International Conference on Social e-xperience, Barcelona, 3-4 July 2012

RELATIONS WITH STAKEHOLDERS THROUGH CORPORATE SOCIAL RESPONSABILITY: A STUDY OF THE 100 BIGGEST PORTUGUESE COMPANIES
Sofia Gaio1, Bruno Graa2 and Filipa Oliveira3
1 University Fernando Pessoa, sgaio@ufp.edu.pt 2 University Fernando Pessoa, bruno_graca@sapo.pt 3 University Fernando Pessoa, filipa.oliveira001@gmail.com

ABSTRACT Organizations have been progressively integrating more and more the social responsibility in their management practices. In this paper we will try to show the changes that have occurred on the 100 biggest companies in Portugal, between 2007 and 2011, analysing their performance in what matters to the Corporate Social Responsibility (CSR). This research was conducted, following the guidelines of the Global Report Initiative (GRI), which allow us to identify the performance in terms of answers given to various aspects such as environment, labour practices, human rights, society and product liability. It is important to understand that nowadays, more than ever before, the companies are looking more and more deeply to the questions related to CSR, as it can be used as a mean to establish themselves as a key player on the community theyre in. The first study made in 2007 has achieved some interesting points regarding the kind of reports that each sector does. It was possible to verify that the sector of industrial products distribution was the one that most reported in terms of society and environmental performance, the constructions and public works sector, in terms of labour practices and human rights, and at last, but not least, the transport sector, in terms of reporting product liability. As the world evolves every day, so the concerns about this topic also change. The companies need, and should, to change their politics, and the areas in which they should invest their efforts with CSR. In this paper we will be analysing the differences between what the companies were doing in 2007, and what they have done in 2011. This aims to seek if they have been progressively updating their role on this matter, what they have been doing, and what they can do next. Key Words: Corporate Social Responsibility. Global Report Initiative. Sustainability. 1. INTRODUCTION The concept of Corporate Social Responsibility has been gaining notability in the past few years. Nowadays we are seeing more and more companies looking to this subject even more closely, what can be seen by the growing number of companies that are trying to implement, practices of Social Responsibility on their activities. The companies should be aware that, to be well-succeeded, they cant aim profit as their only purpose. To achieve a well-succeeded activity, they should also take into consideration the investment in social responsibility practices.
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Being this an actual and important topic, we decided to analyse the performance in terms of CSR of the 100 biggest Portuguese companies, analysing even more deeply the ones that follow the guidelines of the GRI. The GRI guidelines gives us performance indicators, which incorporate aspects such as environmental issues, work labour practices, human rights, society and product liability. The investigation problem that this study tries to give response to is: Which is the performance of the 100 biggest Portuguese companies, concerning with reports of their social responsibility practices?

As this is a subject so immense, we decided to establish the following procedural goals, in order to define and direct our analysis: Analyse the dimensions that constitute CSR; Analyse the dimensions in the universe of the 100 biggest Portuguese companies Interpret their performance and results; Verify the percentage of answers given by the companies to the different performance indicators that GRI stands for; Analyse the percentage of answers given to the different performance indicators that GRI stands for, by activity sector.

First well make a conceptual enclosure about the CSR and sustainability themes, by presenting the points of view of some of the principal authors on this matter. Secondly well be presenting the principal directives that weve classified as most important, on the subject regarding social responsibility. Finally well be presenting and discuss the performance results, in terms of CSR practices of the 100 biggest Portuguese companies, comparing the data of 2007 and 2011. We believe that this study can be useful to many groups of interest, such as the Portuguese companies analysed, once that it can be a mean to achieve the greatness on this matter. One difficulty that weve found doing this study, lies down on the fact that some companies, even being on the 100 biggest, they dont turn public their reports. As so, besides the fact that these companies can have good practices of CSR, they cant be included in this study. 2. CORPORATE SOCIAL RESPONSIBILITY AND SUSTAINABILITY 2.1. CONCEPTUAL ENCLOSURE

