Powering corporate citizenship: assessing corporate social responsibility of hydroelectric companies in Canada

ABSTRACT

Hydroelectric stations are a renewable source of electricity, but social and environmental impacts have been hindering social acceptance of new projects. The hydroelectricity sector has been investing heavily in sustainability marketing and social responsibility to improve the sector perceptions among shareholders and minimize public scrutiny. This paper examines corporate social responsibility (CSR) reporting of the hydroelectric sector focusing on Canadian corporations. In addition, this paper reveals that although CSR is addressed in either the websites or environmental reports, the type of framework adopted, the completeness, and frequency of reporting is not equally implemented. Overall, financial accountability persists driving the reports attention and playing a major role in the CSR view. This work also attempts to link CSR and social impact assessment to improve sustainability reporting. Several recommendations are presented throughout the text.

KEYWORDS:

• Social sustainability
• hydropower
• social reporting
• sustainable energy
• energy governance

Introduction

Electricity is one of the most important sectors in the world. Essentially, industries, residences, cities, and businesses require electric power, at some level, to operate. Regarding renewable energy sources, hydroelectric dams contribute to 15.9% of all electricity consumed in the world (IHA 2019). Canada is one of the world leaders in hydroelectric generation. Nearly 60% of the nation’s electricity comes from hydroelectric dams (Natural Resources Canada 2020). Canada sees hydroelectric power as part of the strategy to reduce its CO₂ contributions, meet increasing domestic power demand, and profit from electricity exports to the United States. With such policy objectives in mind, the hydropower sector plans to expand production capacity through new projects and expansion to existing ones (Aarons K, Vine D, Center of Climate and Energy Solutions 2015; IHA 2019). Around 158 new middle and large-scale hydroelectric dams are predicted to be constructed until 2030. These developments would generate more than 1.7 million jobs to the economy (Desrochers et al. 2011). However, hydroelectric projects can also cause negative environmental and social adverse effects leading to controversial debates around the economic benefits of hydroelectricity over the socioenvironmental impacts (Rosenberg et al. 1995), e.g. Site C project in British Columbia (Bakker and Hendriks 2019) and Muskrat Falls in Labrador.

Good relationship with society and communities is an important in the management of projects. Social conflicts should be mapped and agreements between communities and project’s proponent made (Demuijnck and Fasterling 2016; Gehman et al. 2017) to avoid conflicts (Prno 2013). The relationship grants companies a social license to operate, which is a current issue in the development of high-impact projects (Gunningham et al. 2004; Boiral et al. 2019). Among mechanisms to reach good relationship, companies use corporate social responsibility (CSR) to develop social campaigns and reach communities. CSR also inform stakeholders about actions to meet social demands, minimize and compensate conflicts, and pathways to improve social license (Klimpt et al. 2002; Vanclay 2019). Hydroelectric developments are inserted in a complex market surrounded of environmental, social, and economic issues. Projects have a large-scale nature to provide cheap electricity. Moreover, around 303 projects (Miller et al. 2019) were installed before environmental legislation. Such projects caused major socioenvironmental traumas on Indigenous peoples (Loney 1995), which corroborate the necessity to ‘acquire’ a social license to construct and operate hydroelectric dams in Canada. Consequently, the hydroelectric sector has been investing heavily in sustainability marketing and CSR to improve image perceptions among shareholders and society (Roome and Bergin 2000; Sparkes 2014).

‘Corporate sustainability’ or CSR has been used as a strategy to disclose businesses’ environmental and social performance (Jenkins and Yakovleva 2006; Zhang et al. 2019). The purpose is to promote corporations as good citizens working towards sustainable development (Rondinelli and Berry 2000); and inclusion of social values into the corporation policies and practices (Fordham and Robinson 2019). CSR theory, though, asserts that social investments are merely strategies to increase competitiveness and value among competition (McWilliams et al. 2006). Philanthropy or charity has been considered one of the main ways to outreach communities. Charity is widely debated as a true CSR strategy. Whitehouse (2006) claims that ‘charity does not reflect the extent to which the company is socially responsible’ (p. 286), and therefore philanthropy should not be seen as true CSR. Zhang et al. (2010) evidenced that publicizing donations to social causes creates a positive perception among society and leverage in business competitiveness. In this sense, donations would, somehow, alleviate a social problem while corporations gain public visibility for helping a cause (which they might be part of the problem). Hence, charity is seen as a strategic move for corporations to enhance positive visibility. The equation is simple: corporations invest on and advertise social actions to improve the public view and generate social license (Demuijnck and Fasterling 2016). CSR is more than philanthropy. The extent to which each corporation will invest in CSR varies from auditing internal matters (Metaxas and Tsavdaridou 2012), such as human rights, environmental and health standards, fighting corruption, and transparent business practices, to external goals (Rondinelli and Berry 2000), such as alleviating poverty, working with communities, investing in community projects, and protecting natural resources and life.

