectures and didactic seminars by invitation in various Italian and foreign universities (University of Vigo, Spain; the Juraj Dobrila University of Pula, Croatia; the New Bulgarian University of Sofia, Bulgaria; and the Corvinus University, Budapest, Hungary). Maria-Gabriella Baldarelli, PhD is an associate professor at the University of Bologna (Italy), (acting full professor), Department of Management. She has been a visiting professor at: University of Pula (Croatia) in May 2006; University of Vlore (Albania) from May 12– 15, 2009; visiting professor—teaching staff mobility at the New Bulgarian University of Sofia (Bulgaria) from November 22–27, 2010; University of São Paulo (Brazil) from the end of May to June 1, 2011; University Institute of the Diocese of Buea (Cameroon) from February 4–8, 2012; La Trobe University (Melbourne—Bandoora campus) in 2015; State University of Tirana (Albania) in 2017. Editorial Board member of “Economic Research” Review (UDK 338; ISSN 1331-677X). Her research interests include: financial statements in tour operator and travel agencies; corporate social responsibility; ethical, social and environmental accounting and accountability;

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sustainability in tourist enterprises; responsible and accessible tourism for blind people; Economy of Communion enterprises; gender accounting and accounting history. She was a member of the board of SIDREA until 2018 (Italian Association of Accounting Scholars and Teachers). She is member of: SIDREA, the Centre for Social and Environmental Accounting Research (CSEAR), the Accounting History Association (AHA) and the European Business Ethics Network (EBEN) Italian Chapter. She is a reviewer of international scientific journals.

LIST OF CONTRIBUTORS

Caterina Aura University of Calabria, Italy Francesca Aura University of Calabria, Italy Maria-Gabriella Baldarelli University of Bologna, Italy Mara Del Baldo University of Urbino, Italy Valbona Dudi University of Urbino, Italy Linda Gjika University of Tirana, Albania Dimitrios Kourtidis Institute of Technology, Kavala, Greece Sabrina Vieira Lima University of Milan-Bicocca, Italy Athanasios Mandilas Institute of Technology, Kavala, Greece Franco Ernesto Rubino University of Calabria, Italy Ingrid Shuli University of Tirana, Albania Stavros Valsamidis Institute of Technology, Kavala, Greece

CHAPTER 1 CORPORATE ENVIRONMENTAL SUSTAINABILITY BEST PRACTICES

CATERINA AURA FRANCESCA AURA FRANCO ERNESTO RUBINO

1. Introduction The idea of this research work has been summarised in our statement: There will be no future for firms without a big commitment to respect for the environment. Today, in fact, environmental risk is not limited to a mere reputational threat: it insinuates itself strongly in the life of companies—in investments, in strategies, and in business decisions. Thus, it becomes a theme for the companies themselves, in an era like the one we are experiencing, in which climate policies and decarbonisation increase the need to assess environmental risks. The intent of this paper is to provide a conceptual understanding of the state of the art, in terms of good practices on environmental sustainability for companies. Sustainability—specifically, in a Europe turned upside down by the crisis—becomes the centre of an important line of study. Not only is evaluation required but also accounting for environmental and energy risk. It is also necessary to clarify the impact of operations on health, on the safety of society, on the risks of others, and on the environment in the medium to long term. This communication is necessary in order to interact with stakeholders if the activity of the company with which they are involved in business and, therefore, in which they make investments may involve environmental risks.

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The debate on sustainability, in this new century, takes on a central role in the UHÀHFWLRQ on development dimensions and possible emerging managerial frameworks, in search of world-class, sustainable organisations. As a result, a new development strategy has emerged, embodying political, economic, social, technological and environmental dimensions. Sustainable development means “the satisfaction of the needs of the present generation without compromising the possibility of future generations to realise their own”. In essence, it is a matter of finding solutions that allow good economic development, while at the same time keeping the focus on the environment. A rigid framework for sustainability does not exist today; it is considered a unique challenge in literature—the use of the term “sustainability” was too broad. There are sustainability studies that can be summed up in a few lines (McDonald and Oates 2006; Alhaddi 2015). This paper is based on the fact that the best practices in environmental sustainability performances are no longer the exclusive domain of the major international companies, as they were a decade ago, and it contains several proposals that help companies approach sustainable development as protagonists. However, good intentions are not enough (Epstein 2018). Companies are therefore concerned about society and the environment and need to continue making significant changes to more effectively manage their environmental impacts. Specifically, studies analyse how companies in the market respect and protect the environment starting from concrete actions that already exist or should be invented. This paper includes best practices and is full of good ideas and innovative suggestions, as well as the analysis of initiatives already implemented by companies that aim for environmental responsibility. Its contributions can be used by those who are interested in these topics: by following their contents, it will be possible to identify the ways to implement possible environmental policies. These policies must be monitored, promoted and disseminated to entrepreneurs who have difficulty in identifying the economic and non-economic advantages of environmental responsibility, including by way of specific training courses. This is because the companies of the “future”, whether large or small, in addition to having high margins of added value and being

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innovative, will have to pay special attention to environmental sustainability in order to remain competitive in the markets.

2. Firms and environmental sustainability The increase in concern regarding the future prospects of ecosystems and societies today obliges not only the political world but all society to reflect deeply on the objectives, the strategies and the actions to be taken to manage the complex relationships between the social, economic and environmental spheres. Sustainable development becomes the responsibility for living and managing the planet’s resources so that future generations can meet their healthrelated needs. In this sense, companies must be aware that in management they must respect the environment and ensure sustainable development. Educating companies about sustainable development means considering the different managerial situations, the various specific assumptions of corporate leaders, the environmental context and the many experiences already acquired. In recent years, the adjective “sustainable” has become a must-have addition in every context. We often hear managers talk about “sustainable” success, environmental “sustainability” and “sustainable” measures. With the concept of environmental sustainability, we mean something that has a lasting effect. Consequently, for sustainable business management we mean the acquisition of skills and performing of actions related to the conditions and possibilities of development of the economy, society and the environment that can be solid and durable and suited for the future of our children. That means preserving the natural heritage and using resources wisely. Making reference to the paradigm of “sustainable development”, it is clearly a shared orientation which, however, must find its operative activation in heterogeneous contexts and at very different territorial scales. Precisely this variability is at the origin of very “free” interpretations of the concept itself, which takes on very different connotations depending on the system whose development is considered and the object whose sustainability it is intended to promote (Cicatiello 2015). Precisely in this historical moment, not even a day passes without reading or listening to news of environmental disasters, pollution of any type in air, water or soil, or accidental or deliberate spills of toxic substances of various kinds and origins (Motta 2014).

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The orientation towards sustainable development is considered in a long-term perspective in which interactions between companies are placed. In fact, there are many companies that in recent years have adhered to the “Business Card for Sustainable Development”, which aims to reduce the use of resources considered non-renewable. During the Rio Conference in June 1992, the central theme was the concept of sustainability. Institutionally, the last Action Program of the EU stands out (1993/2000) as constantly referring to sustainability. The concept of sustainability includes development as part of competitiveness between interconnected objectives of a social, economic and environmental nature. This meaning of sustainability in relation to companies is defined by the regional sustainable development planning notebooks as conducting the activity in such a way as to reconcile the needs of the company with those of the stakeholders, protecting, supporting and increasing the availability of natural resources for tomorrow. The sustainable development model frames the interdependence between economy and environment, and it suggests the possibility of reconciling sustainable economic development and environmental protection; in practice, sustainable development becomes an integral business activity. There are factors that are useful in recognising sustainability practices within the company system and are found in the management of environmental variables intended as important priorities, like: the environmental orientation of technological innovations and research, and dialogue with all stakeholders and with all employees on environmental issues (Frey 1995). The concept of corporate sustainability is not a whim of entrepreneurs with feelings of guilt but a need that is emerging because it is the market itself that imposes it. It has now been shown that consumers tend to reward products and companies that choose to reduce their environmental impact and equip themselves with management and organisational structures that ensure they reduce emissions, waste and pollution. After all, companies, whether small or multinationals, are increasingly valued in light of the ESG grid, “Environmental and Social Governance criteria”, and the same goes for their management. The acronym ESG is composed of three words (environmental, social and governance), which in turn contain three distinct universes of social sensitivity. The first is that of the environment, which includes risks such as climate change, CO2 (carbon dioxide) emissions, air and water pollution, waste and deforestation. The

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second includes gender policies, human rights, labour standards and relations with the civil community. The third universe relates to corporate governance practices, including manager remuneration policies, the composition of the board of directors, control procedures, and the behaviour of top management and the company in terms of compliance with laws and ethics. The challenge of sustainability is one of the most important challenges our economic system is facing. All the best companies, for example, are investing in innovative energy efficiency projects, increasing the use of renewable sources and designing products with lower impact. The development of corporate social responsibility (CSR) and sustainability practices has now led to greater awareness and general knowledge on the part of institutions and companies. This is found through institutional documents in the public sphere of the European Commission as well as with Directive 2014/95/EU of the European Parliament and of the Council of 22 October 2014, transposed into Italian law by the legislative decree on non-financial communication n.254 of 2016 (effective from 1 January 2017). It is also evident from the birth, development and influence of the United Nations Global Compact proposals on SDGs (Sustainable Development Goals). In the private and non-profit sectors, this awareness is apparent from the drafting of social/sustainability budgets and their standards proposed by various research centres, and first of all by the Global Reporting Initiative (GRI), international and widespread among large companies, and by the work of the Study Group for the Social Report (GBS), in Italy (Costanza et al. 2016). The GRI Reporting Framework aims to be a universally accepted model for reporting the economic, environmental and social performance of an organisation. The GRI, established in 1997, presented, in the form of guidelines, the reference standard, at international level, for the preparation of sustainability reports. The GRI was promoted by the non-profit organisation CERES (Coalition for Ecologically Responsible Economies), in partnership with UNEP (United Nations Environment Program) and with the involvement of companies, NGOs (non-governmental/civil society organisations), associations of accounting experts, entrepreneurial companies and other stakeholders at the international level. The GRI has drafted the most widespread and requested guidelines on sustainability: to date there are more than 15,000 reports, prepared according to the

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guidelines promoted by the GRI, registered on the site of the organisation only. Companies that want to implement responsible and sustainable behaviour towards the environment must take into consideration all kinds of environmental and ethical certification (ISO 14001, Eco Management Audit Scheme). One of the main objectives of European countries was the study of social responsibility linked to philanthropy, now and for future companies. Many companies have activated measures for the reduced use of paper, water and lighting; for energy saving; and for the introduction or enhancement of waste collection. In 2015, the European countries set themselves common objectives to be achieved by signing the 2030 agenda. There are seventeen (SDG) objectives to be reached, and their contents are related to different areas: economy, environment, society, education, etc. The European Union is progressing towards sustainable development, but Italy shows several problems, except for the area of environmental sustainability, where Italy has better data than the European average. Italy is especially strong in fields like clean and accessible energy, where Italy ranks third after Portugal and Romania. European state companies show their commitment to respecting the environment through a very important document: the sustainability report. There is no current methodology for drafting the sustainability report, but various experiments have been carried out at European and national levels. The ESG criteria indicators, now the result of a wide international debate, have become the parameters of judgment for CEOs, even for magazines such as Harvard Business Review. And while the sustainability reporting frameworks are multiplying (for an overview, see the Global Reporting Standard website), environmental impact, respect for workers’ rights and transparent governance are now indispensable factors of competitiveness. According to Gfk Eurisko, over a third of buyers consider sustainability a decisive factor at least as much as quality and price. With regard to investors, it is estimated that the size of the global sustainable investment market represents at least 31% of the total managed today (Gsia Global Sustainable Alliance). Before proceeding with the definition of a sustainable company, we must first clarify what is meant by sustainability. The origins of the term “sustainability” can be traced back to ecological studies, in which reference is made to the “potential of an ecosystem to survive

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over time, without any change,” (Jabareen 2008) but the theme of sustainability is linked to many other themes: environmental, economic, social and cultural. A social, economic and political objective is considered a broad-spectrum issue, so much so as to be one of the main themes on the research tables Sustainability today is conceived as a real principle, which can be modelled in relation to contexts and interests and is in need of foundation in another context. There are three dimensions of sustainability in the studies: a social dimension, defined as the ability to guarantee conditions of well-being (safety, health, education) equally distributed by class and gender, so that it can grow, but never get worse (or, at most, temporarily worsen); an economic dimension “built” by individuals with their work and their knowledge (construction, infrastructure, information); and an environmental dimension, consisting of the ability to preserve three functions of the environment over time—the function of resource supplier, the function of waste collector and the function of direct source of utility.

3. Environmental responsibility in the sustainable firm A sustainable company often means one that is attentive and motivated by ethical principles, which redistributes part of the value generated in the form of charity. A sustainable company is one that does its best to minimise the negative impact on the environment, on society and the economy, while maximising its positive impact. Actions that provide clear environmental advantages are: x x x x x x x

the control of gas emissions that change the climate; efficient use of energy, water resources and raw materials; reduction and recycling of packaging; correct waste disposal; logistics and transport system optimisation; having a choice of local suppliers; reduction of paper documents and their progressive digitisation.

Sustainability is not a passing trend or trend for companies, but a development path needed to respond to increasingly attentive consumers and an increasingly stringent regulatory framework. It is a necessary choice that involves all companies and that must be

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accomplished here and now. Consumers are increasingly turning their attention to sustainable products. A mood therefore emerges that sees satisfied users only if there is a high signal of “greenness” of the chosen producer at a good quality-price ratio. The green producer also benefits in economic terms, thus creating a virtuous circle. Environmental sustainability for a company also becomes a source of competitive advantage. Sustainability, in its main environmental and social derivatives, representing a real competitive factor and thus also becoming economic sustainability, has a substantial—not to say revolutionary—impact on the business model and on the company’s processes and products. It is probably a long path that requires investments and a predisposition for innovation and change; but it is one that, for this very reason, must be developed with the highest priority and extremely accurate planning in order not to run the risk of being cut off, in a not-so-distant future, from the competition of the markets. Only by building a path of strong, effective and credible sustainability can this become a fundamental element of a marketing and communication strategy that puts the green approach at the core, thus avoiding the risk of greenwashing (Fasan and Bianchi 2017). The emergence of consumer association NGOs, environmental movements and the protection of civil rights seems to be a manifestation of growing concerns, aroused by the evident effects of the behaviour of companies, which are not always consistent with the “ethically desirable” principles and values. The activities of these NGOs and movements are focused on denouncing the improper actions of the companies, but also on imposing conditions on the latter, to induce them to adopt social responsibility. A growing number of national and international companies today promote CSR strategies in response to a series of social, environmental and economic pressures. Being responsible and respectful of the environment for companies means not only fully complying with applicable legal obligations but also increasing investments in the environment and in relations with interested parties. Environmental responsibility can be divided into three different types, each with different juridical consequences and different procedural mechanisms: • civil liability; • administrative responsibility; • criminal liability.

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On the subject of social responsibility, the company must commit to reducing its impact on the environment, contributing to monitoring and reducing its emissions through energy efficiency policies and the use of renewable sources, optimising energy consumption and raw materials, using adequate waste disposal systems, giving priority to virtuous and environmentally conscious suppliers, raising awareness among stakeholders, and creating products and services capable of reducing environmental harm. No environmental and economic policy can do without the assessment of its environmental impacts and the consequent social considerations linked to collective well-being. It is therefore true that any policy or action regarding environmental protection has effects on the performance of the company. “The introduction of environmental sustainability policies produces positive effects, thanks to their impact on the whole economy” (Giacomello 2012). Many scholars have contributed to the studies of the literature concerning environmental initiatives and sustainable behaviour. Indeed, there are those who argue that in order to assess the positive effects of environmental sustainability actions, it is necessary to look at a longterm time horizon (Aura and Aura 2018). On a scientific level, the discussion on environmental responsibility has produced a large body of literature. In fact, the benefits that may result in terms of image and improvement of relations with all the subjects that influence, and are influenced by, the performance of the business activity are considerable. These positive effects may not be evident in the short term but only over a longer time period. In support of this, (Pickman 1998) states, “Environmental regulation imposes costs on companies, necessary to comply with the restrictions imposed. Companies then decide to innovate if the expected cost deriving from compliance with the regulation is greater than the cost of innovation to be introduced.” So, if, on the one hand, adopting initiatives generates costs which have negative effects on one’s business in the short term, on the other hand, in the literature there are those who maintain an opinion contrary to the results obtained in the analysis. Other benefits may be derived from the increase in revenues (e.g., reuse of waste) and from the creation of a “green” image of the company that contributes to improving relations with local communities and public administrations, also increasing the company’s competitive level, as the markets that assign a value to environmental certifications are on the rise (Giacomello 2012).

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All companies that have as their objective the pursuit of the sustainable path in terms of the environment must implement initiatives and good practices to enhance the field. Specifically, there are several initiatives and actions that the entrepreneur can implement to improve their reputation and image in the eyes of stakeholders. We list some of these in the following section, inserting them into a context of “best practice”.

4. The best practices of sustainable firms Good practices, or best practices, are quality experiences and projects carried out in the field by organisations, companies or citizens that bring benefits in the environmental sector and are replicable. The exchange of best practices represents a key approach to all strategies for sustainable development. Among the advantages of best practices are: x they are often innovative and contribute to collecting the necessary data to search for new applications or to improve existing ones; x they are visible in the field, contributing to the spread of knowhow regarding technology and application; x they bring a real advantage in economic and sustainability terms in the field of application; x they can be replicated in whole or in part and can therefore be taken as an example of intervention in other more or less similar fields. Good practice means an action, exportable to other situations, which allows any local administration, community or company to undertake a path towards sustainability, understood as an essential factor of development able to respond to the needs of the present, without compromising the ability of future generations to satisfy their own. By “best practice” we mean the most significant actions that allowed us to achieve the best results, thus becoming a reference model to follow. There are many experiences and initiatives that show companies’ interest in protecting the environment. Examples include the initiatives of municipalities for the development of renewable sources such as sustainable urban transport with sustainable systems, virtuous behaviour in terms of separate waste collection,

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flexible mobility, green culture, zero soil consumption and reduction of energy waste. A best-practice catalogue should contain a selection of the best “good practices” to enable each company to plan and implement the selected and planned strategies in relation to the sector where the company carries them out. The guidelines are: 1. Policy planning; 2. Regulations and official documents; 3. Regulations; 4. Internal organisation; 5. Training and updating; 6. Information, awareness campaigns and events; 7. Help desk and support to local authorities; 8. Systems to enhance good practices; 9. Use of environmental criteria in calls for tender; 10. Checks; 11. Centralised green purchases; 12. Quantification of the costs and benefits of green purchases; 13. Monitoring systems; 14. Comparison, dialogue and involvement of suppliers. A project to be classified as “best practice” must meet certain requirements, such as: x the project under consideration must be implemented or must be being implemented; x the project must be easily extendable and repeatable in other situations; x the project must be consistent with the quality and target objectives adopted nationally and internationally; x the project must possess environmental, economic and social sustainability objectives. There are databases on good practices for local sustainability that are working tools available to public administrations, environmental associations, technicians, environmental consultants, citizens and all those who are interested in how innovative they are being in the field of sustainable development. Every company should be inspired primarily by safeguarding the environment and therefore taking into account the current best

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practices for companies. Choose every day to extend your commitment to protecting the environment, drawing inspiration from the guiding values of your responsibility and putting the best skills in terms of technologies, processes and raw materials. Within the company, a continuous and progressive improvement regarding the environmental impact of each activity and process should be promoted, from the choice of the most advanced packaging solutions to an increasingly efficient use of water and energy, and from the selection of materials to the innovative management of waste and logistics consistent with the type of process carried out by the company. Of course, every company and its core business have best practices to follow.

5. Conclusion The path traced in this chapter started from a general description of the world of environmental sustainability, then examined the sustainability actions that companies can put in place to protect the environment. In this regard, more specific aspects have been addressed, such as responsibility towards the environment, actions and good practices to protect the environment, characteristics of sustainable enterprises and the GRI, in order to concretely assess the dynamics of businesses regarding the issue of sustainability. The elements discussed clearly denote a growing interest in the issue of sustainability among companies. This attention has had proven effects on the strategic choices of entrepreneurs. The business world is considering the idea that companies must not only produce and exchange goods and services to create profit but must also respond to the complex expectations and specific ethical-social demands that are required of companies in respect of the environment. “Environmental regulation imposes costs on companies, which are necessary to comply with the restrictions imposed. Companies therefore decide to innovate if the expected cost deriving from compliance with the regulation is greater than the cost of innovation to be introduced” (Pickman 1998). Adaptation policies in our country have just begun and local authorities and businesses are beginning to think about how to intervene in this territory and how to plan future actions, taking into account the changes taking place. Most of the time, environmental changes have been pushed into the background without considering them a cause of climate change, and often the environmental transformations that are observed today are the result of choices that do not respect the environment. Italy, together with Europe, is acting

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on the basis of the indications of the Kyoto protocol and of the European objectives to reduce carbon dioxide emissions (Calabresi and Taliento 2014). Today, companies cannot escape the best practices that have become part of corporate life. They show a growing attention being paid to the theme of sustainability, so that they can make strategic choices. In other words, the business world has changed. Companies must respond to the complex expectations and demands of stakeholders, not only in terms of value but also in social terms. The construction of a common social identity and shared values seems the only way to manage the negative repercussions in terms of corporate reputation.

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Antonio M. Chiesi, Alberto Martinelli, and Mario Pellegatta. Milano: Il Sole 24 Ore. Massini, Stefano. 2014. “CSR: la responsabilità sociale inizia in azienda.” Openmag, July 3, 2014. McDonald, Seonaidh, and Caroline J. Oates. 2006. “Sustainability: Consumer Perceptions and Marketing Strategies.” Business Strategy and the Environment 15, no. 3 (May/June 2006): 157– 70. Motta, Adriana. 2014. La gestione del rischio ambientale d’impresa, Tecnologie progetti. https://www.anra.it › documenti. Orlitzky, Mark, Frank, L. Schmid, and Sara, L. Rynes. 2003. “Corporate Social and Financial Performance: A Meta-Analysis.” Organization Studies 24 (3): 403–11. Orlitzky, Mark, Donald S. Siegel, and David A. Waldman. 2011. “Strategic Corporate Social Responsibility and Environmental Sustainability.” Business & Society 50 (1): 6–27. Pickman, Heidi, A. 1998. “The effect of environmental regulation on environmental innovation.” Business Strategy and Environment 7 (4): 223-233. Porter, Michael Eugene, and Roderick M. Kramer. 2006. “The Link Between Competitive Advantage and Corporate Social Responsibility.” Harvard Business Review 84, 78–92. Proto, Maria, and Stefania Supino. 2009. Dal management ambientale alla responsabilità sociale delle organizzazioni. Torino: Giappichelli. Ricci, Federica. 2009. La Responsabilità Sociale e il valore patrimonio intellettuale- Un approccio integrato, I edizione. Roma: ARACNE editrice. Rusconi, Gianfranco, and Michele Dorigatti. 2004. La responsabilità sociale d’impresa. Milano: Franco Angeli. Smith, N. Craig 2003. “Corporate social responsibility: whether or how?” California Management Review 45 (4): 52–76. Soana, Maria, G. 2011. “The Relationship between Corporate Social Performance and Corporate Financial Performance in the Banking Sector.” Journal of Business Ethics 104 (1): í Tarquinio, Lara, and Adriana Rossi. 2014. “Customizzazione dei report di sostenibilità e stakeholder engagement. Il contributo del World Wide Web.” Impresa Progetto, Electronic Journal of Management, no. 1. Testa, Mario. 2007. La responsabilità sociale d’impresa: Aspetti strategici, modelli di analisi e strumenti operative. Torino: Giappichelli.