In 1957, Howard Bowen set forth an initial definition of social responsibility as the obligations of businessmen to pursue those policies, to make those decisions, or to follow those lines of action which are desirable in terms of objectives and values of our society. However, to check if a company is socially responsible or not, it becomes necessary to resort to other authors of the seventies, once Bowen didnt define what are the means and values of the society or which are the lines of action. During the seventies, Carroll (1979, pp.497-505) indicates that the truly social responsibility of a company implies to manage all levels, so it is expected that the company can produce services and goods and that sells them with profit (economical component), that respect the law (legal component), that proceed according to ethics and respect the norms (ethical component) and finally, that voluntarily play different roles in benefit of the society (philanthropic component). Handy (2002, pp.65-82) stands up that besides the fact that the companies look at profit as their main objective, they should also be conscientious about regarding the environment and to what surrounds them, making investment on CSR actions with the profit they earned. Actually we have different definitions of CSR than the ones weve already presented, being this the way that most companies are adopting.
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For Michel et al. (2006), for example, they interpret corporate social responsibility as the permanent commitment of the businessman to adopt an ethical behaviour and contribute to the economical development, simultaneous improving the quality of life of their employees and their families, of local community and the society as one, or minimizing the environmental damages that can take place as a result of their activities. Kotler and Lee (2005) reminded that the notion of CSR can very often be misused and be mistakenly presented as philanthropy. Lies the fact that besides having the same proposition, they differ in what matters to the extent of social responsibility, since this one goes far and beyond philanthropy, since it demands a commitment in a long term basis between the organization and the interested parts, while philanthropy can occur only once. Nevertheless, its difficult to talk about social responsibility without referring sustainability. The concept of sustainable development appeared for the first time, on the Brundtland Report, in 1987, which states that Humanity has the ability to make development sustainable to ensure that it meets the needs of the present without compromising the ability of future generations to meet their own needs. In what refers to sustainability level, the companies should respect three essential factors that are: environment, society and profitability. These three dimensions known as Triple Bottom Line allows it can be established a balance regarding responsibilities. The environmental dimension concerns to the impacts resulting of corporate activities, trying to minimize and compensate the negative impacts and maximize the positive ones. The social dimension refers to the implications on the social system where the company operates, and on the resolution of internal social problems, or externs to it. At last the economical dimensions, in which there are implications regarding all levels of the economic system, such as suppliers, clients, banks, partners, etc. The applicability of a social responsibility politic can succeed internally, externally or simultaneously. At an internal level, the company concerns are directly focused on their employees, investing on their physical and psychological welfare, as on their professional qualifications. In terms of application at an external level, of social responsibility politics, the big concerns that the companies are facing, are regarding the support of certain actions that have as objective the protection of the environment, the support to social causes, and Non-Governmental Organizations (NGOs) projects. Every single company can be ethically responsible, from the big multinationals to the smaller ones, since these practices will give them more credibility, helping them on their way towards the future. Weve been noticing in Portugal to the raise of certificated companies in terms of social responsibility, because as theyre inserted in a chain of value, being suppliers of others companies, they feel the need to certificate themselves as well. 2.2. ORGANIZATIONAL VALUES OF SOCIAL RESPONSIBILIY INVESTMENT