With hydroelectric dams, there is an opportunity to analyze CSR strategies for companies and developments that have historical conflicts with host communities but continue to develop new constructions. CSR process needs to account for economic, environment, and social changes associated with the size of the undertaking as well as different cultural and political aspects related to environmental and social management. Therefore, it is essential to study hydropower corporations’ CSR reports. More specifically, does the presence of CSR as an instrument shape how the hydroelectric industry uses social aspects to promote companies as sustainable and ‘good citizen’ corporation?

Hydroelectricity investments belong to the electricity sector portfolio; hence, CSR reports exclusively from hydroelectric corporations might not always be available. The same companies usually have projects in other renewable and non-renewable facilities. In Canada, though, many Crown corporations still have ‘Hydro’ in their names and continuously generate most of the provincial electricity through hydroelectric stations. A study in Canada provides an excellent opportunity to understand how CSRs for hydroelectric companies are viewed on a national level. Therefore, this paper examines CSR reporting of the electric sector focusing on Canadian hydroelectric corporations. Given the broad context present in CSR research, this study aims to tackle the reporting of social issues in the CSR reports and websites of Canadian hydroelectric companies. The research addresses the main forces behind ‘sustainability’ improvement within the hydroelectric sector, indicators used for CSR reporting, and areas the need improvement. The study links CSR to social impact assessment and provides insights to improve sustainability of projects.

Companies powering more than 50% of the province with hydroelectric facilities are assumed to be hydro corporations. Ontario Power Generation is included as an exception because the corporation controls most of the hydroelectric generation in Ontario, the province with the third largest installed capacity in the country; see Table 1. Thereby, this paper examines CSR reporting of the following Canadian hydropower corporations: Hydro Quebec (HQ), BC Hydro, Manitoba Hydro (MH), Ontario Power Generation (OPG), Yukon Energy Corporation (YEC), and Nalcor.

Table 1. Summary of hydroelectric companies’ presence in Canada

Province	Hydroelectric production^1 (%)	Hydroelectric Capacity (MW)	Company’s name
Manitoba	96.8	5,648.0	Manitoba Hydro
Quebec	95.6	36,366.0	Hydro Quebec
Newfoundland and Labrador	93.9	956	Nalcor
Yukon	87.1	116.0	Yukon Energy Corporation
British Columbia	88.7	15,029.0	BC Hydro
Northwest Territories	37.4	50.5	Northwest Territories Power Corporation
Ontario	24.1	7,475.0	Ontario Power Generation
New Brunswick	18.7	889	Energy NB Power
Saskatchewan	14.9	889	SaskPower
Nova Scotia	9.3	400	Nova Scotia Power
Alberta	2.7	916.40	TransAlta

¹source: (Natural Resources Canada 2020)

Governance and sector guidance: CSR in context

Although CSR is not enforced by law, governments play a role in proposing guidelines and standards to facilitate the transition from traditional business-as-usual to a socially and environmentally friendly strategic management system. Governments can regulate companies and encourage further community-based assessments and businesses’ compliance with international CSR standards (Wanvik 2016). The Government of Canada published two guiding reports, 2009 ‘Doing Business the Canadian Way’ document and 2014 ‘CSR implementation guide for Canadian Businesses’ (Industry Canada 2014) aiming to improve social monitoring and community outreach of Canadian companies. The document offers an overview of general parameters to consider, steps necessary to implement a CSR framework, and reasons to adopt a CSR agenda for all corporate sizes. These documents are not a sector-specific or mandatory manual, but rather general guidelines with key information about CSR implementation. The areas to invest in CSR are vast. For example, Dragomir (2018) identifies several areas applied to CSR reporting metrics; they include input/output production dimensions, recycling, biodiversity stewardship, work incidents and safety, investment in new and cleaner technologies, socioeconomic compliance, minimize fines/penalties, employee training and education, audit and environmental impact assessment (EIA), and creation of a board committee for CSR planning.

There is no ‘one way’ to develop an effective CSR strategy. In fact, many guiding tools, such as Global Report Initiative (GRI), United Nations Guiding Principles, Equator Principles, ISO 26,000, IFC performance standards, Equitable Origins EO100, and others are available online.¹ The adoption of one framework does not exclude using another. A noteworthy synergy exist in using GRI and ISO 26,000 standards together to measure and report CSR performance (Buck et al. 2014); this synergy extends to the EO100 standard with both guidelines (Equitable Origin 2017). Corporations must select indicators and develop a CSR agenda based on corporation size, sector, location, stakeholder interests, and policy.

