CSR and Sustainability in the Public Sector [1st ed.] 9789811563652, 9789811563669

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Approaches to Global Sustainability, Markets, and Governance Series Editors: David Crowther · Shahla Seifi

David Crowther Shahla Seifi   Editors

CSR and Sustainability in the Public Sector

Approaches to Global Sustainability, Markets, and Governance Series Editors David Crowther, Faculty of Business and Law, De Montfort University, Leicester, UK Shahla Seifi, University of Derby, Derby, UK

Approaches to Global Sustainability, Markets, and Governance takes a fresh and global approach to issues of corporate social responsibility, regulation, governance, and sustainability. It encompasses such issues as: environmental sustainability and managing the resources of the world; geopolitics and sustainability; global markets and their regulation; governance and the role of supranational bodies; sustainable production and resource acquisition; society and sustainability. Although primarily a business and management series, it is interdisciplinary and includes contributions from the social sciences, technology, engineering, politics, philosophy, and other disciplines. It focuses on the issues at a meta-level, and investigates the ideas, organisation, and infrastructure required to address them. The series is grounded in the belief that any global consideration of sustainability must include such issues as governance, regulation, geopolitics, the environment, and economic activity in combination to recognise the issues and develop solutions for the planet. At present such global meta-analysis is rare as current research assumes that the identification of local best practice will lead to solutions, and individual disciplines act in isolation rather than being combined to identify truly global issues and solutions.

More information about this series at http://www.springer.com/series/15778

David Crowther Shahla Seifi •

Editors

CSR and Sustainability in the Public Sector

123

Editors David Crowther Faculty of Business and Law De Montford University Leicester, UK

Shahla Seifi University of Derby Derby, UK

ISSN 2520-8772 ISSN 2520-8780 (electronic) Approaches to Global Sustainability, Markets, and Governance ISBN 978-981-15-6365-2 ISBN 978-981-15-6366-9 (eBook) https://doi.org/10.1007/978-981-15-6366-9 © The Editor(s) (if applicable) and The Author(s), under exclusive license to Springer Nature Singapore Pte Ltd. 2020 This work is subject to copyright. All rights are solely and exclusively licensed by the Publisher, whether the whole or part of the material is concerned, specifically the rights of translation, reprinting, reuse of illustrations, recitation, broadcasting, reproduction on microfilms or in any other physical way, and transmission or information storage and retrieval, electronic adaptation, computer software, or by similar or dissimilar methodology now known or hereafter developed. The use of general descriptive names, registered names, trademarks, service marks, etc. in this publication does not imply, even in the absence of a specific statement, that such names are exempt from the relevant protective laws and regulations and therefore free for general use. The publisher, the authors and the editors are safe to assume that the advice and information in this book are believed to be true and accurate at the date of publication. Neither the publisher nor the authors or the editors give a warranty, express or implied, with respect to the material contained herein or for any errors or omissions that may have been made. The publisher remains neutral with regard to jurisdictional claims in published maps and institutional affiliations. This Springer imprint is published by the registered company Springer Nature Singapore Pte Ltd. The registered company address is: 152 Beach Road, #21-01/04 Gateway East, Singapore 189721, Singapore

Acknowledgements

The editors would like to acknowledge the Social Responsibility Research Network and all participants at the 18th International Conference on Corporate Social Responsibility and 9th Organisational Governance Conference held in Barcelos, Portugal, during September 2019.

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Contents

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The Developing Public Sector Perspective . . . . . . . . . . . . . . . . . . . . Shahla Seifi and David Crowther

Part I 2

3

4

5

6

Social Responsibility in the Public Sector

Accountability and Sustainability Reporting in the Public Sector. Evidence from Italian Municipalities . . . . . . . . . . . . . . . . . . . . . . . . Fabiana Roberto, Roberto Maglio, and Andrea Rey

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The Portuguese Tax System for Non-profit Institutions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Fátima David, Lúcia Marques, and Rute Abreu

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Environmental Accounting: A Case Study of Implementation in Brazilian Public Airports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Iris Cristina Ferreira da Silva, Fued Abrão Junior, and José Maria Dias Filho

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Sustainable Development of Human and Social Capital in a Socioeconomically Challenged Community in Brazil . . . . . . . . Renuka Vivekananthan

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The Theory of Attachment in Contexts of Public and Social Marketing: Study of the Program “Portugal Sou Eu” . . . . . . . . . . Ana Cardoso and Bruno Sousa

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Part II 7

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Developing Sustainability in the Public Sector

Sustainability and Corporate Social Responsibility in the Perspective of Social Economy Entities: A Bibliometric Study . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 113 Brízida Tomé, Ana Maria Bandeira, Graça Azevedo, and Alberto J. Costa

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Emerging Trends on Sustainability/Integrated Reporting: Public and Private Perspectives . . . . . . . . . . . . . . . . . . . . . . . . . . . 137 Sónia Monteiro, Verónica Ribeiro, and Kátia Lemos

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CSR and Nation Building Agenda in India: An Accounting Framework for “Multiplier” Effect of Corporate Social Responsibility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 151 Taral Pathak and Ruchi Tewari

10 Why Some Public Accounting Reforms Tend to Fail: Evidence from Belgian Public Accounting Reform . . . . . . . . . . . . . . . . . . . . . 165 Christos Tsatsis Part III

The Role of the University

11 The Importance of Ethics and Values for the Students in the Polytechnic of Guarda—Portugal . . . . . . . . . . . . . . . . . . . . . 187 Francisco Tomé and Ermelinda Oliveira 12 Social Responsibility at the Polytechnic Institute of Portalegre: From the Experience Gained to the New Challenges . . . . . . . . . . . 197 Joaquim Mourato, João Alves, Francisco Morais, Isabel Mourato, and Maria Maridalho 13 Social Responsibility: Proposal of Social Re-inclusion of Inmates of the Brazilian Prison System Through Higher Education . . . . . . 213 Ana Lúcia Fontes de Souza Vasconcelos, Patrícia Tuma Martins Bertolin, Bruna Angotti, and Rute Abreu 14 The Social Entrepreneurship and the Development of Human Capital Building Social Capital: The Case of the University of Fortaleza . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 225 Randal Martins Pompeu and Marcus Mauricius Holanda 15 The Future of the Accounting Degree . . . . . . . . . . . . . . . . . . . . . . . 239 Rute Abreu and Ermelinda Oliveira

Contributors

Rute Abreu Instituto Politécnico da Guarda/UDI-IPG/CICF-IPCA/CISeD-IPV, Guarda, Portugal João Alves Instituto Politécnico de Portalegre, Centro de Investigação para Valorização dos Recursos Endógenos (VALORIZA-IPP), Portalegre, Portugal Bruna Angotti Universidade Presbiteriana Mackenzie, São Paulo, Brazil Graça Azevedo Research Centre on Accounting and Taxation, Higher Institute for Accountancy and Administration of Aveiro University, Aveiro, Portugal Ana Maria Bandeira Polytechnic Institute of Porto, Porto, Portugal Patrícia Tuma Martins Bertolin Universidade Presbiteriana Mackenzie, São Paulo, Brazil Ana Cardoso Polytechnic Institute of Cavado and Ave, CiTUR and UNIAG research member, Barcelos, Portugal Alberto J. Costa Research Centre on Accounting and Taxation, Higher Institute for Accountancy and Administration of Aveiro University, Aveiro, Portugal David Crowther De Montfort University, Leicester, UK Iris Cristina Ferreira da Silva PPGCONT, Federal University of Bahia (UFBA), Salvador, Brazil Fátima David Instituto Politécnico da Guarda, Guarda, Portugal Ana Lúcia Fontes de Souza Vasconcelos Universidade Presbiteriana Mackenzie, São Paulo, Brazil José Maria Dias Filho PPGCONT, Federal University of Bahia (UFBA), Salvador, Brazil Marcus Mauricius Holanda University of Fortaleza, Fortaleza, Brazil

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Contributors

Fued Abrão Junior Brazilian Airport Infrastructure Company (Infraero), Brasília, Brazil Kátia Lemos Polytechnic Institute of Cavado and Ave, Research Centre on Accounting and Taxation, Barcelos, Portugal Roberto Maglio Department of Economics, Management, Institution, University of Naples “Federico II”, Naples, Italy Maria Maridalho Instituto Politécnico de Portalegre, Centro de Investigação para Valorização dos Recursos Endógenos (VALORIZA-IPP), Portalegre, Portugal Lúcia Marques Instituto Politécnico da Guarda, Guarda, Portugal Sónia Monteiro Polytechnic Institute of Cavado and Ave, Research Centre on Accounting and Taxation, Barcelos, Portugal Francisco Morais Instituto Politécnico de Portalegre, Centro de Investigação para Valorização dos Recursos Endógenos (VALORIZA-IPP), Portalegre, Portugal Isabel Mourato Instituto Politécnico de Portalegre, Centro de Investigação para Valorização dos Recursos Endógenos (VALORIZA-IPP), Portalegre, Portugal Joaquim Mourato Instituto Politécnico de Portalegre, Centro de Investigação para Valorização dos Recursos Endógenos (VALORIZA-IPP), Portalegre, Portugal Ermelinda Oliveira Instituto Politécnico da Guarda/UDI-IPG/Citur-Guarda, Guarda, Portugal Taral Pathak MICA-the School of Ideas, Ahmedabad, Gujarat, India Randal Martins Pompeu University of Fortaleza, Fortaleza, Brazil Andrea Rey Department of Economics, Management, Institution, University of Naples “Federico II”, Naples, Italy Verónica Ribeiro Polytechnic Institute of Cavado and Ave, Research Centre on Accounting and Taxation, Barcelos, Portugal Fabiana Roberto Department of Economics, Management, Institution, University of Naples “Federico II”, Naples, Italy Shahla Seifi University of Derby, Derby, UK Bruno Sousa Polytechnic Institute of Cavado and Ave, CiTUR and UNIAG research member, Barcelos, Portugal Ruchi Tewari MICA-the School of Ideas, Ahmedabad, Gujarat, India Brízida Tomé Polytechnic Institute of Porto, Porto, Portugal Francisco Tomé Insituto Politécnico da Guarda, Guarda, Portugal

Contributors

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Christos Tsatsis Centre de Comptabilité et Contrôle, Universite Libre de Bruxelles, Brussels, Belgium Renuka Vivekananthan University of Fortaleza, Fortaleza, Brazil

Chapter 1

The Developing Public Sector Perspective Shahla Seifi and David Crowther

Abstract Commonly, the matter of corporate social responsibility has been applied, as the name suggests, to corporations alone. The issues, however, apply equally to all organisations including those of the public sector. This chapter looks at some of the important issues in terms of Brundtland and subsequent actions and initiatives. It also looks at the matter of sustainability to conclude that the issues are subsumed within a concern for social responsibility. In doing so, it argues that this is all related to good governance and therefore the chapter sets the scene for the remainder of the book. Keywords Sustainable development · Brundtland · Environment · Standards · Governance

1.1 Introduction Although the generally accepted term is Corporate Social Responsibility, it is widely understood that the various aspects of CSR apply equally to all organisations, whether profit-seeking or not. Thus, CSR applies in an equal amount to the public sector. There is a wide variety of different public sector organisations, ranging from universities to government agencies to airports and prisons—and all are affected by the implications of social responsibility. Unfortunately, this area of the economy has been relatively neglected in CSR research and this book sets out to redress the balance. We start by looking at some general concepts relating to governance and social responsibility. According to ISO 26000, there are seven principles that organisations should abide by as follows: accountability, transparency, ethical behaviour, respect for stakeholder interests, respect for the rule of law, respect for international norms of behaviour, S. Seifi University of Derby, Derby, UK D. Crowther (B) De Montfort University, Leicester, UK e-mail: [email protected] © The Editor(s) (if applicable) and The Author(s), under exclusive license to Springer Nature Singapore Pte Ltd. 2020 D. Crowther and S. Seifi (eds.), CSR and Sustainability in the Public Sector, Approaches to Global Sustainability, Markets, and Governance, https://doi.org/10.1007/978-981-15-6366-9_1

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respect for human rights. Here, we can see that an enterprise is deemed to be more responsible than before. Their responsibility extends beyond simply improving the profitability of providing a service. But, as was pointed out during the ISO General Assembly in 2008, the existing international standards have not yet paid enough attention to sustainable development. This fact is obviously noticed in the field of energy consumption. Lack of universally recognised energy-labelling standards is a hindrance to sustainable development, as it prevents consumers from making the most sustainable decisions. Enhanced public awareness and concern about the environmental impact of production systems and their products is a key point in energy management. Although the process and product designs concerning such concepts as energy consumption, recycling and product reuse after end-of-life are increasingly confronting legal limitations, global trading still lacks enough comprehensive regulations and standards on the above-mentioned concepts. No international standards have so far been developed on the matter of sustainability.1 International standards only state how to measure energy consumption. It seems that EU Directives are exemplars of good practice: so much so that international legislative bodies follow them. Directives on eco-labelling and energy labelling are outstanding examples. Another example of international awareness about diverse impacts of products and production processes is witnessed through reduced use of materials such as asbestos or legal force to use CFC-free refrigerants. Seemingly, the motto “polluter shall pay” is generally accepted. Accordingly, manufacturers should assume the costs of removing the pollution they have created. And of course, in the long run, less energy consumption equals less costs. Researchers have assessed the costs burdened upon the shoulders of countries to remove pollutants they have entered into their environment through inefficient production processes and their products. A good energy practice results in less external costs.

1.2 The Brundtland Report and After It was in 1983 when the World Commission on Environment and Development (WCED) was held by the United Nations chaired by Gro Harlem Brundtland. This commission is commonly known as the Brundtland Commission. The report produced by the commission as Our Common Future also became famous as the Brundtland Report. The main aim of this commission was to address the concern about what it called the rapid devastation of the environment for human beings and shrinkage of natural resources and the results of such devastation on social and economic development. The UN General Assembly addressed the environmental challenges as global concerns and pointed out the necessity of setting out policies 1 ISO26000 is concerned with social responsibility and therefore indirectly with sustainability. It is,

however, only advisory rather than a true standard. Actually, the definition of sustainability has not yet been agreed upon (see Aras & Crowther, 2009) and so no standard can be forthcoming.

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for sustainable development. It was uttered clearly in the report that economic development should progress sustainably and with no shrinkage in natural resources or with no deterioration of the environment. Before, such a concern for sustainability was only expressed by some NGOs. The primary concern was on assuring equity on a global level, and on redistribution of resources towards the nations suffering from poverty while assisting their economic development. According to the report, it is possible to attain equity, growth and environmental wellbeing—the Triple Bottom Line—simultaneously and that, for every country, there is the feasibility of acquiring complete economic prosperity and enhancement of their resource base. It was also mentioned that such equity and growth is achievable by social and technological advancements. In 1987, Oxford University Press published the Brundtland Commission report, Our Common Future. The definition used in this report for sustainable development is still used validly: Sustainable Development is the development that meets the requirements of the present generations without compromising the ability of future generations to meet their own needs. This includes two key concepts: • Needs, particularly the basic needs of the poor nations which need to be given priority; and • Limits put through social and technological arrangements on the ability of environment to meet the requirements of present and future generations. (WCED, 1987: 16)

Five years afterwards, there was another conference held in 1992 in Rio de Janeiro.2 The conference, called the United Nations Conference on Environment and Development, later became famous as the Earth Summit. In this conference delegates from 172 countries, 108 of which were the heads of governments or countries, participated. Moreover, more than two thousand people delegated NGOs and there were more than 15 thousand people with consultative status attending the parallel sessions. In this conference the following issues were addressed: 1. Analysing the production patterns—in particular when hazardous and poisonous wastes or components were involved, e.g. petrol lead; 2. Replacement of fossil fuels with renewable energy sources. The relationship between fossil fuel and climate change was recognised then; 3. Improved use of public transport to lower problems related to health, traffic and emissions due to smog and air pollution; 4. Water shortage as a growing concern in the world. This conference had an important outcome which was the agreement on the Climate Change Convention and it led to another achievement which was the Kyoto Protocol.3 This has been modified several times and is currently known as the Paris 2 In

2012 this was repeated but with lower success and lower prominence. agreement, the Kyoto Protocol, is arranged in the United Nations Framework Convention on Climate Change. Countries, which have joined in this agreement, are committed to lower carbon dioxide emissions and five more greenhouse gases, alternatively if they keep their emission levels or do not lower their emissions they get involved in what is called emission trading. The protocol

3 This

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Accord, agreeing to limit climate change to 1.5°. This has been signed up to by almost all nations although it is perhaps significant that the USA, under the leadership of Trump, has recently decided not to be included. The other agreement was about the lands belonging to the indigenous people, and accordingly, it was agreed not to do any activities in such lands that might be environmentally harmful or that might be considered inappropriate culturally. Also, The Biological Diversity Convention started at this conference with the aim of redefining measures for money supplies that would not destruct natural ecology or lead to non-economic growths. Agenda 21 was another outcome in relation with sustainable development. The number 21 is used to declare our century and the aim was to imply its long term and futuristic expectations. This agenda lists the measures to be taken by governments and nations and the UN in the fields of their impact on their environment. It specifies three key points as information, integration, and participation which would assist countries in attaining sustainable development which includes its interdependent pillars. The emphasis of this agenda was on that for sustainable development everybody uses and provides information and that the traditional sector-oriented ways of doing business should be changed with modern ways involving cross-sectoral co-ordination and that social and environmental concerns should be integrated into all development processes. Besides the emphasis was on decision-making through public participation in broad scales as a key requirement to attain sustainable development. The drafting of this agenda started in 1989 through sessions of consulting and negotiating and, finally, it was announced at the conference. The agenda has forty chapters in four sections and in almost 1000 pages considered items as follows: Section I: socio-economic aspects Here is the list of main issues: • • • • • •

Poverty eradication Consumption awareness Birth and population control Health and hygiene Patterns of Settlement of people Decision-making based on development and environment.

Section II: resource management and conservation Here is the list of main issues: • • • •

Protecting the atmosphere Fighting with deforestation Biological diversity conservation Pollution control.

was adopted in 1997 and ran from 2008 until 2012. To date, the USA has not signed the protocol and Canada withdrew in 2012. It was succeeded by the Doha Amendment that has not currently been ratified by enough countries to make it an international requirement and so the future of the Protocol seems uncertain. Subsequently the Paris Agreement is current.

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Section III: empowerment of principal groups Here is the list of main issues: • Women and children, non-governmental organisations, workers, businesses and authorities locally. Section IV: implementing tools Here is the list of main issues: • Transfer of technology and science • Educating • International organisations and mechanisms and financial arrangements. On the 20th anniversary of the release of the Brundtland Report, the World Business Council on Sustainable Development (WBCSD) provided a report of its own— Then and Now: Celebrating the 20th Anniversary of the Brundtland Report—which provided an update on the progress made in the intervening years. The WBCSD report gives an account of the Brundtland report but focuses particularly on how the WBCSD has developed itself as the business voice in the sustainable development arena and what actions they have taken towards the future. Although it is primarily about self-promotional, this report shows that the WBCSD has made some positive efforts over the years since Brundtland. Nevertheless, it also highlights that nearly 30 years after the original report, almost everything in the original report is still relevant today, including the warning about climate change. There is some cause for optimism though as climate change is now more of an accepted fact and global warming has entered popular consciousness as a cause for concern. So perhaps pressure from individuals will lead to the action which has been largely missing for the last 30 years. Summits and conferences concerned with climate change continue to occur on a reasonably regular basis. Indeed the Paris conference held in 2015 is actually the 21st such conference—many conferences without too much action! This conference, however, led to the Paris Agreement on action to reduce climate change. The agreement would come into force when ratified by at least 55 countries and, on Earth Day 2016,4 174 countries ratified it and it is now in force. The agreement is to limit global warming to less than 2% and to seek action to limit it to 1.5%. This requires the achievement of zero net anthropogenic greenhouse gas emissions5 before the middle of the century. The main countries crucial to achieving this are the USA and China and this is a problem as President Trump has withdrawn the USA from the accord (2017) and restricted funding for research into the creation of greenhouse gases (2018).

4 22nd 5 In

April 2016. other words emissions caused by human activity.

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1.3 Impacts and Implications of Environmental Issues According to Gray, Bebbington, and Walters (1993) when a company carries out some activity that affects the environment the conventional accounting system does not reflect the ways in which it has impacted that environment. The effects on the environment can either be positive, for instance by investing in public services like a landscaping project or a school or be negative, for instance, by causing pollution through mining activities. As a result of a company’s activities, some benefits, as well as costs, are imposed on the environment. Of course, that company with no consultation incurs such benefits and costs and as argued by Bebbington, Brown, and Frame (2007) in fact they shape part of the company’s operational functions. However, such activities are not included in the company’s conventional accounting,6 and as a result in its field of responsibility. Hence, these kinds of benefits and costs are externalised. The topic of externality is related to how a company externalises such costs and benefits to outside. Nevertheless, they remain within the ambit of the organisation’s activities and therefore within their accountability. Traditionally these costs and benefits that have been externalised are not considered to be related to the company and therefore are not included in the company’s accounting (Gray, 1992). However, the fact is that it is problematic and difficult to quantify and measure the impact of this externalisation—especially from an accounting point of view—which might be a reason for not including these effects in the company’s accounting (Crowther, 2002). However, maybe it is fair to say that whatever is externalised from a company include more costs than benefits—with the resulting net cost being an externalisation. Thus it can be seen that this externalisation has led to gains for a typical company and such a failure in accounting for all benefits and costs has resulted in overstatements in reporting the company’s value creation. The reason for this happening is limiting the company’s accounting evaluation to its inner impacts. Of course, a company can report its value creation by accounting through such externalisation of its costs and in this way excluding them from the accounting of their activities (Mathews, 1993). In an environment in which the ethos is changing to one in which the polluter must pay the costs of the effects of that pollution then CSR raises to prominence (Maunders & Burritt, 1991). A more direct environmental cost that an organisation has to incur is that of energy for its production processes. As energy sources become scarcer, or at least more costly to acquire, then this raises the price of energy and therefore operational costs of manufacturing. Here, CSR and operational efficiency intersect, as the former requires environmental efficiency, while the latter requires financial efficiency and both require the minimum usage of energy. 6 Although

these costs are considered as the costs of operation of a company and so are included in the accounting but traditional accounting is unable to thoroughly recognize all the benefits and costs due to these actions. Social and environmental accounting, as exemplified through Triple Bottom Line reporting includes these effects—see Aras and Crowther (2009).

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1.4 Manufacturing and the External Environment During the previous few decades, it has been recognised that the external environment is affected by the activities carried out by a company. This necessitates the accountability of the company not just to its shareholders but also to a greater audience. This necessity was initially put forward during the 1970s7 and some authors have considered the firm’s social performance as a member of the whole society. Ackerman (1975) argued that the majority of the large-scale businesses have already realised the need to adjust with the recent social environment of accountability towards the community but that the alignment of business to financial outcomes is a constraint for this. In the same way, McDonald and Puxty (1979) argue that shareholders are not anymore the only owners of the but as the firms operate in the society they are responsible for it and so firms are changing to be more accountable to all stakeholders. It also implies that the external environment that gets affected by the activities of the firm is concerned about such activities as the owners of the firm. Moreover, there are a number of stakeholders who have credible concerns regarding the activities of a firm, and the business activities impacts them. They have both an interest and also an influence on the formation of the activities of a firm. Their influence is so substantial that one can discuss that the power of these stakeholders is as a kind of quasi-ownership of the firm. The traditional role of accounting in reporting results was challenged by Gray, Owen, and Maunders (1987) and they presented the view that what is required is a stakeholder rather than ownership approach towards accountability. This is because shareholders are usually concerned with profits and dividends only while stakeholders take into account the negative and positive externalities generated by a business as well.8 Additionally, Rubenstein (1992) went a step ahead and emphasised on the need for the formulation of a social contract between businesses and stakeholders. The main concern of this social contract is for the future and the use of the term “sustainability” is a manifestation of it (Seifi & Crowther, 2012). Such a term appears everywhere either in the discourse of a company’s performance or in that of globalisation. Indeed, sustainability is a controversial issue for which there are so many definitions of what might mean by it. As stated by Crowther (2002), the widest definitions of the term are concerned about the impact of present actions upon the available options in the future and this is central to the Brundtland definition of sustainable development (WCED, 1987). By using the resources now nothing will remain to be used tomorrow, which is especially important if the amount of such resources is finite. Therefore, the quantity of extractive resources like oil, lead, iron or coal is finite and as they are used there will not be any available for later utilisation. In other words, those resources become depleted. There will be a time in the future when in order to the activities that are now performed by such resources alternatives 7 The idea has been promoted over a hundred years earlier by philosophers, like Robert Owen (1816). 8 Many

have criticised the merits of using a model including stakeholders for accountability and performance measurement. Details of this topic can be found for instance in Hutton (1997), Sternberg (1997, 1998) and Freedman and Reed (1983)’.

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will be required. Although it might happen in a distant future, however, what is of concern more now is that by depletion of a resource the cost for gaining what has remained will increase which therefore will lead to an increase in the company’s costs of operations.9 Thus, regardless of replaceability, the cost structure of business inevitably changes10 and this has implications for sustainability. Indeed an element of competition is injected—and supply becomes restricted but demand continues to increase as the world develops—and this raises the transaction costs of acquiring resources as firms must compete to acquire the restricted supply.

1.5 Standardising and Production A large quantity of production accompanied with less variety was the key feature of mass production as inducted by Henry Ford. This automated system offered an opportunity for customers to buy cars in any colour they wish on condition that this colour be black! (Ford, 1922). Car manufacturers started standardising their cars as a way of easing their production processes. Mass production lets the manufacturers utilise professional machinery without a need for highly skilled labour. In this method, manufacturers can produce standardised cars in high quantity and proper costs. This concept is called the “economies of scale”. On the website of the International Organisation for Standardisation (ISO) (www. iso.org), it is written that standards play a significant role in the modern world. Along with economic and scientific development, standards also are created or amended. Usually, people do not recognise the importance of standards as long as services and products satisfy their needs. But if a particular standard does not exist, then the effect will soon be observed. When the quality of products is not up to the mark, or they are hazardous or not reliable, or when they do not match with the already existing devices and equipment, then people easily notice it. Defining production standards at a particular time or period is directly associated with the industrial development level. More new standards or revised ones are needed by the creation of new ideas and innovations. Aras and Crowther (2008b) consider sustainability as a currently fashionable concept. But this fashionable and attractive concept would also need the creation of new standards. This is in line with the title of the ISO strategic plan. The plan is titled: “standards for a sustainable world”. This implies that ISO has aimed at introducing new standards that can effectively contribute to the accomplishment of sustainability. Yet many others are of the view that drastic amendments are needed in the process of standardisation to 9 Or when a species of an animal or a plant gets extinct it is not anymore possible to gain the benefits

from that. At the moment, lots of medications are manufactured using fauna and flora that are yet to be discovered. Therefore, it might become crucial in future. 10 At the present time, this has become very manifest in the dramatic changes in the price of oil, firstly as a dramatic rise in price and subsequently by an equally dramatic fall in price as fracking becomes common place and Iran rejoins the world economy, and the consequences for the world economy.

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ensure sustainability. For example, three-fourth of the members of ISO are developing countries but, in fact, they are not so active in the formulation of standards and further voting on them. This implies that it is the active minority (one fourth) whose comments are the basis for the preparation of the international standards which are supposed to establish the lowest level of acceptable quality. That’s the reason for which developing countries, which have a larger proportion of ISO membership find it hard to conform to the international standards. Therefore, as the international standards created as such at the moment do not address the concerns of all stakeholders, this process does not conform to sustainability requirements. This fact opposes ISO strategy outlined earlier. Numerous studies conducted by bodies such as the UN’s Industrial Development Organisation and the UN’s Food and Agriculture Organization identified a number of constraints in the way of implementing standards in the developing countries. Some of these limitations are listed below. • Deficiency of tools and infrastructure for quality control and metrology, • Intrinsic flaws in public agencies, the civil society, private sector and other actors, • Inadequacy of finances allocated to the formulation of standards and their distribution, • Improper institutional and regulatory framework defined to monitor standardisation processes. Consequently, developing countries have to amend and modify international standards so that they can be appropriately implemented for them. This may contradict the global relevance policy presented by ISO, according to which “the necessary feature of an international standard is that it is implementable by all countries, industries and rest of the stakeholders in international and national markets”. Conversely, lax standardisation at the national or international level (Seifi & Crowther, 2015), cannot help to achieve sustainability. For instance, in ISO 15502 which is adopted as IEC 62552, there is such lax restriction when defining the test for storage temperature inside the cabins or a fridge/freezer. The trouble appears when during the storage temperature test, the appliance needs to cycle but no limit is considered for cycling. So as long as the required temperatures are met inside the cabin, it does not matter if it works 89% or 38%. This standard cannot be considered as environmentally sustainable as well because no range is defined for the permitted insulating materials and refrigerants. However, it does not apply to the majority of IEC standards, in which the required level of quality is outlined, and therefore, the person who tests the equipment or appliance can clearly differentiate between a poor and superior quality. For example, one can mention the safety standards for household appliances. However, there are still flaws in some of the standards like the ones for televisions where this level of transparency and clarity is not met. The other important point is to implement standards. People are divided into their idea about the way to implement standards: some believe in mandatory and the other believe in voluntary standards. Those who believe in mandatory application argue that the ethical awareness of society is not so high to rely on them to do what is best for all. In other words, a utopia is too idealistic to be expected. Moreover, as it

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might not be to the benefit of individuals to follow social responsibility voluntarily such an attitude may lead to a lack of quality and integrity. On the other hand, those who believe in the voluntary application of standards argue that any regulation would lead to a barrier to trade and people’s prosperity will only be gained through getting rid of governing rules including standards on a mandatory basis. These people also may believe that people should culturally improve to act socially responsible then they will look after the application of standards the best possible. Therefore, the EU Commission (2002) defined corporate social responsibility as a voluntary concept through which organisations integrate environmental and social concerns in interacting with stakeholders and also in performing their business. Whatever route is taken in standardisation, whether mandatory or voluntary, what matters is later conformity assessment procedure to ensure conformance to it. In the second part, ISO Development Manuals conformity assessment is defined as the procedure of determining compliance of a process, service or product with the relevant requirements. Conformity assessment has facets such as testing, inspecting and certificating. But how this process is applied is what needs great attention. If the process of conformity assessment is carried out correctly it will lead to integrity in monitoring products and it will be fair for all manufacturers and customers. The importance of the correct application of these facets is as much as or even higher than the standard by itself. Conformity assessment might be implemented by a country’s national standards body (NSB), or it might be performed through notified bodies. This is a especially crucial matter when discussing the developing countries who may suffer a shortage of resources for doing conformity assessment properly. In these countries, there are numerous cases in which the authorised laboratories don’t have adequate tools or personnel, so they do not have enough competencies to test products. In some of the developing countries, the manufacturers’ laboratories have been authorised so they test their competitors’ products and decide their conformity. Obviously, one might not expect a completely unbiased result for their tests and therefore their validity is under question.

1.6 Critiquing Sustainability It is apparent from the analysis already undertaken that a number of factors have combined to raise a general concern about sustainability and to raise it to its current prominence. When this is combined with a recognition of the limited supply of raw materials and increasing energy consumption then there is clearly a need for conservation. Actually, the ability to achieve sustainability must be questioned because resources are depleted and so we cannot preserve unchanged the options for the future as per the Bruntland definition. From this perspective, sustainability refers to the assumption that no more natural resources should be utilised by society than it is achievable to regenerate (Aras & Crowther, 2008a). Hawken (1993) argues that sustainability can also be defined in

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the context of the carrying capacity of an ecosystem and can be quantified by inputoutput models that have been developed. These input–output models can be used to describe the concept of sustainability. If an organisation is considered to be operating in a wider economic and social system then this suggests that such impacts should be considered. It should not be done merely for the sake of quantification of costs incurred and value generated in the contemporary period but also for the future of the company itself. Such an approach to sustainability describes Gaia Theory created by Lovelock (1979). The model put forward by Lovelock depicts the co-dependence of the ecosphere and living organisations in the ecosystem. In this theory, the entire system, and all constituents of this system are inter-reliant and equally essential for preserving the planet Earth and thus sustaining life. These concerns are important for society as a whole, but also at the lower levels of both the individual nation states and the individual or company levels. At this lower level, any measurement of sustainability would need to take into account both the rate at which resources are being consumed and the rate at which those resources are being regenerated. It is possible to take into account a degree of unsustainability either by developing truly sustainable operations or by planning for a future in which the resources currently required do not exist. In actual practice, companies usually try to become less unsustainable by raising their efficiency in resource consumption. An energy efficiency program is a classic example of this. One problem with sustainability, however, is that there is no agreed-upon definition and it has a different meaning for different people. Yet there is an increasing consciousness that there exists a debate regarding the true meaning of sustainability and even that if it is possible to accomplish sustainable development as suggested in the Brundtland Commission report (Schmidheiny, 1992). Sustainable development has been incorporated in policy landscape and widely debated by large businesses, Nation States and the United States through ICC and WBCSD (Gray & Bebbington, 2001; Beder, 1997; Mayhew, 1997). It can be seen that the concept of sustainability is problematic and there is a further confusion surrounding its meaning: for some people, sustainability means nothing more than the ability to continue without change but it is often interpreted as growth in a sustainable manner (for instance see Marsden, 2000; Hart & Milstein, 2003). In fact, sustainability and sustainable development are considered to be synonymous with many people. When it comes to the concept of corporate sustainability (van Marrewijk, 2003), confusion is made worse by the fact that in the literature of management, the idea of being sustainable has been used for over three decades (as an instance see Reed & DeFillippi, 1990) to promote the idea of continuity. This enabled Zwetsloot (2003) to merge the idea of corporate social responsibility with the development of techniques that ensure steady continuation in improvement and development to suggest that sustainability is thus ensured.11

11 Sustainability requires R&D and technological development—and there is often a simple but comfortable assumption that this will enable our descendants to solve the problems which we are causing in the present!

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There is an almost undisputed assumption that growth is still possible (Elliott, 2005)—this is indeed one of the foundations of the Brundtland Report; consequently, sustainability and sustainable development can be treated alike. The viewpoint of market-driven economics is universal and means that development is not only possible but also desired (Spangenberg, 2004). Under this assumption, Daly (1992) states that the economics of growth is all that must be dealt with and that it can be achieved by the market by dealing separately with the three economic objectives of the efficient allocation of resources, sustainable scale, and equitable distribution of resources. This debate is continued by Hart (1997) who considers the idea of sustainable development simply as an opportunity for business. He further argues that once a firm recognises its strategy towards the environment then prospects for new services and products become obvious. The majority of studies concerning economic sustainability identify just the two dimensions of society and the environment (Dyllick & Hockerts, 2002). Some of the studies (for instance Spangenberg, 2004) also identify a third dimension that is associated with organisational behaviour. According to Aras and Crowther (2007a), it is not sufficient to limit the analysis to these dimensions. A major problem in this regard is that most researchers assume that optimisation of environmental/social and also a financial performance of an organisation are not compatible with each other. As Crowther (2002) contends they consider a dichotomy leading to conflict between environmental/social and financial performances of an organisation. As a result, the majority of research in the field of corporate sustainability lacks a recognition of the role of the financial performance of an organisation (Ameer & Othman, 2012) as an important aspect in sustainable development and so financial analysis has been missing in research together with other kinds of analysis.12 Aras and Crowther (2007b) contend that this is such an important aspect of corporate sustainability that adds another dimension to its analysis. They also add that another dimension called organisational behaviour should also be included in the broader analysis of corporate culture. It has been shown that sustainability and sustainable development are often treated as alike but, in fact, they are not the same thing. Sustainable Development should be considered to be a kind of development that tries to connect environmental conservation and economical growth, while at the same time, considers other issues like education and poverty alleviation which are conventionally related to growth. According to Daly (1999), it aims at developing ways of eradicating poverty while protecting economic development and biodiversity without extinguishing environmental capital quickly, to the cost of development in the long run. As Amba-Rao (1993) states of course it is generally agreed increasingly that countries and companies should accept responsibility for enhancing people’s interest in economic activities and also for the welfare of the society.

12 Cynically, it might be considered that it might have happened as many researchers are not skillful

enough to carry out thorough financial analysis even though they understand its importance.

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1.7 Conclusions Decision-making is a large and complex process for any organisation, no matter what its purpose. Such decisions go far beyond merely designing the goods or services produced and the processes whereby they are delivered. Often they are concerned with the making of strategic decisions. Inevitably, when firms engage in the market then transaction costs also become relevant as these are affected by the competition between firms. Naturally, also all organisations desire their own continuance and therefore have a great interest in sustainability. It is unquestioned, almost unquestionable even, that sustainable development is based on the Brundtland’s three pillars of social, environmental and economic. In general these are also the topic of corporate social responsibility and so it can be seen that corporate social responsibility and sustainable development are to a large extent synonymous. Given the increasing apparentness of the existence and effects of resource depletion then sustainability must be fairly central to the production processes. So too must access not only to the raw materials needed to make the products but also to the availability of power, generated through the consumption of natural and renewable resources. The analysis undertaken in this chapter has demonstrated that for several reasons, sustainability has become an important topic. It has also considered the issues involved in sustainability in the present environment in which the increasing scarcity of resources has got more apparent but it not been addressed in a satisfactory manner. These are issues that affect all organisations and this includes the public sector as much as others. It can be argued that what is important in the management of the necessary resources and what is needed for this is appropriate rules of governance. Of course, such rules and procedures need to be satisfactorily applied.

References Ackerman, R. W. (1975). The social challenge to business. Cambridge, MA: Harvard University Press. Amba-Rao, S. C. (1993). Multinational corporate social responsibility, ethics, interactions and third world governments: An agenda for the 1990s. Journal of Business Ethics, 12, 553–572. Ameer, R., & Othman, R. (2012). Sustainability practices and corporate financial performance: A study based on the top global corporations. Journal of Business Ethics, 108(1), 61–79. Aras, G., & Crowther, D. (2007a). Sustainable corporate social responsibility and the value chain. In D. Crowther & M. M. Zain (Eds.), New perspectives on corporate social responsibility (pp. 109– 128). Aras, G., & Crowther, D. (2007b). Is the global economy sustainable? In S. Barber (Ed.), The geopolitics of the city (pp. 165–194). London: Forum Press. Aras, G., & Crowther, D. (2008a). Corporate sustainability reporting: A study in disingenuity? Journal of Business Ethics, 87(supp 1), 279–288. Aras, G., & Crowther, D. (2008b). Governance and sustainability: An investigation into the relationship between corporate governance and corporate sustainability. Management Decision, 46(3), 433–448.

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Aras, G., & Crowther, D. (2009). The durable corporation: Strategies for sustainable development. Farnham: Gower. Bebbington, K. J., Brown, J., & Frame, B. (2007). Accounting technologies and sustainability assessment models. Ecological Economics, 61(2–3), 224–236. Beder, S. (1997). Global spin: The corporate assault on environmentalism. London: Green Books. Crowther, D. (2002). A social critique of corporate reporting. Aldershot: Ashgate. Daly, H. E. (1992). Allocation, distribution, and scale: Towards an economics that is efficient, just, and sustainable. Ecological Economics, 6(3), 185–193. Daly, H. E. (1999). Ecological economics and the ecology of economics. Cheltenham: Edward Elgar. Dyllick, T., & Hockerts, K. (2002). Beyond the business case for corporate sustainability. Business Strategy and the Environment, 11, 130–141. Elliott, S. R. (2005). Sustainability: An economic perspective. Resources Conservations and Recycling, 44, 263–277. European Commission. (2002, July 2). Corporate social responsibility: A business contribution to sustainable development; COM (2002); 347 final. Brussels: Official Publications of the European Commission. Ford, H. (1922). My life and work. NiVision. Freedman & Reed. (1983). Stockholders and stakeholders: A new perspective on corporate governance. California Management Review, 25(3), 88–106. Gray, R. (1992). Accounting and environmentalism: An exploration of the challenge of gently accounting for accountability, transparency and sustainability. Accounting, Organizations and Society, 17(5), 399–425. Gray, R. H., & Bebbington, K. J. (2001). Accounting for the environment. London: Sage. Gray, R. H., Bebbington, J., & Walters, D. (1993). Accounting for the environment. London: ACCA. Gray, R., Owen, D., & Maunders, K. (1987). Corporate social reporting: Accounting and accountability. London: Prentice-Hall. Hart, S. L. (1997). Beyond greening: Strategies for a sustainable world. Harvard Business Review, 75(1), 66–76. Hart, S. L., & Milstein, M. B. (2003). Creating sustainable value. Academy of Management Executive, 17(2), 56–67. Hawken, P. (1993). The ecology of commerce. London: Weidenfeld & Nicholson. Hutton, W. (1997). Stakeholding and its critics. London: IEA Health and Welfare Unit. Lovelock, J. (1979). Gaia. Oxford: Oxford University Press. Marsden, C. (2000). The new corporate citizenship of big business: Part of the solution to sustainability. Business and Society Review, 105(1), 9–25. Mathews, M. R. (1993). Socially responsible accounting. London: Chapman & Hall. Maunders, K. T., & Burritt, R. L. (1991). Accounting and ecological crisis. Accounting, Auditing & Accountability Journal, 4(3). Mayhew, N. (1997). Fading to Grey: The use and abuse of corporate executives’ ‘representational power’. In R. Welford (Ed.), Hijacking environmentalism: Corporate response to sustainable development (pp. 63–95). London: Earthscan. McDonald, D., & Puxty, A. G. (1979). An inducement—Contribution approach to corporate financial reporting. Accounting, Organizations and Society, 4(1/2), 53–65. Reed, R., & DeFillippi, R. J. (1990). Causal ambiguity, barriers to imitation, and sustainable competitive advantage. Academy of Management Review, 15(1), 88–102. Rubenstein, D. B. (1992). Bridging the gap between green accounting and black ink. Accounting, Organizations and Society, 17(5), 501–508. Schmidheiny, S. (1992). Changing course. New York: MIT Press. Seifi, S., & Crowther, D. (2012). The ethics game paradox. Multidisciplinary Journal for Applied Ethics, 1(1), 30–37. Seifi, S., & Crowther, D. (2015). Lax privatisation from lax government. In D. Crowther & M. A. Islam (Eds.), Sustainability after Rio (pp. 221–238). Bingley: Emerald.

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Spangenberg, J. H. (2004). Reconciling sustainability and growth: Criteria, indicators, policy. Sustainable Development, 12, 76–84. Sternberg, E. (1997). The defects of stakeholder theory. Corporate Governance: An International Review, 6(3), 151–163. Sternberg, E. (1998). Corporate governance: Accountability in the marketplace. London: IEA. van Marrewijk, M. (2003). Concepts and definitions of CSR and corporate sustainability: Between agency and communion. Journal of Business Ethics, 44(2/3), 95–105. WCED (World Commission on Environment and Development). (1987). Our common future (The Brundtland Report). Oxford: Oxford University Press. Zwetsloot, G. I. J. M. (2003). From management systems to corporate social responsibility. Journal of Business Ethics, 44(2/3), 201–207.

Part I

Social Responsibility in the Public Sector

Chapter 2

Accountability and Sustainability Reporting in the Public Sector. Evidence from Italian Municipalities Fabiana Roberto, Roberto Maglio, and Andrea Rey

Abstract In the past two decades, the developments of the international issues have increased the need for means of progressing the sustainable development agenda, through which emerged the contribution of accounting through sustainability reporting (SR) techniques. Despite its vital relevance for the public sector, sustainability accounting and accountability do not count to extend research and it is still considered as an emerging field. This paper analyses, using the content analysis technique, the voluntary SR reports in a group of Italian municipalities, by comparing them with the latest Global Reporting Initiative (GRI-G4 2013) guidelines. The analysis found low compliance with the GRI-G4, with only 27.82% of the items disclosed. Keywords Sustainability reporting · Public sector · Content analysis · Municipalities

2.1 Introduction Sustainable development is essentially the recognition that that global risks of environmental degradation and the socio-economic issues related to poverty and inequality are unsustainable in the long term (Greco et al. 2012; Williams et al. 2011). Therefore, the adoption of ‘strategies’ of sustainability would be ideal and necessary in order to fulfill the current needs without compromising future generations. In this scenario, the public sector entities need to take an active role and compromise in sustainable development (Ball and Bebbington 2008; Gamage and Sciulli 2017). As Birney et al. (2010) state, “Public sector organisations are central to the delivery of sustainable development. Every aspect of their role—from education to environmental services, and from planning to social care—shapes how people F. Roberto (B) · R. Maglio · A. Rey Department of Economics, Management, Institution, University of Naples “Federico II”, Naples, Italy e-mail: [email protected] © The Editor(s) (if applicable) and The Author(s), under exclusive license to Springer Nature Singapore Pte Ltd. 2020 D. Crowther and S. Seifi (eds.), CSR and Sustainability in the Public Sector, Approaches to Global Sustainability, Markets, and Governance, https://doi.org/10.1007/978-981-15-6366-9_2

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live their lives”. Moreover, Ball and Bebbington (2008) stated that public organizations can play a superior role in terms of performance and sustainability reporting compared to the private sector one’s since their actions are basically linked to logic related to sustainable development rather than to market (Siboni and Sangiorgi 2013). Other scholars have pointed out that public sector organizations should have an active role in sustainable development (Ball et al. 2014) because one of its jobs is to deliver public policies that favour society in general (Ball and Grubnic 2007). Furthermore, it is important to notice a growing interest among stakeholders about the sustainability of public services, along with greater concerns among public entities to build public trust in them, by publishing details of their sustainability goals (Frey 2009; Galera et al. 2015; Niemann and Hoppe 2018). It is, therefore, crucial for the public sector to assess, disclose and report on their social, environmental and economic policies, strategies, actions and results (Ball and Grubnic 2007; Dumay 2016; Dumay et al. 2009; Farneti et al. 2010; Leeson and Ivers 2005). For the abovementioned reasons, in recent years the public sector entities have been more actively involved in a deep process of managerial and organizational change (Manes-Rossi 2016) through which they started to embrace sustainability values as fundamental for the sector in general (Ceulemans et al. 2015; Dumay 2016). Indeed, in the past two decades, the development of the international issues has increased the need for means of progressing the sustainable development agenda (Gherardi et al. 2014), through which emerged the contribution of accounting through sustainability reporting (SR) techniques (Ball et al. 2014; Ball and Bebbington 2008; Dumay et al. 2010; Guthrie et al. 2010; Guthrie and Farneti 2008; Joseph 2010; Mussari and Monfardini 2010; Olson et al. 1998; Williams et al. 2010). The traditional financial report has been blamed for the limited attention paid to the future of public sector entities (Manes-Rossi 2018) and for not providing a full account of an organization’s social and environmental activities (Gore 2006; Guthrie and Farneti 2008; Biondi and Bracci 2018; Montesinos and Brusca 2019). In addition, SR offers to the organizations the opportunity to engage multiple-stakeholders towards a common objective (Ceulemans et al. 2015). This focus on SR has also been fuelled by increased attention (from policymakers and researchers) to accountability; Willems and Van Dooren 2012; Greiling and Grüb 2014). In fact, external reporting arrangements are common to feature in any performance management or public sector accountability discussion (Downe et al. 2010; Niemann and Hoppe 2018). Although SR is still voluntary, the practice is globally growing (Mussari and Monfardini 2010). SR becomes a formidable means of communicating to stakeholders about the organization’s performance and progress in sustainability (Greco et al. 2015). Furthermore, in countries like Italy, social and environmental reports are playing an important role in helping organizations to discharge their accountabilities to various stakeholders (Sordo et al. 2016). However, while this form of reporting has been taken up by the private sector, in comparison, progress within the public sector appears patchy and, in many respects, SR is still an emerging field (Dickinson et al. 2005; Ball 2004; Lodhia et al. 2012; Biondi and Bracci 2018).

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Various initiatives have been undertaken in the last decades encouraging voluntary SR in the public sector (e.g. CIPFA 2005; GRI 2005; World Bank 2008). The European Commission has also strongly encouraged central and local governments to adopt SR and a recent directive (2014/95/EU) requires all large ‘public interest entities’ to start disclosing ‘non-financial and diversity information’. Furthermore, several national and international institutions have developed a variety of models and tools for SR (Dumay et al. 2010; Yongvanich and Guthrie 2006). Among all of these different SR initiatives, one of the most interesting and therefore used are the guidelines of the Global Reporting Initiative (GRI) which attempt to provide an international framework for SR for all types of organizations (del Mar Alonso-Almeida et al. 2014; Farneti and Guthrie 2009; Farneti et al. 2010; Tarquinio et al. 2018). These guidelines have evolved since their first version (GRI 2000), and currently, the fourth generation is being used since its launch in May 2013. In addition, the GRI published also a pilot sector supplement designed to specifically address the reporting needs of these entities (GRI 2005). The GRI Sector Supplement for Public Agencies identifies several reasons for preparing SR: to promote transparency and accountability; reinforce organizational commitments and demonstrate progress; improve their internal governance; meet disclosure expectations and make information available to facilitate dialogue and effective engagement with stakeholders (GRI 2005, p. 8).

According to GRI, there are multiple benefits to implementing SR. Among those benefits, there is an effective sustainability reporting cycle, which includes a regular program of data collection, communication, and responses, which have the power to help all reporting organizations both internally and externally (Novokmet and Rogoši´c 2016). Most prior research into SR has focused on social and environmental disclosure in private organizations’ reports (Milne et al. 2009; Guthrie and Abeysekera 2006; Parker 2005), rather than into reporting by the public sector or not-for-profit entities (Ball and Grubnic 2007; Bebbington 2007; Farneti and Guthrie 2009; Farneti et al. 2010; Mussari and Monfardini 2010; Siboni and Sangiorgi 2013; Siboni et al. 2013). Despite its vital relevance for the public sector, sustainability accounting and accountability do not count with extant research and it is still considered as an emerging field (Ball and Grubnic 2007; Dickinson et al. 2005; Williams et al. 2011; Tort 2010; Greiling and Grüb 2014). In the Italian context, previous research mainly focuses on a normative perspective such as defining SR and proposing variables on what public sector entities ‘should’ report. However, there is a substantial gap in the analysis of practices, to explore what are the contents of these disclosures (Farneti and Siboni 2011). This paper, in responding to recent calls for more research into SR within the public sector (Ball and Grubnic 2007; Lewis 2008; Guthrie et al. 2010), contributes to research on SR in the public sector in the context of voluntary reporting by focusing

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on what a group of Italian municipalities reports in their stand-alone sustainability reports in comparison to the latest GRI guidelines (GRI-G4 2013). Therefore, the research question is “What and how much sustainability information is reported by Italian municipalities in comparison to the GRI-G4 guidelines”? Municipalities have been chosen because they have been highlighted as the potential mayor players in sustainable development (Ball 2004) since they have the responsibility of implementing environmental projects in their local communities (Joseph 2010; Potts 2004) and among their multiple responsibilities through many stakeholders’ groups, who are no longer confined to the traditional role of ‘housekeeping’ (Ball and Grubnic 2007). Furthermore, local governments have a greater proximity to citizens and address a larger number and a greater diversity of stakeholders (Navarro-Galera et al. 2015). The rest of the paper is structured as follows: Sect. 2 presents prior literature on SR in the public sector and the theoretical background of this study; Sect. 3 describes the research methodology; Sect. 4 presents the main findings of the study and, lastly, Sect. 5 presents our conclusions.

2.2 Literature Review and Theoretical Framework In the past two decades, there has been growing research on environmental and sustainability reporting initiatives in the public sector (Siboni and Sangiorgi 2013; Domingues et al. 2017). Research studies have found disclosure practices around the world which are directly related to SR (e.g. Adams et al. 1998; Gray et al. 1995; Leeson et al. 2005), giving different insights into the nature and extent of voluntary social and environmental disclosure. However, the theme of SR has been considered almost only on the business side (Fifka 2013; Milne et al. 2009; Guthrie and Abeysekera 2006; Parker 2005), while less attention has been paid to the public sector (Ball and Grubnic 2007; Bebbington 2007; Dumay et al. 2010; Farneti and Guthrie 2009; Farneti et al. 2010; Guthrie and Abeysekera 2006; Mussari and Monfardini 2010; Siboni and Sangiorgi 2013; Siboni et al. 2013; Williams et al. 2011). In reaction to this call for more research into sustainability reporting within the public sector, some studies have been carried out during the last decade. Prior studies at the international level have investigated the ‘quantity’ and ‘quality’ of voluntary SR practices by public sector entities. In these studies, it was found that generally disclosure levels are low and SR in public sectors is very poor, illustrated by the lack of consistency in type and extent of SR. Although there is an increased interest in the topic, there are only a few studies that really focus on the empirical perspective by providing evidence on ‘what’ organizations actually report. For instance, Jones et al. (2005) investigated SR in Australia across a broad range of private and public sector entities. The results of this investigation show that just a few of these councils report about sustainability performance, instead of confining their sustainability disclosures to general statements of policy.

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Similar findings were provided by Guthrie and Farneti (2008) in their study focused on Australian public sector SR practices. Although their reports had been informed by the GRI Guidelines, the application of the GRI was fragmentary and organizations chose only some of the GRI indicators to disclose. Specifically, they found that only 32% out of 81 elements within the GRI were used for reporting, concluding that SR in the public sector is still lacking in delivering the impact of sustainable development to the organization (Joseph 2010) since SR is mainly narrative. Having regard to the Italian context, Steccolini (2004) developed a content analysis of the earlier Italian LGs social reports and found that social reports tend to provide data and descriptions, but lacks on the intent of assessing results. Moreover, Siboni (2007) found that in 2005 only 14% of the municipalities and 38% of the provinces issued a social report, usually on a politician’s advice. The author also found that social reports lack of consistency since they do not follow a specific guideline, and tend to offer data and descriptions rather than assessing results. Farneti et al. (2010), in a similar investigation, found that social reports in Italy are still in their infancy since Italian LG’s social reports do not include all the elements outlined by the GRI-G3 guidelines. Looking at ‘quality’ aspects of SR, a study by Farneti and Guthrie (2009) focused on the reasons why organizations report on sustainability issues rather than what they report on. In this research, the authors undertook in-depth interviews across 7 different public sector agencies in Australia, where the findings suggested that sustainability reports were mainly directed towards internal stakeholders. Often these agencies had commenced with either triple bottom line (TBL) reporting or the balanced scorecard (BSC) before using the GRI framework, and the reason behind it lies on the fact that international reputation has enhanced its legitimacy. In another study conducted by Farneti and Guthrie (2007) they examined the reasons for SR in 7 Australian public sector organizations by focusing on the views of preparers of these reports. They found that the reasons for reporting were mixed and that organizational sustainability information was mainly produced for internal stakeholders. Similarly, Marcuccio and Steccolini (2005) investigated 12 local authorities in one Italian region using semi-structured interviews and an analysis of documentation. Their results showed that the main reasons for developing SR were to emulate other local authorities that already prepared such reports to ensure notions of efficiency, effectiveness and accountability were upheld. However, the introduction of SR for these local authorities was mainly influenced by public sector reforms and not by a genuine concern for the environment. According to the authors, indeed, Italian local governments attempted to ‘legitimize’ their activities by adopting new forms of reporting that comply with fashionable labels that show conformity with shared norms of rationality and progress, namely the principles of performance improvement and citizens’ accountability promoted by the ongoing reform processes. Furthermore, they highlighted the significant increase in the SR practice in the public sector related to a managerial fashion, used to enhance the organization’s public image. However, the production of such reports may give the stimulus to finally adopt a new emphasis on sustainability (Marcuccio and Steccolini 2005).

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In a subsequent study, the same authors (Marcuccio and Steccolini 2009) examined the Social Reports ‘Bilancio Sociale’ of 15 Italian local authorities (LA) in order to verify the patterns of financial and non-financial disclosure and the factors affecting those patterns. The authors concluded that although Italian LAs tended to be passive and wait for law reforms before attempting to make any changes to their reporting frameworks, in the case of SR, Italian LAs have commenced preparing SR on a purely voluntary basis. They suggest that each LA uses SR to illustrate their idiosyncrasies and that: “…there is not a standard set of factors that can explain the differences in disclosure practices (p. 163)”. Thus, the legitimacy process drove the reporting of sustainability matters. Moreover, Farneti and Pozzoli (2005) see the self-laudatory intent of some public organizations that have adopted social report practices. Also, Farneti (2011) observed that within Italian LGs, the term ‘social report’ is a misnomer and that the report is used as a tool for disclosing managerial matters. A recent study conducted by Greco et al. (2012) highlighted important differences in SR motivations and practices between different geographical contexts. In this comparative study, a sample of Italian and Australian LCs was used. The authors found that the motivation for SR appears to be affected by several political, social and cultural values, which responds to the national contexts in which these organizations operate. More recently, Greco et al. (2015) conducted a study about the motivations of Italian local councils for producing SR. Their findings highlighted that initially SR is introduced for accountability and legitimacy reasons. However, over time traditional SR was incidental to more advanced tools of policy-making and reporting, in which some of the stakeholders were actively involved. Thus, the authors suggested that there is a political negotiation in which sustainability reporting finds itself. Deducing from the literature review conducted, various theoretical frameworks have been proposed to explain the reasons for SR practices in public sector entities (Giacomini et al. 2018), but they are generally addressed in terms of Legitimacy Theory (LT) (Marcuccio and Steccolini 2009) or of Stakeholder Theory (ST) (Deegan and Unerman 2006). LT and ST may offer an appropriate theoretical framework to explain the behaviour of public sector entities in relation to transparency, as an essential element of accountability (Greiling and Grüb 2014; Navarro-Galera et al. 2018). In addition, Mussari and Monfardini (2010) suggested that the Institutional Theory (IT) (DiMaggio and Powell 1983) offers the possibility to explain the SR adoption and diffusion in public sector entities. IT emphasizes rules, regulations, ideas and a cultural framework that characterize the social context in which companies work (Tarquinio et al. 2018). On the other hand, legitimacy is based on the notion that the legitimate organization is there to support the interests of an individual and/or group, and therefore, there is a general acceptance in the society for that organization because it operates under a consistent and fair framework. However, to maintain that legitimacy, organizations must provide accounts of their activities in order for legitimacy communities to continue to validate, moderate or expel the status of legitimacy (Black 2008). LT considers the way an organization seeks to legitimize its activities and therefore meet society’s

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expectations. For this reason, LT is based on the notion of the social contract, which implies that organizations gain their right to operate through seeking and gaining social approval (Deegan and Unerman 2006). Public sector entities can use SR as a means to communicate with various stakeholders about management, environmental, labour, policy and social responsibility matters. Thus, these reports have an important role in legitimizing their conduct toward stakeholders. In this framework, governments or managers could decide not to report sustainability information because it is not seen as a priority for their legitimation towards citizens (Giacomini et al. 2018). According to ST, the long-term existence of an organization needs the support and approval of its stakeholders (Liu and Ambumozhi 2009). Thus, under ST, different groups of stakeholders and their demands may have an impact on a public entity’s behaviour, pressuring it to give information.

2.3 Research Method There is no consensus on what SR means, nor a common shared framework (Biondi and Bracci 2018). In this study, we refer to multiple SR practices as a set of different reporting labels, such as social reporting, sustainable reporting and environmental reporting. We used the content analysis technique in order to examine the extent of social and environmental disclosures in the stand-alone reports of 8 Italian municipalities in comparison with GRI-G4 guidelines.1 Content analysis was chosen as it is the “dominant research method for collecting empirical evidence” in social and environmental reporting (Guthrie and Abeysekera 2006; Parker 2005). Content analysis is “a technique for gathering data, involves codifying qualitative and quantitative information into pre-defined categories in order to derive patterns in the presentation and reporting of information” and “is a method of codifying the text of writing into various groups or categories based on a selected criterion” (Guthrie and Abeysekera 2006, p. 120). In the Italian context, although SR is not mandatory, public entities can choose to disclose and report their decisions on sustainability issues based on the three national guidelines issued guidelines to encourage the transparency of the public sector towards citizens, by using social reports. The Study Group issued the first operating guidelines for the Social Report (GBS) in 2005 providing principles and procedures for drafting a social report. In 2007 the GBS issued a specific standard addressed to all the public entities. The other two were issued by public agencies. Specifically, in 2006 the Prime Minister’s Office of Public Affairs issued a guide for social reporting for the public sector, mainly focused on social reporting rather than environmental reporting. The next year the Federal Ministry of Interior issued the document Guidelines for Social Reporting in Local Governments (2007), 1 It should be noted that the G4 Guidelines have been superseded by the GRI Standards, released on

19 October 2016. The use of the GRI Standards will be required for all reports or other materials published on or after 1 July 2018.

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which sets out guidelines for social reporting in local governments and recommends providing disclosures regarding environmental policies and green public procurement. However, as stated by Farneti and Siboni (2011) the “governmental guidelines are generic in nature and lack significant details in terms of content, indicators, and assurance. Also, they have a managerial focus, and they have very little to do with sustainability, except for aspects related to labour.” Thus, we decided to use the GRI-G4 guidelines because it “presents a good attempt to overview developments internationally” (Ball and Grubnic 2007, p. 258). Also, “the GRI claims to provide the basis of worldwide standardized, comparable, reporting on the sustainability of (particularly business) organization” (Ball et al. 2006, p. 268), giving the framework a practical appeal for organizations seeking accounting innovation. In this study, we applied the Guthrie and Farneti (2008) framework, developed for a previous study, with some adaptation to the last guidelines GRI-G4 (GRI 2013). Indeed, the framework is based on the International GRI-G3 (GRI 2006) and the public agencies supplement (GRI SSPA 2005). The G4 Guidelines use indicators built on several principles and the standard disclosure is articulated in three main parts: – Strategy and organization profile; – Management approach; – Performance indicators. Performance indicators are divided into six main areas: economic, environmental and social concerns of human rights, labour practices and working environment, and product responsibility and society. Total indicator are 79 items, comprising 9 economic indicators, 30 environmental indicators, 14 indicators of labour practices, 9 indicators of human rights, 8 social indicators and 9 indicators of product responsibility. The Sector Supplement for Public Agencies adds another set of 15 indicators to these (Guthrie and Farneti 2008). In these six categories, the number of indicators is decreasing over time; indeed, the indicators were 92 in the G2 guidelines and 81 in the G3 guidelines (GRI 2006). Thus, in Table 2.1 is presented the disclosure instrument built, divided into six areas and coded into (34) aspects and 84 items including those specific for public agencies. In the next section are presented the results of the analysis developed, as well as the main findings.

2.4 Findings Scholars have expressed different opinions about the most appropriate unit of analysis to be used for content analysis (Steenkamp and Northcott 2007). Gray et al. (1995) suggest using in written communication words, sentences and pages. In addition, Guthrie and Abeysekara (2006) consider portions of pages. Finally, Unerman (2000) considers as a unit of analysis words, phrases, lines, sentences, charters and pictures.