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Tomasi, Filippo, and Angelo Russo. 2012. Il Rating Etico: un’analisi Empirica del Modello Standard Ethics. Standard Ethics, Research Office. Velamuri, Sita. 2006. “A New Approach to CSR: Company Stakeholder Responsibility.” In The Market for Virtue: The Potential and Limits of Corporate Social Responsibility, by D. Vogel. Washington, DC: The Brookings Institution. Viviani, Michele. 2006. “La Responsabilità Sociale d’Impresa ed il coinvolgimento degli stakeholder.” Working paper, AICCON, Forlì, IT. Wartick, Steven L., and Philip L. Cochran. 1985. “The Evolution of the Corporate Social Performance Model.” The Academy of Management Review 10 (4): 758–69. Zamagni, Stefano. 2006. “Responsabilità Sociale delle imprese & ‘Democratic Stakeholding’,” Working paper, Università di Bologna, Bologna, IT. Zamaro, Nereo. 2004. Presentazione dati ISTAT sulla Responsabilità Sociale dell’Impresa. ISTAT.

CHAPTER 2 SOLID WASTE MANAGEMENT IN ALBANIA: DOES ACCOUNTABILITY MATTER? VALBONA DUDI1

1. Introduction This chapter aims at tracing the state of the art of social and environmental accounting in Albania, a post-communism territory, which has been dominated for 500 years by the Ottoman Empire. In recent decades the country has undergone drastic political and economic changes. Rapid urbanisation, higher economic activity and population growth place multiple pressures on environmental and social problems. During this time, in order to create an environment for the promotion of social and environmental accounting, the Albanian government—with the leadership of the Ministry of Economy, Trade and Energy (METE) and the UNDP’s support—has developed a National Action Plan on Corporate Social Responsibility (CSR). In March 2013, the Albanian CSR Network was founded; its main mission is to promote the importance of CSR within the business community and the social environment with the future view of having sustainable CSR practices. At a political policy level, targeted interventions are made even on waste and solid waste management, with the approval in 2011 of the “National Strategy” and “National Plan on Waste Management”, the latter of which is under revision at the time of writing. The documents cover the period 2010–2025 and address the economic, environmental, social, legal and organisational challenges in establishing a modern waste management system. In March 2016, the National Strategy of “Plastic Waste Management and Recycling in Albania” was published, along with Regional Waste Management PhD student, Department of Economics, Society and Politics, University of Urbino Carlo Bo. 1

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Plans and a new law on Integrated Waste Management adopted in line with the Waste EU Directive and, lately, Resolution of Council of Ministers No. 177, dated 6 March 2012, “On packaging and packaging waste, the targets and rules for recycling and recovery of packaging waste are set”. Currently, the process of implementing CSR policies by the Albanian government seems to be accelerating due to the EU accession process, considering CSR as one of the vehicles for positioning Albania in a better light compared to other European business partners, and considering that creating a high CSR performance level allows it to have a competitive advantage over other Balkan states. However, while environmental and social accounting together with the sustainability agenda are becoming mainstream issues for many foreign organisations, for now the country still seems to have some large-scale difficulties in implementing it. CSR is, in fact, mainly promoted by foreign companies which implement the practices that have proved to be efficient in the different countries wherein they operate. Starting from this premise, the work is focused on addressing the related issues/problems by first noting that corporate responsibility has a social and an environmental component. CSR has been an issue discussed in business literature for decades (e.g., Bowen 1953; Carroll 1999), and corporate environmental responsibility has increasingly become a topic of concern (Hart 1995; Shrivastava 1996; Starik and Rands 1995). The research design is configured in two steps; the first step consists of a structured literature review (SLR) related to social and environmental accounting and its implementation in the Albanian context. The SLR aims to provide evidence of the corporate social accounting and environmental accounting in Albanian literature. According to Massaro, Dumay and Guthrie (2016, 2): An SLR is a method for studying a corpus of scholarly literature, to develop insights, critical reflections, future research paths and research questions (Massaro, Dumay and Guthrie 2016, 2).

The second research step consists of a brief presentation of the Albanian solid waste management system and a brief description of the recycling industry, through the case study methodology. According to Yin, researchers use the case study methodology to investigate:

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a contemporary phenomenon in depth and within its real-life context, especially when the boundaries between phenomenon and context are not clearly evident (Yin 2003, 15).

As pointed out in previous extensive reviews which examined the prevalence and the content of CSR articles in international management/business journals during (parts of) the 1990s and 2000s (Lockett, Moon and Visser 2006; Egri and Ralston 2008; Kolk and Van Tulder 2010; Pisani et al. 2017), a very limited mainstreaming of CSR articles concerning developing countries and regions can be found. As Egri and Ralston (2008, 325) pointed out, it is particularly troubling that there has been relatively little on-theground corporate responsibility research in countries where the need for corporate responsibility is most pressing due to greater poverty, environmental degradation, and institutional governance issues (Egri and Ralston 2008, 325).

They therefore note the urgent need to widen the geographic and cultural scope of international management research on corporate responsibility (Egri and Ralston 2008, 325).

Pisani, Kourula, Kolk and Meijer (Pisani et al. 2017) confirmed the same problem, noting that in their review, among the 257 articles covered by their study, only one article on CSR matters from the Albanian context was involved. We can notice a growing, though not sufficient, academic literature on CSR in the Albanian context and a minor presence of these studies in the international arena, with a very low impact. The results show that very few publications have a solid literature framework. Therefore, there is a need for a growing collaboration between academics, policy makers and practitioners in promoting CSR in this country. This chapter is organised as follows: Section 2 introduces the existing theoretical framework in Albania on CSR and waste management studies. Section 3 describes the methodology used and maps the objectives of the articles, while section 4 offers a view of the state of the art of the Albanian solid waste management and presents a brief overview of the country’s recycling industry. Section 5 offers arguments about future research and policy in waste management and CSR in Albania and presents several limits and unanswered problems as well as giving a future direction for research.

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2. Theoretical framework Social accounting is the process of communicating the social and environmental effects of organisations’ economic actions to particular interest groups within society and to society at large (Gray 1987: 9). It takes a wide variety of forms and reports and covers all forms of accounts which go beyond the economic ones. Social accounting appears with many different labels: social responsibility accounting, social audits, corporate social reporting, employee and employment reporting and stakeholders dialogue reporting, as well as environmental accounting (Gray 2002). Environmental accounting, as a subset of social accounting, focuses on the cost structure and environmental performance of an enterprise (Mathews and Perera 1996; Gray 2002; Baldarelli et al. 2017). It points to the fact that companies affect their external environment through their actions and should therefore account for these effects as part of their standard accounting practices tied to the economic concept of externality. A sustainable development can be reached when current needs are met without precluding the needs of future generations. (World Commission on Environment and Development 1987, 40)

In order to prevent or minimise the negative impacts of societies and industries on the environment, firstly, we have to specify and measure these effects, in physical or monetary expressions. Environmental accounting is a tool by which we can measure or define the effects of growth on the environment. Solid waste accounting is part of environmental accounting (Mathews and Perera 1996; Gray 2002; Baldarelli et al. 2017). Defining and measuring solid waste accounting is useful in organising information on the generation of solid waste and the management of flows of solid waste to recycling facilities, to controlled landfills or directly to the environment. Measures of the amount of waste in aggregate or in quantities of specific waste materials may be important indicators of environmental pressure. The construction of solid waste accounts allows these indicators to be placed in a broader context with economic data in both physical and monetary terms. In order to measure the solid waste account, the System of Environmental-Economic Accounting 2012 was released by the United Nations in 2014. This system measures solid waste based on flows of generation of solid waste residuals and solid waste

Solid waste management in Albania: does accountability matter?

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products, and on collection and disposal of solid waste residuals and the use of solid products (United Nations 2014, 88). Although disposing of solid waste is essential to public health and environmental protection, in most countries several problems arise and have to be dealt with. Rapid urbanisation, greater economic activity and rapid population growth place multiple pressures on solid waste management systems in both industrialised and developing countries. During the last twenty-eight years, Albania has undergone rapid economic growth, with uncontrolled urbanisation and a higher demand for imported items leading to a drastic increase in the generation of solid waste materials without an adequate system and strategy for collection, transport, safe disposal and recycling (National Strategy of Urban Waste Management, 2011 Ministry of Economic Development). According to INSTAT (Urban Solid Waste in Albania 2018), during 2017, the amount of solid waste managed in the country was around 1.2 million tonnes, while in 2016 there were 1.3 million tonnes, with a decrease of 3.6%, and only 17.4% of this amount was recycled during 2016 while 1.8% of it was burned in incinerators for energy purposes. Local governments are facing the challenge of growing quantities of waste and limited space for its disposal, especially in the absence of a separation at source and “a good industry” of recycling. For better results and implementation of efficient strategies, it is of fundamental importance that the Albanian government adopts the most cost-effective solutions and reduces the waste disposal rate through waste recycling and waste minimisation at source, in order to reduce the amount of solid waste that ends up in landfills (Merko 2017). In this context, a concrete definition and implementation of social environmental accounting and solid waste accounting, in their multidimensional constructs, are needed.

3. Methodology—Structured literature review According to Massaro et al., researchers use SLRs to map and assess the existing intellectual territory to identify future research needs. (Massaro et al. 2016, 7)

Thus, there is a need to critique existing knowledge before offering future research directions. This study follows the directives of Massaro et al. (2016) on SLRs. The initial step was to identify that to date there has not been other SLRs on CSR and solid waste accounting, specifically for the Albanian context, published in

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academic journals. Then the research was expanded to other literature reviews with a specific focus on CSR in the international arena. From this second research, three significant papers were identified (Lockett, Moon and Visser 2006; Egri and Ralston 2008; Kolk and Van Tulder 2010; Pisani et al. 2017), pointing out the necessity of more studies on CSR in less-developed countries. This study aims to take a step forward towards filling this gap. To that effect, the review process was conducted in eight different phases. Briefly, the first step was to outline how to set up the research project and fix the research phases. The second step was to specify the research questions and focus the problem. The next steps were the selection of databases for the literature review, the research performance, and the creation of the literature review protocol and its implementation, ending with conclusions and future directions for research.

3.1 Research questions As mentioned above, the study aims to identify the gaps to be filled in order to enlarge the knowledge on CSR in general and environmental accounting in particular and their implementation in the Albanian context, through an SLR. In order to reach this objective, the following research questions and related sub-research questions arise: RQ: What is the state of the art of social and environmental accounting research and practice in Albania? RQa: What is the relation between social accounting, environmental accounting and solid waste accounting in Albania? RQb: What are the trends affecting solid waste accounting in Albania, both in theory and practice?

3.2 CSR and solid waste accounting literature— Select relevant publications The third step in the review process involved the selection of data sources for the review. Articles were selected drawing from internationally recognised academic journals cited in Scopus and Web of Science, covering different disciplines, including, but not limited to, the social accounting literature using three key phrases, appearing in article titles, abstracts or keywords: a) CSR in Albania

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23

b) solid waste management and/or solid waste accounting in Albania c) social accounting in Albania Due to the fact that limited numbers of articles with the above phrases were found in the cited sites, a Google Scholar search with the same parameters was performed. For the selection of articles, paper titles, keywords and abstracts, the articles were reviewed to ensure that they discussed one or more of the three key phrases of our research topics. Editorials, commentaries, interviews, conference proceedings, book reviews, books and very short articles (four pages or fewer) were excluded (Lockett et al 2006), as well as articles not available in electronic form. There was no exclusion of articles based on language, as only articles in English were found. Figure 2.1 shows the process of the literature selection. After the first research with the abovementioned parameters, twenty-five potential articles for the review were identified, as follows: ten on Scopus, nine on Google Scholar and six on Web of Science. Duplicates (three articles) and conference proceedings studies were discarded. Specifically it was tried to be consistent with academic trends; this does not mean, in any case, that other publications do not contribute or are less relevant for academic arenas. Fifteen abstracts of articles were reviewed, and I tried to download their PDF files. Two full-text articles were not available for free download; only their abstracts were reviewed and included in the final analyses. According to Randolph (2009), electronic searches may lead to an insufficient number of articles for a thematically exhaustive review and, as suggested by the author: the most effective method may be to search the references of the articles that were found, determine which of those seem relevant, find those, read their references, and repeat the process until a point of saturation is reached—a point where no new relevant articles come to light. (Randolph 2009, 7)

Accordingly, references were searched, and twenty-three potential articles were identified and discarded because they do not address the Albanian context or because they were articles not published in scientific journals. In brief, thirteen full-text articles and two abstracts were reviewed and included in the final analyses.

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Figure 2.1: Flow diagram for literature selection process

Solid waste management in Albania: does accountability matter?

25

This search had no time constraint. However, it is only in the last fifteen years that we have a growing interest from researchers, policy makers and professionals on studies for CSR and environmental accounting in the Albanian context. The retrieved articles cover a period of time from 2004 to 2017, peaking in 2014 (Figure 2.2), in line with the growing interest in this field in the global arena. Figure 2.2: Trends of publications in searched databases by year

3.3 Literature review protocol In order to read, classify and analyse the content of the selected publications, a literature review protocol was developed. Table 2.1 schematically represents the final version, or a coding frame, of the formal reading protocol. Based on this protocol, a coding list was created and used for coding articles with NVivo software.

ERC Fields

Macro domain (e.g., HSC); Discipline (e.g., HSC 1); Sub-discipline (e.g., HSC1:3); Comments

Article Impact

Author(s) Title Journal Year/No./ Impact Database found in Citations

Authors’ research field (e.g., Accounting, Engineering, Social Studies, etc.); Authors’ institution type (e.g., University, Public Institution, Private company)

Author(s)’ Interests and Institutes

Table 2.1: Literature review protocol

26

Applied method Empirical/not Empirical research; Qualitative/Qua ntitative research Surveys/Case Studies

Research Methodology

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Research objective; Theoretical framework; Research results; Audience (academics, practitioners or policy makers, community)

Article Content List of words and Concepts used for coding

Coding

Identify Gaps; Develop future paths and address questions

Future Research

Solid waste management in Albania: does accountability matter?

27

3.4 Article impact As mentioned before, articles have been selected drawing from internationally recognised academic journals cited in Scopus, Web of Science and Google Scholar, covering different disciplines, including, but not limited to, social accounting literature, and only scientific journal articles were considered valid for the study. In order to measure article impact, the number of citations and the journal impact factor were taken into consideration. Table 2.2 presents the list of authors, their academic titles, article title, journals and journal impact factor, the source in which the article was found, and the number of citations for each article. However, the number of citations is not exhaustive due to the fact that, as Dumay and Dai (2014) outline: “one problem with determining the impact from citations alone is that older articles can accumulate more citations than others”. (Dumay et al. 2014, 270)

As the articles found were published within a short timescale, 2004–2017, there is no sense using the CPY (citations per year) citation index instead of the CI index, so it was analysed together with the journal impact factor. However, this other index has its limits because for Albanian researchers it is more difficult to publish in international journals compared to their Western colleagues. As shown in Table 2.2, the number of citations are limited, but articles published in journals with a higher impact factor have more citations than others. Grazhdani (2016) has a citation index of 35 in Scopus and the journal in which the article is published has the highest impact factor in the list (4.99), despite the fact that the article was published only in 2016. On the other hand, we can notice that other articles have no citations at all, but if we consider the fact that the “CSR” and “waste accounting” concepts in Albania are relatively new, these articles have their importance in the field of CSR throughout the local territory.

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3.5 Thematic grouping by scientific domain (ERC) and author institution affiliate Before beginning the coding process, the articles were divided into core categories by their scientific domains. The scientific domain was defined by the author research field and article research focus (Table 2.2). From fifteen articles studied (thirteen with full text and two abstracts), it was noted that all authors are from universities and academic institutions; only two articles involved two co-authors from public institutions and another one from a private company. In brief, it may be said that more communication and coordination between practitioners, policy makers and academic researchers in general in the field of CSR is needed. The authors’ research areas were from the engineering, geology, chemistry and economics fields. After analysing all articles according to the abovementioned criteria, two main scientific domains and one sub-domain were defined, as follows: ƒ EEC—Engineering, Geology and Chemistry (6 articles) ƒ HSC—Human Science and Economics (5 articles) ƒ HSC1—Accounting (4 articles) Classification of the selected publications according to European Research Council (ERC) scientific domains, is fundamental for the objectives of the present research, which aims to identify disciplinary differences and similarities in key concepts employed in the studies of CSR and solid waste management and accounting.

1 ,51 7

0,84

0,7 5

0,1 04

Web of Science

Web of Science

Scopus & Web of Science

Scopus

Scopus & Web of Science

Google Scholar

Google Scholar

Natural Hazards and Earth Sy stem Sciences

Env ironmental Geology

Tehnicki V jesnik

Journal of Env ironmental Protection and Ecology

Metalurgia International

A cademic Journal of Interdisciplinary Studies, MCSER Publishing, RomeItaly

Economic Research(NRQRPVND,VWUDåLY DQMD

1

2

3

4

5

6

7

n.a

n.a

2,61 3

Data-Base

A cademic Journals

Nr.

Journal Impact Factor

12

Parise, M; Qiriazi, P; Sala, S

A ccounting for Env ironmental Liabilities – Case of A lbania (201 4)

Corporate social responsibility in emerging and (201 4) Economics and dev eloping economies in Central Multidisciplinary and Eastern studies Europe – a measurement model from the stakeholder theory perspectiv e

Social and Multidisciplinary studies

Engineering

A ndreeaDaniela Gangone, MarianaCristina *ăQHVFX

Jupe. A ., Keri. L., Biracaj. R., Taka. A

9

0

0

2

3

15

Parise, M; Qiriazi, P; Sala, S

Natural and anthropogenic hazards in karst areas of A lbania (2004) Ev aporite karst of A lbania: main features and cases of env ironmental degradation (2008) Management of municipal solid waste in Tirana: Problems and challenges (201 0)

Cited by

A uthors

A rticle Title

A lcani, M., Dorri, A ., Hox ha, A . Xhagolli, Env ironmental Dev elopment of waste L., Pinguli, Science; management strategy in A lbanian E., Hy ka, Multidisciplinary breweries (201 1 ) G., Gjergjndre studies aj, E. V ozga, Engineering & State of the art of recy cling in I., Kaçani, Chemistry A lbania (201 3) J., Kasemi, V

Geoscience

Geoscience

Journal ERC Domain

Table 2.2: List of articles analysed in the review

Solid waste management in Albania: does accountability matter?

HSC (marketing)

HSC1 (accounting)

EES (engineering)

EES (chemistry )

EES (engineering)

EES (geology )

EES (geology )

A rticle ERC Domain

29

30

0

n.a

Google Scholar

Scopus

Scopus & Web of Science

Web of Science

Google Scholar

European Journal of Research in Social Sciences

Waste Management

NA TO Science for Peace and Security Series C: Env ironmental Security

International Journal Of Ecosy stems A nd Ecology Science-IJEES European Journal of Research and Reflection in Management Sciences

10

11

12

13

15

14

Google Scholar

European Scientific Journal

9

0,41

4,94

n.a

n.a

n.a

Google Scholar

European Scientific Journal

8

n.a

Google Scholar

The Romanian Economic Journal

yp

p

Social Responsibility of Business in A lbania; (201 4)

Social accounting in A lbania (201 4) Pulti. A ., Dragusha. B.

Filipi. G., Karapici. V .

Multidisciplinary studies

CSR Practices by Business in Cela. M., A lbania; Results of a Surv ey Resmeliu. D. (201 4) Social and Potentials and Limits of A liu. B Multidisciplinary Corporate Social Responsibility studies in A lbania (201 5) A ssessing the v ariables affecting Env ironmental on the rate of solid waste Science: Waste Grazhdani, D generation and recy cling: A n Management and empirical analy sis in Prespa Park Disposal (201 6) A pproaches on building of resiliency , mitigation Env ironmental Qafmolla, L. v ulnerability by radioactiv e Science sources and management of radiological situation in A lbania The Impact Of Good Env ironmental Urban Solid Waste Management I Merko, Flora Sciences & n A lbania's Economic Ecology Dev elopment (201 7 ) Corporate Social Responsibility Management & Proda. A as an Ex pression of Missing Social Social Science Capital in A lbania (201 7 )

Multidisciplinary studies

Economics and Multidisciplinary studies

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0

0

0

22

0

0

1

2

HSC1 (accounting)

HSC (economics)

EES (phy sics)

HSC (management )

HSC1 (accounting)

HSC (management ) HSC (management )

HSC1 (accounting)

Solid waste management in Albania: does accountability matter?

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3.6 Coding process—First step The selected articles were analysed based on: a) scientific domain disciplines (ERC) b) research methodology. The analyses were conducted using the coding method, with the help of the computer-assisted qualitative data analysis software NVivo. The articles were firstly divided by objectives into core categories of social accounting research in the Albanian context (CSR, solid waste accounting/management, ethics and social accounting). Subsequently, journal articles were coded by orientation, (theoretical or empirical). The theoretical category includes both theoretical overview and model building articles that developed theoretical propositions based on literature reviews. Empirical-based articles were further coded depending on the methodological approach (case studies, content analysis, database research and surveys). A coding approach to the SLR was applied to the texts of fifteen articles (two abstracts and thirteen full texts), following three steps. Only nouns and adjectives were taken into consideration in order to preserve linguistic and conceptual significance, thus eliminating verbs. After the first review of the articles, “sensitive words” were identified and categorised by ERC domain, as presented in Table 2.3. It can be noted that some words are common to both ERC domains (EES and HSC) and others are used only by each specific ERC category. Some words were excluded by this selection, as were very general ones and ones not attributed only to CSR and solid waste studies.

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Table 2.3: Sensitive concepts categorised by ERC domain—first list Sensitive Concepts

EES

HSC (HSC1)

Environmental sustainability Housing structure Integrated management Solid waste management Solid waste Sustainable development Rapid urbanisation Case studies Collection system Energy recovering Ethics Landfill Pay as you throw Pollution costs Legislation framework

CRS Environmental accounting Social accounting Friedman theory reporting Housing structure Integrated management Solid waste management Solid waste Stakeholder theory Sustainably development Integrated report Financial report Case studies Externalities Landfill Corporate governance Literature review

During the first step, a selection of articles based on the research method yielded thirteen full-text articles. The research method criteria include four attributes, divided into three core categories: empirical qualitative studies (interviews/case studies), empirical quantitative studies (surveys/database search) and theoretical studies (literature review and policy). The results showed that the most commonly used research method is empirical studies (qualitative and quantitative), as presented in Figure 2.3.

Solid waste management in Albania: does accountability matter?

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Figure 2.3 Research method

3.6.1 Coding process—second step The second step consisted of building “sensitive concepts” from the combination of selected “sensitive words” identified in the previous step and determining the most frequently used word combinations with them. This process consisted of confronting the node words (derived from “sensitive words”) and the “sensitive concepts” derived by the list of node words, and their frequency use in text articles. From this step a list of “sensitive concepts” was developed: x x x x x x x x

Corporate Governance Corporate Social Responsibility (CSR) Environmental Accounting Social Accounting Solid Waste Solid Waste Management (SWM) Stakeholders Theory Legislation

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3.6.2 Coding process—connections between concepts (third step) The objective of the third and final phase of the coding process consisted of identifying existing connections between various concepts or, in other words, creation and visualisation of the cooccurrence network. This process was developed by text mining analysis using NVivo software, and then associating the concepts with each ERC domain discipline (Figure 2.4). Based on the reading of the results, we can distinguish between different categories of CSR and solid waste concepts: x General concepts—concepts common to all ERC disciplines (solid waste, solid waste management and legislation framework) x Common concepts—concepts common to two of the three domain disciplines (CSR, environmental accounting and social accounting) x Specific concepts—concepts specific to only one scientific discipline (corporate governance, environmental accounting) In conclusion, waste management studies are generally focused on the investigation of environmental impacts. Within this general context, both applied (engineering, chemistry) and social sciences have a peculiar emphasis on environmental protection and policies, whereas solid waste and management practices require an integrated approach involving social studies (HSC) and quantitative disciplines (EES). On the other hand, only HSC disciplines address particular attention on CSR studies, and only the accounting discipline addresses environmental accounting.

Solid waste management in Albania: does accountability matter?