The World Bank provides a general guiding manual for hydro companies to develop benefit-sharing mechanisms and improve social responsibility and sustainability performance for hydroelectric developments (Wang 2012). Nevertheless, the lack of clear social metrics and business cases for CSR are recognized as issues to overcome for Canadian businesses (Strandberg 2019). No hydro-sector-based framework is available or fully details how CSR fits into hydroelectric corporations’ policies. The closest governance framework or regulation around social responsibility in the sector was created by the Canadian Electricity Association (CEA). CEA operates as an umbrella organization whose objective is to promote the development of the energy sector in a sustainable manner (CEA 2019). The organization calls on companies to adhere to the sustainable company designation brand. This logo certifies that corporations have responsible, concrete commitments to sustainability in accordance with ISO 26,000 and 14,000 standards. There is also the Sustainable Electricity Program that establishes five sustainability pillars for which corporate members must disclose their corporate performance in accordance with ISO 14,000 standards. This process is followed by an external audit every 4 years (Canadian Electricity Association 2018).

Methods

This study uses a qualitative content analysis method to evaluate official data published by Canadian hydroelectric corporations regarding their sustainability or social responsibility actions. The two primary sources of information were reports and corporate websites. The scholarly literature reveals other studies that used one of these two sources (or both) to perform content analysis and investigate how corporations are monitoring and reporting their social performance (Kolk 2006; Gatti and Seele 2014; Szczepankiewicz and Mućko 2016; Hoffmann and Kristensen 2017; Colaço and Simão 2018). The scholarly literature is consulted to provide insights from other industries and strategies to enhance sustainability performance. Specific CSR cases for hydroelectric companies are scarce, as seen in (Agudelo et al. 2020).

The framework chosen to guide this assessment is the Equitable Origin 100 standard (EO100) for responsible energy (Equitable Origin 2017). The authors considered the ISO 26,000 standard, which is a well-known standard for social responsibility, covers a wide-ranging set of criteria for social issues, and has guided other studies such as (Ranängen and Zobel 2014). ISO 26,000 serves as a guiding framework to develop CSR rather than setting requirements that will be verified by third parties. Thus, ISO 26,000 does not have a certification program. EO100, on the other hand, offers guidance and requirements for companies that want to purpose certification of the company’s operating sites (not the entire company). Considering that EO100 focuses on the energy sector and offers a certification program, we prefer to use it as the framework for this study on hydroelectric companies.

In addition to establishing metrics and indicators for the development of sustainable energy projects, the EO100 standard also focuses on the impacts on Indigenous groups affected by energy projects. This is particularly interesting for the Canadian case as there is a long-term history of conflicts between hydroelectric projects and Indigenous groups. Energy companies pursing EO100 certification must comply with six main principles, including governance issues, humans rights, and social impacts, indigenous peoples, working conditions, and environmental issues (Equitable Origin 2017).

This combination of content analysis of reports/websites and comparison against a framework offers a good approach to the identification of indicators used for social responsibility, the analysis of corporate reporting, the degree of information transparency, and the quality of information being presented to the public. The content analysis is performed in a systematic manner, in which the EO100 standard provides a list of keywords/terms/concepts that will be used to code for the existence of certain indicators in the sample. The next step is to read the texts, compare the results with the principles and literature, and critically synthesize the data. We acknowledge that full compliance with GRI or any other standard might be impossible (Skouloudis et al. 2009), but studies such as ours reveal areas that need improvements for CSR practices.

The social license of hydroelectric companies

Social license might be the main driver under a social management system for CSRs of the hydroelectric industry in Canada due to past conflicts between industries and host communities. The content analysis showed companies reinforce social license as part of their strategies. For example, OPG’s sustainability strategy openly expresses the necessity to consolidate social license to operate in host communities (OPG 2017). Yukon Energy flags securing social license through public engagement and consultation as a fundamental value. Although the term ‘social license’ was not found in other hydro corporations’ CSR strategies, the concept of maintaining public trust and good relationships with host communities (mostly Indigenous) is always acknowledged.

The question at hand might be which elements and areas hydroelectric (and other electricity generation facilities) should include in their management strategies to secure social license. The following sections explore how CSR drivers are addressed inside the reports. The implications of such reporting are discussed next.