To Melo and Froes (2001), CSR can present vantages such as: strength of brand and image of the organization; differentiation regarding its competitors; generate spontaneous news making; clients loyalty; employees and patrimonial insurance; bring attraction and keep the talented professionals; give protection against negative actions of employees; to diminish the possible occurrence of inspections; attract investors and fiscal deductions. Its important to retain that defending certain social causes or showing concerns about environmental problems, or by practicing responsible behaviours, it will transmit to the outside world a good image. By its turn, the consumers will feel themselves socially more responsible when buying goods that aggregate both social and environmental attributes. The ferocious competition that we see today between companies, as well as a more demanding external public, enforces the companies to transmit a good institutional image. So, it is necessary that they get an active role in what concerns to the execution of their responsibilities with the society and the environment.
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A company that promotes a good image in terms of CSR will be later on see their efforts recognized by the public opinion and the media as well. So, to be well succeeded, any initiative regarding CSR should be announced near those they want to attain. In order to a proper implementation of those initiatives, they should be reported on the organization communication plan, clearly showing who their targets are maximizing the communication efficiency. The acknowledge by stakeholders of the existence of a CSR politic, could beneficiate a company , not only by reducing the risk of a negative image related to its products, brands or even the company itself, as it will allow the appearance of positive messages regarding the organization (Miles e Munilla, 2004, pp. 1-11). 3. CSR APPLICATION ON THE 100 BIGGEST PORTUGUESE COMPANIES As already said before, this paper intends to point the differences on CSR matter, comparing the data of 2007 and 2011, focusing only on those which present or turn public their reports on Corporate Social Responsibility or Sustainability, and that follow the guidelines established by GRI, which are based on indicators of environmental performance, work labor practices, human rights, society and product liability. This will help us to analyze the performance of them, on the matter of social responsibility practices. In terms of specific objectives we intend to analyze the dimensions that constitute the CSR, as well as it application on the universe of the 100 biggest Portuguese companies, interpreting the results and performances, and their responses to the different performance indicators that GRI stands for. However, it is important to clarify that there are some changes regarding the companies analyzed back in 2007 and the ones on this paper. First of all to notice the exit of two companies: Qimonda and Total Petrleos de Portugal. On the other side, we have the entrance of Samsung Electronica Portuguesa, since they now follow the guidelines of GRI, what doesnt occur in 2007. Another important fact is due to the difficulties that we have had, to access AutoEuropa, Blaupunk Auto-Rdio Portugal, Dia, GMAC, TMN and Toyota Caetano Portugal sustainability reports, even after direct contact with those companies. That being said, they will not make part of the results presentation and discussion of this paper. 3.1. RESULTS PRESENTATION AND DISCUSSION

As already said before, there were some changes regarding some companies since the first study was made. ZON, for example, has now a CSR report, even if its not following the GRI guidelines. CEPSA and Total have merged into a single company but didnt have by the time this paper has been made, a CSR report, and Qimonda ceased their activity, while Samsung now follow the GRI guidelines. This left us with a total of 25 (25%) %) companies to develop our analysis. For this paper, and due to the fact it have a strict amount of words, weve focused our study only on the Society and Product Responsibility guidelines of GRI. 3.1.1. Society and performance The social performance indicators, are used to show the impacts that organizations have over the communities theyre in and the diffusion of how the risks that results from their activities are minimized. So, this indicator should consider the following points: Community Corruption Public politics Unfair competition Compliance
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The companies should report the procedures that took place regarding consciousness about society aspects, as measuring procedures, corrective and preventive measures, performance certifications or certification systems, or other approaches of auditor/verification, including those referring to suppliers chain.
Table 1 Answers given to Society (SO) indicator in 2010/2011 Companies Galp Sonae EDP TAP BP PT Repsol Vodafone REN Auchan Mota-Engil CTT Soporcel Siva Brisa Nestl Peugeot Somague Unicer Cimpor Soares da Costa Secil CP ANA Samsung SO1 SO2 SO3 SO4 SO5 SO6 SO7 SO8

SO1. Nature, scope, and effectiveness of any programs that assess and manage the impacts of operations on communities SO2. Percentage and total number of business units analyzed for risks related to corruption SO3. Percentage of employees trained in organizations anticorruption policies and procedures SO4. Actions taken in response to incidents of corruption SO5. Public policy positions and participation in public policy development and lobbying SO6. Total value of financial and in-kind contributions to political parties, politicians, and related institutions by country SO7. Total number of legal actions for anticompetitive behavior, anti-trust, and monopoly practices and their outcomes SO8. Monetary value of significant fines and total number of non monetary sanctions for noncompliance with laws and regulations

Looking back to the 2007 report, it is easily seen that Sonae was the one that most have altered their performance. If in 2007 they didnt respond to any questions regarding society, today, they have only left one item to respond. By its side, Samsung, the new member on this table, also left one question to answer, which regards to the risks related to corruption. Its visible that most of the companies doesnt answered to SO6 and SO7 indicators, which concerns to contributions to political parties or politicians and anticompetitive behavior, anti-trust and monopoly practices. By its turn, SO5 which refers to public policy development ant lobbying, was the indicator with most answers.