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Figure 2.4: Connections between concepts and ERC domains

4. State of the art of solid waste management in Albania As mentioned above, at political policy level progress was made towards a sustainable development policy for the country, with the approval of specific norms and strategies. The Law on Integrated Waste Management No. 10463/2011 replaced the Law on Solid Waste Management No. 9010/2003 and the Law on Hazardous Waste Management No. 9537/2006. The new law aims to protect human health and the environment by preventing or reducing the negative impacts of waste production and aims to better perform waste management in the country. In 2013, the law was amended to prohibit the import of hazardous and non-hazardous waste under all circumstances. However, in September 2016, the Albanian Parliament adopted a law amendment in order to allow the import of waste, though only for recycling purposes. The amendment faced significant public protests and has not yet been signed off by the President of the Republic (at the time of writing). The subsidiary legislation is quite developed, covering specific waste streams: batteries and accumulators (Legislative Decree (LD) No. 866 dated 4 December 2012), end-of-life vehicles (LD No. 705 dated 10 October 2012), used oils (LD No. 765 dated 7 November 2012), packaging waste (LD No. 177 dated 6 March 2012), disposal and equipment (LD

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No. 387 dated 6 May 2015), and land filling (LD No. 452 dated 11 July 2012). The most recent development concerns the introduction of the legal basis for digital mapping of landfills (LD No. 428 dated 8 June 2016). The Business and Investment Development Strategy 2013–2020 (published in 2012 by METE) is the main document referenced for the identification and implementation of the national policies for business investment promotion during the period 2013–2020. This strategy is in line with the industrial policy of the EU, with a focus on sustainable and environmentally friendly enterprises and SDGs. However, the current challenge for the process of SDG nationalisation is to propose the vision for 2030, since the current planning documents in the country have the horizon of 2020 or, in a few cases, 2025. The available sectorial documents and assessments at policy level do not include projections or visions for 2030. The rapid urbanisation of the country, especially after the 1990s, had brought about serious problems in terms of sustainability and waste management, especially in those urban areas where the population density is most concentrated. Tirana is the capital city of Albania and its largest one in terms of population. By 2018, the population of Tirana reached 834,151 units, from 250,000 in 1989, with an increase of almost 330% in the last thirty years, and it comprises 28.9% of the Albanian population (INSTAT Albania 2019, http://www.instat.gov.al/en/themes/demography-and-socialindicators/projection). This resulted in serious urban problems, such as shortages in infrastructure, particularly in housing. Many rural migrants illegally settled in the surrounding areas of the urban centre or in protected green areas where inadequate water and power supply systems are provided, and where solid waste is managed poorly, resulting in significant degradation of the urban environment. Urbanisation is still in progress, and it is predicted that the city’s population will reach one million units by 2025 (INSTAT Albania, 2019 http://www.instat.gov.al/en/themes/demographyand-social-indicators/projection). In response to the growing urban and environmental challenges, the Municipality of Tirana in February 2013 adopted the “Urban Regulatory Plan in Tirana Municipality” (URPTM). The plan set the vision, directions, and outlines of future development based on Tirana situation. However, no concrete action plans for urban utilities and infrastructure were included, although separate sector plans are in development. An adaptation strategy has also been developed, although not yet approved, by the City Council.

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In order to meet the recycling and recovery objectives of the National Waste Strategy, and to comply with legal requirements imposed by Government Resolution No. 418 of 26 June 2014, “On separate collection of waste”, the local authorities are obliged to introduce new separate collection schemes. The waste separation schemes consist of a three-bin system with suggested colour codes as follows: green, for organic compostable waste; blue, for recyclable dry materials, including plastics; grey or black, for other urban mixed waste. However, separation of waste at source is not a common practice in Albania. Most consumers throw away beverage packaging (glass, plastic and aluminium) and other packaging material with other types of waste. As a result, municipal waste is mixed and difficult to sort out by preferable waste streams. It is important for all plastics to be sorted and kept free of contamination in order to guarantee their quality and value for the market. The challenge of recycling lies in sorting out the different plastic types in order to meet international recycling market needs. Different requirements are set for municipal (household) packaging and for non-municipal (industrial, commercial) packaging; however, they have partially been met. The main challenges for law implementation are related to administrative capacities and institutional cooperation among the many actors involved at national and local levels, to cooperation between municipalities and the private sector, and to attracting investments in this sector, especially in order to close down the existing dumpsites that do not meet sanitary requirements. The local waste management plans for most municipalities are still to be prepared, as required by Law 10463/2011 (UNECE 2018). Up to now, there has been no large-scale waste segregation scheme implemented in Albania, besides some pilot schemes, one of which was applied in the Tirana municipality with the introduction of recycling rubbish bins and the engagement of a new public-private company in 2016 to deal with urban waste management and the collection system, Eco Tirana. This pilot scheme, however, did not reach the expected results. Usually, local authorities operate a basic waste collection system using waste compactor trucks (or waste compacters) and steel containers largely limited to urban areas, with an average coverage rate of 64% in urban areas (UNECE 2018). The frequency of waste collection, and hence standing time, is highly variable. The collected waste is transported to landfills or disposal sites without any pretreatment. About two thirds of the municipalities sign contracts with private companies, selected through public tenders, for a duration of

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between three and five years. Short-term contract periods present a big problem for the operation of such companies because they cannot make long-term plans and therefore do not invest enough in equipment (i.e., the quality of collection is not improving). Delayed payments by local authorities for the services delivered also increase uncertainty for waste management companies. Besides this official scheme of waste collection, other forms of waste collection are carried out by groups or individuals (in illegal form) who scavenge the waste bins and provide most of the domestic raw material for the recycling companies. Consequently, there is no official data on the amount of waste recycled in the country, and the raw estimations can only suggest that, in total, it is between 5% and 12% at the national level.

4.1 The Albanian recycling sector and CSR reporting—Does waste accounting emerge? Currently in Albania there are about sixty private recycling companies that collect and process different types of waste, namely scrap metal, paper, plastic, textiles and used tires. In addition to this, it is considered that more than 12,000 informal individual collectors gather waste from bins and sell it to the recyclers (Albanian Ministry of Energy and Infrastructure, 2017). Most of the recyclable waste comes from urban waste and only partly from the industrial sector (Albanian Ministry of Energy and Infrastructure, 2017The recycling industry is well developed and could have economic success compared to its counterparts in the richer countries where the cost of labour is much higher and therefore the value of recycled items is relatively lower (UNDP/ World Bank ESMAP 1998). In terms of location, the recycling services and processing providers are spread mainly throughout the Tirana-Durres corridor, where major markets/industries and large urban areas are concentrated. There are also a few in the southern areas (Korca, Elbasan, Berat and Gjirokastra) and in the northern part of the country, near transport corridors with neighbouring countries. However, the main companies also have dependent collectors or cooperate with independent collectors working throughout the country. The study then provides a brief description of two companies that work in the field of waste collection and recycling, using the purposive sampling method. According to the case study methodology, in case of limited sources and data, purposive sampling is the most recommended strategy that helps in the identification and selection

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of information-rich cases for the most effective use of limited resources (Patton 2002). Also, according to the Seawright and Gerring (2008) classification, the cases are maximally diversified, aimed at obtaining information concerning the significance of different conditions for a specific process or phenomenon and its result. On this basis, the selection of the following companies was made on the premise that the first one, Eco Tirana, is the company responsible for waste collection in the Tirana municipality, and the second one, Everest IE sh.p.k., is one of the first recycling companies in the country and is actually the leader in the field of production and formmaking of flexible plastic packaging made of polyethylene. Eco Tirana is a joint-venture company in which the Tirana municipality holds 51% of the ownership and the municipal public cleaning service company Amia Verona SpA (an Italian company) holds the remaining 49%. The Italian partner provided the knowledge and most of the initial investment. Eco Tirana was established with the aim of providing separate municipal waste collection for the whole area of the Tirana municipality. It started to operate in December 2016 in downtown Tirana, serving all of the area that borders the ring road of the city. Its services are being gradually expanded to cover the whole city by mid-2018. The company is the first to systematically provide separate and at-source waste collection in an urban area in Albania. Eco Tirana introduced a two-bin system: a blue rubbish bin for the nonseparated waste and a green rubbish bin for papers, plastics and metals. Initially, it had 710 bins at 280 points all over the downtown area. Currently, the company presses and stores recyclables at its depot, but it is negotiating with recycling companies to sell them the recyclable waste. The company not only provides a new type of regular service for the capital’s inhabitants, but its car/truck-park is completely new and equipped with EURO 6 engine cars. It also introduced cargo bikes for waste collection, respecting the up-to-date environmental requirements for a modern public service. The company has already started glass collection in the most central neighbourhood within its first-phase operation area, called Cameria. Glass collection is a door-to-door service for commercial facilities, mostly restaurants and bars. Eco Tirana is also planning to launch separate battery, medicine and electric waste collection. The company ran advertising and awareness raising campaigns throughout the city in order to launch this new service. In terms of CSR, the company owns three certificates:

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x ISO 9001:2008—for the implementation of quality management systems on site; x OHSAS 18001:2007—work security and health management system; x ISO 14001:2015—the working environment management system. They also published a CSR report called “Ethic Code” in which they explain the company’s commitment to CSR in terms of environmental protection and proper and transparent relationships with all stakeholders, employers, suppliers, clients, and so on. The 2018 report is its first one because the company was founded in 2016. However, the new recycling system proposed by the company has not been as immediately successful as originally projected. The Municipality of Tirana and the Environmental Centre for Development Education and Networking (EDEN Centre) have partnered in an effort to increase recycling rates through the participation of the city’s residents, businesses, schools and institutions, through a door-todoor campaign. EVEREST IE sh.p.k. is an Albanian plastics product manufacturing company, founded in 1995. It is the leading company in the field of the production and printing of flexible plastic packaging made from polyethylene and also the biggest recycler of polyethylene waste in Albania (The Union of Albanian Producers, http://prodhuesit.org/?page_id=3260). The main products are: shopping bags for supermarkets and other similar activities; rubbish bags of various standards and colours; bags for beauty shops and other commercial activities; packaging for food products; packaging for raw industrial materials; labels for bottles of juice, water and other drinks; and recycled raw material in the form of granules of polyethylene. The company has invested in a plastic recycling line, with a capacity of about 300 tons/month. The recycling line became functional by mid-May 2006. On a financial level, the company is well supported by local banks. About 120 workers are directly employed by the company, and there are also about 1,300 independent collectors engaged in the network of recycling collection. The average age of the directly employed personnel is twenty-eight years old, with women representing about 48% of employees in all departments. The company is part of the Albanian recyclers’ association, created in March 2007, which counts sixteen members. However, in the company website, it was not possible to find any CSR or other report of the kind.

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5. Conclusions and discussions Academic literature on CSR and solid waste management has grown exponentially in recent years. As pointed out in previous reviews that examined the prevalence and the content of CSR articles in international management/business journals during (part of) the 1990s and 2000s, (Lockett, Moon, and Visser 2006; Egri and Ralston 2008; Kolk and Van Tulder 2010; Pisani et al. 2017), a very limited number of CSR articles concerning developing countries and regions were found. This chapter outlines the state of the art of social accounting and solid waste accounting in Albania and its development, in order to bridge the existing gap and orientate future research in this field. The study is the first of this kind in the Albanian context; it confirms the fact that very limited research in the CSR field has been undertaken in the country, and it contributes to a growing body of literature on CSR and solid waste accounting in the Albanian context. This study aims to develop knowledge and trigger SEAR, which is still underdeveloped. It also aims to provide a starting point for future research on solid waste accounting in the country. Research points out the weak relation between social accounting, environmental accounting and solid waste and the trends affecting solid waste accounting in Albania, both in theory and in practice. An SLR method was applied to a sample of fifteen papers published in international journals, with no time constraint, retrieved in Scopus, Web of Science and Google Scholars. This analysis led to the identification of distinctive words and recurrent concepts employed by various scientific domains and disciplines (ERC) involved in CSR and waste management research. The results helped to build a taxonomy of relevant waste management concepts based on the connections between words and word combinations in various scientific disciplines. Specifically, general, overarching, common and specific concepts were identified, leading to the creation of a tentative umbrella definition of CSR and waste management studies: Waste management studies are generally focused on the investigation of environmental impacts. Within this general context, both applied (engineering, chemistry) and social sciences place a particular emphasis on environmental protection and policies, whereas solid waste and management practices require an integrated approach involving social studies (HSC) and quantitative EES disciplines. A further concept analysis shows that the most commonly used research method is the empirical one, and that some topics (CSR and environmental accounting) are studied exclusively by only one

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scientific discipline while they could benefit from more interdisciplinary perspectives. Also, the results address the fact that more communication and coordination between practitioners, policy makers and academic researchers in general in the CSR field is needed. At the political policy level, Albania has a good regulatory framework in the field of waste management and accounting but faces difficulties in applying it, due to limited administrative capacity and institutional cooperation among many actors at national and local levels. All this is because cooperation between municipalities and the private sector with regard to attracting investments in this sector is poor. Also, as for the collection and the management of solid waste in urban areas, in 80% of cases the municipalities engage private companies, selected by public tender and normally operating under short-term contracts (three- to five-year duration) (UNECE 2018). Short-term contract periods present a big problem for the operation of such companies due to the fact that they cannot make plans over the long term and therefore do not invest enough in equipment. Delayed payments by local authorities for the delivered services also increase uncertainty for waste management companies. On the other hand, the Albanian residents are not educated about the separate collection systems of their waste, and the promotion and control system is not so efficient. As Lucy et al. (2017) affirm, the residents have the perception that despite the fact that they can separate the waste at source, during collection phase they are mixed together in the same truck. This perception decreased their enthusiasm for participating in the recycling programme. The study finds that there exists a recycling industry in the country, and the interest to invest in the field is growing, but the waste collection work in most cases is performed by residents for small profits in an uncontrolled form. From the CSR reporting point of view, in two studied companies that operate in the waste management and recycling field, only the multinational company publishes a social responsibility report (Eco Tirana), although it has been operating in the country for only three years. The other company, the Albanian holding company (EVEREST IE sh.p.k) that has been operating in the country for twenty-four years, has no CSR report published on its official site. The demand for CSR principles implementation from the stakeholders is at a low level. Although there are many civil society organisations that operate in the country, only few of them are actively engaged in promoting CSR. Consumers and communities themselves are often not empowered or informed enough to demand

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greater business responsibility. In short, businesses commonly operate in a context where they do not feel that someone cares whether they are socially accountable or not. As studies of this kind show, findings are limited to the breadth and depth of the data analysed and by personal interpretation of the results. While the SLR method employed offers more reliability than a traditional literature review, other researchers using the same method may interpret the same results differently. Other limits relate to the fact that the results of the review are partial, due to the small number of indexed articles found. For future research of this kind, the suggestion is to include other sources, such as publications in Albanian scientific journals, conference papers and book chapters. The study could be further developed from a comparative perspective, extending the structured review to other post-communist countries of Eastern Europe, in order to better focus on CSR developments and their trends in these locations. Innovative CSR research often requires more complex research partnerships for data collection with effective collaboration structures across disciplines and between academics, policy makers and practitioners. More cooperation in this regard is needed, in order to foster better promotion and awareness of CSR among Albanian institutes, scholars, civil society and companies, as well as better data on CSR reporting. On the scientific front, more engagement and collaboration between Albanian researchers and research centres, such as CSEAR, that deal with this issue at international level is suggested.

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McGrath, Dianne. 2011. “Accounting for the Environment: Towards a Theoretical Perspective for Environmental Accounting and Reporting.” Social and Environmental Accountability Journal, 31(2) 169-170 https://doi.org/10.1080/0969160X.2011.593830. McPhail, Ken and Ferguson, John. 2016. “The past, the present and the future of accounting for human rights.” Accounting, Auditing & Accountability Journal 29 (4): 526–541. https://doi.org/10.1108/AAAJ-03-2016-2441. Merko, Flora. 2017. “The Impact Of Good Urban Solid Waste Management In Albania’s Economic Development.” International Journal Of Ecosystems And Ecology Science-IJEES 7 (4): 683– 690. https://www.ijees.net/journal-43-International-Journal-ofEcosystems-and-Ecology-Science--(IJEES)--7 (4),-2017.html National Plan and National Strategy of Waste Management. 2011. Ministry of Economic Development, Republic of Albania Parise, Mario, Qiriazi, Petrit and Sala, Sokol. 2004. “Natural and anthropogenic hazards in karst areas of Albania.” Natural Hazards and Earth System Sciences. Part of Special Issue Natural and anthropogenic hazards in karst areas 4: 569–81. https://hal.archives-ouvertes.fr/hal-00299185/. Pisani, Niccolò, Kourula, Arno, Kolk, Ans and Meijer Renske. 2017. “How global is international CSR research? Insights and recommendations from a systematic review.” Journal of World Business, 52 (5).:591-614. https://doi.org/10.1016/j.jwb.2017.05.003 Proda, Anisa. 2017. “Corporate Social Responsibility as an Expression of Missing Social Capital in Albania.” European Journal of Research and Reflection in Management Sciences, 5 (2):34-42.https://www.idpublications.org/wpcontent/uploads/2017/ 04/Full-Paper-CORPORATE-SOCIALRESPONSIBILITY-AS-AN-EXPRESSION-OF-MISSINGSOCIAL.pdf. Pulti, Aurora and Dragusha, Blerta. 2014. “Social Responsibility Of Business In Albania.” European Scientific Journal 25:69–81. https://eujournal.org › esj › article. Seawright Jason and Gerring John. 2008. “Case Selection Techniques in Case Study Research: A Menu of Qualitative and Quantitative Options”. “Political Research Quarterly”, 61 (2):294308. https://doi.org/10.1177/1065912907313077.

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Shrivastava, Paul and Howard I. Scott. 1992. Corporate selfgreenewal: Strategic responses to environmentalism. Business Strategy and the Environment, 1(3):9-21. https://doi.org/10.1002/bse.3280010303. Shrivastava, Paul. 1995. “Ecocentric management for a risk society”. Academy of Management Review, 20 (1):18- 137. https://doi.org/10.5465/amr.1995.9503271996. Starik, Mark, and Rands, Gordon P. 1995. “Weaving an integrated web: Multilevel and multisystem perspectives of ecologically sustainable organizations”. Academy of Management Review, 20 (4):908-935. The Union of Albanian Producers, 2019. http://prodhuesit.org/?page_id=3260 UNECE. 2018. “3rd Environmental Performance Review of Albania. Geneva”. UNECE. September 2018. http://www.unece.org/index.php?id=49675&L=0. United Nations. 2014. “System of Environmental Accounting 2012— Central Framework.” New York: United Nations. Urban Solid Waste Statistics. 2017, Instat Albania. http://www.instat.gov.al/en/themes/environmentandenergy/environment/publication/2018/urban-solid-wastestatistics-2017/. Vozga, Indrit, Kaçani, Jorgaq and Kasemi, Vladimir. 2013. “State of the art of recycling in Albania.” Metalurgia International, 18 World Bank. 1999. “Energy Sector Management Assistance Programme (ESMAP) Annual Report 1998” (English). Washington, DC, World Bank. http://documents.worldbank.org/curated/en/917631468739338 896/Energy-Sector-Management-Assistance-ProgrammeESMAP-Annual-Report-1998. World Commission on Environment and Development, 1987, “Our common Future”, pg. 40. https://sustainabledevelopment.un.org/content/documents/59 87our-common-future.pdf Xhagolli, Luljeta, Pinguli, Entela and Gjergjndreaj, Elibjonda. 2011. “Development of waste management strategy in Albanian breweries.” Journal of Environmental Protection and Ecology 12 (4A): 2186–97. http://www.jepe-journal.info/vol-12-no4A. Young, Anna 2001. “Sustainability Accounting and Reporting: Fad or Trend?” Social and Environmental Accountability Journal, 31 (2): 168–69. https://doi.org/10.1080/0969160X.2011.593829.

CHAPTER 3 “GAMING”, ACCOUNTING AND ACCOUNTABILITY: EXPERIMENTING IN HIGHER EDUCATION

MARIA-GABRIELLA BALDARELLI

1. Introduction The current state of the art considers profound transformations, conflicts, and financial crises and crises of meaning. When analysing modern times, we ask ourselves which are the salient aspects that relate to the current situation and the near future and how accounting and accountability come into it and how they can play an active role in improving quality of life on a worldwide scale. Following this line of thought, we particularly want to discuss gambling, a rapidly growing sector, which in one way creates addiction and is increasing especially among young people (De Luigi, Gibertoni, Randon, and Scorcu 2018). In this chapter, we use a very specific perspective: how students, through analysis of the accountability of gambling-sector businesses, regard them and what they think about them. To develop these reflections, we will attempt to answer an initial research question: “Which reflections emerge to improve education for sustainability from the viewpoint of accountability, in the gambling sector?” To answer this research question, the research design envisages the use of literature which addresses certain doctrinal trends on the subjects of socioeconomic systems, accounting and accountability, as well as gambling itself. Analysis of the literature considers certain tendencies we encounter in the current state of the art in the economic and social environment and the plausible trends regarding the possible consequences of gambling and how these issues are considered by young people,

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especially in the context of education for sustainability, which is part of the passage from weak sustainability to strong sustainability (Baldarelli and Del Baldo 2017). We believe that young people, especially, feel the need to know the context wherein they find themselves and what is happening also from a company viewpoint, and especially the role that accounting and accountability plays as regards emancipation and development of social relationships (Baldarelli and Del Baldo 2017). Then the methodology and the empirical cases (named: experiment) that involve students are presented. This is useful to enable us to understand how to teach young people to read the economic system surrounding us all and to try to develop education for sustainability to the utmost (Del Baldo and Baldarelli 2017). Lastly, some final thoughts are proposed, pointing to the drawbacks of the work.

2. Knowledge fragmentation, crisis of meaning and accountability-education role In this section, we present certain aspects of the literature which particularly required us to answer questions concerning the role of accountability in the current state of the art in the economic system generally. By the same logic, we may also underline a wider area of thought on how things currently stand within the economic and productive context that we separate into some main aspects. The first aspect concerns the fragmentation of knowledge, which gives origin to the following phenomenon: The, by now, well-known and feared fragmentation of knowledge leads to always creating new and more effective concrete applications, though it often leads to losing the sense of totality, of the relationships that exist between things, of the complexity of life in society along the way. (Zanzucchi 2018, 98)

Another author says: Ours is a time of fragmentation not just because of the incurable conflicts “between” things, but because of the impossibility itself of the individual, of the “thing that is”, of the being as tradition has transmitted it to us: a radical gaping hole has opened up into which all plunges and, with it, every word that has the pretension to define it. There is no word because there is no being. “What does nihilism

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mean?” Nietzsche urges: “it means that supreme values depreciate. The goal is missing. The answer to: Why? is missing. … The fragmentation of the being, with the corresponding impossibility of the word, fully show themselves in the wars of the twentieth century. The non-being which has no words finds expression in the scream that, in its many forms, permeates the century ... the scream expresses the impossibility of stating the being.” (Baggio 2008, 322)

The difference between the various disciplines leads to a loss of “sense” even within every single discipline. Indeed, every scholar or “school” defends their own positions without succeeding in giving further development to the various situations that are present in the others. This places a limit on the progress of knowledge of the same discipline, precisely owing to a series of difficulties linked together that develop within it. Openness to others and the capacity of leaving one’s own knowledge, even for a short time, to enter into a “common space of founding principles” permits seeing one’s discipline from the outside and then being able to go back in with a new capacity for understanding the evolution and applying the methodology of research. The second aspect regards the gradual commodification of knowledge which, in this way, loses its true meaning and its true worth for society as whole. Research as well cannot and must not always be bridled by corporate interests. To support this idea, Parker and Guthrie write: Scholars need innovative but disciplined approaches to coping with such pressures in order to maintain pursuit of path-breaking and significant additions to knowledge … Personal values and commitment by individual scholars, as well as scholarly networks and support mechanisms,will be the long term key to future research of value to the community. (2005, 5)

It is on this basis that the teaching of accounting and accountability become ever more difficult if we do not head in the direction of a transdisciplinary research method (Rondinara 2008, 68) is from the careful analysis of the profound evolutionary lines which are at the basis of science. This idea, having the courage of taking off the “frills” that prohibit us from seeing its true meaning and its actual development. In this sense: Multi-disciplinarity is here meant as an investigation characterised by a “vertical” dependence which the method and the subject of any given branch of learning may assume when understood in the light of

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This “method” is referred to by various parties; among them are Roslender and Dillard, who say that it: seeks to identify the foundations of accountancy—its underpinnings, its axioms, who it speaks for and perhaps more significantly those whose voices it excludes … (it) is required to draw on the approaches and insights associated with a range of disciplines. (Roslender and Dillard 2003, 325)

This theme is also underlined by internationally renowned scholars among the factors that favour growth in the studies of certain disciplines and which make certain theoretical thoughts applicable: Multi-disciplinarity involves the integration of different skills in a “framework of action” in which interwoven empirical elements and theoretical consensus give rise to practical solutions and theory building which cannot be broken into disciplinary parts. (Adams and Larrinaga-González 2007, 335)

On the other hand, the division of the disciplines is emphasised, when instead the path which is unfolding is that of a common “vision” of the disciplines, though in their specificity. For other scholars, this trend does not seem to be present, highlighting the hardened and unmodifiable fact of the division between various disciplines, as on the issue we may read: The delimitation of knowledge, or rather, its segmentation into multiple spaces or areas of scientific interest, constitutes a founding theme, not only for the progress of the scientific disciplines involved, but also for the gradual progress of epistemological science … we, therefore, assist to different and conjoined phenomena which, on the one hand, lead to broadening the limits of a discipline, to their overlapping onto those of neighbouring areas as well as to searching for fruitful conditions of multi-disciplinarily, and, on the other, point out variable sectors of specialised knowledges. (Di Pietra 2007, 11)

Another aspect can be seen from the close relationship between politics and research. Especially in the area of measuring, this aspect has been overly neglected and it has caused significant problems.

