cd submission
TRANSCRIPT
1
Dissertation Supervisor: Professor Rania Kamla
Word Count: 14771
Dissertation submitted in partial fulfillment of the degree of BBA (Hons) in
Bachelors in Business Administration
at
School of Management and Languages
Heriot-Watt University
Dubai Campus
4th April, 2014
Dissertation Title: Environmental and Social Disclosure by U.A.E
Companies; The levels and quality of environmental and social
disclosure of U.A.E Companies.
by
Syed Adil Mohsin
2
Table of Contents
Originality of the Research .................................................................................... 5
Acknowledgement ................................................................................................... 6
Abstract .................................................................................................................... 7
List of Tables and Diagrams .................................................................................. 8
List of Abbreviations .............................................................................................. 9
1 Chapter 1: Introduction ............................................................................. 10
1.1 Research Background (Introduction) ................................................................................12
1.2 Research Questions...........................................................................................................12
1.3 Research Objectives .........................................................................................................12
1.4 Corporate Social Responsibility (CSR) ............................................................................13
1.5 Research Method ..............................................................................................................15
1.6 Dissertation Structure .......................................................................................................16
2 Chapter 2: Literature Review .................................................................... 17
2.1 Introduction ..................................................................................................................19
2.2 Theoretical Background of CSR .................................................................................20
2.3 Economic Disclosure ...................................................................................................21
2.4 Corporate Environmental and social Disclosure Theories ..........................................22
2.4.1 Legitimacy Theory ............................................................................................24
2.4.2 Stakeholder Theory ............................................................................................26
2.4.3 Institutional Theory ...........................................................................................28
2.5 Types of Environmental and Social Required to be Disclosed by Companies ...............29
2.6 Examples for CSR in different Arab countries ................................................................30
2.7 Dubai CSR ........................................................................................................................33
3
2.8 Impacts on Environmental performance through Public disclosure ............................34
Conclusion ..............................................................................................................................35
3 Chapter 3: Research Methodology ............................................................ 37
3.1 Introduction .....................................................................................................................39
3.2 Research Methodology ....................................................................................................39
3.2.1 Research Philosophy .........................................................................................39
3.2.2 Research Approach ............................................................................................40
3.3 Research Design and Procedures ......................................................................................41
3.3.1 Research Design ................................................................................................41
3.3.2 Research Procedures ..........................................................................................41
3.3.2.1 Gathering Data ...............................................................................41
3.3.2.2 Data Analysis .................................................................................42
3.4 Research Method ..............................................................................................................59
3.5 Research Context ..............................................................................................................60
3.5.1 Sample Size .......................................................................................................60
3.5.2 Reliability and Validity of the Research ...........................................................62
3.6 Time Horizons ..................................................................................................................63
3.7 Limitations of the Study and Ethical Consideration .........................................................64
Conclusion ..............................................................................................................................66
4 Chapter 4 Data Interpretations and Results ............................................. 67
4.1 Economic Disclosure ........................................................................................................69
4.2 Environmental Disclosure ................................................................................................71
4.3 Social Disclosure ..............................................................................................................76
5 Chapter 5: Conclusion and Recommendations ........................................ 83
5.1 Conclusion ........................................................................................................................85
4
5.2 Contribution to Existing Knowledge ................................................................................85
5.3 Suggestions for Future Research ......................................................................................86
References .............................................................................................................. 87
Appendix ................................................................................................................ 92
5
Originality of the Research
I Syed Adil Mohsin declare that in this dissertation except for the citations and quotations which
have been recognized properly. I also declare that this research topic has not been previously
submitted for any other dissertation/degrees/courses at Heriot Watt University Edinburgh (Dubai
Campus).
6
Acknowledgment
I am heartily thankful to Allah Almighty for giving us the strength and health to work on this
dissertation. I wish to express my sincere gratitude to my beloved supervisor, Professor Rania
Kamla, for her guidance throughout this dissertation. I had a lot of difficulties in doing this task
but she was always there to guide me whenever I faced with any problem. I gratefully acknowledge
the suggestions and academic support provided by lecturer in SZABIST Dr. Suchi Dubey.
Last but not the least, I wish to express a sense of gratitude and love to all my friends for sharing
the ideas and my parents for their support, strength, help and for everything.
I also offer my best regards to all those who supported me in any respect during the completion of
the dissertation.
7
Abstract
The main purpose and objectives of the research is to examine the quality and level of economic,
environmental and social disclosure and to explore the reasons for level and quality of disclosure
by U.A.E well known companies. The sample size is 20 as it contains the data from the company’s
annual report of 2012.Qualitative content analysis is used for data analysis and interpretation by
using checklist table. The interpretations of this research project mentions that previous researchers
have found it difficult to analyze the reports and collect information regarding the social impacts
that were disclosed by companies in different Arab countries. However as for the information
collected by the researcher, it states that most issues are not stated for social disclosure but there
are many details that are clearly mentioned by the sample that was selected for the research.