A closer look into the reporting

Corporate social responsibility is addressed in either the websites or environmental reports. However, the type of framework adopted to implement CSR and level of information covered are not homogenous in the corporations’ websites/reports. Different levels of disclosure of socio-environmental content are also observed in other sectors (Jenkins and Yakovleva 2006). Hydro Quebec and Ontario Power Generation adopt the Global Reporting Initiative (GRI) framework and sustainable development (SD) principles. Manitoba Hydro follows guidance of the SD principles, setting 13 areas for its CSR reporting. BC Hydro adopts the triple-bottom-line framework and GRI indicators; the company developed its own social responsibility policy establishing principles and values to be followed. Nalcor uses the same strategy of creating a company-based sustainability agenda and its own sustainability framework based on ISO 14,000 and 26,000 criteria. Yukon Energy does not mention a specific framework; however, the company has specific values established in its internal sustainable policy with indicators for environment community, safety and working conditions, and commerce. Notably, there is not a ‘right’ or well-defined sector-based CSR strategy that will perfectly fit the environmental and social management systems of all hydropower plants. Corporations are free to adopt or develop best practices that meet their strategies and will eventually achieve desired economic, social, and environmental goals.

Why is it important to address CSR reporting? Reports help the identification strengths and weaknesses in the measurement and management of social impacts. Moreover, improving the quality of reports can lead to a positive relationship with stakeholders. Companies that decide to adopt specific frameworks might likely benefit from pre-defined indicators and areas of concern that should normally be addressed. Table 2 summarizes the common indicators tackled in Canadian hydro CSR reports. The next sections will discuss each component in detail.

Table 2. Reported indicators focused on the social and environmental responsibility of Canadian hydroelectric corporations

	BC Hydro	Hydro Quebec	Manitoba Hydro	Nalcor	Ontario Power Generation	Yukon Energy
Environment
Climate change adaptation and CO2 emissions	✓✓	✓✓	?	✓	✓✓	✓
ISO 14,001 management system	✓	✓✓	✓	✓	✓	-
Environmental protection/stewardship	✓	✓✓	✓✓	✓	✓✓	✓
Waste management	?	✓✓	✓	✓	✓✓
Energy Efficiency	?	✓✓	✓	✓✓	✓	✓
Impact assessment	^−	✓✓	✓✓	✓	✓	-
Remediation of environmental liabilities	-	-	-	-	-	-
Restoration of degraded environment	?	✓✓	✓	-	✓	-
Governance
External CSR policy	✓	✓	✓	✓	✓	✓
Sustainability reports	?	✓✓	?	✓	✓✓	✓
Code of conduct	✓	✓	✓	✓	✓	✓
Finance reporting	✓✓	✓✓	✓✓	✓✓	✓✓	✓
CSR awards	✓	✓✓	✓	✓	✓	✓
Sustainable Electricity Program member	-	✓	✓	✓	✓	✓
Sustainable Electricity Designated	-	-	-	✓	-	✓
Bribery and anti-corruption	?	✓	-	-	-	-
Grievance mechanism	?	✓✓	-	-	-	-
Non-compliance	?	✓	-	✓	✓✓	-
Social and finance
Stakeholder engagement	?	✓	✓✓	✓✓	✓	✓
Indigenous engagement	✓	✓✓	✓	✓✓	✓	✓
Local and first nations procurement	✓	✓✓	✓✓	✓	✓	✓
Community investment	✓	✓✓	✓✓	✓✓	✓	✓
Diversity in the workforce	?	✓✓	?	✓✓	✓	-
Affordable energya	$	$	$	$	$	$
Recreation	✓	✓	-	-	-	✓
Cultural programs	✓	✓✓	✓	✓	✓✓	✓
Education trainings	✓	✓✓	✓	✓	✓✓	✓
Philanthropy	✓✓	✓✓	✓✓	✓✓	✓✓	✓
Social equality	?	✓✓	?	✓✓	✓✓	-
Human rights	?	✓	✓		✓	✓
Working conditions
Employee wellbeing	-	✓	-	✓	✓	✓
OHSAS 18,000/ISO 450,001	✓	✓	-	✓	-	-
Forced labour	-	-	-	-	-	-
Working hours and leave	-	-	✓	-	✓	✓
Prevention of accidents	?	✓✓	?	✓	✓✓	✓✓
Safety training	?	✓	✓	✓	✓✓	✓✓
Mercury monitoring in reservoirs	-	✓✓	✓	✓	-	-
Spills	-	✓✓	✓	✓	✓✓	✓✓
Emergencies response	✓	✓✓	✓✓	✓	✓✓	✓✓

ainformation retrieved from https://energyhub.org/electricity-prices/

✓✓: metrics provided in the report or via external links. ✓: indicator described. -: not mentioned. ?: information provided but not updated in the last 2 years (baseline year is 2019).