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Table 2.1 The coding instrument for SR in the public sector Categories

Aspects

Items

1. Environmental

Materials

EN1 EN2

Energy

EN3 EN4 EN5 EN6

Water

EN7 EN8 EN9

Biodiversity

EN10 EN11 EN12 EN13

Emissions, effluents, and waste EN14 EN15 EN16 EN17 EN18 EN19 EN20

2. Social—labour practices and decent work

Products and services

EN21 EN22 EN23 EN24 EN25

Compliance

EN26 EN27

Transport

EN28

Overall

EN29 EN30

Employment labour/management relations Occupational health and safety training and education

LA1 LA2 LA3 LA4 LA5 LA6 LA7 LA8

Diversity and equal opportunity LA9 LA10 LA11LA12 Equal remuneration for women LA13 and men 3. Social—Humans Rights

4. Social—Society

5. Social—product responsibility

6. Public agencies—specific supplement for PA

Investment

HR1 HR2 HR3

Non-discrimination

HR4

Freedom of association and collective bargaining

HR5

Child labour

HR6

Forced and compulsory labour security practices

HR7

Indigenous rights

HR8

Assessment

HR9

Local communities

SO1 SO2

Anti-corruption

SO3 SO4 SO5

Public Policy

SO6

Anti-competitive behaviour

SO7

Compliance

SO8

Customer health and safety

PR1 PR2

Product and service labelling

PR3 PR4 PR5 PR6 PR7

Marketing communications

PR8

Customer privacy compliance

PR9

New disclosure elements for public agencies and new social indicators for public agencies

PA2 PA3 PA4 PA5 PA6 PA7 PA11 PA12 PA13 PA14 (continued)

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Table 2.1 (continued) Categories

Aspects

Items

Administrative efficiency

PA15

The coding instrument applied in this study record the use or otherwise of an individual item within the reports analysed. Moreover, a total index was constructed to show the percentage of possible disclosures (84 items × 8 organizations = 672 possibilities). The index was determined by the total observation from the reports analysed, out of the total possible observations. Also, the analysis recorded the type of information disclosed (declarative, monetary, non-monetary), basing on a common classification in the literature (Guthrie et al. 2004). Table 2.2 presents the characteristics of the social reports and the framework adopted for each municipality analysed. Most of SR lacks consistency since they do not follow a specific guideline (Steccolini 2004). Table 2.3 highlights ‘what’ has been disclosed in terms of categories and items. The first column shows the categories (n = 6). The second column gives the sum of the elements within the GRI-G4 coding instrument (n = 84). The total index is reported in the last column. The analysis undertaken shows that of a possible total of 672, only 187 disclosures have been reported, which is almost 28% of the possible items that could have been reported by the municipalities. In addition, it should be noted that the category of ‘Public Agencies’ accounts for the highest number of disclosures within Table 2.2 Length and framework followed for SR Municipality

Sustainability reporting tool

Number of pages in the report

Framework followed

M1

Social and environmental report

230

None (developed internally)

M2

Social report

151

None (developed internally)

M3

Social report

96

None (developed internally)

M4

Social report

64

None (developed internally)

M5

Social report

158

M6

Environmental report

M7

Social report

127

Italian Directive for a social report issued by the Department of Public Affairs (2006)

M8

Social report

109

None (developed internally)

96

GRI-G3 guidelines None (developed internally)

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Table 2.3 Total SR disclosure by all items Category

A = Number of core and additional items

Environmental

30

Human rights

9

Labour practices and decent work Product responsibility Society

B = Total observations from all reports

Total possible observations 8 × A=C

Total index B/C (%)

68

240

28

0

72

0

13

35

104

33.65

8

4

64

6.25

9

21

72

29.16

Public agencies

15

59

120

49.16

Total

84

187

672

27.82

Table 2.4 Type of information disclosed Quality

Absolute value of observation from all reports

Percentage

1—Declarative

126

67.4

2—Monetary 3—Non monetary 4—Monetary and non-monetary Total

9

4.9

48

25.5

4

2.2

187

100%

the dataset analysed, with 49.16%, followed by ‘Labour practices and decent work’ with 33.65%, ‘Society’ with 29% and ‘Environment’ only accounting for 28%. Finally, Table 2.4 highlighted the type of information disclosed (i.e. declarative, monetary, and non-monetary). Only 4.9% of sustainability reporting disclosures were monetary in nature, 25.5% were non-monetary and 67.4% were declarative. This indicates little use of monetary values.

2.5 Conclusions In the past two decades, there has been growing research on environmental and SR initiatives in the public sector (Siboni and Sangiorgi 2013; Domingues et al. 2017). Although several authors have highlighted the need to understand public organizations’ current SR practices, a few researches have been conducted in this field (Ball and Grubnic 2007; Guthrie and Farneti 2008; Lewis 2008; Farneti and Guthrie 2009; Guthrie et al. 2010). This study offers a view of SR practices in Italian municipalities and their consistency with GRI G-4 guidelines, with similar results to prior studies (see Farneti et al. 2010). The analysis found low compliance with the

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GRI-G4, with only 27.82% of the items disclosed. This level of disclosure is higher than the level found in Guthrie and Farneti’s (2008) study of Australian public sector ‘better practice’ organizations, which found that the GRI framework was used but its use was fragmented even though all of the organizations insisted that they had followed them. Our results highlight that no ‘Human rights’ item was communicated and few disclosures were observed about ‘Product responsibility’ and ‘Society’. The findings suggest that the practice of producing SR is improving over time but is still under-developed in Italian municipalities. Furthermore, it appears that the SR has been used to describe administrative and managerial matters rather than to disclose social and environmental information. Indeed, the ‘public agencies’ category was the most reported by the 8 municipalities. Similar findings emerge from a study on Italian university social reports (Mazzara, Sangiorgi and Siboni 2010). Finally, with regard to the type of information disclosed, it was found that items recorded were mainly ‘declarative’ (67.4%) or non-monetary (25.5%). Less disclosure has been given to ‘monetary’ (4.9%), and ‘monetary’ and ‘non-monetary’ (2.2%) information. This result differs from studies concerning public sector organizations’ sustainability and social reporting (Guthrie and Farneti 2008), that found a ‘non-monetary’ and a ‘monetary and non-monetary’ preponderance disclosure.

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Chapter 3

The Portuguese Tax System for Non-profit Institutions Fátima David, Lúcia Marques, and Rute Abreu

Abstract This chapter explains the Portuguese tax system for the Non-Profit Institutions (NPI or in Portuguese, ESNL), with an emphasis on the Private Institutions of Social Solidarity (PISS or, in Portuguese, IPSS). By comparing the legislation over time and space, the authors find that the current legislation of several Portuguese tax codes is fragmented and that, besides a few individual legislations, no tax regime concentrates on the various regiments, benefits and tax exemptions. A revision of the legal instruments governing the tax regime of the NPI/PISS in Portugal is carried out. These institutions assume various positions in the periodic tax relations within the Tax Administration, as taxpayers of income, wealth and consumption, as well as lenders of taxes and fees. The results show that NPI/PISS have a specific tax system and that their ability to pay tax depends on their social purpose and their public interest. Most institutions have fundraising drives or operate business activities, or both, in order to generate income to carry out their philanthropic activities. The area of NPI/PISS is complex due to the law and legislation. Although with the accurate theoretical framework, this study is not sufficient to provide an empirical evidence of the NPI/PISS tax system in Portugal. The chapter focus on the literature concerning the systematization of the tax system for the NPI/PISS in Portugal, and how these institutions can be proactive in their relationship with the Tax Administration. Thus, the present chapter aims to provide an understanding of the Portuguese tax system for the NPI/PISS, which will helpfully provide the international academic researchers and the professionals with a reference study in order to help them making more informed tax decisions. Keywords Non-profit institutions · Tax system · Social responsibility · Portugal

F. David (B) · L. Marques · R. Abreu Instituto Politécnico da Guarda, Guarda, Portugal e-mail: [email protected] © The Editor(s) (if applicable) and The Author(s), under exclusive license to Springer Nature Singapore Pte Ltd. 2020 D. Crowther and S. Seifi (eds.), CSR and Sustainability in the Public Sector, Approaches to Global Sustainability, Markets, and Governance, https://doi.org/10.1007/978-981-15-6366-9_3

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3.1 Introduction Although the Non-Profit Institutions (NPI or, in Portuguese, ESNL), in general, and the Private Institutions of Social Solidarity (PISS or, in Portuguese, IPSS), in particular, are governed by specific legislation and norms, they are not allowed to have in their genesis the norms and regulations that regulate the generality of business organizations in Portugal. Under the Basic Law of the Social Economy (BLSE or, in Portuguese, LBES), the State has given unequivocal relevance to the NPI, by providing, in law, the support and valorization of the PISS and other entities of recognized public interest, nonprofitable, that pursue objectives of social solidarity. This is because of the fact that the economic, social and cultural contribution of the NPI/PISS is widely recognized, by promoting employment, reducing social exclusion and increasing the value of support to the civil society where they are inserted. The objective of this chapter is to explain the Portuguese tax system for the NPI/PISS and compares several Portuguese tax codes, over the time and space, knowing that the legislation is fragmented and that, besides a few individual norms, no tax regime concentrates all the regiments, benefits and tax exemptions. The methodology established was qualitative and descriptive, with a revision of the legal instruments governing the tax regime of the NPI/PISS in Portugal (Marques, David, & Martins, 2019). These institutions assume various positions in the periodic tax relations within the Tax Administration, as taxpayers of income, wealth and consumption, as well as lenders of taxes and fees. Thus, the structure of chapter presents: in Sect. 3.2, the framework of NPI in civil society, specifying these institutions that are included in the social economy. In Sect. 3.3, considering the specific case of NPI/PISS, it will be presented the historical context of these institutions. In Sect. 3.4, due to the specific characteristics of NPI/PISS, it will be presented the fiscal context with several Portuguese taxes. Finally, Sect. 3.5 argues the conclusions, taking as reference reflections conducted by the authors due to their empirical experience.

3.2 The Framework of NPI in Civil Society With the evolution of civil society, faced with the needs of personal and/or collective fulfillment and the unpredictability and/or contingency of daily life of citizens, a complex set of situations arises that managers of public interests do not always have sensitivity or even conditions to solve with the efficiency and humanity required. In this context, the Non-Profit Sector (NPS, or in Portuguese, SNL), or sector of the social economy, emerges with increasing importance due to its volunteer base or union of efforts to achieve the defined goals (Antão, Tavares, Marques, & Alves, 2012). These entities are not prevented from making a profit, provided that the funds

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obtained by the gainful activities are used to finance the main objectives of the same (Pereira, David, & Marques, 2015). According to Pereira et al. (2015: 3), the NPS is made: (…) by a vast set of entities, diversified among themselves and organized under different legal forms, one of the characteristics common to this type of entities is the development of activities that pursue social well-being. In addition to being located between the public and private sectors, it is in a position of complementarity, through the establishment of partnerships, and even replacing the role of public authorities.

In this context, Article 4 of Law 30/2013, of May 8 (AR, 2013: 2727), which approved the Basic Social Economy Law (BSEL or, in Portuguese, LBES), considers that the following entities are part of the social economy, provided that they are covered by the Portuguese legal system: a) Cooperatives; b) Mutual associations; c) The mercies; d) Foundations; e) Private institutions of social solidarity not covered by the preceding paragraphs; f) Associations with altruistic purposes that act in the cultural, recreational, sports and local development; (…).

Under Article 2 (1) of the Cooperative Code, approved by Law 51/96, of September 7 (AR, 1996: 3018), the cooperatives: (…) are autonomous collective entities of free constitution, variable capital and composition, which, through the cooperation and mutual aid of their members, in accordance with the cooperative principles, are aimed at satisfying the economic, social and cultural needs and aspirations of those.

In addition, pursuant to Article 61 (2) of the Portuguese Constitution (PC or, in Portuguese, CRP—AR, 2005: 4652): everyone is entitled to the free constitution of cooperatives, provided that the cooperative principles are observed.

Meira (2009) argues that the concept of a cooperative is based on four distinct characteristics, namely: • The variability of social capital; • The variability of the corporate composition; • The specificity of the social object: the non-profit satisfaction of the economic, social or cultural needs of the members; and • The specificity of the ‘mode of management’, which is translated into obedience to cooperative principles and mutual cooperation of the members themselves. According to Leite (2012), cooperative principles are guiding principles through which the cooperatives put into practice their values. These, according to Article 3 of the Cooperative Code (AR, 1996), integrate the declaration on the cooperative identity adopted by the International Cooperative Alliance and are: voluntary

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and free membership; democratic management by members; economic participation of members; autonomy and dependence; education, training and information; intercooperation; and interest in the community. The cooperative sector comprises, according to Article 4 of the Cooperative Code (AR, 1996), the following 12 sectors: consumption, commercialization, agriculture, credit, housing and construction, labour production, handicrafts, fisheries, culture, services, education and social solidarity, for which complementary sectoral legislation exists. In accordance with Article 2 (2) of the Cooperative Code (AR, 1996), in pursuance of their objectives, cooperatives may carry out operations with third parties, without prejudice to any legally established limits for each branch. They may also, according to Article 73 of the same Cooperative Code (AR, 1996), return to the cooperators the net annual surpluses, except those arising from operations with third parties, remaining, after the eventual payment of interest, on the equity instruments and the reversals of the various reserves. The mutual associations are defined in Articles 1 and 2 of Decree-Law 72/90, of March 3 (MESS, 1990), which are expressed in the Mutual Association (MA) Code, where it is considered that a PISS is an unlimited number of associates, indefinite capital and indefinite duration that, essentially through the contribution of their associates, practice, in the interests of these and their families, reciprocal aid purposes, specifically: • Provision of social security and health benefits to repair the consequences of the verification of contingent events concerning the life and health of members and their families and to prevent, wherever possible, verification of these facts; • Other purposes of social protection and promotion of the quality of life, through the organization and management of equipment and social support services, social works and activities that aim especially at the moral, intellectual, cultural and physical development of members and their families. Later, the Regulations for Registration of Mutual Associations and Supplementary Social Security Foundations, approved by Ordinance 135/2007, of January 26 (MTSS, 2007), established the rules to be followed by the registration of mutual associations, their unions, federations and confederations. In accordance with Article 16 of MA Code (MESS, 1990), these associations, registered under the terms of the law, automatically acquire the nature of public corporations, with exemption from registration and other obligations provided for in the Statute for Public Utility Persons, approved by Decree-Law 460/77, of 7 November (PCM, 1977). This is defined in Article 1 (1), that states: associations or foundations pursuing purposes of general interest, or the national community or any region or circumscription, cooperate with the Central Administration or the local administration in terms of deserving from the part of this administration the declaration of «public utility» (PCM, 1977: 2656).

The mercies, registered under the law as PISS, aim at the pursuit of social solidarity objectives enshrined in the Constitution itself. In these terms,

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The Misericórdia Brothers or Santas Casas da Misericórdia are associations formed in the canonical legal order with the purpose of satisfying social needs and practicing acts of Catholic worship, in harmony with their traditional spirit, informed by the principles of Christian doctrine and morals (MSESS, 2014: 5882(8)).

The foundations were established by the Civil Code, under the terms of Articles 185–194 (PGDL, 2019), and are rigid by the CRP in Articles 70, 73 and 165 (AR, 2005), and, in accordance with Article 185 (1) of the Civil Code: (…) aim at the pursuit of social interest purposes, and may be instituted by act between living or by will (PGDL, 2019).

In this sense, the foundations are: (…) non-profit organizations established on the initiative of one or more individual or legal persons (founders) for the management of an estate which is definitively assigned to them by the founders and which must be substantially preserved for the fulfillment of certain social interest purposes (CPF, 2012).

The concept of the foundation was clarified in Law 24/2012, of July 9 (AR, 2012), which approved the Framework Law on Foundations, stipulating Article 4 of the same norm that these can be of four types: • Public, when created exclusively by public corporations; • Public under private law, if created by public legal persons or with persons of private law, as long as the former have dominant influence; • Public–private, when created by public corporations and private individuals, provided that the former does not have dominant influence; or • Private, if created by one or more persons governed by private law. Article 1 of the PISS Statute, approved by Decree-Law 119/83, of February 25 (MAS, 1983: 644), defines the Private Institutions of Social Solidarity as institutions: (…) constituted for non-profit purposes on the initiative of individuals with the purpose of giving organized expression to the moral duty of solidarity and justice among individuals that are not administered by the State or by an autarchic body (…).

According to the same article of the PISS Statute, these entities pursue, among others, the following objectives: • Support for children and young people; • Family support; • Protection of old age and disabled citizens in and in all situations of absence or reduction of means of subsistence or of capacity for work; • Promotion and protection of health, namely through the provision of preventive, curative and rehabilitative care; • Education and professional training of citizens; and • Resolution of the housing problems of the populations.

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Table 3.1 PISS typologies Associative

Foundational

• Social solidarity associations • Associations of social action volunteers • Mutual aid associations or mutual associations • Brotherhoods of Mercy

• Foundations of social solidarity • Parish social centers and other institutes created by Institutions of the Catholic Church or other religious Institutions, subject to the regime of social solidarity foundations

Source Adapted from MAS (1983)

In order to achieve these objectives, the State may conclude with the PISS, or similar, “cooperation agreements”, through which it guarantees the direct concession of equipment and services to the population (according to Article 4 (2) and Article 39 of the PISS—MAS, 1983), or “management agreements”, through which they transfer the management of services and equipment belonging to the State (according to Article 4 (3) of the PISS Statute—MAS, 1983). At the same time, PISS may take the form of association and foundational form, as defined in Article 2 (1) of the PISS Statute (MAS, 1983), whose particularities are presented in Table 3.1. An association is, as a general rule, a legal person composed of an individual and/or collective persons, without profit purposes, grouped around common objectives and needs, and is, from its outset, assured in the CP (according to Article 46—AR, 2005) the freedom of their formation, enshrining the right of citizens to freely establish associations, unless they are intended to promote violence and its ends are contrary to criminal law. In short, in Portugal, there is a wide range of institutions within the legal framework of the NPI that it is important to support in fiscal terms.

3.3 The Historical Context of the Piss The BLSE, approved by Law 30/2013, of May 8 (AR, 2013), has reinforced the promotion, encouragement and development of the social economy, as well as, of the institution representation, listing in Article 10 (2) the role of public authorities in complying with this development. With the approval of this Law, a reform of the legislation applicable to social economy entities began. As Meira (2013: 4) defends, the BLSE: is assumed to be a general law, with very limited objectives highlighting the explicit institutional and juridical recognition of the social economy sector, which basically involves: delimiting the subjective scope of its actors and the principles on which they are based; by identifying the forms of organization and representation of the social economy; by defining the broad lines of policies to promote the social economy; by identifying the ways in which social economy entities interact with public authorities.

In this context, the historical evolution of the Statute and norms that governed the PISS over the last years is reflected in Table 3.2.

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Table 3.2 Historical evolution of PISS statutes/regulations

Source Prepared by authors

The Decree-Law 119/83, of February 25 (MAS, 1983: 643), which approved the PISS Statute, states in its paragraph 1 that: (…) it was proposed that the Government review the legislation in force and prepare a new legal instrument containing the global regulations of private non-profit institutions that propose solving social needs.

It also refers, in the same paragraph 1 (MAS, 1983: 643), that: This decision was based on the need to avoid the inconveniences resulting from the excessive delimitation of the specific objective of private institutions of social solidarity, as defined in article 1 of the Statute approved by Decree-Law 519-G2/79, of 29 December, i.e. the «objective of providing social security».

The “1st amendment to the PISS Statute”, through Decree-Law 9/85, of January 9 (MFPTSS, 1985: 38), states, in accordance with paragraph 2, that the PISS: (…) enjoy the tax exemptions that the law establishes for legal persons of public utility, which is fundamentally embodied in Decree-Law 260-D/81, of September 2.

This is reasonable since, paragraph 1 of the same Decree-Law (MFPTSS, 1985: 38) states that: (…) these institutions, once registered under the terms of article 7, automatically acquire the nature of legal persons of public utility.

In the same year, the Decree-Law 89/85, of April 1 (MTSS, 1985a: 876), in the “2nd amendment to the PISS Statute”, mentions in paragraph 1 that:

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Paragraph 2 of the normative said (MTSS, 1985a: 876) continues to mention that: In view of the fact that the practice has shown that that provision has not been effective and that, in any way, it impedes the private nature of the institutions, which, above all, it is important to safeguard.

Later, the Decree-Law 402/85, of October 11 (MTSS, 1985b: 3359), proceeded to its “3rd amendment to the PISS Statute” and included a number of fundamental principles to be met by the register of institutions, that described in Article 11, in particular: The statutes of the institutions and their amendments do not need to take the form of a public deed provided that their registration is carried out in accordance with the decree referred to in article 7, paragraph 2.

That is, as referred to in Article 7 (2) as: By order of the minister of guardianship will be regulated the organization and operation of the registry (…) (MTSS, 1985b: 3359).

The following year, the Decree-Law 29/86, of February 19 (MTSS, 1986), concerning its “4th Amendment to the PISS Statute”, amended Article 94 (2) of Decree-Law 119/83, of February 25 (MAS, 1983), defined the period for reforming the statutes of institutions qualified as public utility companies, and paragraph 2 was replaced by the following wording: (…) shall amend the statutes in accordance with the regime established in the present statute within the period established by an ordinance of the Minister of Labor and Social Security (MTSS, 1986: 443).

After almost 30 years, the Decree-Law 172-A/2014, of November 14 (MSESS, 2014: 5882(2)), proceeded to its “5th amendment to the PISS Statute”, referring to paragraph 12 of the introductory note to this: Despite the Statute of Private Institutions of Social Solidarity, approved in annex to DecreeLaw 119/83 of February 25, amended by Decrees 9/85 of January 9, 89/85, of 1 April, 402/85, of October 11 and 29/86 of February 19, to maintain essentially what is at hand, it is important to recognize that the new social and organizational realities require the reformulation of some of its provisions and introduction of others, so as to provide the institutions thus qualified with a legal basis for furthering their modernization and development.

That is to say, the aforementioned diploma has formally empowered the social economy entities with the necessary instruments to develop a set of initiatives, associated with those traditionally developed by these institutions, enabling them to innovate, strengthen and boost their growth and thus strengthen social cohesion in the country. Following the development of the principles enunciated in Law 30/2013, of May 8 (AR, 2013), called the “Basic Law of the Social Economy”, Decree-Law 172-A/2014,

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of November 14 (MSESS, 2014), revisited the definition of PISS, highlighting the fact that its action should be guided by compliance with the guiding principles of the social economy, namely the ones referred in paragraphs 13–18: • In the clear separation between the main purposes and the instruments of the institutions; • More effective control of the heads of administrative and supervisory bodies in the institutions; • Limiting the mandates of their presidents (or similar posts); • Accountability of the management body for possible poor management, with the possibility of exemption; • The introduction of clearer rules for the achievement of financial and budgetary autonomy and the consequent technical and financial balance of the entities. For this purpose, Article 1 of Ordinance 196-A/2015, of July 1 (MSESS, 2015), defends that: The present decree defines the criteria, rules and forms on which the specific model of cooperation established between the Institute of Social Security, I.P. (ISS, I.P.) And private institutions of social solidarity (…) for the development of social responses in accordance with the subsystem of social action.

This model of action will take into account the specificities in the field of Social Security, also integrating a dispersed matter in technical regulations, namely with regard to family reimbursements and cooperation agreements with the Social Security Institute. Finally, the Law 76/2015, of July 28 (AR, 2015a), approved its “6th Amendment to the PISS Statute”, establishing Article 5 (4), where it was required that all PISS have to adapt their statutes to the provisions and approved by Decree-Law 119/83, within 12 months, of February 25 (MAS, 1983), incorporating all the previously stated amendments. Its further states that the failure to comply with this obligation may lead the Institutions to lose the quality of PISS and thus not be able to obtain, from the State and its Organisms, the financial necessary and indispensable support to the good performance of the social purposes for which these entities are vocational.

3.4 The Fiscal Context of the Piss The NPI are entities of private initiative that act in the pursuit of ends that often are of a public nature or utility. With their own governance models, they are accountable to public agencies in the scope of their activities, mainly of social and humanitarian nature (Pereira et al., 2015). For this, the tax treatment has several particularities, and its contributory capacity is defined according to the social purposes to which they are dedicated and of their public interest.

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Thus, the NPI, during its legal existence, interacts in various ways with various taxes, namely, as Amaral says (2013): (a) When they are constituted, as regards, fundamentally, the taxation of the patrimony with which they are instituted; (b) Throughout their existence and in the course of their activities, either by taxing the income they obtain and the assets they hold or by participating in the taxation of consumption; and (c) In the capacity of organizations receiving gifts under patronage. It should be noted that many of the benefits and tax exemptions that these entities enjoy, as well as the benefits that they can impute to others with whom they relate, in particular the patrons who donate, suffer from recognition by the State, through obtaining the “Public Utility Statute”. The various tax matters related to the NPI are divided into different tax codes and legislation, and there is no specific tax regime or diploma that concentrates the different tax regimes, benefits and exemptions. Thus, the NPI take various positions in periodic tax relations: • As taxpayers: – income: Corporate Income Tax (CIT or, in Portuguese, IRC); – patrimony: Municipal Property Tax (MPT or, in Portuguese, IMI) and Municipal Tax on Property Transfer (MTPT or, in Portuguese, IMT); – consumption: Value Added Tax (VAT or, in Portuguese, IVA); – the vehicles: Vehicles Tax (VT or, in Portuguese, ISV) and Single Transit Tax (STT or, in Portuguese, IUC); • As VAT debtors; and • As creditors of Individual Income Tax (IIT or, in Portuguese, IRS) and Single Social Fee (SSF or, in Portuguese, TSU) in favour of Social Security. Corporate Income Tax The CIT applies to all collective persons, regardless of their profit-making purposes, as well as cooperatives, public companies and other collective persons of public or private law, that have their head office or (place of) effective management in Portuguese territory, as described in Article 2 (1) (a) and (b) of the CIT Code (AT, 2019a). Thus, the NPI are also taxable persons of CIT and, as such, must file a “Declaration of commencement of activity”, even in cases where they are exempt from this tax, as mentioned in Article 118 (1) of the CIT Code (AT, 2019a). In terms of Tax basis, the CIT Code (AT, 2019a) distinguishes two essential types of collective persons, depending on their nature: • Those principally engaged in commercial, industrial or agricultural activities, which are taxed by profit and equity variations, according to items a) and d) of Article 3 (1) of the CIT Code;

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• Those that do not carry out these activities as their principal activity, which are taxed by their total income, in accordance with Article 53 of the CIT Code, as reported by Article 3 (1) (b) of the CIT Code. In view of the above, the NPI is included in the second group, being, like the other entities resident in the Portuguese territory, subject to a rate of 21% of CIT, in accordance with Article 87 (1) of the CIT Code (AT, 2019a). However, PISS or other similar entities, benefit from a privileged tax regime, which translates, in practice, into an exemption from taxation, in accordance with Article 10 (b) and (c) of the CIT Code (AT, 2019a). Whatsoever, this exemption does not cover income derived from the exercise of commercial or industrial activities carried out outside the scope of statutory purposes, as referred to in Article 10 (3) of the CIT Code (AT, 2019a). Nevertheless, regarding the declaratory obligations, even if they are entities to which the exemption was granted, under the terms of Articles 10 and 11 of the CIT Code (AT, 2019a), these entities have to comply with certain reporting obligations, namely those indicated in Article 117 (1) of the CIT Code (AT, 2019a): a) A declaration of registration, changes or cessation, in accordance with articles 118 and 119; b) A periodic declaration of income, in accordance with article 120; c) An annual statement of accounting and fiscal information, in accordance with article 121.

The NPI, and specifically the PISS, since they are exempted under Articles 10 and 11 of the CIT Code (AT, 2019a), are exempt from this exemption and must, therefore, file the CIT Model 22. In the case of exempt income, they are obliged to submit the “Model 22 Annex D”, which is intended to mention the net income covered by exemptions and, if not considered, income deemed not to be subject. The deadline (normal period) of delivery of the annual income tax return—Model 22—shall run until May 31 of the year following that to which the income relates, whether it is a business day or not, as provided for in Article 120 (1) of the CIT Code (AT, 2019a). The tax due, by the NPI that are obliged to send the Model 22, must be paid until the last day of the deadline established for this purpose, according to Article 108 of the CIT Code (AT, 2019a). Article 117 of the CIT Code (AT, 2019a), as well as Article 29 of the VAT Code (AT, 2019c), provides the submission, by entities that do not carry out, primarily, activities of a commercial, industrial or agricultural nature, of the Annual Statement of Accounting and Fiscal Information—Simplified Business Information (SBI or, in Portuguese, IES), comprising by Face Sheet and Annexes D, L, O and P. This information must be electronically submitted, by July 15 of each year, being a business day or not, as indicated in Article 121 (2) of the CIT Code (AT, 2019a). The “Annex D of the SBI” must be delivered by resident entities that do not primarily carry out activities of a commercial, industrial or agricultural nature, provided that they obtain taxable and non-exempt income, in order to determine the taxable amount to be included in Model 22.

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The “Annex L of the SBI” must be submitted by all taxable person’s subject to it, in agreement with what is stated in Article 29 (1) d) of the VAT Code (AT, 2019c), i.e., whenever the NPI has a complementary activity subject to VAT. These entities must also present a summary of Customers (Annex I of the SBI) and a summary of Suppliers (Annex P of the IES), in the previous year taxable operations and internal operations carried out in each one of them, with a total value, equal to or greater than e 25,000, as provided in points e) and f), respectively, of Article 29 (1) of the VAT Code (AT, 2019c). On the other hand, it is important to note that the “Statute of Patronage”, approved by Decree-Law 74/99 of March 16 (MF, 1999), came to define the regime of tax incentives in the ambit of social, environmental, cultural, scientific or technological and sports sponsorship. Currently inserted in the Statute of Tax Benefits (STB or, in Portuguese, EBF) (AT, 2019d), this Statute makes it possible for taxpayers of CIT/IIT, to consider the donations granted to various entities as tax expenses. Specifically, Article 2 (1) of Decree-Law 74/99, of March 16 (MF, 1999: 1431), refers to the costs or losses of the year as donations to the following entities: a) Particular institutions of social solidarity, as well as legal persons assimilated legally; b) Legal persons of public administrative utility and of mere public utility that pursue purposes of charity, assistance, charity and social solidarity and cooperatives of social solidarity;(…).

Also, in paragraph 3 of the same article (MF, 1999: 1431), it is expressed that: The donations referred to in the preceding paragraphs are charged to costs corresponding to 130% of their total or to 140% if they are intended to cover the following measures: a) Child or elderly care;(…)

That is, the entities that grant donations to the NPI, in this case the PISS, benefit fiscally from these deliveries. Also, Article 54 of the CIT Code (AT, 2019a) states that: 3 - Amounts subscribed for shares by the members in accordance with the statutes, as well as grants to finance the attainment of the corporate objects are considered to be income not subject to IRC. 4 - Accretions to net worth received free of charge are considered exempt income where they are applied towards the direct and immediate furtherance of the corporate objects.

Individual Income Tax Although NPI are not subject to IIT, this tax states the rules which are used to determine the overall income under the CIT Code. That is, these entities are taxed in accordance with the provisions of Article 53 of the CIT Code (AR, 2019a), i.e., by the algebraic sum of the income of the categories foreseen for IIT purposes, as well as of the patrimonial increases obtained in free title to principal title. However, some obligations remain with respect to withholding tax and ancillary obligations arising from the payment of income subject to IIT. Article 99 (1) of the IIT Code (AT, 2019b) defends that entities that are dependent on income from work:

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(…) are required to withhold tax when they are paid or made available to their holders (…)

Also, Article 101 (1) of the IIT Code (AT, 2019b) states that entities which have, or need, to have organized accounts are required to withhold tax by applying a tax (referred to in the following paragraphs of that same number) to gross income paid or disposed of available to other categories, that they are obligors. According to Article 97 (1) of the IIT Code (AT, 2019b): The IIT must be paid in the year following that to which the income (…)

For paragraph 3 of the same Article (AT, 2019b) to mention that: The sums actually withheld or paid pursuant to articles 98 to 102 shall be deducted from the amount of tax for the year in which the withholding or payment occurred.

In this sense, Article 1 of the IIT Code (AT, 2019b) mentions that income subject to withholding tax is as follows: • • • • •

Income from dependent work—Category A; Business and professional income—Category B; Capital Income—Category E; Real estate income—Category F; and Pensions—Category H. Article 98 (1) of the IIT Code (AT, 2019b) considers that: In the cases provided for in articles 99 to 101 and in others established by law, the entity liable for income subject to withholding tax (…), are obliged, at the time of payment (…), to deduct the corresponding amounts to the application of the rates set out therein for the tax for the year in which those acts occur.

Furthermore, Article 3 (3) (AT, 2019b), alludes that: The amounts withheld pursuant to articles 99 to 101 shall be delivered by the 20th day of the month following that in which they were deducted.

In order to proceed with the delivery of the retained amounts, taxpayers must access the Tax and Customs Authority (TCA or, in Portuguese, AT) e-portal and file their IIT/CIT withholding tax Declaration and Stamp Duty (if applicable). At the end of the submission of the Declaration, a Payment Guide is issued with the values entered, separated by types of income categories. In addition to the withholding tax, the NPI will also have to submit, until January 31 (or the following business day), the CIT/IIT Model 10 tax return for the previous year, as stipulated in letter c) of Article 119 of the IIT Code (AT, 2019b). This declaration aims to declare the income subject to tax that was not declared in the Monthly Statement of Remuneration (MSR or, in Portuguese, DMR), received by taxpayers of IIT resident in the Portuguese territory, as well as their withholding taxes. It is also intended to declare income subject to withholding tax, excluding those exempts from it, in accordance with Articles 94 and 97 of the CIT Code (AT, 2019a). With the approval of the Law of Religious Freedom, through Law 16/2001 of June 22 (AR, 2001), a new source of PISS funding was established. Thus, the process

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of assigning 0.5% of the IIT paid in favor of the Church or PISS was created. This process consists in the assignment of a quota equivalent to 0.5% of the IIT paid based on the annual declarations of income, which will be destined by the taxpayer for religious or charitable purposes, to a church, religious community, public corporation charitable, humanitarian, or PISS purposes, which will indicate it in your income statement. However, in order for this mechanism to work, it is necessary for the PISS to require this tax benefit under the provisions of Ordinance 80/2003 of January 22 (MF, 2003), which establishes the procedures to be followed by entities that, under Article 32 (6) of Law 16/2001, of June 22 (AR, 2001), require the assignment of a portion of the IIT paid. Value Added Tax VAT is a general consumption tax, which applies to all stages of the economic circuit, where the tax base is limited to value-added at each stage. This tax tends to be neutral, i.e., it does not charge for transfers due to the settlement and deduction mechanism. Only the end consumer is taxed as he cannot deduct it. In accordance with Article 1 (1) of the VAT Code (AT, 2019c), in normal VAT transactions, the following are subject to tax: the transfer of goods and services performed for consideration; the importation of goods; and intra-Community acquisitions of goods and services. Article 2 (1) of the VAT Code (AT, 2019c) states that VAT is subject to individual or legal persons who carry on economic activity or who, by performing a single taxable transaction, that operation fulfills the assumptions of the real incidence of IIT or CIT. The VAT rates provided in Article 18 (1) of the VAT Code (AT, 2019c) are as follows: • Reduced rate—6% (4% in the Azores and 5% in Madeira), for taxed goods and services listed in the VAT Code List I; • Intermediate rate—13% (9% in the Azores and 12% in Madeira), for taxed goods and services listed in the VAT Code List II; and • General rate—23% (18% in the Azores and 22% in Madeira), for the remaining goods and services. As mentioned in Article 1 (1) of the VAT Code (AT, 2019c), the transfer of goods which are in Portuguese territory at the time of transport to the acquirer or in Portuguese territory at the time the goods are made available to it are subject to VAT in Portugal. The NPI, as consumers, do not benefit from any special VAT regime and are subject to the tax rates provided for in the legislation in force at any given time. As service providers, NPI may benefit from the exemption scheme provided for in Article 9 of the VAT Code (AT, 2019c), in relation to the services carried out in the framework of VAT-free transactions, namely those described in paragraph 7 of that article (AT, 2019c), i.e.:

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The provision of services and the transfer of closely related goods, carried out in the course of their normal activity by (…) residential homes, (…), nursing homes, day care centers (…) or other social facilities belonging to legal persons of public law or private institutions of social solidarity or whose social utility is in any case recognized by the competent authorities, even if the services are provided outside their premises.

Also, Article 9 (6) of the VAT Code (AT, 2019c) considers that are exempt from tax: Transfers of goods and services related to social security and assistance (…) including private institutions of social welfare.

As well as Article 9 (19) of the VAT Code (AT, 2019c) states that are exempt from tax: The supply of goods and services related to the collective interest of their associates by non-profit organizations, provided that such bodies pursue political, trade union, religious, humanitarian, philanthropic, recreational, sporting, cultural, civic objectives representation of economic interests and the only consideration is a quota fixed in accordance with the Statutes;

These exemptions, although objective, incorporate a subjective component, notably when they require these activities to be provided by non-profit institutions and/or private institutions of social solidarity as defined in Article 10 of the VAT Code (AT, 2019c), i.e., that simultaneously: a) Under no circumstances distribute profits and their management bodies have no direct or indirect interest in the results of the exploitation by themselves or any other person; b) Have bookkeeping covering all their activities and making it available to the tax office (…); c) Charge prices approved by public authorities (…); d) Do not compete directly with taxpayers.

Even where entities fall under a mixed regime, i.e., a “normal regime” and an “exemption regime”, pursuant to Article 20 of the VAT Code (AT, 2019c), the entity shall define the method to be used for deduction of tax paid: the “pro-rata” or the “total allocation”. How is determined the tax deduction is defined in Article 23 of the VAT Code (AT, 2019c). Thus, in the “pro-rata” method, as defined in Article 23 (1) of the VAT Code (AT, 2019c), the deduction of input tax is determined as follows: a) In the case of a good or service related to the carrying out of operations arising from the exercise of an economic activity (…), part of which does not confer the right to deduct, the tax is deductible in the percentage corresponding to the annual amount of the transactions that give rise to the deduction.

In the “total allocation” method as defined in Article 23 (2) of the VAT Code (AT, 2019c): the taxable person may deduct according to the actual allocation of all or part of the goods and services used, based on objective criteria that determine the extent to which those goods and services are used in deductible and non-deductible transactions.

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In the case of the private institutions of social solidarity, according to the provisions of Decree-Law 91/2009, of April 9 (MTSS, 2009), and successive amendments, namely those derived from Law 159-C/2015 of December 30 (AR, 2015b), which extended the revenue provided for in the State Budget for 2015, may in some situations claim VAT refunds on a certain transaction. Thus, according to Article 2 of that Law (AR, 2015b), 50% of the VAT paid on the following transactions may be refunded to the private institutions of social solidarity: (a) Acquisition of goods or services related to the construction, maintenance and conservation of real estate used wholly or mainly in pursuit of their statutory purposes, provided that they are included in invoices of not less than e 997.60, excluding VAT; (b) Acquisition of goods or services related to items of Tangible Assets subject to decay used solely and exclusively in the pursuit of their statutory purposes, except for vehicles and their repairs, provided that they are included in invoices of not less than e 99.76; excluding VAT and whose overall value during the year is not more than e 9,975.96 excluding VAT. Also, the same Law, as regards the VAT of food and beverages, provides in Article 7 (3) that: During 2016, an amount equivalent to 50% of the VAT paid by the private institutions of social welfare, as well as by the Santa Casa da Misericórdia de Lisboa, is also refunded in relation to the purchase of food and beverage goods or services in the scope of the developed social activities, in accordance with paragraph 1, with appropriate adaptations. (AR, 2015b: 10006(5)).

Therefore, according to the referred diploma, the private institutions of social solidarity were able to request before the Tax Administration the refund of 50% of the VAT related to the purchase of goods or services of food and beverages, as long as they are acquired within the scope of their social activities. As regards VAT-related reporting obligations, they are provided for in Article 29 of the VAT Code (AT, 2019c), in particular: • Declaration of Initiation, change or cessation of VAT activity, pursuant to Articles 31, 32 and 33 of the VAT Code; • Periodic VAT declaration, pursuant to Article 41 of the VAT Code, whenever there is an accessory activity subject to VAT; • Annual statement of accounting and tax information pursuant to Article 29 (1) (d) of the VAT Code and related to Article 121 of the CIT Code (AT, 2019a). Municipal Property Tax The MPT is levied on the Tax Asset Value (TAV or, in Portuguese, VPT) of rustic and urban buildings located in the Portuguese territory, that is, on the value of the buildings for tax purposes, determined pursuant to Article 1 of the MPT Code (AT, 2019e). This tax is due by the owner of the building on December 31 of the year to which it complies, pursuant to Article 8 (1) of the MPT Code (AT, 2019e), or in the case of

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usufruct or surface rights, the tax shall be due by the usufructuary or the surface after the beginning of the construction of the work or the end of the planting, as referred to in Article 8 (2) of the MPT Code (AT, 2019e). According to Article 44 (2) (f) of the SBT (AT, 2019d), the following cases are exempt from MPT: The private institutions of social solidarity and legal persons similar to them, in respect of buildings or parts of buildings intended directly for the fulfillment of their purposes, except for mercies, in which case the benefit covers any property owned by them;

Recognition of exemptions to the above-mentioned entities (private institutions of social solidarity and their equivalent) is unofficial, provided that the registration is effected in the head office on behalf of the beneficiary entities and that the buildings are intended directly for the fulfillment of their purposes and proof of their legal nature as provided for in Article 44 (4) of the STB (AT, 2019d). According to paragraph 8 of the previous article (AT, 2019d), in the case of NPI, the exemption is recognized by the head of the building situation finance department, in a duly documented application, which must be submitted to the building situation finance department, within 60 days of verifying the fact determining the exemption. Accordingly, the private institutions of social solidarity, as well as the other public and administrative utilities, are exempt from MPT in respect of buildings or parts of buildings intended directly for the fulfillment of their purposes, and as regards Mercies, the benefit covers any property owned by them. Municipal Tax on Property Transfer Article 2 (1) of the MTPT Code (AT, 2019f) states that the MTPT covers all transfers, for consideration, of the right of ownership or partial figures of that right, to immovable property located in Portugal. Article 4 of the same MTPT Code (AT, 2019f) states that this tax is due by the individual or legal persons to whom the real estate is transferred. The tax base is, as a rule, the value contained in the act or contract or on the taxable equity value of the properties, whichever is greater, as referred to in Article 12 (1) of the MTPT code (AT, 2019f). However, the IMT Code enshrines in Article 6 (2) (e) (AT, 2019f) that the following are exempt from MTPT: The private institutions of social solidarity and entities legally equivalent to them, as to the assets destined, directly and immediately, for the accomplishment of their statutory purposes.;

However, (with the exception of cooperatives) this type of exemption is previously recognized by order of the Director-General of Taxes, upon request to be submitted prior to the act or contract that gave rise to the transfer, pursuant to Article 10 of the MTPT Code (AT, 2019f). These exemptions are conditional in nature, meaning that they are in force as long as the assets are concerned with the direct and immediate realization of statutory purposes, and they cease upon disposal or assignment to other destinations without

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the prior consent of the Minister of Finance, in accordance with Article 11 (1) of the MTPT Code (AT, 2019f). Vehicles Tax According to Article 52 (1) of the Vehicles Tax (VT or, in Portuguese, ISV) Code (AT, 2019g), are exempt from tax the vehicles for public transport with a capacity of nine seats including the driver, acquired free of charge or by PISS and intended for transport in activities of public interest and which are appropriate to their nature and purposes. This exemption is recognized upon request addressed to the AT submitted until the order for home use, accompanied by an updated document confirming the legal status of the institution and the document proving the acquisition, as referred to in Article 52 (2) of the VT Code (AT, 2019g). Also, paragraph 3 of the same Article 52 (AT, 2019g) states that vehicles must identify, in a visible and permanent place (side and/or rear), the identification of the beneficiary entity. This may not be smaller than the vehicle’s registration. The beneficiaries of tax exemptions may not dispose, for consideration or free of charge, of renting or lending the exempted car before the expiry of the 12-month period from the date of the Portuguese registration, and otherwise the full tax assessment and criminal or administrative liability in accordance with Article 47 (1) of the VT Code (AT, 2019g). In the case provided in Article 58 (change of residence), the taxable person shall maintain his permanent residence on Portuguese territory for a minimum of 12 months, in accordance with Article 47 (2) of the VT Code (AT, 2019g). Single Transit Tax Article 3 (1) of the Single Transit Tax (STT or, in Portuguese, IUC) Code (AT, 2019h) defends that: they are taxable persons owners of vehicles, considering how such individual or legal persons, public or private, on behalf of which they are registered.

According to the STT Code (AT, 2019h): • This tax must be paid annually (Article 4 (1)); • It begins on the date of registration or on each of its birthdays in vehicles of categories A, B, C, D and E and in the calendar year in vehicles of categories F and G (Article 4 (2)); • The tax (Categories A, B, C, D and E) is due until the cancellation of registration made by discontinuation under the terms of the law (Article 4 (3)). However, according to Article 5 (2) of the STT Code (AT, 2019h), they are still exempt from tax: b) Private institutions of social solidarity (…)

In addition, Article 5 (6) of the STT Code (AT, 2019h) states that:

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The exemption provided for in paragraph 2 (b) shall be recognized by order of the Director General of Taxes on the duly documented request of interested parties.

Single Social Fee Article 63 (1) of the PC (AR, 2005: 4652) states that: Everyone has the right to social security.

And in paragraph 2 of the same Article (AR, 2005: 4652): The State is responsible for organizing, coordinating and subsidizing a unified and decentralized social security system, with the participation of trade unions, other workers’ organizations and associations representing other beneficiaries.

Also, paragraph 4 of the same article (AR, 2005: 4652) states that: All working time, under the law, contributes to the calculation of old-age and invalidity pensions, regardless of the sector of activity in which they were provided.

In the case of PISS, the PC considers in Article 63 (5) (AR, 2005: 4652) that: The State supports and supervises, under the terms of the law, the activity and functioning of private institutions of social solidarity and those of recognized non-profit public interest, with a view to the pursuit of social solidarity objectives, (…)

The Social Security Contribution Regimes Code, approved by Law 110/2009, of September 16 (AR, 2009b), with the wording given by Law 119/2009, of December 30 (AR, 2009c) and subsequent amendments/rectifications, came to regulate the various social security schemes, formerly scattered by various statutes. With regards to employees (dependents), Article 5 of the Social Security Contribution Regimes Code (DGSS, 2019) states that the general scheme for employees applies to workers bound by an individual employment contract as defined in Article 11 of the Labor Code, approved by Law 7/2009 of February 12 (AR, 2009a). In addition, Article 11 (2) of the Social Security Contribution Regimes Code (DGSS, 2019: 12) states that: the contributions are the responsibility of employers, self-employed persons, contracting entities and beneficiaries of voluntary social insurance, as appropriate, and contributions are the responsibility of employees, as provided for in this Code.

In other words, the NPI/PISS, as employers, are required to submit by the 10th of the month following the Remuneration Statement referred to in Article 40 of the Social Security Contribution Regimes Code (DGSS, 2019), where, for each worker, not only the amount of the (total) remuneration which constitutes the contributory base but also the working time and the TSU. According to Article 53 of the Social Security Contribution Regimes Code (DGSS, 2019), the overall contribution rate of the general scheme is 34.75%, with 23.75% for the organization and 11% for the employee. However, Article 56 (1) of the Social Security Contribution Regimes Code (DGSS, 2019: 23) considers that:

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Thus, Table 3.3 shows the different rates applied to employees in 2019, in Portugal, according to the different types of workers, that is, depending on the situation for work and the sector of activity. With regard to self-employed, Article 132 of the Social Security Contribution Regimes Code (DGSS, 2019: 41) states that: The self-employed persons are compulsorily covered by the individual persons who perform a professional activity without being subject to a contract of employment or a legally equivalent contract, or are obliged to render to others the result of their activity, and who are not covered by the social security scheme for employees.

Thus, service providers who have had a contractual relationship with an NPI/PISS are covered by the self-employed scheme, i.e. they fall within the group referred to in Article 133 (1) (a) of the Social Security Contribution Regimes Code (DGSS, 2019: 41): Table 3.3 Social security contributory fees, 2019 Description

Employee

Organization

Employees (in general)

11%

23.75%

Statutory board members (in general)

9.3%

20.3%

Statutory board members (manager functions)

11%

23.75%

Students in school holidays

0%

26,1%

Handicapped with undetermined term labour contract

11%

11.9%

Employees of NPI/PISS

11%

22.3%

Employees in the early-retirement period, whose agreement foresees (1) Suspension of the performance of work

8.6%

18.3%

(2) Reduction of the performance of work

Remain with the fixed rate at the time of the early-retirement

Pensioners in employed activity (1) Old Age Performing public functions Without performing public functions

7.8% 7.5%

17.5% 16.4%

(2) Invalidity Performing public functions Without performing public functions

9.2% 8.9%

20.4% 19.3%

Self-employed

21.4% 25.2%

7% 10%

Source Adaptation of DGSS (2019: 10)

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Individuals who are self-employed generating income as referred to in articles 3 and 4 of the Individual Income Tax Code;

Despite being referred to in Article 140 (1) of the Social Security Contribution Regimes Code (DGSS,2019: 43) as: Legal persons and individual persons with business activities, whatever their nature and the purposes pursued, who in the same calendar year benefit from more than 50% of the total value of self-employed activity are covered by this scheme as contracting entities.

In accordance with Article 168 (7) of the Social Security Contribution Regimes Code (DGSS, 2019), the contribution rate to be borne by the contracting entities shall be as follows: (a) 10% in situations where economic dependence is greater than 80%; and (b) 7% in other situations.

3.5 Conclusions In recent years, policymakers have recognized the growing economic, social and cultural importance of the NPI/PISS in the society that is undergoing crucial times of transformation in the face of the insecurity and uncertainty of the national and international context. As so, in order to incentive positive discrimination in taxation, grant exemptions from various taxes are conceded, namely the CIT and VAT. Thus, non-profit institutions, which per definition do not primarily engage in a commercial, industrial or agricultural activity, are subject to corporate income tax. However, not all income obtained by these institutions is subject to CIT taxation and is therefore excluded from the scope of the tax, in compliance with Article 54 (3) of the CIT Code (AT, 2019a), the dues paid by the members, in accordance with the bylaws, as well as the subsidies intended to finance the accomplishment of the statutory purposes, which are considered income not subject to CIT. In the same way, the equity increases obtained free of charge for the direct and immediate realization of the statutory purposes are considered exempt income, in accordance with paragraph 4 of the same article (AT, 2019a). Also, as consumers of goods and services, NPI/PISS do not benefit from any special VAT regime, subject to the tax rates provided for in the respective Code. However, as service providers, these entities may benefit from an exemption scheme for services performed in the course of certain activities. In addition, and in the specific case of PISS, they may, in some situations, claim a refund of input VAT. In a global interconnected society, international knowledge of the Portuguese tax system for the NPI/PISS is fundamental to provide researchers and professionals the ability to study, work, and management with a strong and coherent background. This chapter exposes and explains the Portuguese tax system and compares it with the reality of other countries, namely the European Union, opening excellent discussion for other opportunities into the future in this area of research.

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References Amaral, N. (2013). Da Dependência e Vulnerabilidade à Sustentabilidade e Autonomia do Terceiro Setor. Tese de Mestrado em Serviço Social: Território e Desenvolvimento. Vila Real: Universidade de Trás-os-Montes e Alto Douro. Antão, A. A., Tavares, A., Marques, J. P., & Alves, S. (2012). Novo Regime da Normalização Contabilística para as Entidades do Setor Não Lucrativo. Lisboa: Áreas Editora. Assembleia da República (AR). (1996). Lei nº 51/96, revê o Código Cooperativo. Diário da República, 208, I-A Série, 7 de setembro, 3018–3032. Assembleia da República (AR). (2001). Lei nº 16/2001, aprova a Lei da Liberdade Religiosa. Diário da República, 143, I-A Série, 22 de junho: 3666–3675. Assembleia da República (AR). (2005). Lei Constitucional nº 1/2005, altera a Constituição da República Portuguesa e republica-a (sétima revisão constitucional). Diário da República, 155, I-A Série, 12 de agosto, 4642–4686. Assembleia da República (AR). (2009a). Lei nº 7/2009, aprova a revisão do Código do Trabalho. Diário da República, 30, I Série, 12 de fevereiro, 926–1029. Assembleia da República (AR). (2009b). Lei nº 110/2009, aprova o Código dos Regimes Contributivos do Sistema Previdencial de Segurança Social. Diário da República, 180, I Série, 16 de setembro, 6490–6528. Assembleia da República (AR). (2009c). Lei nº 119/2009, primeira alteração à Lei n.º 110/2009, de 16 de setembro, que estabelece uma nova data para a entrada em vigor do Código dos Regimes Contributivos do Sistema Previdencial de Segurança Social. Diário da República, 251, I Série, 30 de dezembro, 8776–8776. Assembleia da República (AR). (2012). Lei nº 24/2012, aprova a Lei-Quadro das Fundações e altera o Código Civil, aprovado pelo Decreto-Lei nº 47344, de 25 de novembro de 1966. Diário da República, 26, I Série, 9 de julho, 580–589. Assembleia da República (AR). (2013). Lei nº 30/2013, aprova a Lei de Bases da Economia Social. Diário da República, 88, I Série, 8 de maio, 2727–2728. Assembleia da República (AR). (2015a). Lei nº 76/2015, primeira alteração ao Decreto-Lei nº 172 -A/2014, de 14 de novembro e sexta alteração ao Estatuto das Instituições Particulares de Solidariedade Social. Diário da República, 145, I Série, 28 de julho, 5051–5052. Assembleia da República (AR). (2015b). Lei nº 159-C/2015, prorrogação de receitas previstas no Orçamento do Estado para 2015. Diário da República, 254, 2º Suplemento, I Série, 30 de dezembro, 10006(4)–10006(5). Autoridade Tributária e Aduaneira (AT). (2019a). Código do IRC. Retrieved May, 2019, from http:// info.portaldasfinancas.gov.pt/pt/informacao_fiscal/codigos_tributarios/CIRC_2R. Autoridade Tributária e Aduaneira (AT). (2019b). Código do IRS. Retrieved May, 2019, from http:// info.portaldasfinancas.gov.pt/pt/informacao_fiscal/codigos_tributarios/cirs_rep/index_irs.htm. Autoridade Tributária e Aduaneira (AT). (2019c). Código do IVA. Retrieved May, 2019, from http:// info.portaldasfinancas.gov.pt/pt/informacao_fiscal/codigos_tributarios/civa_rep/index_iva.htm. Autoridade Tributária e Aduaneira (AT). (2019d). Código do EBF. Retrieved May, 2019, from http:// info.portaldasfinancas.gov.pt/pt/informacao_fiscal/codigos_tributarios/bf_rep/index_ebf.htm. Autoridade Tributária e Aduaneira (AT). (2019e). Código do IMI. Retrieved May, 2019, from http:// info.portaldasfinancas.gov.pt/pt/informacao_fiscal/codigos_tributarios/cimi/index_cimi.htm. Autoridade Tributária e Aduaneira (AT). (2019f): Código do IMT. Retrieved May, 2019, from http:// info.portaldasfinancas.gov.pt/pt/informacao_fiscal/codigos_tributarios/cimt/index_cmt.htm. Autoridade Tributária e Aduaneira (AT). (2019g). Código do ISV. http://info.portaldasfinancas.gov. pt/pt/informacao_fiscal/codigos_tributarios/iuc/index_iuc.htm. Autoridade Tributária e Aduaneira (AT). (2019h). Código do IUC. Retrieved May, 2019 from http:// info.portaldasfinancas.gov.pt/pt/informacao_fiscal/codigos_tributarios/iuc/index_iuc.htm. Centro Português de Fundações (CPF). (2012). O que é uma fundação. Retrieved December, 2018, from http://www.cpf.org.pt/paginas/8/o-que-e-uma-fundacao/8/.

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Direção Geral da Segurança Social (DGSS). (2019). Código dos Regimes Contributivos do Sistema Previdencial de Segurança Social - Redação em vigor. Lisboa: DGSS. Leite, J. S. (2012). Princípios cooperativos. Lisboa: Imprensa Nacional-Casa da Moeda. Marques, L., David, F., & Martins, P. (2019). A Fiscalidade nas Entidades do Setor não Lucrativo: Especificidades das Instituições Particulares de Solidariedade Social em Portugal. In Asociación Española de Contabilidad y Administración de Empresas (Ed.), Comunicaciones Presentadas Actas del XX Congreso AECA (pp. 1–35). Madrid: AECA. Meira, D. A. (2009). O Regime Económico das Cooperativas no Direito Português: O Capital Social. Porto: Vida Económica. Meira, D. A. (2013). A Lei de Bases da Economia Social Portuguesa. Do Projeto ao texto Final. CIRIEC-España-Revista Jurídica, 24, 1–32. Ministério da Solidariedade, Emprego e Segurança Social (MSESS). (2015). Portaria nº 196A/2015, define os critérios, regras e formas em que assenta o modelo específico da cooperação estabelecida entre o Instituto da Segurança Social, I. P. (ISS, I. P.) e as IPSS ou legalmente equiparadas. Diário da República, 126, 1º suplemento, I Série, 1 de julho, 4564(2)–4564(12). Ministério da Solidariedade, Emprego e Segurança Social (MSESS). (2014). Decreto-Lei nº 172A/2014, procede à quinta alteração ao Decreto-Lei nº 119/83, de 25 de fevereiro, que aprova o Estatuto das Instituições Particulares de Solidariedade Social. Diário da República, 221, 1º suplemento, I Série, 14 de novembro, 5882(2)–5882(26). Ministério do Emprego e da Segurança Social (MESS). (1990). Decreto-Lei nº 72/90, aprova o Código das Associações Mutualistas. Diário da República, 52, I Série, 3 de março, 903–914. Ministério do Trabalho e da Solidariedade Social (MTSS). (2007). Portaria nº 135/2007, aprova o Regulamento de Registo das Associações Mutualistas e das Fundações de Segurança Social Complementar. Diário da República, 19, I Série, 26 de janeiro, 703–707. Ministério do Trabalho e Segurança Social (MTSS). (1985a). Decreto-Lei nº 89/85, revoga o artigo 32.º do Decreto-Lei nº 119/83, de 25 de fevereiro (aprova o Estatuto das Instituições Particulares de Solidariedade Social). Diário da República, 76, I Série, 1 de abril, 876. Ministério do Trabalho e Segurança Social (MTSS). (1985b). Decreto-Lei nº 402/85, altera o nº 2 do artigo 7.º e o artigo 11.º do Estatuto das Instituições Particulares de Solidariedade Social. Diário da República, 234, I Série, 11 de outubro, 3358–3359. Ministério das Finanças (MF). (1999). Decreto-Lei nº 74/1999, aprova o Estatuto do Mecenato, onde se define o regime dos incentivos fiscais no âmbito do mecenato social, ambiental, cultural, científico ou tecnológico e desportivo. Diário da República, 63, I Série-A, 16 de março, 1430– 1432. Ministério das Finanças (MF). (2003). Portaria nº 80/2003, estabelece os procedimentos que devem ser observados pelas entidades que, ao abrigo do disposto no n.º 6 do artigo 32.º da Lei n.º 16/2001, de 22 de Junho (Lei da Liberdade Religiosa), requeiram a consignação de uma parte do IRS liquidado. Diário da República, 18, I-A Série, 22 de janeiro: 392. Ministério do Trabalho e Segurança Social (MTSS). (2009). Decreto-Lei nº 91/2009, estabelece o regime jurídico de protecção social na parentalidade no âmbito do sistema previdencial e no subsistema de solidariedade. Diário da República, 70, I Série, 9 de abril, 2194–2206. Ministério do Trabalho e Segurança Social (MTSS). (1986). Decreto-Lei nº 29/86, altera o nº 2 do artigo 94.º do Estatuto das Instituições Particulares de Solidariedade Social. Diário da República, 41, I Série, 19 de fevereiro, 443. Ministério dos Assuntos Sociais (MAS). (1983). Decreto-Lei nº 119/83, aprova o Estatuto das Instituições Particulares de Solidariedade Social. Diário da República, 46, I Série, 25 de fevereiro, 643–656. Ministérios das Finanças e do Plano e do Trabalho e Segurança Social (MFPTSS). (1985). DecretoLei nº 9/85, estabelece o regime de isenções aplicável às instituições particulares de solidariedade social, uma vez registadas nos termos dos artigos 7.º e 8.º do Estatuto aprovado pelo Decreto-Lei nº 119/83, de 25 de fevereiro. Diário da República, 7, I Série, 9 de janeiro, 38–39. Pereira, A. C., David, F., & Marques, M. L. (2015). Entidades do Setor não Lucrativo: Abordagem Fiscal. Revista Portuguesa de Contabilidade, 5(19), 309–336.

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Presidência do Conselho de Ministros (PCM). (1977). Decreto-Lei nº 460/77, aprova o estatuto das coletividades de utilidade pública. Diário da República, 257, I Série, 7 de novembro, 2655–2657. Procuradoria-Geral Distrital de Lisboa (PGDL). (2019). Código Civil (77ª versão). Retrieved May, 2019, from http://www.pgdlisboa.pt/leis/lei_mostra_articulado.php?nid=775&tabela=leis.

Chapter 4

Environmental Accounting: A Case Study of Implementation in Brazilian Public Airports Iris Cristina Ferreira da Silva, Fued Abrão Junior, and José Maria Dias Filho Abstract Environmental issues, a relevant topic today, have led accountants and business managers to consider them in management and accounting systems. Airport activities cause several environmental impacts; therefore, a management and control structure is needed to minimize the impact of airport activity on nature. This paper discusses the implementation of environmental accounting at the Brazilian Airport Infrastructure Company (Infraero), to evaluate the benefits of environmental management and show that environmental accounting helps managers to make decisions and adopt sustainable actions. Delimiting the theme, specifically for an airport administrator, it was sought to identify its sustainable activities, to know the environmental assets and liabilities, as well as the investments, costs, and expenses resulting from actions that involve the prevention, control, and recovery of the environment. In addition, we have verified the environmental information disclosed by the company in the last 5 years in its annual reports. The results obtained show that the company targeted by this study has been increasing its concern about the environment every year. This can be verified in ten programs covering the main topics of interest of airport administration in the areas of sustainability and compliance with environmental legislation and that environmental accounting can be an internal control tool to measure environmental spending and contribute to sustainable business strategies to gain a competitive advantage. Keywords Environmental accounting · Airports · Environmental disclosure · Management and control

I. C. F. da Silva (B) · J. M. D. Filho PPGCONT, Federal University of Bahia (UFBA), Salvador, Brazil e-mail: [email protected] F. A. Junior Brazilian Airport Infrastructure Company (Infraero), Brasília, Brazil © The Editor(s) (if applicable) and The Author(s), under exclusive license to Springer Nature Singapore Pte Ltd. 2020 D. Crowther and S. Seifi (eds.), CSR and Sustainability in the Public Sector, Approaches to Global Sustainability, Markets, and Governance, https://doi.org/10.1007/978-981-15-6366-9_4

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4.1 Introduction Sustainable development, a relevant topic today, has influenced companies to show their concern about the impact of their activities on the environment. Companies are under increasing pressure to demonstrate adequate performance in the environmental field, with social responsibility being one of the mechanisms by which they seek to satisfy this requirement, and that corporate environmental disclosure is an important way for the management to influence the company’s external perceptions. (Da Silva, de Macena Araújo, & da Silva Santos 2018). In the context of the modern economy and the role of the corporation in modern society, the concept of sustainability and corporate social responsibility (CSR) takes a special role. Organizations are encouraged by stakeholders to embrace a more holistic social behavior and balance between the need for profitability and need to contribute to local community, social equity, and environmental protection (Markota, Omazi´c, & Aleksi´c 2018). According to Stahel (2010), discussing sustainable development is an urgent issue and requires special attention and commitment from the whole society; since in the last decades, the economy of several industrialized countries has as its main characteristics the combination of high resource consumption. These results in the consequent generation of waste, leading to increased public debt, often accompanied by persistent unemployment and very slow economic growth. Bertoli and Ribeiro (2006) explain that the inclusion of environmental information in the financial statements reflects, for users of the statements, the concern of companies with social aspects and their position in relation to the environment. According to the authors, when adopting this conduct, there will be reflexes on the image of the organization and its patrimonial situation. Concern about environmental issues is growing and involves debates at various levels of society. In the airport operation, it is no different; airports are more than a take-off and landing infrastructure. They are also important integration equipment, large resource consumers, and drivers of urban and regional development. Thus, several environmental activities are required for its full operation, such as compliance with legislation, solid and liquid waste management, noise monitoring, maintenance of green areas, and others. (Junior & Aguiar 2015). The adoption of environmental policies, in contrast to a financial disadvantage, has become an important competitive differential. Accounting can be an important instrument in the mensuration and disclosure of the effects of costs and revenues resulting from the adoption of sustainable investments in the entities’ results and equity. (Guimarães 2014). Thus, the following question emerges that guides this research: Is the adoption of environmental accounting important to adequately measure and evidence environmental activities in airports? This paper investigates the implementation of environmental accounting at the Brazilian Airport Infrastructure Company (Infraero). Aiming to evaluate the benefits

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of disclosure and measurement of environmental activities and show that environmental accounting helps managers in making decisions for adopting sustainable actions. After the introduction, the article provides an overview of environmental accounting and the importance of its implementation by companies, as well as a brief presentation of the researched company. After the theoretical part, the case study and the methodology are presented, as well as the conclusions. Finally, discussion of the results as well as research limitations and future study directions are provided.

