In today’s era, Corporate Social Responsibility (CSR) is regarded as one of the major pillars for the success of the businesses. CSR is considered as the business approach contributing towards the sustainable development with the help of delivering social, economic and environmental benefits to all the stakeholders (Windsor, 2013). CSR is a broad concept that addresses different aspects like corporate governance, human rights, environmental factors, health and safety, working conditions and many others (Jha, & Cox, 2015). The main aim of this report lies in the suggestion of appropriate approaches to accounting for CSR to British petroleum (BP). It needs to be mentioned that BP has been suffering from significant fall in public relations as well as financial punishment as a result of the oil spill of Deepwater Horizon Drilling Rig. This report suggests two major CSR approaches to BP for effective reporting of their CSR activities and behavior.
The above discussion shows that CSR is a vast area and the business organizations are required to take into consideration many aspects while adopting the CSR approaches. As per the requirement of CSR, business organizations are required to take into consideration the adverse effects of their business operations on the environment, community people, employees and other stakeholders. The adoption of CSR activities is not enough unless the business entities disclose all the information related to the progress of their CSR activities. In this aspect, the approaches of CSR reporting play an integral part as it helps the business organizations in the reporting of their progress in the CSR activities (Attig & Cleary, 2015).
This aspect is also applicable for BP as the company is required to adopt the appropriate CSR approach. In this aspect, it needs to be mentioned that there are many approaches of CSR available for the companies. As BP has been facing major issues related to CSR, it is required to suggest a set of effective CSR approaches to the company. After considering the depth of the CSR issue in BP, two approaches has been identified for CSR reporting; they are Sustainability Reporting and Integrated Reporting (forbes.com, 2018). The following discussion shows all the details about these two approaches and their appropriateness in the CSR reporting of BP.
Business organizations all over the world are using the approach of sustainability reporting as a major tool for the reporting of their CSR activities. Sustainability reporting provides great assistance to the business organizations in the reporting of their economic, environmental and social impact caused by their everyday business activities with the help of a sustainable report (lexicon.ft.com, 2018). In addition, sustainability reporting helps in the presentation of business’s governance and values model and shows the linkage between the strategy and commitment to sustainability. Most importantly, sustainability reporting helps the business organizations in measuring, understanding and communicating their environmental, economic, social and governance performance with their key stakeholders so that effective goals can be set and managed effectively. For this reason, it is said that sustainability reporting is regarded as a key platform for the communication of sustainability performance and impacts irrespective of positive or negative (globalreporting.org, 2018).
In this context, it needs to be mentioned that sustainability reporting provides some major internal as well as external benefits to the business organizations. In case of internal benefits, it helps in increasing the underatsding about the risks and opportunities of the businesses. After that, it helps in establishing a connection between the financial and non-financial performance of the business entities (globalreporting.org, 2018). Moreover, it helps to streamline processes that lead to reduction in cost as well as improvement in overall efficiency. In case of the external benefits, sustainability reporting helps in the mitigation of negative environment along with social and governance impacts. In this process, it helps in the improvement in the reputation and brand loyalty. More importantly, the adoption of sustainability reporting enables the external stakeholders of the companies in underatsding the organization’s true value along with tangible as well as intangible assets. In this context, the Global Reporting Initiative (GRI) Sustainability Reporting Standard is considered as major part of sustainability reporting (globalreporting.org, 2018).
Thus, for the demonstration of BP’s renewed commitment towards the adoption of CSR, it was highly required for the oil company to adopt the approach of sustainability reporting as a part of their CSR activities. The multi-stakeholder base approach of sustainability reporting would provide major assistance to the company in delivering all the required information about their non-financial performance to their major stakeholders (globalreporting.org, 2018). The adoption of sustainability reporting would help BP in the identification and understanding of the key risks related to the business activities that can create negative effect on the company. In this way, the company would be able to develop effective CSR related strategies in order to reduce the effect of their business activities on the environment. The adoption of sustainability reporting in BP would make the stakeholders in understanding the organization’s process of value creation by taking major steps towards CSR. For this reason, the stakeholders of the companies would be able to get transparent information about different CSR related steps of the company in order to minimize the effect of their business activities on the environment and community (globalreporting.org, 2018). Apart from this, sustainability reporting is a consistent method as a CSR approach for the companies. Thus, in the presence of all these aspects, BP could adopt the strategy of sustainability reporting.
Apart from sustainability reporting, Integrated Reporting is considered as another major approach of CSR reporting for the companies all over the world due to its simplicity in the process of disclosing the information about the CSR related activities of the business organizations. The main reason for the introduction of integrated reporting for enhancing accountability, stewardship and trust within the business organizations by disclosing all the information related to the financial as well as non-financial performance of the business organizations (integratedreporting.org, 2018). Thus, integrated reporting helps the investors in making effective decision related to capital allocation by providing all the information to them.
The introduction of integrated reporting is considered as an evaluation in the field of corporate reporting as it provides a concise focus on the CSR related strategies and activities of the business organizations. It also helps in improving the quality of financial as well as non-financial information by bringing transparency in the whole value creation process (integratedreporting.org, 2018). For this reason, integrated reporting is regarded as a concise framework of concise communication that shows the process of the business organization to create value with the assistance of strategy, governance, performance and prospects. It implies that integrated reporting helps in the promotion of integrated thinking in the business organizations (integratedreporting.org, 2018). The adoption of integrated report makes all the stakeholders beneficial like employees, customers, suppliers, investors and others. The framework of integrated reporting assists in the establishment of CSR principles and concepts that governs the overall content of the aspects of integrated reporting.
Based on the above discussion it can be stated that the BP could adopt integrated reporting as their CSR reporting approach in order to disclose all the required information on their financial as well as non-financial performance (integratedreporting.org, 2018). From the above discussion, it can be observed that integrated reporting helps in the development of a principle-based framework that provides great assistance in providing all the required information to the stakeholders. For this reason, the adoption of integrated reporting would make BP able in the development of their own report that would include all the information about the company’s CSR activities (ey.com, 2018). Most importantly, this aspect helps to bring a cultural change within the organization that would help BP in the effective communication of the progress in all the CSR related activities of the business organization. Apart from this, the adoption of integrated reporting would provide the stakeholders in effective communication of all the information about the resources of the companies. Most importantly, BP would be able to develop principles and contents related to CSR or developing the strategies in order to achieve the CSR related objectives and goals (ey.com, 2018). Thus, from the above discussion, it can be said that BP would be able to develop an effective CSR reporting mechanism with the help of integrated reporting.
Based on the above discussion, it can be seen that CSR is considered as a major aspect for the business organizations to achieve success. Among so many CSR related approaches, two of the major CSR approaches are sustainability reporting and integrated reporting. The adoption of these two CSR reporting approaches would make it possible for BP to communicate all the information about their CSR activities to the key stakeholder. In this context, it needs to be mentioned that the adoption of these CSR reporting approaches makes it easier for any third party organization to assess these information. Business organizations develop these CSR related reports and publish them in their websites so that any third party can access them. Apart from this, these reports can be reviewed easily.
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