Environmental indicators

Climate change has become an important indicator, as hydropower is a renewable energy source designed to generate stable electricity and minimize CO₂ emissions. Most hydro corporations report the amount of CO₂ emissions avoided as a metric to indicate fighting of climate change. However, as corporations might operate fossil fuel facilities as well, they sometimes disclose a balance between released/avoided/targeted CO₂ emissions. For instance, OPG follows CDP guidelines to disclose greenhouse gas and other emissions from operating facilities. Most emissions are reported from other non-hydro electricity sources to present the in the corporation’s portfolio.

Waste management reporting also depends on the type of electricity matrix the company works with. As OPG heavily operates nuclear electric stations, their CSR strategy focuses on managing nuclear waste and ensuring clean and safe environmental conditions. Hydro Quebec, on the other hand, has a strategy to decommission nuclear stations and increase other renewable sources in their portfolio.

Environmental stewardship is represented in actions to preserve rivers, protected areas, wetlands and lakes, habitats, biodiversity, and threatened species. Common metrics are reforestation activities and number of trees planted; specific fish, bird, and wildlife monitoring programs; number of accidents/penalties/spills; waste recycling and management; improvement of infrastructure (e.g. energy efficiency and access to electricity); water management; and mercury level monitoring in reservoirs (not in all reports).

Acknowledging these activities and proving quantitative metrics for each category is a step toward communicating CSR results to stakeholders. The exact location of reforestation and biota preservation, along with numeric data for these metrics, are sometimes missing in the reports. The companies should regularly provide links for stakeholders to follow the veracity and spatial distribution of conservation actions. Moreover, exploring environmental liabilities (environmental impacts) and non-compliance is a key strategy for social responsibility. As for legal compliance, surprisingly, not all reports contain metrics or targets for environmental non-compliance and respective fines or monetary sanctions suffered from incidents that occurred during operation/construction.

Regarding environmental liabilities, only two corporations’ websites provide studies communicating the environmental impacts of their activities beyond the reporting of metrics and performance. Hydro Quebec published a study revealing 30 years of experience working with hydroelectric generation in northern communities and the dam’s environmental and social impacts; see (Hayeur 2001). Manitoba Hydro communicates to the public about the environmental impacts of transmission lines on terrestrial, aquatic, and aerial wildlife; see (Berger 2010). Agreement and acceptance of likely social and environmental impacts are part of the decision-making process, and there CSR needs to clearly address past experience and knowledge lessons learned from them (Slootweg 2005). Moving toward improving CSR means obtaining knowledge of the resources, activities, and liabilities of the company. These reports should demonstrate a somewhat transparency of the company regarding environmental liabilities and efforts to improve the management system. Environmental liabilities can help to monitor concerns and areas needing investments.

Social and environmental impacts of past developments can offer important lessons on which areas should receive closer attention and possibly pathways on which to focus under a socially responsible program, such as remediation of impacts and restoration of degraded sites. It is not the purpose of the sustainability reports to address specific projects and their mitigation and adaptive measures. The corporate responsibility and sustainability strategy can gather information about projects and use it to improve the environmental and social management system of the company. The recommendation here is that hydro corporations should further explore environmental liabilities on their websites and in reports published under the sustainability flag.

Governance

In the context of CSR research, the present work gave special attention to the reporting of the selected indicators present in the EO100 framework: anti-corruption or bribery, non-compliance, grievance mechanisms, and existence of values and principles related to social and sustainable development.

All corporations evaluated have posted a code of conduct on their website. A CSR or environmental policy usually complements the code of conduct and explores details on how the firm’s vision will dictate social investments and priorities to be addressed. As stated by Fifka and Frangen-Zeitinger (2015), ‘the mere formulation and communication of a code of conduct does not guarantee its compliance’ (p. 153); the same statement is true for CSR policy. The transparency in the level of communication reveals corporate governance for the promotion of good citizenship. The regularity and completeness of environmental and social agenda provided in the reports and websites varied significantly, though. Although third-party auditing can improve credibility and transparency of information and compliance with principles and values of the corporation (Zhang et al. 2019). This study identified a lack of reporting metrics related to corporate governance. Transparency seems to be closely related to the corporate financial status, as financial accountability is yearly disclosed. For environmental and social reporting, Hydro Quebec, Manitoba Hydro, OPG, and Nalcor include details about their objectives, actions, targets, and metrics. Yukon Energy’s sustainability reports contain superficial information on sustainable development principles and accountability performance. BC Hydro has not uploaded a sustainability report since 2013. Nevertheless, financial accountability reports are available yearly on each company’s website. What are the implications of that? From the sustainability viewpoint, critics can allege that CSR efforts are merely green and bluewashing (companies state they follow sustainability principles, but no action is taken in practice to do so) (Laufer 2003). On that front, the efforts stated in paper to acquire social license to operate and maintain good relationship with communities would be just ‘words in the paper’.