4.2 Theoretical Framework 4.2.1 Sustainable Development and Environmental Accounting The concept of sustainable development is broad and integrates with the concept of Triple Bottom Line, which has been widespread (Gregson, Crang, Fuller, & Holmes 2015; Slapper & Hall 2011). The Triple Bottom Line (TBL) is defined as an accounting framework that incorporates three performance dimensions: social, environmental, and financial. This differs from traditional reporting frameworks, and in that, it includes ecological (or environmental) and social measures that may be difficult to assign to the appropriate means of measurement. TBL dimensions are also commonly referred to as three Ps: people, planet, and profits (Slapper & Hall 2011). However, there are challenges to put the TBL into practice. These challenges include measuring each of the three categories, finding applicable data, and calculating the contribution of a project or policy to sustainability. Challenges aside, the TBL framework allows organizations to evaluate the ramifications of their decisions from a truly long-term perspective. In this sense, accounting has the role of helping in the measurement and disclosure of environmental and social information; second, the concern of society with the environment has increased in recent decades; more people are interested to know what is the environmental impact on the production processes and services offered by companies. Thus, environmental information has gained relevance in society. (Carvalho Filho, Pimentel, Bertino, & Oliveira 2018). Social and environmental accounting has been defined by Gray et al. (1987) as the process of communicating the social and environmental effects of organizations’ economic actions to particular interest groups within society and to society at large. As such, it involves extending the accountability of organizations (particularly companies), beyond the traditional role of providing a financial account to the owners of capital, in particular, shareholders. Such an extension is predicated upon

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the assumption that companies do have wider responsibilities than simply to make money for their shareholders. Defined as the study of the environmental heritage (environmental assets, rights, and obligations) of entities, Environmental Accounting aims to provide its users, internal and external, with information about environmental events that cause changes in the patrimonial situation, as well as to identify them, measure and disclose (Santos, 2001). According to Gray (1998), perhaps the most frequent perspective employed in social accounting is that of the standpoint of accountability and transparency. Such a view is predicated upon the rights to information of the polity in a democracy and argues, in an increasingly secretive and complex world, for a commensurate increase in the transparency of the organizations that control and determine our futures. Gray (1994) states that accounting and reporting cannot act in isolation. Organizational change is necessary to enable and/or encourage the internal information and reporting systems to be both developed and used while institutional, regulatory, and market changes are necessary to encourage organizations to report and for financial participants to respond positively. In this sense, sustainability must be part of the strategic planning of organizations. In order to give so, me indication of the kind of organizational change that is needed, Gray presented, John Elkington’s “Ten Steps to Environmental Excellence.” Based on John Elkington’s ten steps, we have drawn up a table with four strategic planning phases, associating it to each step and its objectives (Fig. 4.1). Bertoli and Ribeiro (2006) highlight that the adequacy of the inclusion of environmental information in the accounting reports (environmental assets and liabilities),

Fig. 4.1 The ten steps to environmental excellence. Source: Elaborated by the authors, adapted from Elkington (1987) and Gray (1994)

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Disclosure of information Financial Non-Financial amount spent on environmental should be matters (possibly enabling environmental policy for the organization possibly be capitalization due to spend impact on split between EPS) regulated and anticipated pattern of future voluntary costs environmental expenditure organizational activity in the environmental field, including such matters as emissions environmental contingent liabilities - most especially those arising from remediation costs under ‘Superfund’ statement type legislation

Fig. 4.2 Proposals United Nations (UN) to environmental accounting and reporting. Source: Elaborated by the authors

as well as its disclosure, is useful for the various groups of users. Because, it makes it possible to evaluate the company’s concern with its social role, positioning in relation to the environment, formulation, and implementation of ideas and attitudes and behaviors that promote improvements in the short and long terms, which will be reflected in the company’s image and in your equity situation. The UN proposed a synthesis of the financial and non-financial information that should be included in the sustainability reports (Gray 1994) (Fig. 4.2). Thus, if the UN is successful in getting nations to adopt their proposals, all companies can be expected to increase their financial disclosure within the current financial statements whilst also being required to provide statements of environmental policy and statements of environmental performance. This last would almost certainly follow the general sort of direction suggested for the statement of compliance-with-standard. Still, according to the author at its simplest, the current accounting and reporting activity depends upon four factors: (i)

Organizations: The organizations that are accounted for (the ‘accounting entities’) are defined in space and time. Events, which do not fall within the defined organization, are ignored. (ii) Economic Events: The only events that accounting recognizes are the ‘economic events’ which are tautologically defined as those events which have financial effects on the organization. (iii) Financial Description: The events that accounting recognizes are further limited to those economic events which can be described in financial terms— or, more particularly, those which have generated in the past, do generate now or will generate in the future cash receipts or cash payments. (iv) The Users of Information: The way in which the events are recognized and then processed is (largely) determined by sets of assumptions about the eventual users to whom this information will be communicated and by whom it will be used. The users are predominantly assumed management, investors, and lenders, and their interest is assumed to be predominantly financial.

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4.2.2 Environmental Chart of Accounts Ferreira Apud Tinoco and Kraemer (2011) highlights that the chart of accounts of a company that has the environment as a strategic variable of its business must be prepared considering the current and potential particularities, in order to enable the preparation of environmental management reports and not need to be constantly changed. Environmental accounting seeks to highlight the accounts that include accounting facts relevant to environmental management. The main criteria used to prepare a chart of accounts to support environmental accounting are: • The chart of accounts structure must be specific to each organization; • The chart of accounts hierarchy should be illustrated by a classification system based on its own codes; • The classification should be constructed from the most general characteristics of the account groups to the specificities inherent in each of them; • The information generated from the chart of accounts must be in accordance with the needs of users; • The names contained in the chart of accounts should easily identify the assets; • The structure must allow flexibility that allows its alteration (enlargement or reduction) and operationalization. Adapting the chart of accounts to obtain reliable financial information is essential for preparing sustainability reports. Companies need to adapt to this new reality and seek new forms of management in relation to the environment. One of the paths that can be followed for this adaptation is that of Environmental Management. Through an adequate costing system, managers are more likely to better allocate environmental costs to their products (Bouças, Buratto, & Silva 2010). Organizational obligations related to your responsibility in society can be released through a mechanism. The benefits that a company can obtain from sustainability reports include the creation of a positive image and reputation, in addition to a greater potential for market growth Markota Vuki´c, Omazi´c, & Aleksi´c (2018).

4.3 Methodology This research is characterized as a case study. Yin (1984) defines the case study research method “as an empirical inquiry that investigates a contemporary phenomenon within its real-life context; when the boundaries between phenomenon and context are not clearly evident; and in which multiple sources of evidence are used.” According to Patton (1987), the choice of the case study to research an area of interest in depth is particularly appropriate.

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Anderson sees case studies as being concerned with how and why things happen, allowing the investigation of contextual realities and the differences between what was planned and what actually occurred. To create a theoretical framework, we conducted a bibliographic search based on the analysis of books and scientific articles, which shows an overview of accounting and the importance of its implementation by companies. Later, we started to investigate its applicability in the analyzed company. Infraero discloses its financial statements considering the result of all 54 airports and 55 stations that provide aeronautical telecommunications services, managed by the company. Thus, an individual analysis of each airport was not carried out, but based on the disclosure made by the company through an annual report, consolidated trial balance, and general chart of accounts.

4.4 Findings and Discussion 4.4.1 About Infraero Infraero is a federal government company indirectly linked to the Civil Aviation Secretary; it was founded in 1973 and is currently responsible for the direct administration of 54 public airports in Brazil. In 2018, Infraero was responsible for operating approximately 1.3 million flights, carrying more than 82.7 million passengers at the airports under its management (GRI INFRAERO 2018). Until 2011, Infraero held a monopoly on all major Brazilian airports. From this period, some of the airports previously managed by Infraero were granted to private companies. During the operation of an airport, there are several interfaces with the environment, among which are the maintenance of the quality of the drinking water served to the passengers, management of the solid waste produced in the buildings, monitoring of atmospheric emissions, environmental licensing, recuperation of degraded areas, monitoring of aeronautic noise, and management of wildlife risk (Neto et al 2019). In 2017, the company adopted the GRI report for the first time, emphasizing the environmental actions carried out with greater emphasis in relation to previous years considering the requirements of the report, where it disclosed the following: It is worth mentioning some of the actions carried out in 2017 that positively impacted environmental management. One of them was the revision of the Company’s chart of accounts, specifically regarding the adequacy of the measurement of environmental management expenses.

The statement found in the GRI was what motivated this research, in order to verify, what were the changes made in the company’s chart of accounts, to identify environmental expenditures and how this information is being measured and disclosed.

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4.4.2 Implementation of Environmental Accounting in Brazilian Public Airports To implement environmental accounting, it is first necessary to know the environmental events and impacts related to the company’s activity that affect its heritage and its continuity, as well as the quality of life of people, fauna, flora, rivers, and seas, and therefore, they should be subject to registration, accumulation, measurement, evaluation, and disclosure by corporate accounting (Tinoco and Kraemer 2011). So that environmental activities do not jeopardize the operational safety of airports managed by Infraero, airports must follow environmental programs and guidelines and, in this context, meet the environmental services defined by the company. These services range from simple technical guidelines to the development of more specific studies and reports. In Brazil, there are no differences in environmental regulations between regional and international airports. The regulations consider the environmental impact caused, the noise zones, and the specific laws that vary in each state where the airport is located. We found that in order to properly measure the expenses incurred with environmental management actions, the company’s chart of accounts was revised. The need to create new accounts and the segregation of exclusively environmental expenses from other expenses are to be identified. Analyzing the accounting accounts included in the company’s chart of accounts, we identified which item of the company’s ten environmental programs, the environmental accounts would be associated, and the results found are shown in Table 4.1. The company also owns and discloses its environmental policy, thus verifying how the actions taken are in line with John Elkington’s “Ten Steps to Environmental Excellence.” We analyzed the company’s balance sheet to identify the values recorded in 2018, in the main environmental accounts; the findings are in Table 4.2. Although electricity and water supply are associated with the company’s environmental programs, the expenses incurred in these accounts are not considered environmental expenses, but inputs managed by the company through policies to control and reduce consumption, as per included in objective five of Infraero’s environmental policy. V —Rational use of energy and water resources; Therefore, they are not in Table 4.2. It is found that the largest environmental expense is with the treatment of sewage generated, which in turn has three forms of treatment: • Disposed directly into the public sewage system to be treated by the utility. • Forwarded to treatment and reuse (ETR) stations for pretreatment and subsequent release to the public network; • Referred to treatment and reuse stations for complete treatment and launches at the receiving site.

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Table 4.1 Environmental accounts Ten infraero environmental programs

Associated accounting accounts

1

Environmental licensing

Other taxes and fees

2

Soils and flora

Flora and green management—forest inventory Management of flora and green areas

3

Solid waste

4

Fauna

Solid waste management Wildlife Management

5

Environmental compliance

Environmental management and compliance Environmental fines External Audit—Environmental Provision for environmental contingencies

6

Energy

Electricity

7

Noise

Noise management

8

Atmospheric emissions

Air quality and air emissions management

9

Water resources

Water resource management Wastewater Management Water supply

10

Environmental education

Environmental education

Source Elaborated by the authors Table 4.2 Accounting records Environmental Account

BRL

%

Environmental education

33.600,00

0

Environmental taxes and fees

73.830,58

1

98.619,13

1

Environmental management and compliance Air quality and air emissions management

165.443,97

1

Provision for environmental contingencies—liabilities

366.470,36

3

Flora and green management—forest inventory

426.963,32

3

Environmental fines

501.016,38

3

Water resource management

734.957,98

5

Noise management

812.511,76

6

Management of flora and green areas

1.292.324,54

9

Wildlife Management

1.595.847,32

11

Solid waste management

3.353.846,58

23

Wastewater management

4.901.115,60

34

Total Source Elaborated by the authors

14.356.547,52 100

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We have identified that the amount recorded in the “Wastewater Management” account refers to the payment of the sewage fee charged when the concessionaire collects, transports, and disposes of waste, pursuant to Article 3 of Law 11.445 of January 5, 2007 (Establishes national guidelines for basic sanitation). Sanitary sewage: consisting of activities, infrastructures, and operational facilities for proper collection, transportation, treatment, and disposal of sanitary sewage, from building connections to their final release into the environment; (Brasil 2007). In this sense, it is verified that only the sewage costs collected by the concessionaire are recognized, the sewage costs treated in the ETR are hidden in other expense classifications, as they are not easily prorated. Second in the ranking of environmental spending is Solid waste management, in relation to this item the company highlights in its policy: VII—effectively manage solid waste, striving for reduction, reuse, recycling, and treatment, as well as the environmentally appropriate final disposal. The third is Wildlife Management spending, according to Neto et al (2019) this is the most emblematic example of the interface between an airport operation and the environment. As an example, according to the Brazilian Annual Wildlife Strike Summary (2015), the country registered 1733 collisions between aircraft and birds, 1081 near-collisions, and 2634 sightings in 2015. According to the same report, the focus of airfield operators must be excellence in performing passive and active measures to mitigate collisions in flights, thereby depending on the pro-active actions of air traffic controllers and aircraft operators. Following are the expenses with Flora Management and Green Areas, Noise Management, Water resource management.

4.4.3 Disclosure The disclosure of assets and liabilities may be made in the financial statements or by other means, such as explanatory notes or management reports. This potential set of means for disclosure encompasses compulsory and voluntary disclosure. Disclosure policies are mechanisms by which manager’s influence outside perceptions of the organization to which they belong. Therefore, the use of disclosure may be associated with the company’s relationship policy with society. (Alves & Borba 2010) Thus, we verify the environmental expenditures disclosed by the company in the last 5 years in its annual reports, the data obtained are shown in Graph 4.1. From 2014 to 2016, the company disclosed, through its Social Report, included in its annual report, the environmental expenses. In 2017, following the adoption of the GRI, it disclosed financial information on environmental activities in the report and mentioned the revision of the company’s chart of accounts. In 2018, despite adopting environmental accounting, no information on the amounts of environmental expenditures was disclosed in the report. However, it can be seen that, through management reports, the separation of environmental expenses

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Environmental Expenses in R$

16,000 14,000 12,000 10,000 8,000 6,000 4,000 2,000 -

2014

2015

2016

2017

2018

Graph 1 Disclosure of environmental expenditures (2014-2018). Source Elaborated by the authors

from other expenses provided a better identification of expenses, since there was no increase in expenses but a better disclosure of the segregation of environmental expenses, which had previously their costs implied in other expenses. The company recognizes in its financial statements the environmental liability, arising from environmental contingencies and Termos de Compromisso de Compensação Ambiental—TCCA (Environmental Commitment and Compensation Terms). According to Bertoli and Ribeiro (2006), the environmental liability represents the sacrifice of economic benefits that will be realized for the preservation, recovery, and protection of the environment, to allow the compatibility between the economic development and the ecological environment or due to misconduct regarding environmental issues. It concerns not only the sanctions for environmental degradation but also the business measures for the prevention of environmental damage, which have economic and financial consequences, compromising both the present and the future of the company, exemplified in the situations in which the company has to assume the responsibility. Responsibility for the consequences of its operational activities, such as the disposal of waste in the environment. Environmental Compensation (TCCA) is defined in Federal Law n°. 9.985 (National System of Conservation Units—SNUC), which provides that, in the case of environmental licensing of projects with significant environmental impact, the entrepreneur is required to support the implementation and maintenance of unit group conservation. Alternatively, if the venture affects a specific Conservation Unit or its buffer zone, it must receive environmental compensation even if it does not belong to the Integral Protection Group. Infraero classifies as restricted cash savings deposits held pursuant to the Environmental Compensation Commitment (TCCA) entered into with environmental organizations. The use of these resources is solely for compliance with environmental licensing of projects, as provided for in Law. The amounts related to the environmental commitment totaled R$ 16,746 million in 2018. (GRI INFRAERO 2018). Although it does not mention in the financial statements the contra entry of the accounting entry in the savings account, it was verified from the balance that

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the recognition of the environmental liability was correctly accounted; now the commitment was entered, recording the obligation as accounts payable, although disbursement has not yet occurred, in line with IAS 37. The company informed in an internal document, the reason for the registration of environmental liabilities: Given the commitment assumed and the already known value of 0.5% applied to the expected total cost for the expansion of the airport, it is necessary to record the obligation in liabilities to demonstrate the counterpart of the resources already transferred to the savings account, in order to honor the obligation., with future transfers to environmental agencies to compensate for the environment. The company also provisioned environmental contingencies in the amount of R $ 336 thousand and was informed by means of an explanatory note: Environmental Actions—Infraero establishes provisions for environmental actions arising from fines imposed by public bodies, which are under discussion at the administrative level, arising from the normal course of their activities or alleged non-compliance/non-compliance with environmental conditions (GRI INFRAERO 2018). In order to demonstrate what would be the disclosure of qualitative and quantitative environmental information, we performed a simulation highlighting these factors in the company’s balance sheet (Table 4.3). In addition to Infraero’s disclosure analysis, in order to identify the level of disclosure on sustainability issues by Brazil’s leading airport administrators, we apply the index developed by (Jordão & Rhouma 2009), which shows the level of coverage of the Report. Sustainability Reporting, taking into account the following report scoring criteria: Level 1: No information on sustainability issues is available on reports neither on website. Level 2: There is information related to sustainability issues only on the website and is not Updated. Level 3: There is no updated exclusive sustainability report but these issues are included in the Annual Report. Level 4: There is an updated exclusive sustainability report available but it is not based on GRI guidelines. Level 5: There is an exclusive sustainability report available and it is based on GRI Guidelines. Airport concessions started in 2011, with São Gonçalo do Amarante Airport (RN). In 2012, the airports of Brasília/DF, Guarulhos, and Viracopos, in São Paulo were auctioned; and, in 2013, the Antônio Carlos Jobim—Galeão International Airports, in Rio de Janeiro/RJ and Tancredo Neves—Confins, in Minas Gerais. Such concessions were aimed at improving the quality of services at these airports and accelerating the execution of the works necessary to meet the demand for air transport, the growth of the sector in the country and the holding of major events, such as the FIFA World Cup in 2014 and the Games Olympic Games in June 2016. In 2017, four more airports were awarded: Pinto Martins, in Fortaleza/CE; Luiz Eduardo Magalhães, in Salvador/BA;

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Table 4.3 Balance Sheet (simulation with environmental disclosure) R$ (mil) Assets Current Assets

R$ (mil) Liabilities and stockholders equity

1.737.297 Current Liabilities Obligations

Total current assets

Other obligations*

260.469

Environmental compensation**

612

1.737.297 Total current liabilities

Noncurrent Assets

733.040

994.121

Noncurrent Liabilities

Restricted cash *

60.098 Post-employment benefit

1.632.249

Restricted cash—environmental compensation **

16.746 Provision for contingencies *

547.243*

Bills to receive Judicial deposits Investments Immobilized* Environmental equipment** Intangible

210.861 Environmental Contingencies** 362.641 Taxes to collect 2.327.375 Capital increase resources 262.240 Other obligations* 500 Environmental compensation**

336 668.551 16.134

18.451

Total noncurrent assets

3.258.912 Total non current liabilities

Total asset

4.996.209 Total liabilities and stockholders 4.996.209 equity

Total stockholders equity

2.864.513 1.137.575

* Represents environmental information has been recorded in the balance sheet originating ** Segregated environmental information Source: elaborated by the authors Source: elaborated by the authors

Hercílio Luz, in Florianópolis/SC; and Salgado Filho, in Porto Alegre/RS (National Civil Aviation Agency—ANAC 2018). Thus, we analyze the environmental information of Infraero and these other Brazilian airport administrators and classify them according to the levels proposed by (Jordão & Rhouma 2009). Table 4.4 shows that among the main Brazilian airport administrators, only Infraero and Fraport have an exclusive sustainability report available and it is based on GRI Guidelines. This result does not mean that these companies are more efficient in relation to environmental practices, but that better demonstrate their environmental activities through annual reports, in relation to the other companies that obtained lower scores. Regarding the qualitative and quantitative environmental information in the financial reports, only Infraero discloses this information in the financial statements through explanatory notes. No environmental information was identified in the financial statements of other airport management companies.

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Table 4.4 Level of sustainability reporting coverage by Brazilian airports Airport

Sustainability reporting coverage

Company

Locality

Aeroporto Internacional de Brasilia—Presidente Juscelino Kubitscheck

1

Inframerica Brasilia—DF (Corporacion America S/A)

Aeroporto Internacional de Belo Horizonte

2

BH Airport

Confins—MG

Aeroporto Internacional Tom Jobim

1

RIOgaleao

Rio de Janeiro—RJ

Aeroporto Internacional de Florianopolis—Hercilio Luz

2

Zurich Airport

Florianopolis—SC

Aeroporto Internacional Pinto Martins

5

Fraport Brasil—Fortaleza (Fraport AG)

Fortaleza—CE

Aeroporto Internacional de Sao Paulo

1

GRU Airport

Guarulhos—SP

Aeroporto de Natal

1

Inframerica Natal—RN (Corporacion America S/A)

Aeroporto Internacional Salgado Filho

5

Fraport Brasil—Porto Alegre (Fraport AG)

Porto Alegre—RS

Aeroporto Internacional de Salvador—Deputado Luis Eduardo Magalhaes

2

VINCI Airports

Salvador—BA

Aeroporto Internacional de Viracopos

*

Aeroportos Brasil

Viracopos—SP

Infraero Airports

5

Empresa Brasileira de Infraestrutura Aeroportuaria— INFRAERO

54 public airports in several Brazilian states

Triunfo Participações e Investimentos is insufficient, as it is not limited to Viracopos Airport, but to all projects managed by the Company as a whole Source Adapted by the authors

Considering Infraero’s performance in relation to other companies, in terms of measuring expenses with environmental management and disclosing the environmental impacts of its activities, privatization did not significantly influence this issue. Rolim, Bettini, & Oliveira (2016) carried out a study of the behavior of Brazilian airports after the privatization process, the authors concluded that privatization led to a general increase in passenger demand, a phenomenon probably associated

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with increased flexibility in private management, but did not identify a clear linear relationship between efficiency gains and privatization.

4.5 Conclusions The results obtained show that the company targeted by this study has been increasing its concern with the environment every year. This can be seen in ten programs covering the main topics of interest to airport administration in the areas of sustainability and compliance with environmental legislation and that environmental accounting can be an internal control tool to measure environmental spending and contribute to business strategies sustainable in order to obtain a competitive advantage. The company analyzed, when implementing environmental accounting, recognizes the importance of disclosing qualitative and quantitative information related to its environmental activities in the financial statements and the usefulness of this information to understand the environmental impact on business. However, as the information is not made available individually for each airport, as well as the criteria for apportioning environmental costs and expenses are not yet fully defined and implemented, since many of them are implicit in other activities carried out by the company. It is understood that by means of an environmental management system integrated with the accounting system, the company will be able to obtain more detailed financial information, in addition to improving its cost-sharing processes between activities. The sustainability report presents a systematic communication between the organization, its stakeholders, and the general public about social responsibility activities, including organizational social and environmental impacts, as well as corporate governance impacts, which are not covered by financial performance indicators. Thus, the adoption of GRI provided the company with a better disclosure of the environmental aspects existing in Brazilian public airports and financial disclosures. This study was limited to investigating the adoption of environmental accounting by Infraero and how information is disseminated through annual reports. Other studies will be able to verify that all environmental requirements are followed by airports in Brazil and that environmental investments are relevant and capable of enabling greater operational and financial efficiency. Finally, the study shows the importance of correctly recognizing environmental assets, liabilities, costs, and expenses in accounting, and that the environmental information disclosed by Infraero is superior to that disclosed by other airport administrators in Brazil.

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Rolim, P. S., Bettini, H. F., & Oliveira, A. V. (2016). Estimating the impact of airport privatization on airline demand: A regression-based event study. Journal of Air Transport Management, 54, 31–41. Santos, A. D. O., Silva, F. B. D., Souza, S. D., & Sousa, M. F. R. D. (2001). Contabilidade ambiental: Um estudo sobre sua aplicabilidade em empresas brasileiras. Revista Contabilidade & Finanças, 12(27), 89–99. Slaper, T. F., & Hall, T. J. (2011). The triple bottom line: What is it and how does it work. Indiana Business Review, 86(1), 4–8. Stahel, W. (2010).The performance economy. Springer. Tinoco, J.E.P., & Kraemer, M. E. P. (2011). Contabilidade e Gestão Ambiental: Gastos, Ativos, Passivos, Despesas (Custos) e Receitas Ambientais. 3ª edição. São Paulo. Atlas. Yin, R. K. (1984). Case study research: Design and methods. Beverly Hills, Calif: Sage Publications.

Chapter 5

Sustainable Development of Human and Social Capital in a Socioeconomically Challenged Community in Brazil Renuka Vivekananthan

Abstract In an increasingly globalized world, the issue of poverty and inequality is gaining in importance. While some parts of society benefit from the positive effect of globalization, other strata of society feel left behind, having no opportunities to participate in the increase in prosperity. The concept of Corporate Social Responsibility is a topic that has increasingly gained significance over the past five decades. More recently, the expectation of social involvement has not been limited to just businesses, but has also expanded to educational institutions, which led to the formulation of the Corporate Social Responsibility-derived concept of University Social Responsibility. This paper analyzes a University Social Responsibility project in the community of Dendê, part of the Brazilian city of Fortaleza. As a social initiative, its aim is to provide the community members with skills and work experience. For the project to function in an optimal way and fulfill its intended purpose, potential hindering factors have to be remedied. The scope of this analysis was to examine the project, identify possible obstacles to the optimal functioning of the project, and propose optimization approaches. The implementation of the suggested ideas into the project is expected to facilitate the sustainable development of human capital and social capital in the community of Dendê. Keywords Corporate social responsibility · University social responsibility · Social capital · Human capital · Sustainability

5.1 Introduction The globalized world has brought with it an ever-growing gap between the rich and the poor, uneven distribution of wealth, and large segments of society at a disadvantage. Many people live below the poverty line with lack of education, restricted access to sources of information, and insufficient standards of living. Social initiatives by R. Vivekananthan (B) University of Fortaleza, Fortaleza, Brazil e-mail: [email protected] © The Editor(s) (if applicable) and The Author(s), under exclusive license to Springer Nature Singapore Pte Ltd. 2020 D. Crowther and S. Seifi (eds.), CSR and Sustainability in the Public Sector, Approaches to Global Sustainability, Markets, and Governance, https://doi.org/10.1007/978-981-15-6366-9_5

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corporations and universities are meant to counteract and remedy these precarious socioeconomic conditions. In the northeastern Brazilian city of Fortaleza, significant segments of the population struggle with low or very low living conditions on a daily basis (Globo, 2017). The community of Dendê is one of the poorest out of Fortaleza’s 119 districts with a very low Human Development Index of 0.350 HDI (Vasconcelos de Sousa, 2017). To counteract the poor living conditions, the University of Fortaleza (UNIFOR) launched and supported a University Social Responsibility based project. The project POLO DE PRODUÇÃO DE VASSOURAS COM GARRAFA PET, which roughly translates to broom production out of PET bottles, is the recycling of plastic bottles in the district of Dendê. The project is an environment-friendly, zero-waste social initiative, as it uses plastic bottles, which are usually not reused, to produce bristles out of the plastic and thus producing no additional waste. The brooms are produced at the project’s workshop, which is located in the community of Dendê (Luzanira, 2017). The production work is carried out by a small team consisting of six members, drawn from the community of Dendê. The project was initiated with the intention to provide the community members of Dendê with skills, work experience, and the opportunity for networking. This paper addresses the potential obstacles in achieving these intended aims of the project and poses the question, what the causes of these obstacles are and how they can be overcome, so that the project can fully unfold its potential and promote the sustainable development of human and social capital. To identify the obstacles, the internal and external circumstances of the project were used to extract relevant data, which was then categorized and analyzed in a contrasting juxtaposition. After identifying the obstacles, optimization proposals were designed for each of the hindering factors. The identification of the causes of the hindering factors constitutes the analysis of this project.

5.2 Theoretical Foundation 5.2.1 Understanding Corporate Social Responsibility (CSR) Since the 1950s, the relationship between business and society has been a subject of debate. The formulation of Social Responsibility or what became to be known later as CSR played a vital role in igniting the debate (Turker, 2009). The concept has a relatively short history, with Bowen (1953), one of the first scholars to define the concept, formulating in his book Social Responsibilities of the Businessman that CSR is “the obligation of businessmen to pursue those policies, to make those decisions, or to follow those lines of action which are desirable in terms of the objectives and values of our society” (Carroll, 1999, p. 270). This is to mean that corporations should base their decisions and actions with due regard to society’s contemporary values of the time, so as not to ignore them or even go against them when formulating their business policies. In the 1960s, the concept of CSR started to grow in popularity in

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society, and this was largely driven by the social movements that formed the zeitgeist. These movements included civil rights, women’s rights, consumers’ rights, and the environmental movement, all of which changed the way in how large segments of society perceived these social topics, and this paved the way for CSR to enter the general public’s mind (Carroll & Shabana, 2010). A growing part of society supported the concept of CSR, with academics such as Carroll, Davis, and McGuire arguing in favor of CSR and were of the opinion that corporations’ duties should go beyond merely their economic and legal interests. In contrast to this, economists such as Milton Friedman contended, “few trends could so thoroughly undermine the very foundations of our free society as the acceptance by corporate officials of a Social Responsibility other than to make as much money for their stockholders as possible” (Friedman, 1962, p. 133). Friedman’s stance was that corporations should solely focus on maximizing their profit and stated that Social Responsibility going beyond this would mean challenging the principles of a free society. According to Friedman, the only way corporations should address social issues is by making as much money as possible. Friedman emphasized this by saying, management is “to make as much money as possible, while conforming to the basic rules of society, both those embodied in the law and those embodied in ethical custom” (Friedman, 1970, p. 17). While earlier research was mainly focused on the question, if CSR should exist, the emphasis began to shift to why CSR exists and its effect on the economy (Kitzmüller & Shimshack, 2012). This had a profound effect on the more recent definitions of CSR by including contemporary social and environmental issues by “incorporating social characteristics or features into products and manufacturing processes (e.g., aerosol products with no fluorocarbons or using environment-friendly technologies), adopting progressive human resource management practices (e.g., promoting employee empowerment), achieving higher levels of environmental performance through recycling and pollution abatement (e.g., adopting an aggressive stance towards reducing emissions)” (McWilliams, Siegel, & Wright, 2005, p. 3) into the definition of CSR. Rahman (2011) demonstrating this transformation defines CSR of the 1950s as an obligation to society, while CSR of the twenty-first century has a more specific definition, including a wider array of social and environmental issues as opposed to the rather vague definition of the 1950s. Benabou & Tirole (2009) posit that businesses have to sacrifice profits for the interests of society on a voluntary basis. In their definition of CSR, sacrificing profits means transcending obligations required by law and contracts. By going beyond these obligations, the definition would include good causes, inter alia supporting the arts and universities. Lantos (2001) describes three types of CSR: ethical, altruistic, and strategic. According to this categorization, ethical CSR encompasses avoiding harm to society and is obligatory for organizations. Specifically, it is stated that altruistic CSR, which means doing good deeds at the expense to shareholders, is not legitimate for publicly held businesses. In addition to this, companies’ philanthropic activities should be confined to strategic CSR, which means doing good deeds, that are beneficial to society as well as the business (Lantos, 2001).

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As the definition of CSR has evolved over the years, the perception of CSR in the public’s mind has also changed. A survey found that 52% of the questioned individuals look for company’s CSR records using the Internet (Fleishman-Hillard & National Consumers League, 2007). A poll conducted by Mori (2003) showed that more than half of American customers are influenced by a company’s social reputation when purchasing a product and 70% of U.K. customers responded that they would pay more for a product, which they see as ethically superior. Both surveys demonstrate how CSR has gained importance in the general population. While various definitions have been postulated since the 1950s, Carroll’s pyramid of corporate social responsibility continues to be a reference point for CSR research (Carroll, 2016).

5.2.2 Impact of Carroll’s Pyramid of Corporate Social Responsibility The Pyramid model, which was designed by Carroll (1991), is seen as a positive and appropriate definition of the concept of CSR. Since its publication, it has served as a popular reference and definition for CSR research purposes (Carroll, 2016). McGuire defined CSR as corporations having “not only economic and legal obligations but also certain responsibilities to society, which extend beyond these obligations” (McGuire, 1963, p. 144). A major advantage over the previous definition was that with his pyramid model Carroll names and defines more precisely what corporations’ “certain responsibilities” are (McGuire, 1963, p. 144). He incorporated these responsibilities in his pyramid model in a plain and graphic way, in order to bring together all the components in a context and in ascending sequence of importance (Carroll & Shabana, 2010). Carroll named the individual building blocks of the pyramid, economic, legal, ethical, and philanthropical responsibilities (Carroll, 1991). The economic responsibility, in other words, the financial profit, is discerned as the foundation upon which the other three responsibilities rest. And therefore, Carroll described the economic responsibilities as “required” (Carroll & Shabana, 2010, p. 90). Legal responsibilities are to be obeyed by the business because “the law is society’s codification of acceptable and unacceptable behavior” and therefore, just like economic responsibilities, it was described as being “required” (Carroll, 1991, p. 42). Ethical responsibilities mean in their basic definition to do what is “right, just, and fair and to avoid and minimize harm to stakeholders (employees, consumers, the environment, and others)” (Carroll, 1991, p. 42). Carroll described ethical responsibilities as “expected” of corporations and businesses (Carroll & Shabana, 2010, p. 90). Philanthropic responsibilities are defined as being a good corporate citizen, more specifically, “wherein business is expected to contribute financial and human resources to the community and to improve the quality of life” (Carroll, 1991, p. 42). The difference between philanthropic and ethical responsibilities is that philanthropic responsibility is not expected

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in an ethical or moral sense. Because society does not expect but hope for businesses to act in a philanthropic way; philanthropic responsibilities are described as being “desired” (Carroll & Shabana, 2010, p. 90). The realization of philanthropic responsibilities through social initiatives is not just restricted to businesses and corporations, but also applies to educational institutions (Shawyun, 2012). Although classical definitions of CSR such as Carroll’s Pyramid of CSR continued to serve as an important reference for CSR research purposes, more recent, innovative, and unorthodox definitions of CSR have been brought forward by academics, most notably, Michael Porter and Mark Kramer.

5.2.3 Contemporary Approach to CSR Michael Porter and Mark Kramer, calling Friedman’s view of capitalism “old” (Porter & Kramer, 2011, p. 6) and “narrow” (Porter & Kramer, 2011, p. 6), argue in their paper Creating Shared Value that it is this perspective, which has influenced the thinking among business and management leadership during 1990s and 2000s. According to Porter and Kramer (2011), most businesses see societal concerns as a peripheral social responsibility and do not see the issues as being at the core of their policymaking. In order to counteract this development, Porter and Kramer formulated a more modern approach to businesses’ responsibility toward society, calling it shared value. Claiming that the concept of shared value has the power to unleash a wave of global growth, Porter and Kramer (2011) define the concept, as the connection between societal and economic progress by addressing the needs and challenges that society faces and thereby creating economic and societal value. To reconnect economic success with societal progress and to address society’s concerns, three key ways are identified: (1) To reconceive products and materials; (2) To redefine productivity in the value chain; and (3) to enable local cluster development. Furthermore, Porter and Kramer (2011) declare that the creation of shared value would be the best opportunity to present business in the proper light in the eyes of the society again.

5.2.4 Understanding University Social Responsibility (USR) University Social Responsibility is a new management thought that results in the renaissance of social involvement of universities, facilitating innovative solutions to the challenges of university teaching in the context of a globalized world, yet based on unsustainable development. Other views see the concept of Social Responsibility as a creation born out of the corporate world, but that it is also applicable to universities because of an increasing number of higher education institutions recognizing the importance of a strong relationship with the society in which they operate (Pompeu, Marques, & Braga, 2015). Nagy and Robb argue that universities increasingly “operate like corporations” (Nagy & Robb, 2008, p. 1414), while at the same

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time stating that these institutions have “more obvious historically based obligations to society” (Nagy & Robb, 2008, p. 1414) compared to businesses. This is to mean that while universities are starting to emulate corporations in the way they operate, through, e.g., changes in the way they are administrated, they still have an evident interconnectedness with society. This, despite the mentioned corporatization, obligates these institutions to consider societal issues and address them. Shawyun (2012) takes the same line stating that universities are vital for human development and therefore should be socially responsible toward their human product and stakeholders, both of which affect business and society. When CSR and USR take shape in the form of social initiatives, Social Capital and Human Capital play a vital role.

5.2.5 Social Capital Social capital influences society, organizations, social groups, small to mediumsized enterprises, and other corporations, which act collectively, in numerous ways. The term social capital in its essence is used to describe networks of interpersonal relationships within a society. These networks serving as foundations for shared values, action, research trust, and cooperation among the members of the community and the resulting drive, which are useful for economic and social development, are described as social capital (Loury, 1976). Diop, Pascot, and Mbibi (2013) postulate that social capital is made up of internal and external social relations. Internal social relations refer to the bonding ties within a collective network, while external social relations mean the bridging ties between networks. The development of social capital creates the optimal structural, relational, and cognitive preconditions that minimize hindering factors to facilitate the self-development of individuals (Diop et al. 2013). A conceptual framework formulated by Diop et al. (2013) shows how social capital influences human capital via knowledge transfer and absorption capacity. It describes social capital in three different types, namely (1) structural social capital, (2) relational social capital, and (3) cognitive social capital. The common understanding of structural social capital is that it refers to social relations among individuals and communities. The qualitative characteristics of a social network are described as relational social capital. In specific, the term refers to the interpersonal aspects of social relations within a network. The third component of social capital is the cognitive social capital. Cognitive social capital refers to all the resources of a network, which facilitate collective extending of knowledge, the structure purporting institutions among members of a social network. Knowledge transfer is the sharing of knowledge between the individual members of a network, the acquisition of new knowledge and skills as well as the sharing of existing knowledge. The acquisition, exchange, and integration of knowledge, skills, and information are influenced by the absorption capacity (Diop et al., 2013). In precise terms, the absorption capacity is the ability of a network to acquire, assimilate, transform, and use knowledge, skills, and information for its own development (Zahra & George, 2002). Knowledge transfer and absorption capacity are mutually dependent, and the trust that is required for

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transferring knowledge is built on transparency within the network. All three types of social capital promote the development of human capital via knowledge transfer and integration as well as absorption capacity (Diop et al., 2013).

5.2.6 Human Capital Becker (1994) defined human capital as knowledge, skills, health, and values a human being has, as it is not possible to separate a human from the aforementioned values. A more recent definition was brought forward, describing human capital as the cumulative tacit knowledge, competencies, experience, skills, leadership, management skills, innovativeness, and talents (Wang, Hou, & Cullinane, 2015). Nahapiet and Ghosal (1998) postulate that human capital refers to the skills and the abilities of individuals or the stock of knowledge within an organization. Human capital as a resource has a key role in organizations. It should also be noted that its function as a crucial resource is continually gaining in importance, leading to several consequences for the operation of modern organizations. The rising significance of information on the value and structure of an organization’s human capital is one of the consequences (Koziol, 2017). According to Coleman, human capital differs from social capital, in that human capital means the acquired skills, expertise, and knowledge of a human being, while social capital refers to the interpersonal relations of members within a society. He further states that one of the important characteristics of human capital is that it is an important organizational resource (Coleman, 1988).

5.2.7 The Effect of CSR and USR on Social Capital and Human Capital Habisch and Moon (2006) state that in order for businesses to be successful it depends on a functioning society in which it operates. The society should be built on trust and confidence among the members of the society in question, organizations, institutions, and the business’ stakeholders. These can be promoted by corporations being socially involved through CSR initiatives and invest in social capital (Habisch & Moon, 2006). Human capital as a resource has a key role in organization. It should also be noted that its function as a crucial resource is continually gaining in importance, leading to several consequences for the operation of modern organizations. The rising significance of information on the value and structure of an organization’s human capital is one of the consequences. (Koziol, 2017). Vallusova and Marasová (2010) see the Human Resources Management as the important CSR component toward human capital, in that it is the inner environment of the company where the investment in its human capital is realized. However, the philanthropic component of

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CSR, through philanthropic initiatives, is usually expressed in its financial impact or volunteered hours, but not in the impact it has on society or on human capital. A way for companies to develop human capital is through investing into community-building programs and sending their own human capital to participate in such initiatives, thereby developing their own human capital at the same time (Silva & Cooray, 2014). The interconnectedness of social capital and CSR also plays a vital role in the development of human capital, as social capital increases the value of human capital (Vveinhardt, Andriukaitiene, & Cunha, 2014). The function of USR is expressed through the aim of higher education institutions, namely, to spread and generate knowledge through the teaching, research, and extension of the same. Through investment in human capital and providing training by academic staff, who are aware of the Social Responsibility that comes with their job position, universities help to strengthen democracy in societies. The investment in human capital facilitates an improvement in self-esteem and credibility in a community. By productive interaction and a network built on trust, the development of social capital is encouraged between teachers, students, and communities (Pompeu et al. 2015).

5.3 Research Methodology Utilizing the survey method, a two-part interview and a poll were conducted in June 2018, and the information gathered from both were categorized into the subject areas, named internal process operation and external perception of the project. The information that was categorized into the subject area internal process perception was used to analyze the internal ties and the production process of the project. The information in the category of external perception was used to determine the project’s external ties. The first part of the interview consisted of a visit to the workshop, where the brooms are produced and an explanation as well as a demonstration through the inner workings was given. The analysis of the internal operation process required a thorough examination of the workshop, particularly the workspace, production process including a detailed explanation of the individual production steps, and the storage area. The second part of the interview was carried out with a community board member of Dendê at the campus of the University of Fortaleza with the purpose of getting an overview on, inter alia, how the project is seen from within the community, information about the production process and team members’ views as usually the existing project information, is based on an outside perspective. In order to get this information, the questions were categorized into the following subject areas: (1) general project information, (2) project background, (3) broom manufacturing process operation, (4) the impact of the project, and (5) future prospect of the project. The answers given for each of the categories were analyzed in closer detail to extract

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information for the analysis of the production process operation as well as internal ties of the project. To determine the external perception, i.e., external ties of the project in the immediate surroundings of Dendê, a poll was conducted using the information gathered from the interview. One spot at the campus of the University of Fortaleza was chosen and two consecutive weekdays in the middle of the week were selected. On each day, the questions were asked during the peak times for two hours. Prior to performing the poll, the target groups were determined by the external circumstances, e.g., the environment. The target groups were from a variety of social backgrounds and included employees of the university, lecturers, students as well as foreign students and were between the age of 18 and 60 years. A total of 125 participants took part in the poll. The participants were asked two questions: (1) Are you aware of the project POLO DE PRODUÇÃO DE VASSOURAS COM GARRAFA PET? (2) Would you use the product of the project POLO DE PRODUÇÃO DE VASSOURAS COM GARRAFA PET? Depending on the answer given to the second question, the participants were asked why they would not purchase the product.

5.4 Results 5.4.1 Production Site The first part of the interview consisted of inter alia an analysis of the internal operation process, which was carried out on the workshop itself, i.e., the actual workspace and the storage area, in order to learn the inner workings of the project. The workshop is relatively small, with the dimensions being 4 × 6 m, yet it has to be used in a multifunctional way. The major part of the workshop is used for the production process. In one corner of the workshop, the bottles to be used for the production are stored in waste bags, and in the other corner, partly finished as well as finished products are stored. In the workshop, there are four worktables in the room, which are used as work surfaces or as an intermediate storage for objects and materials. There are no fixed areas on the worktable that are defined as a work surface or storage areas. The worktables are used for several purposes at the same time. It is decided and used depending on the situation. While one half of the worktable is used as a work surface, the other half is used to store materials, such as the prepared bottles or bristles. The tools that are required for the manufacturing process were assembled by the team members using simple equipment, such as cutting blades attached to pieces of wood. The distinguishing characteristic of the tools is that they do not require electricity to be used. Another positive aspect of the tools is that they can be flexibly attached to and detached from the worktables.

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5.4.2 Production Process The first and second part of the interview was carried out to get an overview of the workshop’s layout and gather information about the actual production process. The workshop’s primary function is to serve as the production site for the brooms. The production process of the brooms is carried out in individual manufacturing steps, which are performed in a specific order at different spots of the workshop. The multi-purpose utilization of the workshop with six team members simultaneously carrying out the manufacturing steps leads to overlaps and waiting times during the production process. According to the interview statement, only a maximum of 30 brooms are produced on a typical production day. Taking into account that the team consists of six team members, this would mean that each team member produces an average of five brooms per production day. It should be noted that no information could be gathered of how many hours a production day consists of. When comparing the figure of five brooms per employee on a production day to the information given during the interview, it becomes clear that the production output is not at the stated capacity of 15 brooms per day for each team member, which would result in a total daily output of 90 brooms. Manufacturing takes place depending on sufficiently available raw material. To expand the production capacity, a steady supply of raw materials is required. This, in turn, proved to be difficult since a steady source of revenue is needed by establishing a stable customer base. A steady customer base can be achieved through a wider customer reach and increased production capacity. So, it can be said that the obstacles to increase the production capacity are interrelated. To address the issue of productivity, an improvement of the workspace around the team members would boost productivity and the team’s satisfaction (Stallworth & Kleiner, 1996). When improving the workspace according to the team members’ needs, it is expected that the increase in productivity should be at 5–10% according to Brill’s (1992) estimation, while Clements-Croome & Li (2000) estimate the rise in productivity at 4–10%.

5.4.3 External Perception of the Project The outcome of the poll demonstrated that there prevails a great unawareness about the project’s existence in the immediate vicinity of Dendê leading to the conclusion that the external ties of the project is improvable. Out of the 125 interviewed participants, 73% answered that they were unaware of the project’s existence. The remaining 27% were aware of the project, many of whom, however, are either directly or indirectly involved in the project. Then, the participants were asked the second question, namely how likely it is that they would purchase the project’s product. After briefly explaining the product and how it is manufactured, the participants were asked

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whether they would use the product in their own household. To the second question, a vast majority of 89% of the respondents answered that they “would buy” the product, while 11% answered that they “would not buy” the product. The 11% of the participants who answered to the second question, that they would not buy the product, were then asked the optional third question to understand the reasons for not purchasing the product. Asking the question why they would not purchase the product, 36% said they were not convinced of the products’ quality and 21% stated the convenience of purchase as the reason for not purchasing the product. 29% found the idea of producing brooms out of the plastic bottles peculiar, while 14% were not convinced of the products’ effectiveness. The findings demonstrate that there is great unawareness about the project’s existence and that its external ties can be improved. It should, however, be taken into account that the project is a local development with mainly members of the community of Dendê and employees and students of UNIFOR being involved in the project, which could explain the unawareness about the project in the immediate vicinity.

5.4.4 Optimization Ideas For each of the subject areas, namely production site, production process, and external perception of the project, appropriate optimization ideas were formulated and described. • Production site: When contrasting the findings of this paper with the research done by Nyati, Sardar, and Jaybhaye (2017), it can be concluded that a modified layout of the floor can bring about an improvement in productivity. The results found that in the case of the workshop the multifunctional utilization leads to an overlap of the individual tasks. Through a more efficient storage system that uses the limited available space, a fixed production process can be achieved, by using the freed-up space for regular, organized production steps. A proper storage system would then use not just the length and width of the available space, but also its height. • Production process/productivity: Using the Six Sigma and Lean Management methods to analyze and eliminate production steps that do not create value, as well as stabilize the production process, the workflow can be newly designed so that the individual production steps do not overlap and do not result in unnecessary pauses. As a result of the modified workshop layout and the optimized production steps, the productivity is estimated to increase by 5–10%, as Brill (1992) suggested. When incorporating the concepts of Lean Management and Six Sigma into the project’s production process, it is vital to consider whether both approaches are mainly in use in larger production processes of corporations and businesses to optimize productivity. For social projects such as the one in Dendê, both concepts should be tailored accordingly.

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To monitor the improvement in productivity, the introduction of regular working hours, e.g., twice a week, for four hours daily, would make it possible to calculate the effectiveness of the production, in order to keep track and continuously improve the production’s performance. With these precise calculated figures, the selling prices of the products can be optimized because, without a precise calculation, the selling prices are randomly determined. Optimizing the prices of the products is important because, with the revenue from the sales, the overhead costs from the project can be covered. Consequently, this would facilitate the realization of the projects desired objective, namely the introduction of the project’s product onto the market. The boosted employee satisfaction would increase the likelihood of additional team members staying part of the project for a longer time. • External perception of the project: Through the use of social media, the external perception of the project can be optimized and the potential for winning and binding more customers can be tapped into. Berad (2011) suggests the use of media, in order to create awareness about social responsibility projects among the general public. In his paper, he analyzed the obstacles that CSR initiatives face in India. Yet, the suggestion of using media to spread awareness about social responsibility projects can also be applied to the project of this paper. Further, Berad identified, among others, a lack of community participation in CSR activities of companies as a hindering factor to their wider reach. He attributes this to improvable knowledge about CSR. This has also been found to be true for the community and project in Dendê. Ali, Bicho, and Jimenez-Zarco (2015) collected data from Pakistan, and their analysis found social media to be important in spreading the awareness about CSR activities. To increase the knowledge about CSR and the project’s level of awareness, social media would be of great benefit, as it is costeffective, and in relation to the relatively low cost, it has a huge reach far beyond local and municipal levels. In specific, social media would have a greatly beneficial effect on the project’s social capital-improving performance, as it would help to build a social network that would not just be limited to the community of Dendê and surrounding districts. The results of this paper are in line with the findings of Berad (2011) and Ali et al. (2015), namely that one of the important obstacles for social responsibility initiatives to be achieving their objectives is the improvable public awareness about it. The research of this paper also agrees with both that to improve public awareness about CSR media or social media would be a solution. To name specific applications (apps), there are WhatsApp, Facebook, and Instagram. These apps were randomly chosen because all three apps support the proliferation of information and have several other functions, e.g., the options to create groups for specific target audiences and themes, dissemination of information about activities as well as online polls. While a further inquiry may be needed to establish the accessibility of the local population to the mentioned social media, however, it can be assumed that in a digitalized world most of the local population would be connected to the named Social media applications, in one way or another.

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5.5 Discussion and Conclusion By bringing the members of the community together, social relations are optimized, and community members acquire the benefit of a social network (Nahapiet & Ghoshal, 1998). The bonding between members of the community through collective work is the relational part of the three components of social capital. The key characteristics of relational social capital, namely the level of trust, friendship, and the forming of social relations, are improved through bonding between the community members (Lee, Arnason, Nightingale, & Shucksmith, 2005). The collective work also affects the cognitive social capital, by promoting a common understanding among the individuals. The common understanding and communication enable the sharing and exchanging of knowledge among the members of the community, resulting in the improvement of human capital (Lee, Arnason, Nightingale, & Shucksmith, 2005; Diop et al. 2013). As a result of the improvement of human capital, in other words, the self-improvement that team members can experience and notice on themselves and the benefits of the project can be realized and this too, in addition to the building of external social ties, can contribute to the improvement of the project’s appeal. This again can result in additional team members being won and committing their long-term involvement to the project. Other community members may then see the benefits the project has to offer to them and are more likely to become team members themselves. The development of trust, value systems, and social ties facilitates individual actions, leading to the development of human capital. Through newly made contacts, which are enabled by the project, the acquisition and exchange of knowledge are made possible (Nahapiet & Ghoshal, 1998). Human Capital is not just improved via the knowledge acquisition and transfer within the community through “bonding” or in other words internal social ties, but community members are also given the opportunity to build and expand their own network outside of their community, defined as external social ties or “bridging.” The building of external social ties to other social networks-other communities, institutions, and social projects-would enable community members to acquire knowledge and the exchange thereof through new social conduits. The interview also revealed that another hindering factor to the further development of the project is the reach of the project beyond Dendê and undeveloped network, respectively. This was affirmed during the execution of the poll, demonstrating that the project was not particularly known even in the immediate vicinity of Dendê. To expand the customer base, it is vital to improve the knowledge about the project in the immediate vicinity of Dendê and in the long term beyond that, which would then allow for a stable source of revenue. It was discerned that insufficient revenues cause a compromised production process, which by extension also affects the productivity. Specifically, insufficient funds also make it more difficult to cover the costs for the materials, which are necessary for the production. This, in addition to the improvable work environment, was found out to affect the team members’ motivation; because due to the compromised production process, they have less work to do. This fact

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was reinforced by the answers given during the interview, suggesting that increased revenue from the sales of the product could be used to cover the overhead costs of the project and thus being an optimizing factor to the compromised production process. Furthermore, during the interview, it was found that the group discerns financial issues as the main problem and said that a solution to this would be to win new team members, increase the production volume, and facilitate more sales of the product, generating finance to stabilize the revenue for the materials. Eventually, it is to be expected that when new team members are willing to stay part of the team and the community members of Dendê recognize the social and economic opportunities the project is able to open up to them, a stable customer base and thus a steady source of revenue would make it possible in the future, for the community to take the initiative and learn to help themselves and consequently gain greater autonomy in the socioeconomic development of their own community. While an autonomous development is ultimately one of the objectives, at the same time, the importance of leadership should not be disregarded. During the two-part interview with a board member, it became clear that leadership is a characteristic of human capital (Wang et al. 2015). The reason for the ability to motivate the team can be explained by optimal social capital, which is built on trust, shared values, and collective action. Motivation is an important factor in recruiting and keeping new team members. Motivated employees influence the work atmosphere in a positive manner and a lack of motivation compromises the atmosphere, especially when it comes to volunteer work. A positive work atmosphere is crucial for recruiting new team members. The appeal of the project on the community of Dendê and the attraction of new team members are capable of improvement. To win and keep additional team members for the long term, motivation and a positive work atmosphere play a key role. Besides motivation and a positive work atmosphere, optimal internal ties are vital to strengthen the cohesion within the team as well as in the community. The presence of these characteristics leads to social and economic development via the improvement of social capital. The progress of the social and economic status quo, in turn, leads to an increase in motivation and productivity (Loury, 1976). The betterment of the economic and social status quo would not only lead to an increase in motivation and productivity, but it would also strengthen the project’s appeal on the community and this, in turn, would lead to the attraction of additional team members. This interaction of social capital, motivation, and productivity can be discerned from the answers given by the board member. Specifically, the finding suggests that in order for the project to attract more team members and increase its production volume, the promotion of both social capital and human capital would be of significant importance. A newly structured workshop would improve the human capital of the project, through a more structured and coordinated production process. This would have two crucial effects, namely, on the one hand, the team members would increase their production volume due to simplified and standardized process steps. On the other hand, the increased production volume would expand the project’s level of awareness and thereby attract more team members. In a structured work environment, new team members are more likely to

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become permanent members of the project, than in an unstructured work environment. The project members’ desire is that the project’s development should have a positive effect on Dendê and that many community members should benefit from it. While the main goal of the project is to improve the social conditions in Dendê, it was also stated that it is also an aspiration of theirs to be a signpost for other socioeconomically challenged communities, with the intention for them to adopt the project’s concept for their own community’s benefit. When the factor of improvable appeal of the project is addressed, it is equally important to find a solution to the accommodation of additional team members. This was learned during the internal operation analysis of the workshop, namely, that the workspace of the workshop can be used in a better optimized way. To tackle this obstacle to accommodating new team members, as well as optimizing the productivity, a Lean Management approach and a Six Sigma thought should be implemented. This would allow for better use of the available workspace. The Lean Management approach is meant to eliminate unnecessary production steps (Kobus & Westner, 2015), while the Six Sigma approach can analyze the process steps and eliminate process defects and thereby stabilize the production process (Takao, Woldt, & Bento da Silva, 2017). Lean Management in tandem with Six Sigma can warrant an optimized production process. The application of the methods of Six sigma and Lean management solely applies to the actual production process. A direct connection to the development of human capital and social capital is not intended. However, the implementation of both concepts can give the team members a common denominator on which they can jointly work and thereby strengthen the internal ties. In the ideal conception, the team members, through their direct participation in the improvement of the project, will learn to be more proactive and become autonomous. More importantly, the layout of the workshop can be restructured around the team members’ needs, while carrying out the process steps, so that the productivity and the team members’ satisfaction are maximized (Stallworth & Kleiner, 1996). Having said that, a prerequisite for these suggestions to be applicable is the consideration of the conditions of a socioeconomically challenged community in an emerging economy. Research on social projects such as the one presented in this paper is scarce, especially in the context of developing countries. The thorough research done by Berad (2011) analyzed social responsibility activities in another emerging economy, namely in India and can therefore be applied to conditions in Brazil to a certain extent. Previous studies by Dobers and Halme (2009) demonstrated that research on CSR, which is mostly based on Western notions, may not always be compatible with local circumstances of developing countries. As opposed to the research done by Dobers and Halme, which examines Social Responsibility in developing countries from the businesses’ point of view, this paper looks at it from the community’s and the actual project’s viewpoint. Similarly, Ward, Fox, Wilson, and Zarsky (2008) found that there is not a single predefined approach to social responsibility around the world and rather should be adapted to local preconditions. Therefore, the circumstances in Dendê should be taken into account when considering and implementing the identified optimization proposals of this paper.

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If the suggested optimization ideas were to be integrated into the project, while tailoring them to the circumstances in Dendê, it could lead to a 5–10% increase in employee productivity (Brill, 1992) or to a 4–10% increase (Clements-Croome and Li, 2000), in addition to an increase in public awareness about the project. To conclude, an optimized work environment and the implementation of new ideas facilitate the self-improvement of the involved individuals. Since socioeconomically challenged communities and regions tend to have a high population density, minor development steps could have major impact and lead to a real and perceivable development in the living conditions and result in the improvement of the Human Development Index.

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Chapter 6

The Theory of Attachment in Contexts of Public and Social Marketing: Study of the Program “Portugal Sou Eu” Ana Cardoso and Bruno Sousa

Abstract The brand has an identifying function since it allows to differentiate the products and/or services existing in the market, through a name, term, sign, and symbol, or a combination of all these elements. The identity of the brand can be adapted according to the needs and desires of its target audience, in order to foster recognition and create an emotional link with it. This cognitive and affective bond is called the attachment theory, and it is defined by the attachment between an individual and a brand, in such a way that, when the connection is strong, it will see it as an extension of itself, being part of its characterization. In the context of this study, we will also analyze public and social marketing focusing on the “Portugal Sou Eu” program, an initiative of the Ministry of Economy. This initiative aims to support and stimulate the national supply, aiming to promote the informed consumption and valorization of Portuguese products and services, with the aim of increasing competitiveness and job creation in Portuguese companies, especially in small and medium-sized enterprises. Based on a totally qualitative approach, this study intends to analyze the influence of the theory of attachment at the time of purchase, noting if there is predisposition of the sample to consume products of Portuguese brands adhering to the program, instead of others of different origin. For this proposed, was realized a focus group (10 participants) with portuguese consumers, three face-toface interviews with affiliated companies (Minhofumeiro, Life in a Bag and Marsil), another by e-mail (Nacional) and an interview with the entity responsible for coordinating the program (Associação Empresarial de Portugal). The results suggest that there is low recognition of the brand “Portugal Sou Eu” and, consequently, the affective bond, by the consumers, proved to be weak, with a prioritization of the price. The business fabric pointed to the lack of bet on strategies of dissemination that fit the type of business of each company and allow an increase of its notoriety, as for example, the lack of presence in international fairs. A. Cardoso (B) · B. Sousa Polytechnic Institute of Cavado and Ave, CiTUR and UNIAG research member, Barcelos, Portugal e-mail: [email protected] B. Sousa e-mail: [email protected] © The Editor(s) (if applicable) and The Author(s), under exclusive license to Springer Nature Singapore Pte Ltd. 2020 D. Crowther and S. Seifi (eds.), CSR and Sustainability in the Public Sector, Approaches to Global Sustainability, Markets, and Governance, https://doi.org/10.1007/978-981-15-6366-9_6

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Keywords Attachment · Brand · Public and social marketing · Recognition

6.1 Introduction Portugal and its economy are currently experiencing a phase of re-emerge from a serious economic crisis that has shaken not only this country, but also most European countries. The markets resented this negative phase, causing the population to lose some purchasing power, especially in Portugal. Due to the decrease in purchasing power, the price sensitivity of consumers increased significantly, meaning that concerns about the valuation of domestic production were in the background. However, we have seen, mainly in the last year, a recovery of the markets and, consequently, a slight increase in purchasing power. As such, the motivation for choosing this theme finds its justification on this point. The aim is to understand the role of affectivity in Portuguese products by studying the possibility that the Portuguese are currently willing to spend a higher monetary value in exchange for national products and/or services covered by the “Portugal Sou Eu” program. Thus, it is intended to understand the attachment phenomenon in a context of public and social marketing, analyzing the affectivity to the previously mentioned program, having as reference that, as Thomson et al. (2005), cited by Malär et al. (2011), the feelings that a brand has the ability to generate may be decisive to differentiate it from another competitor. This study intends, in a general way, to understand the affectivity to Portuguese products, studying the decision process of purchase through the study of the case of the national program “Portugal Sou Eu.” Considering that the research problem of this study is defined by the research question: “What is the role of attachment theory in the purchasing decision process in public and social marketing strategies: ‘Portugal Sou Eu’ program?” The following are the detailed objectives guiding the research: • Understand the role of attachment theory in public and social marketing strategies, such as the strategies implemented in the “Portugal Sou Eu” program. • Understand the role of attachment theory in increasing affectivity to Portuguese products, as well as the possible effects on the intention to purchase products covered by the above-mentioned program. • Analyze consumers’ perception of the “Portugal Sou Eu” program (recognition, notoriety) and, consequently, their predisposition to consume products of the program’s brands. • Understand the view of member companies in relation to the program, taking into account their experience. • Understand how the promotion and dissemination of the program, carried out by the responsible entity, is considered.

