Sustainable Development Strategy and Sustainability Reporting connections with Corporate Governance
SOCIUS ISEG lisboa, Portugal
Verga Matos, Pedro
ADVANCE, Dep. of Management ISEG Lisboa, Portugal
IBED University of Amsterdam Amsterdam, The Netherlands
This paper discusses the development of Corporate Social Responsibility (CSR) tools and their spill-over and interrelations with Corporate Governance (CG). More specifically the paper posits the role of sustainable development strategy and sustainability reporting on the dynamics of corporate management change and their potential relevance for the improvement of CG; first by reviewing the literature and second using the postal sector. The way how companies put sustainability on a strategic level and its interrelation with their CG are both subject of current discussion and research (e.g., Surendra, 2005; Porter and Kramer, 2006; Jamali et al., 2008). The stakeholder view of the theory of the firm (Blair, 1995), with relevance in the European model of CG (O´Sullivan, 2003) can justify a progressive overlap between the CG agenda and the CSR and sustainable development agendas (Elkington, 2006). CSR in Portugal is getting to be a talkative strategic issue and sustainability and governance´s reporting got to be a systematic practice from large Portuguese companies (e.g., KPMG, 2007; Heidrick and Struggles, 2007). The empirically methodology applied in this study considered a company qualitative sustainability performance evaluation from 15 large worldwide postal companies that demonstrate CSR activities, based upon a specific CSR matrix for evaluation. A sustainability internal diagnosis, following strategic guidelines for the large Portuguese postal company is suggested. For the development of the sustainability strategic planning, the focus is on factors that are considered a risk or a benefit to business development and profit, and to environmental and social value creation. A survey to main company´s managers was performed to understand the impact of CSR´s tools in management changes and in CG after two years CSR tools implementation. Despite difficulties in quantifying and monitoring its impact this case identifies an association between the CSR and CG. The implementation of CSR tools, has improved the transparency of the organization, increased its reported performance to stakeholders, and not just to the shareholder, introduced greater fairness / balance in defining its strategy and implemented various procedures for control of risks and compliance, all crucial factors for good governance of a company (OECD, 2004).