Individually we can see that BP, PT, Repsol, REN, CTT, Somague, Soares da Costa and ANA, are the ones that fully responded to all indicators. On the other hand we have Cimpor and TAP that only have answered to one and two indicators respectively. 3.1.2. Product Responsibility and performance According to GRI, this point should rely on: Health and client insurance Products and service labeling Marketing Communications Customers privacy Compliance The company should report the procedures that took place regarding consciousness about society aspects, as measuring procedures, corrective and preventive measures, performance certifications or certification systems, or other approaches of auditor/verification, including those referring to suppliers chain.
Table 2 Answers given to Product Responsibility (PR) indicator in 2010/2011 Companies Galp Sonae EDP TAP BP PT Repsol Vodafone REN Auchan Mota-Engil CTT Soporcel Siva Brisa Nestl Peugeot Somague Unicer Cimpor Soares da Costa Secil CP ANA Samsung PR1 PR1 PR3 PR4 PR5 PR6 PR7 PR8 PR9

PR1. Life cycle stages in which health and safety impacts of products and services are assessed for improvement, and percentage of significant products and services categories subject to such procedures PR2. Total number of incidents of non-compliance with regulations and voluntary codes concerning health and safety impacts of products and services during their life circle PR3. Type of product and service information required by procedures, and percentage of significant products and services subject to such information requirements PR4. Total number of incidents of non-compliance with regulations and voluntary codes concerning product and service information and labeling PR5. Practices related to customer satisfaction, including results of surveys measuring customer satisfaction PR6. Programs for adherence laws, standards, and voluntary codes related to marketing communications
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PR7. Total number of incidents of non-compliance with regulations and voluntary codes concerning marketing communications, including advertising, promotion and sponsorship PR8. Total number of substantiated complaints regarding breaches of customer privacy and losses of customer data PR9. Monetary value of significant fines for noncompliance with laws and regulations concerning the provision and use of products and services

In terms of product responsibility the values weve get shows that PR1, PR3, and PR5 indicators are the ones that most of the companies respond to. In which concerns to the number of incidents of non-compliance with regulations and voluntary codes concerning marketing communications, including advertising, promotion and sponsorship (PR7) and total number of substantiated complaints regarding breaches of customer privacy and losses of customer data (PR8), those were the indicators with less responses. According to GRI these are additional items, what can in part explain the lower values weve get. Reporting back to the 2007 study, the big difference weve noticed refers to PR9 indicator which concerns with fines for noncompliance with laws and regulations. While back then only half of the companies answered this indicator, today we see that only 8 companies in a total of 25 havent answered that item. Another difference weve spotted says respect to Sonae. While in 2007 Sonae only did respond to two items, which were PR1 and PR5, with their latest report, weve been able to see that theyve changed their politics regarding product responsibility. Now theyre one of the companies that answered on more indicators regarding product responsibility, leaving only the indicator regarding the number of incidents of non-compliance with regulations and voluntary codes concerning marketing communications in blank. Analyzing the companies individually, weve checked that Galp, Sonae, BT, PT, Repsol, REN, CTT, Soporcel, Nestl, Soares da Costa and ANA, are those, between the 25 companies weve analyzed, that most respond to most items. On its side, by not giving one single answer to product responsibility indicators, TAP is by far the worst company regarding this GRI guideline, what also happened back in 2007. 4. Analysis to the response given to indicators by activity sector At this point well be presenting the response given to society and product responsibility indicators by activity sector. By the time the results are shown, well be complementing and illustrate with information that we collected of some sustainability reports. 4.1. Performance regarding society