Regarding bribery and anti-corruption in the sector, Lu et al. (2019), highlights that corruption can occur at any stage of the development of sustainable energy projects. A hydroelectric dam can cost billions of dollars and take several years to complete construction, making bribery and corruption big concerns in capital-intensive industries that involve government interest, such as the energy sector. Canada might be considered a leader in combatting corruption (Mijares 2015), but that does not exempt the sector from investing in and reporting anti-corruption training. CSR of Canadian hydroelectric corporations have either addressed corruption or the participation of political interference for electoral campaigns. Crown corporations play a specific role in pushing policies and ensuring the continuation of sustainable and unsustainable practices.

Grievance mechanisms follow the same level of reporting, focusing on customers’ complaints. To prepare to manage controversies in projects, corporations should develop a system to respond to community protests (Vanclay 2019). Although it is undesirable for protests to occur, they may likely happen, so corporations need to establish a system of good faith and trust when responding to negative grievances.

The social focus

Under CSR implementation, metrics for social performance usually cover employment rate, differentiating Indigenous and non-Indigenous personnel, number of partnerships and agreements with local communities and Indigenous groups, local procurement for services and products, enhancement of other activities such as tourism in the region, sponsorship of community events, and activities to engage with people affected by local specific projects. The quantification of results follows the previously mentioned tendency to vary widely among the reports/websites. Description of the gender equity in the workplace or number of people who identified themselves as Indigenous is acknowledged; however, only Manitoba Hydro and Hydro Quebec provided a table quantifying woman in the workforce, persons with disabilities, visible minorities, and Indigenous employment.

Such metrics are not able to enlighten society and stakeholders whether projects contributed to equality, minimization of poverty, and improvement of social conditions. The idea of CSR as ‘band-aid’ actions applies well for hydroelectric industries. Thus, metrics used to measure efforts to inform partnerships, agreements with communities, and local procurement need improvement. For engagement with communities, we suggest making results of follow-up, monitoring, and benefit-sharing programs easily available in clear language to the public. An example would be creation of a list of projects with agreements followed by a description and quantification of the benefits brought by the partnership.

Companies also report seeking partnerships with local communities to increase the project’s acceptance. For instance, Manitoba Hydro formed a partnership with Cree Nations to construct the Keeyask Generating Station on the Nelson River in northern Manitoba (Buckland and O’Gorman 2017). The economic compensation would be devoted to the implementation of cultural activities and maintenance of Indigenous traditions. All other companies, OPG, HQ, BC hydro, Yukon Energy and Nalcor, have partnered with communities to develop new projects as part of their mission. Why is that important? Community engagement reflects into the social license component (Gunningham et al. 2004) and specific goals such as avoiding social conflicts and costs associated with delays (Franks et al. 2014), negative reputation due to social movements against hydropower (Gebhardt 2012), and other monetary penalties. The results of such partnerships are not fully reported, though.

Partnering with communities also promotes the corporation’s goal of working towards sustainable development of the community by encouraging economic growth and opportunities for development. Conversely, Strandberg (2019) conducted semi-structured interviews with senior managers in different sectors of Canadian industry and identified barriers for CSR implementation in the national scenario. Working with northern and Indigenous communities is recognized as a challenge to be overcome in the integration of CSR strategies in Canadian industries. This challenge might arise due to differences in culture and mindsets among corporations, communities, or non-profit organizations. We, therefore, argue that partnerships should be followed by constant consultation and engagement. For example, Strangway et al. (2016), report a community-led monitoring program of fish spawning in a hydro-impacted river in Quebec. The authors believe the program to be a success due to the high level of engagement and willingness to continue the project after the contract ended in 2014.

Finances and community outreach: money matters

This analysis observed the promotion of corporate community investment programs mainly focused on education training, environmental initiatives, local procurement, health and safety, youth programs, humanitarian causes, and arts and culture. The full extent of each initiative is not clear or promoted on the companies’ websites, though they are being incorporated as sponsorship programs and philanthropic actions. CSR is expected to have a focus on economic performance driven by maximization of profits for shareholders (the government) while ‘improving social welfare’ of other stakeholders (society) (Hediger 2018). That is, it is naïve to think that companies will invest beyond legal compliance not to gain other benefits such as improving perception of the company (or government when public-owned) among the public and maximize the corporation value.