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Finally, which we would like to underline, is the progressive degrading of entrepreneurs into speculators; this creates vicious circles that imprison freedom and democracy in favour of pure profit and economics, as can be read here: When the economy loses sight of real people, it therefore becomes ruthless. This tendency is all the more true if we lose the positive concept of power or “Potency”. In accordance with our point of view, the concept of power and Potency may be drawn from Guardini: “every acquisition of potency is simply progress, growth of security, utility, well-being, vital strength, fullness of worth.” (Guardini 1987, 80, cited in Zanzucchi 2018, 92)

This means that: Modern man was not trained for a correct use of potency: the enormous technological growth over past decades was not accompanied by a similar development of the human being in his entirety, even in the spiritual, that is with a parallel growth in responsibility, in human values and upright conscience. All of which is tantamount to saying that an adequate self-awareness of his own limitations has not developed. (Zanzucchi 2018, 93)

The fourth aspect regards the thoughts which originate in recognising the importance of accounting, even considering situations of material poverty (Gallhofer and Haslam 2004; Cooper 2005). Moreover, next to situations of material poverty, like the absence of commodities essential for the physical survival of people (Atkinson and Hills 1998), aspects of a “new” poverty come irrepressibly to the fore. These poverties derive from excessive material well-being but also from an ever-greater lack of attention towards taking time to think about and to reflect upon the sense of existence, on aspects of our life that belong to being more than to doing, and on: saving society from that massive and formidable blockage, towards the enslavement of the spirit, in sight of an objective of automation of brains and mummification of souls. (Giordani 2019, 145)

These consequences develop especially in those countries whose wealth is greater than the rest of the world’s. One of these poverties falls upon the area of gambling and is represented by the compulsive player (Reith 2007), about whom we will speak in a following section.

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The fifth aspect allows us to develop our thoughts on methods of teaching accounting and accountability (Baldarelli 2012; Del Baldo and Baldarelli 2017), where the importance of teaching social accounting and accountability as a discipline which contributes to creating a better world is highlighted. In particular, the topic centres on the relationship between education and sustainability: To shift from the education about sustainability (with a focus on knowledge) to the education for sustainability (with a focus on enhancing students’ knowledge, skills, values and dispositions necessary to achieve it) and affective learning, of values and attitudes, is highly problematic for higher education, yet is at the heart of “education for sustainability” (Del Baldo and Baldarelli 2017, 412). Educating for sustainability requires a very important teaching and student engagement in sustainability matters that is relative to a relationship between teaching and personal life behaviour (Baldarelli and Del Baldo 2017, 413).

The experiment has its origins in the objective of making students reason about aspects of the progression from weak sustainability to strong sustainability (Bebbington and Contrafatto 2006; Bebbington 2007; Baldarelli and Del Baldo 2017; Matacena 2010)—in particular, within the category of “controversial industries” (Leung and Snell 2017). The subdivision between weak sustainability and strong sustainability is important to adequately develop the tools of accountability through which the company looks for legitimisation (Bebbington 2007). According to our viewpoint, it is not enough to point out adequate tools of accountability; these tools need to have a basis of values and enable the setting of adequate methods of governance, which include good practices for the integral development of the business (Sorci 2007; Ruisi 2009). A company’s passage from weak sustainability, which is prevalently based upon reduction of the impact of the company on the ecological and social environment, does not translate into becoming aware of its active and strategic role to activate, in order to be able to not just reduce unsustainability but also to improve the environment wherein it operates. The latter tendency is found, mainly, in the dimension of ecojustice which echoes the definition of sustainable development of the WTO (World Tourism Organization) and which encompasses the fields of making the environment better than what it was for future

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generations. Moreover, it considers the relationship between the generations as being foundational for a truly sustainable development which is defined as being “strong”. Not least in importance, sustainable development—and, therefore, strong sustainability—is obtained when categories of disabled people are actively involved in the process of development, too (Nussbaum 2007). The aspects analysed are particularly important if we go on to speak of the controversial industries, are defined in this way because the subjects who come into contact with them do not have univocal reactions and thoughts but contradictory ones, in that it is a matter of companies which carry on production activities, like pornography and gambling. Additionally, within these industries there are companies that generate differing sensations and reactions in those who approach and study them, among which are aversion to and disagreement with their existence (Leung and Snell 2017, Leung and Gray 2016). Among the companies in this conceptual category (Leung and Snell 2017; Leung and Gray 2016) is gambling, and that makes us reflect particularly upon the topics which we will present here. Before we do, however, we ask ourselves: “What are the numbers on gambling and how, exactly, is it approached within a multidisciplinary logic?” The answer comes in the following section.

3. The numbers on gambling and higher education The market for gambling throughout the world is in progressive growth, as can be seen in the graphs which follow (Tables 1, 2 and 3). Additionally, predictions of its development are very optimistic, as we may read: “The global gambling market is expected to reach revenues of over $525 billion by 2023, growing at a CAGR of approximately 4% during 2017-2023.” (https://www.researchand markets.com/reports/4616550/gambling-market-global-outlookand-forecast). Again: “Gaming has expanded massively in the past decade. The online business is now worth USD 50bn “globally and expected” to increase to over USD 60bn by 2020, and drives 11% of total internet traffic. Statistics from Casino.org illustrate the rapid growth of the industry from 2011–2017” (The gaming market in 2019; https://www.reportlinker.com/market-report/Gambling/526 288/Gaming?utm_source=adwords4&utm_medium=cpc&utm_ca mpaign=High_Tech_And_Media&utm_adgroup=Gaming_Market

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_Reports&gclid=EAIaIQobChMIwZvO1py_5gIVVOd3Ch2bkwGLE AAYASAAEgLoIPD_BwE). Table 1: Online gambling (billions of $)

Table 2: Gambling overall (billions of $)

Source: https://www.casino.org/gambling-statistics/

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Table 3: Commercial casino gaming profits in the US

Source: https://www.casino.org/gambling-statistics/

With respect to this data, that show the growth of activities relating to gambling, themes relating to win probability are being discussed at the same time, as can be read: Mathematics is helping us unmask the pitfalls of gambling. Let’s learn how to decode the messages: a prize of € 5 for a ticket that costs € 5 is not a win; it is not true that it is easier to win than to play … In all gambling, the only one who wins is whoever organises it. Playing regularly, is no longer gambling, but it is certainty of losing! (Parolini 2016 and Andrà et al 2016)

According to another scholar (Reith 2007), it is a matter of a truly pathological dependence and it requires complex intervention over a long time, which is not a priori easily quantifiable. Indeed, the issue exists even when gambling does not become “a mainstream leisure activity” (Reith 2007, 39), yet the idea that gambling is “a mainstream leisure activity” (Reith 2007, 39) inexorably spreads since gambling becomes a consumer good. According to Bauman (1998) and Reith (2007, 39), modern society moved from an ethics of production to an ethics of consumption (defined as: consumerism). This ethics of consumption has led to directing attention ever more to hedonism, self-affirmation and instant happiness and, at the same time, pivots and relies on selfcontrol for all consumeristic action. Therefore, self-control is what guides the capitalist system, as other authors also state, among whom are.

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In this scenario, gambling may be a problem, since the ofteulogised tendency towards self-control demonstrates itself to be in vain and gives way to: dependence, irrationality, lack of self-control, and an irresponsible attitude to money, family and work relations. (Reith 2007, 41)

Reith (2007, 42) later considers all problematic issues relating to the gambler. She analyses the various types of problems, including those from the psychological viewpoint of the game itself, which increases adrenaline, lets you forget other problems and gives immediate “potential” satisfaction: Problem gambling is here conceived as a problem of will: a lack of control, driven by impulse and sensation. (Reith 2007, 43)

It creates an irrational subject who plays just for the sake of playing and not even for the money or to win. The scholar (Reith 2007) goes further regarding dependence, which represents a social problem that is hardly identified to its fullest extent since it is based on self-exposure and on the desire to be helped. But how many gamblers are compulsive and never think of being helped? Furthermore, even if they got help, psychologically a compulsive gambler learns how to dominate their desire to play though they never really get away from it completely. The issue is not so much in the game itself as in the individual’s psychological problems which have unleashed this endless procession of gambling acts from which they cannot (and do not want to) escape: In place of the autonomous, sovereign consumer, engaged in the project of construction identity and shaping his or her own trajectory through responsible consumption, we have an individual who is instead dependent … compelled to repeat the same form of consumption over and over again in an irrational cycle that leads to self-destruction. (Reith 2007, 45)

Alongside this evident “pathology” (Reith 2007) to which gambling may lead, according to us, there is another—and in the longer term, worse—tendency towards this new poverty and that is to accept the logic that the individual game, gambling included, is harmless, makes us happier and is all part of our normal lifestyle. That is, the idea that the individual game helps in life and is to be accepted.

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So, online games spread, gambling both offline and online, as well as other forms of the same, where adrenaline increases, with the idea that this makes us happier. This is not the adequate context in order to reflect in depth upon the theme of the importance of the game, and which game, so we will put this off. However, we intend here to underline this type of trend which, in our opinion, should not pass by silently and should animate a debate that seems rather dull, placing it within the context of education of sustainability, as we see in the following section.

4. Experiment on educating for sustainability and gambling The experiment we describe in this section can be placed in that part of the role of the teacher which falls within upbringing and not just education. This has to do with not only the administration of scientific notions but also with making what is already there within the students come to the surface (Baldarelli 2012). The objectives were to understand relationships among accountability and greenwashing and to understand whether cases could be positioned in weak sustainability or in strong sustainability accountability behaviour (Baldarelli and Del Baldo 2017). The concepts of weak and strong sustainability, using accounting and accountability points of view (Baldarelli and Del Baldo 2017), were explained during classes because they are part of the programme. The experiment took place during the last lectures of the day, using six hours in total that had been split into three hours each across two days. During the first three hours, the teacher (I) presented the matter of gambling, the content of the activities to be performed and methodology to be used. Then, students worked at home to analyse the cases following the guidelines that are described below. Finally, during the second day of three-hour lectures each group presented the results of the teaching cases brief analysis (Naumes and Naumes 2006). During the first three hours we identified the way of proposing to the students how to analyse company cases, which belong to the sector of gambling at a worldwide level, using the mission, governance and accountability model (Matacena 2010). The model named before (Matacena 2010) had been the content of one of the first lectures of the course.

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The objective is to understand how the students would place such cases within the two options: weak sustainability or strong sustainability, and then understand their reasons behind the choice. The students were divided into groups, which could be of a maximum of five people each. The groups had to include students from various nations. This was to allow personal growth through exposure to various cultures and diversities of approach to the problems tackled (Tables 4 and 5). Information about cases was taken from websites and from financial, social and environmental reports available online. Seventeen cases were presented as short papers that were on average six pages each and with seven- to ten-minute presentations. PowerPoint was not required, but some groups used it. The role of the teacher was to hear and to ask some questions if the presentation was not so clear. The discussion happened during class (Table 6) and involved the participation of 100 students. Cases were presented during two workshops, internal to the course, called: “Workshop on gambling”. The first one was held in December 2018 during the Managerial Accounting and Reporting in Sustainable Tourism course in the first year of the master’s degree course in Economics, Tourism and Management. The second workshop was held in March 2019, as part of the course on Environmental Auditing and Corporate Social Responsibility of the master’s degree course in Resources, Economics and Sustainable Development. Here below, we present the guidelines for the analysis of the cases. Table 4: Guidelines for students to analyse the teaching case Please read the uploaded papers and articles on the website inside of the folder named: “Workshop on gambling” Please work in international groups (not more than five people each, and outside lecture time) Please analyse one company case per group regarding “gambling” using the suggested guidelines Please write one 5-page report per group regarding the case analysed Please describe the case analysed (5 minutes per group)

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Table 5: Guidelines for case analysis 1) The mission, governance and accountability model (MGA): 1 a) Mission, governance and accountability model of the enterprise 1 b) Please answer the questions below 2 a) Connection of economic, financial and sustainable information 2 b) How are the GRI/IR guidelines and framework in the enterprise implemented? 2 c) Is it really a sustainable report or not? Why? 2 d) What are the core indicators regarding stakeholders (economic, social, environmental dimensions)? e) What information/indicators exist regarding environmental/economic areas? f) What information/indicators exist regarding social/economic areas? 3) Is the enterprise implementing weak or strong sustainability?

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Table 6: Teaching cases analysed Company 888 Holdings PLC Casinos Austria and Austrian Lotteries Crown Resorts Ltd Delta Corp. Ltd Gamenet Group Ltd GVC Holdings PLC Holland Casino LTD Hoosier Lottery LTD IGT (International Game Technology) Ltd Marina Bay Sands Casino in Singapore (subsidiary of Las Vegas Sands Corp.) Mr. Green and Co. Novomatic group Ltd Paddy Power group Ltd Scientific Game Corporation Ltd Veikkaus National Betting Agency (state owned) White Sands China William Hill PLC

Prevalent sector(s) of activity Casino, gambling

Country (origin) US

Casino, lotteries

Austria

Casino

Australia

Gambling AWP, VLT, 2 betting and online gaming, retail and street operations Sports betting and gaming online Casino

India

Lottery games Lotteries, betting, VLT, online gambling

US

Casino and resort

Singapore

Italy Isle of Man The Netherlands

UK and Italy

Casino and gambling online Sweden Producer of and operator of Austria gaming technologies Betting

Ireland

Gambling products, lottery

US

Betting

Finland

Casino and resort

Macao

Online sports betting

UK

There were eighteen groups, and one case was analysed by two different groups who, among other things, gave contradictory evaluations.

2

AWP (amusement with price); VLT (video lottery terminal).

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Of the eighteen groups, eight considered the analysed companies closer to the aspects of strong sustainability. Below are some statements on the matter. Group 1: “By analysing 888 Holdings, we found that the company, due to its online presence, has a very small impact on the environment from a social prospective. It is using new methods to develop its employees’ careers right from the beginning…. By implementing values in everyday operations and gathering donations, the company is doing its best to ensure sustainability. …the most impressive and effective method for sustainability is the Code of Corporate Governance, which contains all principles and is based on the UN Global Compact.” “The company seems to adopt greenwashing… The enterprise is implementing strong sustainability.” “We can identify strong sustainability … However, we should note that Holland Casino is a monopolistic company and it is strongly dependent on political decisions.” “In our opinion, Hoosier Lottery puts effort into being a strongly sustainable company.” “The authors would suggest that other gambling companies consider Mr. Green and Co. as a benchmark for their future development.” “It can be said that the company moves through sustainability with a strong approach.” “The company is implementing strong sustainability.” “The company is on the way to being called a full and strong sustainable business.”

Nine groups stated that the cases are nearer to the weak sustainability area. Below are their comments. Group 2: “The transition from weak to strong sustainability in the case of gambling companies like 888 seems to be impossible when we look at the negative impact on society that such activities create in the long run.” “Therefore, it is evident that despite its effort, Veikkaus’ operations have had a negative impact on society, and there is still a long way to go before we can talk about ‘social sustainability’.”

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Chapter 3 “We have investigated whether Paddy Power acts to modify the stakeholder’s attention and its sustainability.” “As a matter of fact, Novomatic is implementing weak sustainability.” “It looks like we are going toward strong sustainability. But we know that it is difficult to find a ‘strong sustainability’ company in this sector due to the many problems that gambling can cause in society.” “Gambling addiction fails to be regarded as an important health issue in India, and few people consider it a medical problem.” “Gamenet is a clear example of a company that tries to tackle the issue of missing legitimacy through manipulation of society’s expectation, refusing to take responsibility for the generated costs and highlighting its (limited) environmental and social achievements.” “We consider SGC to be an unsustainable corporation.”

One group has expressed contradictory views, so it is placed at an intermediate level as may be deduced by the following summary: “It also needs some improvements in the areas of accountability and social development in order to complete the transition from weak to strong sustainability.”

Among the main results which came to the fore, we can underline the reduced ecological impact, in that many companies operate online and, by their very nature, do not have strong ecological impacts. From a social perspective, this sector is considered important for the creation of “high-risk” jobs and for future problems of “dependence” for the very same workers, as we have stated previously. In terms of respect for the law, it has emerged that the businesses apply the laws of the various countries wherein they operate, even if, among those cases analysed, we have met situations where there have been charges brought against them for illegal management methods.

5. Conclusions As could have been expected from this category of companies, the motivations behind placing a company in one area or the other have not been unambiguous; rather, there are groups of students who placed the cases analysed here in both the areas of weak sustainability

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and strong sustainability. This is all part of the characteristics of those companies belonging to the “controversial industries” category (Leung and Gray 2016). It is interesting to comment on the considerations they presented at the end of their respective presentations. Among the advantages of these two workshops, we can see, first and foremost, the capability of facing a relatively new topic, even if it was previously presented by the teacher. The second advantage consists in the possibility of working in a group, which had to have the characteristic of being international, in that both courses include students who come from all over the world. Thirdly, we wished to make it clear that the phenomenon of gambling is greatly increasing all over the world. This allowed us to think about what the implications within the context of sustainable development are and gave students the possibility of gaining awareness of what developments are happening throughout the world and how businesses may behave. The drawbacks of such an experiment regard having limited the analysis only to the financial, environmental and sustainability reports which are found on the company websites. This sets boundaries in the analysis, since it does not include elements of direct observation within the company itself. And, anyway, it is important for answering the pre-set objective for the workshops. Another limitation to this research is, surely, its prevailing monodisciplinarity, since the topic treated also considers aspects, as partially outlined above, which recall elements of multi-disciplinarity, as is highlighted and wished for from many sides. Indeed, Bebbington et al. (2017) highlight how accounting lingered over recording the practices in the service of power. Accountability has not been used to fully express transformative and emancipatory potential, in that it itself was interpreted in a restrictive way in order to respond to competitive behaviours. Accountability has greater openness if compared to accounting (Bebbington et al. 2017, 9). At the same time, an issue of excessive focusing on one discipline is noted. A further perspective is that accountancy is at the service of other disciplines of the economic and social system, and therefore the potential that is there within it must be exploited to emancipate these other disciplines, as we may read: “Accounting scholarship has much to offer other disciplines such as the critical examination of calculative practices that are being designed and utilised in regimes of environmental governance… In doing so, I hope to contribute to the ethos that sits at the heart of much critical and SEA scholarship

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and to retain the emancipatory intention that Burawoy (2007) observes can be dampened as academics progress though their career (Gendron 2008 and 2013)” (Bebbington et al. 2017, 5). The proposal discussed in this paper concludes by affirming that social and environmental accounting (SEA) is a complex and transdisciplinary topic which involves many more players than can be imagined and where accountancy plays a fundamental role for the understanding and development of SEA. It is, moreover, very important to consider the interdependencies between the various players and the role of accountancy in the management of these interdependencies. There should be a logic of interaction between those, including scholars, who have the right to citizenship within a unitary and interrelated process, as we may read: “The potential for authentic social and environmental accountability through organised crowd-sourced participation accessible to all citizens with a stake in a sustainable future is under explored” (Bebbington et al. 2017, 12). Lastly, the recent trend where the centre of the world of gambling is reconverting itself into music venues attracting famous singers from all over the world and attempting to put forward a new “face”, different from its past one, is interesting. Is the world of gambling beginning to creak, or is this just another strategy to attract new gamblers? The answer will be provided in forthcoming works. .

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CHAPTER 4 THE DEVELOPMENT OF ASSURANCE SERVICES FOR SUSTAINABILITY REPORTING: A CHALLENGE AND AN OPPORTUNITY FOR ACCOUNTING PROFESSIONALS

LINDITA GJIKA INGRID SHULI

1. Introduction Since the beginning of the 21st century, most of the developing countries are facing problems such as environmental degradation, corruption and unequal distribution of resources, which lead to poverty in most parts of the globe. These problems are translated into challenges such as strengthening the capacity of people to design and deliver sustainable development policies to foster governments’ accountability towards their citizens and to build systems that impact economic growth. The goal of sustainable development is that entities are responsible for their social, environmental and economic impact. Sustainable development presumes that the organisations should not only worry about their profits but they should also act responsibly regarding their social, environmental and economic impact. In order to meet the sustainable development requirements of the managers, the trade partners, the investors, the consumers, the regulators and the civil society, the organisations are committing themselves to publishing sustainability reports. The reporting on sustainable development is a way of displaying information regarding the environmental, the social and the economic performance of an organisation (Rao, Mock and Srivastava 2009, 2). Such reporting allows the organisation to demonstrate how non-financial factors

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influence financial data and how these affect the orientation of a company’s value (Mock, Strohm and Swartz 2007, 69). The organisations report on their overall performance for a variety of reasons. These may include moral and ethical reasons such as the advantage over competitors, the pressure from the industry in which they operate, the need to create an image and strengthen a public relationship, and the social pressures from investors for financial gains. Other authors conclude that the assurance services for sustainability reports improve the perceived credibility of environmental and social information (Hodge, Subramaniam and Stewart 2009, 180). Many big organisations in the world choose to benefit from assurance services on their sustainability reports so that their reports are reliable for their stakeholders. Some researchers point out that these organisations seek to promote the credibility of their reports (Simnett, Vanstraelen and Chua 2009, 939). Other ones (Ballou et al. 2006, 67) argue that the assurance services are needed for sustainability reports as these reports themselves have a high risk of fraud. Furthermore, reporting on sustainability, and assurance on the reporting, provide a more transparent view of the company’s business, which allows the stakeholders to make better-informed decisions (Coram, Monroe and Woodliff 2009, 140). Initially, sustainability reporting became a compulsory requirement for listed companies on the French Stock Exchange, then this concept was accepted and promoted by the Australian Stock Exchange and the one in São Paulo (KPMG International 2009). The Japanese companies began using environmental reporting under Japanese government guidelines in 2001. The Global Reporting Initiative (GRI) promotes the use of sustainability reporting as a way for organisations to become more sustainable and contribute to a sustainable global economy. In 2002, 150 reports were published according to GRI Guidelines, 3 and this number has increased every year, to finally reaching 35,000 on 2019. In 2004, the International Register of Certified Auditors started a new training programme for auditors in the field of social reporting. In the same year, this organisation, in cooperation with the accountability organisation, published the first certification scheme in the field of assurance services for sustainability. The G4 guidelines are designed to be universally applicable to all organisations of all types and sectors, large and small, across the world. They have been superseded by the GRI Standards, released on 19 October 2016. 3

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A KPMG Report (KPMG International 2009) states that the growth of indexes that measure the stable performance of companies—in particular, the DJSI index—in the United States or European countries may have been a contributing factor to the growth of activities related to sustainable reporting. This index is used by nonprofit organisations and government agencies to show that integrating economic, environmental and social factors into the activities and the management of a company increases the value for shareholders. Other researchers argue that the organisations that aim to increase the credibility of their reports and try to create a good reputation are the ones that most require the assurance reports (Simnett, Vanstraelen, and Chua 2009, 960). There is a link between the publication of assurance reports and the reduction of capital costs, which means that companies with a more sustainable performance enjoy a reduction in capital costs and attract dedicated investors (Dhaliwal et al. 2011, 70). According to Wong and Millington, assurance can strengthen stakeholders’ assessments of the usefulness of the CSR report (2014, 869). The increasing number of companies that promote sustainable reporting has been accompanied by an increasing interest in the reliability of these reports. This is an expected and welcome trend among accounting and auditing professionals who can become the main providers of this service. Data on environmental and social performance, in addition to financial data, are a powerful tool for assessing the current and expected “health” of a society. Independent assurance services can provide readers with more confidence in the quality of the data, thus increasing the probability that these data will be used for decision-making. The assurance services for sustainability reporting are similar to the auditing services on the financial statements but there are also some important differences between them. For example, it is clear what is reported in the financial statements and under which rules and standards (well-defined) this reporting has been made. Sustainability reporting often involves a mixture of quantitative and qualitative information. The reporting is not always done in monetary units and the data collection systems may not be as developed as those for collecting and reporting financial information. Recently, some international standards for assurance services on sustainability reporting have been developed, but these standards are not mandatory, they use different methods and they are not used in all regions of the world. However, the publication of these standards, followed by many reports and studies related to these

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services, shows that the accounting profession has identified a real opportunity in this emerging market. As the assurance service market is rapidly developing, it is not well-defined what qualities a provider of assurance services should have. One of the objectives of this research work is to present the key qualities that may affect the value of assurance services. After a careful analysis of these qualities, we will try to identify potential providers of assurance services for sustainability reporting that possess these qualities. Our final research objective will be to give some evidence of the role and the actual and future position of the accounting professionals as providers of the assurance services for sustainability reporting.