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6.2 Literature Review 6.2.1 The Brand The evolution of marketing also brought with it the development of the brand concept, whose interest lies in perceiving ways to influence consumer behavior, as Ruão (2017) states. “According to the American Marketing Association (AMA), a brand is a name, term, sign, symbol, or design, or combination thereof, for the purpose of identifying the goods and services of a seller or group of sellers and differentiate them from those of competition”. Ghodeswar also enhances the identification function by stating that a trademark “is a distinctive name and/or symbol (such as a logo, trademark or packaging design) with the intention of identifying the goods or services of a seller or a group of sellers, and to differentiate those products or services from competitors” (2008, p. 4). As Wood (2000) points out, the brand adapts its identity or image according to the needs and desires detected in its target audience, using, for this purpose, the mix and marketing: product, price, distribution, and promotion. The author adds that the degree of brand loyalty will be determined by the success or failure of the strategy adopted. To be efficient and to deliver positive results, a brand identity must be in tune with its customers, differentiate the brand from competitors, and represent what the organization can do and effectively do over time (Ghodeswar, 2008; Aaker & Joachimsthaler, 2012). In this way, it becomes necessary to understand the process of identification by the consumers, more specifically the process of insertion in certain social groups. Thus, according to Morales et al., there are three main components: 1. Individual processes; 2. Group processes; 3. Macro-social processes. Individual processes are defined as personal motivation and the importance given by individuals to inclusion in a specific group. In turn, the group processes result from the comparison, on the part of the individuals, between different groups, in view of a positive social differentiation. As far as macro-social processes are concerned, these refer to the social context in which people are involved, a context that makes possible the realization of the comparisons mentioned above. This way, it is possible to affirm that “people feel a need for a social identity”, preferably positive. This same social identity is related to the emotional ties, that is, the individuals are inserted in social groups in which they intend to develop these affective bonds (Heere & James, 2007; Kuenzel & Halliday, 2008; Lisjak et al., 2012). However, the social identity of people can change, being flexible according to their evolution in personal and professional terms. According to several authors, social identity may change in relation to four perspectives (Wann & Branscombre, 1993; Brewer & Hewstone, 2004). They are 1. Intensity/value of individuals’ participation in a group over time;

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2. Valuing the participation of a particular group; 3. Importance of being part of a particular group; 4. Changing the role of people in groups. Therefore, there are four dimensions, described below, which stand out in order to understand the process of demonstrating identification with the brand. 1. 2. 3. 4.

Cognitive structure Affective element Evaluation aspect Behavioral aspect

The cognitive dimension refers to individuals’ knowledge about a brand, resulting from their own experience or from others (Underwood et al., 2001). This knowledge derives from the experiences of individuals with the brand, the way they identify it, the image they have of it, the reading of their values, and the perception of the influence it exerts on their lives (Burgess & Harris, 1999; Brewer & Hewstone, 2004). In the case of the affective dimension, we combine the rational and emotional elements that, together, direct the entire buying process. According to Escalas & Bettman (2005), consumers build links between the brands they choose and the definition of their selfconcept. These connections develop through the affinity between consumer identity and brand elements, as referred to in Sirgy’s theory of self-congruence (1982, 1986). Regarding the evaluation, according to Ashmore et al. (2004, 83), this aspect refers to the “positive or negative attitude that a person has in the social direction in question.” This attitude can be influenced by two distinct judgments: the private and the public. In the case of the former, it is a question of how the individual sees himself and, in turn, the latter relates to how others understand the individual (Heere & James, 2007). The evaluation has the capacity to reinforce the recognition and social identification of the individual. Regarding the fourth dimension, the behavioral aspect refers to the “level at which a person engages in actions that directly imply the identity of the group of the category in question,” according to Ashmore et al. (2004, p. 83). Thus, this dimension is related to individuals’ interests, as well as their ability to differentiate between brands and their willingness to express the level of involvement with a brand (Burgess & Harris, 1999). In his work, Kapferer (1991, p. 55) states that “any brand acquires through the accumulation of its communications a history, a culture, a personality, a reflection.” So, after the strategy diagnosis of a company is made, it becomes possible to determine the identity of a brand by constructing its identity prism. This type of diagnosis came about through the “Brand Identity Prism” model created by Kapferer, which has six facets: physics, personality, relationship, culture, reflex, and self-image. This model has helped in the recognition of human characteristics to brands, a process that can be explained by the fact that, as Aaker points out, consumers often absorb the marks and their symbolic meaning when they present traits of human personality. Vieira shares as well the same perspective, stating that the brand is seen and treated as if it were really a human being, which is conferred human traits and characteristics. The prism under study, which demonstrates the characteristics that a brand must consider to be able to construct and manage its identity, is being analyzed below:

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• The physical characteristic refers to the physical, tangible elements of the marks. According to Kapferer (2008), this is the basis from which brands should develop. • All brands have a personality, adopting characteristics, and personality traits that are typically human. • The relationship is built through the interaction between brands and consumers. • Brands have a culture, that is, they behave through certain principles and values. • Brands should reflect the characteristics appreciated by their consumers, translating into the image they intend to use when using the same brands. • The concept of self-image refers to how consumers feel when they are in contact with brands, that is, how they see themselves by using certain brands. Regarding brand architecture, it is equally relevant to analyze the concept of brand positioning. So, as Ruão (2017, p. 44) mentions the “brand positioning corresponds to that part of the identity that must be actively communicated to audiences.” Castro refers to the positioning as being “the distinctive perception of the brand that we seek to create in the consumer spirit.” In the same sense of this perspective, the positioning is related to “how the brand is intended to be known” form Once a position has been put in place, a brand must be able to execute it and, as Aaker (1996, p. 186) states, it is necessary “a brilliantly executed communication program opens the way, hitting, entertaining or involving the audience.” The image of the brand is another element of great importance, also referring to the architecture of the brand, according to Sousa & Vasconcelos who consider the image as “one of the most important and influential instruments of branding, representing the association that it makes to the product” (2018, p. 7). According to Leão & Mello, the image translates the perspective on the value of brands that, in turn, is oriented toward the consumer. In this sequence, when the brand is able to engage consumers and create an emotional relationship, it becomes important to realize the value of the brand, taking into account that these brands “are considered as links between products/companies and their customers” (Brito, 2010, p. 49). These connections come from building a culture driven by a lifelong commitment to mentoring and a way of life that requires time, planning, and persistence. This process will bring the desired value that the brand seeks, resulting in increased customer satisfaction and loyalty, less price sensitivity, fewer customer dropouts, increased customer base, and brand referrals. (Ghodeswar, 2008, Baumgarth & Schmidt, 2010). Thus, with the awareness of the importance that the reach of the value represents for both the brands and the consumers, it is advisable to deepen the concept of brand equity. According to Aaker (1996), brand value, or brand equity as already mentioned, is defined as “a set of assets and liabilities associated with a brand, its name and symbol, which are added or subtracted from the value provided by a product or service to a company and/or its customers” (1991, p. 15). In this regard, and considering that the assets and liabilities referred to may vary depending on the context, the author has grouped them into five categories: 1. Brand Loyalty 2. Awareness of the name 3. Perceived/recognized quality

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4. Brand associations other than perceived/recognized quality 5. Other brand-owned assets—patents and trademarks. Looking more closely, with regard to brand loyalty, Aaker (1996) states that, whatever the business area, it is more costly to win new customers than to keep existing ones, “especially when existing customers are satisfied with—or even like— the brand” (1991, p. 19). The loyalty to a brand is defined by the preference that consumers demonstrate for that brand to the detriment of competing brands. Also considering Jung & Sung’s (2008) perspective, brand loyalty from the consumer point of view is the dimension that most positively influences the intention to purchase a particular brand. As for awareness of the brand’s name and symbols, the importance of familiarity is emphasized, because, according to Aaker, “people often buy a family brand because they are comfortable with the relative” (1991, 19). Indeed, brand awareness can be measured by the consumer’s recall of the brand (Pike et al., 2010). Regarding the perceived quality factor, this concept influences not only loyalty to the brand, but also in the moment of the purchase decision and, similarly, helps in the acceptance of a premium price. In addition, quality recognition may be “the basis for brand extension,” because it is assumed that if a brand succeeds in one context, then it will also avenge in another related context (Aaker, 1996, p. 19). From the point of view of consumers, Pappu et al. (2005) and Low & Lamb (2000) consider that the perception of quality adds value to these, as it allows them to create differentiations between brands, as well as to define reasons to choose to decide for a specific brand. The value of a brand may also be linked to the associations made to it since a strong association may form the basis for a brand extension. Brand associations are decisive in the process of brand enhancement since, in terms of the brand, they help it to differentiate, to define its position and can form a solid, previously mentioned, extensions. On the other hand, from a brand’s point of view, a positive image can contribute to generating trust and, consequently, a positive attitude (Delgado-Ballester, 2004). The strength, exclusivity, type, and positivity of the associations in question make it possible to differentiate between brands (Keller, 1993). In the case of the fifth category, branded assets, such as patents and trademarks, “will be more valuable if they inhibit or prevent competitors from eroding their customer base and loyalty” (Aaker, 1996, p. 21).

6.3 Attachment The attachment theory has been studied by several authors. The author Bowlby (1982), in a pioneering research on parent-child bonding, has defined attachment as a bond of emotion between an individual and a specific object. This bond can differ in strength, with some individuals likely to exhibit a weak bond with one object and others, in turn, may exhibit a strong bond.

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Many authors point out that consumers can create a connection and feel affection for offers (Mick & DeMoss, 1990), collection articles, places of residence (Hill & Stamey, 1990), and even brands (Schouten & McAlexander, 1995). Belk (1988) and Fournier (1998) also point out that in the context of marketing people can maintain emotional links with brands, complementing also that the brand attachment consists of the affective bond that connects the consumer to brand, nourishing feelings for it. Thus, starting from the existence of an emotional connection between individuals with a brand, the attachment is defined as being the strength of the cognitive and affective bond between the brand and the individual. We are faced with a concept that, according to Park et al. (2008), may mean when the affective and cognitive bond is strong, the brand is perceived as an extension of the individual’s self, forming part of its own characterization. According to Malär et al. (2011), the more the brand reflects the ‘I’ of the consumer and the greater the emotional connection felt between the ‘I’ and the brand, the stronger the link and the more affection it will feel for the brand. This strong link between the individual’s brand and “self” leads him to want to display the brand and, also, wants to be part of consumer communities that demonstrate the same emotional connection to the brand. It should be noted, according to Park, et al. (2008), that these behaviors of emotional connection between the consumers and the brands must be analyzed with attention by the marketers since they look for results of interest for the brands, as for example, the loyalty to the mark, the willingness to pay more price, mouth-to-mouth advertising, and willingness to forgive the brand for possible setbacks. These components are positively related to the high value of a brand and may even be decisive so that it can, for example, practice a premium price. Thus, according to Scales and Sprott et al. (2009), the greater the level of identification as evidenced by consumers in relation to a brand, the more favorable their attitudes will be, the more attention they will give to the information disclosed, and the greater the commitment made in relation to it. Through the research of Malär et al. (2011), there are four factors to be considered by marketers when attempting to increase brand affectivity. They are (1) to include consumer interests in brand decisions, (2) to highlight the authentic brand characteristic, (3) to reassess the diffusion of aspirations, and (4) to individualize brand promotion and communication efforts, based on the consumer’s perspective. These authors demonstrate that brand managers must now bet on the construction of the personality of brands so that it is compatible with the ‘I’ of the consumers, as they will show similarities between themselves and the brand making it easier to creating a strong emotional link. They also stress that brands should not raise aspirations too much, as it can be considered as lack of authenticity, leading to a decrease in affectivity by parts of consumers. They also point out the importance of collaborative branding, allowing consumers to contribute to building a brand personality that matches their ‘I’. Therefore, it is now important to understand its cause. At this stage, it is important to understand the process that leads a person to feel affectively connected with a brand and/or product, gaining a place in their memory. Thus, according to Park, et al. (2008), there are three resources that can lead to the construction of affection and

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the emotional link, and they are the hedonic, social, and functional resource. The same can be used simultaneously, always with the objective of complementing the ‘I’ of the consumer. Effectively, a brand can make use of aesthetic/hedonic elements with the objective of generating satisfaction and pleasure, being able to immediately change the mood of the consumers, through a combination of sensorial experiences, as pointed out by Park, et al. (2008). The authors also point out that brands that possess this ability can divert negative thoughts and external incentives to the consumer’s self and to their enjoyment, and that the coordination of the sensory elements of a brand is particularly important to evoke an emotional connection between the ‘I’ of the consumer and the same. It is also exposed by the authors, another possibility that involves the enrichment of the ‘I’ of the consumer, by the brand, through the symbolic representation of the past, present, and future idealized by it. In relation to the past, brands can promote a sense of security and comfort by representing the consumer’s past, acting as a kind of anchor. Park, et al. (2008) report that these brands can evoke feelings such as nostalgia and satisfaction while maintaining a sense of continuity. Next, the present also has its role, and the brands can represent the consumer’s current self, reflecting who he is and what he believes. As far as the future is concerned, brands will be able to portray the consumer’s future ‘I’, reflecting their future aspirations and hopes. Following the exposition of the hypotheses, the authors also affirm that emotional attachment can be achieved by the ability of the brand to create a sense of efficacy in the consumer, in such a way that the consumer has control over the environment that surrounds him, leading him to achieve the desired objectives. Finally, the authors believe that for brand attachment to exist, it is crucial that consumers perceive the brand as being reliable and believe that it is sensitive to their needs, allowing it to be perceived as an extension of the consumers’ self. To conclude, Frasquet et al. (2017) show that the brand attachment, because of its strong emotional connections that define it, can predict the intention and willingness of a consumer to get involved with a specific brand. The confidence increases the affective bond, discouraging the consumer from abandoning the relationship with the brand and increasing the consumers’ willingness to pay a premium price (Thomson et al., 2005).

6.4 Public and Social Marketing Social marketing directs your concerns to society. According to Kotler, it is defined as the design, implementation, and control of programs that aim to increase the acceptance of an idea and/or social project in a target group. Through a study by Araújo (2011, p. 79), it is also possible to define social marketing as a way of strategically managing support for social change in the cause of relevance in the public sphere, seeking to realize the rights of citizens, “from the ethical practice of conduits appropriate for themselves and with others.”

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However, Andreasen (1994) points out three problems with the above definition. In the first place, he argues that choosing the term “social marketing” could lead people to confuse with societal marketing. Societal marketing, as opposed to social marketing, seeks to protect individuals through market control, and thus does not deal with actions for behavioral changes, as in the case of social marketing. Then, as Andreasen (1994) points out, in relation to the second problem, there was a discussion in order to make it clear if the practice of social marketing would be limited, or not, to the public sector and to non-profit organizations. The third problem was that the definition limited the purpose of social marketing simply to the acceptability of social ideas. Andreasen (1994) proposes a new definition of social marketing in which he argues that social marketing is based on the adoption and adaptation of commercial marketing technologies to programs designed to influence voluntary behaviors of its target audience, in order to improve their own welfare and the society of which they are a part. It should be noted that Andreasen (1994) stresses that the concern and purpose of social marketing is behavior change. Combined with the concept of social marketing, there is the idea of social responsibility. Levek et al. (2002) goes further and even considers social marketing as a consequence of social responsibility, arguing that “they depend intrinsically on each other” (p. 23). Social responsibility is defined as the “duty and commitment of the company to assume a transparent, responsible, and ethical attitude” in the relations that it maintains with its target group. Mohr et al. (2001) argue that social responsibility actions have positive effects not only for companies, but also for individuals who benefit from them. According to several authors, the company’s sponsorship of certain social actions positively stimulates the purchase decision (Andrews et al., 2014; Sen & Bhattacharya, 2001) to invest in companies (Sen et al., 2006), posture in relation to firms (Zdravkovic et al., 2010) and word of mouth (Skarmeas & Leonidou, 2013). Thus, considering the consumers’ point of view, as supported by Kamiya et al. (2018), when they identify with the social cause sponsored by a brand, their will and intention to participate and help increases. It is also noted that many people find these products more convincing than their competitors who do not support any social cause (Levek et al., 2002). However, as pointed out by Becker-Olsen et al. (2006), social responsibility actions can also have negative consequences. Consequences that, according to Vlachos et al. (2009), may be due to the fact that consumers do not understand the reciprocity character associated with social responsibility actions and associate the involvement of companies in these actions for opportunistic purposes. Public marketing, as its name implies, is related to public entities, strategically used by governments. Within public marketing and its strategies, all initiatives aim to promote programs/initiatives/causes in favor of civil society. It can be considered that the target public is the population in general since its purpose is to serve the purposes of the same. In a broader sense, public marketing is defined as a public sector strategy whose objective is to ensure that the public receives the attention it deserves, as Epstein points out. However, it is possible to define this practice more

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narrowly. Thus, according to Velas & Bocigas, public marketing includes a variety of techniques that are used by central, regional, or local administration with the aim of getting citizens to adopt a certain behavior. In summary, synthesizing the concept, public marketing deals with activities, carried out by organizations that constitute the Public Administration, that aim to satisfy social needs. (Santesmases, 2004).

6.5 Program “Portugal Sou Eu” 6.5.1 Contextualization and Mission The program “Portugal Sou Eu” is an initiative of the Ministry of Economy, approved by the Resolution of the Council of Ministers 56/2011, designed to be particularly addressed to SMEs, and aims to boost and enhance the national offer through an active brand that represents the national production. The main objective of this program is to increase informed consumption and foster the valorization of national supply through the involvement of all civil societies, increasing competitiveness and job creation in Portuguese companies, especially Small and Medium-sized Enterprises (SMEs). The “Portugal Sou Eu” initiative is available to any citizen and/or entity, and there are various forms of participation, broken down on the program’s website. The project under study is intended for all end consumers and needs to be sensitized by promoting and identifying the origin of products and services, providing informed and sustainable choice of consumption. It is also important to include SMEs in the primary, secondary, retail, and catering sectors, as for them there are advantages and benefits of joining the “Portugal Sou Eu” network of companies. Finally, the program in question also includes large companies and large retailers and institutional buyers. These are sensitized to the promotion of supply and demand platforms that facilitate interaction with national SMEs. Always aiming at enhancing national identity, promoting conscious consumption, and fostering the competitiveness of Portuguese companies, the program has strategic and operational objectives. Regarding the strategy, the “Portugal Sou Eu” program was designed to stimulate the economic recovery of the economic fabric, making it more competitive, always with a view to enhancing the national supply. By boosting the market, it is intended to assist companies so that they are able to increase their export potential. Nowadays, this program has been gaining more importance, as exemplified by the two agreements reached between Associação Empresarial de Portugal (AEP), the coordinating entity, Makro and the SONAE MC group. These two agreements aim to include products with the “Portugal Sou Eu” seal, in order to encourage consumers to buy them. Still in relation to the context, through contact with the company Nacional, another company whose adhesion to the program is also recent,

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there are advantages related to the reinforcement of portugality provided by the seal acquired in the adhesion.

6.5.2 Initiatives Thus, through the website of the program under study, the initiatives related to the member companies refer to their mobilization, using various activities of member mobilization such as visits, meetings, workshops, and seminars, in order to clarify the companies about membership of the “Portugal Sou Eu” seal and its requirements. Focusing now on initiatives aimed at consumers, the program under analysis also develops several actions that favor the adhesion to “Portugal Sou Eu.” Therefore, the first initiative concerns the dissemination of information through the portugalsoueu.pt portal. In this portal, the qualified products and services “Portugal Sou Eu” are disseminated and on social networks and through smartphones, shows in each place where the same products, services, and participating establishments can be found. Another initiative relates to the use of prescribers in the promotion of “Portugal Sou Eu.” In other words, some personalities from the most different spheres of society, designated as “Portugal Sou Eu” ambassadors, are used, who contribute publicly to boost the brand, promoting the initiative and promoting the informed choice of products and services that adhere to their activities.

6.6 Methodology This project will follow a qualitative approach that, according to Godoy (1995), is essentially concerned with the study of the analysis of the empirical world in its natural environment, being that the researcher comes in direct and prolonged contact with the environment and the problem under study. In the case of qualitative research, it is sought to study the process, understanding how a certain phenomenon manifests itself in daily activities, through “the perspective of the participants,” as Godoy (1995, p. 63) states. In the same line of thought, De Ruyter & Scholl (1998) also emphasize the importance of understanding how the participants’ thoughts on a given subject are processed and why they think so. Thus, in the case of the developing project, it is considered that the qualitative research is the most adequate option, in relation to the quantitative research since it is intended to understand the possible role of the attachment in the purchasing decision process of the participants, and not to evaluate or measure how many people are influenced. Based on Malhotra et al. (2013), this type of research studies small samples, characterized by not being structured and has an exploratory nature. In relation to the sample used in qualitative studies, according to De Ruyter & Scholl (1998), it is characterized by being small. The authors consider that a qualitative research does not seek representativeness, but rather offers insight into questions

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that aim to understand how people think about a particular topic and why they do so, not answering questions that involve knowing how many people share the same opinion. Thus, the goal is to achieve the representativeness of the results according to the theme under study, not the sample participating in the investigation. Having said that, the sample of this study was then chosen non-probabilistically.

6.6.1 Paradigm The research has an exploratory character following the constructivism (or interpretive) paradigm since reality is an individual construct and will never be independent of the researcher’s conscience, considering it is socially constructed and perceived as a mental construct, intangible, socially, and experientially based, predicting the existence of multiple realities (Denzin & Lincoln, 2000). In the constructivist paradigm, the analysis is performed using the narrative to describe detailed and specific reports about the social reality that is being studied, which, according to Neuman, is called the idiographic approach.

6.6.2 Collection Instruments Data were collected through semi-structured interviews with partners and members of the “Portugal Sou Eu” program and the representative (on behalf of the Ministry of Economy) of this program. The sample of the interviews conducted was nonprobabilistically chosen; Wahyuni (2012) mentions that this predetermined selectionbased method is known as case selection/organization, so respondents were chosen based on the criterion convenience to the theme under study.

6.6.3 Focus Group The focus group method has some advantages, as described by the author Malhotra. Therefore, the first concerns the synergy created between the participants, resulting in greater information production. Secondly, there is the advantage of creating the snowball effect, which is the triggering of reactions and comments from other participants after one participant intervenes. Next, flexibility is pointed out, as it is possible to treat different topics in greater depth. Combined with this, the characteristic spontaneity of focus groups is revealed, because participants are free to respond freely and spontaneously. Finally, the production of innovative ideas is praised since good ideas are born more quickly in a group conversation than in an individual interview. In this study, the participants in the focus group were selected, considering the particular context of the research, concentrating on the criterion that they should be

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Portuguese consumers, combining a variety of professional areas, which offered a more diverse view of the topics addressed, and different age groups. The script of the conversation was designed according to the objectives of the research, aiming to discuss the crucial points of the research, but was given freedom for the participants to talk to each other, which resulted in some changes in the order of questions and the inclusion of new topics.

6.7 General Conclusions of the Study The coordinating entity has shown that it is developing a dissemination work in order to reach the largest number of consumers leading them to join, even registering an increase in the purchase of Portuguese products frequently between 2014 and 2017, through a study. However, through data collection and subsequent analysis, it is clear that the same work is still not enough and is not reaching consumers because consumers, studied in this qualitative research, revealed, for the most part, unaware of the program, concluding that there is still a need to develop and bet more, by the bodies responsible for “Portugal Sou Eu,” in the dissemination and creation of relationship with consumers. It was concluded that the greatest benefits of the existence of the program and, consequently, of the work developed so far, as is the case of fairs, events, or even the use of the seal, are mainly directed to the member companies. This means that it has not yet been reflected in the attitudes of Portuguese consumers, in order to make them prioritize the consumption of products with “Portugal Sou Eu” seal at the moment of choice. In addition to the need for increased dissemination, consumers pointed to the lack of identification of Portuguese products in general, for example, in large retailers and, in particular, of the brands that hold the adhesion seal. The data collection led to the conclusion that the support provided by the entities managing the “Portugal Sou Eu” program could be greater. More precisely, through the interviews conducted, it was found that support should be directed toward bringing adhering brands into foreign markets and thus increasing their visibility and possibly their exports through new contacts. The sample indicated that the events held by the entities responsible for the program may not be effective since the products are placed in the same stand, mixing, not giving great visibility to each of the brands and their corresponding products. There is a lack of bet on the program ambassadors under study. Throughout the data collection, it was apparent that they should be more active and more frequently advertise the products and services of the acceding brands, for example, on their social networks. In summary, through the study performed, it is possible to realize that the theory of attachment has no influence, at this time, on the choice, by the Portuguese consumers, for national products and/or services of brands that adhere to the program under study by Portuguese consumers. This program needs greater investment by public

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authorities in order to reach as many consumers as possible, making them more aware of the importance of valuing national production. Further recognition of this program is crucial, for example, including the appointed ambassadors. Their recognition and public exposure should be enjoyed through publications on their social networks about the program “Portugal Sou Eu,” for example. Considering the adhering brands, it can be concluded that there is a need for more support in order to make them able to increase their exports and gather more contacts abroad, increasing their visibility.

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Part II

Developing Sustainability in the Public Sector

Chapter 7

Sustainability and Corporate Social Responsibility in the Perspective of Social Economy Entities: A Bibliometric Study Brízida Tomé, Ana Maria Bandeira, Graça Azevedo, and Alberto J. Costa

Abstract We start from the conceptual interconnection between Sustainability and Corporate Social Responsibility, which, although continuously subject to controversy, both within the scope of its definition and in its performance, advocate, as the ultimate goal, human development and of the society in general, promoting the interests of the Communities on a permanent, long-term basis and without compromising the options of the future generations. In this context, we cannot fail to draw a parallel with the entities that constitute the Social Economy Sector. The activities they carry out are of economic and social nature and must be pursued in the general interest of their members, users and beneficiaries, thus in the general interest of the Community. These institutions also reveal concerns about the sustainability in all the dimensions involved (economic, social and environmental), in which the organizational performance is particularly important, as it becomes imperative to guarantee their continuity, fostering and promoting their social action. We will, therefore, start by framing what is meant by Sustainability, Corporate Social Responsibility and Social Economy, with a particular focus on the current requirements of stakeholders regarding the socially responsible behaviour of the institutions as these, in turn, will entail the adoption of more comprehensive management tools, also more efficient and transparent concerning all dimensions (economic, financial and social). It is within this framework that a project called “TFA—TheoFrameAccountability—Theoretical framework for the promotion of accountability in the social economy sector: The IPSS case” emerges, being promoted by the University of Aveiro, with the participation of National Confederation of Solidarity Institutions (CNIS—acronym in Portuguese), and the Polytechnic Institutes of Coimbra and Porto. This project aims to promote the accountability of the social economy sector (economic, financial and social aspects), in the Private Social Solidarity Institutions (IPSS—acronym in B. Tomé · A. M. Bandeira Polytechnic Institute of Porto, Porto, Portugal G. Azevedo (B) · A. J. Costa Research Centre on Accounting and Taxation, Higher Institute for Accountancy and Administration of Aveiro University, Aveiro, Portugal e-mail: [email protected] © The Editor(s) (if applicable) and The Author(s), under exclusive license to Springer Nature Singapore Pte Ltd. 2020 D. Crowther and S. Seifi (eds.), CSR and Sustainability in the Public Sector, Approaches to Global Sustainability, Markets, and Governance, https://doi.org/10.1007/978-981-15-6366-9_7

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Portuguese), assisting them not only in fulfilling their legal obligations, but also facilitating the reporting of results of activities carried out in a more effective manner and promoting transfer of knowledge (for the IPSS and also for the academic community), thus contributing to the development and sustainability of these institutions. Thus, we develop an exploratory and descriptive analysis, of a quantitative-qualitative nature, in which the procedures of data collection determine the result of the search strategy by the defined descriptors. For this purpose, the analysis will focus on the following variables: number of articles published per year; methodologies used; theories of support; identification by sector/area of activity; countries of origin; more representative institutions; authors who publish more and journals with the largest number of publications. The main results indicate a growing concern about sustainability and a growing publication in this area. This paper presents a bibliometric study to evaluate the main trends of current research on sustainability and on corporate social responsibility, thus contributing to the construction of the theoretical basis underlying the “TFA—TheoFrameAccountability” project. Keywords Corporate social responsibility · Governance · IPSS · Social economy entities · Sustainability · Sustainable development

7.1 Introduction This work emerges from the new challenges that are posed to the social economy entities, in particular the “IPSS” (acronym in Portuguese for Private Social Solidarity Institutions) which, in Portugal, can take on various legal forms, from Associations, Mutualist Associations, Foundations to Mercies (Portuguese Basic Law of Social Economy—LBES, 2013). These entities have great relevance in the national economy, as they develop relevant social and economic actions, supplying needs not met by either the State or the Second Sector (LBES, 2013). Their mission is to perform a social function in the general interest, providing welfare to the community in which they operate, thus denoting the social responsibility that is an integral part of their genesis (Meira, 2011, 2012). In the current context, among many of the demands placed on them, these entities are faced with the issue of sustainability that cannot be neglected, so that they can continue to carry out their mission properly. We will begin by giving a brief theoretical framework on the concepts and definitions of Social Economy, Corporate Social Responsibility and Sustainability. Nowadays, the demands on IPSS, both in terms of compliance with legal obligations and Accountability are extremely high. The duty of transparency required by the State, their main funding source, as by many other stakeholders with whom they are related (patrons, partners, suppliers, clients, users/beneficiaries, among others) leads them to have to act proactively and

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to include all stakeholders in decision-making processes and to disclose their performance not only at economic and financial, but also social and environmental levels, highlighting their socially responsible behaviour (Oliveira & Gouvêa, 2011; Souza & Costa, 2012). On the other hand, they face enormous challenges in terms of management and capacity of the social governing bodies to achieve sustainable development in all aspects (economic, social and environmental). Thus, these entities must pursue strategic planning processes, drawing sustainable development goals in line with those set at national and international levels, improving their performance and disclosure in order to promote, ultimately, their sustainability. It is in this context that the TFA project arises. The TFA project—“TFA— TheoFrameAccountability—Theoretical framework for promotion of accountability in the social economy sector: The IPSS case” is promoted by the University of Aveiro, with the participation of CNIS (acronym in Portuguese for National Confederation of Solidarity Institutions) and of the Polytechnic Institutes of Coimbra and Porto. This project aims to promote the accountability (economic, financial and social) of the social economy sector, in particular the IPSS—Private Social Solidarity Institutions—assisting them in fulfilling their legal obligations, facilitating a more effective disclosure of results of activities developed and promoting knowledge transfer (to the IPSS and also to the academic community), thus contributing to the development and sustainability of these institutions. This project proposal is to (i) Facilitate a means for online dissemination of legally required information and voluntary information covering social and economic and financial aspects of its activities; (ii) Conceptualize a framework that allows stakeholders to make this assessment; (iii) Start a yearbook to evaluate the impact of the performance of the IPSS. Finally, we carry out a bibliometric analysis in order to evaluate the main trends of current research on sustainability and on corporate social responsibility in the social economy sector, thus contributing to the construction of the theoretical basis underlying the project “TFA—TheoFrameAccountability”.

7.2 Concepts We start by analyzing the definitions of each of the three major themes of this study, Social Economy, Corporate Social Responsibility and Sustainability, in order to establish comparisons and interconnections between them, and place us among the controversies that exist in these domains. The definition of the Social Economy, established by no. 1 of article 2 of the Portuguese Basic Law of Social Economy (LBES, 2013), is that of a “set of activities freely carried out by social economy entities: Cooperatives, Mercies, Mutualist

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Associations, Foundations, IPSS, among others, pursued in the general interest”.1 This law was able to consolidate the concept of the social economy, surpassing existing controversies (Meira, 2011). The Corporate Social Responsibility (CSR) was initially defined by the Commission of the European Communities, on the Green Paper (2001) as “companies that decide on a voluntary basis to contribute to a fairer society and a cleaner environment”. Regarding Sustainability, conceptualized by the UN, in the World Commission of Environment and Development (UN, 1987), by the Brundtland Report, “Our Common Future”, is seen as the development that “promotes the satisfaction of the needs of the present generation, without compromising options of future generations”. These wide concepts, which are in constant evolution, seem somehow to be interconnected, sometimes intersected or, on the contrary, very distant one from each other, effectively generating difficulties of concise definition or knowledge or, we would even say, recognition. Although the concept of Economy has been linked to concerns of citizenship and common welfare since Antiquity, Social Economy arises in more adverse circumstances or extreme crises surroundings, such as the Industrial Revolution, World War II or several rises of market failures, as the great scandals that occurred in the 90s and early twenty-first century, among other facts. It should be noted that Portugal’s first Mercy was founded in the fifteenth century, in Lisbon, to minimize social problems resulting from the Discoveries, and the first consumer cooperative, was founded in 1844 in Rochdale, England, due to the externalities of the aforementioned Industrial Revolution. Therefore, one might think that the Economy was becoming something merely “economic”, focusing only on pecuniary value and could have lost its social character over time. In this context, it can be concluded that the associations emerged to fulfil growing social needs. The main concern of these non-profit associations was the general interest of the most disadvantaged people, characteristic which shaped the abovementioned concept of social economy. They arose because states were neither efficient nor effective enough to develop this “welfare” role, and because the other actors in society, the companies, had a distinct purpose that focused solely on profit. In this regard, the activities developed by the social economy entities should pursue the general interest, and their mission is therefore outlined, essentially focused on this social object or general purpose (LBES, 2013). The association between the concept of social economy and the general interest binds mandatory social economy entities to the adoption of socially responsible behaviours (Meira, 2011). The mode of organization and functioning of social economy entities is a reflection of their guiding principles, designated in LBES (2013): (i) Primacy of people and social objects; (ii) Free and voluntary membership and participation; (iii) Democratic control; (iv) Conciliation of interests and (v) Respect for several values: Solidarity, 1 Entities

designed on article no. 4 of LBES.

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Equality, Social Cohesion, Justice and Equity, Transparency, Social Responsibility, Autonomous and independent management, Allocation of surpluses to the pursuit of social economy purposes. However, these entities simultaneously pursue business and social objectives, on a complementary perspective (Meira, 2011, 2012), which brings us to the prominence of business performance, aiming to achieve the goals set in a sustainable manner. According to Cases—Cooperativa António Sergio para a Economia Social (2019) “this sector has contributed to social cohesion, combating unemployment, labour instability, as well as social exclusion among the most vulnerable groups, through the development of various activities. The social utility of these entities also derives from their values and principles, based on the promotion of the human person and the communities, through practices of cooperation, solidarity and social justice”. The concept of Corporate Social Responsibility (CSR) is also not static and could not be more comprehensive. It does not ignore any aspect in which CSR may be exercised (social, economic and/or environmental). Hence this concept, Triple Bottom Line (TBL) (Elkington, 1997) refers to organizations that promote environmentally sound, socially fair and economically viable behaviours, with the resulting consequences for the conception of the company’s role in today’s economy. By incorporating in its definition the purpose of contributing to a fairer society and a cleaner environment, the concept of CSR is highlighting the social and environmental aspects, although it is now seen from an organizational perspective (Meira, 2011). This change of business paradigm—the company open to its external surroundings—implies a need for convergence of transparent, responsible and ethical attitudes, beyond shareholder profit. Many theories have emerged over time, outlining the company’s role, such as the Shareholders theory, which aims exclusively at maximizing shareholder profit (Friedman, 1970), the Institutional theory, which pursues the reconciliation of the parties’ interests, through mimetic and/or philanthropic actions, still aiming at the legitimation of the company (Meyer & Rowan, 1977; Dimaggio & Powell, 1983), the Stakeholder theory, reinforcing the growing need for the legitimation of the company with these interest groups, but introducing social and environmental concerns (Freeman, 1984) or even the theory of Shared Value Creation, promoting cooperation and value creation for mutual benefit (Porter & Kramer, 2011). The great variability of objectives and purposes of CSR, its scope of action or the many possible modalities for its pursuit generates great controversy. Several authors argue that the company can exercise CSR in order to pursue sustainability goals and business success, albeit in a different way. CSR can be developed at the level of its internal or external environment, as the company seeks only to improve its organizational culture, or if it intends to improve intangible values such as reputation and brand, respectively, while aligning these objectives with the concern to achieve a “socially correct” status (Neto & Froes, 1999). The social function of the company becomes more prominent through a growing interrelation with the social, economic and environmental environment and the

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company must become socially responsible in all areas of its activity, including the decision-making process (Torre, 2005; Velasco, 2005). Another very critical approach, from Heal (2005), claims that many companies view CSR from a purely economic perspective, focusing solely on increasing notoriety and legitimacy, as a reinforcement of competitive advantage and financial return. Returning to the great variability of objectives and company’s positioning towards CSR, Jamali and Mirshak (2006) and Branco (2006) agree with the hierarchical levels of action proposed in Caroll’s (1979) conceptual model: from the economic, legal, ethical levels to the discretionary level. However, they stress that companies will make strategic choices about their CSR program, developing it more proactively or reactively, more accommodatingly or defensively. Beyond all controversies, it seems consensual that the practice of CSR is not based on compliance with regulatory and coercive conventions. Companies that voluntarily undertake it, promoting management strategies that consider the interests of all parties and, above all aim at quality and sustainable development, are positioned at a high level of demand for social development, environmental protection and defence of fundamental rights. Therefore, being socially responsible can affect stakeholder’s decision-making. CSR has important impacts on the company, as it is a factor valued by stakeholders, differentiates business performance (affecting decision-making), shows a great leverage capacity, conditioning the results, raises the requirements at managers’ skills and at the degree of achievement of the objectives (Velasco, 2005; Roque, 2010). Regarding the objectives of CSR outlined in the social policy of the European Union (European Commission, 2013), they are based on a supportive strategy for sustainable development and respect for European values, i.e.: (i) Human rights and labour protection; (ii) Continuous learning and employability of workers with inclusion of disadvantaged groups; (iii) Environmental protection; (iv) Reduction of pollution; (v) Rational use of natural resources; (vi) Social and environmental innovation and (vii) Improvement of public health. As far as CSR development is concerned, we find the work of several national and global organizations, such as the Business Council for Sustainable Development Portugal (BSCD Portugal) and the World Business Council for Sustainable Development (WBCSD), namely the “Action 2020” (BCSD, 2013a, b) and the “Vision 2050” (WBCSD, 2013a, b, 2019). Based on the above-mentioned CSR core values, these two players develop specific programs that materialize the priorities of various key areas such as social development, economy, natural capital, energy, cities and infrastructure, as well as industry and materials, in order to promote “meeting the needs of the present generation without compromising future generations’ options”. We are, therefore, talking about Sustainability, understood as the set of human actions and activities that aim to supply the current needs of human beings, without compromising the future of the next generations. Sustainability is related to economic development and based on the principles of respect for the environment and the

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rational use of natural resources, from a triple bottom line perspective, in order to ensure sustainable development. In conceptual terms, some questions are raised at this stage: Are human activities carried out to solve people’s needs developed in all sectors that make up the Portuguese institutional sectors (State/second sector/social economy)? Can CSR be confused with Sustainability? Is the latter an evolutionary extension of the former? Are the concepts of Sustainability and Sustainable Development equal or similar? From the conceptual analysis of the terms sustainability and sustainable development we find numerous controversies, ranging from reports of a lack of clear, unconcise definition, misunderstanding and misconception, inconsistent interpretation and application, to a fashion accessory, to common sense or even being considered as a populist slogan (Sartori, Silva & Campos, 2014). Sustainability, according to Sartori et al. (2014), citing Dovers and Handmer (1992), is defined as “the ability of a human system, natural or mixed, to resist or adapt to an endogenous or exogenous change indefinitely”. However, they define sustainable development as the “intentional and evolutionary change that increases or maintains this system attribute, meeting the needs of the population”. From this perspective, sustainability is a long-term goal. However, the same authors emphasize the existence of other approaches, such as that of Elkington (1997), according to which sustainability is not the goal to be achieved, but the process to reach sustainable development: sustainability arises from the recognition of the need of stable markets, from the ability/competence in the technical, financial and management fields that will enable the transition to sustainable development. Elkington, in 1997, was the creator of the term Triple Bottom Line (TBL), considering sustainability as the balance between the three pillars: environmental, economic and social. Further to Sartori et al. (2014), the lack of consensus between the definitions of sustainable development and sustainability lies in the fact that the term sustainability is based on processes and/or activities while sustainable development has as its focus on the persons and their well-being. Following the opinion of these authors, sustainability entails a variety of topics from different areas of knowledge, with different frameworks. They conclude that sustainability requires, (i) The balance between the Triple Bottom Line strands; (ii) Indices and/or indicators for long-term sustainability monitoring; (iii) Alignment between objectives and identified indicators. Stahel and Cendra (2011) emphasize the evolution of ethical and moral issues, as “scale limits” have been exceeded at many levels (socioeconomic, environmental, technological, cultural, ethical and political). In their opinion, the crisis of legitimacy gave rise to the sustainability/sustainable development paradigm, whereby an attempt has been made to propose an alternative development model that ensures the basic conditions for the well-being of present and future generations. It is about answering a political and ethical question: “How do we want to live as individuals and society today and in the future”? These authors make a sustainability analysis, which they foresee through several principles, presented in Table 7.1.

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Table 7.1 Sustainability principles Sustainability principles

Involvement

Long-term phenomenon

Implying future generations, hence long-term policies

Qualitative and relational phenomenon

Fundamental the quality and type of relationships between elements; organization of interests and their relations with external environment through self-regulation

It is measured by the achievement of an ethical Sustainability is evaluated by the achievement and aesthetic objective of the objectives and not through the preservation of a given system. Fundamental is not the resilience of the model, but the ability to generate well-being with inter and transgenerational equity (the core of sustainability) Technical/economic progress helps to achieve the goal, but it is a means, not an end. Sustainability should be assessed, not the development elements (economic/technical), which are subordinate to ethical/aesthetic objectives They do not consider sustainable development as a goal, but as a means to an end (individual/collective well-being) Sustainability is dynamic rather than static

Development is the process and sustainability is the ability to conserve/preserve certain elements The essence of sustainability is the achievement of certain objectives and not the preservation of the development model itself, which may change in favour of sustainability

Phenomenon emerging from an organizational Sustainability is the emergent property of a process whole and not a characteristic that can be attributed to individual elements The elements of development are the result of the system organization (as a whole and not separated), appearing as a result of the quantity and quality of established relationships There are organizational models that favour (or not) the sustainability of the system (not sustainable separate elements). The elements of development are the result of the system organization (as a whole and not separated), appearing as a result of the quantity and quality of established relationships There are organizational models that favour (or not) the sustainability of the system (not sustainable separate elements) (continued)

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Table 7.1 (continued) Sustainability principles

Involvement

Sustainability requires participatory self-organization

Dynamic/complex systems, such as sustainability and development, are based on the elements of participatory organization (inside-out/bottom-up process). Decentralization autonomy predominates over centralized enforcement, in order to avoid lack of relevant information and gain the ability to change behaviours

Sustainability is holistic and total

Implying the set of principles that define it and not some separately. This notion “The whole is greater than the sum of its parts” applies to the concept/definition of sustainability

Source Stahel and Cendra (2011)

Calleros (2012) also draws the attention to the multifaceted socio-economic and environmental challenges that require the adoption of multidisciplinary scientific approaches in their assessment. Besides that, Bansal and Desjardine (2014) also view sustainability in a time-based logic. They see sustainability as a system that should respond to current needs without compromising future needs from the perspective of a long-term system. Sustainability lies in the ability to trade indefinitely and timelessly and will be jeopardized by shorttermism if strategic management omits the time factor. They, in fact, consider time to be central to the distinction of sustainability from other concepts such as CSR and TBL, which they claim only to operate in the short term. They argue that sustainability has to go hand in hand with strategy, making it essential to analyze organizational issues, concepts and theories: (i) At different levels of analysis (“to get the big picture”); and (ii) Through performance evaluation indicators to promote integration and capture the value generated over the long term. Strand, Freeman and Hockers (2015) comparatively address the concepts and evolution of CSR, sustainability and sustainable development. They emphasize that sustainable development is people-focused (UN—Brundtland Report, 1987) while in the CSR perspective the focus is on stakeholder engagement (EU, 2001); a decade later at the World Economic Forum (2013),2 CSR was associated with sustainability: the company is now responsible for the impacts on society, as we have seen in the historical evolution of CSR presented above. In Scandinavia, according to those authors, there is a paradigm shift from “business in society” to “business and society”, simultaneously promoting the interests of the parties. These changes from implicit CSR, what they call “walking to walk” (to do!) to explicit CSR, i.e. “talking to talk”, determine the on-going change, no longer based 2 The Sustainable Adjusted Global Competitiveness Index (GCI) is created, reflecting a set of insti-

tutions, policies and factors that make a nation stay productive over time while ensuring social and environmental sustainability.

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on traditions, values, norms and rules to be supported on corporate strategies and business policies that will promote responsible articulation of community interests. Furthermore, considering the new requirements for CSR implementation and for the pursuit of sustainability and Sustainable Development Goals (SDGs), Strand et al. (2015) highlight the need to take into account various cultural and institutional influencing factors for these changes to be successful, such as democratic management, ethical behaviour, mandatory worker representation on governing boards, and the promotion of long-term stakeholder relations. In short, these authors understand sustainability as a set of principles to be respected, with relations of reciprocal interdependence, from where a development model can emerge to equitably meet the well-being of present and future generations. Schaltegger, Hansen and Freunde (2016) also propose sustainability-oriented business models, which should be imbued with structural and cultural attributes such as (i) The development of team/community spirit; (ii) Increasing/enhancing worker confidence and loyalty; (iii) Commitment to sustainability evaluation; (iv) Disclosure to stakeholders. In this respect, they argue that the organization’s mission and objectives should have to be considered, not forgetting the performance evaluation approach, the need to include all stakeholders and the way nature must be addressed. Sustainability management must have an interdisciplinary character, integrating social, economic and environmental aspects (TBL) to transform the organization and contribute to sustainable development (Economy and Society).

7.3 The Social Economy in Portugal Given that this study aims to establish a relationship between Corporate Social Responsibility and Sustainability from the perspective of the Social Economy, we cannot fail to make a brief presentation of this sector in Portugal. The social economy shows a noteworthy performance in the national economy. The figures presented in the Satellite Accounts 2016 (2019; CASES, 2019) report that the entities of this sector contributed to the national GVA with 3.0%, having increased 14.6%, in nominal terms, compared to 2013, growth well higher than that of the economy as a whole (8.3%), in the same period, as shown in Fig. 7.1. The social economy ascended to 5.3% of wages and total employment and 6.1% of paid employment in the national economy. Compared with 2013, those two factors increased by 8.8% and 8.5%, respectively, showing greater dynamism than the total economy (7.3% and 5.8%, respectively). By groups of social economy entities, Associations with altruistic purposes, which include the IPSS, assumed special importance in a number of entities (92.9%), GVA (60.1%), Remuneration (61.9%) and Paid employment (64.6%). IPSS amounted to 5622un (7.8% of total sector entities), with a contribution of 44.2% to GVA, 51.5% to Remuneration and 63.1% to Remunerated Employment.

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Fig. 7.1 Satellite accounts of Portuguese Social Economy 2016. Source CASES (2019)

Table 7.2 shows the comparison of the statistical values contained in the satellite accounts for 2010, 2013 and 2016 (reported in 2013, 2016 and 2019, respectively), showing that this sector of the Portuguese economy was in counter cycle with the national economy, showing a strong resilience ability. Comparing the three pillars referred to—Social Economy, Corporate Social Responsibility and Sustainability—we might be tempted to establish a timeline, in which the emergence of a concept seems to follow the previous one in an evolutionary way. However, in our opinion, they do not fade or replace themselves, but they complement each other or converge. Sustainable development is an integral part of the social economy, as its end is the common interest. Objectives other than for the common good and for the benefit of Table 7.2 Satellite Accounts of the Portuguese Social Economy (2010, 2013, 2016) Satellite accounts of the social economy in Portugal Number of entities

GBP (%)

Paid employment (without volunteering) (%)

2010

55583

2.80

5.50

2013

61268

2.80

6.00

2016

71885

3.00

6.10

14.8%

6.7

1.6

Source INE—Adapted from Statistics Portugal (2013, 2016 and 2019)

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the community and the planet cannot be set, nor can its actions be developed without bearing in mind the interconnection with other societal sectors such as the State and the Second sector and even civil society. Social economy entities are stakeholders of companies in the second sector, as they will establish programs, projects, partnerships, alliances and various actions to develop their CSR programs. Both sectors converge in the objectives of contributing to the development and well-being of the community in which they operate, in a sustainable manner, and make commitments to each other, so that the viability, credibility and transparency of the projected and developed actions are shared. As far as the connection of social economy entities with the State is concerned, recent legal frameworks have emerged in order to recognize the social economy as an important stakeholder in the national context, regarding the development of the Portuguese society (LBES, 2013). The State assumes a partner relationship with these entities, in addition to its supervisory function. Indeed, both sectors share many of their sustainable development goals. Thus, the State should foster and support social economy entities that will achieve these objectives on the ground. Another important role of LBES (2013) was to have driven the revision of the legal frameworks of the different entities belonging to the Social Economy sector. Revised codes gradually emerged, such as the Cooperative Code, the IPSS Statute (EIPSS—acronym in Portuguese standing for Statute of the Private of Social Solidarity Institutions) and the Mutualist Associations Code. In particular, the EIPSS entails greater accountability of management social bodies, especially in terms of oversight and transparency duty (Tomé, Meira & Bandeira, 2016). This statute establishes a new model for the financial supervision of IPSS.3 On the other hand, this Statute is very demanding and implies the need for specific capacities of managers. They are required to have leadership and strategic vision skills, ability to align the institution’s values and principles through the best governance practices and codes of conduct for fulfilling their Vision/Mission. They must necessarily know the social economy sector and the area where the entity operates. It is also imperative to have experience in people management, legal knowledge, finance and accounting, not forgetting that they should be motivated and have personal availability to perform the function, in most cases on a volunteer basis. Many of these capacities required for governing bodies of social economy entities had already been identified and evaluated by several authors (Teixeira, 2005; Velasco, 2005; Mulgan, Tucker Ali & Sanders, 2007; Azevedo & Couto, 2010; Martins, 2010a, b; Meneses, 2010; OECD, 2010; Roque, 2010; Teixeira, 2010; Vasconcelos, 2010), given that companies are also becoming more demanding regarding the establishment of partnerships with social economy entities. The

3 The

main purpose of accountability is to prepare and provide internal and external information about the entity’s management and its equity situation. Failure to comply with the obligation to present the accounts within the set deadlines has serious consequences for the entity (EIPSS—no. 5 of Article 14-A).

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same is true for the international funds to which these institutions are increasingly applying for, and whose management is required to be more professional. Regarding transparency, it should be noted that social economy entities have an added duty. Indeed, in Portugal, the public authorities have an obligation to promote these entities, which are also defended by the Principle of protection of the cooperative and social sector (Constitution of the Portuguese Republic (article 80) and LBES). On the other hand, being conditioned to the strict compliance of the general interest and of the guiding principles, they must highlight their socially responsible behaviour. In addition, as legal entities of public utility, they benefit from positive discrimination (more favourable tax regime (Gonçalves, 2010), conditions of access to credit, technical support), factors that lead to a greater need for accountability. Not of minor importance is the need for regulation by the State guardianship, in order to pursuit proper evaluation and monitoring over the efficiency and effectiveness of public money’s use as well as over the actions’ contribution of these entities in the development of the sector. Transparency is also required and increasingly important for all stakeholders (members, users, beneficiaries and third parties operating with the entity), and may be a differentiating factor in the visibility and notoriety of institutions. As we can see, all actors in the various national institutional sectors aim at sustainable development; their sustainability depends on how they manage their resources to achieve these objectives. In the context of sustainable development, we underline that the United Nations (UN) has been setting the Sustainable Development Goals (SDGs) since 2015, which “define global priorities and aspirations for 2030 and require global action by governments, businesses and civil society, to eradicate poverty and create a life with dignity and opportunity for all within the limits of the planet”. For companies, in particular, the SDGs provide an opportunity to create and implement solutions and technologies that address the greatest global challenges, helping to link business strategies and global priorities (UN, 2019).

There are currently 17 SDGs outlined, assessed through 169 targets and 244 indicators and spread across three levels. These should be implemented by all countries around the world, until 2030 (Agenda 2030), thus seeking to mobilize global efforts of a set of common goals and objectives, which we present in Fig. 7.2. These objectives, in whole or in part, are contemplated in programs designed and developed by the State, private sector companies and social economy entities. In our opinion, certain conceptual differences will be overcome if everyone’s perspective and focus are on the general interest and the common good, and if collaboration between all sectors becomes more transparent, with the necessary increase of accountability, in order to promote the sustainability of all sectors involved. It is in this context of change and need for accountability that the TFA project arises. The TFA project (“The TheoFrameAccountability: Theoretical framework for the promotion of accountability in the social economy sector: the IPSS case”) is promoted by the University of Aveiro, with the participation of CNIS—National

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Fig. 7.2 Sustainable development goals. Source INE—Statistics Portugal

Confederation of Solidarity Institutions—and the Polytechnic Institutes of Coimbra and Porto. This project aims to promote the accountability (economic, financial and social) of the social economy sector, in particular the IPSS—Private Social Solidarity Institutions—but the problem is how to promote accountability (social, financial and economic) in the social economy sector. In this regard, there are a certain number of factors that will have to be evaluated, such as (i) the level of satisfaction of those who benefit from IPSS’s activities; (ii) the efficient use of their financial resources; (iii) the quality of their relationship with the community; (iv) the insurance of greater transparency by the IPSS. Thus, the objectives and expected outputs of the project are to (i) Conceptualize of a framework, allowing stakeholders to assess accountability, in the social, financial and economic dimensions (ii) Provide an electronic platform for collection and processing of necessary data, proper online dissemination of mandatory and voluntary IPSS’ information, covering the above dimensions; (iii) Initiate the publishing of a yearbook, that allows IPSS performance evaluation. The TFA is still on-going, and we’ve already performed some of the first stages, as per Fig. 7.3. Phase 1 (Literature review, to which this paper is also contributing) is almost finished, as well as phases 2 and 3 (development of the technological platform and

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1- Literature review 2 - Development of a technological plattform to: • 2.1 Collect and publish the mandatory IPSS financial report via the Internet; • 2.2 Process information to study performance of social, financial and economic performance of IPSS. 3 – Conceptualization of the framework • 3.1 Set of indicators grouped by analysis dimensions; • 3.2 Considers financial and non-financial information; • 3.3 Satisfy the information needs of different stakeholders. 4 – Conducting a workshop and focus group 5 – Technological plattform validation • ISO/IEC 25010:2011 6 – Data collection and processing • 6.1 Per IPSS (mandatory and voluntary information); • 6.2 Preparation of a report on IPSS performance (social, financial and economic). 7 – Global analysis Fig. 7.3 The TFA’s stages. Source Prepared by the authors

framework of indicators). The Focus group (stage 4), counted with the participation of specialists on the social economy sector, academy and other related entities, has been completed end of October 2019, and the set of indicators previously defined and submitted to the invited opinion-makers are now being reformulated, having into account the inputs collected. The purpose of TFA project is to help IPSS, on the one hand, to fulfil their legal obligations, facilitating a more effective disclosure of the results of the developed activities and promoting knowledge transfer (to the IPSS and also to the academic community). We are most certain of the impact that the increased accountability may have on these entities’ performance, and the positive way in which this growth will be contributing to the development and sustainability of these institutions.

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Table 7.3 SCOPUS search criteria Words/expressions

“Social economy” or “Third sector” and “Sustainability” or “Corporate social responsibility”

Fields

Article title, Abstract, Keywords

Subject area

Business, Management and Accounting; Economics, Econometrics and Finance; Social Sciences

Access type

Open access and others

Year

All available (1998—2019)

Publication stage

Final

7.4 Bibliometric Analysis 7.4.1 Methodology In order to make a bibliometric analysis on the theme of Sustainability and Corporate Social Responsibility from the perspective of social economy entities, this study is characterized as exploratory, since it intends to know what is being studied and published on the subject. Bibliometric analysis is a quantitative and statistical technique that measures the indexes production and dissemination of knowledge, accompanies the development of several scientific areas and the patterns of authorship, of publication and use of research results (Lopes et al., 2012). This bibliometric analysis focuses on research through the SCOPUS database of scientific articles, having defined some search filters, which are described in Table 7.3. Then, the data of the selected articles were analyzed, with a level of detail that allows to reach the predefined objective, such as the name and number of the authors, number of authors and co-authors per article, the title of the journal, the country of affiliation of the authors, supporting theories, among others.

7.4.2 Results This section presents the results obtained according to the analysis of the sample data. Based on the adopted criteria, our search results retrieved 145 documents: 120 articles, 10 book chapters, 7 books, 4 reviews, 3 conference papers and 1 editorial. These documents span from 1998 through 2019 (Graphic 7.1). As we can see, the publication rate was low until 2006, increasing dramatically after 2009; the year 2017 reached a maximum of 24 documents but we register a decline in 2018, and 2019 is still far from what we could expect in comparison (Graphic 7.1).

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Graphic 7.1 Documents by year

Graphic 7.2 Documents per year by source

Graphic 7.3 Documents by author

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Graphic 7.4 Documents by affiliation

Graphic 7.5 Documents by country or territory

The following graphic (Graphic 7.2) shows all documents per year and by source. As we can see, Voluntas (International Journal of Voluntary and Non-profit Organizations) gathers a total of 23 documents, considering all years, followed by CIRIEC– España Revista de Economia Publica, Social y Cooperativa and REVESCO (Revista de Estudios Cooperativo), both with 10 documents each. Again, it is clear that the year 2017 was the most productive one. Graphic 7.3 shows how prolific were the authors. There is a set of authors (nine) responsible for two documents, and we also acknowledge Portuguese authors in this list but in short number. Regarding affiliation (Graphic 7.4), three Spanish Universities lead the ranking, with four documents each and we also register documents from Portuguese Universities. Graphic 7.5 corroborates the perception that Spain contributes with a considerable number of documents to this list (27 documents), followed by the United

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Graphic 7.6 Documents by type

Graphic 7.7 Documents by subject area

Kingdom (20 documents) and The United States of America (19 documents). Portugal contributes to four documents. As said before, Graphic 7.6 shows that 120 documents are articles, representing 82.8% of the total. Portugal contributes to three articles and one book chapter. Finally, Graphic 7.7 shows all documents by subject area. We have decided to restrict the search to three main areas and managed to list 109 documents in the “Social Sciences” area, 71 documents in the “Business, Management and Accounting” area and 60 in the “Economics, Econometrics and Finance” area.

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7.5 Conclusions As it is well known, the concept of corporate social responsibility is related to the concept of sustainability itself, which aims to reconcile the economic, social and environmental aspects in the generation of a scenario compatible with continuity and the expansion of the activities of the different entities in the present and in the future. In this sense, the main conclusions of the present study are as follows: 1. Analysing the definitions and concepts of Sustainability, Corporate Social Responsibility and Social Economy, in addition to many divergences and controversies, we found a guiding line, which links the actors of the various Portuguese institutional sectors (State, second sector companies and entities of the social economy), as they seek sustainable development as their ultimate goal, to strengthen the common good. 2. This common objective enables each sector to develop the actions it considers strategically appropriate, relying on the most accredited partner to carry them out and, simultaneously, contributing to their sustainability and that of all stakeholders involved, in particular, of social economy entities. 3. From this permanent interconnection, we would even say of increasing trend, results the assumption of more challenging and demanding roles by all parties: (i) The State will have to position itself as a partner of social economy entities, beyond its essential guardian function; (ii) Private for-profit companies will have to develop CSR programs that effectively meet the needs of the community in which they operate, which will certainly require greater planning and monitoring capabilities, and should also collaborate more closely with social economy entities; (iii) Finally, these social economy entities will have to become more effective and efficient, open to their external environment, facilitating awareness of their socially responsible behaviour, credibility and transparency in all aspects (economic, social and environmental). 4. In this context of increased requirements for IPSS, the TFA project emerges to help these institutions to plan and develop activities more effectively, to facilitate monitoring and reporting of results and to support them in complying with legal obligations, thus promoting their accountability. 5. The bibliometric study presented corroborated the importance of this theme, with greater emphasis on studies by Spanish authors and with a higher incidence in 2017. However, we found that in Portugal these themes have been of greater interest, believing that knowledge transfers and sharing between the academic community and the IPSS is necessary and could contribute to the development and sustainability of these institutions.

7.6 Further Considerations for Future Work This project is still on-going. Some new indicators could be defined, and a large number of participative IPSS could enter the project, improving its scalability.

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In the future, hope the project could be replicated to other countries and other sectors (e.g. public sector).

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Consulted Legislation Constituição da República Portuguesa (1976). Edições Almedina, SA. GC Gráfica de Coimbra, Lda. (2009) = Portuguese Constitution. Decree Law no. 172-A/2014 14th November, Diário da República no. 221 – 1st serie, Assembleia da República, Lisboa = (EIPSS) IPSS Statute. Law no. 30/2013 8th May, Diário da República no. 88 – 1st serie, Assembleia da República, Lisboa. (LBES) – Basic Law for Social Economy.

Chapter 8

Emerging Trends on Sustainability/Integrated Reporting: Public and Private Perspectives Sónia Monteiro, Verónica Ribeiro, and Kátia Lemos

Abstract There has been increasing voluntary integration of social and environmental concerns into the organizations’ strategy and their interaction with other stakeholders. The public sector, in particular, plays an important role, not only in promoting social responsibility practices but also in its application to its own structures and should set an example to the private sectors and the citizens. In the context of the strategy at the international level to the achievement of sustainable development, it is increasingly recognized that the disclosure of information on matters of social responsibility/sustainability is a key element in the transparency and accountability of organizations, both public and private. The objective of this paper is to analyze the evolution in the reporting of organizations, namely the progress from traditional financial information to non-financial information reporting, in particular, the sustainability report and the integrated report. We highlight the specificities of reporting in the public sector perspective. The main international reporting frameworks (such as the Global Reporting Initiative and the International Integrated Reporting Council) and recent developments in non-financial reporting within the European Union (EU) are explored. Finally, the connection between the report and the Sustainable Development Goals (SDGs) of Agenda 2030 is also analyzed. Keywords Financial reporting · Non-financial reporting · Sustainability reporting · Integrated reporting · Public sector

8.1 Introduction One of the concepts that has emerged in the last decades is that of Corporate Social Responsibility (CSR), in which the organizations commit themselves to voluntarily S. Monteiro (B) · V. Ribeiro · K. Lemos Polytechnic Institute of Cavado and Ave, Research Centre on Accounting and Taxation, Barcelos, Portugal e-mail: [email protected] © The Editor(s) (if applicable) and The Author(s), under exclusive license to Springer Nature Singapore Pte Ltd. 2020 D. Crowther and S. Seifi (eds.), CSR and Sustainability in the Public Sector, Approaches to Global Sustainability, Markets, and Governance, https://doi.org/10.1007/978-981-15-6366-9_8

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link with the purpose of contributing to a more just society and in favor of sustainable development. Social Responsibility has been integrating the companies’ strategy due to concerns about the increase in social disparities and inequalities that exist in society, which leads them to reflect on their economic, social and environmental development, and the attempt of a more responsible management (Frey, Marcuzzo, & Oliveira, 2008). On the other hand, it has, has been increasing citizens awareness of the need for economic growth to be accompanied by social and environmental sustainable development (Aerts, Cormier, & Magnan, 2006), and the stakeholders pressure organizations to adopt sustainable practices. In this sense, the public sector has also taken an active role in promoting socially responsible practices and should be a “driver” of CSR (Moon, 2004). According to Navarro Espigares and Hernández Torres (2005), the public sector plays an important role, not only in the diffusion of socially responsible initiatives and policies but also in its application to its own structures. The global challenge of Sustainable Development impels organizations to think and manage in a socially and environmentally responsible way and to disclose to different stakeholders, their behavior in this field. Thus, the development of information systems to assess and communicate organizations’ social responsibility (for example, through social, environmental and sustainability reporting and/or integrated reporting) is one of the ways that organizations can inform stakeholders of the impacts that the development of its activities has, not only economically but also socially and environmentally. Over time, several terms have been used to refer to the non-financial reporting, from social accounting, social and environmental reporting, sustainability reporting or integrated reporting (Guthrie, Manes-Rossi, & Orelli, 2017). The objective of this work is to analyze the evolution in the reporting of organizations, be they public or private, in particular, the advances that have occurred from the traditional financial information to the reporting of non-financial information, in particular, the sustainability report and the integrated report. The main international reporting frameworks (such as those of the Global Reporting Initiative and the International Integrated Reporting Council) will be explored, as will recent developments in non-financial reporting within the European Union (EU). The connection between the report and the Sustainable Development Goals (SDGs) of Agenda 2030 will also be explored. We will seek, whenever possible, to highlight possible differences in reporting from the public sector perspective. In light of the above, this work is structured in three parts: the first one dedicated to the analysis of the evolution of the concepts of sustainable development and social responsibility, in the context of the private sector and the public sector; the second part describes the evolution of traditional financial reporting to integrated reporting; and the third part presents a brief reflection on the linkage between reporting and the sustainable development goals of Agenda 2030. Finally, the main conclusions are drawn.