Looking at the information collected by the researcher it states that most of these companies do
present detailed information and that information can be vital for future research. To do the
research on same topic (Environmental and Social Disclosure by U.A.E Companies; The levels
and quality of environmental and social disclosure of U.A.E Companies) in future, the researchers
will get more knowledge and can provide the results more accurately. Due to lack of time the
researcher was unable to look into more organizations annual report and the technique used for the
interpretation was only qualitative content analysis, so in future the researchers can look into more
organizations annual report in U.A.E and with more techniques like detailed interviews from the
managers, C.E.O’s and employees and separate detailed questionnaires for each research
objectives to stakeholders which includes employees, managers, suppliers, shareholders and
customers.
8
List of Figures and Tables
Figure 2.3: Legitimacy, Stakeholder and Institutional theories (Source: International Journal of
Asian Social Science, 2013, 3(3):590-609 601) ............................................................................23
Table 3.2: Research Methods (Source: Research Methods and Statistics, 2010: 01-11 05) .........40
Table 3.3.2.a: Checklist Table Sample (Source: GRI 3.1 (2006), Standard Disclosures:
Performance Indicator: 1-5). ..........................................................................................................43
Table 3.3.2.b: Categories Explanation (Source: GRI 3.1 (2006), Standard Disclosures:
Performance Indicator: 1-5). .........................................................................................................49
Table 3.5: Sample Size..................................................................................................................61
Table 3.6: Time Horizons (Source: Harvard University (2010), Research Methods: Time
Dimension: pg. 4) ..........................................................................................................................63
9
List of Abbreviations
U.A.E: United Arab Emirates
MENA: Middle East and North Africa
C.E.O’s: Chief Executive Officers
CSER: Corporate Environmental and social Reporting
CSED: Corporate Environmental and social Disclosure
CSR: Corporate Social Responsibility
ISO: International Organization for Standardization
SEA: Environmental and social Accounting
DI: Dubai Investments
ADCB: Abu Dhabi Commercial Bank
NBAD: National Bank of Abu Dhabi
ADNOC: Abu Dhabi National Oil Company
ADCO: Abu Dhabi Company for Onshore Oil
DC: Dubai Customs
GASCO: Abu Dhabi Gas Industries
DUBAL: Dubai Aluminum
FDF: Family Development Foundation
SDE’s: State Dominated Enterprises
GCC: Gulf Cooperation Council
GRI: Global Reporting Initiatives
10
Chapter 1: Introduction
11
In this chapter the researcher introduce the main aims and objectives of the research along with
the research questions. An overview of the methods used in the research for collecting and
interpretations of the data. Following are the areas take into consideration in this chapter:
Research Background.
Research Questions.
Research Objectives.
Corporate Social Responsibility (CSR).
Research Methodology.
Dissertation Structure.
12
1.1 Research Background (Introduction):
Corporate economic, environmental and social disclosure refer to companies as the disclosure
about the company’s performance towards the economic, environmental and social performance
respectively. Society in general has to adjust in almost all periods of evolution. This process of
environmental issues has caused irreversible damages to the environment and has caused a serious
effect on the balance of nature. These effects were only taken seriously by people in the 20th century
and people started to raise concerns about protecting the environment. The main purpose of social
accounting, disclosure and reporting would be to enable accounting to participate in achieving the
welfare of the society at large. The main objective of the researcher in this research project is to
focus on the corporate and social responsibility reporting in the UAE. This merely focuses on the
effects that needs to be or are required by companies to be reported in the balance sheets. These
issues play a vital role in saving the environment and focusing on the welfare of individuals and
social benefits. These all incur a cost which are not taken into account by most of the businesses
that are running in the UAE. Most of these businesses do not consider spending on these issues
that relate to the environment or social issues as they do not consider it to be a part of their business
activities. The aim is to focus on these businesses and find out the environmental and social
reporting that is done in the UAE and what are the effects on these firms that do not include these
issues in their financial reports.
1.2 Research Questions:
The researcher is focusing on the following questions throughout the period:
1. What are the levels and qualities of environmental and social disclosure of UAE
companies?
2. What are the main factors influencing the levels and quality of disclosure by UAE
companies?
The aim of the researcher from this research project is to look at the main factors that influence
the levels and quality of disclosure by the U.A.E based companies.
1.3 Research Objectives:
The main objectives of this dissertation (research project) are:
To examine the level and quality of environmental and social disclosure by U.A.E top
twenty companies.
To explore the reasons for level and quality of disclosure by U.A.E top twenty companies.