This is a very important indicator to social responsibility, since its on this one that companies report their practices and investments regarding the community theyre in. When looking to it, we can verify that the less responsive items were SO6, which refers to the contributions to political parties, politicians, and related institutions by country and SO7, which refers to number of legal actions for anticompetitive behavior, anti-trust, and monopoly practices and their outcomes. The sectors that more respond to these items are the industrial products distribution and construction and public works. Galp Development of Misso Up | United for the Planet, which is an educational project of Galp Energia part of its strategy to promote energetic efficiency. It is a national wide program destined to childrens of first and second degree. This is clearly a path that Galp has always done, since 2007. Sonae The support on the social-economic development of the communities were Sonae lays its activities, were always an objective of the company. The support to the community surpassed the 10 million Euros, in a total of 3.082 organizations involved. In 2007 there were no data available regarding SO, to let us now make some kind of comparisons.
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PT In 2007 invested 602 thousand Euros supporting initiatives and community projects, related to health, support to social solidarity and human rights. The last report indicates that PT have done an investment on the society of 4 million Euros, through their brands and Fundao PT Soporcel Soporcel conceded 790 thousand Euros in donations between 2006 and 2007, seeking the development of projects and initiatives regarding social needs. Looking at 2011 CSR report of Soporcel, it is visible that between 2010 and 2011, theyve spent 1.4 million Euros in educational, social and humanitarian projects and activities. This traduces itself on a raise of 50% since 2007 data. 4.2. Performance regarding product responsibility

Soporcel In 2007 they used to resort to a kind of forestall specimen that allows to fabric more paper volume with the same amount of wood. Soporcel was also a supporter of paper recycling, when it becomes as the more sustainable solution. In 2011 Soporcel obtained a license to the usage of European Ecological Label, the Ecolabel, on the paper they produce e sell to the office segment paper and to graphical usage. It is guaranteed that during the years, Soporcel always tries to bring innovation to their activity, always looking towards the sustainability and ecological footprint. Vodafone Like in 2007, Vodafone continues in 2011 with its policies regarding their packages. They are labeled in a way that allows consumers and partners to perform a good disposal of them, according to the European Union legislation. Sonae Contrary to what existed in 2007, when Sonae had the clients at the center of their attention, by evaluating their needs, with the last report of corporate social responsibility known, it was impossible to know what changes are they implementing, since they havent gave that information this time. 5. CONCLUSION Nowadays CSR is already a common practice in Portugal to almost all companies. With this new study our intention was to show the differences between 2007 practices and those in 2010/2011, to see if there were noteworthy changes or not. In fact it was possible to see that therere were some changes regarding companies that left this group by several factors, others that came in this time, and others that have change their practices of social responsibility for better. In most cases the differences were not so big. The companies tend to change the projects were they put their efforts in, but always looking towards, trying to make the better from their activity. In fact, we see these cases, as a form to give back to the community and all stakeholders, what these have gave to them on the first hand. The literature revision allowed us to see that this is indeed a theme that is assuming an augmented interest. As a result of that, there is a document that describes the guidelines that companies can and should follow to report their corporate social responsibility practices. Were talking about GRI, which were the base of this study. If a company want to create more value for itself, then the implementation of sustainable practices based on GRI guidelines, should be the way to purse. By doing this, they are indirectly making their suppliers to adapt themselves, and turn themselves also socially responsible. The measures can also be look upon as a way to become better looking by their consumers and stakeholders. A client, when looking for a service or a product, tends nowadays to give both importances to the quality of the service or product it is looking for, but also to a company that can give the best of both worlds. In Portugal we can assume that the way is already outlined by the biggest companies, but theres still a long journey until this subject becomes transverse not only to these companies, but
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also to the medium ones, once that are these that more importance have to the society in terms of creation of value, work and to the economical growth.