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8.2 Sustainable Development and Corporate Social Responsibility (CSR): Evolution of Concepts The concept of Social Responsibility (SR) is closely related to the concept of Sustainability/Sustainable Development (SD), which integrates the economic, social and environmental aspects that interact and relate to each other. As Ramos and Abrantes (2008) suggest, SR and SD concepts are concepts that are confused. Although they have different starting points: the SR focuses on the issues related to the behavior of companies vis-à-vis their stakeholders while the SD starts from environmental and economic issues, both come to the same conclusion: a socially responsible company has to be governed by the principles of SD and vice versa. According to Cueto Cedillo (2010), the concepts of SR and Sustainability are presented as “spark and ashes”, “starting point and result”, because they consider that SR expresses the foundation of the organization’s behavior, the set of values and principles that motivate actions, and that sustainability represents the goal of such behavior. The most well-known and quoted definition of SD is that of the Brundtland Report which defines SD as “one that meets the needs of present generations without compromising the ability of future generations to meet their own needs” (World Commission on the Environment and Development, 1987: 16). From the United Nations Conference on Environment and Development (UNCED)—ECO92 or Rio Summit (1992), some structural documents have emerged from a sustainable approach to development, notably Agenda 21, which consolidates the SD strategy and its concept. The European Union (EU) was present at ECO92 and endorsed its declaration of principles for the SD. In the European context, the EU Strategy for Corporate Social Responsibility (2011–2014) recognizes that the dissemination of information in this area is a key element in transparency and accountability, leading to the publication of Directive 2014/95/EU, of October 22, 2014, on the provision of non-financial information with regard to social, environmental and corporate governance areas by companies. The European Directive marks the beginning of a new stage in the reporting of large public and private companies toward the non-financial reporting. However, within the EU, “The next steps toward a sustainable European future” are already being considered (COM, 2016). Based on the disclosure requirements of Directive 2014/95/EU, the guidelines proposed in that document make an important contribution to the Sustainable Development Goals (SDGs) of Agenda 2030. Agenda 2030 for Sustainable Development covers all areas and sectors of any country. It represents an opportunity for the improvement of public management, the relationship between the private sector and others, and the articulation and consolidation of public policies with SDGs. Thus, organizations will need to know how to assess their impact on SDGs and review their strategies, accordingly, necessitating the collection and reporting of new data, as well as how they relate.

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8.3 Advances in Traditional Financial Reporting to Non-financial Reporting Traditionally, the report and accounts referred exclusively to financial information. The report and accounts are a mandatory drafting dossier, which includes the financial statements of the reporting entities, their management reports and other documents of accountability. This is the primary means used by the different stakeholders, to meet the economic and financial performance of organizations. There was a time when corporate responsibility information was considered strictly “non-financial” and was not relevant to include in the annual financial reports. However, increasing awareness and concern, both by the business sector and the public sector, regarding social and environmental issues, led Accounting as the main information system to follow this trend. The annual financial report is no longer seen as a dissemination tool capable of meeting the new demands of stakeholders. This stagnation of financial reporting has led to the dissatisfaction of its information needs, namely external factors (such as political, environmental and social), risk management, business models, among others, that allow for a well-informed decision-making process (PWC, 2013).

8.3.1 The Environmental Financial Reporting The various accounting standardization bodies have been working to integrate information and reports on corporate social and environmental responsibility into their reports and accounts, either through the creation of specific standards (such as Portugal, with NCRF 26—Environmental Matters) or by means of provisions dispersed in different regulations. As in the case of Portugal, many other countries, such as USA, Canada, Norway, Spain, Belgium, France, the United Kingdom, Sweden and Denmark, among others, have accounting regulations that require recognition of social and environmental matters in financial reporting (Ribeiro & Monteiro, 2015). The growing accounting regulations for these matters (particularly environmental matters) mean that currently more than three quarters of the world’s 250 largest companies include at least some “non-financial” information in their annual financial reports (KPMG, 2017). In the public sector, this accounting regulation of environmental and social matters was not as felt as in the private sector. This is the case of Portugal, where, in our opinion, the opportunity to create a standard similar to NCRF 26, applicable to public entities within the scope of the SNC-AP, was wasted (Ribeiro & Monteiro, 2018).

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8.3.2 The Autonomous Social and/or Environmental Reporting Although the report and accounts of companies have included information of a social and environmental nature, other forms of disclosure of information on social responsibility have appeared, generally in the form of autonomous documents such as Corporate Social Responsibility Reports, Social Balance Sheets, Sustainability Reports and Environmental and Social Reports. In fact, society increasingly demands responsible and transparent action by organizations, based on the paradigm of a more inclusive society and a more sustainable economy. And it is in this context that we have witnessed an international orientation to increase the reporting of non-financial information. As a first step, the need for companies to demonstrate the conformity of their labor practices with the Universal Declaration of Human Rights led to the emergence of the first social reports. However, the concept of corporate social responsibility (CSR) has led to social and environmental reporting, although some organizations choose to autonomize social reporting of environmental reports. These independent reports on social and/or environmental issues are generally sought to meet the information needs of certain stakeholder groups, which are not fully met by the information provided in the annual accounts. The European Commission has continuously issued a number of documents/communications to foster CSR, which describes corporate social responsibility as the voluntary integration of social and environmental concerns by companies into their operations and in interaction with other parties (stakeholders). The evolution of concepts such as CSR and Sustainability has led to the inclusion of these themes in the information to be disseminated to the stakeholders, as a result of the proliferation of Sustainability Reports as a general rule elaborated according to the Global Reporting Initiative (GRI) guidelines. Regarding independent reports or statements, reference should again be made to Directive 2014/95/EU, on the dissemination of non-financial information and diversity information by certain large companies and groups. This directive requires certain companies to include in the annual management report, a non-financial statement or, alternatively, prepare a separate report containing the information required for the non-financial statement. This Directive had to be transposed into the legislation of the various EU Member States by the end of 2016, applying to large companies which are public interest entities or to large groups which, at the date of closure of their balance sheet (individual or consolidated, respectively), have an average of more than 500 employees. It is regretted that in the scope of application of the directive only the public companies are covered, not contemplating the public sector in general. The transposition of Directive 2014/95/EU was made to the Portuguese legal system by Decree-Law No. 89/2017, of July 28. The diploma creates two nonfinancial reporting obligations, one related to environmental, social and labor aspects,

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and the other is centered on the diversity policies of members of higher corporate bodies. Specifically, Decree-Law (DL) No. 89/2017 stipulates that companies must present a non-financial statement, as a general rule included in the management report, as from 2018, with reference to the financial year 2017, but it may be presented in a separate report (either as an annex to the management report or thereafter, not later than 6 months after the balance sheet closure date). The information requested in this non-financial statement includes a description of the business model, policies, risks, environmental and social performance, as well as measures aimed at workers, respect for human rights, gender equality, and anti-corruption and bribery. The question that arises is: on what models or on what good practices should organizations rely to prepare this non-financial statement? The DL suggests that companies can use national, EU or international systems, and the system used must be specified. It refers to the Community Eco-Management and Audit Scheme, or to international systems, such as the United Nations Global Compact, the Organization for Economic Co-operation and Development guidelines for multinational enterprises, the ISO 26,000 Social Responsibility standard of the International Organization for Standardization, the Global Reporting Initiative (GRI) on Sustainability Reporting or other recognized international frameworks (such as the Integrated Reporting) and the methodological reporting guidelines developed by the European Commission.

8.3.3 The Sustainability Reporting Regarding sustainability reporting (based on the social, economic and environmental dimensions), since 1999, GRI has published a set of guidelines for the preparation of Sustainability Reports, based on principles and contents that, regardless of the characteristics of each company, can be implemented when preparing the respective sustainability reports. These guidelines enable a better understanding and management of the impacts of sustainability on the organization’s activities and strategy, through a diverse range of performance indicators. In a logic of continuous improvement, several versions of the GRI guidelines (in 2000, 2002 and 2006) have already been published, and the G4 version, published in 2013, intended to give the report a higher level of information concentration and relevance. The G4 version of the guidelines brings to the use of the indicators a new perspective that, in addition to using them as complex information communication tools, reflects the importance of an annual comparative analysis of the organization’s performance. In this version, the GRI Guidelines help companies to identify and report on issues that significantly influence the assessment and decision of their stakeholders and which represent relevant economic, environmental or social impacts. More recently GRI Standards have been introduced in 2016, representing the transition to a set of global standards that have replaced the G4 version since July 2018. The GRI Standard is a global standard for the disclosure of economic, environmental

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and social information, which is designed to be used as a set, presenting a flexible and interrelated modular structure. It is basically a restructuring of the G4 into a new Standards architecture with the aim of making the content clearer and more logical, in a more flexible and easily adaptable structure over time. With regard to the public sector, Lamprinidi and Kubo (2008) consider that the reasons that lead private and public entities to disseminate sustainability information are similar, among which we highlight the following: (i) The need to demonstrate efforts to combat climate change and other sustainability issues; (ii) increased interest in transparency and accountability; and (iii) Showing leadership in the sector. In this context, GRI developed sectoral supplements of the Guidelines in order to capture relevant and essential issues in the development of sustainability reports for a specific sector in question. Thus, prior to the publication of the G3 Guidelines in 2006, GRI began to develop a sectoral supplement for the public sector. The pilot version of the Sector Supplement for Public Sector (SSPA) was published in 2005 and can be applied at different levels of government: regional, central, federal and local. Although some studies have shown that the use of the supplement was minimal and that organizations use the general structure of the GRI guidelines (Tort, 2010; Navarro, Ortiz, & Alcaraz, 2016), we believe that the supplement is still relevant and useful for organization disseminators of the public sector. The KPMG study (2015) states that GRI guidelines continue to be the most popular voluntary reporting framework worldwide but notes that GRI usage has fallen among the largest companies in the world. This decline may be related to the introduction of the GRI G4 structure, because it is considered more complex than the previous GRI structure, or because the companies have started to make integrated reports. This idea is reinforced in the KPMG study (2017), whereby some countries seem to be embracing the concept of integrated financial and “non-financial” reporting, in many cases driven by stock market regulation/guidance. South Africa stands out as the pioneer country, by imposing the King’s Code, to require the preparation and publication of the Integrated Report to companies listed on the Johannesburg Stock Exchange.

8.3.4 On the Road to the Integrated Reporting Although the sustainability report has acquired great importance in the last decades, as a result of the work developed by the GRI, the information disclosed in the sustainability reports is not always presented in a business model context or an organizational strategy, making it difficult for the stakeholders understand how sustainability (social, economic or environmental) can affect the value creation process of an organization (Eccles & Serafeim, 2015). This idea is in line with the broader concept of CSR in the Communication of the European Commission (COM, 2011): social responsibility is now taken as the conceptual platform that integrates not only environmental and social issues but also

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human rights, consumer issues and ethics. CSR has to be at the heart of business strategy and based on shared value creation. Traditionally, companies have been publishing separate financial reports and sustainability reports because the strategic link between them was not recognized. In this context, the concept of Integrated Report emerges as a model that values the reporting of financial and non-financial information, under duly defined parameters, interconnecting investment decisions with the strategic and operational options and the conduct of the organization. In this context, in 2013 the International Integrated Reporting Council (IIRC) published the guidelines for the elaboration of an Integrated Report, entitled “The International Framework”, which aims to increase the relevance, consistency and comparability of information, adding in the same report all the components (“Capitals”) that contribute effectively to business success and to value creation, not only in the short but also in the medium and long term. The integrated reporting enables organizations to think in an integrated way about their strategy, facilitating more informed decision-making, good risk management, increasing the confidence of the various stakeholders, with the main objective of improving the performance of the organization as a whole (Guthrie et al., 2017). This report is the next step in the organizational report, complementing the report on sustainability, being perfectly applicable also to the public sector. According to the CIMA report (2016), integrated reporting in public entities promotes a better understanding of the impact of decisions on the value creation process, taking into account a comprehensive range of factors relevant to the process and not just financial considerations of short term. In this way, better decision-making processes, greater transparency and long-term perspectives are promoted, crucial to the sustainability of public services. There have been a number of public entities at the international level that have successfully implemented the Integrated Report, such as the City of London Corporation, Welsh Government, Crown Estate and other government departments in the United Kingdom, as well as other public entities from Africa, Russia, New Zealand, Singapore, etc. Oprisor, Tiron-Tudor, and Nistor (2016) consider that the Integrated Report has been gaining momentum in the public sector, but progress is still rather slow. According to Ernest and Young (2014), GRI conducted a market study concluding that the release of Integrated Reports is still a minority practice and only about onethird of these reports combine sustainability and financial information, once that the majority consists of two separate documents: A Financial Report and a Sustainability Report.

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8.4 Linking the Integrated Reporting with the SDGs The year 2015 will go down in history by defining the 17 Sustainable Development Goals (SDGs) at a UN summit that brought together world leaders to adopt an ambitious agenda for poverty eradication and global economic, social and environmental development by 2030, known as Agenda 2030 for Sustainable Development. The 17 SDGs, adopted by almost all countries in the world, define the priorities and aspirations of global sustainable development by 2030 Agenda and require global action by governments, business and civil society to eradicate poverty and create a life with dignity and opportunities for all, within the limits of the planet. For organizations, whether public or private, SDGs provide an opportunity to create and implement solutions and technologies that address the greatest global challenges, helping to link organizational strategies and global priorities. It is, therefore, important at this point to assess how organizational practices can be developed in order to meet the goals proposed in Agenda 2030, and how to articulate the organizations’ strategy and reporting with the SDGs. The report needs to evolve in order to quantify, verify and effectively communicate the impact that companies have on SDGs (KPMG, 2017). In order to facilitate the integration of the Sustainable Development Goals in the Organizational Report, the UN Global Compact Network together with the GRI have developed two key1 documents that should be used together as part of the business reporting cycle. It is not intended to create a new reporting structure, but to help companies to highlight their contribution to SDGs and provide relevant information to stakeholders through qualitative and quantitative disclosures for the SDGs’ targets that are likely to be relevant to business, regardless of the size, sector or location of operations. Organizations can use these documents to disclose their impacts and contributions to the SDGs, for example, reporting according to GRI standards and/or the 10 principles of the UN Global Compact. Given the above, major challenges are faced by companies and public entities in identifying priority SDGs for their operations/activities and stakeholders, incorporating them into their strategy, setting goals for their success, and measuring and reporting on their progress. Integrate the SDGs assessment into corporate reporting implies to disclosure to stakeholders the effective company performance, using the emerging nonfinancial reporting models. Whether through sustainability reports or integrated reports, we believe that what is important is to align these reports with the structure and scope of the SDGs and should, therefore, be a research area to be favored in the future.

1 UN

Global Compact Network and GRI, “Integrating the Sustainable Development Goals into Corporate Reporting: A Practical Guide”, http://globalcompact.pt/images/pdf/Practical_ Guide_SDG_Reporting_08_2018.pdf e “Business Reporting the SDGs “Analysis of the Goals and Targets https://www.globalreporting.org/resourcelibrary/GRI_UNGC_Business-Report ing-on-SDGs_Analysis-of-Goals-and-Targets.pdf.

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8.5 Conclusion Sustainability issues have deserved a prominent role on the agenda of many governments and have therefore aroused the interest of society, in particular, the various institutions, businesses and citizens. In companies, CSR is already seen as a business opportunity and a booster of benefits, both in terms of competitive advantages and legitimacy and for the company’s own long-term survival. In the public entities, SR is inherent to its own competencies and thus implicit in the actions that these entities develop. It also highlights their role as promoters of SR through public policies. But not least, it should be noted that they should set an example by following SR practices in their own organizations thus influencing companies to adopt them. Both in the private sector and in the public sector, media scrutiny and societal pressures have required greater efficiency and transparency on the part of organizations. CSR creates new needs and information requirements for stakeholders. As the main information system, Accounting has been responding, in particular, to the reporting process. In this sense, there is a growing accounting regulation in these matters, published by the main standardizing bodies, both internationally and nationally, and rules and provisions have been created for the accounting treatment and disclosure of social and environmental issues. Reference should be made to the EU recommendation on the recognition, measurement and dissemination of environmental information in the annual accounts and management report of European companies. These regulations were the main drivers of accounting regulations in Portugal, namely NCRF 26—Environmental Matters. Thus, the Annual Reports and Accounts of the entities already show some social and environmental information, although for the most part regarding the financial aspects of environmental responsibility and mandatory disclosure. However, these documents may also make some non-financial reference to environmental and social issues, especially in the management report. The evolution of concepts such as CSR and Sustainability has led to the inclusion of these themes in the information to be disclosed to stakeholders, witnessing the proliferation of CSR reporting and/or reporting sustainability, based on social, economic and environmental dimensions. Traditional financial statements disclose financial information to stakeholders, while social responsibility reports/sustainability reports provide non-financial information on the social/environmental and governance impacts of organizations. Both the traditional financial reporting and the SR/sustainability reports should disclose relevant information, and SR reports respond to the growing demand for transparency and accountability by stakeholders, as well as provide information related to risks and opportunities not evidenced in the traditional financial reporting (KPMG, 2008). With regard to normative, accounting and legal aspects, several non-governmental organizations, such as the GRI and the UN, have taken initiatives to promote corporate social responsibility and its communication to stakeholders. The standards developed by GRI, of voluntary adoption, are an important instrument of CSR and are pointed

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out as the main reference, worldwide recognized, for the reporting of sustainability. Its aim is to harmonize the information disclosure practices in these three areas: economic, social and environmental (triple bottom line), which led to the proliferation of autonomous and independent documents of the Annual Report, such as the Sustainability Reporting. It should be noted that non-financial reporting is voluntary for most companies but has become mandatory for certain large EU companies as a result of the publication of Directive 2014/95/EU. In Portugal, the transposition made by Decree-Law No. 89/2017 constitutes a challenge for companies that are covered by this law, taking into account that it is already applicable since 2017, i.e. the reports published in 2018. This law may imply for some companies the need to deepen some areas, such as the identification and management of risks and the formalization and monitoring of policies. The need for a non-financial reporting is already clearly identified, and the studies developed by KPMG (2008, 2015, 2017) show that more and more companies publish specific reports on sustainability issues, presenting information that is not governed by principles or standards accounting policies. However, this type of reporting does not allow a comprehensive and integrated analysis of the organization’s performance. Thus, it is only possible to add value when integrating all the organizational information, relating the strategy, risks and opportunities with the organization’s governance, and the management of economic, financial, social and environmental performance. Investors and other stakeholders have been gradually pressing for the existence of an Integrated Report, the purpose of which is to report financial and non-financial information under duly defined parameters. This type of report encompasses the activities carried out by the entity and its impacts in a more holistic perspective, by aggregating financial and non-financial information, in order to understand not only how companies, manage economic and financial performance but also the themes of sustainability and social responsibility (Triple Bottom Line). In sum, the integrated report aims at improving the quality of information and the comprehensiveness of management responsibilities at the level of “capitals” and the interdependencies between them; the diffusion of a more cohesive and efficient approach to corporate reporting; and cooperation in the adoption of integrated thinking in decision-making that will enable value creation in the short, medium and long term (IIRC, 2011). Two years have passed since the definition of the United Nations SDGs under Agenda 2030, with business and government/public sector playing a key role in helping to achieve SDGs. In this sense, it is important to align the organizations’ strategy and the organizational report with the SDGs, giving the stakeholders the current level of commitment to these objectives.

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References Aerts, W., Cormier, D., & Magnan, M. (2006). Intra-industry imitation in corporate environmental reporting: an international perspective. Journal of Accounting and Public Policy, 25, 299–331. Chartered Institute of Management Accountants (CIMA). (2016). Integrated Report in the public sector. http://integratedreporting.org/wp-content/uploads/2016/09/IR-in-the-Public-Sector-CIM ACGMA.pdf. Commission of the European Communities. (2006). Implementation of the partnership for growth and jobs: Making europe a pole of excellence in terms of corporate social responsibility. COM (2006) 136 final. Retrieved from http://www.dgae.gov.pt/servicos/sustentabilidade-empresarial/ responsabilidade-social-das-empresas.aspx. Cueto Cedillo, C. (2010). La responsabilidad corporativa de los Gobiernos y Administraciones Públicas: Fundamentos y soluciones innovadoras desde el sector público local. XIV Encuentro AECA, Coimbra, Portugal, 23–24 setembro. Decreto-Lei n.º 89/2017, de 28 de julho - divulgação de informações não financeiras e de informações sobre a diversidade por grandes empresas e grupos. Diretiva 2014/95/UE do Parlamento Europeu e do Conselho, de 22 de outubro de 2014, que altera a Diretiva 2013/34/UE no que se refere à divulgação de informações não financeiras e de informações sobre a diversidade por parte de certas grandes empresas e grupos. Eccles, R. G., & Serafeim, G. (2015). Corporate and integrated reporting: A functional perspective. In S. Mohrman, J. O’Toole & E. E. Lawler (Eds.), Corporate stewardship: Organizing for sustainable effectiveness (pp. 156–173). Sheffield, UK: Greenleaf Publishing. Ernest & Young. (2014). Integrated reporting—Elevating value. Ernst & Young. Obtido de https://www.ey.com/Publication/vwLUAssets/EY-Integrated-reporting/%24FILE/EY-Integr ated-reporting.pdf. European Commission. (2011). Corporate social responsibility: A new EU strategy for the period 2011–2014. COM (2011) 681 final. http://www.europarl.europa.eu/meetdocs/2009_2014/doc uments/com/com_com(2011)0681_/com_com(2011)0681_pt.pdf. Frey, M., Marcuzzo, J., & Oliveira, C. (2008). O Balanço Social como ferramenta de transparência para o setor público municipal. Revista Universo Contábil, 4(2), 75–92. ISSN 1809-3337. Global Reporting Initiative (GRI). (2005). Sector Supplement for Public Agencies, Pilot Version 1, incorporating an abridged version of the 2002 Sustainability Reporting Guidelines, March. Global Reporting Initiative, Amsterdam. Guthrie, J., Manes-Rossi, F., & Orelli, R. L. (2017). Integrated reporting and integrated thinking in Italian public sector organisations. Meditari Accountancy Research, 25(4), 553–573. https://doi. org/10.1108/MEDAR-06-2017-0155. International Integrated Reporting Council (IIRC). (2013). The international framework. Retrieved from www.theiirc.org. International Integrated Reporting Council (IIRC). (2011). Towards integrated reporting: Communicating value in the 21st century. International Integrated Reporting Council. Obtido de http:// integratedreporting.org/wp-content/uploads/2011/09/IR-Discussion-Paper-2011_spreads.pdf. KPMG. (2008). KPMG international survey of corporate sustainability reporting 2008. KPMG. (2015). KPMG survey of corporate responsibility reporting 2015. https://home.kpmg/con tent/dam/kpmg/pdf/2015/12/KPMG-survey-of-CR-reporting-2015.pdf. KPMG. (2017). KPMG survey of corporate responsibility reporting 2017. https://assets.kpmg/con tent/dam/kpmg/xx/pdf/2017/10/kpmg-survey-of-corporate-responsibility-reporting-2017.pdf. Lamprinidi, S., & Kubo, N. (2008). Debate: The global reporting initiative and public agencies. Public Money Manage, 28(6), 326–329. Moon, J. (2004). Government as a driver of corporate social responsibility (Research Paper Series Nº 20-2004). International Center for Corporate Social Responsibility. Nottingham University. The United Kingdom. Navarro Espigares, J. L., & Hernández Torres, E. (2005). Responsabilidad Social Corporativa en el ámbito del setor público. XIX Reunión Anual Asociación Internacional de

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Economia Aplicada - ASEPELT, pp. 1–26. Badajoz. España. 8–15 Junio. Disponível em http://www.asepelt.org/ficheros/File/Anales/2005%20-%20Badajoz/comunicaciones/respon sabilidad%20social%20corporativa….pdf. Navarro, A., Ortiz, D., & Alcaraz, F. (2016). Online dissemination of information on sustainability in regional governments. Effect of technological factors. Government Information Quarterly, 33(1), 53–66. Oprisor, T., Tiron-Tudor, A., & Nistor, C. (2016). The integrated reporting system: A new accountability enhancement tool for public sector entities. Audit Financial, Year XIV, 7(139), 747–760. PricewaterhouseCoopers-PWC. (2013). Point of view: Integrated reporting—Going beyond the financial results. https://www.pwc.com/us/en/cfodirect/assets/pdf/point-of-view-integrated-rep orting.pdf. Ramos, G., & Abrantes, J. (2008). Responsabilidade social empresarial e o Desenvolvimento organizacional - aplicação à Escola Superior de Gestão de Idanha-a-Nova. GESTIN. VII, 7, 23–142. Ribeiro, V., & Monteiro, S (2018). Social and environmental accounting (SEA) research in public sector: the Portuguese case. In D. Crowther, S. Seifi & T. Wond (Eds.), Responsibility and governance: The twin pillars of sustainability, series: Approaches to global sustainability, markets, and governance (pp. 215–236). Spring Nature Singapore Pte Ltd. Ribeiro, V., & Monteiro, S. (2015). Public and private sector environmental reporting: Mandatory or voluntary regulation? Revista de Ciências Empresariais e Jurídicas, no, 26, 163–188. Tort, L. E. (2010). GRI reporting in government agencies. Amsterdam: Global Reporting Initiative. Retrieved from http://www.globalreporting.org. World Commission on Environment and Development. (1987). Report of the world commission on environment and development: Our common future, UN Documents. http://www.un-documents. net/wced-ocf.htm.

Chapter 9

CSR and Nation Building Agenda in India: An Accounting Framework for “Multiplier” Effect of Corporate Social Responsibility Taral Pathak and Ruchi Tewari Abstract Corporate Social Responsibility (CSR) goes through various stages of evolution and integration which is researched and detailed by Visser (Journal of Business Systems, Governance and Ethics 5:7, 2010), and according to this framework different kinds of values are generated for a target group of stakeholders; this should find a reflection in the way CSR is accounted for. The current study is based in India and proposes to do the same to ensure CSR implementation, and its cost and benefits are being fairly represented in books of accounts. Recent research on CSR confirms the existence of the “social impact hypothesis” (Waddock and Graves in Strategic Management Journal 18:1–34, 1997) suggesting that better and sincere CSR performance results in not only fulfilling stakeholders’ expectations but also building stakeholder’s trust (Verma and Singh in IIM Kozhikode Society & Management Review 5:1–13, 2016), which in turn may lead to an enhanced reputation and superior financial performance for the organizations. The latter half of the chain effect, i.e. stakeholder trust leading to enhanced reputation which in turn leads to superior financial performance is defined by the authors as the “multiplier effect” of CSR activities. Law and accounting standards play an important role in establishing a framework for corporate commitment and management discipline toward CSR activities (Aras and Crowther in global perspectives on corporate governance and CSR, Gower publishing, 2009). According to Krstic and Dordevic (Economics and Organization 7:335-348, 2010)), no longer can the accounting profession afford to be a mere witness to the core changes happening in modern companies. The main argument in legislating CSR activities for Indian companies is the recognition of a vital role by corporates in Nation Building. Therefore, any outflow of funds incurred during the “multiplier phase” of CSR activities should not by default be expensed in the profit and loss statement. The current paper recommends the measurement of intangible assets arising out of nation building activities by corporates during the multiplier phase. T. Pathak · R. Tewari (B) MICA-the School of Ideas, Ahmedabad 380058, Gujarat, India e-mail: [email protected] © The Editor(s) (if applicable) and The Author(s), under exclusive license to Springer Nature Singapore Pte Ltd. 2020 D. Crowther and S. Seifi (eds.), CSR and Sustainability in the Public Sector, Approaches to Global Sustainability, Markets, and Governance, https://doi.org/10.1007/978-981-15-6366-9_9

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Keywords Corporate social responsibility (CSR) · Nation building · Phases of CSR · Intangible CSR assets · Accounting framework and Conceptual model

9.1 Introduction Nation building, as a field of study, draws from various disciplines like political science, sociology, economics, psychology, etc. because it entails a socio-politico function which has distinct implications on the human psyche and well-being. Alesina and Reich (2015) defined nation building as, “as a process which leads to the formation of countries in which the citizens feel a sufficient amount of commonality of interests, goals and preferences so that they do not wish to separate from each other” while Lowe (1970) mentioned that popular support for rapid change is imperative for nation building. One of the popular means to bring in change and build a nation is the public policy (Mulligan et al. 2004). Internationally, evidences from the political history of France, Italy, etc. reflect the use of public policy in the domains of education, military, tax impositions, etc. for the purpose of nation building. Very recently, the government of India (GoI) amended the Companies Law, 2013, and made corporate social responsibility (CSR) mandatory and stated that, “The rationale behind CSR legislation is not to generate financial resources for social and human development since the resource gap, if any, for such development or social infrastructure could have been met by levying additional taxes/cess on these corporates. Therefore, CSR should not be interpreted as a source of financing the gap in inclusive growth. Use of corporate innovation and management skills in the delivery of ‘public goods’ is at the core of CSR implementation by the companies” (Ministry of Corporate Affairs 2015). Under the circumstances, it is obvious that corporates are not expected to pursue defensive or mere compliance-oriented CSR. However, only strategic, systemic (Visser 2010) and internalized CSR can lead to sustainable development and contribute to nation building over the long term. Hollender and Breen (2010) stated that most CSR activities presently being conducted by firms fall into the category of doing “less bad” rather than “doing good” and therefore, Visser (2010) suggested that a shift in CSR at both the meta level and micro level will take place and the entire Western concept of CSR will give way to a more culturally diverse concept. The cultural heritage of India is reflected in the Sanskrit term “Vasudhaiva Kutumbakam” which means “the entire world is one family”. This concept is at the heart of the proposed “Internalized CSR” approach. The Gandhian vision of respect for all forms of life, nonviolent conflict resolution and holistic development is an extension of the concept of Vasudhaiva Kutumbakam. If Indian firms believe that the entire world is one family and thus inculcate CSR in their DNA, then they would move beyond Visser’s last stage. “Internalized CSR” starts where “Systemic CSR” ends and it proposes to go beyond innovating business models, processes, products and services. When a corporate gets to the stage of Internalized CSR, it is assimilated inside the company’s ethos, belief system, vision and mission, policies, processes,

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products and services, and its conduct with the rest of the world. The global move to create a sustainable global order is also based on a similar ideology, and to see a sustainable world, it is imperative that corporate and business entities begin to internalize CSR and accept their larger role in the frame of business and society. Long-standing ethical companies like “Ford”, “Rockfeller”, “Tata”, etc. are real-life examples of good corporate citizenship. But the question at the heart of this issue is, why is this attitude to CSR limited to a few companies and what best can be done to find a solution such that CSR can be employed as a tool to create a win-win for the business and society. Internalized CSR will result in nation building and through the multiplier effect, the organization experiences social as well as financial benefits of “Internalized CSR”. Al-tuwaijri et al. (2004), Burnett and Hansen, (2008), Erhemjamts et al. (2013) and Rodgers et al. (2013) reported a positive relationship between CSR and Financial Performance (FP) which provides grounds in the stakeholder theory (Freeman, 1984). This relationship leads to two hypotheses—“slack-resource hypothesis” (Preston and O’Bannon 1997) indicating that better FP leads to the availability of extra resources which can be channelized into CSR while “social impact hypothesis” (Waddock and Graves 1997) suggests that better performance across the various dimensions of CSR indicates fulfilling stakeholders’ expectations which in turn leads to an enhanced reputation and reflects as better FP of the companies and vice versa. This view furthers into positive synergy hypothesis which supposes that improved CSR leads to enhanced FP which finds a cyclical channel into CSR activities (Allouche and Laroche, 2005), and, therefore loops the social impact hypothesis and the slack resources hypothesis which as Waddock and Graves (1997) put, “form a simultaneous and interactive positive relation between CSP and FP, forming a virtuous circle”. Given the fact that the multiplier phase can result in future economic benefits, the accounting system needs to have adequate provisions for the recognition of tangible or intangible assets generated as a result of CSR activities. The Guidance Note on Accounting for Expenditure on CSR Activities, issued by ICAI on 15th of May, 2015, states that a company may decide to undertake its CSR activities in the following three ways: 1. Making a contribution to the funds as specified in Schedule VII to the Act; or 2. Through a registered trust or a registered society or a company established under Sect. 8 of the Act by the company; or 3. In any other way in accordance with the CSR Policy Companies Rules, 2014. The third point above basically means that the company carries out the CSR activities on its own. It is this approach that is central to the idea of the multiplier phase. When the company itself carries out CSR activities, the chance of a random, residual approach to CSR diminishes since a lot more is at stake. The CSR definition used by European Commission states that “CSR stands for responsible business practices in the respective company’s actual core business” (National Strategy for Corporate Social Responsibility—Action plan for CSR—of the German Federal Government). Therefore, unless the company on its own carries out CSR activities,

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it would fail to reflect in its DNA and each and every business process, decisionmaking and stakeholder engagement activity. Godfrey et al. (2009) states that CSR has an insurance-like property and in case of a negative event, the goodwill generated as a result of the CSR activities has a tendency to absorb the negative impact. It is during this multiplier phase that the outflows of CSR activities should be capitalized in the Balance Sheet and not expensed in the Profit and Loss (P&L) statement while in the currently available system, CSR is still booked under the P&L on account of which organizations clearly see CSR as an expense than an asset. The current paper makes an attempt to present a conceptual framework for CSR.

9.2 CSR in a Global Context The role, concept and impact of CSR have sharpened over a period of time. Friedman (1970) considered CSR as a cost according to the shareholder theory. On the other hand, Freeman (1984) considered it to be a strategic tool under the stakeholder theory. The earliest imprints of CSR can be traced back to the 1800 s with the dawn of Industrial Revolution. During these days, CSR was mainly carried out through philanthropic activities for the purpose of engaging with external stakeholders (Carroll, 2008). Over a period of time, firms have moved beyond compliance-based CSR to strategic CSR, which involves integrating CSR with the firms’ core business, development of CSR policy, crafting strategic activities that create competitive advantage, implementation, reporting and auditing. All of this taken together improves the firms’ reputation, brand awareness and goodwill. (Alcaniz et al. 2010; Hur et al., 2014; Walsh et al., 2003). Frederick (2008) described CSR at the macro- and micro levels and emphasized the need to integrate the two levels. According to him, CSR evolved in a series of stages as summarized in Table 9.1. The common observation across all the stages is that CSR started at the macro level, i.e. top-level managers and moved toward the micro, i.e. people level, i.e. child care, meals, health care for families and individuals. Visser (2010) argues that CSR as a governance system has failed unless it reincarnates itself in the form of Systemic CSR or radical CSR or CSR 2.0. Systemic CSR is based on the concepts of creativity, scalability, responsiveness, glocality and circularity. This new CSR built around the four elements of value creation, good governance, societal contribution and environmental integrity is likely to put to rest the argument that the purpose of businesses is to earn profits and serve shareholders. The historical progress of CSR summed up by Visser is given in Table 9.2.

9.3 CSR in India The Brundtland Commission—World Conference on Environment and Development in, 1987 and the United Nations Conference on Environment and Development in

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Table 9.1 Stages of CSR Guiding CSR principle

Main CSR action CSR drivers

CSR policy instruments

CSR-1 (1950s–1960s) corporate social stewardship

Corporate managers are public trustees and social stewards

Corporate philanthropy

Executive conscience and company reputation

Philanthropy and public relations

CSR-2 (196s–1970s) corporate social responsiveness

Corporations should respond to legitimate social demands

Interact with stakeholders and comply with public policies

Stakeholder pressures and government regulations

Stakeholder negotiations and regulatory compliance

CSR-3 (1980s–1990s) corporate/business ethics

Create and maintain an ethical corporate culture

Treat all stakeholders with respect and dignity

Human rights and religious-ethnic values

Mission statements, ethics, codes and social contracts

CSR-4 (1990s–2000s)

Accept responsibility for corporate global impacts

Adopt and implement global sustainability programmes

Globalization disruptions of economy and environment

International code compliance, sustainability policy

Source Frederick (2008)

Table 9.2 Stages of CSR and key enables Economic age

Stage of CSR

Modus operandi

Key Enabler

Stakeholder target

Greed

Defensive

Ad hoc interventions

Investments

Shareholders, government and employees

Philanthropy

Charitable

Charitable programmes

Projects

Communities

Marketing

Promotional

Public relations

Media

General public

Management

Strategic

Management systems

Codes

Shareholders and NGOs/CSOs

Responsibility

Systemic

Business models

Products

Regulators and customers

Source Visser (2010)

1992 have put a spotlight on Governments around the world as a result of which they have adopted sustainable development as a national goal. An emergent debate is the role of business in contributing to this objective. The Government of India (GoI) mandated corporates, which fell under the ambit of section 135 of the Companies Act 2013, to spend at least 2% of average net profits every financial year toward CSR activities as defined in Schedule VI of the Companies Act. The primary objective behind legislating CSR activities of corporates is to ensure Nation Building through their ability to innovate, engage and manage CSR activities. CSR is not a substitute

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for political action. For India, CSR offers a solution to social challenges, which could not have been achieved through Government action alone. Historically, India has a tradition of “daan”, “seva” and “zakat”. Philanthropy has been the major tool through which wealthy individuals and business houses have reached out to the lower sections of society. The private sector was also involved in India’s freedom struggle, funding of the freedom movement is still considered as one of the biggest Nation Building investments made by the private sector then. Big business houses like the Tata group embraced the concept of CSR 150 years ago when formal government guidelines were nonexistent. A brief history of the CSR landscape in India is available below (Table 9.3). Four years have gone by since it was made compulsory for corporates to undertake CSR activities. The total CSR spend by Indian corporates has reached Rs. 7,536. 30 crores (around $1 billion) for the financial year ended March 2018. The spend by top Indian companies in 2018 is 47% higher than in 2014. Health care and education received over 50% allocation out of the total CSR spend by companies. The Graph 9.1 below gives a breakup of the CSR spend of Indian companies. However, at the same time, the number of companies which haven’t spent the mandatory 2% spend has also increased. Companies have cited reasons like not being able to identify the right projects, not being able to set up necessary teams to implement the project as well as not being able to execute the projects internally or through third parties for not spending the mandatory amount. The GoI plans to revisit the CSR provisions in 2019 with a view to making them more effective. Now is the right time to review the nature of CSR expenditures incurred, the manner in which they are incurred and whether the CSR activities are aligned to the larger goal of Nation Building. Table 9.3 History of CSR India Time period

Economic currents

State role

Corporate CSR

1850–1914

Industrialisation

Colonial, extraction

Dynastic charity

1914–1947

Trade barriers for new industries

Colonial, exploitative

Support freedom struggle

1947–960

Socialism, protectionism Five year plans

Support new state; launch own rural initiatives

3960–1990

Heavy regulations

Licence raj; development failures

Corporate trusts

1991–2013

Liberalisation

Shrinking in production; expanding in social provision

Family trusts, private-public partnerships, NGO sponsorship

2013–present

Globalisation

Need to manage Introduction of inequality; new reforms to mandatory 2% rule liberalise further

Source https://www.gatewayhouse.in/a-brief-history-of-indian-csr/

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Graph 9.1 Source https://www.theatlas.com/charts/H1FwtAZbE

Over the last 3 years, two countries of the European Union (EU)—Denmark and Italy—have made CSR disclosure mandatory, and though limited studies have been done Balluchi et al. (2019), work reflects a positive impact of mandatory CSR disclosure and a larger number of companies communicating CSR and a growing CSR funds which has helped the Italy as a nation.

9.4 Accounting, CSR and Nation Building Accounting has played an important role in holding corporates accountable vis-a-vis their interactions with society. Social accounting was first heard of with the social responsibility movement of the 1960 s (Drucker 1965). Subsequently, Corporate Social Reporting (CSR) came into the reckoning to be followed by Social and Environmental Accounting (SEA). The triple bottom line approach (Planet, People and Profit) proposed by Elkington captured the essence of the sustainability of a business. More recently, the popularity of the Global Reporting Initiative (GRI) framework for reporting of social, environmental and governance information is a testimony to the importance and changing role of social accounting. Milne (1996) introduced a framework of analytical approaches to environmental resources within which to view existing and future accounting developments. Atkinson (2000) suggested the full cost accounting (FCA) method to calculate “green profits” or “green value added” to judge its impact on the external environment. Figge and Hahn (2004) proposed

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a sustainable value-added statement, which simultaneously considered economic, environmental and social aspects of a business. Gray et al. (2010) stated that social accounting is not a precise or definable concept but a “complex, diverse, amorphous and constantly changing craft”. On the other hand, Lehman (2006) suggests that “accounting is a practice which moves in a space of reason” and in it “attempts to create social change through rational assumptions perpetuate a strategy that remains caught within the confines of the present”. Therefore, the question to ask is how does accounting contribute toward taking good decisions? Or avoiding bad decisions? The majority of the body of work in accounting revolves around social accounting, which proposes additional methods and reporting frameworks on a firm’s social impact. However, the need is to bring CSR activities into the mainstream by changing financial accounting norms, which affect the financial statements, viz., the Income statement and Balance Sheet. Once corporates see that the “real” financial statements are impacted as a result of their CSR activities, a considerable change in their approach to CSR activities can be expected. To assist with the accounting of the CSR expenditure, the Institute of Chartered Accountants of India (ICAI) issued a guidance note on accounting for expenditure on CSR. It states that if CSR expenditure were incurred by making a contribution to specified funds under Schedule VII of the Act or through a registered trust or a society, the same would be treated as an expense and charged to the Statement of Profit and Loss. In case the company incurred the expenditure on its own, the same should also be charged as an expense to the Statement of Profit and Loss. It specifically mentions that “In case the expenditure incurred by the company is of such nature which may give rise to an ‘asset’, the company needs to analyze whether the expenditure qualifies the definition of the term ‘asset’ as per the Framework i.e. whether it has control over the asset, derives future economic benefits from it and can be identified separately.” However, the guidance note discourages the recognition of an asset due to CSR activities and also advises against recognizing any income generated from such assets. When the guidance note provisions are read together with Accounting Standard 26 issued by ICAI on “Intangible Assets”, it seems it is highly improbable for corporates to recognize any internally generated CSR asset, as a result of sustained CSR activities. The current accounting stand negates and contradicts the basic spirit of mandating CSR by the Government of India (GOI) for the purpose of Nation Building. Contribution toward Nation Building has to be considered as an investment and not an expenditure. It is very clear from the GoI mandate that sporadic, one-time expenses under the head of CSR will not be considered as “valid CSR expenditure”. However, a sustained investment, which is incurred in line with the CSR policy of the company and as per the recommendations of the CSR committee, is desirable. In the next section, the paper clearly lays down the proposed accounting techniques in line with the CSR framework adapted from Visser (2010).

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9.5 CSR-Multiplier Framework The CSR multiplier framework proposed by the authors builds on the CSR stages proposed by Visser (2010). It breaks up the CSR journey of an organization into two distinct phases. The non-multiplier stage consists of Defensive CSR, Charitable CSR and Promotional CSR. During this stage, the company is not likely to reap any positive benefits of the CSR activities conducted, and therefore the proposed accounting treatment is in line with the proposals of ICAI which recommends charging the CSR expenditure to Profit and Loss statement. The Multiplier stage consists of Strategic CSR, Systemic CSR and Internalized CSR. It is during this stage that businesses start making positive contributions to society, where businesses move away from profitability and move toward value creation for the “world-family”. The accounting of CSR expenditure during this stage needs to be revisited since the suggested treatment by ICAI is definitely not in line with the intent of the transactions undertaken. During this stage, the multiplier effect ensures that the company starts reaping benefits (financial or nonfinancial) of the CSR activities. Therefore, where CSR expenditures are non-revenue in nature, asset recognition for tangible CSR assets should be allowed in the books of accounts. Representation of business transactions on the face of the Balance Sheet raises stakes for the company concerned. The effort and energy put into CSR expenditures are clearly different than what they would be if the same transactions are routed through a trust or a third party-operated fund. The asset recognition criteria given in the accounting standards should be applied to such assets and any income generated through such assets may still not be recorded and expensed immediately by creating a CSR reserve. However, at the outset not allowing corporates to recognize an asset is self-defeating for GoI. The last stage, which relates to Internalized CSR, calls for recognition of intangible CSR assets. Since CSR as a concept has moved into the DNA of an organization, the chances of the existence of a CSR brand, reputation or goodwill are very high. Usually, the companies would take at least 5 years to move from the Strategic CSR stage to the Internalized CSR stage and, therefore, tests should be applied for the existence of intangible CSR assets. In case of super profits, brand premium, resilience of brand during a negative event or clear evidence of a role in Nation Building are witnessed, then the accounting fraternity should allow recognition of self-generated CSR-based goodwill/brand. The valuation of such an asset should be done based on Fair Value principles used in valuing long-term assets in accounting.

Stage of CSR

Defensive CSR

Charitable CSR

Promotional CSR

Strategic CSR

Business age

Greed

Philanthropy

Misdirection

Management

CSR multiplier framework

Public relations

Community programmes

Ad hoc interventions

Modus operandi

Multiplier stage Management systems

Non-multiplier stage

Phase of CSR

Codes

Media

Projects

Investments

Key enabler

Self-effort through top management and employees or foundation, trust, chairman’s fund

Self-effort through HR and marketing departments or foundation, trust, chairman’s fund

Shareholders and NGOs/CSOs

General Public

Foundation, Communities Trust, Chairman’s Fund

(continued)

Recognize CSR assets to the extent of non-revenue outflows incurred. Revenue outflows to be charged to Profit and Loss statement

Treated as an expense and charged to Profit and loss statement

Treated as an expense and charged to Profit and Loss statement

Treated as an expense and charged to Profit and loss statement

Stakeholder target Suggested accounting treatment

Sporadic Shareholders, self-effort Government and projected outward Employees

Implementation mechanism

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Systemic CSR or CSR 2.0 or game-changing CSR

Internalized CSR

Responsibility

Assimilation (internalization*)

Phase of CSR

Social conscience embedded in decision-making across the board

Business models

Modus operandi

Imbibing ethics

Products

Key enabler

Regulators and customers

Recognize intangible CSR assets based on fair valuation principles

Recognize CSR assets to the extent of non-revenue outflows incurred. Revenue outflows to be charged to profit and loss statement

Stakeholder target Suggested accounting treatment

Internalized by All stakeholders management, including society employees and all and environment stakeholders

Self-effort through all levels of management, employees and integration of different stakeholders

Implementation mechanism

Source Developed by the authors * John Finley Scott (1971) defined Internalization as a metaphor in which something (i.e. an idea, concept and action) moves from outside the mind or personality to a place inside of it. At this final stage of CSR, the organization practicing CSR becomes a torchbearer for not only its own industry but also for the corporate world at large. The practicing organization has a reputation in the market because of the multiplier effect

Stage of CSR

Business age

(continued)

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Lowe, J. (1970). Adult Education and Nation Building. Edinburgh: Edinburgh University Press. Milne, M. J. (1996). On sustainability; the environment and management accounting. Management Accounting Research, 7(1), 135–161. Ministry of Corporate Affairs. (2015). Report of the High Level Committee. At http://companiesact.in/mailer/HLC report 05102015.pdf Accessed on 24th July, 2020. Mulligan, C. B., Gil, R., & Sala-i-Martin, X. (2004). Do democracies have different public policies than nondemocracies. Journal of Economic Perspectives, 18, 51–74. Preston, L. E., & O’Bannon, D. P. (1997). the corporate social-financial performance relationship: A typology and analysis. Business and Society, 36(1), 419–429. Rodgers, W., Choy, H. L., & Guiral, A. (2013). Do investors value a firm’s commitment to social activities? Journal of Business Ethics, 114, 607–623. Scott, J. (1971). Internalisation of norms: A sociological theory of moral commitment. Verma, P.,& Singh, A. (2016). Fostering stakeholders trust through CSR reporting: An analytical focus. IIM Kozhikode Society and Management Review, 5(2), 1-13 Visser, W. (2010). The Age of responsibility: CSR 2.0 and the new DNA of business. Journal of Business Systems, Governance and Ethics, 5(3), 7 Waddock, S., & Graves, S. (1997). The corporate social performance—Financial performance link. Strategic Management Journal, 18(4), 1–34. Walsh, J. P., Weber, K., & Margolis, J. D. (2003). Social issues and management: Our lost cause found. Journal of Management, 29(6), 859–881.

Chapter 10

Why Some Public Accounting Reforms Tend to Fail: Evidence from Belgian Public Accounting Reform Christos Tsatsis

Abstract In the past decade, public sector, in the strait idea of new public management (Hood, 1991, 1995) many countries did undertake public accounting reform to improve the performance of the public sector accounting. Our main research question is therefore to find how public accounting reform in Belgium does improve the performance of a public entity. Political promoters drive the accounting reform, while, as a controlling entity, they generally have only very imperfect information about the structure they controlled. It is a perpetual case of information asymmetry. This reform could be the change in public management that drives the content of the accounting reform. Meanwhile the content of the reform points out the tool we need for this accounting reform. While the tool used has an impact on the institution and its organization and influences itself the organizational change. Our research is based on neo-institutional theory of (Powell & DiMaggio, 1991) while the other is based on the Agent-Principle theory (Broadbent, Dietrich, & Laughlin, 1996; Mayston, 1993) and its rare case of market failure (Akerlof, 1970). Unlike other countries (Caruana, 2014; Jorge, 2003), public accounting reforms in Belgium took place in more than 30 years since the start point is 1991 (Moniteur belge, 1991) and it is expected to be finished in 2021 (Moniteur belge, 2014a, 2014c). The very long process reform is something very unusual which is mainly due to the absence of a strong political commitment (Ghysels, Phan, & Tsatsis, 2011; IFAC, 2011, p. 14). This absence was also stressed out by the Court of Audit; The government’s perspective was presented by Budget Minister Freya Van Den Bossche. It expressed non-partisan support for the introduction of accrual accounting, mainly because of the high costs associated with it, and argued for transaction-based budget accounting. The legislation adopted and the possibilities offered by the Fedcom project do not, however, rule out taking the step, in the future, towards a partially double accounting (Cour des comptes, 2007, p. 29). C. Tsatsis (B) Centre de Comptabilité et Contrôle, Universite Libre de Bruxelles, CP 102 Av. FD Roosevelt 50, Brussels 1050, Belgium e-mail: [email protected] © The Editor(s) (if applicable) and The Author(s), under exclusive license to Springer Nature Singapore Pte Ltd. 2020 D. Crowther and S. Seifi (eds.), CSR and Sustainability in the Public Sector, Approaches to Global Sustainability, Markets, and Governance, https://doi.org/10.1007/978-981-15-6366-9_10

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Translated from French: «Le point de vue du gouvernement a été présenté par madame Freya Van Den Bossche, ministre du Budget. Elle s’est déclarée non partisane de l’introduction d’une comptabilité double, principalement en raison des coûts élevés y associés, et a plaidé en faveur d’une comptabilité budgétaire sur la base des transactions. La législation adoptée et les possibilités offertes par le projet Fedcom n’excluent cependant pas de franchir le pas, à l’avenir, vers une comptabilité en partie double» (Cour des comptes, 2007, p. 29). This long period of uncertainty does create some conditions to deviate from initial reform since time is provided to alter the initial conditions of the reform. The aim of this paper is to underline why and how those who are in charge of that particular reform implementation are likely to deviate from the initial reform. Our final goal is to develop a model in order to test it with the main stakeholders of this reform to understand why and how accounting has been shaped by the environment and the rules and how “new accounting” shaped in turn the environment. As Littleton said a long time ago, “Accounting is relative and progressive. The phenomena which form its subject matter are constantly changing. Older methods become less effective under altered conditions; earlier ideas become irrelevant in the face of new problems. Thus surrounding conditions generate fresh ideas and stimulate the ingenious to advise new methods. And as such ideas and methods prove successful they in turn begin to modify the surrounding conditions. The result we call progress” (Littleton, 1933) quoted by (Napier, 2006, p. 451). Keywords Public accounting · New public management · Agent principle

10.1 Introduction Article 1 of the Belgian Constitution states that “Belgium is a federal state made up of communities and regions” (Senat belge, 2019). This federal state with a double layer of federalism which are communities and regions exists because unlike other federal states like Germany or the United States of America, Belgians do not all share the same official language. This means that in order to make all this work the side of traditional regional level of authority, called regions, which have powers for “‘territorial issues’, such as public works, agriculture, employment, town and country planning and the environment”. Communities “are delimited on linguistic grounds, relate to education, culture, youth support and certain aspects of health policy” (Federal Public Service for Foreign Affairs & Federal Public Service for the Chancellery of the Prime Minister, 2015, p. 4) are the second layer of this federal state. Working on the process of public accounting reform in Belgium since the early 2010s, the question, “Why some accounting public reforms tend to fail?” arise from the experience of the process itself. I do have the chance to endeavor this question

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from multiple points of view since my background permits me to do it.1 Unlike other researchers who “generally speaking, the authors in our review mainly stick to their academic background and seem to take a rather distant stance from practice” (Van Helden, 2005, p. 114). My background permits me to tackle this question from a practical point of view. To be fair, it is wrong to state that the process failed. Littleton, by stating that accounting is both relative and progressive (Littleton, 1933) finds out the true nature of accounting. We should therefore reformulate failure as the lack to deliver the expected result within the available time to do it. The Belgian case is also very interesting since we are not speaking about the accounting reform of one state but rather the accounting reform of nine states.2 This matter-of-fact permit to eliminate the bias of legislation in our analysis since the reform is based on the same law. Belgium is, in the meantime, a case of good and bad students since Belgian federal governments provide both a best-case and worst-case scenario of the reform. The idea of this research arises from a conference with Prof van Caille. While I was enumerating my finding of some years of research, he points out in one hand my big ambition to apply Luder’s model in a doctoral research (Lüder, 1992, 2002). In the other hand that the results, I’ve found lack of theoretical background, which seems to be a common statement in my field “public sector accounting research continues to accommodate a very large proportion of work without any clear theoretical base alongside studies explicitly mobilising a diverse set of theoretical perspectives” (Modell, 2013, p. 100). According to the first findings we had, it was proposed that neo-institutional theory could be suitable to tackle the process of the reform while the problems identified within the process should/could be used using Agent-Principle theory. Questions raised from this perspective are complex and could be summarized such as 1. The change in public management drives the content of the accounting reform. 2. The content of the reform points out the tool we need for this accounting reform. 3. The tool used has an impact on the institution and its organization and influences itself the organizational change. The scope of this early stage draft is to pick up theories suitable for the process of Belgium to understand why and how the accounting processes itself. The goal is to develop a framework within which we can ground our research for a better understanding of why, within the same country, some public accounting reforms were succeeded and why other public accounting reforms were wrong. 1I

have a degree in accounting and a master’s in economics. In the meantime, I did realize few missions as a consultant in public sector accounting working as management controller in a public sector firm and be a teacher in the high education system. 2 One in federal level (Belgium), three communities (the Flemish Community, the French Community and the Germans-peaking Community), three regions (the Brussels-Capital Region, the Flemish Region, and the Walloon Region), and two community bodies within the Brussels-Capital Region which are the only two language-speaking community.

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10.2 Background Research in public sector management and public sector accounting is quite old, and the first theories arise in the late 80s (Hood, 1991; Klaus Lüder, 1989). The first literature review started in the meantime (Broadbent & Guthrie, 1992) and actual scholars (Broadbent & Guthrie, 2008; Goddard, 2010) tend to prove that research in public accounting is a “mature field of research” (Jacobs, 2012, p. 2). Two theories we found suitable for our research is the Neo-Institutional theory and the Agent-Principle theory. Thus, we found afterward that those two frameworks are the most common framework in public accounting research. Van Helden (2005, pp. 103 and 108) and Goddard (2010, pp. 78–80) point out some theories used. Jacobs, in the paper of 2012 “map the theorisation in public sector accounting research. As such, my aim was to identify what was happening” (Jacobs, 2013, p. 112) using the framework developed by van Helden and Goddard in a large-scale analysis which shows that from 758 papers. The main findings are that only 47% of the papers used a ground theory and within them the two most popular theories are neo-institutional theory for 25% and economic theory for 20% (Jacobs, 2012, p. 5) which tend to reinforce the initial findings we had with Professor van Caille. Classical Neo-institutional theory was used by (Covaleski, Dirsmith, & Michelman, 1993), based on (DiMaggio & Powell, 1983; Meyer & Rowan, 1977) they stress the importance of organizations conforming to societal norms of expected practices in order to “express and demonstrate a conformity with institutionalized rules and expectations” (Covaleski et al., 1993, p. 76). Furthermore “power conditions the decoupling that may take place between external imagery and internal social and technical operating processes” (Covaleski et al., 1993, p. 78). This idea of “isomorphism” (DiMaggio & Powell, 1983, p. 149; Meyer & Rowan, 1977, p. 355) and “legitimacy” (DiMaggio & Powell, 1983, p. 150; Meyer & Rowan, 1977, p. 353) the main trend to multiple research in public accounting. Increasing legitimacy is done by “incorporate the practices and procedures defined by prevailing rationalized concepts of organizational work and institutionalized in society” (Meyer & Rowan, 1977, p. 340). “An organization that incorporates in its formal structure practices and procedures that are institutionalized in society increases its legitimacy and its survival prospects (…) Accounting practices and personnel selection among other technical procedures ‘become taken-for-granted means to accomplish organizational ends’and, as institutionalized techniques, they ‘establish an organization as appropriate, rational, and modern” (Gomes, Carnegie, & Rodrigues, 2008, p. 1149). This incorporation of non-binding rules creates what we call an isomorphism (DiMaggio & Powell, 1983, p. 149). Isomorphism is “the constraining process that forces one unit in a population to resemble other units that face the same set of environmental conditions” (Gomes et al., 2008, p. 1150). DiMaggio and Power identified three empirical forms of isomorphism: coercive, mimetic, and normative. (DiMaggio & Powell, 1983, p. 150):

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– “Coercive isomorphism results from formal and informal pressures exerted on organizations by other organizations upon which they are dependent as well as cultural expectations in the society in which organizations function” (DiMaggio & Powell, 1983, p. 150). It came from political influence and legitimacy; therefore, pressures may be attributed to government mandates, such as certain accounting practices and practical procedures of international standards adoption (ISO 9001). – Mimetic isomorphism emerges under uncertainty as a powerful force that encourages imitation. Organizations will model themselves on similar organizations in their field whose practices are considered to be legitimate. – Normative isomorphism is derived from two key aspects of professionalization: formal education and professional networks that span organizations and across which new models and practices diffuse rapidly (DiMaggio & Powell, 1983, p. 152). These three forms of institutional pressures are useful categories for understanding the actions of stakeholders and can be applied in public accounting today. More especially, the questions we’ve raised before have already been theorized by neoinstitutional theory since “the role that organizational actors in their fields play in interacting with the environment and interpreting the meanings of the contexts to construct and re-construct their environment” (Robson, Humphrey, Khalifa, & Jones, 2007, p. 415). To sum up, Neo-Institutional theory states that organizational actors try to increase legitimacy by increasing isomorphism. In accounting field this happens quite often when, for instance, European Community passes the Regulation (EC) No 1606/2002 of the European Parliament and of the Council of July 19, 2002 on the application of international accounting standards. This regulation decides to adopt international accounting standards made by a private standard setter for all the listed companies. This regulation does include coercive and mimetic isomorphism which we point out in the following sentences: "(2) In order to contribute to a better functioning of the internal market, publicly traded companies must be required to apply a single set of high quality international accounting standards for the preparation of their consolidated financial statements. Furthermore, it is important that the financial reporting standards applied by Community companies participating in financial markets are accepted internationally and are truly global standards. This implies an increasing convergence of accounting standards currently used internationally with the ultimate objective of achieving a single set of global accounting standards. (5) It is important for the competitiveness of Community capital markets to achieve convergence of the standards used in Europe for preparing financial statements, with international accounting standards that can be used globally, for cross-border transactions or listing anywhere in the world (6) On 13 June 2000, the Commission published its Communication on “EU Financial Reporting Strategy: the way forward” in which it was proposed that all publicly traded Community companies prepare their consolidated financial statements in accordance with one single set of accounting standards, namely International Accounting Standards (IAS), at the latest by 2005. (7) International Accounting Standards (IASs) are developed by the International Accounting Standards Committee (IASC), whose purpose is to develop a single set of

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global accounting standards. Further to the restructuring of the IASC, the new Board on 1 April 2001, as one of its first decisions, renamed the IASC as the International Accounting Standards Board (IASB) and, as far as future international accounting standards are concerned, renamed IAS as International Financial Reporting Standards (IFRS). These standards should, wherever possible and provided that they ensure a high degree of transparency and comparability for financial reporting in the Community, be made obligatory for use by all publicly traded Community companies.” (European Parliament and of the Council, 2002)

Agent-Principle theory takes the problem in the opposite way. Since NeoInstitutional theory tries to identify how legitimacy can be increased, Agent-Principle theory states how asymmetry information impeaches the market to work properly and could lead to market failures. Principle (P) hires an Agent (A) for a specific task but the asymmetry information leads to the point that the principle cannot motivate the agent. The example of the “traveller in an unknown area who cannot be sure a taxi driver takes the best route to a destination” is the best example (Broadbent et al., 1996, p. 266). Broadbent et al. (1996) argues that asymmetric information could be either hidden information from the agent (known as adverse selection), either hidden action for the agent (known as moral agent). Adverse selection is an ex-ante problem which can be solved by the clear specification of the relationship between resource inputs and outputs. Moral agent problem is an ex-post problem which according to authors principal is uncertain ex-ante and requires the same utilities as ex-post. In public sector accounting, the issues were more about accountability (Broadbent et al., 1996; Mayston, 1985, 1993). Akerlof theory is used as well for healthcare sector (Belarbi, El-Refae, & Abu-Rashed, 2012; Dassiou, Langham, Nancarrow, Scharaschkin, & Ward, 2015). Akerlof, in the 70s, shows up that under certain conditions of asymmetry market could collapse.3 This asymmetric information leads to the adverse section which occurs when the seller does not disclose all the information to the buyer. Researchers tend to prove that the threat of the end of business relationship thought reputation over the long run dissuade the seller from selling inferior quality products (Allen, 1984; Kaplan, Roush, & Thorne, 2007; Rogerson, 1983; Seal & Vincent-Jones, 1997; Shapiro, 1982). Akerlof model was then adapted for other markets such as Hotel Quality (Fernández-Barcala, González-Díaz, & Prieto-Rodríguez, 2010), audit firms (Kaplan

3 (1)

It states that this market could find four kinds of cars based on two kinds of categories, new or used cars and “good” or “bad” cars (Akerlof, 1970, p. 488). (2) The seller cannot know the quality of new cars just as the buyer; therefore, both hold the same information. On contrarious, the quality of bad cars is well known by the seller which the purchaser does not. (3) The asymmetric information leads dishonest sellers to sell bad quality used cars (or lemons) at good quality prices. Eventually, buyers of used cars who cannot distinguish between good and bad quality cars use price by only offering a price as if the used car is of bad quality. (4) This lead that lemons cars drive most of the good quality cars out of the marketplace since sellers of good quality used cars are unwilling to accept the price of a bad quality used car and the market for used cars fails.