2. Potential providers of assurance services for sustainability reporting Assurance service providers reflect the diversity of subjects for which assurance is provided, the ways in which they deal with assurance services and also the different requirements of the information users. Since 1998, Robert Elliot foresaw that although assurance services were developed by audit services, accountants and auditors, they would have to compete with other providers such as IT firms and lawyers. In this section, we will further discuss the qualities and characteristics of assurance service providers for sustainability that affect the value of these services. According to report N0.86 of SSSC (Zadek et al. 2004), assurance services are provided by several providers: External: • Accountants and accounting professionals (mainly “The Big Four”) • Quality assurance companies • Social responsibility specialists • Civil society organisations (NGOs) • Opinion panels/advisory panels Internal: • Internal field experts • Risk assessments/internal audits • At board level

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For the purpose of this study, we will focus on external assurance service providers. According to a GRI research series (GRI 2013), the external assurance service providers are different. The users of the assurance services claim that they are independent but have other qualities, such as expertise and knowledge of the process. This study categorises the providers into three groups: • Accounting and auditing companies. The main advantages of these companies are that they are connected to global networks, are focused on business, have expertise in financial and non-financial reporting, and have systems, control procedures and audits (including data on climate change). • Engineering companies. These companies usually provide technical certificates as well as engineering expertise; they understand complex processes and use multidisciplinary approaches. • Sustainable reporting firms. These firms focus on and specialise in sustainable development and reporting issues; they are smaller and are usually local firms. They have the advantage of their experience with the stakeholders. According to this report, 64% of the assurance reports on sustainability reporting are provided by accounting firms. This conclusion is supported by Sunita Rao who surveyed sustainability assurance reports from 2013 and provides advice for professionals and users (Rao 2017). According to her research, Deloitte provided assurance for 13 companies, Ernst and Young 16, KPMG 13, PricewaterhouseCoopers 23, and Thomas Davis and Co. 1; altogether they provided assurance on 66 reports in twenty-seven countries. In such a way, one or more of the Big Four audit firms provided assurance on sustainability reports in each of these countries. They used international assurance frameworks (ISAE 3000 and/or AA1000AS) in 53 of 65 reports (82%) and used other frameworks in the remaining 12 (18%). Another study shows that out of 1,241 listed companies from thirty-one countries reporting general non-financial information, 31% of them chose to have an assurance service for these reports, and 42% of these assurance services were provided by audit professionals (Simnett, Vanstraelen, and Chua 2009, 942). In another study regarding the assurance service providers, seven categories of providers were identified:

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Accounting, auditing and/or tax professionals. Notaries or lawyers: legal experts. Engineering consultants: engineers or designers. Management consultants: business consultants. Technology consultants: information technology and information systems experts. • Independent NGOs. • Employees of the company (Knechel et al. 2006, 149). In order to provide a service that enhances the reliability of the information, the freelance professional should offer confidence not only as a provider but also through the process of providing this service. Regarding the provision of assurance services and related services in European countries, the results of a survey of the Federation of European Accountants (Federation of European Accountants 2009) shows that: • Most of these services are provided by auditors under the Audit Directive. • However, in five locations some or all services can be provided by any provider. • In three places, the difference between “auditors” and “accountants as practitioners” is established. The latter may also provide related services or assurance services in addition to auditing the financial statements. • In very few other countries, these services can be provided by “qualified persons”, “independent experts”, “censors”, “trade unions”, a tax consultant or a “layman”, while auditors are not prohibited from offering these services. Regarding public and professional oversight of providers of assurance services and related services in European countries, there are three main approaches: • In almost half of the countries, providers of these services are supervised, mostly by a public authority but in some other (fewer) countries by professional accounting authorities; • In the other half of the countries, assurance service providers (beyond the auditing of financial statements) are not supervised by public or professional authorities; • In a very limited number of countries, a special supervisory regime has been established for providers of these services, especially when the provider is not an auditor. • • • • •

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Furthermore, the accountants and auditors can provide assurance services to strengthen the public sector as a continuous monitoring and evaluation tool of foreign or domestic donor funds. According to KPMG International (KPMG International 2009), many donors require prior assurance before granting funds to developing countries. Large accounting firms are engaged in evaluating and analysing the financial and control systems of public entities applying for funds but also in ensuring a transparent and effective use of these funds. Today, specialists of accounting and auditing companies around the world offer services far from traditional services, such as assurance services related to the appropriate distribution of funds and goods from various organisations in different countries. All these reports state that the accountants and the auditors have exclusivity regarding providing related services and review services, but competition is wider in the market with regard to assurance services on sustainability reporting. The assurance service providers need to focus on their strengths while facing their weaknesses so that they may become competitive in the market. One of the objectives of this research is to analyse the most important qualities they need to possess in order to provide assurance on sustainability reporting.

3. The required skills and qualities of the providers of the assurance services for sustainability reporting Some authors claim that the necessary skills of assurance service providers should be grouped as follows: • Credibility • Ability to provide assurance services in general—for example, in data control—in terms of the assurance role and system analysis • Process skills—for example, in communication with stakeholders, determination of materiality and assessment of the ability of the organisation to react • Skills and knowledge related to social, scientific, economic and industrial issues (Zadek, Raynard and Forstater, 2004) Due to the broad focus of sustainable reporting issues, the required skills vary by case and type of assurance offered. These skills include:

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• Technical skills • Process skills • Content skills Technical skills refer to the ability to provide assurance in general—for example, for data collection and control—to understand the roles and responsibilities of providing assurance. Some assurance service providers would deal with their risk by focusing on material aspects while others would control all the data. Thus, it can be said that accounting and auditing professionals, but especially the four major audit firms, have strong technical skills. Process capabilities are specific to the assurance of sustainability reports in terms of identifying and communicating with all interested information users about a company and the ability to determine materiality. These skills are characteristic of market researchers and assurance consultants for sustainability or conflict resolution. Content skills relate to the capabilities of assurance service providers to understand that the social, economic and businessrelated issues of a company are of particular importance. Complex issues related to the social and environmental performance of an organisation are far more problematic in terms of risk than financial issues because there are far fewer criteria for these types of issues. Many of these issues are dealt with in the judgment of the assurance provider (i.e., not based on well-defined criteria), so the risk associated with the report is much higher. Referring to the International Standard on Assurance Engagements (ISAE) 3000, this means that there will be a distinction between a “reasonable assurance” and a “limited assurance”. Other scholars make a classification of qualities that can affect the value of assurance services as follows: • Confidentiality: This quality refers to the extent to which a service provider maintains confidentiality while performing and reporting on its services. • Expertise: This quality refers to the extent to which a service provider is perceived as an expert in the context and fulfilment of the service. • Professional reputation: A general assurance professional reputation of an assurance service provider may have an impact on service demand. • Independence: Independence is the lack of interest in the issue of engagement—an interest that otherwise could undermine the judgment of the service provider.

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Objectivity: It is expected that the value of the assurance services depends on the objectivity of the assurance service provider. Integrity: Personal and professional integrity as well as honesty may be present at different levels among various assurance service providers and may affect the demand for these services (Knechel et al. 2006, 150).

Table 1 below provides a summary of the key findings from the literature review regarding the main skills and qualities that the potential providers of the assurance services should possess in order to be successful in this evolving market. It also provides a theoretical analysis of whether these skills should be considered as strengths or weaknesses for the professional accountants in the assurance market.

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Credibility

•

•

Expertise Professional reputation Skills and knowledge related to social, scientific, economic and industrial issues Ability to provide assurance services in general—for example, in data control—in terms of the assurance role and system analysis

• • •

The skills and qualities required to provide assurance on sustainability reporting

The auditors of the financial statements are continuously certified by professional bodies such as the IFAC, through testing, internships, quality control, etc. This means credibility for the users of the sustainability reports. For sustainability assurance providers that are not accountants, there is no such parallel structure of professional development.

Accountants and auditors have already established a structure and published standards on quality control, auditing, review, and other assurance and related services, on the basis of which they can be expected to perform their engagements. They also have experience in auditing financial statements, which gives them an advantage compared to other providers.

The accountants and auditors as providers of assurance services for sustainability reporting

Table 1: Key findings from the literature review on the qualities of the providers of the assurance services on sustainability reporting

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The accounting and auditing professionals, but especially the four major audit firms, have strong technical skills as they are used to providing assurance and estimating risk by focusing on material aspects. Compared to the financial information, there are no well-defined rules to measure the non-financial information. This affects auditors in the sense that they might not have a suitable, consistent criteria by which to evaluate the subject matter. If the information is too subjective, the auditors should rethink their engagement because their personal judgment or experience may not be considered as suitable criteria. These skills are characteristic of market researchers and assurance consultants for sustainability or conflict resolution. The lack of stakeholder involvement in the sustainability assurance process appears to be a major limitation in the practices of several providers (Gillet-Monjarret and Rivière-Giordano 2017). The authors of Report No. 86 of the ICSM conclude that accounting and auditing professionals, quality assurance providers and social responsibility consultants use a similar approach to the auditing of financial statements, and they only focus on the accurate descriptions of data assurance and information-generating systems, while civil society and opinion leaders tend to make normative judgments (Zadek et al. 2004).

Technical skills, referring to the ability to provide assurance in general and to understand the roles and responsibilities of providing assurance

Process skills—for example, in communication with stakeholders and assessment of the ability of the organisation to react

Content skills related to the capabilities of assurance service providers to understand that the social, economic, and businessrelated issues of a company are of particular importance

•

•

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There is a lack of unified standards and instructions (especially at the technical level) regarding the assurance for non-financial information and this is particularly evident in the area of corporate responsibility (Jose 2017, 257). The assurance providers could either use the ISAE 3000 Revised standard (which replaced the first standard on assurance engagements, ISAE 100 and is published by the International Auditing and Assurance Standards Board—IAASB), the Accountability AA1000 Assurance standard, the GRI standards or other guidelines created by the European Federation of Accountants. The requirement to comply with the International Education Standards (IES) may be considered as an advantage of professional accountants as potential providers of the assurance on sustainability reporting. The IES 7 Continuing Professional Development (Revised) makes it clear that all professional accountants must develop and maintain professional competence to perform their role. “The Code of Ethics for professional accountants” establishes ethical requirements for accountants and these skills are considered to be its fundamental principles. Assuring independence in practice requires major efforts and awareness. Auditors have to continue to work on the way their independence is perceived by stakeholders.

Knowledge of assurance, client operations and sustainability

Lifelong learning skills

Confidentiality Objectivity Integrity

Independence

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4. Conclusions The assurance providers and auditors should be aware that today 63% of the world’s 250 largest companies by revenue get their sustainability reports assured, and 70% of those choose a major accounting firm to provide the assurance (KPMG Survey 2019). According to Sunita Rao (2017), audit firms and others (e.g., KPMG, Burns and McDonnell) employ sustainability professionals to provide a better understanding of the social, environmental and governance issues that might be encountered during the assurance process. In the coming years, assurance providers with expertise in both sustainability and assurance will find themselves in greater demand than those with expertise in only one of those areas. Therefore, the assurance providers should familiarise themselves with the international assurance frameworks (ISAE 3000 and AA1000AS). The auditors should be familiar with audit technologies (e.g., automated control testing procedures, continuous monitoring, data analysis) available in their countries in order to operate effectively and maintain data integrity. Many researchers agree that no single individual or single firm can have all the skills needed to provide an assurance process for all stakeholders. Most of the time, the solution has been the combination of the expertise of multiple assurance service providers: • by creating a working group • by combining professional assurance services with civil society commentaries, or • by using a panel of experts. At the end of this research, we believe that the accounting and auditing professionals should encourage the companies to use and support sustainability reporting by ensuring the accuracy and value of these reports. They should become more visionary and raise awareness and support for their activities via several accounting initiatives. The accountant professionals and academics can contribute significantly to the debate on the social responsibility of the organisations as they have the ability to offer mechanisms to make the organisations responsible and offer assurance on their reports.

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Bibliography AccountAbility. 2008. AA1000 Assurance Standard. AccountAbility UK London, AccountAbility North America Washington D.C. ISBN: 978-1-901693-55-3 Accessed July 2018. https://www.accountability.org/wp-content/uploads/2016/ 10/AA1000AS_english.pdf Ballou, Brian, Dan L. Heitger, Charles. E. Landes, and M. Adams. 2006. “The Future of Corporate Sustainability Reporting.” Journal of Accountancy 202 (6): 65–74. Buhr, Nola. 2007. “Histories of and rationales for sustainability reporting.” Sustainability Accounting and Accountability, 64– 65. Coram, Paul, Gary Monroe, and David Woodliff. 2009. “The Value of Assurance on Voluntary Nonfinancial disclosure: an experimental evaluation.” Auditing: A Journal of Practice and Theory 28 (1): 138–50. Dhaliwal, D., O. Li, Albert Tsang, and Yong George Yang. 2011. “Voluntary Nonfinancial Disclosure and the Cost of Equity Capital: The Initiation of Corporate Social Responsibility Reporting.” The Accounting Review 86 (1): 59–100. https://doi.org/10.2308/accr.00000005. Farooq, Muhammad B., and Charl De Villiers. 2019. “Sustainability assurance: Who are the assurance providers and what do they do?” In Challenges in Managing Sustainable Business: Reporting, Taxation, Ethics and Governance, edited by S. Arvidsson, 137–54. Palgrave Macmillan,London, UK, eBook ISBN 978-3-319-93266-8. Federation of European Accountants. 2009. Survey on the Provision of Alternative Assurance and Related Services Across Europe. Accountancy Europe. Gillet-Monjarret, Claire, and Géraldine Rivière-Giordano. 2017. “Sustainability Assurance: A Literature Review.” Comptabilité Contrôle – Audit, 2017/2, volume 23, pg 15. Global Reporting Initiative (GRI). 2008. Count me in. The readers’ take on sustainability reporting. GRI Readers’ Choice survey, 2008, The Netherlands. Global Reporting Initiative (GRI). 2013. The external assurance of sustainability reporting. GRI Research and development series, The Netherlands.

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Hodge, Kristy, Nava Subramaniam, and Jenny Stewart. 2009. “Assurance of Sustainability Reports: Impact.” Australian Accounting Review 19 (3): 178–94. Institute of Chartered Accountants in England and Wales (ICAEW). 2009. Alternatives to audit re: Assurance initiative. London: ICAEW. Jose, Thejo. 2017. “Need for Harmonisation of Sustainability Reporting Standards.” Journal of Finance and Economics 5 (6): 253–58. http://pubs.sciepub.com/jfe/5/6/1/. Knechel, W. Robert, Philip Wallage, Aasmund Elilifsen, and Bart van Praag. 2006. “The Demand Attributes of Assurance Services and the Role of Independent Accountants.” International Journal of Auditing 10 (2): 143–62. KPMG International. 2009. KPMG International Survey of Corporate responsibility reporting, 2008, KPMG International, The Netherlands, http://s3.amazonaws.com/zanran_storage/www.kpmg.bg/Cont entPages/45691987.pdf Mock, Theodore, Sunita Rao, and Rajendra P. Srivastava. 2013. “The development of worldwide sustainability reporting assurance.” Australian Accounting Review 23 (4): 280–94. Mock, Theodore J., Christiane Strohm, and Kevin M. Swartz. 2007. “An Examination of Assured Sustainability.” Australian Accounting Review 17 (1): 67–77. Rao, S. Sunita. 2012. “Corporate Sustainability Reporting: Investigation of Assurance Process, Assurance Characteristics and Assurance Frameworks Used.” PhD diss., York University, Graduate School of Business Administration, 2012. Rao, S., Sunita. 2017. “Current state of assurance on sustainability reports.” The CPA Journal, July 2017 issue. https://www.cpajournal.com/2017/07/26/current-stateassurance-sustainability-reports/. Rao, Sunita, Theodore Mock, and R. P. Srivastava. 2009. “Sustainable Development, Corporate Sustainability Reporting and Assurance: An Overview.” Indian Accounting Review 13 (2): 1–30. Simnett, Roger, Ann Vanstraelen, and Wai Fong Chua. 2009. “Assurance on General Purpose Non-Financial Reports: An International Comparison.” The Accounting Review 84, no. 3 (May 2009): 937–967.

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Wong, Renfred, and Andrew Millington. 2014. “Corporate social disclosures: a user perspective on assurance.” Accounting, Auditing and Accountability Journal 27 (5): 863–87. Zadek, Simon, Peter Raynard and Maya Forstater. 2004. The future of sustainability assurance. Research report no. 86. London: Certified Accountants Educational Trust.

CHAPTER 5 NEW CATEGORIES FOR A SUSTAINABLE AND SPIRITUALITY-BASED COMPANY: INSIGHTS FROM THE ECONOMY OF COMMUNION MARIA-GABRIELLA BALDARELLI MARA DEL BALDO SABRINA VIEIRA LIMA

2. Introduction The experiences of the civil economy are the seeds of a new humanism that feeds a new ethos of the market and contributes to building a new economic anthropology. This “rediscovered” economic current concerns a vast archipelago of social, civic, political and economic organisations that carry out different activities in a number of fields: social welfare, health, education, environment and business. Altogether, these organisations form a new composite reality, which is the bearer of an economy on a human scale, suitable to both enterprises and families (Bruni and Zamagni 2004). This complex and dynamic reality includes the EoC (Economy of Communion) companies, as well as many experiences in the world of cooperation and the non-profit sector, ethical banks, microcredit, fair trade, joint purchasing groups and NGOs. All of these actors are united by carrying on a different and much broader vision of the economy, capable of generating social innovation (Ims and Zsolnai 2014; Blasco et al. 2018), which is not only conceived as a place of self-interest and for pursuing profit, but rather as a chance to meet people and participate in activities inspired by solidarity and fraternity, as well as fighting poverty. Accordingly, such a vision involves a collective contribution to the common good, which

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presupposes the genuine responsibility people and organisations have in regard to integral development (Mofid 2003; Bouckaert et al. 2007; Ketola 2008; Sorci 2007; Zsolnai 2015). In addition, it requires the recognition of a spiritual dimension to the enterprise (Malloch 2009; Zsolnai 2011; Ims 2015) and a non-materialistic value orientation in its management (Zsolnai 2015). The experience of EoC enterprises originated in Brazil in 1991 to solve poverty problems near the São Paulo area. It was triggered by the charisma of Chiara Lubich, the founder of the Focolare Movement (Lubich 2001a, 2001b). EoC arose as a response to her experience with the suffering of humanity (see Bruni and Héjj 2011, 380). Once the project started, it gradually took root throughout various areas of the world. For an appraisal of the phenomenon as a whole (EoC 2014), several statistical investigations have been carried out by scholars (EoC 2014), who, initially, were only economists (Bruni 1999). Later on, scholars from almost every discipline and scientific field joined them (Baldarelli 2006; Gold 2010; Callebaut 2010). The various publications (monographs, articles and PhD theses) on this subject matter bear witness to this (Bruni and Pelligra 2002; Gold 2003a, 2003b; Bruni and Crivelli 2004; Bruni and Uelmen 2006; Bruni and Héjj 2011; Baldarelli et al. 2015; Ims and Zsolnai 2015). Starting from this premise, the paper aims to analyse: 1) how the spirituality-driven and inspiring principles that characterise EoC companies influence and transform their mission, governance and accountability; and 2) how the same principles drive EoC enterprises towards a strong sustainability approach aimed at promoting fraternity worldwide. After presenting the theoretical framework and depicting the pillars of EoC companies (universal fraternity, communion and the culture of giving) derived from the charisma of Chiara Lubich, the paper addresses the case study relative to the international Network of EoC enterprises (EoC-IIN) in order to analyse and discuss how the aforementioned pillars are “operationalised” and implemented in daily choices and activities. The reflections emerging from the analysis provide useful insights on how a spirituality-driven approach can foster the economic, social and spiritual development of people inside and outside the company and contribute to shedding light on new (and old) possible approaches to integral development, both in theory and in practice.

