Stakeholder Concerns

Apart from the top down changes resulting from regulatory policy and frameworks, stakeholder concerns appear to be the other main driver of change for business and business practice. The Global Reporting Initiative (2006b) claimed that businesses were now required to be responsive to an increasingly diverse range of stakeholders, who had become increasingly aware of the activities of businesses as well as the impact of the activities on the environment and society in general. Moreover, Cramer (2002, p. 105) stated that ‘we are moving towards a network society in which regulation by civil society plays an important role alongside regulation by government’.

The globalisation of trade has placed enormous pressure on businesses, which have to respond to an increasingly diverse group of stakeholders. Kuhndt, von Geibler and Eckermann (2002) claimed that ‘the accelerating pace of globalisation has created corporations whose power often seems greater that the governments of many countries in which they operate’, and that as a result, there are now increasingly higher expectations of companies in regard to their environmental and social performance. Businesses now find themselves dealing with stakeholders from the local community and employee expectations, government and regulators, industry associations, shareholders and scrutiny from socially responsible investors (Global Reporting Initiative 2006b; The Allen Consulting Group 2002). Low and Davenport (2001) claimed that the most prominent development in the 1990’s was the addition of the environment to the list of stakeholders, represented by a number of high profile environmental interest groups such as Greenpeace. Indeed, Stead and Stead (1994) maintained that the earth was the ultimate stakeholder. As well as environmental lobby groups, many people began to see threats to fresh water, clean air and natural resources as global issues and looked to business to provide equitable solutions to the problems (Soerensen 2002). As a result, businesses began to see the need to measure and report on their wider performance, signifying a shift from a narrow focus on their shareholders to a broader stakeholder orientation (Robson & Robson 1996).

There also appeared to be an increased awareness amongst stakeholders about issues of corporate behaviour. A number of high profile corporate collapses (for example, Enron in the US and HIH in Australia) have shown what can result from inappropriate corporate behaviour, which has raised concerns about disclosure and accountability. Pressure has also come to bear on businesses because of practices that have been perceived as creating social injustices, particularly those that manufacture goods in developing countries. For example, Nike was seen as operating outside of acceptable societal values after revelations that the company was using children from Pakistan to hand stitch soccer balls. The resulting worldwide protests outside Nike shops caused further damage to the organisation’s reputation (Elias 2003). Moreover, according to Cramer (2002, p. 101) ‘public opinion may even turn out to be the most important determinant of corporate behaviour’.

Welford (2002) maintained that globalisation has caused global conditions of inequality and discrimination to worsen and that the loop of globalisation has left out the vast majority of the world’s citizenry. He claimed that organisations must refrain from putting the economic arguments surrounding globalisation above the human rights arguments and that there was now an opportunity, helped by globalisation trends, to more fully embed human rights into the new economic order (Welford 2002). In Australia, it is suggested that the community has a low opinion of big business, which is seen as anonymous, detached from the community, self-interested and greedy (Group of 100 2003).

Practical initiatives such as The Good Reputation Index and the RepuTex Rating Index have been developed to attempt to counteract community scepticism by increasing the reputation of big businesses as good corporate citizens. The Good Reputation Index measures the ability of the top 100 corporations in Australia to manage the activities that contribute to their reputations as socially responsible organisations (Gettler 2002). The methodology uses the categories of management of employees, environmental performance, social impact, ethics and corporate governance, financial performance and management and market focus. The results are achieved by examining the perceptions of a range of community stakeholders and experts (Gettler 2002). Similarly, the Dow Jones Sustainability Index is a response to

the call for greater corporate responsibility and accountability. Therefore, by incorporating a broader approach to the evaluation of their performance, businesses have the potential to enhance and maintain the reputation and brand of businesses (Department of Industry Tourism and Resources 2002; KPMG 2002a; The Allen Consulting Group 2002). In short, organisations must attempt to build trust through positive relationship building policies via multi stakeholder consultations, which include internal (for example, employees) and external stakeholders (Global Reporting Initiative 2006b).

Grafé-Buckens and Beloe (1998) noted that the terms sustainability and sustainable development are often interpreted as being two different but related concepts. The approach taken in this research is to distinguish the two concepts in terms of the conceptual and the practical. Therefore, where possible, the aim is to use sustainable development in reference to the concept and sustainability in reference to the practical application, for example, sustainability reporting or sustainability indicators (For a further discussion on this see, for example, Palmer et al. 1997; Redclift 2005).