In terms of finances and social liabilities, there are controversies regarding philanthropy to offset impacts caused by people’s induced displacement, which has been an issue for many past hydroelectric projects as monetary compensation given to resettled people does not restore the livelihood aspects lost by the impacts of big projects (Rowan 2017). Boiral et al. (2019) argued that social license to operate involving Indigenous groups exceeds simple predetermined monetary compensation; rather a CSR agenda must create a long-term relationship that mutually benefits both proponent and affected groups. However, such component and information are not always evident. In addition, Indigenous peoples in some areas still fight for compensation from past developments. The focus on charitable events without meaningful improvement of social conditions might still be a future issue to overcome in the hydroelectric CSR agenda as there is still some resistance to shifting from traditional philanthropic views to a holistic CSR agenda (Strandberg 2019). As it might improve the corporation’s perception among society, it will not disappear from CSR policies.

The main critique that reporting of socially driven actions that contributed to the enhancement of affected local groups, especially in the face of controversial hydroelectric undertakings, needs to improve. Companies should use data-driven understanding to monitor social impacts and easily communicate outcomes with the public (Siesfeld et al. 2018). Results of community investment programs should be further explored, specific metrics pointing out the improvement of environmental and social conditions need to appear, and contributions to meet sustainable development goals must be expressed openly and regularly. Direct investments accompanied by monitoring and engagement should be prioritized to create real and long-term net benefits for affected populations. Therefore, the reports or websites can create room to explore how big projects that went through complex approval have been benefiting people and contributing to social and sustainable development. In addition, they should show how small-scale hydro projects address the generation of secure power while minimizing the impacts on the environment.

Health, safety, and working conditions

Koskela (2014) performed a content analysis of the occupational health and safety (OH&S) theme in CSR reporting of different industries. The authors discovered that reports dedicate from 0 to 10% of their content to health-related issues. Well-being of employees in the workplace was the most common issue, and the reports rarely used graphical images or tables to display results.

This is similar to the results of our analysis. We identified that concerns around the work environment and social performance are expressed in actions and targets towards health and safety, number of days without accidents, training, community courses, relationship with employees in the workplace, and employee wellbeing. Other issues present in the CSR framework related to workers’ rights and legislation but rarely reported (Montero et al. 2009) are long working and shifting hours and health care assistantship. These issues are often addressed in separate links or during the contracting process. Most of the reports only provide a description and a few statistics for accidents. Forced labor and child labor indicators, which are heavily focused on extractive industries operating abroad, did not emerge as a concern in the reports for hydro energy in the country. This might be because Canada has high standards for working conditions or lack of studies addressing conditions at the workcamp.

Why should we improve corporate social responsibility reporting?

The previous sections described the current state of CSR reporting for selected Canadian hydroelectric companies and provided several recommendations to improve reporting practice. The somewhat standardization of CSR reporting is relevant to the enhancement of social initiatives of companies operating in different cultures or markets (McWilliams et al. 2006; Golob and Bartlett 2007). Hence, improving CSR reporting help companies to understand actions, identify areas of improvement, and communicate with stakeholders on the achievement of goals. Reports built on strong analytical information will contribute to create business value (Evans and Siesfeld 2020) while weak reporting practices can demonstrate patterns of greenwashing and bluewashing (Laufer 2003). In this context, CSR reporting becomes crucial to track down actions for sustainability and socially responsible governance (Owen and O’Dwyer 2009). Analyzing CSR reporting in different market concentrations and political interests, stakeholders can evaluate whether CSR is going to a different direction than desired (Acabado et al. 2020), which has been demonstrated for Nalcor and BC Hydro. Site C dam and Muskrat falls, owned by BC hydro and Nalcor, respectively, are clear examples that social license with the public has not been obtained and corporate actions are not offsetting their negative social impacts. So, CSR can also be used to help corporations develop investment strategies (Gulakov et al. 2020).

As some of the social requirements to offset social impacts are linked to environmental regulation (Moon and Vogel 2009). The next section will touch on CSR connection to social requirements for the acquisition of legal approval to operate and monitoring of social impacts.