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2. Literature review 2.1 Spiritual companies: spirituality in business and leadership Interest in scholarly articles on spirituality in the workplace has increased significantly, particularly since the turn of the century (Oswick 2009; Bouckaert 2011; Zsolnai 2011; Ims and Zsolnai 2014). Moreover, spirituality in the business context has emerged as an organisational issue, reflected in all aspects of management and organisation (Ghasemi 2006; Ims 2015). Although different definitions of spirituality have been provided, scholars usually recognise both secular and sacred values as a source of spirituality (Delbecq 2009; Epstein 2002; Harlos 2000). Despite the existence of significant criticism, literature comprising spirituality at work and the spiritual leadership theory has become highly influential, especially in the US (Ghasemi 2009). Spirituality, intended as religious or non-religious, is a substantial characteristic of humans that refers to the meaning of religion, whose key aspects—among others—are: seeking for meaning, completeness, peace, individuality, harmony, a way of life and knowledge of the world (Abedijafari and Rastegar 2007; Cavanaugh et al. 2003; Case Vink 2003). Several authors argue that organisations need to make a spiritual system to improve organisational behaviour (Ghasemi 2009). Rovers and Kocum (2010) emphasise three facets of spirituality: faith (acknowledgement of a higher power), hope (a search for the meaning of life) and love (a relationship with God, others, community and nature). Faith requires the ability to act with uncertainty in honouring Divine principles that often require effort, sacrifice and trying circumstances (Jones 2017). Spirituality has also been acknowledged as the source of spiritual capital (Mofid 2003). Spiritual capital, a term used by economists referring to the aspect of capital linked to spiritual life (see Malloch 2009, 11), can be defined as the fund of beliefs, examples and commitments that are transmitted from generation to generation through a religious tradition and attach people to the transcendental source of human happiness. The connection between virtues and a religious way of life, as manifests in business, has been explored by Ims (2015) and Malloch (2009). The latter affirms: “I’m acknowledging the great amplification of the human spirit that comes through faith” (Malloch 2009, 16). Moreover, he considers theological virtues (faith,

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hope and charity), hard virtues (leadership, courage, patience, perseverance and discipline) and soft virtues (justice, compassion, forgiveness, gratitude and humility), affirming that: “If we study the workings of spiritual capital, we will see that its principal manifestation lies in the virtue of individual people” (Malloch 2009, 17). Recognising the importance of spirituality in the workplace, Fry pointed out the need for leaders who can respond to the spiritual well-being of their followers and are attuned to the universal spiritual values of humility, charity and veracity (Fry 2003). The spiritual leadership model explicitly links spiritual values and organisational outcomes (Fry 2003; Fry and Slocum 2008; Fry, Matherly and Ouimet 2010). Drawing from a review of over 150 studies, Reave identified a clear consistency between spiritual values and practices and effective leadership (Reave 2005). Values that have long been considered spiritual ideals, such as integrity, honesty and humility, have been shown to affect leadership success (Burke 2006; Klenke 2007; Sison et al. 2017). The basic elements of spiritual leadership include empowerment, altruistic love, culture, vision and mission, as well as the encouragement of hope and faith (Fry 2003). In detail, empowerment means providing employees, together with other stakeholders, with information regarding the organisation and the power to make consequential decisions. Altruistic love rests on considering the other person to be as important as one’s self, while culture forms the basis for intrinsic rewards in addition to appropriate extrinsic rewards. Hope and faith are conceived in a transcendent vision of service to key stakeholders and lead to care, concern and appreciation, both for one’s self and for others. Faith (and trust) is purpose driven and assume that an individual is committed as a member of an organisation to add value and create a better world (De Pree 2004). Finally, vision and mission are based on: service to others; striving through faith and hope in a vision grounded in the values of altruistic love; the will to “make a difference”; high ideals with the establishment of a standard of excellence through constant improvement, learning and overcoming personal obstacles that require both faith and repentance (Watson 2013). The willingness to cooperate, be proactive and serve others is motivated by a belief that one’s actions matter and can trigger a positive benefit for other people (Covey 2004; Hayes and Caldwell 2016). Humility and gratitude are not just ways in which people

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acknowledge their Creator or merely gestures designed to elicit sympathy in others. Instead, they are deep-seated virtues whose purpose is “to direct the business activity towards the common good and to help release the best creative energies” (Malloch 2009, xix). The aforementioned pillars characterise visionary companies (Collins and Porras 1997), defined as corporations that desire to make a real contribution to society, of which the EoC enterprises are an example. Observing visionary companies “may even impress upon the world and its workforce by a desire that its primary purpose is to honor God” (Malloch 2009, 3). We, therefore, agree on the assumption that: “The correlation between professional business and religious faith ought not to surprise” because “business is the real test of the moral life, and those who engage in it are putting themselves in a position where trust in God’s goodness is the surest guarantee of success” (Malloch 2009, 17). Profit-only companies are considered parasites, while companies “that commit themselves to a more holistic core mission and are steeped in spiritual capital often succeed in righting wrongs and creating genuine personal and social progress, while also succeeding in generating strong profits” (Malloch 2009, xvi). An example of spiritual enterprises can be found among companies driven by Catholic principles, such as the EoC enterprises and companies oriented by principles that are proper to other faiths: “I earthily believe that spiritual enterprise is often conducted among Jews, Muslims, Hindus, Buddhists and other perspectives and that every religion and spiritual tradition offers blueprints for building spiritual capital in its own distinctive ways” (Malloch 2009, xx). Accordingly, the EoC project introduced below—tied itself to the ecumenical spirit of the Focolare Movement—is a concrete example of spiritual companies aimed at adding value and creating a better world, or, in other words, is an example of companies with an ideal motive (Molteni 2009), in that they are the fruit of an ethical substratum, which directs every field of human behaviour and, therefore, economic behaviour.

2.2 The EoC project and the EoC companies EoC companies are the practical results of the principles lived by the charismatic founder—Chiara Lubich (Lubich 2001a, 2001b and 2003)—of the inter-religious Focolare Movement (Gallagher 1997; Zambonini 1991; Bruni 2002 and 2007; Cortright and Naugthon 2002; Buckeye and Gallagher 2013; Bruni and Sena 2013; Bruni and

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Smerilli 2014). With its foundation in Catholic social teaching, the EoC model gives priority to the development of relationships among internal and external stakeholders, while profit is an outcome of sustainable practices that respect both people and the planet (Lopez et al. 2013, 75). The fundamentals of the Catholic social doctrine, as found in the various Papal Encyclicals, rest on human dignity, concern for the common good, subsidiarity (participation in decisionmaking), justice in the distribution of goods, the stewardship of resources and solidarity with the poor (Lopez et al. 2013). Initiated in 1991 in Brazil, the EoC currently has about 1,000 enterprises located in every continent (Baldarelli 2006 and 2011; Gold 2010; EoC 2014). The EoC project reflects the diversity and unity of the lay movement from which it was triggered, including members from various Christian denominations, as well as Buddhists, Jews, Muslims and people without a particular religious conviction who share a desire for unity and dialogue with others (Gold 1996). The challenge—to transform society and the economy and humanise the market—inspired by C. Lubich (2001a), has attracted the interest of economists, entrepreneurs, practitioners and scholars belonging to different disciplines, and it rests on the will to promote a new business culture based on the principles of reciprocity, fraternity and communion (Peris-Ortiz et al. 2018). A fundamental aspect of the communitarian ethos of the Focolare is the building of relationships based on communion. “This ethos may be called a culture of giving and rests on a different anthropology of the human person that is dominant within economic theory” (Ims and Zsolnai 2015, 202). Unity with God and thinking in terms of community is the essence of the EoC (Bruni and Héjj 2011). The principle of reciprocity (Bruni 2006) is a fundamental pillar of EoC companies’ mission, governance and accountability (Matacena 2010), as is the aim to “serve”, which means actively contributing to the common good (Zamagni 2007). Focusing on the common good, while respecting the right to private property, has attracted the scrutiny of the EoC model’s conformity with Catholic social teachings, given that the “economic sphere is neither ethically neutral, nor inherently inhuman and opposed to society” (Benedict XVI 2009, par. 36). In this regard, the EoC model places itself within the “broad new composite reality embracing the private and public spheres, one which does not exclude profit, but instead considers it a means for achieving human and social ends” (Benedict XVI 2009, par. 46). Specifically, the objectives of the EoC are the following: (a) forging “new men”, meaning people able to live a culture of giving, as

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opposed to the culture of capitalism; (b) promoting universal fraternity throughout the various spheres of economic action; and (c) contributing to the creation of a world “free of the poor” through the distribution of earnings produced, directly providing for the most urgent needs of people in economic hardship and promoting relationships of reciprocal trust within the company itself, as well as with its stakeholders—consumers, suppliers, competitors, local and international communities, and public administration—and living and spreading a culture of giving, peace, and legality and attention to the environment. The Focolare entrepreneurs, workers, directors, consumers, savers, citizens, scholars and economists are all committed, at various levels, to promoting a practice and an economic culture based on communion, gratuity and reciprocity. Entrepreneurs are invited to share their profit to sustain the goals of the EoC: reduction of exclusion and its subsequent poverty, diffusion of the culture of giving and communion, development of businesses and creation of new jobs (Ims and Zsolnai 2015, p. 201). This intent is practically translated into sharing the profits into three parts: (1) one part of the profits is reinvested in the business in order to develop new jobs; (2) the second part is used to create a new culture aimed at inspiring people capable of incorporating communion into their lives; (3) and the third part is designated to the poor to fully reinsert them into the dynamic of communion and reciprocity (Ims and Zsolnai 2015; Bruni and Héjj 2011). EoC businesses “compete freely with non-EoC businesses on equal terms, and so have to be as profitable as any other business” (Gold 1996, 15). However, they are concerned not only with the production of wealth but also with its distribution (Molteni 2002, 91; Lopez et al. 2013, 83). Indeed, the profits of EoC companies are distributed in equal parts to train people able to manage businesses to respect the fundamental values of the person, alleviate situations of poverty whether local or far-off, and create new jobs through the company’s development (Ferrucci 2011). In other words, one critical component of a company’s profits is reserved for a reinvestment in the business to provide for sustainability and continued growth. A second allocation is made for the support of educational programmes. A concern for those in need results in a third allocation of profits to help with basic necessities such as food, clothing, medicine and jobs. The profits are “shared not only within the company but also outside of it … between companies and, even more importantly, with those in need” (Sorgi 1991, 12). This allocation does not represent a charitable endeavour but a fundamental aspect: placing the human

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person and, particularly, the poor at the centre of the business allows the beneficiary also to assume the role of benefactor and humanise relationships with the many stakeholders of the business (see Gold 2010, 89). “The voluntary sharing of profits is a core point that has to be adapted to the concrete economic situations in which the businesses find themselves” (Molteni 2002, 94). Therefore, being an EoC business means aiming for universal fraternity by way of economic activity, which is developed by adopting the “culture of giving”. The EoC model focuses on promoting communion and reciprocity among the various stakeholders (management, employees, customers, competitors and the broader community), placing value on relationships and the happiness of others (Bruni and Uelmen 2006). EoC businesses “actively encourage innovation, creativity, responsibility and planning in a participative environment” (Lopez et al. 2013, p.81). Ferrucci describes this feature as a “capital of relationships” within and among the EoC businesses “which cannot be measured in dollars and cents” (Ferrucci 1998, 27). EoC businesses seek to offer specific measures aimed to help employees (and therefore their families) in moments of difficulty since employees, according to the Catholic social tradition (Baldarelli 2006), should share the profits of the company, have a voice in its direction and participate as active shareholders. EoC businesses are committed to a “spirit of fraternity” that emphasises “justice toward one’s employees” (Sorgi 1991, 12). These concepts are closely related to the Catholic social tradition and are very similar to the key components of hope, faith, vision and altruistic love included in Fry’s spiritual model (mentioned in the previous section) and intrinsic motivations (Fry 2003; Sison et al. 2017). EoC business leaders are “convinced that it is necessary to let the values [they] believe in shape every aspect of social life, and therefore also economic life, so that it too can become a field of human and spiritual development” (Lubich 2007 [1999], 276). The pillars upon which the EoC businesses are founded are: dialogue, trust and reciprocity (Bruni 2006; Argiolas et al. 2010; Argiolas 2006, 2009 and 2014). Previous research carried out by scholars (Bruni 1999; Gold 2010; Callebaut 2010; Di Ciaccio 2004; Bruni and Pelligra 2002; Bruni and Crivelli 2004; Baldarelli 2006; Argiolas 2009; Gold 2010) has led to numerous interdisciplinary publications focused on this emerging model, whose guiding principles (New Humanity, Inc. 2004) were released and updated in 2008 and are based on the following seven aspects:

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Business Leaders and workers: The human person and personal growth are always placed at the centre of the business, and a participative environment and business climate are encouraged. Capital investment decisions favour job creation initiatives, and employees are provided with competitive benefits and help in times of hardship. Relationships inside and outside the company: Relationships are based on mutual respect and trust. Relationship capital is regarded as important for stable and resilient economic growth. Ethics: An ethical business atmosphere promotes ethical behaviour towards employees, tax authorities, regulators and labour unions. Appropriate working conditions, health and well-being provisions are made for those with special needs. Quality of Life and production: The well-being and expectations of customers are considered when establishing the quality standards of products. Safe and environmentally friendly products are produced. Energy and natural resources are conserved. Harmony in the work environment: Mutual respect and trust are promoted. Teamwork and personal development are fostered. Clean, orderly environments are maintained. Training and education: Opportunities are provided for continuous learning to enable individuals to achieve personal and corporate objectives. Personnel selection criteria and professional development programmes foster mutual support and the sharing of talents and ideas. Communication: Open and honest communications are fostered. Communication among EoC participants and stakeholders are nurtured at local and international levels. These seven aspects coexist with the mission and vision of the EoC business, which can be reflected by the following principles. Human Dignity represents the intrinsic worth of each human being. To pursue the common good implies helping each member of the community to reach their full potential. EoC guidelines call for owners and managers to express their desire to respect and value, at all times, the dignity of every human being both within and outside their businesses. EoC businesses are grounded in the “golden rule”, where each stakeholder (within and outside the business) is treated as a decision maker would like to be treated. Justice is intended as the distribution of goods that meets human needs and rewards contributions. EoC businesses “strive to provide specific measures to help employees and their families in times of hardship” (Sorgi 1991, 12).

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Stewardship concerns the effective use of resources, care for the environment and sustainability. Solidarity with the poor means promoting dignity and providing opportunities through solidarity rather than simply through philanthropy, in an atmosphere of mutual support and trust. The aforementioned principles reflect the mission and vision of EoC businesses, which rest on a lived spirituality congruent with both Fry’s spiritual leadership model (Fry 2003) and the Catholic social teachings, focusing on human dignity, the common good, subsidiarity, justice, stewardship and solidarity with the poor—elements considered critical to “any organization claiming to be authentically human” (John A. Ryan Institute for Catholic Social Thought 2008). Such elements testify to “strong sustainability”, which is a view of sustainability that addresses social justice, poverty eradication and spiritually rich lives. Accordingly, the accountability of EoC businesses—based on transparency, stakeholders’ dialogue and engagement—comes from the entrepreneurs’/managers’ sense of “a calling”, which provides intrinsic motivation, and the reciprocal nature of their relationships with other EoC business leaders and stakeholders.

3. The implementation of strong sustainability and spirituality from EoC to EoC-IIN: theory and praxis 3.1. Strong sustainability and spirituality in economic theory: market, state and society relationships To introduce the discourse, the simplified diagrams below show how Neoclassical Economics (traditional-Western profit-oriented) and the economics called “civil economy” may be represented (Graph 1).

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Graph 1: Neoclassical and civil economies Neo-classical Economy market

Civil Economy state

society

market

state society

As one can see, in the first case, the market has its own logic that aims for economic choices based on the individual and profit (only economic). The market is understood as a set of contracts through which the agents exchange economic assets. The basis is the selfish behaviour of the different actors: agents, businesses, etc. The market becomes the coordinator—i.e., the so-called “invisible hand” that makes all the agents of society happy. The economics called “civil economy” instead revalues the relationships among people and states that the contract for regulating relationships is insufficient. In fact, to be happy, people need to build deeper relationships that are based on respect, honesty, reciprocity, trust and dialogue. This means that the market is no longer a set of contracts; it is seen as a set of relationships that go beyond the contractual relationship and consider aspects such as friendship and gratuity. Looking at this last reasoning, the economic suggestions deriving from the Economy of Communion are grafted, therefore. It is necessary to understand how it was born, what it is, what it means in broader terms and how it fits into the Market Economy as a model, and also as the promoter of a new economic and business model, which is able to change economic and business culture (Graph 2). Graph 2: The Economy of Communion—A “prophetic inspiration”

market

state society

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The drawings that are present inside the circles indicate that a change is occurring in a part of society. In this mechanism, the market also changes within it. This becomes a reciprocal movement in which the market is influenced by society and vice versa. Society changes through a new concept of production and distribution of wealth, and production and consumption of relational goods. Relational goods contain the aspects of a relationship in one word: reciprocity, motivation, gratuity, respect for others, respect for the environment. It opens the economic space that does not exclude the human dimension of the economy—for example, the family situation, the emotional situation, etc. The EoC manifests in the company through the “culture of giving”, which is opposed to that of “having” and the exclusive personal advantage, in order to also open up spaces of dialogue that orient the company towards the creation of relational goods with the ultimate goal of helping to build universal fraternity.

3.2. The implementation of strong sustainability and spirituality from EoC to EoC-IIN Drawing from the logic that the company is a mode of application of a wider culture of giving (giving oneself) and an instrument for the achievement of universal fraternity, as children of a single Father (Lubich 2001a, 2001b), we try to explain the different lines of orientation that derive from it. Particularly since 2007, EoC scholars and companies have focused on implementing and studying two areas in which economic activities seem important; the first concerns work and the second concerns poverty. Work has become a very important aspect, especially following the economic crisis that has affected Western countries since 2008, leading to the loss of jobs as an indirect effect. This aspect will be discussed later with the analysed case because it seems particularly important to respond to the need for the creation of new jobs. The topic of poverty will only be quickly mentioned in this paper. In previous works, we already mentioned the presence of the seven aspects—guiding principles of the EoC model— defining them as a rainbow of colours (Baldarelli and Del Baldo 2017a, 55–56), whereas, in this work, we try to extend the treatment of these features by going deeper and trying to highlight them in the case of the EoC incubating network (EoC-IIN). The first aspect, which originally derives from the promotion of the culture of “giving” to “us”, sharing and communion, becomes

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essential so that no one is in need. This aspect is reflected in company concerns: entrepreneurs, workers and business. It is expressed in the fact that the functions and the company roles must be carried out with responsibility towards the achievement of profit but also with the style of participatory management. Management is oriented towards creating new jobs and solidarity (Lubich 2004). In this regard, it can be emphasised that work has a very high value: “The work of man is that doing which places man in real harmony with the making of God” (Lo Presti 2007, 8). The second aspect is tied to the joy of involving stakeholders—that is, the others with whom one enters into a relationship—concerning: dialogue with customers, suppliers, financiers, civil society and external subjects. The staff of the company are committed to building solid relationships with customers, suppliers, workers and other stakeholders. The company relates in a legal and civil manner to the public administration and the surrounding territory and tries to communicate its experience and spread the culture of giving to other entrepreneurs and society (Lubich 2004). The third aspect concerns the attention to ethical and moral behaviours. The company: consistently behaves correctly towards the tax authorities and institutions; is invested in the quality of working life as an aspect of the realisation of workers as persons and human beings; goes beyond compliance with contractual obligations; and is attentive to the effects of products on people’s health and the environment (Lubich 2004). The fourth aspect is concerned with the idea that love heals, and it includes the areas of the environment and health, which the company translates into: “quality of life, happiness and relationships, that is, the company is primarily a community of people; the quality of interpersonal relationships must be verified through periodic interviews; listening to the managers and any protests or dissent; exchange of experiences during the special scheduled meetings; everyone’s physical health is important, like sport and the care of the external and internal environment” (see Lubich 2004). The fifth aspect concerns the creation of harmony, and, in the company context, it consists of harmony in the work environment: “Beauty and harmony in the workplace is very important but without excessive luxury and keeping up sobriety; hygiene, cleanliness and order are the basis of the culture of giving; compliance with safety standards, the necessary ventilation, tolerable levels of noise and adequate lighting facilitate the quality of relationships within the company” (see Lubich 2004).

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The sixth aspect is the “culture of giving”, which generates trust and wisdom and manifests as training, education and knowledge. “In this way the company favors the establishment of a climate of mutual trust; the continuous training of the personnel is at the base of the development of the skills and the growth of the company; attention to young people and their creativity is an important factor for increasing trust” (Lubich 2004). The seventh aspect is sharing communication (Baldarelli and Del Baldo 2017a, 57). Regarding the use of “fraternity networks”, we will now discuss the description of the case of EoC-IIN, which is a result of the need for a response to the latest crisis (majorly US’ 2008 and Europe’s 2011 crisis, and their repercussions around the world). In fact, after the financial crisis that started in 2011, a lot of companies and EoC enterprises closed or had considerable economic and financial problems; and, of course, many lost their jobs. Twenty-five years after the EoC’s creation, a 2016 worldwide census claimed: “there are 811 businesses that value and live the EoC spirit: 263 of these are active in Italy, 200 in the rest of Europe, 220 in Latin America, 84 in Africa (these have doubled since the last count), 26 in North America and 18 in Asia” (EoC 2016). The same report (for the period 2014–2015) underlined that, despite the crisis, the earnings shared by companies in 2015, that amounted to € 1,613,345, increased by 28% compared to the previous year. Moreover, 50% of company profits were dedicated to the poor, as well as all the contributions of those who participated in the project but are not entrepreneurs, amounting to € 404,943 (see: www.eoc-companies.org; www.edc-online.org.). To solve these problems, EoC enterprises wondered what strategies and methods would be useful for managing the loss of work and trying to help companies face the crisis. In some countries—for example, Italy—EoC enterprises, along with other partners, began start-up business incubators. This idea had been shared among other EoC companies, and in 2015 the EoC-IIN was created. EoC-IIN is the International Incubating Network, with international hubs, located inside the EoC parks (Baldarelli and Del Baldo 2017a, 2017b), where entrepreneurs and professionals share their talents, experience and time to help the growth of a new generation of people and companies. The first goal is to incubate purpose-driven businesses and entrepreneurial vocations using the main principles of EoC companies. The second goal is to spread a new

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way of doing business that generates relationships of communion and positive impacts on the different countries that take part in it. EoC-IIN constitutes three main areas, and the first one consists of hubs in fourteen countries. The hubs are the coordinators of selforganised local communities that offer services, training and followup to new entrepreneurs. They represent the access point (and act as a bridge) to a greater network of mentors and businesses (Figure 3). Figure 3: International partners of the EoC-IIN

Source: EdC-online.org

The second area is the online platform, which provides the opportunity to share professional and material resources and digital incubation (Figure 4). The online platform promotes webinar training programmes with experts from different countries that take

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part in the EoC-IIN project. EoC-IIN mentors are entrepreneurs and professionals that share their time and talents to help with the selection and development of EoC start-ups. Figure 4: Example of the online platform

Source: EdC-online.org

The third initiative is represented by International Accelerators, which is a one-week programme for selected new businesses that want to generate positive impacts and communion inside and outside their companies. The EoC-IIN has been creating opportunities to develop ideas and start-ups since 2015, as per the brief history depicted in the following table (Figure 5).

New categories for a sustainable and spirituality-based company 103 Figure 5: Brief history of the EoC-IIN

Source: EdC-online.org

The first EoC-IIN aspect that we can describe refers to the Brazil– Anpecom hub. It was developed along with “Aleanza Emprendedores”— including 200 participants—and the “PROFOR Project” in partnership with the non-profit AMU (Azione per un Mondo Unito). Since 2015, six enterprises have been set up and fifty workplaces created. Other start-ups are still being implemented all over the world. We can read this case by following the grid of aspects that have been highlighted above, even if it seems that the first aspect—that is, job creation through an assisted process of triggering and developing new businesses that share the EoC pillars—is the most important (Baldarelli 2011; Argiolas 2014). This allows us to develop a future capacity to support the development of projects that are at the basis of the EoC. With reference to dialogue with the stakeholders (Argiolas 2014), in this case, it extends to various countries and allows for the opening of a dialogue between the members of the project and those interested in it. Therefore, it can further contribute to spreading the EoC-IIN initiative. The third EoC-IIN aspect is related to ethical behaviour, which has been considered a core point since the early stages of the startup and develops both in the idea of a company (business idea) and in its realisation (implementation), thus allowing the growth of “structures of grace” and “prophetic” businesses that can represent a beneficial “leaven” for an innovative economy.

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The presence of these aspects may not always be only positive since we can identify some characteristics that could deviate from the original objectives and values, turning the aspects into paradoxes for the realisation of some companies but not others. To avoid these personalistic and opportunistic “drifts”, it is important not only to consider the results achieved in quantitative terms but to pay particular attention to the quality of the relationships that emerge and their adherence to the original idea, giving ample space, at the same time, to creativity. This leads us to the fourth EoC-IIN aspect, concerning physical health and quality of life. The latter consists in making the established relationships between the different world hubs sincere, deep and nurtured through meetings and incentive mechanisms, which are all contexts for co-participation. The fifth aspect—related to harmony in the environment and safety—must be prepared especially when the start-up begins to implement its activity, relying on the professional and material support of the international network. The sixth EoC-IIN aspect concerns the attention to the formation, training and dissemination of culture, which is done through the selection of ideas and the development of start-ups. This process is especially important for young people, and EoC-IIN addresses it through a path of involvement with the Summer Schools of the EoC and all the initiatives, which are promoted annually at the world level to contribute to bringing a new culture into the economic system. In the seventh aspect, which concerns communication, the danger of an insularity that would weaken this experience’s potential can be avoided if relationships based on reciprocity are built, making this network of fraternity active both inside and outside the EoC.

