Reporting Models do not Translate Well: Failing to Regulate CSR Reporting in Spain

ABSTRACT

This paper explores the regulation of corporate social responsibility (CSR) reporting for corporations exceeding 1000 employees introduced in Spain by the Sustainable Economy Law 2/2011 of 4 March. The relevance for this special issue stems from the fact that this law anticipates possible outcomes of the 2014/95/EU Directive to the Spanish context. Furthermore, the Spanish Law has been cited by the EU as a precedent for the Directive. This paper adopts a multi-method approach, based on content analysis and qualitative interviews to portray the state and evolution of such CSR reporting regulation. The results of the content analysis suggest that the regulation did not have any impact in terms of the number of reporters, but it is associated with a slight improvement in the reporting quality of the published reports. Those findings are consistent with the argument made in previous literature indicating that governmental regulation of CSR reporting alone does not guarantee better disclosure levels and that structural elements are necessary to accompany changes in the law. With the help of qualitative interviews with relevant actors, the paper has examined three elements that seem to explain the limited effect of this regulation: (i) competing views about CSR and CSR regulation; (ii) CSR reporting patterns; and (iii) how power was mobilised to suppress the potential of CSR reporting regulation.

Acknowledgements

We would like to thank the individuals who took the time to be interviewed for this project and Enrique Mesa for his assistance in data gathering. Previous drafts were presented at the 2015 Konopka, 2015 CSEAR and 2015 EBEN research conferences and at a University of Strachclyde research seminar. Comments received from participants are gratefully acknowledged. We are also grateful to Christine Cooper, Javier Husillos, Thomas Johansen and the two anonymous reviewers for their observations.

Notes

1. Directive 2014/95/EU of the European Parliament and of the Council of 22 October 2014.

2. Companies with more than 500 employees and either with total assets exceeding 20 million euros or with annual turnover surpassing 40 million euros are obliged under the Directive.

3. The law also mandated that those guidelines had to conform to the principles of

transparency, good governance, commitment to the local communities and to the environment, respect for human rights, improving labor relations, promoting the integration of women, effective equality between women and men, equal opportunities, universal accessibility for the disabled and sustainable consumption. (SEL, article 39)

4. Following the 2008 Act, further initiatives by the Danish government include the Danish Action Plan for CSR (2012–2015) (Danish Government 2012). This plan contends that CSR and transparency are an essential part of the agenda for growth, in response to financial crisis. This plan also proposes to improve the guidance on CSR issues. As part of this regulation, the Danish government carries out an in-depth evaluation of the disclosure of CSR policies to the government (especially by listed corporations) and how those policies are implemented (2008, 2012).

5. SABI is a Bureau Van Dijk database containing more than one million companies in Spain and Portugal. SABI is the reference in the area of financial and governance information for Spanish non-financial firms (see http://www.bvdinfo.com/en-gb/our-products/company-information/national-products/sabi). For financial firms we referred to the financial industry yearbook published by the Asociación Española de Banca (2012).

6. The initial list of companies retrieved from the databases included more than 400 companies. But, subsequently this sample was reduced by considering only the parent company when two or more entities were found to be part of the same group.

7. It has to be remembered that, for the purposes of this study, companies refer to those that are regulated under LES (having separate legal entity and more than 1000 employees). Some CSR reports identified in this study which were published by subsidiaries of those companies, were included in the analysis for the only purposes of analysing the overall evolution of CSR disclosure.

8. Clarkson et al. (2008) developed a comprehensive environmental disclosure scale. This 95-point index was largely based on GRI guidelines and consists of two major sections. Their ‘hard disclosure items’ include four sub-sections labelled as (i) governance and structure management, (ii) credibility, (iii) environmental performance indicators (EPIs) and (iv) environmental spending, whereas ‘soft disclosure items’ comprise three sub-sections classified as (i) vision and strategy claims, (ii) environmental profile and (iii) environmental initiative.

9. The purpose of this study is not to evaluate the influence of G4 over the quality/comprehensiveness of CSR reporting. However, the emphasis on materiality in G4 could, arguably, weaken the link between completeness and reporting quality that underlies our disclosure index. Nevertheless, G4 does not seem to affect our results, since we are analysing only 13 G4 reports (all in 2013) and the disclosure index of the G3 reports in 2013 (N = 26) does not statistically differ from the disclosure index of the G4 reports (N = 13) (Wilcoxon-Test = 941.000; p = .309).

10. The main discrepancies between coders revolved around ISO 26000, SA 8000, internal environmental audits and the fine-tuning of the 0–6 scores of performance indicators. Internal validity is the key concern of this study, as it intends to evaluate quality disclosure evolution in the period 2010–2013.

11. The mean disclosure index for the GRI reports is significantly greater than the mean disclosure index of the non-GRI reports in all the years (Wilcoxon Z = −4.655 (2010); −4.396 (2011); −4.234 (2012); −4.999 (2013); p < .05).

12. The mean disclosure index is significantly greater for 2011 and for 2012 than for 2010 (Wilcoxon Z = −3.634 (2010–2011); −4.171 (2010–2012); p < .05). In the rest of the cases there are not significant differences (p > .05).

13. Kruskal–Wallis H = 4.894 (2010); 2.729 (2011); 1.899 (2012); p > .05. H = 7.125 (2013); p < .05).

14. A competing explanation could rely on the economic crisis, that is, the regulation could have a positive effect in some companies, compensated by the decision of other companies to discontinue CSR reporting due to the economic crisis. This explanation has, however, to be rejected. García-Benau, Sierra-Garcia, and Zorio (2013) conducted a study before the SEL entered into force and found that CSR reporting increased significantly during the 2008–2010 crisis period compared to the 2005–2007 pre-crisis period.

15. Servimedia. 22/03/2011. RSC. Más de 400 empresas tendrán que comunicar al Cerse sus políticas de responsabilidad social. Accessed July 27, 2015, from http://www.servimedia.es/noticias/detalle.aspx?s=24&n=129411.

16. As has been pointed out above, the Danish government provided guidelines to the companies and developed an in-depth evaluation process (2008, 2012).

17. Servimedia. 1/6/2011. RSC. Los informes de responsabilidad social no serán obligatorios en España, según Juan José Barrera. Accessed July 27, 2015, from http://www.servimedia.es/noticias/detalle.aspx?s=24&n=145956.

18. “Transparencia, Comunicación y Standards de los Informes y Memorias de Sostenibilidad” Accessed July 27, 2015, from http://www.observatorio-rse.org.es/sitio/cerse.aspx.