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et al., 2007). In public sector, Lane found this problem in the public enterprises efficiency.4

10.3 Similarities and Convergence, First Insights As it was shown by (Devos, Van Landeghem, & Deschoolmeester, 2011), the link between Agency and Lemon Market theory is the information asymmetry, moral hazard, and adverse selection. Similarities between those three models (1) Agency theory and (2) Lemons Theory (3) Institutional theory are straightforward: First, they all use a two-actor relationship with an initiator and a recipient, a sponsor, and a beneficiary. The initiator acts toward the recipient such as (1) “traveler hiring taxi,” (2) “buyer buying a car,” and (3) “European commission imposing IFRS to private firms to gain international legitimacy.” The initiator is, respectively, (1) the principle, (2) the buyer, (3) institutions/organizations while the recipient is (1) the agent, (2) the seller, (3) the “institutional entrepreneur” (Maguire, Hardy, & Lawrence, 2004). Second, the relationship is not equal. Agent and lemon theory are based on the economic concept of asymmetric information which supposes that the lack of certain information from the initiator. Institution theory used the concept of legitimacy which should be conformity to values and social fact (Oliver, 1991, pp. 148–149). Therefore, organizations tend to gain legitimacy which does support a leak of relationship between the initiator and the recipient. This relationship is always on the advantage to the recipient which holds more information/legitimacy. The only difference is in the outcome of this strategy in the behavior and results of the recipient in the face of the expectations of the recipient: – Agent theory shows that results of the recipient are different or against the expectations of the initiator. – Lemon theory shows that in the long run recipient deviates that much which gives the signal to the initiator that the “the game’s rigged.” – Institutional theory shows that results of the recipients embrace and even exceed the expectations of the initiator. Therefore, the problem for the initiator is how to control that the action he undertakes is understood and executed by the recipient.

4 “When public enterprises are transformed into joint-stock companies, it is vital that the positions as managers be put up for bidding. Often the managers in place demand huge pay raises when there is a switch from the one governance form to the other, but this is an example of opportunistic behaviour, or self -interest seeking with guile. Actually, this is a version of the so-called lemons problem” (Lane, 2000, p. 267).

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This is exactly the problem the Belgian legislator had with its eight recipients5 which could eventually overpower the will of the legislator. The next section will try to identify some examples of this reform.

10.4 Two Opposite Examples if the Belgian History of Accounting Reform As stated before, Belgium is European federal country with regions and communities. This means that the federal Government gives the autonomy to regions and communities to have their operational freedom. This operational freedom goes hand in hand with the freedom to operate accounting in the way which seems suitable for those entities.6 Besides, Belgium must report, as a single entity to supranational level, a bunch of economic indicators which are derived either for national accounting systems (ESA 2010 (Eurostat, 2013))7 either for their accounting system (Six-Pack directive in 2011 (Council of EU, 2011; Moniteur belge, 2014b)). Public accounting in Belgium from its creation until the beginning of this decade was purely a budget accounting system. Even if in the notion of assets, balance sheet, depreciation, have been defined since 1963 for the public accounting law (Moniteur belge, 1963), the modernization of accounting has really started in 1991 (Moniteur belge, 1991) by creating the “Commission de normalisation de la comptabilité publique”8 which had to establish the chart of accounts which will allow the integration of all budgetary, financial and patrimonial operations, and prepare the subsequent legal rules.

5 (1)

The Federal state, (2) Wallonia region, (3) Brussels region, (4) Flemish region, (5) Frenchspeaking community, (6) Dutch-speaking community, (7) German-speaking community, (8) Brussels Agency of French community. 6 «The autonomy of the Communities and Regions in setting their budgetary and accounting rules is enshrined in the special law of 16 January 1989, but it can only be exercised in compliance with general provisions common to all entities, which must be laid down by law. Federal legislation will also have to respect these general principles. Pending these principles are enacted, the provisions of State accounting continue to apply to each of the entities and any modification must take into account the repercussions for the Communities and the Regions» (La Chambre, 2003). 7 «The European Union expects Member States to provide comparable economic information, including public interventions. This aspect is gaining even more importance in the framework of Economic and Monetary Union, of which Belgium is a part. To achieve the desired uniformity, the European Commission has developed an important system of accounting standards, the European System of Accounts, the latest version of which dates from 1995 (ESA 95). An essential part of it is devoted to the intervention of the public authorities» (La Chambre, 2003). 8 Which can be translated by “Regulatory Commission of Public Accountancy.”.

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This work will end up in 2003 by the publication of three legal rules (Moniteur belge, 2003a, 2003b, 2003c) which will set the new national framework public accounting rules in Belgium called FEDCOM.9 These laws were – A general law with 19 key principles applicable to all eight public entities (Moniteur belge, 2003a) – A specific law for the Federal County which gives all the needed information to run the federal state (Moniteur belge, 2003c) – A specific regulation which modifies the power of the Cour de Comptes in accordance with the new regulation (Moniteur belge, 2003b) We should stress out that the eight federate entities passed their own regulations in order to comply with the first regulation (Moniteur belge, 2003a) (see Annex 2). Let’s take two examples of different paths taken by the legislator: The federal state, due to a weak political support the reform was delayed/postponed. Two ministers in charge of this project in 2004 and 2007 had expressed large reserves about the opportunity of the project in the face of its cost. (Khrouz, 2010, p. 250; Tsatsis, 2012). “The view of the Government was presented by Ms. Freya Van Den Bossche, budget minister. She expressed the non-partisan introduction of double bookkeeping, mainly because of high costs associated with them and pleaded for budget accounts on a transaction basis” (Cour des comptes, 2007, p. 29). In 2011, we already pinpoint that “(1) after the introduction, on January 1st, 2009, within the five pilot departments, of the aforementioned law of May 22nd, 2003, this same law as well as the related Fedcom IT project entered into force in only four departments on January 1st. 2010, six years later; 2 since the launch of Fedcom, only one decree of execution has been approved and published, whereas it is about twenty decrees10 of execution which are awaited” (Ghysels, Phan-Thanh, & Tsatsis, 2011, p. 12). In a former publication, M. Alain Bouchat, general inspector of finance, recalls that politicians have decided not to apply the reform in its entirety. «Indeed, the Council of Ministers of 9 July 2004 opted for a limited solution focused on transaction-based budget accounting, reporting in accordance with the international standards SEC 95 and COFOG 98, a management of debts and receivables as well as a analytical 9 As we quoted in 2009 (Khrouz & Tsatsis, 2009, p. 143) “The FEDCOM accounting reform of the Belgian State aims to modernize the federal accounting and integrate into one computerized accounting system (SAP). This new accounting system will be built in accordance with generally accepted accounting principles and will meet both European accounting standards and international standard IFRS and IPSAS. It will also make easier the financial analysis of annual accounts and allow the establishment of a permanent internal control. With this new system, the state will now have a new tool which will go beyond the traditional budgetary system of public accounting thanks to the addition of an accounting system inspired by the private sector model. The federal accounting system will include: (1) budgetary accounting for control purposes, (2) financial accounting for stakeholders information through financial statements and (3) cost accounting in order to calculate the cost of some services, probably according to activity-based cost management.”. 10 The list of those decrees is in Annex.

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component» (Bouchat, 2008, p. 27). Sir Bouchat deplore these delays: «The arguments put forward and the delays, even the blockages noted in the implementation of a reform so long prepared, however, give the impression that “history passes again the same plots”. Indeed, the dissatisfaction of the leaders themselves with the state budget and accounting management tools is not new (…)» (Bouchat, 2008, p. 28). Mr. Bouchat indicates that this delay in the reform creates significant problems in the information transmitted by the State to others: «In its 164th observation, the Court of Auditors reports the results of the checks it has carried out on the general account of the State (…) Examination of the accounts of changes in assets for the years 2004 and 2005 revealed that these accounts no longer give a true and fair view of the State’s wealth situation. Property, plant and equipment recorded in the property accounts do not consider significant changes, such as the sale of buildings. In the absence of unambiguous calculation bases and reliable basic information, the recognition of direct and indirect tax claims is imprecise. Successive postponements of the entry into force of the new accounting law of 22 May 2003 are partly responsible for this situation» (Bouchat, 2008, p. 35). In 2013, the question has been raised again “we see that from year to year, the federal level has each time had the concern to postpone the entry into force - specially to avoid any obligation. How can we explain this lack of willingness to come to an accountability that we did not hesitate to implement at the other levels of power? Companies have been doing it for a very long time” (Christiaens et al., 2013, p. 22). The latest report of Court of Auditors about federal-state accounts indicates that not only the latest two sets of accounts don’t give a true picture of the accounts, but furthermore, points out that the legislative framework is not yet completed while, in the meantime, this body of Court of Accounts have to certify accounting from the 2020 accounts in accordance of the 2011/85/EU Directive.11 In the opposite way, the Region of Brussels, enforce the low very quickly. «The Brussels-Capital Region and the German-speaking Community have already taken the plunge» (Baumann, 2008a, p. 7).

11 “While the quality of the general administration’s annual accounts had gradually improved until 2016, the Court notes that it has deteriorated since then. For example, the first version of the 2018 Annual Accounts had gross errors that could have been detected by a front-line check and limited analytical verification. Moreover, the second version of these accounts still does not give a true picture of the financial and wealth situation of the general administration. For some topics, many transactions are not recorded in accounts or are incorrectly recorded. This is especially the case for tangible and intangible assets, inventories, tax receivables and financial resources. (…) Finally, the Court points out that the legislative and regulatory framework remains incomplete and that current internal control measures are insufficient, which is an obstacle to a structural improvement in the quality of annual accounts. This improvement is, however, essential in view of the Court’s certification of the annual federal government from fiscal year 2020, in accordance with the law of May 22, 2003”.

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The regional regulation goes further than the law since it not only organizes the general accounts, the budget accounts, and subsidies but it takes support on this accounting reform to completely also reorganize the whole mode of internal control and specific accounting control in the respect the philosophy of the abolition of the prior approval of the court of auditors. This ruling also goes further since it gives the Court of Audit the role of the general account to attest, as does an external auditor for a commercial company, that the accounts reflect the reality of operations. The regulation is organized around a new computer tool. This choice is imposed by the will to «better administrate public authorities can no longer be conceived without the use of modern communication and information technologies» (Gruson, 2008, p. 78). Then, «ERP software offers, (…) an extensive range of real-time integrated features such as inventory and asset management, human resources management, project management, cash management, workflow and authorizations (electronic signature), internal control, information system, etc. (…) The ministry did not need a new management system as it already had an ERP package. The choice of this management system was confirmed by the evaluation made by a consulting firm: SAP is the appropriate management system for the Ministry» (Gruson, 2008, p. 78). As Mr. Gruson reminded members of the federal government in 2002 «At the technical level, for the implementation of the double-entry accounting system, the Region of Brussels-Capital has already, since 1999 and after a global analysis, and while remaining within the framework of the coordinated laws of 1991 on the accounting of the State, the implementation of an ERP-based software package operating on this principle, which entailed, in addition to the necessary training of users, the modification of certain procedures and the introduction of a workflow system and electronic approval, for example» (La Chambre, 2002, p. 14). “A word of conclusion (…) what the Brussels-Capital Region did modestly should inspire the federal and other regions. They started small, but still with SAP. Everything was not perfect, but little by little, it improves. The federal government is backing down because the cost of the inventory is going to be very high, because the computer problems have not been solved yet. Because the fact of showing the assets and management in accrual basis rather than in cash basis are all brakes that really delay the entry into force”» (Christiaens et al., 2013, p. 27). Last but not least, the latest set of accents of the Region of Brussels has not been approved by the Court of Audits since several errors of reporting do exist. Although, several subsidiaries (21 up to 23) of this Region have been approved either without any note either with one or several notes.

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10.5 Discussion This paper tries to explain the theoretical construction of the model which tries to analyze how the outcome of a particular reform designed by an initiator could deviate from the initial willpower of the initiator. We have seen that existing theories help us to explain why the outcome may be either better than expected (isomorphism), either worse than expected (agent principal), or even completely sabotaged (market for lemons). Our goal is to test and improve this model though a practical case which is the public accounting reform in Belgium. Since Belgium is a federal state, public accounting reform offers us nine different recipients of the same reform. In this paper, we try to explain the evolution over time of the reform of two extremes beneficiaries. The first one tries whether to postpone, or to reduce the scope of the reform, while the second tries to go beyond this reform by implementing the reform even before it exists. We have seen that the national standard setter (initiator) is often obliged by the European level to go beyond their initial willpower. This European sponsor seems to have more coactive power to beneficiaries since the court of Audit seems to sound the alarm of the non-conformity of a legal rule desired by Europe. The main limitation of this example is that we deal with the legislator as a unique consistent body ignoring that, from the time we started our retrospective until now, more than four governments have been given the role of this standard setter. The next step in this study is to propose a analysis grid. This analysis would be made by exploring secondary date combined to interviews and trials in order to fine-tune the analyses to the subject if this research. This research will normally take place during 2020.

10.6 Conclusion We are confident that by combining present theories, we can understand how and why the outcome of a reform managed by a recipient could deviate from the initial design made and asked by the initiator. We want to test this hypothesis based on the Belgian public accounting reform which offers a huge room for analysis. Thought, we are creating a analysis grid in order to collect, compile, compute, and report findings.

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Annexes (Mostly in French) Annex 1: List of Royal Decrees Provided for in the Draft Law on the Organization of the Budget and the Accounts of the Federal State. Source: (La Chambre, 2003, p. 117, DOC 50 1870/004)

Article

Sur proposition de

Objet

Ministre du Budget

Modalités de la constatation des droits

5 8

Fixation du plan comptable

14

Conditions auxquelles doivent répondre les pièces justificatives Conditions de leur conserva lion Conditions de leur mise à disposition du contrôle interne et externe

15

Ministres des Finances et du Budget

Modalité de tenue des livres et journaux comptables

17

Budget

Règles complémentaires de présentation des comptes annuels

18

id

Règles relatives à rétablissement et à la publication du rapport annuel

24

id

Dérogation par limite de somme, à la règle qui interdit la notification des contrats et des arrêtés de collations de subventions avant leur imputation sur crédit d’engagement

29

id

Règles applicables aux services ou aux catégories de service en matière d’organisation des opérations comptables et budgétaires Définition des fonctions de décision d’exécution, d’enregistrement, de conservation et de surveillance

31

id

Modalités d’organisation et d’intervention de l’audit interne en matière de budget et de comptabilité

33

Premier ministre et ministre du Budget Organisation du contrôle administratif, budgétaire et de gestion

37

Finances et Budget

Comptables justiciables de la Cour des comptes PROJET TERMINE

48

Budget

Conditions d’octroi des subsides

73

id

Forme dans laquelle est établi le compte d’exécution du budget de 1 administration générale

78

id

Règles de présentation du budget des services administratifs à comptabilité autonome (continued)

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(continued) Article

Sur proposition de

Objet

80

id

Règles de paiement des dotations aux services administratifs à comptabilité autonome

86

id

Règles de présentation du budget des organismes administratifs publics

87

id

Date d’établissement du budget des organismes administratifs publics et règles de transmission aux autorités compétentes

89

id

Modalités de blocage des versements des interventions de l’Etat en faveur des organismes administratifs publics en cas d’absence de budget

96

id

Règles de présentation du budget des entreprises d’État

101

Budget et Ministre dont l’entreprise relève

Règles de contrôle administratif et budgétaire de chaque entreprise d’État

107

id

Conditions pour le paiement d’avances dans une entreprise d’État

109

Finances et Ministre dont l’entreprise relève

Intérêts pour les dettes et créances entre l’État et une entreprise d’État

122

Budget

Organisation et coordination des contrôles sur place exercés sur l’emploi des subventions

133

Budget et Finances

Report de l’entrée en vigueur de la loi (au plus tard 1e janvier 2005)

In the 1st of January of 2019, only the first decree has been passed.

Annex 2: Public Accounting in Belgian Communities and Regions (Source: Ph.D. Thesis of the Author)

A

Loi du 16 mai 2003 Loi du 22 mai 2003 SEC 95

R

Décret du 25 mai 2009 relatif au règlement budgétaire de la Communauté germanophone

1er janvier 2010

R

Communauté germanophone

01 janvier 2012

R

R

R

B

M

M

A

C

Composantesa

R

Loi du 16 mai 2003 – SEC 95

Entrée en vigueur

1er janvier 2012

Décret portant organisation du budget et de la comptabilité des Services du Gouvernement de la Communauté française Décret portant organisation du budget et de la comptabilité des Services du Gouvernement wallon

Région wallonne et communauté française

Référentiels explicites

Communauté flamande Décret du 8 juillet 2011 Loi du 16 mai 2003 réglant le budget, la SEC 95 comptabilité, l’attribution de subventions et le contrôle de leur utilisation, et le contrôle par la Cour des Comptes

Textes légaux

Entités D

A

P

A

E

P

A

R

(continued)

Adaptation de la loi du 22 mai 2003 en tenant compte des dispositions du SEC95

Ce décret lui-même remplace un décret plus ancien (7 mai 2004) qui complète certaines matières Il y ajoute, notamment de façon explicite la référence aux SEC 95

Ont été modifiée en 2013 pour intégrer toute une série de dispositions consécutives au «Traité sur la stabilité, la coordination et la gouvernance au sein de l’Union économique et monétaire»

Particularités

10 Why Some Public Accounting Reforms … 179

1er janvier 2016

1er janvier 2007

Entrée en vigueur

R

R

A

R

R

B

M

M

C

Composantesa

M

M

D

R

P

E

Composante de contrôle (interne, gestion, externe) prévue par le décret, qui, puisqu’il est le plus récent, intègre les dernières exigences en matière de comptabilité publique

Une des premières entités à avoir mis en place la réforme. En pratique composante analytique embryonnaire, système poussé de contrôle (Gruson, 2009)

Particularités

cinq colonnes correspondent à: A Comptabilité budgétaire; B Comptabilité générale; C Composante analytique; D Consolidation; E Certification des comptes. Les sigles correspondant à P Présent; A Absent; R Présent et fait référence à la réglementation, S Présent sans référence à la réglementation (disparité); M Mention (arrêté à prévoir) b Traité sur la stabilité, la coordination et la gouvernance au sein de l’UEM

a Les

Décret du 24 avril 2014 portant les dispositions applicables au budget, à la comptabilité et au contrôle des services administratifs de la Commission communautaire française et des organismes administratifs publics qui en dépendent

Commission communautaire française

Loi du 16 mai 2003 SEC 95 – COFOG – TFUE - Traité sur la stabilité (…) de l’UEMb

Ordonnance organique du Loi du 16 mai 2003 23 février 2006 portant SEC 95 - COFOG les dispositions applicables au budget, à la comptabilité et au contrôle

Région de Bruxelles Capitale.

Référentiels explicites

Textes légaux

Entités

(continued)

180 C. Tsatsis

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Part III

The Role of the University

Chapter 11

The Importance of Ethics and Values for the Students in the Polytechnic of Guarda—Portugal Francisco Tomé and Ermelinda Oliveira

Abstract Ethics and values are increasingly important for the pursuit of any profession. The purpose of this study is to analyze the attitude of students of the accounting degree of the first year of higher education and the existence of ethical values and behaviors necessary for their professional future. It is intended to follow the evolution of ethical behavior throughout their academic career. The methodology used was the elaboration of a questionnaire that evaluates to what extent the moral intensity, and its several dimensions, are associated with the ethical decision-making. It was then administered to 70 students of the Management and Accounting degrees of the 1st year of higher education in Polytechnic of Guarda. Guarda Polytechnic Institute is located in a small town in the interior of Portugal. This study deals only with the student’s opinions. In the next stage, the SPSS program provided a statistical treatment of ethical and demographic variables (age and gender), in order to, detect phenomena potentially associated with ethical behavior. The results obtained from the statistical treatment are compared with similar studies and the underlying theoretical framework. The analysis of the results allowed to identify the practices most used by the students, their level of seriousness, as well as to identify the inhibiting factors of academic fraud. Finally, reflections on the implications of the practice of fraud and ways to inhibit them are presented. Keywords Fraud · Ethical decision-making · Moral intensity · Higher education

11.1 Introduction Behaviors based on codes of ethics are common practice in most institutions and in working life. Its application creates a solid organizational culture, avoids friction, and promotes well-being in most organizations. The studies of Gama et al. (2013), F. Tomé (B) · E. Oliveira Insituto Politécnico da Guarda, Avenida Dr. Francisco Sá Carneiro, n. 50, 6300-559 Guarda, Portugal e-mail: [email protected] © The Editor(s) (if applicable) and The Author(s), under exclusive license to Springer Nature Singapore Pte Ltd. 2020 D. Crowther and S. Seifi (eds.), CSR and Sustainability in the Public Sector, Approaches to Global Sustainability, Markets, and Governance, https://doi.org/10.1007/978-981-15-6366-9_11

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McCabe et al. (2001), and Witherpoon et al. (2012) demonstrate the importance of training, values, and organizational culture as the key to the economic success of most developed countries. The purpose of teaching is not limited to developing technical skills but also ethical values and principles that develop strong human skills essential to professional success. As higher education is the last step before entering work, therefore, brief training in the area of ethical behavior should be given utmost importance. The main objective of this study is to learn about the perception of the students of the Polytechnic Institute of Guarda about the frequency of fraud practices, motivations, and inhibiting factors for fraudulent practices.

11.2 Empirical Studies Conducted on the Theme Research on the topic of ethics and professionalism in organizations has been presented. There are numerous published articles, for example, Bretag et al. (2011), McCabe (1999), Donald et al. (1999), Hilbert (1987), etc., that have generated some discussion and controversy, alerting to the impact on professional and social codes of conduct (such as the sense of injustice for those students who are compliant with the regulations), but also on reputation and quality of the higher education institutions that confer the academic degrees where the frauds occur. In addition to these effects, the impact on business life, the reputation of policy, and economic decision makers and agents in a particular country (corruption, fraud, and tax evasion) cannot be overlooked. Academic dishonesty also creates problems for teachers. Academic dishonesty does not have a universal definition. From the different readings, we found that the difficulty of defining the concept of academic fraud is also associated with the different ways of quantifying it, which obviously complicates the comparisons of the several studies carried out at an international level, as stated in Teixeira and Rocha study (2010). Along with these difficulties, other authors such as Gama et al. (2013), criticize the reliability of respondents’ responses on a controversial, personal, and ethical issue. Although these obstacles remain, a number of authors have indeed shown in their results an increase in a fraudulent practice in assessments in a number of countries, thanks to the widespread use of new communication technologies, and in particular, to a decrease in students’ sense of responsibility and pride. This trend is particularly evident in the countries of southern Europe and Brazil, as evidenced by McCabe et al. (2001), Teixeira and Rocha (2010), and Crittenden et al. (2009), in their studies on student academic fraud in higher education. We can say that the phenomenon of fraud also has a cultural and social dimension associated with the context and the perception of a greater permissiveness of parents and teachers, as well as a society towards fraudulent attitudes. With regard to the type of practices most used, a predominance of “plagiarism and copy in written tests” is clearly evident, as reported in the study by Witherpoon et al. (2012).

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Regarding the reasons that lead Portuguese students to commit fraud, from the study mentioned above, the answers indicated as the most important are the “pursuit of educational success” and “better grades” and as a practice of inhibiting fraud, “a greater discussion and dissemination of the professional relevance of codes of ethics”, as well as “greater proximity to teachers”.

11.3 Methodology This study included the following steps: exploratory readings on the topic of professional ethics, preparation of the questionnaire, pretesting, information collection, database creation, statistical treatment, data analysis, and conclusions. The statistical program used was the SPSS program. In the statistical treatment, we used the univariate and multivariate analysis of the variables, and also parametric tests and factorial analysis. Students from the courses of Accounting and Management participated in this study, as it is in these degree courses where ethics and professional responsibility is increasingly important for the practice of their professional functions. In addition, the questionnaire was administered only to students who attend the first year of higher education, because it is intended over the next few years to monitor the evolution of these students during their academic path and to analyze their changes in ethical and professional values during their stay in Guarda Polytechnic, in order to, compare it with other studies carried out at a national level. The students enrolled for the first time in the degrees of Management and Accounting in the academic year 2017–18 (71 in the Management degree course and 44 in the Accounting degree course) participated in this study. Thus, we collected a non-probabilistic sample of students who attended Financial Accounting classes on April 10, 2018; (44 questionnaires) and 37.1% for the Accounting degree course (26 questionnaires). As already mentioned, the questionnaire was prepared and adapted based on the study carried out by Gama et al. (2013), for higher education at a national level The questionnaire presents only closed questions, and some innovations related to previous studies were introduced. In order to enhance the honesty and diversity of responses, Likert scales were created with five evaluation levels. In question 12 of the questionnaire, a level of intensity from 0 to 10 was created to assess the seriousness of the fraud, and thus to express more realistically the diversity of opinions. In order to value ethics and the importance of values, an additional question was created at the end of the questionnaire (question 15) to evaluate and raise students’ awareness about the importance of developing ethical values and human skills for professional success. This questionnaire is subdivided into three parts: the first one related to the sociodemographic and academic characterization of the students; the second part concerning the type of fraud practiced, the frequency and the degree of seriousness attributed to the students, and finally, the third part questioning students about

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the reasons that determine academic fraud and actions that may best inhibit it, as indicated by Malgwi and Rakovksi (2009). The data collected through a non-stratified sample was performed in the classroom after clarifying the doubts about the questions of the questionnaire and ensuring the confidentiality and anonymity of the answers.

11.4 Data Analysis The main purpose of the first part of the questions was to characterize the students in academic terms, but also to know if they had knowledge of the school rules about the ethics and values of the institution they attend. The analysis of data referring to question 1, shows that the respondents present an average age of 21.6 years, mode 19 years. Through question no. 2, it is found that 70% are female and 30% male; which is in line with the general trends of greater participation of women in higher education. For 72.7% of the students, the course was the first option of choice, while for 57.7% from Accounting it was only the first option. Concerning question no. 5, it is verified that 45.8% of Accounting students have already failed in a test held during the 1st semester, while only 34% of students from Management failed. From the analysis of question nº 7, it is possible to affirm that most students know that there is a school regulation on ethics and values in the institution (87% of the students surveyed attended Management and 72.7% of the students attended Accounting). However, only 2 students (4.6%) from Management read the regulations, while in the Accounting degree course the percentage who read these regulations rises to 28%. In the second part of the questionnaire, students were asked if they considered academic fraud acceptable. From the data analysis it was verified that only 3 students from Management, corresponding to 7.5% of the respondents, answered affirmatively; while the students from Accounting, who from the outset had greater knowledge of the regulations, 30.4% answered that committing academic fraud is perfectly acceptable. From data crossing, we observed that from those who read the regulations, only one of them agrees with the academic fraud. Regarding the types of fraud most committed by students, respondents reported predominantly that they have already committed the following frauds: providing answers to a colleague on the exam (64.3% admit having already done it), copying answers by a colleague in the exam (52.9%), copying assignments from the internet (45.7%), and consulting unauthorized material in a written test (45.7%). Of the frauds indicated in the questionnaire, the least practiced by students are the purchase of a work from a colleague (94.3% answered that they never did it), not participating in a group work but benefiting from a collective grade (94.3%), as well as presenting the same work in different disciplines (88.6%), and selling their own work to colleagues (88.6%). These results are close to the conclusions of the study

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carried out by Gama et al. (2013), that suggest the classic forms of fraud committed during the most frequent tests. Students were also asked how often they committed these types of fraud. The data made it possible to conclude that frauds most often committed are copying responses by a colleague in the exam, providing answers by a colleague in the exam, and viewing unauthorized materials in a written test. This suggests the existence of some complicity and mutual aid among students in tests and the existence of some tolerance for this type of fraud. A nonparametric Mann-Whitney test was used to investigate the existence of significant differences in relation to the following variables: (1) gender, (2) course, (3) failure, and (4) the reading of regulations. It was found that regarding these four variables there are no significant differences, for a level of significance of 0.005. When asked about severity level associated with the thirteen types of fraud studied on a scale from 0 to 10, respondents consider it more serious: not to participate in a work benefiting from the group grade (7.04), to invent data in a written work and buy a work from colleagues (7.0), as shown in Table 11.1. They do not consider a fraud to obtain the collaboration of a family member (4.7) and provide answers to a colleague in an exam (5.34), as shown in Table 11.1, which suggests the legitimation of this type of fraud. In the third part of the questionnaire the reasons that lead students to commit academic fraud, on a scale from 1-nothing important to 5-very important, were evaluated. The answers suggest that the most important reasons that lead them to commit fraud derive first from the need for success in a discipline they have already failed Table 11.1 Average related to the severity of academic fraud (Scale from 0—irrelevant to 10—very severe) Values from 0 to 10 Buying a work from a colleague

6.96

Consulting unauthorized materials in a written test

5.77

Getting family collaboration

4.77

Authorized plagiarism of a colleague’s work

5.66

Copying answers from a colleague in a written test

5.44

Copying assignments from the Internet

5.61

Not participating in group work, benefiting from the group grade

7.04

Inventing data in a written work

7.00

Presenting the same work in different disciplines

5.66

Selling to colleagues works carried out by themselves

6.89

Providing answers to a colleague in an exam

5.34

Lending colleague works done by themselves so that they present them as theirs

5.93

Allowing a colleague to share the formal authorship of a work without having participated in it

6.11

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Table 11.2 Main reasons for academic fraud Average (Values from 1 to 5) Successful safety in a discipline where he has already failed

3.55

Academic workload

3.26

Insecurity about the ability to achieve success that would not otherwise be possible

3.31

Successful safety in a discipline where he has already failed

2.62

Academic workload

3.01

Insecurity about the ability to achieve success that would not otherwise be possible

2.91

Regularity of fraudulent practice between colleagues

2.68

Insufficient pedagogical competence of teachers

2.90

Passivity of teachers in situations of fraud

2.69

Perception that the penalty is insignificant when fraud is detected

2.84

Lack of knowledge about what good academic behavior should 2.53 be Lack of debate on the subject in class with teachers

2.60

Competitive pressure among colleagues

2.47

(average 3.55), secondly from the high academic workload (average of 3.26), and third from the feeling of insecurity about their ability to achieve the success that would not otherwise be possible (mean of 3.31), as shown in Table 11.2. The data show that the most relevant reasons are related to the past experience of the student, the difficulty in obtaining approval in the discipline, and the lack of time to study, which apparently leads him/her to opt for fraud to succeed in the test. Insecurity and lack of knowledge also motivate fraud as a way to succeed. The least important reason, according to respondents, is the competitive pressure among colleagues (average of 2.47) which is in line with other studies already conducted for students from Economics and Management at a national level. Regarding the three most important reasons, the Mann-Whitney test was used to investigate the existence of significant differences in relation to the variables: (1) gender, (2) course, (3) disapproval, and (4) the reading of regulations. It was verified that in relation to these four variables there are no significant differences, for a level of significance of 0.005. Regarding the factors that may inhibit fraud (Table 11.3), students suggest a greater involvement of students in the dissemination of good academic practices (average of 3.36), the existence of a close relationship between teachers and (average of 3.36) the worsening of the penalties for fraudulent academic conduct (average of 3.03), as shown in Table 11.3. Although according to the opinion of the students, the worsening of the penalties for fraud is a very important practice, the results also show a greater proximity of the student with the teachers to discourage fraud, and more information and disclosure

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Table 11.3 Averages concerning the importance of inhibitors of academic fraud Academic fraud inhibitors

Values from 1 to 5

Worsening of the penalties for fraudulent academic conduct

3.03

Existence of a close relationship between teachers and students

3.36

Involvement of students in the dissemination of good academic practices

3.36

Impediment of connected cell phones in the exam room

2.85

Use of surveillance mechanisms and electronic fraud detection

2.71

Attendance of academic competence development programs

3.00

Attendance of psycho-pedagogical support programs

2.88

Guarantee of anonymity in reporting fraudulent behavior of colleagues

2.78

Disclosure of a school code of conduct 2.83

2.83

Delivery of a declaration of authorship/originality of the papers submitted for evaluation 2.64

2.64

Clarification sessions promoted by the school on good academic behavior

2.79

Attendance of subjects on ethics

2.59

Disclosure in the school environment of the names of students who committed fraud

2.09

Existence of compulsory oral tests

2.32

of the institution’s code of ethics in order to reduce fraud in the future. This suggests that more information can lead to more trust and loyalty. The fraud inhibitors classified as least important in the opinion of the students are the disclosure in the school environment of the name of the students who practiced fraud (mean of 2.09), and the existence of compulsory oral tests (average of 2.32). Disclosing the name of offenders and conducting oral tests are the mechanisms that least please students to reduce fraud in academia. These results are in line with the findings of the previously mentioned national study about Economics and Management students. In order to group the main reasons for fraud in categories, a factorial analysis of the data was performed. From the analysis performed, three main components were obtained, which explains 64.79% of the variance, as shown in Table 11.4. From the information obtained, we can clearly identify three factors: the first related to the student’s individual attitude towards fraud, centered on individual needs for success (Factor 1), the second related to institution-installed routines (Factor 2), and the third with institutional non-valuation with the fraud problem (Factor 3). Given the small number of observations, we can only conclude that the factorial analysis in this case is exploratory and not confirmatory. These factors suggest the need for greater dissemination of the codes of ethics among the students by the institution, lectures, and training actions to reduce academic fraud. However individual and social factors are more difficult to change in a short term.

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Table 11.4 Reasons for academic fraud (Exploratory factor analysis) Main components 1 Successful safety in a discipline you’ve ever failed

2

3

0.804

Academic workload

0.811

Insecurity about the ability to achieve success in another way

0.617

Modalities of evaluation

0.610

Little practical relevance attributed to curricular content

0.582

Insufficient pedagogical competence of teachers

0.687

Habit of fraudulent conduct since high school

0.862

Regularity of the fraudulent practice between colleagues

0.811

Perception that the penalty is insignificant when the fraud is discovered

0.653

Passivity of teachers in situations of fraud

0.756

Lack of knowledge about what good academic behavior should be

0.847

Lack of debate on the subject in class with teachers

0.652

Competitive pressure among colleagues

0.550

Nota KMO 0.787

Factor 1-Individual attitude—pressure to succeed; Factor 2-Routines installed in the institution. Factor 3-Institutional valorization with fraud problem. Respondents were also asked about the competencies that they found most important for their professional success. By analyzing the data, as expected, students are aware of the importance of human and technical competencies for their professional success, given that 84.3% of students consider them both to be very important (Table 11.5). We can affirm that the role of the teacher to change ethical behaviors, as well as the intrinsic motivation of students is quite limited, as confirmed by the study of Sivrikaya Ahmet; “there is a low positive and significant correlation between academic achievement score and extrinsic motivation interjected point” (Sivrikaya 2019). Some scholars contend that there are students who have a pathological urge to cheat. Table 11.5 Importance of technical and human skills

N Technical skills Human skills

4

Percentage (%) 5.7

2

2.9

Both (technical and human)

59

84.3

Total

66

94.3

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11.5 Conclusion The ethical perceptions regarding academic fraud of students in Management and Accounting degrees of higher education sooner or later would have a great impact and relevance on the business, social, and economic life of a country due to decisions later taken by them and their mental code of values learned throughout his school and personal life. The analysis of the students’ answers allowed us to conclude that although the majority of the students knew about the existence of school regulations in the institution, few read it curiously. In addition, while few students find fraud acceptable, most of them end up with fraud in evaluations, in particular when consulting unauthorized materials, providing and receiving replies from colleagues, and copying work over the Internet to obtain better grades. The less practiced frauds are related to the purchase of work from colleagues, or to the benefit of a grade of a group work in which they did not collaborate. Regarding the level of severity attributed to each of the fraudulent tactics indicated in the study, and since the students were already evaluated in the first semester, these results suggest, the need to guarantee success in a discipline they have already failed, so that their performance could be improved. As for fraud-inhibiting practices, students suggest greater proximity to teachers in disseminating good academic practice. However, they are against the disclosure in the school environment of the names of students who have committed fraud and they are against compulsory oral tests. Finally, the exploratory factorial analysis allowed us to identify three explanatory factors of fraud; the first focusing on the individual and personal attitude towards risk, the second on the attitude towards institutional performance, and the third on the interpersonal relationship. We suggest that school regulations on values and ethics should be more widely disseminated in the institution at the beginning of the academic year; the development of activities to improve interaction and integration in the group, and a greater proximity between students and teachers. On the other hand, we think that any type of fraudulent practice should be penalized in such a way as to previously inhibit such attitudes and foster a sense of justice, ethical values, and professionalism. Generally, the teachers of this institution are in favor of the oral exams as they allow to improve the student’s evaluation through direct and personal contact. On the other hand, teachers are also against disclosing the names of students who have committed fraud. As a way of inhibiting fraud, the teachers of this institution have made efforts to get closer to the students through the practice of tutorial classes. However, oral tests will have little effect on the behaviors acquired over the years. Some professors may have little incentive to reduce cheating in their classes below a point that would otherwise be obvious to outside observers, as they are rated by how many research papers they publish and research grants they win for the college, and not by how well they teach.

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This study was very important for us, as teachers, because it allowed us to develop some strategies that can be used in the classroom to motivate students. First, we must promote a mindset of learning and ethical responsibility that develops respectful relationships with students; second, make a constant effort to integrate everyone’s diversity and create a real community in your classroom; third establish trust relationships, and finally assess the merit in accordance with the clearly established objectives. It can never be stressed enough that it is essential for a teacher to be an excellent motivator and communicator. This study allowed us to know the different types of fraud committed, the degree of severity that the student attributes to the various types of fraud, as well as the importance of inhibitors of academic fraud. This study deals only with the student’s opinion, through an anonymous questionnaire, which could be improved in the future, comparing the results with the teacher’s opinion on this subject. Henceforth, better disclosure of internal standards and the code of ethics, greater involvement of students with teachers, more training in this area, and greater rigor and demanding compliance will be necessary. Although this study focuses on the students of the Guarda Polytechnic, the lessons learned from it are useful for other institutions, both national and international.

References Bretag, T., et al. (2011). Core elements of exemplary academic integrity policy in Australian higher education. International Journal for Educational Integrity, 7(2), 3–12. Crittenden, V. L., Hanna, R. C., & Peterson, R. A. (2009). The cheating culture: A global societal phenomenon. Business Horizons, 52(4), 337–346. Donald, L. M. et al. (1999). Academic integrity in honor code and non-honor code environments: A qualitative investigation. The Journal of Higher Education, 70(2), 213. Gama, P., et al. (2013). A Ética dos alunos de Administração e de Economia no Ensino Superior. Revista RAC, Rio de Janeiro, 17(5), 620–641. Hilbert, G. (1987). Academic fraud: Prevalence, practices, and reasons. 3, 39–45. Elsevier. Malgwi, C. A., & Rakovski, C. C. (2009). Combating academic fraud: Are students reticent about uncovering the covert? Journal of Academic Ethics, 7(3), 207–221. McCabe, D. (1999). Academic dishonesty among high school students. Adolescence, 139(34), 681–687. McCabe, D. L., Trevino, L. K., & Buterfield, K. D. (2001). Cheating in academia institutions: A decade of research. Ethics & Behaviour, II, 3, 219–232. Sivirikaya, A. (2019). The relationship between academic motivation and academic achievement of the students. https://www.researchgate.net/publication/335763276_The_Relationship_ between_Academic_Motivation_and_Academic_Achievement_of_the_Students. Teixeira, A. C., & Rocha, M. F. (2010). Cheating by economics and business undergraduate students: An exploratory international assessment. High Education, 59(6), 663–701. Witherpoon, M., Maldonado, N., & Lacey, C. (2012). Undergraduates and academic dishonesty. Internacional Journal of Business and Social Science, 3(19), 77–86.

Chapter 12

Social Responsibility at the Polytechnic Institute of Portalegre: From the Experience Gained to the New Challenges Joaquim Mourato, João Alves, Francisco Morais, Isabel Mourato, and Maria Maridalho Abstract In carrying out its mission, the Polytechnic Institute of Portalegre (IPP), addresses social concerns and ethical and transparent behavior, based on a system of social responsibility management certified since 2011. The aim of this study is to evaluate the system and to understand what the new social concerns are, contributing to the eventual redefinition of social responsibility programs and actions that support the institution’s strategic objectives. The methodology followed was based on an online questionnaire survey, aimed at stakeholders, namely teaching staff, nonteaching staff, and students. As main results, it is highlighted that the stakeholders confirmed the importance of the institution to have an SRMS, mainly for the attention it provides to social inclusion, to the support in crisis situations resulting from social emergencies and to the teaching of quality and excellence. Hence, stakeholders positively evaluate the overall system as a whole, although 17% have considered whether it can be revised. Among the proposed changes is the need for greater involvement of stakeholders in the programs, renewal of some programs, and greater articulation among them, as well as broadening the team under the system, and strengthen the communication of programs and results. The main limitation of the study is the difficulty of getting a response from a larger number of students and other external partners. The interest that the results of this study may have in the strategy of other higher education institutions is highlighted, given the development of the case study and its originality. Keywords Social responsibility · Quality · Higher education · Certification

J. Mourato (B) · J. Alves · F. Morais · I. Mourato · M. Maridalho Instituto Politécnico de Portalegre, Centro de Investigação para Valorização dos Recursos Endógenos (VALORIZA-IPP), Portalegre, Portugal e-mail: [email protected] © The Editor(s) (if applicable) and The Author(s), under exclusive license to Springer Nature Singapore Pte Ltd. 2020 D. Crowther and S. Seifi (eds.), CSR and Sustainability in the Public Sector, Approaches to Global Sustainability, Markets, and Governance, https://doi.org/10.1007/978-981-15-6366-9_12

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12.1 Introduction Social responsibility in higher education institutions has been gaining centrality, positioning itself as a strategic dimension. In Portugal, this theme gained expression with the green paper on social responsibility and institutions of higher education and with the creation of an observatory (Social Responsibility Observatory of the Higher Education Institutions-ORSIES 2018). Scientific production in this field has grown throughout the world, giving high responsibility to higher education institutions, both in adopting it for its own management and in influencing the present and future generations. The Polytechnic Institute of Portalegre, for its mission and context, developed a Social Responsibility Management System and was certified by NP-4469-1: 2008 to 2011, being the only public higher education institution to get such commitment and distinction. The NP 4469-1:2008 is the Portuguese Standardization in Ethics and Social Responsibility. This certification was the culmination of a process of implementation of the Polytechnic of Portalegre strategy, which has always aimed at integrating with the community and interacting with stakeholders, based on the practice of social responsibility programs and actions. Over the years, before and after certification, these practices are mainly based on student integration and support; applied research and geared to the needs of the region; in the promotion, with the interested parties, of several joint initiatives, of scientific, cultural, and social scope. In this context, because the system already has a decade of existence, benefiting from countless experiences, feeling the need to redefine social responsibility programs and actions that continue to support the institution’s strategic objectives, we intend to develop a consultation and reflection work with the stakeholders about their knowledge, involvement, and evaluation. With this work we intend to identify new social concerns and also new forms of response of the Social Responsibility Management System, assuring the increasing involvement of the stakeholders and their appropriation of the methodologies, organization, and objectives found.

12.2 Literature Review It is important to clarify what is and how social responsibility in higher education institutions is being considered and worked out. According to Chiavenato and Aaron (2004, p. 332), “social responsibility means the degree of obligations that an organization assumes through actions that protect and improve the well-being of society as it seeks to achieve its own interests”. Otherwise, we can say that organizations must be accountable for the impacts that arise from their existence, trying to maximize positives and minimize negatives. Thus, social responsibility is a complex issue,

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combining several variables that must be considered (Zenisek 1979), being interlinked with the ethical principles adopted by organizations in their relationship with employees, society, and other entities, as an instrument capable of improving quality of life (Eells and Walton 1974). It is demonstrated that socially responsible practices stimulate employees at work, increasing motivation and productivity, conferring organizational identity, and good external reputation (Dutton et al. 1994, cited by Leal et al. 2007). The European Union, together with the Green Paper (European Commission 2001), sought to broaden the debate on the promotion of corporate social responsibility and to encourage the development of innovative practices. In the scope of university social responsibility, Vallaeys et al. (2009), with a reference work on this subject, emphasizes the fact that it is not accepted that there are responsible actions in one area and not in others, and social responsibility must cover all university processes. Institutional coherence must be ensured, which means correspondence between action and institutional discourse and consistency between all areas of the university. The same authors trace the process of social responsibility in the university in four spheres: organizational, educational, knowledge, and social. They also define a methodology based on four steps: commitment, self-diagnosis, execution, and accountability. With regard to the polytechnic higher education network, the impacts they produce in regions and in society as a whole are evident. A study carried out by the Coordinating Council of Portuguese Polytechnic Institutes concluded that the direct impact of these institutions in their respective regions varies between 27 and 171 million euros, and their average weight in GDP varies between 5 and 11% of the region where they are inserted and are responsible for the employment of more than 12% of the active population of the municipalities (Alves et al. 2014). Given these evidence, social responsibility in the management of polytechnic institutions gains strength and centrality. Regarding Polytechnic of Portalegre, the study by Jorge et al. (2011), came to highlight the Polytechnic of Portalegre for being the one where greater perceptions of authentic climate, greater job satisfaction, and more social responsibility practices are observed. Mourato (2013), also demonstrated the evolution and continuous improvement of the Social Responsibility Management System and its contribution to the sustainability, reputation, and results of the Polytechnic of Portalegre. In the case of an evolutionary process and continuous improvement, it is important to apply the Plan-Do-Check-Act method, so that the dynamics and adaptation to new realities happen naturally, guaranteeing the effectiveness of the systems (IPP 2018). The Institute has a Code of Ethics (IPP 2017), inspired by the principles referred to in NP 4460/1-2007 (IPP 2007), adopted as a code of honor, which seeks to go further in the commitment to adopt very demanding ethical behavior.

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12.3 The Social Responsibility Management System at Polytechnic of Portalegre In its development strategy, the Polytechnic of Portalegre integrates social and environmental concerns, assuming ethical and transparent behavior and a strong relationship with the environment and the surrounding community, taking into account the needs and expectations of its stakeholders. As a natural consequence of this strategy, the opportunity arises for the implementation of a Social Responsibility Management System, which began in 2009, with a very comprehensive and extended training for Polytechnic of Portalegre staff. After identification of Interested Parties, both internal and external, which affect and/or are affected by the performance of the Polytechnic of Portalegre, the respective significance was assessed and the aspects of social responsibility that the Polytechnic of Portalegre controls and/or influences related to the various activities, as well as the most significant ones identified. The main stakeholders of the Polytechnic are academic partners, students, teachers, government, companies, unions, and student associations. Based on this evaluation, and based on the social responsibility principles defined in the norm NP 4469-1: 2008, the Institution promoted the development of programs that can respond to the defined social responsibility objectives, supported by the social concerns and values adopted by the Polytechnic of Portalegre. For each program, a responsible person was identified whose mission was to coordinate, develop, and monitor the actions defined. In an initial phase, for the implementation of the system and operationalization of the social responsibility policy, a continuous improvement group was created, involving human resources of all the organic units of the Polytechnic of Portalegre. The objective of this group was to promote, in the organic unit that represented, practices of social responsibility that later became to constitute as programs, in response to the objectives identified by the Presidency, for the whole Institution. In the second phase, the evolution of the Social Responsibility Management System led to the identification of specific areas of work, which corresponded to the different aspects of the social responsibility approach in the institution. Thus, the areas of “Hygiene, Safety, and Risk Prevention”, “Health Promotion”, “Environmental Concerns”, “Social Concerns and Emergencies”, “Programs”, “Legal Compliance”, and “System Maintenance” were created. These areas were composed of elements from several organic units, teaching staff, and nonteaching staff according to their training and proximity to the topics to be addressed by each group. Over the years, some of the areas have been revised in terms of organization and objectives, aggregating issues that were directly related, such as “Hygiene, Safety, and Risk Prevention”, “Environmental Concerns” and “Health Promotion”. In this case, in particular, the synergies created by those responsible for each of the areas made it possible to include the objectives and activity in a single group that became “Safety, health, environment and risk prevention.” Throughout the years of Social Responsibility Management System implementation and development, the gains and results achieved in terms of safety and risk

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prevention, health promotion, environmental concerns, social support for students, and community involvement have been well-known. These results emerged from the implementation of several social responsibility programs that aimed to: – Knowledge and preparation of employees, and levels of safety, through training, drills, adequacy of plans and emergency plans, and reinforcement of human and material resources; – The promotion of the improvement in the eating habits of the students of the Polytechnic of Portalegre and of the Schools of the county of Portalegre; – Prevention of oral health of the internal and external community of the Polytechnic of Portalegre; – The development of sensitization sessions, the provision of human spaces and resources, recreational and cultural activities, and partnerships with other institutions to promote healthy lifestyles; – Solidary management of the Polytechnic of Portalegre olive grove; – The organization of campaigns to promote paper collection for solidarity purposes and social support to institutions; – Substantial improvement of the reception/integration conditions, with the support of older students, as well as improvements in accommodation, food, and economic and social responsiveness to students, even in situations of crisis and emergency and special needs, through the provision of meal vouchers and food basket, reduction/exemption of housing payment; – Support and benefits for other institutions, such as volunteer and student collaboration, short and medium-term training, support for the elderly, children, and other target groups with economic, psychological, and social initiatives. At the internal level, there was a reinforcement of skills and qualification of employees, which resulted in a positive impact on the performance of tasks, operational efficiency, and quality of teaching. Recently, in 2019, the Integrated Management System was reorganized and an attempt was made to approximate the strategic plan for the development of the benchmarks of the Agency for Assessment and Accreditation of Higher Education. Because the Polytechnic of Portalegre soon realized that the success of the Social Responsibility Management System would be transversal, the organization saw in this regard an opportunity to re-stimulate the collective contribution and invited all the continuous improvement groups, which cover the functional areas of the institution, to implement new social responsibility practices. Thus, the responsibility for the implementation of Social Responsibility Programs, based on the objectives defined by the Presidency, is of the Continuous Improvement Groups that support the Quality Management System, thus guaranteeing the transversality of the Social Responsibility Management System. The maintenance of the system, in formal terms, and in response to the standard that certifies it, is under the responsibility of the Office of Evaluation and Quality. This Office also ensures regular oversight of the system by analyzing the achievement of objectives, monitoring of indicators, program evaluation, Interested Parties

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satisfaction assessment, internal and external audits, control of action plans, and an annual (critical review) review of the system.

12.4 Methodology The methodological strategy implemented was quantitative, based on the implementation of an online questionnaire survey for teaching staff, nonteaching staff, and students, conducted during December 2018. The number of validated questionnaires was 98, constituting a sample consisting of 35 professors, across the four organizational units that make up the Polytechnic of Portalegre1 ; 39 nonteaching staff, mainly to perform functions in the Central Services of the institution2 ; and 24 students, overwhelmingly attending first study/undergraduate courses.3 The structure of the questionnaire incorporated three dimensions of analysis: (i) Importance of Social Responsibility; (ii) Evaluation of the current Social Responsibility Management System; (iii) Proposals for amendments. The data were analyzed, in a first phase, from the outputs generated directly by the online platform that supported the survey; and in a second phase, using SPSS software for more specific analysis, namely some crossings of variables. In addition, using a content analysis, a set of answers to open questions included in the same questionnaire survey was systematized.

12.5 Analysis and Discussion of Results 1. Importance of Social Responsibility in the Polytechnic of Portalegre framework: some indicators In the first analytical dimension of the study, it was tried to measure a set of indicators alluding to the importance of Social Responsibility within the institution. A first data gains relevance: 83% of the respondents stated that they had knowledge of the existence of a Social Responsibility Management System, against only 17% of the respondents who manifest ignorance. In a more specific perspective, and taking into 1 Superior

School of Education and Social Sciences, Superior School of Management and Technology, Superior School of Health and Superior Agrarian School of Elvas. 2 The remaining nonteaching staff who answered the questionnaire were distributed very closely by the four organizational units and other services transverse to the institute, although with a higher response rate in one of the schools in particular, in this case Superior School of Education and Social Sciences. 3 In the case of the students, the small number of answers obtained is understood, in the context of this study, only as indications and not as representative value of the universe of students of the Polytechnic of Portalegre. Besides the students, the number of teachers and nonteaching staff who answered the questionnaire is also insufficient to be representative of the institution’s universe. However, the responses obtained provide analysis lanes of interest in this research.

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account those who say that they do not know the Social Responsibility Management System, they are mainly the students and a residual number of nonteaching staff who assume this. In relation to teachers, all reveal to know the Social Responsibility Management System. Regarding the degree of knowledge that the same respondents demonstrate about the fact that Polytechnic of Portalegre is the only public higher education institution in Portugal, with a certified Social Responsibility Management System, the tendency of answers obtained generally reproduces the advanced interpretation regarding the previous indicator. That is, a considerable number of respondents still claim to know the certification obtained by the institution (67%), although the number of those who say they do not know this particularity has increased (33%). Of the latter, students continue to be the ones who demonstrate the greatest lack of this knowledge, although also among teaching staff and nonteaching staff, there are some cases that assume that they do not know the same certification. Another indicator established evidence the positioning of the respondents on the importance of the institution to have an implemented Social Responsibility Management System. The answers obtained are 95%. Only 5% assume a contrary opinion, being that, of this residual value, the majority falls to the group of nonteaching staff. In complementary to the data derived from this last indicator, are the reasons pointed out by the respondents. Figure 12.1 shows the reasons given for this, two reasons given the greater number of responses: “increased satisfaction, involvement, and support to internal and external stakeholders” with 62.4% of responses and “continuous improvement” with 57% of responses. The remaining justifications also deserved equal weight percentages, ranging from 40 to 44%.

Greater integraƟon and implementaƟon in the region Increased economic, social and environmental sustainability Improvement of the insƟtuƟonal image Strengthening the capacity of responsiveness, flexibility and adaptaƟon

40.9%

39.8%

44.1%

40.9%

ConƟnuous improvement Increased saƟsfacƟon, involvement and support to internal and external stakeholders

57.0%

62.4%

0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0% 70.0%

Fig. 12.1 Reasons for the existence of a Social Responsibility Management System

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The reasons given for the existence of an implemented Social Responsibility Management System cover a set of ideas around both the role that the Polytechnic of Portalegre has assumed in the scope of its intervention as a Higher Education Institution and taking into account a set of capital gains with reflex in the continuous improvement of its activities, both internal and external. 2. Evaluation of the current Social Responsibility Management System in the perspective of some internal stakeholders In a second analytical dimension, it was intended to establish a set of indicators capable of providing an evaluative perspective on the Social Responsibility Management System, namely around some aspects: (i) the degree of identification with the concerns that currently shape the system of social responsibility ongoing in the institution; (ii) the degree of agreement with the values inherent to the Social Responsibility Management System; (iii) the level of knowledge, participation, and benefit revealed/obtained by the respondents about the social responsibility programs currently in force. Regarding the concerns inherent to the Social Responsibility Management System, Fig. 12.2 shows the whole of the latter in relation to the different degrees of identification demonstrated by the respondents. From the reading of the previous table, it is noticeable that the generality of the concerns listed has a high or very high degree of identification by the universe of respondents, since the values obtained correspond to the highest values of the Teaching of quality and excellence

6, 7, 8

The support to the graduates in the insertion in the active life

6, 7

Social inclusion

5, 6, 7, 8

Health

5, 6, 7, 8

Support to the school community

6, 7, 8

Safety

5, 6, 7, 8

Volunteering

6, 7

The sustainability of the staff job

6, 7, 8

Support in crisis situations resulting from social emergencies

6, 7, 8

Recognition of merit

6, 7, 8

The practice of sports

4, 5, 6

The impact on the environment

5, 6, 7

The interaction with the surrounding environment

6, 7

Legend: 1 = low degree of identification; 8 = high degree of identification. Bold numbering represents the highest scale values in each item

Fig. 12.2 Degree of identification in relation to each interested stakeholders

12 Social Responsibility at the Polytechnic Institute … 100.0% 90.0%

90.8%

87.8%

205 93.9%

87.7%

89.8%

80.0% 70.0% 60.0% 50.0% 40.0% 30.0% 20.0%

12.2%

10.0%

17.3% 9.2%

6.1%

10.2%

0.0% OrganizaƟonal excellence

Ethics and transparency agree

Subsidiarity

Involvement Sustainable and guidance to development stakeholders

disagree

Fig. 12.3 Agreement or disagreement with the values inherent to the Polytechnic of Portalegre

response scale (levels 6, 7, and 8). This means that, for the internal audited stakeholders, with the exception of two or three concerns, the vast majority of them deserve a very positive assessment in the context of the concerns that the Polytechnic of Portalegre currently holds within its social responsibility system, for their diversity, both in terms of scope of action and in terms of potential beneficiaries inherent to the same concerns. Regarding the degree of agreement or disagreement with the intrinsic values of the Social Responsibility Management System, the verified data reveal an overwhelming majority of answers in terms that agree with all the values in force, being residual, in the sample as a whole, the number of those who express a contrary opinion. Figure 12.3 gathers this information and confirms the reading regarding this indicator. The questionnaire survey also included a set of questions relating to the Social Responsibility Management System activities and programs in place at the Polytechnic of Portalegre. Respondents were asked about their level of knowledge on the one hand and the level of participation and benefit obtained, arising from the same activities and programs, on the other hand.4 4 The

activities and programs mentioned here, in a total of 23, are: “Support for the inclusion of students with special needs”, “Volunteer Scholarship”, “Student Friendly Cities”, “Short-term Training (nonteaching staff)”, “Flexible Scheduling Management (teaching staff)”, “IPP Friend”, “IPP Leisure”, “IPP Health”, “IPP Mentoring”, “We are an interested party”, “Social IPP—Healthy Food Project in the Schools of the Municipality of Portalegre”, “Social IPP—Social IPP—Food Reuse”, “Social IPP—Exhibition space in December”, “Social IPP—Yellow Ribbon Project”, “Social IPP—Health promotion and hygiene care oral”, “Social IPP—Paper for the Food Bank”, “Social IPP—Collection of food and goods for donation to animal protection associations of the region”, “Social IPP—Solidary and Ecological Olive grove”, “Social IPP—8i 8 h Overtime for a

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The results found for this indicator show that, in the overwhelming majority of activities and programs in progress, the level of knowledge revealed by internal stakeholders exceeds the level of participation and benefits obtained in relation to the same activities and programs. This result reveals a mismatch between a more consensual stance, supported by the knowledge of the existence of this set of activities and programs inscribed in the institution’s social responsibility and, in another perspective, more distant regarding the involvement, with a greater or lesser degree of implication by the respondents themselves regarding their availability and commitment to the execution of the same activities and programs. In other words, we are dealing with a community which, while generally aware of the substance that characterizes Polytechnic of Portalegre’s social responsibility system, reveals, in a more timid way, a less committed attitude, through its own involvement in promoting the same activities and programs. The exception goes to a small set of situations, in which the participation/benefit level reaches, nonetheless, non-negligible values, corresponding to actions that have deserved greater adherence on the part of the respondents. This is the case of the activities: “Short-term training (nonteaching staff)”, “IPP Social-We all have love to give”, “Training/awareness actions in the area of Security and Risk Prevention” and “Training “I explain”. All other activities/programs do not present a level and significant participation/benefit, although all of them are the subject of an expressive knowledge on the part of the respondents, as shown. In the evaluation directed specifically to each of the social responsibility activities/programs, Fig. 12.4 gathers the assessments made by the respondents. As seen, across the table, all activities/programs deserve a very positive evaluation, assuming values, on average, at levels 7 and 8. However, the significant number of cases in which the answer option “does not know, does not respond” has also been somewhat preponderant, evidencing a relative difficulty of evaluation by the universe of respondents in relation to some specific situations. In order to extend the evaluative perspective, compared with the need to evaluate the Social Responsibility Management System in its entirety, 76% of the respondents place their evaluation in the highest values of the scale, between levels 6 and 8, consubstantiating a very positive evaluation, evidencing a visible convergence with the evaluation previously directed to each particular activity/program (Fig. 12.5). 3. Proposals to change the future of Social Responsibility in the Polytechnic of Portalegre The final analysis dimension of the study was aimed at obtaining the perspective of internal stakeholders regarding the future of Polytechnic of Portalegre’s Social Responsibility Management System and was invited to comment on the strengths

Good Cause/8 h for a Good Cause”, “Training/Awareness-raising Actions in the Health Promotion Area”, “Training/Awareness-raising actions in the area of Safety and Risk Prevention of first intervention in fire and/or rescue techniques)”, “Training/Awareness actions “I explain””.

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Support for the inclusion of students with special needs

6, 7, 8

Volunteer Scholarship

6, 7

Student friendly cities

5, 6, 7 + (N/S)

Short-term training (non teaching staff)

5, 6, 7, 8 +(N/S)

Flexible scheduling management (teaching staff)

6, 7, 8 +(N/S)

IPP Friend

5, 6, 7, 8

IPP Leisure

5, 6, 7, 8 +(N/S)

IPP Health

6, 7, 8

Mentoring

5, 6, 7, 8

We are interested part

5, 6, 7, 8 +(N/S)

Social IPP – Healthy Food Project in the Schools of the Municipality of Portalegre

6, 7, 8 +(N/S)

Social IPP – We all have love to give

7, 8

Social IPP – Food reuse

6, 7, 8 +(N/S)

Social IPP – Exhibition lounge (in december)

5, 6, 7, 8 +(N/S)

Social IPP – Yellow Ribbon Project

6, 7, 8 +(N/S)

Social IPP - Health promotion and oral hygiene care

6, 7, 8 +(N/S)

Social IPP – Paper for the Food Bank

6, 7, 8 +(N/S)

Social IPP - Collection of food and goods for donation to animal protection associations of the region

6, 7, 8 +(N/S)

Social IPP – Solidary and ecological olive grove

6, 7 +(N/S)

Social IPP - 8i (8 Hours Overtime for a Good Cause/8 Hours for a Good Cause)

6, 7, 8 +(N/S)

Training/Awareness-raising Actions in the Health Promotion Area

6, 7, 8

Training/Awareness-raising actions in the area of Safety and Risk Prevention of first intervention in fire and / or rescue techniques)

6, 7, 8

Training/Awareness actions "I explain”

6, 7, 8

Legend: 1 = less important; 8 = most important; N / S = do not know. Bold numbering represents the highest scale values in each item

Fig. 12.4 Evaluation of activities/specifically programs

and weaknesses of the social responsibility system implemented, as well as possible implementation proposals, in a prospect of continuous improvement. In this chapter, the first accurate indicator shows that for most respondents (80%), the Social Responsibility Management System should be maintained against 17% who understand the need for it to be reviewed. Only 3% consider the cancelation hypothesis.