4. Conclusion Drawing from the analysis of EoC fundamentals and the experience of the EoC-IIN, we argue that they can be appreciated as an example of spiritual enterprises (Malloch 2009) since they involve fairness in the distribution of goods, stewardship of resources and solidarity with the poor (Lopez et al. 2013), claiming justice and subsidiarity all over the world, especially at this time. It is particularly important to us to underline that this practical experience that is being implemented is a bearer of novelty, also in the “spirited business” (Del Baldo 2012) and in the transition from weak sustainability to strong sustainability (Baldarelli and Del Baldo 2017a, 2017b). This is because two main mechanisms are put in

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place. The first one concerns courageous reciprocity (Bruni 2006) and the globalisation of solidarity (Baldarelli 2011) through the creation of new businesses that have the characteristics of the territory in which they arise, and the basis of values and practices shared internationally. Unity is therefore realised in multiplicity, which is typical of the companies of this project (Baldarelli 2011). The second characteristic concerns the opening of the project, warmly and repeatedly desired by the Pope, as the hubs are by definition the incubators’ points of connection of activities for each participating country, and public and private institutions, lay and religious, who wish to participate in the project. This creates a framework of collaboration in which the fraternity circulates and spreads (Bruni 2002), which is the ultimate goal of this charisma (Argiolas 2014). The advantage is that these ideas and start-ups are born in different countries with different cultures. Therefore, they are united by a common base of values despite their diversity, which can be considered a blessing.

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CHAPTER 6 GLOBAL REPORTING INITIATIVE DISCLOSURES FOR OIL AND GAS COMPANIES

ATHANASIOS MANDILAS STAVROS VALSAMIDIS DIMITRIOS KOURTIDIS

1. Introduction From the beginning of the 19th century (with the industrial revolution and especially with the invention of the combustion engine), oil became an everyday need. Everything runs using energy and oil is the first consuming source. The first motor car (for massive production) produced by Henry Ford was in 1896 and as the years passed, it became a necessity for the lifestyle of the growing communities. In modern times, a survey by Statista (2015) shows that in 2012 around 808 million passenger cars and 291 million commercial vehicles were used worldwide, and Phil LeBeau, from CNBC (LeBeau 2012), states that by 2035 the number of vehicles worldwide is expected to double to 1.7 billion. That means an increase in oil products consumption but also an increase in greenhouse gas (GHG) emissions. Owing to this reality, oil and gas companies use technology and innovation to make products more friendly to the environment and more efficient. Unfortunately, for the last 100 years or so, oil did not bring only development and a better level of life for people, but it was also connected with economic crises, wars, pollution and damage to the environment. Oil was connected with the value of the American dollar and was involved with great economic crises. Furthermore, the countries that had economic power and military force in different

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periods over these years tried, by every means possible, to control the areas of production and the distribution paths of oil. Under these circumstances, oil and gas companies succeeded in surviving and expanding their operations all over the world. Over the years, from small and limited national companies, they became global brands with huge benefits and problems, challenges and opportunities, powers and pressures. The big competition between them, taxes, economics, government pressures, politics and the need to expand into new markets are some of the reasons which lead oil and gas companies to mergers and acquisitions. In the last forty years in oil’s history there has been a significant number of accidents which have caused damage to the environment and a significant number of fatalities. Even if the technology is developed, supporting the oil and gas companies, and even if the international laws for the environment and the safety measures of the operations have become stricter, it was nevertheless impossible to avoid these situations. This is because the operations are getting more and more difficult (drilling deeper, difficult formations and chemical treatments are challenges with risks for companies) and also the demand for energy consumption is increasing together with the increase of population. Chart 1. World Marketed Energy Use by Fuel Type

Source: Environment Impact Notification 2006; Gazette of India, 14th September, 2006

The concerns of the public, but also the desire of the same oil and gas companies to control, monitor and measure the impacts of their operations on the environment and the life of society at the sites of

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their operations, lead many companies to report details of their performance. CSR is a framework with specific economic, environmental and social indicators to support reporting for oil and gas companies, together with the GRIs. Numerous question marks surround the extent to which oil multinational enterprises really contribute, through CSR activities, to sustainable development (Garcia-Rodriguez et al. 2013).

2. Disclosures 2.1 Corporate Social Responsibility (CSR) In today’s economic and social environment, issues related to social responsibility and sustainability are gaining more and more importance, especially in the business sector. Business goals are inseparable from the societies and environments within which they operate (UNITAR, 2015). According to Lantos (2001) business organisations are supposed to exhibit ethical behaviour and moral management. A contribution to the issue from the companies is CSR, which focuses on economic, environmental and social responsibility. The United Nations Industrial Development Organization (UNIDO 2015) defines CSR as a management concept whereby companies integrate social and environmental concerns in their business operations and interactions with their stakeholders. Emphasis on social, environmental and economic sustainability has become a focus of many CSR efforts. Sustainability was originally viewed in terms of preserving the earth’s resources. In 1987, the World Commission on Environment and Development published “Our Common Future”, a landmark action plan for environmental sustainability. The commission defined sustainability as “meeting the needs of the present without compromising the ability of future generations to meet their needs”. Companies are now challenged by stakeholders, including customers, employees, investors and activists, to develop a blueprint for how they will sustain economic prosperity while taking care of their employees and the environment (Foundation 2015, 1). Leedy (2009, 3) wonders: “Why would a for-profit firm concern itself with doing good?” Giving an answer to this question, Leedy points out opinions of different authors which claim that CSR can improve the image and reputation of a company, increase the efficiency of production due to sustainability programmes, or increase sales and higher prices. Also, CSR has a neutral effect on

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financial performance because the types of actions taken in the name of CSR are often cost saving. There is no generally accepted definition for CSR. David Crowther and Guler Aras in their introduction to CSR mention two interesting points (Crowther and Aras 2008). The first is that people do not necessarily agree with each other about what is socially responsible and the second is the huge number of definitions for CSR. However, according to Merefield and Blewitt (2013), CSR will be defined as the continuing commitment by a business to behave ethically and contribute to economic development while improving the quality of life of the workforce and their families as well as of the local community and society at large. BusinessDictionary gives a framework regarding the third word of CSR, “responsibility” (BusinessDictionary 2015). “Responsibility” refers to a company’s sense towards the community and environment (both ecological and social) in which it operates. Companies express their citizenship through their waste and pollution reduction processes, by contributing educational and social programmes, and by earning adequate returns on the resources employed, according to Fallon (2015). CSR refers to a business practice that involves participating in initiatives that benefit society. Types of CSR include environmental, social and ethical labour practices. Debra Dunn, Hewlett Packard Senior Vice President for Global Citizenship writes in the company’s 2005 global citizen report for CSR. Dunn (2005) mentions that, “Some see this work as charity, philanthropy, or an allocation of resources that could better be donated by shareowners themselves, but to us, it is a vital investment in our future, essential to our topline and bottom-line business success.” Finally, the United Nations Industrial Development Organization also thinks likewise and declares that there is a distinction between CSR, that can be a strategic business management concept, and charity, sponsorships or philanthropy. Key issues for CSR include environmental management, ecoefficiency, responsible sourcing, stakeholder engagement, labour standards and work conditions, employee and community relations, social equity, gender balance, human rights, good governance and anti-corruption measures (CSR Hellas 2015). Some characteristics of CSR are presented below in Figure 1.

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Figure 1: The Pyramid concept of CSR

Source: http://www.open.edu/openlearnworks/mod/oucontent/view.php?id=5763 &printable=1

As regards CSR Hellas, the vision and mission of the network is the promotion and integration of responsible work in Greek businesses and organisations to improve their competitiveness through practices and initiatives that ensure social cohesion and sustainable development. Nikos Analitis, the president of CSR Hellas, declares that today the network is the chief institutional body of CSR in Greece. It displays business responsibility and its importance for the economy and society, reflecting broader concerns about the form and progress of society and the environment. The basic criterion is to promote the development of social inclusion. The founding members of CSR Hellas are Hellenic Petroleum, Motor Oil Hellas, AVIN, Intracom, Interamerican, Microsoft and other companies that are important for the national economy. CSR Hellas has international cooperation ties to the Global Compact Network, the CSR 360 Global PARTNER NETWORK, and the basic instrument for CSR—the Global Reporting Initiative (GRI).

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2.2 The GRI—the most widely used sustainability reporting framework The GRI is an international independent organisation that helps businesses, governments and other organisations understand and communicate the impact of business on critical sustainability issues such as climate change, human rights, corruption and many others (Global Reporting Initiative 2015a). The GRI was established in Boston in 1997. Its roots lie in the US non-profit organisations the Coalition for Environmentally Responsible Economies (CERES) and the Tellus Institute (Global Reporting Initiative 2015b). The GRI is now the most widely used sustainability reporting framework. According to a Global Reporting survey in 2013 by KPMG, almost 80% of the largest 100 companies in forty-one countries worldwide issuing corporate responsibility (CR) reports now use the GRI’s Sustainability Reporting Guidelines. In addition, the Sustainability Disclosure Database (Global Reporting Initiative 2015d) states that 21,149 reports in this database are based on the GRI framework and 8,452 organisations have a profile. The GRI Guidelines are intended to be applicable to organisations of all sizes and types operating in any sector. However, they were developed primarily with the needs of larger businesses in mind. According to GRI, the reporting framework is used by more than 1,500 organisations, including many of the world’s leading brands. GRI disclosures have five versions so far: GRI G1, GRI G2, GRI G3, GRI G3.1, and the newest, GRI G4. As far as Greece is concerned, TÜV HELLAS (2015) provides services in the field of independent verification as well as assurance of the accuracy and reliability of the information contained in the sustainability reports published annually. The verification audit that TÜV HELLAS provides is based on the sustainability reporting guidelines GRI G4 or GRI G3.1, provided by the GRI.

2.3 GRI disclosures for oil and gas companies Oil and gas companies which use GRI disclosures are primarily involved in the exploration, extraction, production, refining, transportation and sale of oil, gas and petrochemicals. The main contextual issues for the reporting companies and the users of their reports include:

Global reporting initiative disclosures for oil and gas companies y y y y y y y y y y y y y y

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responding to growing energy demands control, use and management of land contribution to national economic and social development community and stakeholder engagement environmental management developing lower-carbon energy sources relationships with governments climate protection and transformation of the energy market environmental protection, including the use and disposal of water and chemicals transparency of payments to governments and public policy lobbying activities respect of human rights security health and safety asset integrity and process safety

Greater transparency of reporting can increase understanding, enabling better-informed decision-making around the trade-offs in the industry between economic, social, environmental and development objectives. Apart from GRI disclosures, there are also other frameworks providing support for reporting to the oil and gas companies. IPIECA, API and IOGP, as well as the GRI, provide reporting guidance targeted at companies and organisations operating in the oil and gas sector. While GRI and IPIECA, API and IOGP use different approaches to developing and structuring their guidance, the organisations have the same overall aim: to encourage consistent and high-quality sustainability reporting as an enabler of stakeholder engagement, transparency and performance improvement. Most of the oil and gas companies in this research work, at the end of their reporting, have included the GRI indicators in a table. Other companies such as Shell PLC, even if they do not follow GRI Guidelines indicator by indicator, have their reporting based on GRI disclosures. A few companies have their own framework for reporting and others do not provide reporting at all. The GRI disclosures in this research are basically from the GRI 3.1 version with specific indicators from GRI G4 guidance. China National Petroleum and Marathon Petroleum are companies which used G4 Guidelines for their reporting, and in this research work the indicators were transferred from G4 to the GRI 3.1 version like all the other companies.

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The differences between GRI 3.1 and the G4 version for the oil and gas companies are not significant. G4 adds more data points for reporting but does not change the basic framework. As we can see in Table 1, the majority of the indicators have either stayed the same or have more details added. Table 2 and table 3 show the main tools the GRI framework provides the oil and gas companies for their reporting. These tables present the main categories, the aspects and the type of indicators. Ʒable 1: Specific Standard Disclosures

Report p Profile Governance Ethics and Integrity

Local Communities Equal q remuneration for women and men Public Policyy Anti-competitive p behaviour Compliance p Involuntaryy Resettlement Asset Integrity g y and Process Safety

Investment and Procurement Practices Non-discrimination Freedom of Association and Collective Bargaining g Child Labour Forced or Compulsory p Labor Securityy Practices Indigenous g Rights Assessment Remediation R emedi diatiion di

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Product Responsibility p y Customer health and safetyy Product and service labelling Marketing M arketi k ingg communications Customer privacy p Compliance p Fossil Fuel Substitutes

Effluents and Waste Products P roducts d aand nd d Services Services i Compliance p Transport p Overall

Society

Social Labour Practices and Decent Work EEmployment mployment pl y Labour/Management / Relations Occupational O ccupa p tio i Health and Safety TTraining raiining i g aand nd d Education Diversity Diversi Di ityy an and Equal Opportunity pp Equal q Remuneration for Women and Men

Category g SubCategories Aspects A spects

Environmental Materials Energy gy Water Biodiversityy Emissions

Human Rights

Economic Economic Performance Market M arket k P Presence resence Indirect Economic Impacts Reserves

Category g y Aspects

SPECIFIC STANDARD DISCLOSURES

Strategy gy and Analysis y Organizational g Profile Identified Material Aspects p and Boundaries Stakeholder Engagement

GENERAL STANDARD DISCLOSURES

STANDARD DISCLOSURES FOR THE OIL AND GAS SECTOR

Table 2: Standard Disclosures for the Oil and Gas Sector

Global reporting initiative disclosures for oil and gas companies

ECONOMIC INDICATORS ENVIRONMENTAL INDICATORS LABOR PRACTICES AND DECENT WORK INDICATORS HUMAN RIGHTS INDICATORS SOCIAL INDICATORS PRODUCT RESPONSIBILITY INDICATORS MATERIAL ASPECT INDICATORS

GRI INDICATORS FOR THE OIL AND GAS SECTOR

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SPECIFIC STANDARD DISCLOSURES FOR THE OIL AND GAS SECTOR

EC EN LA HR SO PR OG

Table 3: GRI indicator categories

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Reserves

Indirect Economic Impacts

Market Presence

Economic Performance

EC9 OG1

EC8

EC7

EC6

EC3 EC4 EC5

EC2

EC1

DIRECT ECONOMIC VALUE GENERATED AND DISTRIBUTED FINANCIAL IMPLICATIONS AND OTHER RISKS AND OPPORTUNITIES FOR THE ORGANIZATION’S ACTIVITIES DUE TO CLIMATE CHANGE COVERAGE OF THE ORGANIZATION'S DEFINED BENEFIT PLAN OBLIGATIONS SIGNIFICANT FINANCIAL ASSISTANCE RECEIVED FROM GOVERNMENT RANGE OF RATIOS OF STANDARD ENTRY LEVEL WAGE BY GENDER COMPARED TO LOCAL MINIMUM WAGE AT SIGNIFICANT LOCATIONS OF OPERATION POLICY, PRACTICES, AND PROPORTION OF SPENDING ON LOCALLY-BASED SUPPLIERS AT SIGNIFICANT LOCATIONS OF OPERATION PROCEDURES FOR LOCAL HIRING AND PROPORTION OF SENIOR MANAGEMENT HIRED FROM THE LOCAL COMMUNITY AT SIGNIFICANT LOCATIONS OF OPERATION DEVELOPMENT AND IMPACT OF INFRASTRUCTURE INVESTMENTS AND SERVICES SUPPORTED SIGNIFICANT INDIRECT ECONOMIC IMPACTS, INCLUDING THE EXTENT OF IMPACT VOLUME AND TYPE OF ESTIMATED PROVED RESERVES AND PRODUCTION

ECONOMIC DISCLOSURES FOR THE OIL AND GAS SECTOR

Table 4: Economic Disclosures for the Oil and Gas Sector

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3. Research methodology The research design includes the comparison of data from annual reports. The majority of the companies report details for their economic, environmental and social performance but give different values to each of these categories (see Annual Report listing in the Bibliography for this chapter). For example, the Asian companies, such as JX Holdings and Showa Shell Sekiyu, in their reporting give most of their attention and a lot of space to safety regarding procedures, personnel and the environment in case of disasters from physical phenomena such as earthquakes and tsunamis. Companies which are involved in significant accidents with injuries, fatalities and damage to the environment, like BP, Statoil and Pemex, look like they are paying a lot more attention to the environment and issue more careful and analytical reporting.

4. Results As far as Greek companies are concerned, they have good rankings globally, and regarding their reporting, Hellenic Petroleum has a fuller report than Motor Oil, which focuses only on a few environmental indicators. The oil and gas companies are mostly targeting reducing GHG emissions, reducing energy consumption, reducing production costs, developing eco-friendly products, and generally eliminating their footprint on communities and environments where they operate.

100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0%

percentage of percentage of companies which give companies which reporting in public don't give reporting in public

Percentage of the 61 oil and gas companies for furnishing reporting in public

Figure 1: Percentages of the reporting companies

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Making a summary for each company for GRI 3.1 Disclosures, we have: Exxon Mobil: Exxon Mobil reports the majority of the indicators for economic, environmental and social disclosures. The only part that it avoids concerns product responsibility disclosures. More analytically, with regard to the economic indicators, the company provides details concerning the direct economic performance and retirement obligations of the company, and the risk and opportunities of the carbon price; and with regard to the impacts on local communities, the company provides details concerning the value of goods, services and local currencies, local procurement, local suppliers and local investments by the company. For environmental disclosures, Exxon Mobil provides all details with regard to water and biodiversity indicators. Also, it provides a lot of information concerning energy, emissions and waste. As for the social disclosures, Exxon Mobil reports on employment, procurement and security practices, human rights, equal opportunities, non-discrimination and local communities. Royal Dutch Shell: For this corporation, Shell’s entire reporting of 2014 is used. As regards the economic indicators, Shell reports on its direct economic performance such as taxes, dividends and shares, concerning the risk and opportunities of the carbon price and local procurement and economic development at the sites of its operations. For environmental disclosures, Shell reports on the total production of hydrocarbons, the refinery throughputs and also the production of chemicals. It also provides information on the energy which was saved because of the product’s efficiency improvements, as well as information regarding water and biodiversity, GHG and other air emissions, regarding discharges and spills, and regarding flaring and transportation impacts. Concerning labour practices and decent work disclosures, Shell focuses on occupational health and safety and training the employees, and on health and safety procedures. Shell also pays attention to biofuels, human rights and Indigenous people, local communities and equal opportunities for both women and men. BP: BP was responsible for an accident with a huge environmental, economic and social impact in the Gulf of Mexico in 2010. This was probably an event that influenced the reporting of the company,

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which provides information to the public regarding all these very analytical and detailed aspects. BP used GRI 3.1 disclosures as a framework and focused on environmental and safety indicators. Verdict: Fulfilled reporting. Sinopec: Sinopec is a Chinese company which gives information to the public for several GRI 3.1 indicators—at least one from each of the categories. The company, when reporting, focuses most on health and safety procedures and equal opportunities in the company. Verdict: Poor reporting. China National Petroleum: China National Petroleum’s reporting has the G4 indicators as its base. The company gives full information about the economic indicators. About the environmental indicators, it gives more details for biodiversity and air emissions due to the company’s operations. Concerning the social disclosures, China National Petroleum focuses on health and safety procedures, diversity and equal opportunity, human rights for the employees, child labour, Indigenous people and product responsibility for the customers’ health and safety. Saudi Aramco: Saudi Aramco does not supply a lot of information about the economic performance of the company. It reports only on the operations of the company with local suppliers, local hiring and investments for the local communities. In the environmental part of the report, Saudi Aramco focuses on biodiversity and provides some information about water, emissions and waste. Concerning the social indicators, the company gives a lot attention to diversity, equal opportunity and equal remuneration for men and women, training and education, and child labour. Chevron Corporation: Chevron Corporation gives full data to the public concerning the economic indicators of GRI 3.1. On the other hand, the environmental disclosures that the company covers are the indicators about energy, biodiversity and water recycling, and there are few indicators for emissions and wastes. As regards social indicators, the company gives even less information. Generally, it covers some indicators about safety, human rights and product responsibility.

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Conoco Phillips: This is one more American company, after Chevron. The reporting information Conoco Phillips provides for the public is similar to that of the previously analysed company. It includes a lot of economic results, environmental data for energy, biodiversity, emissions and waste, and very few social indicators regarding product responsibility. Total SA: Total reports details about the direct economic performance of the company and its retirement obligations. Concerning the environmental disclosures, it focuses on the GHG emissions and effluents and waste, and for social disclosures it provides data for employment, new hirings, equal opportunity for men and women, and health and safety. Gazprom: Gazprom reports on the majority of the economic, environmental and social indicators. The part with the less covered indicators regards product responsibility disclosures. Verdict: Fulfilled reporting. Eni: Eni reports on almost every one of the economic, environmental and social indicators of GRI 3.1. Verdict: Fulfilled reporting. Petrobras: Excellent reporting with all indicators covered. Verdict: Fulfilled reporting. GDF Suez: GDF Suez also covers all the aspects of the GRI and the majority of the indicators. Verdict: Fulfilled reporting. Pemex: Pemex, even if it does not cover all the indicators of GRI, gives excellent reporting to the public, with very analytical tables for the results of the performance of the company. Pemex, in 2012, had a significant accident with fatalities, and the reporting of the company focused on the disclosures of environment, safety, non-discrimination and human rights.

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PDVSA: PDVSA is a Moldavian company which covers just a few of the GRI indicators in its reporting. Concerning economic disclosures, PDVSA reports information which is only for local investments and hiring. As regards environmental disclosures, the company reporting mainly covers selected indicators about emissions and waste, and as regards society, about health and safety, diversity and anti-corruption. Statoil: Statoil reports on most of the indicators as regards economic disclosures. More analytically, the company gives information about its reserves and direct economic performance, about the risk and opportunities of the carbon price, and about its economic influence on local communities where the company operates. Concerning the environmental disclosures, Statoil gives many results on waste, energy and emissions. Concerning the social disclosures, the reporting of the company focuses on employment and new hirings, safety, equal opportunities, anti-corruption and involuntary resettlement. JX Holdings: JX Holdings reports on direct economic data, local hiring, and investments and reserves. The environmental indicators that it covers regard recycled input materials, energy consumption and energy saved, water withdrawal and recycled water, biodiversity, GHG and other air emissions, waste and fines. Concerning social disclosures, it focuses on health and safety and local communities. Lukoil: Concerning economic indicators, Lukoil reports about the direct economic performance and retirement obligations of the company and about its influence on local communities regarding the value of goods, services and local currencies, local procurement, and local investments by the company. As regards environmental indicators, Lukoil provides information on energy consumption, energy saved due to efficiency improvements, and renewable energy products and services, for water withdrawal and water recycled, and for emissions and environmental protection expenditures. Lukoil covers the social GRI indicators for the total workforce, new hirings, occupational health and safety, training programmes, freedom of association and collective bargaining for employees, human rights for children, anticompetitive behaviour, customer satisfaction and the incidents of non-compliance with regulations regarding the safety impacts of the

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products during their life cycle, regarding product and service information and labelling, and regarding marketing communications. National Iranian Oil: No report. Petronas: Petronas covers a few indicators from the GRI disclosures. As regards economic performance, it reports on direct economic values and distributions and on spending on local suppliers. Concerning environmental disclosures, Petronas gives information on renewable energy and energy saved, total water withdrawal, total GHG emissions and reduction of them, and on waste and number of spills from the company’s operations. As for social GRI indicators, Petronas reports on the total workforce, the new hirings, occupational health and safety and training programmes, the impacts on local communities and product responsibility as regards health and safety impacts of its products, and customer satisfaction. Indian Oil: No report. Repsol: Repsol reports on almost every GRI indicator. Verdict: Fulfilled reporting. PTT: PTT provides very poor reporting to the public, covering just seven of the GRI indicators out of a total of 98. More specifically, it provides reports for the direct economic performance of the company, for water withdrawal and recycled water, for significant air emissions, for health and safety, and for the impacts of its operations on local communities. Sonatrach: No report. Reliance Industries: No report. China National Offshore Oil: China National Offshore Oil reports on its direct economic performance, the risks and opportunities determined by carbon price, its basic salary levels by region and its expenses for local suppliers, local hiring and indirect economic impacts. Concerning environmental disclosures, China National Offshore Oil covers the

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majority of the GRI indicators as regards materials, energy, water, biodiversity and emissions. The reporting of the company covers the indicators for the impacts of the products and transportation and for the general environmental expenditures, too. As regards social disclosures, China National Offshore Oil covers the majority of the indicators regarding labour practices and adequate work disclosures and also a few indicators for human rights and social and product responsibility disclosures. Marathon Petroleum: Marathon Petroleum reports on its direct economic performance and on the expenses of the company for local suppliers, local hiring and investments for infrastructures. Concerning environmental disclosures, Marathon Petroleum publishes little information on energy, water, emissions, waste, environmental impacts from products and transportation impacts. Finally, as for social disclosures, Marathon Petroleum covers some GRI indicators regarding employment, occupational health and safety, training and education, diversity and equal opportunity, human rights, local communities, equal remuneration for women and men, and product labelling. It generally covers few indicators, and especially those indicated in the overall framework of 3.1 GRI disclosures. Pertamina: Pertamina, concerning economic disclosures, publishes data on its direct economic performance, the risks and opportunities determined by carbon price, retirement obligations, and expenses for local hiring and investments for infrastructures and reserves. Concerning environmental disclosures, Pertamina covers indicators mainly regarding energy, emissions, and products and services, but also indicators for actions and plans for managing impacts on biodiversity, number of spills, volume of flaring and general environmental expenditures. For social disclosures, Pertamina covers the majority of the labour practices and adequate work disclosures. It also reports disclosures for non-discrimination, freedom of association and collective bargaining, security practices, customer health and safety, and fossil fuel substitutes. In addition, there are also indicators for local communities and product labelling.