Social impact assessment and corporate social responsibility

As indicated by Bice (2015), CSR and social impact assessment (SIA- tool used to measure as well as monitor and manager social impacts – (Vanclay 2003)) are connected even though there are differences in the legal framework for each tool (Gulakov et al. 2020). While SIA is mandatory for legal licensing and access to external funds from lending organizations, CSR is a voluntary act enforced by a strategic desire to improve corporations’ performance and social acceptance. SIA is undertaken for a project-specific situation, whereas CSR reaches the entire corporation, its code of conduct and policies (Scace and Barrera-Hernández 2013) and should reflect actions beyond legislative compliance. Despite these small differences, the bottom line is that companies use both SIA and CSR to meet legal licensing requirements, manage adverse effects and benefits, and promote corporate good practices. Vanclay et al. (2013) claim that SIA objective is to provide an equitable and sustainability biophysical environment while Miras-rodríguez M Del et al. (2015) state that electricity companies use CSR to minimize negative image that cheap electricity comes at high social costs. Both tools work to minimize non-compliances with environmental and social risks, avoid protests, interruption of operations, financial penalties, decrease in the company value, and damage to the business reputation (Evans and Siesfeld 2020). For Manohar (2019), the alignment of SIA and CSR would contribute to effective implementation of social projects. But how can CSR support SIA for a better sustainability assessment? While CSR reports would not contribute to reviewing and approving new projects during the licensing phase, reports might be particularly important for monitoring of social impacts and fulfillment of moral and legal obligations (Singh et al. 2018). For example, in Harvey and Bice (2014), CSR reporting analysis showed contradictions between SIA commitments and social development programs in Australian mine company. SIA and CSR can communicate corporations at the macro (corporate policy) and micro-level (corporate activities) (Gulakov et al. 2020). In this perspective, Siesfeld et al. (2018) highlight that executives can understand the company’s social contributions to society and show metrics to governments and other parties. This strategy would comprise results from social monitoring as well as outreach campaigns to improve social responsibility and minimize social grievances. Hence, CSR might serve as a complementary monitoring tool to evaluate whether legal compliance and voluntary actions are taken into account for sustainability and transparency. Monitoring and measuring social impacts create value to the company, identify which goals were met and areas that need more effort to achieve desired outcomes, evaluate real impacts of current measures and programs (Siesfeld et al. 2018).

As for barriers, Bice (2015) highlighted that SIA and CSR seem to remain managed separately by corporations. From a practical viewpoint, whereas an external team of environmental consultants conducts SIA to assess the social impacts of a project, CSR might be designed by internal personnel who might not be familiar with SIA practices. There might be political barriers as governments has institutional powers. One hypothesis is the exposure of detailed social conflicts for public-owned corporations would impact electoral campaigns or political interests. The other hypothesis is that the environmental regulation only enforces project-level sustainability while CSR might be often used to tackle philanthropic actions outside project’s impacts. Consequently, social license to operate (associated with CSR) and legal license (associated with SIA) have been looked from different perspectives. Nonetheless, the results of regulatory hurdles and lack of integration between CSR reporting with social impacts affects the whole sustainability plan, unable the understanding of real social impacts of Crown corporations and its contribution to social equality, and generates more mistrust from communities (Harvey and Bice 2014). The current study did not address the ownership influence that companies might have over CSR practice and SIA. This should be tackled in future studies about policy side of social impacts.

Conclusion

This work evaluated corporate social responsibility reporting of the most representative Canadian hydroelectric companies. EO100 framework was applied to analyze reports and corporation webpages with regards to indicators, CSR drivers, corporations’ commitment, and main strategies for current and future CSR.

All companies now acknowledge working with indigenous communities to promote a socially accepted hydroelectric station. Nevertheless, this study showed that the stage of CSR reporting clarity varies among companies analyzed. The study identified inconsistences with what it reported to actual implementation of sustainability goals with regards to social performance. Major players such as BC Hydro and Nalcor value more financial sustainability and accountability. However, philanthropy continuously plays a major role in the CSR outlook for all companies. The study also highlighted several areas that need improvement as the acknowledgments of environmental liabilities in the reporting. As CSR reporting is a worldwide practice, the knowledge and suggestions to improve indicators, reporting of environmental liabilities, provision of information regarding actions, and improvements to the scope of CSR reporting can be applied to other industries. Equally important to notice is that many other countries such as Brazil, Norway, USA, China, among others, are considered hydroelectric countries. The key areas of improvement for CSR reports of Canadian industries can be used to compare CSR practice among other counties and perhaps serve as benchmark for general areas of concern for the industry.

Lastly, this study highlighted a link existing in CSR and SIA showing that they should, ideally, complement one another in the formulation, implementation, monitoring, and reporting of social impacts and solution for communities. Further studies should also analyze political and regulatory implications hindering CSR and SIA to understand barriers specifically within the sector or driven by the government-owned and scale nature of these investments.

Acknowledgments

The author would like to thank Nova Scotia Graduate Scholarship and Killam Trust Scholarship for sponsoring the first author of this paper. This research would not have been possible without the funding provided.

Additional information

Funding

This work was supported by the Killam Trusts; Nova Scotia Graduate Scholarship.

Notes

1. List on the website of the Government of Canada see https://www.ic.gc.ca/eic/site/csr-rse.nsf/eng/h_rs00587.html, accessed on 12 December 2019.