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40.0% 33.7%

35.0% 30.0% 24.5%

25.0% 20.0%

17.3%

15.0%

11.2%

10.0% 5.0%

6.1% 3.1%

3.1% 1.0%

0.0% 1

2

3

4

5

6

7

8

Legend: 1 = less important; 8 = most important. Fig. 12.5 Social Responsibility Management System assessment of Polytechnic of Portalegre as a whole

Figure 12.6, which crosses the future situation of the Social Responsibility Management System by type of internal stakeholders, reveals that, although respondents are mostly in favor of maintaining the Social Responsibility Management System, it should be pointed out that from those who understand it should be reviewed, are the nonteaching staff and teaching staff, those who express in greater numbers this scenario, as seen in Fig. 12.6. In addition to the previous analysis, the trend towards a more expressive response coinciding with the maintenance solution of the Social Responsibility Management System is not, however, exempt from some less valuative positions. In addition, most of the weaknesses identified call for an overhaul of the internal and external stakeholder engagement strategy (identified by the respondents as “interested parties”) on the one hand, as well as a review of some social responsibility programs, along with a greater articulation between those who are currently underway, on the other hand. The current SRMS of the IPP should be Maintained 29

Canceled 0

Reviewed 6

Total 35

Non teaching staff

29

2

8

39

Student

20

1

3

24

78

3

17

98

internal stakeholders Teaching staff

Total

Fig. 12.6 Future situation of the Social Responsibility Management System by internal stakeholders (values in N)

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On the internal stakeholders Difficulties in involving internal stakeholders in participation, as responsible for activities, in the various programs Break in the dynamism of the system and in the recognition of the participants Reduced active participation by the majority of its staff, a situation that requires an additional effort of awareness and implication Some misunderstanding by the stakeholders, reflecting in less involvement On the programs in action Programs without activity or results, lack of integration of social responsibility in some areas, little dynamics in the specific development of the Social Responsibility Management System and associated practices Difficulty of implementing some programs Social Responsibility Management System programs not widely publicized within the academic community The inclusion of international students should be further supported Missing project renewal

Fig. 12.7 Weaknesses identified in the Polytechnic of Portalegre’s Social Responsibility Management System

These perceptions, assumed by the respondents, are summarized in Fig. 12.7, as a result of the content analysis performed on the answers obtained. On the other hand, the most positive aspects of the Social Responsibility Management System identified by teaching staff, nonteaching staff, and students also deserve some attention. Figure 12.8, shows the various responses obtained, aggregated according to their similarity, and it is possible to find positive opinions, especially regarding the commitment that the Polytechnic of Portalegre has been taking with the surrounding community, including also the recognition of added value in the Social About the Polytechnic of Portalegre involvement with the community Greater accountability of participants and awareness of active citizenship Strong interaction with the surrounding environment / Privileged connection with external stakeholders / Global commitment and assumed with the surrounding community and territory / Approximates the Polytechnic of Portalegre to the entire community in which it is involved, transferring its values to society Sustainable development from the economic, environmental and social perspective About IPP's commitment to the internal academic community Recognition, assertive activities, involvement of different actors in the academic community, including students / Motivation for the intensification of relations between staff – teaching staff and non-teaching staff of the different organic units Programs to support students / Works in critical areas such as the daily needs of students with social needs / Ability to respond to social or other emergencies / Mainly, programs aimed at student support Training Opportunity Improves organizational climate Voluntariness and capacity of staff Concern about achieving standards of excellence in the academic community Strong structure, commitment, productivity

Fig. 12.8 Strengths identified in the Polytechnic of Portalegre’s Social Responsibility Management System

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With an internal focus on the institution Focus on the "student" and all their needs Implementation / revision of programs involving/benefiting teaching staff and non-teaching staff Greater dissemination (internal and external) of all programs and actions Should have a greater and exclusively dedicated and team / Rationalization of human resources Articulate the different programs Greater commitment to the search for greater employability for its graduates Better organization and functioning, social responsibility programs and actions with more concrete results for Polytechnics, greater participation of teaching and non-teaching staff With an external focus on the institution More partnerships Actions that can internalize the spirit of unity - WE ARE ALL IPP - for the involvement of all Organize an annual seminar open to other institutions to learn and improve the system Greater involvement of the academic community

Fig. 12.9 Proposed improvements for the future

Responsibility Management System with internal repercussions, in particular, with its collaborators. Nevertheless, in general terms, the need for a redefinition of the future action strategy more directed to the outside, emphasizing, in a more regular and active way, the external stakeholders, within the framework of the institutional relations of the Polytechnic of Portalegre with the community and with the region. To conclude this analysis, a set of concrete proposals is advanced, across the three groups of respondents. Figure 12.9, summarizes these proposals, arranged according to the internal and external focus of the institution. From an internal perspective, the suggestions directed towards a greater focus on the student and their needs; a review of programs that directly involve Polytechnic of Portalegre employees, the allocation of human resources exclusively, and in greater numbers to the Social Responsibility Management System, are among the proposals listed. From an external perspective to the institution, an increase in partnerships and broad discussion, open to other institutions, for sharing and collective learning on other processes of improvement of the Social Responsibility Management System, through a seminar organized for that purpose.

12.6 Final Considerations The overall results of this study, centered in the case of a Higher Education Institution with recognized experience in the field of social responsibility in the universe of national Higher Education Institutions allows to obtain a framework characterizing the relevance that can take the auscultation of its internal stakeholders regarding the social responsibility management systems. In addition to providing clues for reflection, strategically relevant to inform a possible process of redefinition of priorities, programs and actions to be developed

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within the scope of Polytechnic of Portalegre’s Social Responsibility policy; the results achieved through this case study, based on the experience gained and the pioneering experience of this institution in the social responsibility domain, may similarly suggest possible implementation strategies and/or redefinition of social responsibility management systems by other higher education institutions, towards new challenges that local communities, in particular, and society, in general, are imposing on the universe of higher education institutions. Acknowledgements The authors thank the Presidency of the Portalegre Polytechnic Institute for the collaboration provided throughout the fieldwork, as well as the interviewees at the Polytechnic.

References Alves, J., Carvalho, L., Carvalho, R. Correia, F., Cunha, J., Farinha, L., Fernandes, J., Ferreira, M., Lucas, E., Mourato, J., Nicolau, A., Nunes, S., Nunes, S., Oliveira, P., Pereira, C., Pinto, S., & Silva, J. M. (2014). O Impacto Dos Institutos Politécnicos na Economia Local. Uma Primeira Reflexão. Lisboa: Conselho Coordenador dos Institutos Superiores Politécnicos. Chiavenato, I., & Arão, S. (2004). Planejamento Estratégico: Fundamentos e Aplicações (p. 332). Edição Rio de Janeiro: Elsevier. Comissão Europeia (2001). Livro Verde - Promover um quadro europeu para a responsabilidade social das empresas. Bruxelas. http://www.europarl.europa.eu/meetdocs/committees/empl/200 20416/doc05a_pt.pdf. Consulted in 30 April 2018. Eells, R., & Walton, C. (1974). Conceptual foundations of business (3rd ed.). Boston: Burr Ridge. Instituto Politécnico de Portalegre (2017). Código de Ética. Portalegre: IPP. Consultable in: https://www.ipportalegre.pt/media/filer_public/de/10/de10829a-a058-4ee1-b1e3-7699f566b 744/codigo_de_etica_2017_rev1.pdf. Instituto Politécnico de Portalegre (2018). Manual do Sistema Integrado de Gestão do IPP (revisão 14). Portalegre: IPP. Consultable in: https://www.ipportalegre.pt/media/filer_public/16/45/164 5ddf2-40fb-49d1-a116-3ccc7622b06b/manual_sig_rev14_2018_24_abril.pdf. Instituto Português da Qualidade (2007). NP 4460-1/2007 Ética nas organizações: Parte 1: Linhas de orientação para o processo de elaboração e implementação de códigos de ética nas organizações. Lisboa: edição março/2007 CT 165 (APEE). Jorge, F., Marta, A., & Leal, S. (2011). A responsabilidade social como variável antecedente dos climas autentizóticos, da satisfação e do empenhamento afectivo: um estudo aplicado a alguns institutos politécnicos portugueses. Editora ETEA, Institución Universitaria de la Compañia de Jesús. ISBN 978-84-86785-57. Leal, S., Rego, A., & Faria, J. (2007). Como as percepções de cidadania empresarial explicam o empenhamento afectivo, normativo e instrumental dos colaboradores. X Fórum Internacional de Administração/IV Congresso Mundial de Administração. Coimbra, Universidade de Coimbra. Mourato, J. (2013). Sistema de Gestão da Responsabilidade Social do Instituto Politécnico de Portalegre – Primeira Instituição de Ensino Superior Público Português a obter a acreditação na NP 4469-1:2008. Millenium, 44 (janeiro/junho), 7/22. Observatório da Responsabilidade Social e Instituições de Ensino Superior - ORSIES (2018). Livro verde sobre responsabilidade social e instituições de ensino superior. Edição SA PRESS FORUM - Comunicação Social. ISBN: l 978-972-8976-05-7.

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Vallaeys, F., Cruz, C., & Sasia, P. (2009). Responsabilidad social universitaria: manual de primeros pasos. McGRAW-HILL Interamericana Editores, S.A. de C.V. ISBN: 978-1-59782-082-0. Zenisek, T. (1979). Corporate social responsibility: a conceptualization based on organizational literature. The Academy of Management Review, 4(3), 359–368.

Chapter 13

Social Responsibility: Proposal of Social Re-inclusion of Inmates of the Brazilian Prison System Through Higher Education Ana Lúcia Fontes de Souza Vasconcelos, Patrícia Tuma Martins Bertolin, Bruna Angotti, and Rute Abreu Abstract The present proposal presents a pilot action research in progress at the Universidade Presbiteriana Mackenzie (UPM), in São Paulo, Brazil, in partnership with the Department of Penitentiary Administration of the State Government of São Paulo aimed at the recovery and social inclusion of prison inmates, through the offer of vacancies in undergraduate courses at the University, as well as of additional citizen qualification. The courses are Advanced Technology in Marketing, Commercial Management, and Human Resource Management. Social responsibility in educating for the full exercise of citizenship is part of the University’s Institutional Development Plan and this project is in line with UPM’s mission. Since the beginning of 2019, fifteen students from the Butanta Women’s Penitentiary, the only semi-open female unit in the city of São Paulo, participate in the project in a semi-presential manner, performing activities in prison and attending university for weekly training. The aim of the project is to help the semi-open regime to actually fulfill its role by ensuring effective qualification and increasing the employability potential of the prisoners participating in it, not only during the execution of the sentence, but also after inclusion in the labor market. The authors present the partial results of this initiative, taking stock of the first six months of the project, as well as presenting the challenges of the coming semesters. This project was inspired by social responsibility projects carried out with detainees at the Instituto Politécnico da Guarda, Portugal, for that reason the interinstitutional partnership. Keywords Social responsibility · Higher education · Prison · Social inclusion · Brazil

A. L. F. de Souza Vasconcelos (B) · P. T. M. Bertolin · B. Angotti Universidade Presbiteriana Mackenzie, São Paulo, Brazil e-mail: [email protected] R. Abreu Instituto Politécnico Da Guarda, Guarda, Portugal © The Editor(s) (if applicable) and The Author(s), under exclusive license to Springer Nature Singapore Pte Ltd. 2020 D. Crowther and S. Seifi (eds.), CSR and Sustainability in the Public Sector, Approaches to Global Sustainability, Markets, and Governance, https://doi.org/10.1007/978-981-15-6366-9_13

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13.1 Introduction This chapter hereby briefly presents the research pilot project named ‘Social Responsibility: A proposal for social re-inclusion for Brazilian incarcerated people by means of the higher education, which came into being the extension project accomplished by the Universidade Presbiteriana Mackenzie, in partnership with the Secretary of Penitentiary Administration of the State of São Paulo, Brazil. Thus, it relates to the first semester of accomplishment of the project, making a brief statement through the period. Therefore, the possibility of social inclusion, in an academic space, of learners of the prison system, allowing them, quicker and effectively, they reintegrate to the social life, is welcome in a university featured ever since its foundation by this vocation of inclusion. The subject of the citizenship according to Smanio (2009, 1): requires a dimension of social inclusion.

According to the Brazilian Law, women who have had children in prison would have the right to keep them together until their six-month age, then to be separated eventually. The group for human rights advocacy called “Coletivo de Advocacia em Direitos Humanos” (CADHu) was responsible for the presentation in 2017, of the first collective habeas corpus (HC 143.641) recognized by the Supremo Tribunal Federal (STF), the Brazilian Federal Supreme Court. In favor of all incarcerated women, without definitive sentence, pregnant or mother of children up to 12 years, the order was granted on the 20th of February, 2018. Such Habeas Corpus aims for assuring, which those women, when provisional convicts do not remain in incarceration, fulfilling provisional remedies diverse to prison. Thousands of women and babies have the left prison for the reason of this Action, which was granted with the recognition of the Inter American Commission on Human Rights and of the UN Women. This collective habeas corpus has defended the rights of babies and children to live in freedom under the care of their mothers, and so far, over five thousand women and their babies have left the prison. After a year of the decision, there are still hindrances to the execution of this collective habeas corpus. In a survey done by the CADHu, it has been verified that pregnant women and their children that could be beneficiaries of this Habeas Corpus are still incarcerated. The pilot project concerns social responsibility, entailing the academia and the public power. Aimed at the inmates of the Dra. Marina Marigo Cardoso de Oliveira Penitentiary, best known as Butantã Female Penitentiary, the project consists of the offer of 15 spaces in academic courses for incarcerated women. The courses are Technological Course in Marketing, Business Management, and Human Resource Management. To comply with the objectives of this paper, firstly we present the project, in particular, its goals and method of operation, reflecting on its transformational social role. Hereupon, we have attended to the first semester of its accomplishment, highlighting the main occurrences and investments made. Eventually, it has been introduced a brief summary listing the challenges to cope.

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13.2 The Project for Social Inclusion of Inmates of the Prison System The project aims to promote social responsibility, in general, and social inclusion for the prison system inmates, in particular, on making feasible their academic degree at the Universidade Presbiteriana Mackenzie (UPM), as well as their training course for the job market and the exercise of citizenship. Its core goal is to train the audience in order to contribute with the semi-open prison regime meets its requirements, by assuring professional qualification and the raise of the employability potential of the attendants. The project offers to make the social inclusion for Brazilian prison system inmates more opportune through higher education, with an ambiance of reformed Christian faith, for the full exercise of citizenship. For reaching this purpose, we have driven ourselves by the following specific objectives: (a) promote the access to the university for people in situation of incarceration and ex-convicts of the prison system, assuring higher education and encouraging the emancipation through the learning; (b) foster to the prison system inmates the motivation for developing a profession; (c) qualify the inmates from the prison system with skills for the insertion in the job market; (d) offer the possibility of finding new purpose for the personal life of these inmates from the prison system; (e) support the guidelines of the national policy for social re-inclusion of the incarcerated population; (f) foster the formation of networkings related to promoting the reintegration of incarcerated citizens and ex-cons of the prison system, (g) foment opportunities of job training courses, for the increment of the perspective of employment/work/income generation/entrance to the social security system. It relates to, therefore, an activity of social responsibility of the University, aimed at a fully transformational education. Thereby, the action aims for collaborating with the reduction of second offense recidivism rate and as a result, for crime prevention in and out the prison, through the opportunities the learning and the work commonly provide. The proposition for the action sits on the socio-educational outlook of leaving from the prison system—or on the ones imprisoned under the semi-open regime—as the possibility for this to regain their social life, by having the right to education assured by the Federal Constitution of 1988, Article 205, providing favorable conditions to their social integration and entrance to the job market. This proposal of inclusive perspective is guided through affirmative actions, which are deeds or measures for concrete situations that ensure equality of opportunity and treatment, by way of policies or private, focal actions that allocate resources for benefit of people who endure for coming under discriminated groups and victimized by some sort of social exclusion. As stated by Bertolin and Benedito (2013, p. 372), affirmative actions are “mechanisms considered by the Brazilian constitutional text of 1988, and deployed to correct a material inequality, when the Universalist policies have shown insufficient to being concretized”. In that respect, it is fair enough to have a specific action, not only by the public power, but along its private partner allies, having as a focus to benefit members of vulnerable groups.

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The affirmative actions perhaps has on the education their most important scope of action. In Brazil, there is the case of the quota for racial and ethnic minorities in the higher education institutions, declared constitutional in April, 2012, by the Federal Supreme Court, at the Claim of Breach of Fundamental Precept “Ação de Descumprimento de Preceito Fundamental (ADPF) 186” (). To a proper extent, these measures can—though not used to—have as focus people in incarceration. According to Balibrea and Rojas (2012, 62), “the education in prison, in a higher sense, has multiplied the socializing action”. Actions of educational intervention into the prison environment are of use for “[…] organize the everyday life of the prison population and of the prisons and occupy the time […]” (Balibrea and Rojas, 2012, 63), after all, as much pervaded, “the idleness in the prison courtyard is the worst thing that can happen in the prison system” (Balibrea and Rojas, 2012, 63). In this very project, proposed as being beyond the walls of the prison, to be carried out in the academia, the intervention must happen in respect to educate women, many times young people, in formative and working age, with little or without any access to education (especially, academic degree). Well, if the lack of an educational degree is one of the great barriers that hamper the entrance and permanence of women in the job market (Balibrea and Rojas, 2012, 70), the investment on this crowd can be understood as a deed for recognition of the potentialities of these women, rescuing them from the crime, in giving them real opportunities. The choice for having women as target audience on the pilot project is due to quite objective aspects, dealing with the profile of Brazilian Women´s prison population: the formal education level of convict women is significantly higher than men; they mostly have committed drug trafficking, in which have played a secondary role (their partners, spouses or brothers tend towards to play a leading role); are in general minor misdemeanors (mostly, first offenders); they are used to be left out by the family when being incarcerated, not receiving visits; having children in general, whose custody will need to be taken by another family member, and in which, in the absence of someone, ending up being in foster cares (Ministério da Justiça do Brasil, 2016). Besides, it lies historically with the women taking care of children, the elderly and sick people of family, the reason why to guarantee the dignity of these women has the potential to impact on many people, multiplying the benefits of the project. Thereby, to invest in Education—especially on incarcerated women—is to invest in overcoming on what it seems a “twist of fate”, (Balibrea and Rojas 2012, 75), where the lack of access and opportunity is used to be the thrust. As mentioned, it relates to a pilot project, which the University expects to be able to continually offer, in partnership with the public power. It also comes to become public the necessary procedures for its operation, somewhat delayed, in the face of the innovative potential of the project. Thus, once overcome the starting hindrances, another educational institution will be able to benefit from the procedures developed and replicate the project, even in other Brazilian states and regions. The Universidade Presbiteriana Mackenzie (UPM), has it as mission, to help people not only in their personal life and career, but in the spiritual life, too: “As an educational institution we understand the knowledge as something that enlightens us and delivers from darkness and ignorance. This is our role: lighting up the way”.

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Owing to respect and contribute with Christian ethic values and principles for the construction of an ethic and sympathetic citizenship (UPM, 2019, 58), the social responsibility in educating for the full exercise of citizenship is part of the action of its institutional Development Plan. Education encompasses the formative processes, which are developed in many ways of the human coexistence, such as family life, labor relations, experiences obtained along with learning and research institutions, together with social and cultural movements of sectors of the civil society. This principle posits that the activities with educational purposes are formulated and implemented in an articulate and integrated way among all the instances that are learning source and of formative processes. In search of answers to the challenges of the integration of social and scientific aspects in the university, the Extension Program, as one of the spaces for critical reflection, a milieu that contributes for the oxygenation of thinking and action on the search for excellence of learning in a meaningful and contextualized way. This interventionist project, which aims to help out the process of resocialization of reeducatees from the prison system, has as the basis a pedagogical proposal for integral education whose conception encompasses a script for an educational process that seeks the development of educatees in a full dimension—intellectual, physical, emotional, social, and cultural. The project tends to consist on a collective basis, shared in a transdisciplinary way scientific content, but not excluding the observation of its familiar, educational, and career pathways, conveying the history into everyday use. The Education insured by the Penal Execution Act, in its Articles 10 e 11, transcribed following, aims for the re-inclusion of the individual into the society and the crime prevention, entailing six categories of assistance, which must be assured to the individuals subject to freedom-depriving penalty: Article 10. The assistance provided to the inmate is a duty of the State, aiming for crime prevention and guidance for the return to the society coexistence. Subparagraph. The assistance stretches out to the ex-con. Art. 11. The assistance will be as of: I – Materials. II – Health. III – Legal. IV – Educational. V – Social. VI –Religious.

The Brazilian Constitution of 1988, in the Article 205, also conveys the following concern of the Brazilian State: Article 205. Education is the right of all and a duty of the State and of the family, will be promoted and encouraged with the collaboration of the society, aiming for the full development of the individual, their preparation for the exercise of citizenship and qualification for work.

As understanding that people, at the carceral re-education process, are vulnerable, mainly on the psychologic and emotional aspects, the process for integral education must assume a more meaningful sense, with a view beyond the teaching–learning process. We must search for a reception in the academic campus, encouraging emancipation, so that the incarcerated citizens attain new values being seen as educatees, putting extracurricular relations into place by way of a collective work that contributes

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for the development of technical competences and social and ethical skills, as from their welcome inside the institution with assistance programs. The assistance program comprises a body of knowledge (know-what), practices (know-how), and attitudes (know-who), ramping up the possibility of perspective beyond the academic walls across a supportive network of employability for job creation/work/income generation/and admittance to the social security system. In this perspective, the learners are having the opportunity to develop on this further education, understanding on their formative process, growth of potentialities before the selected course, in the face of all hardships found at the Academia and the enhancement of the egoic structure, which fosters and supports the learning process. The proposal is about to enable build on and broaden the understanding and making sense of the processes of academic graduation. The proposal has been engaging several actors at the University, such as the Psychology College, which at the course run-up for the semester, has volunteered for the reeducatees psychological counseling on a weekly basis, as well as a work for awareness and guidance of their skills, then achieving the choice of the course in a guided way, in the final stage. Already in the own selection process for the learners, the work of the Psychologists corps involved in the project has proven essential, in view of the mistrust by part of this crowd relating to the initiatives that, supposedly, aimed to benefit those, which was perfectly understandable, in view of the inmates are not used to be the center of many social inclusion policies. So, the services volunteered by the Psychology College, which is part of the Biological Sciences and Health Center, has demonstrated to be fundamental for the accomplishment of the project, on the preparatory stage. In other college units, as the Center for Social Sciences and Applied, in which the courses offered in this pilot project are linked to; the College of Law, which has been participating actively in the activities since the very beginning, trying to make the agreement feasible between the university and the public power, by adapting it to the prescriptions of the Penal Execution Law, regrettably few times fulfilled in Brazil; and yet the College of Architecture and Urbanism, which will become to offer the learners, several classes of artistic technical skills, in order to make possible other forms of expression, other than the verbal ones, and occasionally to offer new professional possibilities to the students who have developed this skillset. There has been the participation of the Faculty of the College of Law, as lecturers, at the Citizenship Day Penitentiary, of the Dra. Marina Marigo Cardoso de Oliveira, in April, of 2017. Others will be responsible for workshops of citizenship and human rights to be offered to the students after-class, in the second semester of the course. This work seems essential to an education for citizenship. Thus, the joint effort of all these units, wedded to a framework of excellent service, as well as the commitment of its administrative corps, which has been in touch with the reeducatees on many occasions, with the purpose of assuring the reception of the incarcerated person and or from the ex-convict into the UPM happens in a careful way, providing to the learner academic follow-up with the aim of well performing throughout the course.

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13.3 Target Audience The choice for carrying out this pilot project in a semi-open unit has come about considering the possibilities, as provided by law, of leaving the unit for attendance of learning institutions, which makes easier the commuting of students, without the need of being under escort. In the semi-open prison units, there is major freedom to come and go, and the possibility of everyday leave. Also, those who find themselves in the semi-open regime are closer to the end of the sentence, than those in the closed prison regime, which ensures that, along the course or at this end, they will be already ex-convicts, therefore, apt to integrate the job market. Apropos the option for a women´s prison unit has come about in the first place, due to the fact of having more female inmates than the male inmates, with high school concluded or in course, apt to be admitted to college, which increases the number of eventual candidates for vacancies in college, assuring the good going of the pilot now turned project. Important to clarify that the female prison selected is the only unit with a semi-open regime for women in the Capital of São Paulo. Moreover, it is important to highlight that the majority of the incarcerated women are nowadays there for their vulnerable condition and lack of opportunities. Drug trafficking recruits people in need of money and sees this as a possibility of sustenance. However, it is about an extremely risky activity, which puts them even more in a vulnerable situation, in particular, before the criminal justice system. The prison, in this context, appears as a destination nearly inevitable, being its consequences extremely disastrous for the biography of those women, as well as their relations beyond the walls of the prison. We experience these days what the specialists call the “Boom of the women´s prison system”. Despite the number of men´s incarcerated population is great than women, there has been an appalling increase of the female population in the prison system between 2000 and 2014: in the order of magnitude of 567.4%, while the average male growth, in the same period, was of 220.20%, what, per se, is the important rationale, which justifies an action aiming at the qualification and re-inclusion of this crown in the society, after the sentence served (Ministério da Justiça, 2014, 5). Thus, it has been selected the female semi-open unit based in the capital of the State of São Paulo, for the accomplishment of the pilot project now introduced. By means of a selection process coordinated by the Faculty of the UPM Psychology College, it has been selected, at first, 20 inmates to be interviewed, among those who complied with the established conditions in law and for the criteria of the prison unit for the achievement of the course. In the second stage, constituted through an interview made by Psychologists, there have been 15 inmates selected to take the vacancies. They are mostly young women who were employed prior to incarceration. Among them, in their own words, there are hairdressers, sales assistants, telemarketing operators, office clerks, clothing/garment store owners, employees of several types of companies, street market stall merchants, kitchen assistants, housemaids, manicurists, cleaning ladies, dancers, translators, promoters, teachers, and steelworker.

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13.4 The Experience on the First Semester of the Project Between March till June, of 2019, has happened the preparatory course with the aim of preparing the students for the entrance in the higher education. It has been achieved in all 13 face-to-face meetings (a span of 13 weeks) on the premises of the University. Besides, the reeducatees have accomplished some activities in the Penitentiary, long-distance, having been donated ten workstations to the correctional facility and prepared the structure for this purpose, which the own students were in charge of painting and arranging. The academic preparatory activities have been planned to be developed in two courses, namely: Methods and skills for studies through LDL and Methods and skills for academic studies. The first course has tackled the main aspects of the appropriation and knowledge of the Long Distance Learning model of the UPM. Besides, it has been worked up with aspects such as time management (inclusive in class, with timing for each programmed task), engagement, group discussion, teamwork, individual assignments, Quality researches, use of online tools for text production, and studies. The appropriation of technological languages and the academic and career guidance were developed through workshops, with the purpose of providing an interactive experience and living in an academic atmosphere. The result was reached, by providing possibilities for the increase of the repertoire of culture, by means of readings and lectures. The meetings on a weekly basis, of two hours each, have provided opportunities for immersion onto the online platform, knowing of the tools and ambiance for studies. In every class, the students have had exercises to be posted on the platform and also have accomplished works in the group. The second course has tackled methods and techniques for the development of academic activities, having as the focus to prepare educates to become familiar with the college academic practice. Individual activities to be delivered on the virtual environment were the focus for the course, considering the need for familiarization with the online environment, and the ways of posting of the activities on the online learning environment Moodle. The online setting counts on video classes, Reading, exercises, forum for debates, and activities to assist in the construction of this brand new knowledge. Such a course, also a hybrid, has afforded content on reading, writing, text comprehension, and exercises for the articulation of the critical thinking, specific for the higher education, allowing the learners to prepare themselves for the higher education Technology course that will be done in the next stage. There has been a special interest of the reeducates in activities toward collaborative learning, which can supposedly bear fruit in their professional future. Some of them who has already shown huge potential to engage in entrepreneurship—on which the University will turn to foster in future—started showing interest in pulling together competences to start a business (the case of a hairdresser and a manicurist from the group). Another subject that has stirred them up was the matter of time management, so much important for anyone in search of productiveness in the modern World, where

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everything is way fast-paced. Yet when it is about inmates or ex-cons of the prison system—where time flies by at its own pace, apart from beyond the walls. During the face-to-face meetings, the reeducatees also attend workshops led by the UPM Psychology Professors, with the purpose of providing guidance for the integral education, by offering care and support by means of appropriate strategies of the psychology, in order to reach out feelings of social belonging, which make sense to their life stories, in a space for reflection based on feelings about the formative processes. The group method with a therapeutic or formative perspective, which makes use of pictures as devices to access the content of individuals in several situations in life, allowing to tackle different subjects over different contexts, has been used as a facilitative device to tap into content in a trustworthy ambiance. The group has participated in weekly workshops that have occurred twice: (I) Photolanguage, which consists on a strategy of group intervention developed in France, with the objective of promoting swaps among people in a collective space, as from those swaps and by means of the mediation of image selection, people can work up their difficulties, and for instance, reorder questions related to the education for work, one of the perspectives of the use of the technique; (II) Career guidance to facilitate the selection of the course to be performed as from the next semester, in view of mitigating the risk of an inapt choice. After two years been elapsed, there has been much work in the conception of the project and in the sessions with the State agents involved, to whom we have been in contact with on a nearly daily basis, so that it was possible to begin the preparatory semester, critical for the course outcome, on account of many of the students, who were out-of-school for a long time and the near total of them were not familiarized with the long-distance learning. A huge hindrance to the implementation of the program was the security measures taken by the prison system, which does not allow inmates to have access to the Internet. It has been bad times to win the direction over that it would be possible to save and make the material available onto a memory stick and printouts; and that the learners could do the exercises on the computers of the correctional facility, only allowing posting the lessons whenever they where at the university lab, under the supervision of the course subject Professor and by the Long Distance Learning teaching assistant. However, once the course has started, the dedication of the learners has amazed all of us. As for the “Reception” like we have named the day in which the reeducatees have been greeted at the University, and there has been a guided tour to the many spots, such as the library and the historical center, among other activities, and in each one of them has received the course material and a T-shirt from the UPM, the enjoyment on having this new opportunity was manifested in their faces. All have worn the T-shirts at once, and many have said they were yearning for the in-class day at the University. Throughout the semester, the liveliness has remained unvarnished. Quite the contrary, every week the learners were becoming more attentive and interested, and even the most withdrawn have begun expressing their opinions and questioning, without any fear. Gradually, they have become to believe in the Project for social

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inclusion through the higher education in which they were taking part, to be real— and there have been no “hidden agendas” behind it. All of them appeared to be totally self-assured and unwavering to honor the opportunity granted by the end of the preparatory semester, when they have obtained the certificates and have taken part in a group dynamics, followed by a celebratory breakfast. Important to mention that, during the course preparatory semester, 4 out of 15 reeducatees have been freed from prison. However, what it was meant to be grounds for celebration has turned into fear, in view of we have been expecting their freedom to come when they had already been concluded the necessary qualification, with immediate effect, making living for themselves and brood. We need to search for possible ways to reintegrate those learners into the job market—or enabling their engagement into entrepreneurial activities. This is why we have contacted a businesswoman from the textile industry (garment arm) who have created a designer brand named Joaquina Brasil (Joaquina, 2019), some years ago, which hires in the foremost place female convicts and ex-cons from the prison system and, after many hours of conversation, has identified with the project and were willing to employ all the UPM reeducatees, whenever it is necessary. Partnerships with businesspeople are Paramount for that some ex-cons, primarily those who cannot count on any family livelihood support, are able to carry on the course until the end. Yet, we count, with the purpose of employability, on companies engaged with the Pro Ex-Con Program of the Government of the State of São Paulo. The Business Incubator of Mackenzie is an ecosystem for fostering and support to the development of new innovative startups—service industry, technology services based on light manufacturing. UPM is also on the brink of going into a partnership with a financing startup for small business loans. In the future, Mackenzie´s business incubator will foster the project of the ex-cons with entrepreneurial potential and keep track of it for quite some time, with the purpose of the business may have a high potential of doing well.

13.5 Conclusion The proposal of social re-inclusion of inmates of the Brazilian prison system through higher education is a very hard project on the domain of social responsibility, but it is difficult to highlight the entire project due to many hardships to make it feasible until the state paperwork to reach the agreements. This able to make potential stakeholders opting out of the intent; even mistrust by the detainees who feel forlorn behind the bars of jail, of someone who effectively could be concerned on dedicating a high standard degree, solely aspiring to assure them social inclusion and citizenship. The challenges have been coming forward as the project was being defined, with some even being undreamed of during the project conception, however a multidisciplinary and close-knit team, allied to some devoted agents of the public power have been capable of giving the proper directions before any problem, on which combined

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with the University Rectorate´s determination in delivering vocational discernment for the inclusion of vulnerable groups, it allows the project to do really well. Those who have been in contact with the project are being rubbed off by its transformational potential; therefore, there have not been few the offers of collaboration. An embodiment of that was a criminology Professor invited to give a lecture at the Penitentiary Citizenship Day, which has volunteered aid from their law firm, which through an agreement with the University, on the brink of entering into, tracking pro bono the legal cases of the project´s reeducatees. Greater challenges will come about as the project dares to object to the prison system goal, which historically has been the one of segregating and excluding the most vulnerable groups. However, the true calling of the university is not to keep itself alienated of the surroundings, discussing abstract matters, and without any potential for transforming society in a place more humane and righteous. The most important challenge of the project is related with the State Policy and Higher Education Institutions due to the need to raise awareness of the public management and social integration of each citizen in the society, then the next term not to discredit it for the covenant has been carried out by the predecessor. Social reinclusion and citizenship are essential in a society bound to be democratic, and it may not depend on few men and women of good will.

References Balibrea, L. F., & Rojas, A. V. (2012). El trabajo em prisión: observando las desigualdades de género. In: C. del Val Cid & A. Viedma Rojas (Eds.), Condenadas a la desigualdad – sistema de indicadores de discriminación penitenciaria. Barcelona: Icaria. Bertolin, P. T. M., & Benedito, A. (2013). Ações Afirmativas. In G. P. Smanio & P. T. Bertolin (Eds.), O Direito e as Políticas Públicas no Brasil (pp. 371–403). São Paulo, Atlas. Joaquina, B. (2019). Information site of the projeto “Joaquina Brasil”. http://www.joaquinabrasil. com.br. Ministério da Justiça do Brasil. (2016). Levantamento Nacional de Informações Penitenciárias (INFOPEN). http://www.justica.gov.br/seus-direitos/politica-penal/infopen_dez14.pdf. Smanio, G. P. (2009). As Dimensões da Cidadania. In: Revista da Escola Superior do Ministério Público. 2, jan.-jun, p. 13–23. Universidade Presbiteriana Mackenzie. (2019). Plano de Desenvolvimento Institucional (PDI). São Paulo: UPM.

Chapter 14

The Social Entrepreneurship and the Development of Human Capital Building Social Capital: The Case of the University of Fortaleza Randal Martins Pompeu and Marcus Mauricius Holanda Abstract The study investigates how social entrepreneurship through social responsibility actions can contribute to the development of the professional qualification and building social capital, as well as analyze the impacts of reducing social exclusion and creating job opportunities for those benefited from the professional training courses. The research and analyzed field of this study is the Professional Training Center—(CFP) of the University of Fortaleza, a non-profit institution, located in the northeast of Brazil and maintained by the Edson Queiroz Foundation that promotes free professional qualification courses to the low-income communities. The hypothesis that guided this research is the possibility that the social qualification projects derived from social entrepreneurship actions, can be an instrument of social inclusion, through the qualification and creation of new opportunities for insertion in the labor market. The methodology applied in this research has an exploratory nature, which aims to bring new knowledge about social entrepreneurship and social responsibility of the universities. The descriptive character aims to understand and list the contributions of social entrepreneurship in the formation of social capital and to analyze the impacts of the social transformation in the communities inserted in a company context. In this sense, the University of Fortaleza offers professional training that contributes effectively to the progress of the local economic growth. International and national references are used as theoretical resources to develop and delimit the theories of Social Entrepreneurship, Social Responsibility, Human Capital and development in order to understand the possibility of the universities to be social entrepreneurs and transforming agent to economic development. It identified that social entrepreneurship has great potential to be reproduced with the poor communities and social exclusion, with the possibility to promote professional qualification and insertion in the labor market and to promote income generation for the community. The results obtained show that the objectives proposed for a professional qualification, namely, qualification and insertion in the labor market of the low-income population were accomplished, competitive equality derived from the professional R. M. Pompeu · M. M. Holanda (B) University of Fortaleza, Fortaleza, Brazil e-mail: [email protected] © The Editor(s) (if applicable) and The Author(s), under exclusive license to Springer Nature Singapore Pte Ltd. 2020 D. Crowther and S. Seifi (eds.), CSR and Sustainability in the Public Sector, Approaches to Global Sustainability, Markets, and Governance, https://doi.org/10.1007/978-981-15-6366-9_14

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training, with the insertion of the actors that received training and increased income. It is noticed that the free professional qualification offered by the University of Fortaleza, promotes the inclusion and emancipation of the people in the situation of social risk. Keywords Social entrepreneurship · Human capital · Social capital · Professional training center · Local development · Corporate university social responsibility

14.1 Introduction The concern regarding social entrepreneurship issues creates behaviors that require the company to assume its duty and participation in the process of developing social, human, economic, political, cultural, and environmental. The combat to social inequalities and the cultural gap that divides the population, the promotion of human well-being development are not exclusive tasks of the State, they pass through all institutions. The construction of equilibrium and fraternal society has become an individual and collective commitment. In the perspective of social entrepreneurship, creating positive impacts for society is the main objective. In this way, the formation of human and social capital directs the actions for the development, profit being the necessary means to implement the entrepreneurial actions focused on society. From this perspective, the universities are enabled to promote education and qualification for human formation and contribute to local economic progress and growth. This research sought to contribute to better understand the question of how universities, through social entrepreneurship and social responsibility, have collaborated to the formation of human capital through professional training. The University of Fortaleza—UNIFOR, a non-profit institution located in the northeast of Brazil and maintained by the Edson Queiroz Foundation, was the field of research and analysis of this study. The methodology applied in this research has an exploratory nature, intends to bring new knowledge about social entrepreneurship and social responsibility of universities. The descriptive character aims to understand and list the contributions of the social entrepreneurship in the formation of social capital and analyze the impacts of the social transformation in the communities within the area of influence of the company. In this context, professional training has contributed effectively to the progress of local economic growth. It is noticed that social entrepreneurship is a potential model to be replicated around the poor communities that are socially excluded, with a great potential to improve professional qualification and insertion in the labor market and promote income generation for the community. The possibility of achieving competitive equality through professional training promotes access to the potentialities and creates mechanisms of balance for each

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individual to have the power to enter the labor market. Education and training are the key elements for eliminating inequalities and social inclusion. The results obtained shows that the objectives proposed for a professional qualification, namely: qualification and insertion in the labor market by the low-income population, were accomplished. Competitive equality derived from the professional training was established, with the consequent professional insertion and increased the income of the actors that received training.

14.2 The University and the Formation of Human and Social Capital The globalization expansion and the increasing competition in the economic world have accelerated the use of advanced technologies and as a consequence the emergence of jobs with higher demands. It also outlines a new professional profile, more flexible and endowed with a broad knowledge about the needs of the community in which it operates and capable of taking on new situations and getting involved in solutions to problems in society. In this context, it is important that the institutions of higher education are able to meet the challenge: Qualify professionals of excellence with social commitment and prepare them through higher and professional education, with human training and constantly updated, to be able to act critically and productively in the community. The university keeps in symmetry with society by bringing to the academic field new conceptions of the world (Zainko, 2006). Education represents an important strategy, which must be used to create changes in the behavior of the individual to benefit the society by creating life choices. Education is an important strategy, it is liberating and creates life opportunities for the individual and benefit to society as a whole (Topal, 2010). It is the greatest allied in the human formation and consequently the progress of the State, that purges hunger, poverty, marginalized, corruption, social and economic differences. Only a population, aware of their history, values, culture, and traditions, are capable of positioning themselves as subject of their rights and duties, recognizing that the authorities of the State are their representatives in the function as legislative, executive and judiciary to guarantee justice for the common good (Pompeu, 2005). From the recognition and appreciation of the community action process that other processes began to be created and exalted, having the community as a reference. The development of the community is proportional to the community action that aims to protect the interests and ensure solutions to the concerns of the population itself. Once properly motivated and empowered, the citizens are able to understand the essence of the social problems and contradictions they face and are subjected to (Putnam, 1996). Human development provides unlimited possibilities for the fulfillment of essential conditions for the individual: a life with quality, longevity, and development of personal capacities through education (Diniz, 2010).

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In this sense, Pompeu, Marques and Braga (2014, p. 124) assert that in this scenario, it is important to train qualified professionals for the labor market, in order to provide solutions to economic and social problems, viewing the challenges of contemporary society. So that “in light of these conditions, the professionals of the modern world cannot rely solely on technical expertise; they must also be committed to fulfilling the needs of society and be ready to provide solutions to social problems”. The theory of the shared value, Porter and Kramer (2006, p. 11), assert that this concept “redefines the boundaries of the capitalism by connecting the companies for better success with the progress of society”. Thus, the company maintains efficiently profit and behaves in the market in harmony with society, and both develop and generate mutual benefits for the market and society. Putnam (1996) defends that social capital has as its basic element the trust, as well as the norms and social relations chains that contribute to increasing efficiency of the society. The higher is the level of trust among individuals in the community higher is the likelihood of cooperation between them and, consequently, greater social capital. In addition, the more social capital is used the stronger it becomes. Unlike the financial capital, that usually is private and individual, the social capital constitutes a public good, since it is not a private property of anyone who benefits from it. The social capital, “socially reproductive cooperation” (Franco, 2004, p. 39), is essential for the proper functioning of organizations and their economic development. It represents the potential and ability of individuals to work together, interact with confidence, aiming common goals in groups or institutions (Fukuyama, 2005). Therefore, it is a set of common values and relations of trust and cooperation within a community, and as financial capital, it can be transformed, consumed or reconstituted (Commission of the European Communities—CEC, 2001). The idea of human capital, defended by Adam Smith (1723–1790), emphasizes the role of education and the division of labor as well as the learning and expertise acquisition to increase the production and contribute to economic and social development. It is noticed by Smith (1998) that strongly advocates the power of education and training as a way to improve human capacities, citizen well-being and to make the most productive human being over time and contribute greatly to the process of economic expansion (Sen, 2000). University education formation should support the processes of citizenship building, such as respect for human rights, environment, diversity, and must act in the promotion of culture, in harmony with the global context, local and regional demands. Education encourages the sense of community while fostering the spirit of solidarity and cooperation. Therefore, it is a pedagogical activity designed to foster mutual knowledge (individual and collective) and the sense of respect for the other, legitimized through the development and formative experiences capable of promoting values aimed to improve integration among peoples, with an end to social welfare, ethics and the strengthening of citizenship. It is also understood that one of the functions of the university necessarily passes through the production of high-value knowledge and this knowledge must be accessible to as many people as possible (Botomé, 1996).

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Relating the investment to human capital, Schultz (1961, p. 2) states that “economists have known for a long time that people are an important part of the nation’s wealth” and that the productive capacity of the human being is greater than all fortunes. Defend that financial resources with the training and qualification of individuals in the organizations increase the productivity and consequently obtain positive return rates. The investment in human capital, through education and professional education, represents an intangible resource. It is the skills that become part of the individual, and cannot be sold, and it is not the property of the organization. The professional training and qualification, adult education programs, formal education, including primary, secondary and higher education, represent investments that the companies provide to the human being, aiming the salary increase, improving the quality of life of the people, the formation and increase of human capital, having the productivity value incremented (Schultz, 1961). The actions of social entrepreneurship that provide the individual growth for the formation of human capital is the fundamental basis for the valorization of the community and implantation of social capital.

14.3 Social Entrepreneurship for the Development of Social Capital and Creation of Social Value Social entrepreneurship deals with social business and has in society as the main focus. It is an innovative process focused on the social area; an action based on an innovative idea and possible to be achieved, aimed to solve a situation that involves several people or segments of a community and that has a social impact as measurable results. Social entrepreneurship has as a strategy action the involvement of the community with the government and the company (Oliveira, 2008). According to Oliveira (2008, p. 170), social entrepreneurship can be considered as a “process of innovation in technology and social management to combat poverty, social exclusion through the promotion of social emancipation, human development, citizen empowerment, sustainable local development”. In this context, social entrepreneurship is defined as a group of people who develop “innovative solutions to social problems and cause changes in society “(Sarkar, 2008, p. 32). Social innovation is focused on people management, in order to obtain a solution to social issues (Marques, 2004). In this perspective, social entrepreneurs have the primary function of being socially beneficial and according to Martin and Osberg (2007), they do not organize themselves to generate substantial profits for investors but seek social value in the form of benefits to society. Jones (1980) asserts that companies have an obligation with the society in general, in viewing the impact and consequences of corporate actions within society. In this sense, arises the idea that companies are responsible for their actions in the world and not just locally.

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In this circumstances, Yunus (2011) affirms that the companies have a duty to support economic and social development, and also claims that the objective of the businesses, besides the profit for the shareholders, is to overcome poverty, as well as support in the solution of education problems, health, environment, and various social problems, not only maximize profit. In this perspective, Yunus (2011) asserts that the rules of corporate citizenship directed to social entrepreneurship must, above all, ensure that businesses do not put in endanger anybody’s life, which implies not putting the life of the workers at risk and avoid to pollute the environment, as minimum steps to create a healthy environment, develop products easier and safer for those who use them. Nonetheless, it also asserts that the compliance of the laws must be established, as well as the promotion of practices for a better world. In this sense, Pompeu and Marques (2012) demonstrate that both social entrepreneurship and social responsibility are presented in their active form when qualifying and empowering people, and prepare them for the insertion in the labor market, by adopting practices that support social inclusion with the power to transform these people qualitatively and generates greater economic and social integration in human development, especially with the use of inclusive practices. It is perceived that social entrepreneurship is based on the creation of social value for the transformation of society with a positive social impact, always focusing on social innovation and the construction of social technologies to meet the need to solve the problems that afflict society and thereby generate positive social impact. In this sense, it is perceived that social entrepreneurship has its foundation of existence focused on social interaction and actions that positively influence change in society. Promote the development of society is the primary objective of the social entrepreneur, with profit being secondary and supporting social goals (Dess, 1998). It is observed that the mission of social entrepreneurs “is explicit and central”, as Dess (1998, p. 2) explains, the social impacts of social entrepreneurship in the construction of a fair society are the main focus and not only the creation of wealth, since this is a means to achieve the mission of the social entrepreneur. Social entrepreneurship has the mission of maximizing social value (Parente & Quintão, 2014) and also has the commitment to maximizing social results. In this perspective, Melo and Froes (2002, p. 34) understand that the social entrepreneurship has its driving force through transformative ideas and “assumes an attitude of nonconformity and criticism facing the existing social injustices in its region and in the world”. Thus, social entrepreneurship focuses on the collective for the production of goods, services, development of social technologies, directed to solve social problems and positively impact the community through its social transformation and elimination of risk situations and economic neglect. Analyzing the social entrepreneurship, it stands out that with the dynamism and stimulation of social transformations by creating solutions and innovations for the problems that afflict society. By innovating, it brings the possibility of realizing sustainable transformations and of positive impact on the community in the medium or long term (Alvord, Brown & Letts, 2002).

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In this perspective of stimulating social transformations with innovative actions, it establishes the creation of social value for the community in the resolution of the social problems that directly reach it. In this way, the establishment of social value can be understood as the result of the positive impact derived from the actions of social entrepreneurship that generate benefits to society. These social values must be created in such a way that they are permanent, grounded all the actions of social entrepreneurship and their intrinsic relationship with the community in solving the problems that directly affect it.

14.4 The Profissional Training Center of the University of Fortaleza as an Instrument of Training, Inclusion, and Social Transformation The case of the Professional Training Center is a great example of social entrepreneurship since it is based on the transformation of society; it is possible to create innovative businesses with the development of social technologies on behalf of human and social development by promoting opportunities for the needy and helpless population. (Unifor, 2019a). This way the analysis of the case of the Professional Training Center was chosen as a successful example of social entrepreneurship that transforms the lives of thousands of poor and marginalized communities. Despite the students trained in the courses come from different places and far from the University of Fortaleza, the main objective of the project is to change the reality of the population, mainly local, whose the social problems coming from the poverty, lack of education, health, and low income is the reality of almost the entire local population. The courses offered, allied with the direction to insertion in the market, widen employment opportunities, and raise family incomes, creating a positive impact for the community in promoting the economic and social development. Thus, in order to contribute to the growth of the State of Ceará, through education and professional qualification, the Edson Queiroz Foundation has promoted, for more than 30 years, social entrepreneurship and social responsibility actions, by aiming to engage the students and encouraging the interaction of the academic community with social projects. In this way, the concept of learning in the classroom is covered, housing the socialization, knowledge by providing services to the community, materializing it in social benefits. Every year, the Edson Queiroz Foundation expands its operating philosophy, which consists in promoting the acceleration of the development and growth, with the primary mission of supporting initiatives for the production of positive results for all society, through the renewal of teaching and adoption of skillful mechanisms with a variety of ideas that can contribute to a Brazil socially fairer (Unifor, 2019b).

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14.5 Case Analysis of the University of Fortaleza—The Formation of Human and Social Capital The creation of the University of Fortaleza—UNIFOR by the Edson Queiroz Foundation happened around the 1973s when Brazil was facing a crisis in higher education due to the reduced number of places available (Unifor, 2019b). The exit of many young people to live in other states to pursue or for completing their studies was inevitable because, in large urban centers, other institutions of higher education could fulfill their aspirations. In the State of Ceará, the number of vacancies available in the few university courses was offered only by two public institutions based in Fortaleza, capital of the State of Ceará, the Federal University of Ceará (UFC) installed in 1956 and the State University of Ceará (UECE), initially created as Educational Foundation of the State of Ceará (FUNEDUCE) in 1973 (UECE, 2019). However, the conception of UNIFOR was not only motivated by a market study that revealed the lack in the State’s educational system, but it aimed also to act in the development process of the region and to provoke changes in the social and economic status of the beneficiaries, with positive effects for families and the community. The Edson Queiroz Foundation, a non-profit private organization, allocates the resources of student’s tuition payments for academic education to activities that can contribute socially with the population in need of the city of Fortaleza. The academic courses, offered by the University, are based on methodologies that reconcile the teaching of excellence with regional development, making impossible the inseparability of Teaching, Research, and Extension (Lei n. 9.394, 1996). In this way, the social entrepreneurship of the University becomes an indispensable tool to decrease the social inequalities caused by transnational market capitalism. Its effectiveness is closely related to the awareness of the faculty and student body and constitutes a project of shared responsibilities. It promotes the synergy of the activities developed at the university with the needs of society (Tassigny, 2008). UNIFOR is an institution dedicated to the development of Teaching, Research, and Extension, extending to the professional training that is materialized with the Profissional Training Center—(CFP), coordinated by the Vice-Rectory of Extension and University Community. The CFP project was created in 2002 to provide training to low income or to people without an occupation, by offering them technical and professional courses. The courses are offered in three different shifts, enable the residents of poor communities to carry out activities that can facilitate employment and generate income (Pompeu & Holanda, 2019). The University defines its activities based on three basic premises: service provision to the community, the relationship between teaching and research, and integration among academic and social activity. That gives the necessary capacity for organization and articulation for social development, and without these actions, it could be confused just as assistentialism. The urgency for inclusive practices, driven by the social movement itself strengthened and strives for guaranteeing the essential rights for building a minimum level of equality among individuals, forms the idea of citizen emancipation allied to the need for effective social actions.

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The courses offered at the Professional Training Center fulfill the procedure of the projects elaborated with the pedagogical support of the faculty of the University of Fortaleza, and consequently, approval of the Vice-Rectory of Extension and University Community and Rectory. It is necessary to assert that all students, regardless of the course, can receive a certificate, a document that gives authenticity and legitimacy upon approval, which is given through the verification of the frequency and final evaluation of each course, by tests and/or practical activities, with the purpose of evaluating the subject taught in each module. The courses are held at the University of Fortaleza Campus, in classrooms adapted to the number of students, between 25 and 30 students per class, aiming for a better involvement among the community and academic context. The enrollment process occurs periodically, to allow the presence of a greater number of people, enabling access to professional education. The students of the Professional Training Center can also enjoy the infrastructure and physical space of the University of Fortaleza because the courses are taught with access to workshops, print shop, video library, and computer and electronics labs (Unifor, 2019a). The didactic material is provided free of charge and as a stimulus to continuous study, allowing the students to follow the subjects taught and the adaptation to the educational process, providing differentiated training. Under the aegis of a dynamic and inclusive pedagogical practice, professional education also points to the formation of citizens, denoting the transformative force of a socially neglected individual that recovers possibilities for insertion through professional training. The students have the chance to practice the knowledge learned with activities of a practical nature, consolidating the theoretical knowledge and developing specific skills, coherent to the objectives of each course. Evaluations are carried out periodically with the purpose of verifying the quality of the courses taught and mainly the acceptance of the community to the initiative offered by the University, as well the collection of suggestions for new courses and analysis of the learned content. Usually, courses are offered in the area of Tourism, such as Waiter Training, Waiter Assistant, Housekeeper, basic Foreign Languages, and English and Spanish for Tourist Workers. In the area of technological sciences, the following courses are offered: Basic Computing, Civil Construction Assistant, Architectural Plants Reading, Basic Electrician, and Advanced Computer Maintenance. At the Administrative Sciences area, the courses most sought are Office Assistant, Concierge, and Retailers Agents. This offer also aims to qualify and standardize the performance as street vendors within the UNIFOR campus, providing to the participants specific training and provide practical internship for Administrative Sciences students. In the Health Sciences Center, the courses related to Child and Elderly Caregivers and to the use of medicinal plants can be highlighted, among others (Unifor, 2019a). The research was conducted through UNIFOR internal documents and reports, and it could be observed that during 17 years of existence of the project, more than 36,000 (thirty-six thousand) people have been trained in the areas of technology, administrative, and health. Students teach the professional training courses from different fields of the University, guided by qualified faculty with the support and coordination of their respective undergraduate courses. An opportunity to combine

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theoretical learning with practical experience in promoting knowledge as an element indispensable for good professional training in each field. After the data collection and its subsequent analysis, it was observed that in 2018, 110 courses were held in four modules of three months each, with a workload average of 60–80 h. More than 2,671 students, from one hundred and ten classes, were qualified to re-enter the labor market and to carry out specific work activities. It was noticed that until June 2019, 1.620 vacancies were distributed in 54 classes of various types of courses. It is important to highlight that, for the first time, a class of 30 students with hearing impairment was taught in Brazilian Sign Language— Libras. Throughout 2019 it will still be carried out in two more blocks of courses with the forecast of another 1,500 vacancies to be offered free of charge to the population. It is possible to observe that the fight against social exclusion is concretized by adopting practices directed to minimize its effects, implementing mechanisms able to the people development and the construction of professional education spaces. The social indicators of communities surrounding the University of Fortaleza, for example, highlight the urgency of the implementation of initiatives that proclaim a new relationship between university and community in a more participative and active way to reduce the inequalities of access to education, dignity, social rights, prioritizing the individual and the sustainability relation between university community and external public. The actions of social entrepreneurship and social responsibility of the University are shown in an active way the qualification and training of people for insertion in the labor market, by adopting practices to support social inclusion, in a significant and present way in the execution of initiatives. The integration of people, especially those living under the circumstance of social risk, evidences the need for mobilization and articulation of effective actions as an essential condition for social adequacy, in order to confer them the decision-making power of active participation in society. There is also a need for a continuous reflection on the social role of agents who adopt inclusive practices, such as the University, which uses its own human resources for the materialization of initiatives like the Profissional Training Center, avoiding the refuge to assistentialism to work on insertion mechanisms of an individual to building citizenship and professional improvement. Therefore, the impact perceived in this connection with the market is a great absorption of these professionals by the companies. Alongside this, the training serves as an instrument of human development in general, with successful cases not only in the opportunity of employment, but also in stimulating entrepreneurship, with an incentive to create new businesses and perspectives of lives. It is noticed that the actions of UNIFOR’s CFP project in promoting professional training courses serve as a great tool for transforming local society. Associated with the focus on the people and formation of social networks, UNIFOR’s CFP contributes to the regional and local development and stimulates social entrepreneurship. This practice can be observed in the studies of Slaughter and Rhoades (2004) and Thompson (2004). The university plays the role of the agent of social and economic transformation by offering professional courses, promoting sustainable human development, focusing

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on people, and contributes to the formation of human and social capital (Pompeu & Holanda, 2019). In this perspective, it is identified that the UNIFOR institutionalizes the social entrepreneurship and social responsibility by the involvement of the faculty in the organization of content and the student as a monitor of the CPF courses. It creates a competitive differential and provides a positive response to Stakeholders. It also stimulates culture, the development of social networks, and contributes to regional and local development. In this way, there is the formation of human and social capital, which contributes to sustainable local development of the communities to solve the social problems that directly affect them.

14.6 Conclusion This research shows how the social entrepreneurship actions of the University of Fortaleza—UNIFOR contribute to the formation of human and social capital and acts as a sustainable local development tool through professional training. The University, by implementing social entrepreneurship projects through professional qualification, conciliates theory and practice, transforms students, faculty, employees, and the community into citizenship committed with a society where they are inserted, concerned about the social injustices, responsible for local development, for social inclusion and the realization of social rights. It is observed that the social technology developed through the Profissional Training Center can contribute to the solution of problems and seeks to repair one of the main causes of social problems, namely: the absence of inclusive education that promotes the professional training of the population and direct them to the job market. In this way, the social impacts derived from UNIFOR’s social entrepreneurship actions create a beneficial impression with fruitful results for society. Thus, it can be seen that the actions generate in practice economic emancipation, social inclusion, and autonomy of the citizens. It is noticed that the Profissional Training Center, through UNIFOR’s social entrepreneurship and throughout its 17 years of existence, has already trained more than 36,000 (thirty-six thousand) citizens in need of specialized training. In addition to promoting the creation of social capital, the value of such actions has the capacity to promote the sustainable development of the community by eliminating the gap of education and technical professional development that makes society able of developing solidarity activities and contextualizing the acquired knowledge in order to solve the community problems. It is perceived that the University of Fortaleza—UNIFOR as a private higher educational institution, maintained by Edson Queiroz Foundation, a non-profit organization, fulfills its commitment with the economic and social development by carrying out and promoting services of positive impact in the region in which it installed, targeting the underprivileged population, contributing unequivocally to the

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development of human and social capital and also promotes sustainable development in the region, focusing on innovation and social entrepreneurship. The results obtained in this study showed that UNIFOR through social entrepreneurship:(i) invests in human capital by offering free professional training courses, based on the demand and characteristics of the region; (ii) promotes the improvement of the quality of life of people living in the areas surrounding the institutions; (iii) encourages the creation of start-ups and new businesses, promoting innovation and entrepreneurship; (iv) trains professionals of excellence, committed, and awareness of social problems; (v) promotes self-esteem and credibility among the people of the same community, investing in social capital, and (vi) becomes a transforming agent and instrument of sustainable local development. It is pointed out that the University of Fortaleza—UNIFOR effectively promotes through social entrepreneurship, strategies for the construction of a multicultural and inclusive democratic society, by reducing the social inequalities. In this context, education with human training becomes an important strategy in the qualification and training of professionals, able to act critically and productively facing new challenges of contemporary society. The desired institution of higher education in the twenty-first century represents the place of transmission and construction of knowledge as a fundamental space where democracy, citizenship, and social justice are promoted. In order to ascertain the evidence on the development and training of human capital derived from the courses of the Professional Training Center, the University of Fortaleza, in 2019, created the center for monitoring graduates in the labor market. The initial follow-up was carried out with 485 graduates. A degree of employability of 76.30% outcome for these graduates, as a result of the completion of the courses, which is considered a positive result. Besides, the monitoring group registered that the graduates feel empowered and with high selfesteem for having completed a professional training course with excellent acceptance by the job market. There were 119 spontaneous reports of satisfaction and gratitude to UNIFOR for having provided the professional training they needed so much to join a job opening. The center for monitoring graduates in the labor market detected that some graduates have not concluded the courses. Thereby, while trying to identify the reasons why the amount of 39 students were able to complete the training, it was noted that 26 students didn’t do it. The reason why these students have not concluded the training is because they got jobs and claim that the content taught in the CFP was essential for this achievement. The center for monitoring graduates in the labor market detected that some graduates have not concluded the courses. Thereby, while trying to identify the reasons why 39 students were able to complete the training, it was noted that the amount of 26 students didn’t do it. The reason why these students have not concluded the training is that they got jobs and claim that the content taught in the CFP was essential for this achievement.

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For the year 2020, the proposal is to apply a questionnaire at the end of each course to all students, as well as keep track of them for 3 months in order to verify the degree of employability resulting from the courses offered by UNIFOR.

References Alvord, S. H., Brown, L. D., & Letts, Christine W. (2002). Social Entrepreneurship and social transformation: An exploratory study. Hauser Center for Nonprofit Organizations Working Paper, 15. Retrieved November 20, 2018, from http://dx.doi.org/10.2139/ssrn.354082. Botomé, S. P. (1996). Pesquisa alienada e ensino alienante: o equívoco da extensão universitária. Petrópolis/São Carlos/Caxias do Sul: Vozes/EDUFSCar/EDUCS. Commission of the European Communities—CEC (2001). O Livro Verde: Promover um quadro europeu para a responsabilidade social das empresas, Brussels. Retrieved May 15, 2019, from http://www.enterpriseeuropenetwork.pt/info/RSO/Documents/Livro%20Verde-Promover% 20um%20Quadro%20Europeu%20de%20Responsabilidade%20Social%20para%20as%20E mpresas.pdf. Dess, J. G. (1998). The meaning of social entrepreneurship. Retrieved May 14, 2019, from https:// entrepreneurship.duke.edu/news-item/the-meaning-of-social-entrepreneurship/. Diniz, F. S. (2010). Crescimento e desenvolvimento econômico–modelos e agentes de processo. Lisbon: Sílabo. Franco, A. (2004). O lugar mais desenvolvido do mundo. Investindo no capital social para promover o desenvolvimento comunitário, Sobradinho dos Melos–DF: AED. Fukuyama, F. (2005). Construção de Estados. Translation by Nivaldo Montingelli Jr., Rio de Janeiro: Rocco. Jones, T. M. (1980). Corporate social responsibility revisited, redefined, Management Review, California 22(59–67), 59–60. Retrieved December 5, 2018, from http://journals.sagepub.com/doi/pdf/ 10.2307/41164877. Lei n. 9394, 20 December 1996 (1996). Estabelece as diretrizes e bases da educação nacional. Brasília, DF. Retrieved July 20, 2019, from http://www.planalto.gov.br/ccivil_03/leis/l9394.htm. Marques, C. S. (2004). O impacto da inovação no desempenho econômico-financeiro das empresas industriais portuguesas. Tese de doutoramento, Vila Real: Departamento de Economia, Sociologia e Gestão, Universidade de Trás-os-Montes e Alto Douro. Martin, R. L., & Osberg, S. (2007). Social entrepreneurship: The case for definition. Standford Social Innovation Review (Spring 2007). Retrieved May 16, 2019, from http://www.ssireview. org/articles/entry/Social_entrepreneurship_the_case_for_definition. Melo, P. F., & Froes, C. (2002). Empreendedorismo social: A transição para a sociedade sustentável. Rio de Janeiro: Qualitymark. Oliveira, E. M. (2008). Empreendedorismo social: da teoria à prática, do sonho à realidade: Ferramentas e estratégias. Rio de Janeiro: Qualitymark. Parente, C., & Quintão, C. (2014). Uma abordagem eclética ao empreendedorismo social. In C. Parente (Org.) Empreendedorismo social em Portugal, Porto: Universidade do Porto. Pompeu, G. V. M. (2005). Direito à educação: controle social e exigibilidade judicial. Fortaleza: ABC Editora. Pompeu, R. M., & Holanda, M. M. (2019). A responsabilidade social da universidade na formação de capital social e humano: os casos da utad e da unifor no contexto lusófono. In G. V. M. Pompeu, N. E. A. Santiago, & M. J. F. Monte (Eds.), Dignidade humana edesenvolvimento social. Unifor: Fortaleza. Pompeu, R. M., & Marques, C. S. (2012). As ações de responsabilidade social da Unifor para o desenvolvimento social, formação de capital humano e capital social, In R. Pompeu, & C. Marques, (Org.), A responsabilidade social das universidades, Florianópolis: Conceito.