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Rosneft: Rosneft reports on almost every GRI indicator. Verdict: Fulfilled reporting. TNK: No report. Idemitsu Kosan: Idemitsu Kosan reports on its direct economic performance and the expenses for local hiring and infrastructures and reserves. Regarding environmental disclosures, Idemitsu Kosan covers few indicators for materials, energy, water biodiversity and emissions. As for social disclosures, the company publishes data on labour practices and adequate work disclosures and on the health and safety impacts of its products. Verdict: Poor reporting. OMV Group: OMV Group provides an excellent report for the reader. It covers all of the indicators concerning the economic performance of the company. As for environmental disclosures, it publishes data on energy, water, emissions, effluents and waste, fines and environmental expenditures. Concerning social disclosures, the OMV Group reports mainly on labour practices and adequate work disclosures. For human rights, the OMV Group covers indicators dealing with freedom of association and collective bargaining, security practices, Indigenous rights and number of human rights grievances. As regards the social aspect, the company covers indicators about local communities, equal remuneration for men and women, and involuntary resettlement. Finally, for product responsibility disclosures, the OMV Group reports on health and safety impacts of its products, on the information requirements of its products and on the volume of biofuels meeting sustainability criteria. Sunoco: Sunoco publishes a lot of information concerning economics. As regards environmental disclosures, it reports about materials, energy, water, emissions, products and services, fines and environmental expenditures. As for social disclosures, except the product responsibility aspect, Sunoco covers the majority of the indicators.

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Bharat Petroleum: Bharat Petroleum reports on most of the GRI indicators. Verdict: Fulfilled reporting. Enterprise Products: No report. GS Caltex: GS Caltex reports on almost every GRI indicator. Verdict: Fulfilled reporting. Suncor Energy: Suncor Energy reports on almost every GRI indicator. Verdict: Fulfilled reporting. Hindustan Petroleum: Hindustan Petroleum reports on almost every GRI indicator. Verdict: Fulfilled reporting. Hess Corporation: Hess Corporation reports on almost every GRI indicator. Verdict: Fulfilled reporting. Centrica: Centrica provides little economic data in its reporting. It reports about its direct economic performance, retirement obligations and basic salary levels by region. Regarding environmental disclosures, Centrica covers almost all the indicators for materials, energy, water, biodiversity and emissions. For social disclosures, Centrica covers the majority of the indicators concerning all aspects. PKN Orlen: PKN Orlen reports on its direct economic performance, the risks and opportunities determined by carbon price, its basic salary levels by region, and the expenses for local suppliers, for local hiring and for infrastructure investments. Concerning environmental disclosures, PKN Orlen publishes information about almost all categories, such as materials, energy, water, biodiversity, emissions, effluents and waste, products and services, and general environmental expenditures. As for social disclosures, PKN Orlen covers the majority of the indicators about labour practices and adequate work disclosures and human rights disclosures, and also a few indicators for social and product responsibility disclosures.

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Ecopetrol: No report. Hellenic Petroleum: Hellenic Petroleum, except for four indicators that have to do with the risk and opportunities determined by the carbon price, the volume of used water, the amount of drilling waste and the operations at sites with Indigenous communities, covers the whole framework of the GRI indicators. Verdict: Fulfilled reporting. World Fuel Services: No report. China National Aviation Fuel: China National Aviation Fuel gives poor reporting to the public. As for economic disclosures, it offers information about its direct economic performance and about its economic development of local communities. About environment disclosures, it focuses on energy and emissions, and for social disclosures it covers the indicators for new hiring, safety, training and equal opportunity; as for product responsibility, it covers the indicators for customer health and safety and product and service information. Plains All American Pipeline: Plains All American Pipeline’s reporting focuses on the economic performance of the company. It presents a significant amount of information about economics—unlike environmental disclosures, which, except for the indicator regarding initiatives to mitigate environmental impacts of the products and services, is not covered at all. As for social disclosures, Plains All American Pipeline covers indicators about employment, safety, training and education, and local communities. Verdict: Poor reporting. Cosmo Oil: Cosmo Oil is an Asian company which also gives poor reporting to the public; and this report is from 2006, so it contains information referring to many years ago. As for economics, Cosmo Oil reports only on direct values and distributions of the company. Regarding environmental disclosures, it gives information on energy consumption, reduction and renewable energy and also on water withdrawal, emissions, product efficiency, transportation impacts and environment expenditures. As for social disclosures, Cosmo Oil covers GRI indicators regarding the percentage of employees who are covered by collective bargaining agreements, regarding health and

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safety topics which are covered by international agreements, and concerning human rights of employees, children and women and customer satisfaction. Motor Oil Hellas: Motor Oil Hellas only reports on some environmental results of the company’s performance regarding total production of hydrocarbons, the refinery throughputs, and also production of chemicals and the proportion of materials used which are derived from recycled materials. It also reports on the energy saved due to efficiency improvements, water withdrawal, emissions, waste and transportation impacts. Verdict: Poor reporting. Murphy Oil: No report. Oil and Natural Gas: No report. Tesoro: Tesoro is an American company which reports on its direct economic performance and retirement obligations, and on its expenses for local procurement and local investments and reserves. As for the environmental disclosures, Tesoro covers GRI indicators for energy consumption, water withdrawal, emissions, waste, fines, transportation impacts and environment expenditures. Finally, for social disclosures, Tesoro analyses very few indicators; they are mainly for labour practices and adequate work disclosures. Verdict: Poor reporting. GasTerra: GasTerra covers only 14 GRI indicators: 3 indicators for economic disclosures, 3 for environmental and 8 for social. GasTerra reports on the direct economic performance of the company, its retirement obligations and its local procurement. As for environmental disclosures, it provides information on energy consumption, energy efficiency, renewable energy and energy efficient products. As regards social disclosures, the reporting of the company mainly concerns labour practices and adequate work disclosures. Verdict: Poor reporting. Gas Natural: Gas Natural provides reports for its direct economic performance, the risks and opportunities determined by carbon price, its

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retirement obligations, the government’s financial support to the company and its expenses for local suppliers. As far as environmental disclosures are concerned, Gas Natural almost totally covers them. For social disclosures, Gas Natural covers all of the indicators concerning labour practices and adequate work disclosures. It also covers the majority of the indicators regarding human rights and social and product responsibility disclosures. Verdict: Fulfilled reporting. Ultrapar: No report. S-Oil: No report. Showa Shell Sekiyu: Showa Shell Sekiyu, in its reporting, supplies information on its direct economic performance, the risks and opportunities determined by carbon price, and its expenses for local investments and the reserves. As for environmental disclosures, the company covers almost all indicators for materials, energy, water, biodiversity and emissions and also the indicator for total weight of waste. Finally, for social disclosures, Showa Shell Sekiyu covers all of the labour practices and adequate work disclosures, excepting labour/management relations. It also covers the indicators concerning investment agreements for human rights, nondiscrimination, child labour, and equal remuneration for men and women. Regarding product responsibility disclosures, Showa Shell Sekiyu reports on customer health and safety, product and service labelling, marketing and fossil fuel substitutes. Formosa Petrochemical: Formosa Petrochemical covers few GRI disclosures. The company, in its reporting, focuses mainly on economics, presenting a lot of details on economic performance, but for environmental and social disclosures it covers some indicators regarding energy and water and concerning safety, training and education, and marketing. Verdict: Poor reporting. MOL: MOL reports on its direct economic performance and the risks and opportunities determined by carbon price. It also reports on its basic salary levels by region, the government’s support to the company, and its expenses for local suppliers and investments. As

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regards environmental disclosures, MOL covers mainly GRI indicators for biodiversity, emissions and waste. As for social disclosures, MOL analyses few indicators for safety, training and education, non-discrimination and equal remuneration for men and women, Indigenous rights and customer satisfaction. Verdict: Poor reporting. Korea Gas: No report. Surgutneftegas: No report. The following charts will show a lot of information regarding the level of reporting from the oil and gas companies and also where they are focused and where they are not. The characterising of a report as a “fulfilled” one or a “poor” one is based entirely on how much it covered the GRI disclosures framework. Making the analysis easier, the companies are seperated into groups by region. Figure 2: The biggest oil and gas companies based on revenues for 2013 by region

OIL AND GAS COMPANIES BY REGION RUSSIAN AMERICAN ARABIAN

5 6 8 Number of companies

AMERICAN (USA) ASIAN EUROPEAN

12 15 15

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Figure 3: The level of reporting from the European oil and gas companies

European Oil and Gas Companies 2.5 2 1.5 fulfilled reporting

1

good reporting

0.5

poor reporting

0 MOL

Gas Natural

GasTerra

Motor Oil Hellas

Hellenic Petroleum

PKN Orlen

Centrica

OMV Group

Repsol

Statoil

GDF Suez

Eni

Total SA

BP

Royal Dutch Shell

All the European companies on the list publish reporting. In addition, 12 of 15 of them have fulfilled or good reporting according to the GRI framework. Only companies from the lower positions in the ranking for the biggest oil and gas companies for 2013 by revenue, such as Motor Oil Hellas, Gas Terra and MOL, present poor reporting.

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Figure 4: The most covered GRI indicators of the European reporting companies

European Oil and Gas Companies 14.2 14 13.8 13.6 13.4 13.2 13 12.8 12.6 12.4 EC1

EN8

EN16

EN20

EN21

Number of companies

LA1

LA7

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Figure 5: The less covered GRI indicators of the European reporting companies

European Oil and Gas Companies 4.5 4 3.5 3 2.5 2 1.5 1 0.5 0 EN25

OG7

EN27

OG8

OG11

PR7

PR8

PR9

Number of companies

As regards specific GRI indicators, European companies cover most in their reporting, as we can see from Figure 5, and are reporting on their direct economic performance, water, greenhouse and other emissions, the total workforce, and the health and safety for the employees. On the other hand, the specific GRI indicators that are covered less by European companies deal with environmental impacts and waste and product responsibility.

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Figure 6: The level of reporting from the Asian oil and gas companies

Asian Oil and Gas Companies 2.5

2

1.5

1

fulfilled reporting good reporting

0.5

poor reporting no reporting

0 Korea Gas

Formosa Petrochemical

Showa Shell Sekiyu

S-Oil

Cosmo Oil

China National Aviation Fuel

GS Caltex

Idemitsu Kosan

Pertamina

China National Offshore Oil

PTT

Petronas

JX Holdings

China National Petroleum

Sinopec

Unlike the European ones, the Asian companies, according to Figure 6, do not follow the GRI disclosures at their reporting. Only GS Caltex publishes fulfilled reporting, whereas eight of the companies present poor reporting or do not publish reporting at all.

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Figure 7: The most covered GRI indicators of the Asian reporting companies

Asian Oil and Gas Companies 13.5 13 12.5 12 11.5 11 10.5 10 EC1

EN18

LA7

PR1

Number of companies Figure 8: The less covered GRI indicators of the Asian reporting companies

Asian Oil and Gas Companies 1 0.9 0.8 0.7 0.6 0.5 0.4 0.3 0.2 0.1 0 EN15

EN24

OG7

EN27

HR10

Number of companies

OG9

OG13

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The Asian oil and gas companies mostly cover the GRI indicators regarding their direct economic performance, reduction of greenhouse emissions, and health and safety for the employees and also for the customers with their product responsibility. Regarding the less covered indicators, not one of the Asian companies covered any indicators for impacts on the environment from their operations or the impacts on human rights or Indigenous people or safety issues. Figure 9: The level of reporting from the American oil and gas companies

American (USA) Oil and Gas Companies 2.5 2 1.5

fulfilled reporting good reporting

1

poor reporting

0.5

no reporting

0 Tesoro

Murphy Oil

Plains All American Pipeline

World Fuel Services

Hess Corporation

Enterprise Products

Sunoco

Marathon Petroleum

Valero Energy

Conoco Phillips

Chevron Corporation

Exxon Mobil

Half of the American companies publish fulfilled or good reporting, and the other half reported poorly or not at all. Furthermore, when the Hess Corporation, which is not even a major player, is the only one with fulfilled reporting, the conclusion is that the level of reporting of the American companies is low.

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Figure 10: The most covered GRI indicators of the American reporting companies

American (USA) Oil and Gas Companie 8.2 8 7.8 7.6 7.4 7.2 7 6.8 6.6 6.4

Number of companies

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Figure 11: The less covered GRI indicators of the American reporting companies

American (USA) Oil and Gas Companies 1.2 1 0.8 0.6 0.4 0.2 0

Number of companies

The findings for the American companies are mixed. Some of them present a lot of their economic data in their reporting. GRI indicators for energy consumption, GHG emissions, number of spills, health and safety, and training and education for skills management are mostly covered by the American oil and gas companies. As regards the less covered GRI indicators, they concern renewable energy, impacts and waste, and many social indicators.

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Figure 12: The level of reporting from the Arab oil and gas companies

Arab Oil and Gas Companies 2.5 2 fulfilled reporting

1.5

good reporting no reporting

1 0.5 0 Oil and Natural Gas

Hindustan Petroleum

Bharat Petroleum

Reliance Industries

Sonatrach

Indian Oil

National Iranian Oil

Saudi Aramco

The majority of the Arab oil and gas companies on the list do not publish reporting. Although only 3 of 8 of these companies do so, their reports are at a very good level.

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Figure 13: The most covered GRI indicators of Arab reporting companies

Arab Oil and Gas Companies 3.5 3 2.5 2 1.5 1 0.5 0 SO5 SO3 SO1 HR6 HR1 LA14 LA12 LA11 LA6 LA2 EN22 EN21 EN18 EN16 EN12 EN10 EN8 EN5 EN2 EN1 EC8 EC7 EC6 Number of companies Figure 14: The less covered GRI indicators of Arab reporting companies

Arab Oil and Gas Companies 1 0.8 0.6 0.4 0.2 0 EN15

EN24

EN29

Number of companies

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Of course, from just 3 reporting companies, it is very difficult and not accurate to make conclusions, but it is still possible to highlight a trend. From Figure 14, we see that Arab companies emphasise social disclosures and present some economic data and results for emissions. Figure 15: The level of reporting from the American oil and gas companies

American Oil and Gas Companies 2.5

2

1.5 fulfilled reporting good reporting 1 no reporting 0.5

0 Petrobras

Pemex

PDVSA

Suncor Energy

Ecopetrol

Ultrapar

The American companies, except the ones from the United States, which publish reporting, such as: Petrobras, Pemex, PDVSA and Suncor Energy, present excellent reports for the reader, even if they are not all fulfilled according to the GRI indicators.

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Figure 16: The most covered GRI indicators of American reporting companies

American Oil and Gas Companies 4.5 4 3.5 3 2.5 2 1.5 1 0.5 0

Number of companies

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Figure 17: The less covered GRI indicators of American reporting companies

American Oil and Gas Companies 2.5 2 1.5 1 0.5 0 PR9

PR7

PR5

PR2

SO7

OG11

HR11

HR8

HR2

LA12

LA4

LA3

EN29

OG8

EN24

EN15

OG3

EN7

EC2

Number of companies

Like the Arab companies, the sample is small for specific conclusions. The disclosures of these 4 American companies focused more on energy consumption, emissions and waste. On the other hand, the environmental disclosures and total workforce, health and safety, and equal remuneration for women and men, as well as social disclosures, are less considered. Additionally, the less covered indicators regarded all the main categories of GRI disclosures.

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Figure 18: The level of reporting from the Russian oil and gas companies

Russian Oil and Gas Companies 2.5 2 1.5 1 0.5 0

fulfilled reporting good reporting no reporting

Figure 19: The most covered GRI indicators of Russian reporting companies

Russian Oil and Gas Companies 3.5 3 2.5 2 1.5 1 0.5 0

number of companies

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Figure 20: The less covered GRI indicators of Russian reporting companies

Russian Oil and Gas Companies 1 0.8 0.6 0.4 0.2 0 EN15

EN25

LA12

HR8

Number of companies

The Russian companies that publish reporting are Gazprom, Lukoil and Rosneft. Their reporting is adequate, covering the majority of the disclosures of the GRI framework excepting a few specific indicators for impacts on place of operations, reviews for the development of the employees, and security training of personnel for human rights. A general picture regarding the reporting companies by region says that many of the American companies, like: Valero Energy, Enterprise Products, World Fuel Services and Murphy Oil, either do not provide reports to the public or deliver poor reporting, like Tesoro. Most of the American companies in their reporting, give information about their economic performance, give some data about their environmental performance and look as though they are not so interested in social disclosures. The remaining American oil and gas companies publish reporting and provide high-level reports. All the European companies of the specific ranking publish reporting, and the majority of them, such as: BP, Eni, Repsol and Hellenic Petroleum, have fulfilled reporting regarding the GRI indicators. The Asian companies focus on the protection of the environment, personnel and infrastructures with training programmes and high technology levels. The Arab companies look to be more sensitive and wish to prove their interest in social issues and human rights, especially for women and children, in such areas as equal remuneration for men and women and child labour.

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Figure 21: The level of reporting from the oil and gas companies

The Level of Reporting for the Oil and Gas Companies Based on GRI Disclosures 14, 4 23% 15, 25% 1 11, 18%

fulfilled reporting good reporting poor reporting

21, 34% 2

In total, 35 of 61 companies in this research publish fulfilled or good reporting according to the GRI disclosures. This constitutes a percentage of 57% of them, and the remaining 43% publish poor reporting or do not provide any publicly available reporting. Considering that these were the biggest oil and gas companies by revenue for 2013, the level of reporting as a total result is less than what is expected. The GRI indicators which all oil and gas companies in their reporting cover concern direct economic performance, direct GHG emissions, NOX, SOX, and other air emissions, and regard occupational health and safety dealing with the type of injuries, injury rates, lost days and fatalities by region and gender.

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Figure 22: The most covered GRI indicators of the reporting companies

The most covered GRI indicators from the oil and gas companies reporting 43 42 41 40 39 38 37 EC1

EN16

EN20

LA7

number of companies

Some of the GRI indicators that are not sufficiently included in reports are the following: the identity, size, protected status and biodiversity value of water bodies and related habitats significantly affected by the organisations’ discharges of water and runoff; the percentage of products sold and their packaging materials that are reclaimed by category; the benzene, lead and sulphur contents in fuels; and the number of sites that have been decommissioned and sites that are in the process of being decommissioned.

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Figure 23: The less covered GRI indicators of the reporting companies

The less covered GRI indicators from the oil and gas companies 12 10 8 6 4 2 0 EN25

EN27

OG8

OG11

number of companies

5. Conclusions A general conclusion from this research is that oil and gas companies globally do not place enough value on reporting. This of course is changing by region, though it is still the main impression. For example: overall, European companies publish reporting—unlike Arab companies, where only 3 out of 8 do so. An issue with the reporting of the oil and gas companies and generally with big international companies, which have an impact on the environment and societal life at the sites of their operation, is the accuracy of the information about their performance that they provide to the public. Non-financial reporting is a requirement coming mostly from the local communities, to have knowledge about their performance as well as environmental impacts and the changes in their lives. Only in recent years does legislation for reporting appear, and this is only for a small number of regions and basically for economic data. This gives the chance to many companies, like the Asian and most of the Arab oil and gas companies, to produce poor reporting or no reporting at all. This fact was an obstacle for this research work, which limited its possibility to give better results, but it also offers the chance for future projects to urge or motivate these

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companies to provide the public with sufficient and accurate economic, environmental and social data of their performance. The most requested information for the oil and gas companies to share among the public is their economic performance. International organisations force the companies to produce correct economic results so as to attract new investors and shareholders, giving them a true picture of the economic level of the company. According to this analysis, the American companies in particular maintain their economic level and current situation. Moreover, companies report about their GHG emissions and other air emissions as far as the environmental part of their reporting is concerned. They focus on health and safety issues and likewise on injury types, injury rates, working days lost and fatalities by region and gender. Another limitation of this project, excepting the number of oil and gas companies that present poor reporting or do not publish reporting at all, is the relevance of the indicators. Many of the reporting companies, even if they have fulfilled reporting, avoid covering them. This is because most companies use the 3.1 GRI version for their reporting. This version is not the newest, but it is the most applicable, and because of that this research is based on it. Future research into oil and gas companies may deal not only with the current needs of the markets and stakeholders for reporting but also with future trends. For example, the framework for reporting now is based on three pillars: the economic, environmental and social performance of the oil and gas companies. Moreover, it is known that oil and gas companies operate also in hostile environments where wars between different religious fanatics and tribal fights exist. Further research may propose specific disclosures to avoid terrorist attacks or react efficiently to these types of circumstances. Future research could also propose ideas, plans, measures and targets for the oil and gas companies with poor reporting to improve their presentation. For example, the majority of Asian companies publish reporting, but their reporting is very general and they are not focusing on giving substantial information to the public. There is no doubt that the oil and gas companies in the majority of their operations offer a lot of opportunities for economic development and employment for the local communities at the sites of operation. On the other hand, there has been a great debate over the last thirty years about safety, environmental impacts and human rights, and about how much the oil and gas companies care, pay attention to and work on these categories.

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There are a variety of measures for CSR disclosures. Recently, a popular one is based on natural language analysis (Dhaliwal et al. 2012; Nazari et al. 2017). Measures for ensuring the protection of the environment, human rights and working conditions during the operations of the oil and gas companies were proposed over recent years, and CSR with a GRI disclosure framework is one of them. But reporting must be an obligation by international and national laws for the companies to be more effective because, in such a way, giving information about their performance to the public would take on a more official character. In addition, the presence of a global organisation without political, governmental and economical influences, which would not only ensure the accuracy of the information about their performance from the companies but would also support the oil and gas companies to succeed in economic growth and adopt a social and human rights mentality, would be important. Members of this organisation could be highly educated and also socially motivated people from different countries, and their main target would be to transmit the message “Respect the Human and Save the Environment” to the oil and gas companies.

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