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Pompeu, R. M., Marques, C., & Braga, V. (2014). The influence of unversity social responsibility on local development ande human capital. In M. Karatas-özkan, K. Nicolopoulou, & M. Özbilgin (Eds.), Corporate social responsibility and human resource management a diversity perspective. London: Edward Elgar Publishing. Porter, M., & Kramer, M. (2006). Estratégia e Sociedade: O elo entre vantagem competitiva e responsabilidade social empresarial, Havard Business Review Brasil 84(12), 78–92, 90. Retrieved May 17, 2019, from http://hbrbr.com.br/o-elo-entre-vantagem-competitiva-e-responsabilidadesocial-empresaarial/. Putnam, R. (1996). Comunidade e democracia: a experiência da Itália moderna. Rio de Janeiro: Editora Fundação Getúlio Vargas. Translation by Luiz Alberto Monjardim. Sarkar, S. (2008). O empreendedor inovador: Faça diferente e conquiste seu espaço no Mercado. Rio de Janeiro: Elsevier. Schultz, T. W. (1961). Investment in human capital. The American Economic Review, 51(1), 1–17. Sen, A. (2000). Desenvolvimento como liberdade. São Paulo: Companhia das Letras. Translation by Laura Teixeira Motta. Slaughter, S., & Rhoades, G. (2004). Academic capitalism and the new economy: Markets, state, and higher education. Baltimore: Johns Hopkins University Press. Smith, A. (1998). A riqueza das nações: Investigação sobre sua natureza e suas causas (3rd ed.). São Paulo: Abril Cultural. Tassigny, M. (2008). Extensión, cidadanía e inclusión social: bases conceptuales y el programa de formación para el trabajo. In Responsabilidad social de las universidades (pp. 86–101). Buenos Aires: Fundación Red Latinoamericana de Cooperación Universitaria-RLCU. Thompson, J. L. (2004). The facets of the entrepreneur: Identifying entrepreneurial potential. Management Decision, 42(2), 243–258. Topal, R. S. (2010). CSR in universities around the world. SRRNet, Discussion Paper in Social Responsibility, No. 0902. Retrieved May 11, 2019, from http://www.socialresponsibility.blz. Universidade de Fortaleza–Unifor. (2019a). Responsabilidade social. Retrieved July 07, 2019, from http://www.unifor.br/responsabilidade-social. Universidade de Fortaleza–Unifor. (2019b). Fundação Edson Queiroz. Retrieved July 07, 2019, from https://www.unifor.br/fundacao-edson-queiroz. Universidade Estadual do Ceará–UECE. (2019). Funedece. Retrieved July 10, 2019, from http:// www.uece.br/institucional/historico/. Yunus, M. (2011). Bulding social business: The new kind of capitalism that serves humanity’s most pressing needs. New York: Public Affairs. Zainko, M. A. S. (2006). Gestão das competências e formação do cidadão do século XXI no estado do Paraná. In J. Desaulniers (org.), Responsabilidade social & universidade (pp. 155–190). Porto Alegre: EDIPUCRS.

Chapter 15

The Future of the Accounting Degree Rute Abreu and Ermelinda Oliveira

Abstract Many insolvencies and bankruptcy cases, especially, among countries that are economically and financially dependent on others, were reported in newspapers and scientific journals, but the list of reasons and risks are truly a failure to treat the underlying cause of these cases. Without no doubt that the accounting information system applied in a firm generates reports that identifies quickly all the data, then the relevant information, produced by this system, allows to appropriately prevent this situation. A comprehensive overview of these tendencies, all over the world, will promote the most important competencies to help accountant professionals to become leaders and guide their firms to reach their personal and organizational goals, such as: strategy, planning, performance, reporting, control, technology and analytics, business operations, professional ethics and values. Since the pioneering guidelines of the International Accounting Education Standards Board (IAESB) that published the International Education Standards (IES) for their professional development and in order to the higher education student careers and their businesses be more ethically and sustainably developed. Methodologically, this research focuses, on the one hand, in the literature review to contextualize the accounting degree, in general, and, the competency framework for professionals in the digital age. On the other hand, it promotes the investigation of the new approach to advancing accountancy education at the national level. The research is supported by the international accounting standards and, also, the information and communications technology skills and professional scepticism proficiency grow across legal, financial, economic and social jurisdictions. In the future of the accounting degree, the results of this research evaluate the impact to provide education to accounting students and training to accounting professionals to correctly perform reports for rapid diagnosis of dramatic economical and financial situations. The novelty is that the graduate in accounting will be selfcritical for each day activities, politics and strategies, especially when they prepare R. Abreu (B) Instituto Politécnico da Guarda/UDI-IPG/CICF-IPCA/CISeD-IPV, Guarda, Portugal e-mail: [email protected] E. Oliveira Instituto Politécnico da Guarda/UDI-IPG/Citur-Guarda, Guarda, Portugal © The Editor(s) (if applicable) and The Author(s), under exclusive license to Springer Nature Singapore Pte Ltd. 2020 D. Crowther and S. Seifi (eds.), CSR and Sustainability in the Public Sector, Approaches to Global Sustainability, Markets, and Governance, https://doi.org/10.1007/978-981-15-6366-9_15

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statistical systems in large scale with new sources and legal databases to diagnose problems earlier and then propose solutions. Keywords Accounting · Higher education · Portugal · Education strategies

15.1 Introduction This research recognizes the central role of the labour market of the accounting degree with the presence of effectiveness, efficiency and strengths for the future. Indeed, Education for Sustainable Development (ESD) plays an essential role in providing students with the knowledge and skills to improve solutions to the global sustainability challenges through innovative pedagogy that enhances quality teaching and learning (UNESCO, 2014, 3). Methodologically, this research focuses, on the one hand, in the literature review to contextualize the accounting degree, in general, and, the competency framework for professionals in the digital age. On the other hand, it promotes the investigation of the new approach to advancing accountancy education at the national level. The research is supported by the international accounting standards and, also, the information and communications technologies skills and professional scepticism proficiency grows across legal, financial, economic and social jurisdictions. This research is unique, because it presents an evaluation of the accounting degree in Portugal which allows to promote sustainable development of the accounting market. This market recognizes the importance and the promotion of sustainable development that are consistent with taxation and accounting obligations under the challenges of a mix of standards, including regulatory, voluntary and other rules that must be applied, at the national level. The exchange of experiences for the organization is vital to reaffirm new opportunities and fight for risks on inequality, as well as, examples, such as: United Nations Conference on Sustainable Development in Rio (UNCSD, 2012) that invites “accountants would save the world.” (Bakker, 2013). For many decades, the successful firm on the future will be open up to entirely new possibilities for improving by the accounting context and making it timelier to the needs of information of the management structure that will be conducive to innovation (Ansoff, 1965). Beyond this, both external and internal problems are given appropriate and continuous attention. The impact may be direct in terms of the firm (insolvency or bankruptcy), or indirect, in the lower level of taxes and economic activities. These perspectives allow to promote the use of big data sources as a transparent and independent data to take economic and financial decisions that promote the well-being of the society. Because of these tactics, the level of knowledge and skills needed for the accounting degree demands from the higher education system new approaches, new methodological strategies and more dynamics of all scientific areas. All relevant areas must input understanding and awareness of the economic reality to the accountant student and also the accountant professional due

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to the velocity of the information and the data produced which demands how quickly the accounting degree change to the new concepts on the debate on a worldwide basis and under the (national and international) accounting standards. A competitive and sustainable higher education system is needed to push the innovation of the accounting degrees and markets to more sustainable development. The remainder of this article is organized as follows. Section 15.1 presents the introduction of this research. Section 15.2 provides a literature review about the Higher Education System, in general, and the Accounting Degree, in particular. Section 15.3 presents the empirical methodology to manage statistics about the accounting degree in Portugal. The final section of the article summarizes results and suggestions of future lines of research, knowing that accountancy education must join strategies of the professional accountancy organizations, public accounting firms, employers, higher education institutions and professional education providers.

15.2 Theoretical Framework: The Higher Education System and the Accounting Degree The theoretical framework of this research is based on the Portuguese educational system regulated by the Basic Law of the Educational System (AR, 1986). This system is developed in three complementary levels: basic, secondary and higher education and pre-school till 3 years old and short cycle for the professional vocational training. In Table 15.1, it is presented the distribution of the number of students, from 1996 till 2018, by year and level of education. From the school year of 1996/1997 to the school year of 2017/2018, the number of students had a decrease of 305,155 students, due to the stronger reduction of birth rate. Indeed, the basic education (first cycle) had a strong decrease with 156,447 students with a negative relative value of 30.95% of the total students. The higher education had an increase of 109,715 students with the most significant relative value of 55.2% of the total students. So, this research focuses on the total students of 308,489 that go to the Portuguese Higher Education. The Portuguese Higher Education is organized in a binary system that integrates University and Polytechnic Education and subdivided into public and private institutions. Thus, the polytechnic education, the first cycle degree can be obtained after the conclusion of 180 ECTS credits and a normal length with 6 semesters and, exceptionally some degrees, such as mandatory by the same professional order demands more ECTS credits up to 240 with 7 or 8 semesters. Also, in university education, this degree has the same length. The degree of “Licenciado” is conferred to those Higher Education Institutions which, through the approval in all the curricular units, have obtained the necessary number of credits. This degree is awarded to students that: (a) Demonstrate knowledge and understanding in a training area in such a level that:

242

R. Abreu and E. Oliveira

Table 15.1 Distribution of number of students by year and level of education, 1996–2018 Year

Level of education Total

Pre-school Basic education education 1st cycle 2nd cycle

3rd cycle

Secondary Short education cycle

1996 1,922,725

82,828

505,514

289,482 429,818 416,309

1997 1,893,727

–

Higher education 198,774

94,530

492,089

277,154 419,062 398,166

–

212,726

1998 1,871,464 100,753

489,700

258,257 413,851 382,261

–

226,642

1999 1,847,321 105,517

489,193

253,517 398,094 362,143

–

238,857

2000 1,843,185 113,644

489,049

248,364 382,288 354,832

–

255,008

2001 1,834,792 117,226

483,329

243,735 372,837 344,135

–

273,530

2002 1,802,759 123,060

468,241

241,637 358,987 326,045

–

284,789

2003 1,784,653 127,688

458,684

243,246 347,423 316,848

232

290,532

2004 1,779,117 133,353

456,725

243,650 341,590 315,066

424

288,309

2005 1,760,120 137,297

454,458

238,122 336,593 310,762

615

282,273

2006 1,716,075 139,412

443,906

226,488 346,973 282,424

1,351

275,521

2007 1,729,083 138,168

447,527

225,426 350,856 289,714

2,071

275,321

2008 1,762,540 141,854

445,768

233,272 372,344 280,286

4,683

284,333

2009 1,902,774 142,347

433,288

236,174 424,806 377,981

5,740

282,438

2010 1,881,505 141,044

424,587

236,023 409,416 369,979

6,628

293,828

2011 1,844,317 143,472

410,040

241,652 389,692 343,341

8,142

307,978

2012 1,788,121 144,918

400,439

230,961 371,889 319,542

8,798

311,574

2013 1,731,329 143,584

388,658

221,667 349,617 315,014

9,079

303,710

2014 1,687,590 141,999

373,644

219,003 335,894 305,613

9,783

301,654

2015 1,668,023 141,571

367,667

207,369 336,527 312,497

10,033 292,359

2016 1,629,116 137,573

357,232

198,871 323,435 307,984

6,137

297,884

2017 1,624,713 133,930

352,382

196,158 320,358 314,478

4,811

302,596

2018 1,617,570 127,535

349,067

193,563 318,711 315,522

4,683

308,489

Source PORDATA (2019)

(i)

Based on the knowledge acquired in secondary education, may develop and expand upon it; (ii) Can work with advanced learning materials and relate to them; (iii) Have state-of-the-art knowledge in some aspects of that area. (b) Demonstrate how to apply acquired knowledge and understanding capacity, in order to clearly demonstrate a professional approach to the work carried out in their vocational area; (c) Have the capacity to solve problems within the field of their training area, based upon their own arguments;

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Table 15.2 Distribution of Portuguese students by level of ISCED and by gender, 2017/2018 Gender

5—Short cycle degrees

6—Licenciado or equivalent

7—Master degree or equivalent

8—PhD degree

Total

Men

2,176

19,812

10,346

1,067

33,401

Women

1,580

28,996

14,673

1,199

46,448

Total

3,756

48,808

25,019

2,266

79,849

Source DGES (2019)

(d) Have the capacity to collate, select and interpret relevant information, particularly in their training area, which will enable them to consolidate the solutions they present and the opinions they put forward, including the analysis of relevant social, scientific and ethical aspects; (e) Possess competencies that enable them to communicate information, ideas, problems and solutions, both to experts and non-experts; (f) Possess learning competencies that will enable them to benefit from lifelong learning with a high degree of autonomy. The total number of students that have been graduated on the education programmes promoted by Universities and Institutos Politécnicos based on the International Standard Classification of Education (ISCED) level of qualification is presented in Table 15.2. It is important to detail that ISCED presents each level: short cycle degrees, Licenciado or equivalent, master’s degree or equivalent, PhD degree has been implemented by all countries in EU since 2014. In Table 15.2, during the school year of 2017/2018, the total students of 79,849 has concluded at least one degree. Women present the higher value in 6, 7, 8 ISCED levels of qualification, an exception has to be made in the short cycle’s degree, in which men present higher number than women, basically due to the professional focus of these courses and relation with labour market. Also, important is that 61% of the total students have obtained a graduate degree (licenciado in Portuguese), 31% master degree, 4.7% short cycle degree, but, only 2.8% of the total students have Ph.D. degree with same number of men and women. Table 15.3 shows the distribution of graduate students by the school year since 1996/1997 till 2017/2018 and general area of education and training. In Table 15.3, from the school year of 1996/1997 to the school year of 2017/2018, a total students of 1,510,088 have concluded at least one degree. The general area “business sciences, administration and law” has a total of 296,537 students which is the most significant. After the school year of 2013/2014, it appears that 118 students are without a classification on the general area of education and training and it has been classified as “unknown area”. This research is focused on the most relevant general scientific area during this period of analysis with less graduate students in the school year of 2008/2009 with 12,802 (17.3% of the total students) and the higher in the school year of 2017/2018 with 16,178 (20.3% of the total students). Due to the importance of the general area of “business sciences, administration and law”, this research details the population of 29 degrees developed by 21 Higher

11,659

2,020

807

5,508

987

Business sciences, administration and law

Natural sciences, mathematics and statistics

Information and communication technologies

Engineering, manufacturing and construction

Agriculture, forestry, fisheries and veterinary science

Unknow area

1,253

4,580

Social sciences, journalism and information

4,788

4,227

Arts and humanities

Services

6,354

Education and training

Health and social protection

1996/97

General area of education and training

1,738

4,388

1,212

6,380

980

2,139

12,646

5,129

4,626

6,619

1997/98

1,963

5,066

1,187

7,063

876

2,089

13,964

5,655

4,693

8,245

1998/99

1,879

6,892

1,217

7,363

892

2,281

13,307

5,416

4,779

9,607

1999/00

2,024

10,142

1,389

7,533

862

2,486

13,452

5,453

4,814

11,936

2000/01

2,402

9,795

1,319

8,736

966

2,782

12,067

5,523

5,283

14,024

2001/02

2,661

10,485

1,389

9,518

914

3,212

12,395

6,050

5,643

14,949

2002/03

2,959

11,505

1,321

10,126

1,117

3,254

12,412

6,162

5,927

12,088

2003/04

3,346

13,113

1,352

10745

1,199

3,370

12,079

6,698

6,059

10,112

2004/05

Table 15.3 Distribution of graduate students by school year and general area of education and training from 1996/1997 to 2017/2018

3,398

15,000

1,214

10,688

1,032

3,079

12,415

7,722

5,989

8,672

2005/06

(continued)

3,560

15,505

1,409

16,530

1,305

3,890

15,269

9,118

7,039

6,916

2006/07

244 R. Abreu and E. Oliveira

2007/08

5,200

7,407

8,890

13,702

4,818

1,388

18,045

2,046

16,442

3,601

General area of education and training

Education and training

Arts and humanities

Social sciences, journalism and information

Business sciences, administration and law

Natural sciences, mathematics and statistics

Information and communication technologies

Engineering, manufacturing and construction

Agriculture, forestry, fisheries and veterinary science

Health and social protection

Services

Source DGES (2019)

Total

81,539

42,183

Total

Unknow area

1996/97

General area of education and training

Table 15.3 (continued)

73,857

4,030

14,853

1,471

15,684

1,181

4,121

12,802

8,987

6,269

4,459

2008/09

45,857

1997/98

75,002

4,105

15,066

1,255

15,059

1,002

3,866

13,121

8,804

6,302

6,422

2009/10

50,801

1998/99

75,482

4,101

15,298

1,354

15,449

993

4,102

13,513

8,574

6,286

5,812

2010/11

53,633

1999/00

79,034

4,127

14,751

1,067

15,713

1,048

4,379

14,520

9,489

6,946

6,994

2011/12

60,091

2000/01

78,947

4,213

14,430

1,259

16,333

1,055

4,578

14,609

8,929

7,403

6,138

2012/13

62,897

2001/02

74,129

8

4,262

13,793

1,301

15,083

919

4,471

13,618

8,336

7,104

5,234

2013/14

67,216

2002/03

74,757

21

4,250

13,885

1,408

15,338

862

4,661

13,950

8,479

6,742

5,161

2014/15

66,871

2003/04

73,086

22

4,204

13,305

1,416

15,545

857

4,810

13,944

8,247

6,875

3,861

2015/16

68,073

2004/05

77,034

27

4,735

13,412

1,711

16,105

1,479

4,828

14,915

8,427

7,693

3,702

2016/17

69,209

2005/06

79,849

40

5,032

13,972

1,874

15,635

1,745

4,897

16,178

8,905

8,045

3,526

2017/18

80,541

2006/07

15 The Future of the Accounting Degree 245

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R. Abreu and E. Oliveira

Education Institutions, where 8 degrees on 5 Private Higher Education Institutions and 21 degrees on 16 Public Higher Education Institutions and 1,787 places for each school year about accounting as it is presented in the next table. A better understanding of Table 15.4 shows that in general the accounting degree has 6 years of accreditation from the National Agency of Accreditation Studies. Table 15.4 details that the distribution of the accounting degree only in Portugal continental, because the Madeira and Açores Universities do not have this degree. Also, relevant is the location available to future students in the literal of Portugal continental and in large cities. Furthermore, future students could be increasingly confused with so many information, because of the unlimited sources. Thus, it is fundamental that family and older students influence the younger students. Also, the Higher Education Institutions can facilitate the dialogue across multiple stakeholders, including government, private sector, academic and scientific community, civil societies and the public (El-Jardali, Ataya, & Fadlallah, 2018).

15.3 Empirical Framework: The Accounting Degree The empirical framework is based on the data that is available on the website of the Science and Higher Education National Directorate of the Portuguese Government related with all the degrees and their basic indicators. Firstly, it exists in all the degrees (which does not, however, mean that it can be accessed by all, especially, to does degree that is mandatory the process of close.) Secondly, all questions are answered and publicly available as an independent source based on the answer by the students of each degree. Thirdly, it has potential relevance to all the questions that allow to analyse each one for each degree and compare them. Besides the information presented in each question, the flow determines the importance of the education and then capture the changes during the time and each degree in the labour market. The first question—How the students entered on this course?—will be analysed by degree and by Higher Education Institution. This analysis presents the distribution of 48.182 students of all the degrees in Portugal. So, their options in which students enrolled in the first year, for the first time, in the academic years 2017/18, are: 41.4% for the first option of the national competition for higher education access; 19.6% for the other options or modalities for higher education access; 15.3% for the second option of the national competition for higher education access; 11.4% other forms for higher education access; 6.1% for the change and transfer of the degree and 6.1% for access to older than 23 years.

The second question—Where are the students one year after starting this course?—will be analysed by degree and by Higher Education Institution. The national distribution of the 45.397 students with 81.6% students are enrolled in the same course; 8.2% students were not found in the National Higher Education (because they are working); 5.1% students are enrolled in another course of the same Higher Education Institution and 4.9% of the total students are enrolled in a course of another Higher Education Institution. Each student will necessarily be in only one of these categories.

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Table 15.4 Distribution of the accounting degree in Portugal, 2019 Higher education institution

Degree

ECTS Semesters CNAEF Places Level of Accreditation qualification of A3ES

IPGuarda

Accounting

180

6

344

35

Licenciado

6 years (2018)

IPBraganca Accounting

180

6

344

75

Licenciado

6 years (2018)

Accounting 180 and Financial Management

6

344

30

Licenciado

2013

IPCoimbra Accounting 180 - ESTG OH and Management

6

344

45

Licenciado

2014

IPCoimbra - ISCAC

Accounting 180 and Auditing

6

344

85

Licenciado

6 years (2018)

IPCoimbra - ISCAC

Accounting 180 and Public Management

6

344

55

Licenciado

1 year (2018)

IPCoimbra - ISCAC

Finance and Accounting

180

6

344

40

Licenciado

2015

IPLeiria

Accounting 180 and Taxation

6

344

70

Licenciado

6 years (2018)

IPLisboa

Accounting 180 and Management

6

344

322

Licenciado

1 year (2018)

IPSantarem Accounting 180 and Taxation

6

344

60

Licenciado

6 years (2019)

IPSetubal

Accounting 180 and Taxation (day)

6

344

80

Licenciado

2013

IPSetubal

Accounting 180 and Taxation (night)

8

344

50

Licenciado

2013

IPTomar

Accounting

180

6

344

25

Licenciado

1 year (2018)

IPViana Castelo

Accounting 180 and Taxation

6

344

35

Licenciado

2013

IPViseu ESTG Lamego

Accounting 180 and Auditing

6

344

25

Licenciado

2013

IPViseu ESTG Viseu

Accounting

6

344

40

Licenciado

2013

IPCastelo Branco

180

(continued)

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Table 15.4 (continued) Higher education institution

Degree

ECTS Semesters CNAEF Places Level of Accreditation qualification of A3ES

IPCA ESG

Accounting

180

6

344

100

Licenciado

6 years (2018)

IPCA ESG

Accounting 180 and Taxation

6

344

40

Licenciado

6 years (2011)

IPPorto ESESIG

Accounting 180 and Management

6

344

85

Licenciado

2013

IPPorto ISCAP

Accounting 180 and Management

6

344

370

Licenciado

6 years (2018)

UAveiro ISCAA

Accounting

6

344

120

Licenciado

6 years (2018)

180

Source DGES (2019)

The third question—Distribution of enrolled students by gender?—will be analysed by degree and by Higher Education Institution. The national distribution of enrolled students by gender in the school year of 2017/2018 is based on the total of 171.968 students from all school years. The national distribution is 55% for women and 45% for men

The fourth question—Percentage of recent graduates of this course who are registered in IEFP as unemployed—will be analysed by degree and by Higher Education Institution. The percentage of recent graduates of all the courses who are registered in IEFP as unemployed or employability rate, all 5181 students who graduated in the course between the 2013/14 and 2017/18 school years were considered in relation to the 5 graduates who were unemployed and registered in the IEFP in 2018, which has an employability rate of 96.6%. The national analysis presents the distribution of 149.548 recently graduated students who noted that this rate is lower than the national training area of 95.2% and national level of 96.8%.

The fifth question—Distribution of enrolled students by nationality—will be analysed by degree and by Higher Education Institution. The national average represents 90% of the total students are Portuguese and 10% of the total students are foreigners and, also, included international mobility programmes.

The sixth question—Distribution of enrolled students by age—will be analysed by degree and by Higher Education Institution. The national distribution of enrolled students by age in the school year of 2017/2018 and based on a total of 171.968 students from all school years. The biggest number (31.675) has 20 years and the range changes from 22.665 students under 18 years and 7.708 students above 40 years.

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In the Instituto Politécnico da Guarda in the Accounting Degree, in the past school year with available information (2017/2018), the main statistics for the degree show a degree with strong international commitment. Figure 15.1 presents the distribution of the 69 students and their options in which students enrolled in the first year, for the first time, in the academic years 2016/17 and 2017/18, such as: 55.1% for other forms for higher education access; 18.8% for the first option of the national competition for higher education access; 14.5% for the other options or modalities for higher education access; 10.1% for the second option of the national competition for higher education access; 1.4% for access to older than 23 years. Figure 15.2 presents the distribution of 67 students with 76.1% students who are enrolled in the same course; 19.4% students were not found in the National Higher Education (because they are working); 3% of the students are enrolled in another course of the Instituto Politécnico da Guarda; 1.5% of the total students are enrolled in a course of another Higher Education Institution. Figure 15.3 presents the distribution of 109 enrolled students by gender. For one side, the degree average is 60% for women and 40% for men. For the other side, the national average is 55% for women and 45% for men Figure 15.4 presents the percentage of recent graduates of this course who are registered in IEFP as unemployed or unemployability rate, all 59 students who graduated in the course between the 2013/14 and 2017/18 school years were considered in relation to the 5 graduates who were unemployed and registered in the IEFP in

Fig. 15.1 IPG—Question 1—How the students entered on this course? Source DGEEC (2019)

Fig. 15.2 IPG—Question 2—Where are the students one year after starting this course? Source DGEEC (2019)

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Fig. 15.3 IPG—Question 3—Distribution of enrolled students by gender. Source DGEEC (2019)

Fig. 15.4 IPG—Question 4—Percentage of recent graduates of this course who are registered in IEFP as unemployed. Source IEFP (2019), DGEEC (2019)

2018, which has an employability rate of 91.5%. It is further noted that this rate is lower than the training area of 95.2% and national level of 96.8%. Figure 15.5 presents the distribution of enrolled students by nationality based, on the one hand, in the degree with a total of 109 students which represent that 71% of the total students are Portuguese and 29% of the total students are foreigners. On the other hand, the national average represents 89% of the total students are Portuguese

Fig. 15.5 IPG—Question 5—Distribution of enrolled students by nationality. Source DGEEC (2019)

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Fig. 15.6 IPG—Question 6—Distribution of enrolled students by age. Source DGEEC (2019)

and 11% of the total students are foreigners and, also, included international mobility programmes. Figure 15.6 presents the distribution of enrolled students by age in the school year of 2017/2018 and based on a total of 109 students from all school years. The biggest number is 20 years and the range changes from 8 students under 18 years and 2 students above 40 years. In the Instituto Politécnico da Bragança in the Accounting Degree, in the last school year with available information (2017/2018), the main statistics for the degree shows more stability. Figure 15.7 presents the distribution of the 132 students and their options in which students enrolled in the firsst year, for the first time, in the academic years 2016/17 and 2017/18, such as: 34.1% other forms for higher education access; 29.5% for the other options or modalities for higher education access; 16.7% for the first option of the national competition for higher education access; 16.7% for the second option of the national competition for higher education access; 1.5% for access to older than 23 years; 1.5% for the change and transfer of the degree. Figure 15.8 presents the distribution of the 123 students with 82.1% students are enrolled in the same course; 8.9% students were not found in the National Higher Education (because they are working); 3.3% students are enrolled in another course of the Instituto Politécnico de Bragança; 4.1% of the total students are enrolled in a course of another Higher Education Institution and 1.6% of the total students are graduates in this course.

Fig. 15.7 IPB—Question 1—How the students entered on this course? Source DGEEC (2019)

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Fig. 15.8 IPB—Question 2—Where are the students one year after starting this course? Source DGEEC (2019)

Fig. 15.9 IPB—Question 3—Distribution of enrolled students by gender. Source DGEEC (2019)

Figure 15.9 presents the distribution of 227 enrolled students by gender. For one side, the degree average is 55% for women and 45% for men. For the other side, the national average is 55% for women and 45% for men. Figure 15.10 presents the percentage of recent graduates of this course who are registered in IEFP as unemployed or unemployability rate, all 86 students who graduated in the course between the 2013/14 and 2017/18 school years were considered in relation to the 8 graduates who were unemployed and registered in the IEFP in 2018, which has an employability rate of 90.7%. It is further noted that this rate is lower than the training area of 95.2% and national level of 96.8%. Figure 15.11 presents the distribution of enrolled students by nationality based, on the one hand, in the degree with a total of 227 students which represents 82% of the total students are Portuguese and 18% of the total students are foreigners. On the

Fig. 15.10 IPB—Question 4—Percentage of recent graduates of this course who are registered in IEFP as unemployed. Source IEFP (2019), DGEEC (2019)

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Fig. 15.11 IPB—Question 5—Distribution of enrolled students by nationality. Source DGEEC (2019)

other hand, the national average represents 89% of the total students are Portuguese and 11% of the total students are foreigners and, also, included international mobility programmes. Figure 15.12 presents the distribution of enrolled students by age in the school year of 2017/2018 and based on a total of 227 students from all school years. The biggest number is 21 years and the range changes from 13 students under 18 years and 7 students above 40 years. In the Instituto Politécnico de Coimbra in the Accounting and Auditing Degree, in the last school year with available information (2017/2018), the main statistics for the degree shows more stability. This degree exists only in Coimbra and Oliveira do Hospital. Figure 15.13 presents the distribution of the 188 students and their options in which students enrolled in the first year, for the first time, in the academic years 2016/17 and 2017/18, such as: 32.4% for the first option of the national competition for higher education access; 26.6% for the second option of the national competition for higher education access; 25% for the other options or modalities for higher education access; 5.9% other forms for higher education access; 5.3% for the change and transfer of the degree and 4.8% for access to older than 23 years.

Fig. 15.12 IPB—Question 6—Distribution of enrolled students by age. Source DGEEC (2019)

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Fig. 15.13 IPC1—Question 1—How the students entered on this course? Source DGEEC (2019)

Figure 15.14 presents the distribution of the 199 students with 86.4% students who are enrolled in the same course; 8% students were not found in the National Higher Education (because they are working); 5% students are enrolled in another course of the Instituto Politécnico de Coimbra; 0.5% of the total students are enrolled in a course of another Higher Education Institution. Figure 15.15 presents the distribution of 434 enrolled students by gender. For one side, the degree average is 61% for women and 39% for men. For the other side, the national average is 55% for women and 45% for men. Figure 15.16 presents the percentage of recent graduates of this course who are registered in IEFP as unemployed or unemployability rate, all 248 students who graduated in the course between the 2013/14 and 2017/18 school years were considered in relation to the 10 graduates who were unemployed and registered in the IEFP in

Fig. 15.14 IPC1—Question 2—Where are the students one year after starting this course? Source DGEEC (2019)

Fig. 15.15 IPC1—Question 3—Distribution of enrolled students by gender

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Fig. 15.16 IPC1—Question 4—Percentage of recent graduates of this course who are registered in IEFP as unemployed. Source IEFP (2019), DGEEC (2019)

Fig. 15.17 IPC1—Question 5—Distribution of enrolled students by nationality. Source DGEEC (2019)

2018, which has an employability rate of 96%. It is further noted that this rate is lower than the training area of 95.2% and national level of 96.8%. Figure 15.17 presents the distribution of enrolled students by nationality based, on the one hand, in the degree with a total of 434 students which represents 96% of the total students are Portuguese and 4% of the total students are foreigners. On the other hand, the national average represents 89% of the total students are Portuguese and 11% of the total students are foreigners and, also, included international mobility programmes. Figure 15.18 represents the distribution of enrolled students by age in the school year of 2017/2018 and based on a total of 434 students from all school years. The

Fig. 15.18 IPC1—Question 6—Distribution of enrolled students by age. Source DGEEC (2019)

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biggest number is 20 years and the range changes from 42 students under 18 years and 37 students above 40 years. In the Instituto Politécnico de Coimbra in the Accounting and Public Management Degree, in the last school year with available information (2017/2018), the main statistics for the degree show more stability. This degree only exists in Coimbra. Figure 15.19 presents the distribution of the 100 students and their options in which students enrolled in the first year, for the first time, in the academic years 2016/17 and 2017/18, such as: 38% for the other options or modalities for higher education access; 30% for the second option of the national competition for higher education access; 21% for the first option of the national competition for higher education access; 5% other forms for higher education access; 4% for the change and transfer of the degree and 2% for access to older than 23 years. Figure 15.20 presents the distribution of the 94 students with 87.2% students who are enrolled in the same course; 5.3% students were not found in the National Higher Education (because they are working); 6.4% students are enrolled in another course of the Instituto Politécnico de Coimbra; 1.1% of the total students are enrolled in a course of another Higher Education Institution. Figure 15.21 presents the distribution of 192 enrolled students by gender. For one side, the degree average is 59% for women and 41% for men. For the other side, the national average is 55% for women and 45% for men. Figure 15.22 presents the percentage of recent graduates of this course who are registered in IEFP as unemployed or employability rate, all 99 students who graduated in the course between the 2013/14 and 2017/18 school years were considered in relation to the 8 graduates who were unemployed and registered in the IEFP in 2018,

Fig. 15.19 IPC2—Question 1—How the students entered on this course? Source DGEEC (2019)

Fig. 15.20 IPC2—Question 2—Where are the students one year after starting this course? Source DGEEC (2019)

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Fig. 15.21 IPC2—Question 3—Distribution of enrolled students by gender. Source DGEEC (2019)

Fig. 15.22 IPC2—Question 4—Percentage of recent graduates of this course who are registered in IEFP as unemployed. Source IEFP (2019), DGEEC (2019)

by which has an employability rate of 97.4%. It is further noted that this rate is lower than the training area of 95.2% and national level of 96.8%. Figure 15.23 presents the distribution of enrolled students by nationality based, on the one hand, in the degree with a total of 192 students which represent 96% of the total students are Portuguese and 4% of the total students are foreigners. On the other hand, the national average represents 89% of the total students are Portuguese and 11% of the total students are foreigners and, also, included international mobility programmes.

Fig. 15.23 IPC2—Question 5—Distribution of enrolled students by nationality. Source DGEEC (2019)

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Fig. 15.24 IPC2—Question 6—Distribution of enrolled students by age. Source DGEEC (2019)

Figure 15.24 presents the distribution of enrolled students by age in the school year of 2017/2018 and based on a total of 192 students from all school years. The biggest number is 20 years and the range changes from 24 students under 18 years and 7 students above 40 years. In the Instituto Politécnico de Viseu in the Accounting Degree, in the past school year with available information (2017/2018), the main statistics for the degree that shows a strong national commitment. Figure 15.25 presents the distribution of the 90 students and their options in which students enrolled in the first year, for the first time, in the academic years 2016/17 and 2017/18, such as: 57.8% for the first option of the national competition for higher education access; 18.9% for the second option of the national competition for higher education access; 7.8% other forms for higher education access; 6.7% for the other options or modalities for higher education access; 6.7% for access to older than 23 years; 2.2% for the change and transfer of the degree. Figure 15.26 presents the distribution of the 42 students with 78.6% students who are enrolled in the same course; 9.5% students are enrolled in another course of the Instituto Politécnico de Viseu; 7.1% students were not found in the National Higher Education (because they are working); 4.8% of the total students are enrolled in a course of another Higher Education Institution. Figure 15.27 presents the distribution of 87 enrolled students by gender. For one side, the degree average is 66% for women and 34% for men. For the other side, the national average is 55% for women and 45% for men.

Fig. 15.25 IPV—Question 1—How the students entered on this course? Source DGEEC (2019)

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Fig. 15.26 IPV—Question 2—Where are the students one year after starting this course? Source DGEEC (2019)

Fig. 15.27 IPV—Question 3—Distribution of enrolled students by gender. Source DGEEC (2019)

Figure 15.28 presents the percentage of recent graduates of this course who are registered in IEFP as unemployed or employability rate, all 86 students who graduated in the course between the 2013/14 and 2017/18 school years were considered in relation to the 3 graduates who were unemployed and registered in the IEFP in 2018, which has an employability rate of 98.1%. It is further noted that this rate is lower than the training area of 95.2% and national level of 96.8%. Figure 15.29 presents the distribution of enrolled students by nationality based, on the one hand, in the degree with a total of 87 students which represents 95% of the total students are Portuguese and 5% of the total students are foreigners. On the other hand, the national average represents 89% of the total students are Portuguese and 11% of the total students are foreigners and, also, included international mobility programmes.

Fig. 15.28 IPV—Question 4—Percentage of recent graduates of this course who are registered in IEFP as unemployed. Source IEFP (2019), DGEEC (2019)

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Fig. 15.29 IPV—Question 5—Distribution of enrolled students by nationality. Source DGEEC (2019)

Fig. 15.30 IPV—Question 6—Distribution of enrolled students by age. Source DGEEC (2019)

Figure 15.30 presents the distribution of enrolled students by age in the school year of 2017/2018 and based on a total of 87 students from all school years. The biggest number is 19 years and the range changes from 20 students under 18 years and 2 students above 40 years. In the Instituto Politécnico de Lisboa, at the Instituto Superior de Contabilidade e Administração de Lisboa, it is teacher one of the third Accounting and Management Degrees in Portugal. In the past school year with available information (2017/2018), the main statistics for the degree that shows a national commitment. Figure 15.31 presents the distribution of the 256 students and their options in which students enrolled in the first year, for the first time, in the academic years 2016/17

Fig. 15.31 IPL—ISCAL—Question 1—How the students entered on this course? Source DGEEC (2019)

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Fig. 15.32 IPL—ISCAL—Question 2—Where are the students one year after starting this course? Source DGEEC (2019)

and 2017/18, such as: 46.5% other forms for higher education access; 21.1% for the second option of the national competition for higher education access; 19.5% for the first option of the national competition for higher education access; 7.4% for the other options or modalities for higher education access; 4.7% for the change and transfer of the degree and 0.8% for access to older than 23 years. Figure 15.32 presents the distribution of the 270 students with 77.4% students are enrolled in the same course; 13.7% of the total students are enrolled in a course of another Higher Education Institution, 6.7% students were not found in the National Higher Education (because they are working); 2.2% students are enrolled in another course of the Instituto Politécnico de Lisboa. Figure 15.33 presents the distribution of 555 enrolled students by gender. For one side, the degree average is 56% for women and 44% for men. For the other side, the national average is 55% for women and 45% for men. Figure 15.34 presents the percentage of recent graduates of this course who are registered in IEFP as unemployed or unemployability rate, all 652 students who graduated in the course between the 2013/14 and 2017/18 school years were considered in relation to the 22 graduates who were unemployed and registered in the IEFP in 2018, by which has an employability rate of 96.6%. It is further noted that this rate is lower than the training area of 95.2% and national level of 96.8%. Figure 15.35 presents the distribution of enrolled students by nationality based, on the one hand, in the degree with a total of 555 students which represent 93% of

Fig. 15.33 IPL—ISCAL—Question 3—Distribution of enrolled students by gender. Source DGEEC (2019)

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Fig. 15.34 IPL—ISCAL—Question 4—Percentage of recent graduates of this course who are registered in IEFP as unemployed. Source IEFP (2019), DGEEC (2019)

Fig. 15.35 IPL—ISCAL—Question 5—Distribution of enrolled students by nationality. Source DGEEC (2019)

the total students are Portuguese and 7% of the total students are foreigners. On the other hand, the national average represents 89% of the total students are Portuguese and 11% of the total students are foreigners and, also, included international mobility programmes. Figure 15.36 presents the distribution of enrolled students by age in the school year of 2017/2018 and based on a total of 555 students from all school years. The biggest number is 19 years and the range changes from 74 students under 18 years and 48 students upper 40 years.

Fig. 15.36 IPL—ISCAL—Question 6—Distribution of enrolled students by age. Source DGEEC (2019)

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Fig. 15.37 IPCB—Question 1—How the students entered on this course? Source DGEEC (2019)

In the Instituto Politécnico de Castelo Branco, in the Escola Superior de Gestão, the only one learned in Portugal, the Accounting and Financial Management. In the last school year with available information (2017/2018), this is the last statistics for this degree, because it will close. Figure 15.37 presents the distribution of the 38 students and their options in which students enrolled in the first year, for the first time, in the academic years 2016/17 and 2017/18, such as: 60.5% other forms for higher education access; 15.8% for the other options or modalities for higher education access; 13.2% for the first option of the national competition for higher education access; 6% for access to older than 23 years; 4% for the second option of the national competition for higher education access; 4% for the change and transfer of the degree. Figure 15.38 presents the distribution of the 33 students with 63.6% students who are enrolled in the same course; 21.2% students were not found in the National Higher Education (because they are working); 9.1% students are enrolled in another course of the Instituto Politécnico; 6.1% of the total students are enrolled in a course of another Higher Education Institution. Figure 15.39 presents the distribution of 70 enrolled students by gender. For one side, the degree average is 40% for women and 60% for men. For the other side, the national average is 55% for women and 45% for men. Figure 15.40 presents the percentage of recent graduates of this course who are registered in IEFP as unemployed or unemployability rate, all 58 students who graduated in the course between the 2013/14 and 2017/18 school years were considered in relation to the 8 graduates who were unemployed and registered in the IEFP in

Fig. 15.38 IPCB—Question 2—Where are the students one year after starting this course? Source DGEEC (2019)

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Fig. 15.39 IPCB—Question 3—Distribution of enrolled students by gender. Source DGEEC (2019)

Fig. 15.40 IPCB—Question 4—Percentage of recent graduates of this course who are registered in IEFP as unemployed. Source IEFP (2019), DGEEC (2019)

2018, which has an employability rate of 95.7%. It is further noted that this rate is lower than the training area of 95.2% and national level of 96.8%. Figure 15.41 presents the distribution of enrolled students by nationality based, on the one hand, in the degree with a total 70 students which represent 75% of the total students are Portuguese and 25% of the total students are foreigners. On the other hand, the national average represents 89% of the total students are Portuguese and 11% of the total students are foreigners and, also, included international mobility programmes.

Fig. 15.41 IPCB—Question 5—Distribution of enrolled students by nationality. Source DGEEC (2019)

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Fig. 15.42 IPCB—Question 6—Distribution of enrolled students by age. Source DGEEC (2019)

Figure 15.42 presents the distribution of enrolled students by age in the school year of 2017/2018 and based on a total of 70 students from all school years. The biggest number is 20 years and the range changes from 4 students under 18 years and 11 students above 40 years. This is one of the degrees with a high level of age concentrated between 25 and 27 years until 40 years. In the Instituto Politécnico do Cávado e do Ave, in the Escola Superior de Gestão, is learned the Accounting (day schedule). In the past school year with available information (2017/2018), this is the last statistics for this degree. Figure 15.43 presents the distribution of the 118 students and their options in which students enrolled in the first year, for the first time, in the academic years 2016/17 and 2017/18, such as: 39.8% for the first option of the national competition for higher education access; 29.7% other forms for higher education access; 15.3% for the second option of the national competition for higher education access; 8.5% for the other options or modalities for higher education access; 4.2% for access to older than 23 years; 2.5% for the change and transfer of the degree. Figure 15.44 presents the distribution of the 110 students with 83.6% students are enrolled in the same course; 6.4% students were not found in the National Higher Education (because they are working); 5.5% of the total students are enrolled in another course of Higher Education Institution and 4.5% students are enrolled in another course of the Instituto Politécnico. Figure 15.45 presents the distribution of 200 enrolled students by gender. For one side, the degree average is 60% for women and 40% for men. For the other side, the national average is 55% for women and 45% for men.

Fig. 15.43 IPCA—Question 1—How the students entered on this course? Source IEFP (2019), DGEEC (2019)

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Fig. 15.44 IPCA—Question 2—Where are the students one year after starting this course? Source IEFP (2019), DGEEC (2019)

Fig. 15.45 IPCA—Question 3—Distribution of enrolled students by gender. Source DGEEC (2019)

Figure 15.46 presents the percentage of recent graduates of this course who are registered in IEFP as unemployed or employability rate, all 261 students who graduated in the course between the 2013/14 and 2017/18 school years were considered in relation to the 14 graduates who were unemployed and registered in the IEFP in 2018, which has an employability rate of 94.6%. It is further noted that this rate is lower than the training area of 95.2% and national level of 96.8%. Figure 15.47 presents the distribution of enrolled students by nationality based, on the one hand, in the degree with a total of 200 students which represents 92% of the total students are Portuguese and 8% of the total students are foreigners. On the other hand, the national average represents 89% of the total students are Portuguese

Fig. 15.46 IPCA—Question 4—Percentage of recent graduates of this course who are registered in IEFP as unemployed. Source IEFP (2019), DGEEC (2019)

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Fig. 15.47 IPCA—Question 5—Distribution of enrolled students by nationality

and 11% of the total students are foreigners and, also, included international mobility programmes. Figure 15.48 presents the distribution of enrolled students by age in the school year of 2017/2018 and based on a total of 200 students from all school years. The biggest number is 21 years and the range changes from 29 students under 18 years and 4 students above 40 years. This is one of the degrees with a high level of young students concentrate between 18 and 22 years. In the Instituto Politécnico de Setubal, in the Escola Superior de Ciências Empresariais, it is learned the Accounting and Finance (day schedule). In the past school year with available information (2017/2018), this is the last statistics for this degree.

Fig. 15.48 IPCA—Question 6—Distribution of enrolled students by age. Source DGEEC (2019)

Fig. 15.49 IPS—Question 1—How the students entered on this course? Source DGEEC (2019)

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Figure 15.49 presents the distribution of the 168 students and their options in which students enrolled in the first year, for the first time, in the academic years 2016/17 and 2017/18, such as: 48.8% for the first option of the national competition for higher education access; 30.4% for the other options or modalities for higher education access; 6.5% for access to older than 23 years; 6.5% for the second option of the national competition for higher education access; 4.2% other forms for higher education access; 3.6% for the change and transfer of the degree. Figure 15.50 presents the distribution of the 175 students with 86.9% students are enrolled in the same course; 7.4% students were not found in the National Higher Education (because they are working); 4% of the total students are enrolled in a course of another Higher Education Institution and 1.7% students are enrolled in another course of the Instituto Politécnico. Figure 15.51 presents the distribution of 299 enrolled students by gender. For one side, the degree average is 60% for women and 40% for men. For the other side, the national average is 55% for women and 45% for men. Figure 15.52 presents the percentage of recent graduates of this course who are registered in IEFP as unemployed or unemployability rate, all 341 students who graduated in the course between the 2013/14 and 2017/18 school years were considered in relation to the 14 graduates who were unemployed and registered in the IEFP in 2018, which has an employability rate of 97.3%. It is further noted that this rate is lower than the training area of 95.2% and the national level of 96.8%.

Fig. 15.50 IPS—Question 2—Where are the students one year after starting this course? Source DGEEC (2019)

Fig. 15.51 IPS—Question 3—Distribution of enrolled students by gender. Source DGEEC (2019)

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Fig. 15.52 IPS—Question 4—Percentage of recent graduates of this course who are registered in IEFP as unemployed. Source IEFP (2019), DGEEC (2019)

Fig. 15.53 IPS—Question 5—Distribution of enrolled students by nationality. Source DGEEC (2019)

Figure 15.53 presents the distribution of enrolled students by nationality based, on the one hand, in the degree with a total of 299 students which represent 96% of the total students are Portuguese and 4% of the total students are foreigners. On the other hand, the national average represents 89% of the total students are Portuguese and 11% of the total students are foreigners and, also, included international mobility programmes. Figure 15.54 presents the distribution of enrolled students by age in the school year of 2017/2018 and based on a total of 299 students from all school years. The biggest number is 20 years and the range changes from 35 students under 18 years and 9 students above 40 years.

Fig. 15.54 IPS—Question 6—Distribution of enrolled students by age. Source DGEEC (2019)

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Fig. 15.55 IPT—Question 1—How the students entered on this course? Source DGEEC (2019)

In the Instituto Politécnico de Tomar in the Accounting Degree, in the last school year with available information (2017/2018), the main statistics for the degree shows a degree with a strong commitment to graduates during the life of work. Figure 15.55 presents the distribution of the 24 students and their options in which students enrolled in the first year, for the fist time, in the academic years 2016/17 and 2017/18, such as: 29.2% other forms for higher education access; 16.7% for the first option of the national competition for higher education access; 16.7% for the second option of the national competition for higher education access; 16.7% for the change and transfer of the degree; 12.5% for access to older than 23 years; and 8.3% for the other options or modalities for higher education access. Figure 15.56 presents the distribution of the 25 students with 72% students are enrolled in the same course; 12% students were not found in the National Higher Education (because they are working); 8% students are enrolled in another course of the Instituto Politécnico; 8% of the total students are enrolled in a course of another Higher Education Institution. Figure 15.57 presents the distribution of 42 enrolled students by gender. For one side, the degree average is 62% for women and 38% for men. For the other side, the national average is 55% for women and 45% for men. Figure 15.58 presents the percentage of recent graduates of this course who are registered in IEFP as unemployed or employability rate, all 32 students who graduated in the course between the 2013/14 and 2017/18 school years were considered in relation to the 3 graduates who were unemployed and registered in the IEFP in 2018,

Fig. 15.56 IPT—Question 2—Where are the students one year after starting this course? Source DGEEC (2019)

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Fig. 15.57 IPT—Question 3—Distribution of enrolled students by gender. Source DGEEC (2019)

Fig. 15.58 IPT—Question 4—Percentage of recent graduates of this course who are registered in IEFP as unemployed. Source IEFP (2019), DGEEC (2019)

by which has an employability rate of 92.2%. It is further noted that this rate is lower than the training area of 95.2% and national level of 96.8%. Figure 15.59 presents the distribution of enrolled students by nationality based, on the one hand, in the degree with a total of 42 students which represent 88% of the total students are Portuguese and 12% of the total students are foreigners. On the other hand, the national average represents 89% of the total students are Portuguese and 11% of the total students are foreigners and, also, included international mobility programmes. Figure 15.60 presents the distribution of enrolled students by age in the school year of 2017/2018 and based on a total of 42 students from all school years. The

Fig. 15.59 IPT—Question 5—Distribution of enrolled students by nationality. Source DGEEC (2019)

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Fig. 15.60 IPT—Question 6—Distribution of enrolled students by age. Source DGEEC (2019)

Fig. 15.61 IPSANT—Question 1—How the students entered on this course? Source DGEEC (2019)

biggest number is 20 years and the range changes from 1 student under 18 years and 4 students above 40 years. Also, this degree has a long range of age of enrolled students. In the Instituto Politécnico de Santarém, in the Escola Superior de Gestão e Tecnologia, it is learned the Accounting and taxation (day schedule). In the past school year with available information (2017/2018), this is the last statistics for this degree. This degree also is learned in Viana de Castelo. Figure 15.61 presents the distribution of the 67 students and their options in which students enrolled in the first year, for the first time, in the academic years 2016/17 and 2017/18, such as: 33.8% for the other options or modalities for higher education access; 27.3% for the first option of the national competition for higher education access; 27.3% for the second option of the national competition for higher education access; 7.8% other forms for higher education access; 2.6% for the change and transfer of the degree and 1.3% for access to older than 23 years; Figure 15.62 presents the distribution of the 60 students with 80% students who are enrolled in the same course; 8.3% students were not found in the National Higher Education (because they are working); 6.7% students are enrolled in another course of the Instituto Politécnico; 5% of the total students are enrolled in a course of another Higher Education Institution. Figure 15.63 presents the distribution of 118 enrolled students by gender. For one side, the degree average is 62% for women and 38% for men. For the other side, the national average is 55% for women and 45% for men.

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Fig. 15.62 IPSANT—Question 2—Where are the students one year after starting this course? Source DGEEC (2019)

Fig. 15.63 IPSANT—Question 3—Distribution of enrolled students by gender. Source DGEEC (2019)

Figure 15.64 presents the percentage of recent graduates of this course who are registered in IEFP as unemployed or employability rate, all 87 students who graduated in the course between the 2013/14 and 2017/18 school years were considered in relation to the 5 graduates who were unemployed and registered in the IEFP in 2018, by which has an employability rate of 94.3%. It is further noted that this rate is lower than the training area of 95.2% and national level of 96.8%. Figure 15.65 presents the distribution of enrolled students by nationality based, on the one hand, in the degree with a total of 118 students which represents 98% of the total students are Portuguese and 2% of the total students are foreigners. On the other hand, the national average represents 89% of the total students are Portuguese

Fig. 15.64 IPSANT—Question 4—Percentage of recent graduates of this course who are registered in IEFP as unemployed. Source IEFP (2019), DGEEC (2019)

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Fig. 15.65 IPSANT—Question 5—Distribution of enrolled students by nationality. DGEEC (2019)

Source

Fig. 15.66 IPSANT—Question 6—Distribution of enrolled students by age. Source DGEEC (2019)

and 11% of the total students are foreigners and, also, included international mobility programmes. Figure 15.66 presents the distribution of enrolled students by age in the school year of 2017/2018 and based on a total of 118 students from all school years. The biggest number is 20 years and the range change from 10 students under 18 years and 5 students upper 40 years. In the Instituto Politécnico do Porto, in the Instituto Superior de Contabilidade e Administração do Porto, it is teached the Accounting and Management Degree (day schedule). In the past school year with available information (2017/2018), the main statistics for the degree shows a national commitment. Figure 15.67 presents the distribution of the 512 students and their options in which students enrolled in the first year, for the first time, in the academic years 2016/17 and 2017/18, such as: 52.9% for the first option of the national competition for higher education access; 22.7% for the other options or modalities for higher education access; 11.3% for the second option of the national competition for higher education access; 10.5% for the change and transfer of the degree; 1.8% other forms for higher education access; 0.8% for access to older than 23 years. Figure 15.68 presents the distribution of the 562 students with 74% students who are enrolled in the same course; 11% of the total students are enrolled in a course of another Higher Education Institution; 8% students are enrolled in another course of

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Fig. 15.67 IPP—ISCAP—Question 1—How the students entered on this course? Source DGEEC (2019)

Fig. 15.68 IPP—ISCAP—Question 2—Where are the students one year after starting this course? Source DGEEC (2019)

the Instituto Politécnico; and 6.9% students were not found in the National Higher Education (because they are working). Figure 15.69 presents the distribution of 1004 enrolled students by gender. For one side, the degree average is 57% for women and 43% for men. For the other side, the national average is 55% for women and 45% for men. Figure 15.70 presents the percentage of recent graduates of this course who are registered in IEFP as unemployed or unemployability rate, all 987 students who graduated in the course between the 2013/14 and 2017/18 school years were considered in relation to the 40 graduates who were unemployed and registered in the IEFP in 2018, hich has an employability rate of 95.9%. It is further noted that this rate is lower than the training area of 95.2% and national level of 96.8%.

Fig. 15.69 IPP—ISCAP—Question 3—Distribution of enrolled students by gender. Source DGEEC (2019)

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Fig. 15.70 IPP—ISCAP—Question 4—Percentage of recent graduates of this course who are registered in IEFP as unemployed. Source IEFP (2019), DGEEC (2019)

Fig. 15.71 IPP—ISCAP—Question 5—Distribution of enrolled students by nationality. Source DGEEC (2019)

Figure 15.71 presents the distribution of enrolled students by nationality based, on the one hand, in the degree with a total of 1004 students which represents 98% of the total students are Portuguese and 2% of the total students are foreigners. On the other hand, the national average represents 89% of the total students are Portuguese and 11% of the total students are foreigners and, also, included international mobility programmes. Figure 15.72 presents the distribution of enrolled students by age in the school year of 2017/2018 and based on a total of 1004 students from all school years. The biggest number is 19 years and the range changes from 161 students under 18 years

Fig. 15.72 IPP—ISCAP—Question 6—Distribution of enrolled students by age. Source DGEEC (2019)

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Fig. 15.73 UA—ISCAA—Question 1—How the students entered on this course? Source DGEEC (2019)

and 12 students above 40 years. This degree has a big concentration from 18 to 22 years. In the Universidade de Aveiro, in the Instituto Superior de Contabilidade e Administração de Aveiro, it is teached the Accounting Degree (day schedule). In the past school year with available information (2017/2018), the main statistics for the degree shows a national commitment. Figure 15.73 presents the distribution of the 163 students and their options in which students enrolled in the first year, for the first time, in the academic years 2016/17 and 2017/18, such as: 39.3% for the first option of the national competition for higher education access; 24.5% for the other options or modalities for higher education access; 22.1% for the second option of the national competition for higher education access; 8.6% other forms for higher education access; 4.3% for the change and transfer of the degree and 1.2% for access to older than 23 years. Figure 15.74 presents the distribution of the 146 students with 85.6% students who are enrolled in the same course; 6.2% students were not found in the National Higher Education (because they are working); 6.2% of the total students are enrolled in a course of another Higher Education Institution and 2.1% students are enrolled in another course of the Instituto Politécnico. Figure 15.75 presents the distribution of 288 enrolled students by gender. For one side, the degree average is 60% for women and 40% for men. For the other side, the national average is 55% for women and 45% for men. Figure 15.76 presents the percentage of recent graduates of this course who are registered in IEFP as unemployed or employability rate, all 332 students who graduated in the course between the 2013/14 and 2016/17 school years were considered in relation to the 18 graduates who were unemployed and registered in the IEFP in

Fig. 15.74 UA—ISCAA—Question 2—Where are the students one year after starting this course? Source DGEEC (2019)

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Fig. 15.75 UA—ISCAA—Question 3—Distribution of enrolled students by gender. Source DGEEC (2019)

Fig. 15.76 UA—ISCAA—Question 4—Percentage of recent graduates of this course who are registered in IEFP as unemployed. Source IEFP (2019), DGEEC (2019)

2018, by which has an employability rate of 94.6%. It is further noted that this rate is lower than the training area of 95.2% and national level of 96.8%. Figure 15.77 presents the distribution of enrolled students by nationality based, on the one hand, in the degree with a total of 288 students which represents 97% of the total students are Portuguese and 3% of the total students are foreigners. On the other hand, the national average represents 89% of the total students are Portuguese and 11% of the total students are foreigners and, also, included international mobility programmes.

Fig. 15.77 UA—ISCAA—Question 5—Distribution of enrolled students by nationality. Source DGEEC (2019)

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Fig. 15.78 UA—ISCAA—Question 6—Distribution of enrolled students by age. Source DGEEC (2019)

Figure 15.78 presents the distribution of enrolled students by age in the school year of 2017/2018 and based on a total of 288 students from all school years. The biggest number is 20 years and the range changes from 53 students under 18 years and 6 students above 40 years. This degree has a big concentration from 18 to 20 years. In the Instituto Politécnico de Leiria, in the Escola Superior de Tecnologia e Gestão, it is teached the Accounting and Finance (day schedule). In the past school year with available information (2017/2018), this is the last statistics for this degree. Figure 15.79 presents the distribution of the 85 students and their options in which students enrolled in the first year, for the first time, in the academic years 2016/17 and 2017/18, such as: 40% for the first option of the national competition for higher education access; 24.7% for the second option of the national competition for higher education access; 16.5% other forms for higher education access; 14.1% for the other options or modalities for higher education access; 2.4% for access to older than 23 years; 2.4% for the change and transfer of the degree. Figure 15.80 presents the distribution of the 83 students with 79.5% students who are enrolled in the same course; 10.8% students are enrolled in another course of the Instituto Politécnico; 6% of the total students are enrolled in a course of another Higher Education Institution and 3.6% students were not found in the National Higher Education (because they are working). Figure 15.81 presents the distribution of 142 enrolled students by gender. For one side, the degree average is 61% for women and 39% for men. For the other side, the national average is 55% for women and 45% for men.

Fig. 15.79 IP Leiria—Question 1—How the students entered on this course? Source DGEEC (2019)

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Fig. 15.80 IP Leiria—Question 2—Where are the students one year after starting this course? Source DGEEC (2019)

Fig. 15.81 IP Leiria—Question 3—Distribution of enrolled students by gender. Source DGEEC (2019)

Figure 15.82 presents the percentage of recent graduates of this course who are registered in IEFP as unemployed or employability rate, all 152 students who graduated in the course between the 2013/14 and 2017/18 school years were considered in relation to the 8 graduates who were unemployed and registered in the IEFP in 2018, which has an employability rate of 95.1%. It is further noted that this rate is lower than the training area of 95.2% and national level of 96.8%. Figure 15.83 presents the distribution of enrolled students by nationality based, on the one hand, in the degree with a total of 142 students which represents 93% of the total students are Portuguese and 7% of the total students are foreigners. On the other hand, the national average represents 89% of the total students are Portuguese

Fig. 15.82 IP Leiria—Question 4—Percentage of recent graduates of this course who are registered in IEFP as unemployed. Source IEFP (2019), DGEEC (2019)

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Fig. 15.83 IP Leiria—Question 5—Distribution of enrolled students by nationality. Source DGEEC (2019)

and 11% of the total students are foreigners and, also, included international mobility programmes. Figure 15.84 presents the distribution of enrolled students by age in the school year of 2017/2018 and based on a total of 142 students from all school years. The biggest number is 19 years and the range changes from 15 students under 18 years and 1 student from 31 to 39 years. All these examples allow to prove that a resilient higher education institution can absorb shocks, such as: strong reduction of Portuguese students and then change to increase in foreign students, rather than getting disappointed with the system that promotes the HEI near the sea. The strong and fast disclosure of information, such as: employment rate of graduates is an important information that could have affected them, including their families, thus the higher education institutions must share. The last perspective of this research is the adoption of the Decree-Law nº 62/2018, published on 6 August (PCM, 2018), of the International Student Status Law, which is a very important tool to enrol students to the Portuguese higher education system. Indeed, the Portuguese Higher Education Institutions had host students from conflicting countries, especially for their cooperation over the past few years with the Global Platform for Syrian Student Emergency Assistance. Furthermore, Portugal has a Higher Education System with two different focus: Science based on Universities and Professional Science based on Institutos

Fig. 15.84 IP Leiria—Question 6—Distribution of enrolled students by age. Source DGEEC (2019)

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Politécnicos. Thus, the international student’s entrance in the Higher Education System, where they need to pay the real cost of education and the degree, established on their expectations of success and employability of the degree. To be honest, the less value-add of the degree is being graduate and the higher value-add is low unemployment rate.

15.4 Conclusion The education and training on the accounting degree have remained the central input of this research that focuses on the accounting and reality. Furthermore, the access to these data are unilateral and present a positive balance, because it does not damage the economy due to the increase of the use of external data to carry out to the report to the National Tax Agency or Stock Markets. Indeed, this demand for the accounting degree produces more knowledge sharing between accounting students and accountants professional. The first opportunity of the accounting degree in Portugal is to answer to organization’s demand of workers in the accounting area. These graduates are more focused on training and their education is at international level, because it prepares them to answer to markets. The stakeholders recognize the trade-off between the accounting information system and the dynamic of markets that it is greater and faster than in the past. So, the challenge is increasing the relation of the accounting information with the technology and communication systems that generate big data which is relevant each day for organizations, governments, and national authorities, to improve the well-being of the citizen. The second opportunity of the accounting degree in Portugal is the future itself, because the strong combination of different sources, pilot projects and statistics allow to produce innovative systems useful to organizations all over the world. The challenge is producing a powerful accounting information system that demands concepts, definitions and standards that are more flexible with the reality of markets. The reuse of the accounting information to plenty of sources generates more transparency and guarantee for the future of the accounting degree. The third opportunity of the accounting degree in Portugal, in general, and in the Instituto Politécnico da Guarda, in particular, is the answer to employers’ need for skills and knowledge. The fundamental question of the curriculum in the accounting area is preparing students for the real world, putting emphasis on the professional science based. So, the challenge of this degree to many students is giving the capability of the learnability to answer the substantial activities of the tasks on the organization.

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