13
1.4 Corporate Social Responsibility (CSR):
“Corporate Social Responsibility is the process of communicating the environmental and social
effects of organizations economic actions to interest groups that are either within the society or to
the society at large”. (Gray et. al., 1987, p. ix). The corporate environmental and social disclosure
reporting have improved significantly both in developing and developed countries in the last two
decades (KPMG, 2008; GRI 2010). The reasons for increase in corporate environmental and social
reporting is that helps to build, maintain or enhance corporate reputation to market companies
product and services to minimize the cost of equity capital of the companies and to gain
competitive advantage for the develop company markets to provide economic, environmental and
social performance information through annual reports and CSR reports or through any other
medium ((Adams 2002; Solomon and Linda 2002; Bichta 2003; Dwyer 2003; Navickaite, Juozas
2007, Dhaliwal, Zhen et al. 2011, US & UK: Cheah et al., 2007 cited in Ziaul-Hoq., Mohammad
et al. 2010, Haniffa and Cooke 2005, Branco and Lu Rodrigues. 2008).
CSR, CSD and CSED refer to companies as the disclosure about the company’s performance
towards the society and the environmental performance respectively. The CSED practices have
improved drastically both in developing as well as in developed countries in about last two
decades. Some other theories that is stakeholder, legitimacy and institutional provides a sound
theoretical basis to demonstrate the value of economic, environmental and social accounting
research.
Legitimacy theory can be implicit as well as explicit and it is dominant to the societal contract,
(Shocker and Sethi 1975; Mathews 1993). The societies expectations is defined in social contract
(Shocker and Sethi 1974), it can be changed in future (Islam and Craig 2008). It is the company’s
responsibility to fulfill the society’s expectation in an ethical way. If the company is unable to
fulfill the society’s expectations, the legitimacy of the company is at risk and if the company is
able to fulfill the society’s requirement and expectations which conclude that the organization is
treating the society in a legitimate manner (Woodward, Pam et al. 1996; Deegan and Jeffry 2006).
If the company is able to fulfill the society’s requirement and expectations, only then the company
has the right to use environmental and human resources (Mathews 1993; Deegan and Jeffry 2006).
It is also necessary for the organizations to respond positively towards the changing expectations
of the society in which they are operating, only by this the company can sustain their legitimacy
(Islam and Craig 2008).
14
Stakeholder theory is considered to be a social contract that is aimed to be both implicit and explicit
in which the firms consider to be in a contract with the society as a whole (Shocker and Sethi,
1974) (Dowling and Pfeffer, 1975).
Social contracts are mainly expressed according to what is expected from the society which are
not fixed and continue to change over time periods (Shocker and Sethi, 1974) (Islam and Craig,
2008). The moral obligation that is considered for the company is to fulfil the society’s
expectations in general. If the company succeeds in fulfilling the demands and lives up to the
potentials of the whole society, then that particular company would be considered to be legitimate
otherwise it would be considered in danger (Woodward, pam et al. 1996, Deegan and Jeffry 2006).
The legitimate companies have been provided the right to utilise the natural and human resources
that belong to the society, which is considered to be one of the prime reasons why these
organizations are required to keep responding to the changes in the expectations of the society and
adjusting to them. (Mathews 1993, Deegan and Jeffry, 2006) (Islam and Craig, 2008).
Institutional theory mainly focuses on explaining the adaption policies of different organizations
and their practices and forms which they perform within a particular organization field (Deegan,
2009). The institutional theory has two main horizons which are known as isomorphism and
decoupling. These mainly explain the adoption of the voluntary types of environmental and social
disclosures (Deegan and Jeffry 2006; Deegan 2009). DiMaggio and Walter (1983) defined
isomorphism as: “a constraining process that forces one unit of population to resemble other units
that face the same set of environmental conditions”.
15
1.5 Research Method:
Looking at most of the previous environmental and social reporting the study used to do the
interpretation part through qualitative content analysis. Data content analysis has been specified
as the organized replicable method for reducing text into fewer content categories built on explicit
rules of coding (Berelson, 1952; Krippendorff, 1980; Weber, 1990). Holsti (1969:14) suggests a
broad definition of content analysis as, “any technique for making inferences by objectively and
systematically identifying specified characteristics of messages”. The type of data content analysis
used in this research will be qualitative (Adams and Harte, 1998), explain that it is used in the
measurement of volume of disclosure by focusing on the effects of the disclosures by examining
the context.
The qualitative content helps in examine the qualitative characteristics of environmental, economic
and social disclosures of an organization. The process of the qualitative data analysis often is stated
at the early stage for the data collection. In order to support valid and reliable information the
qualitative data analysis involves set of orderly and transparent procedures for processing data.
The sample size will be of 20 companies from 6 different sectors in UAE. Due to the lack of time
the researcher will only focus on the one annual report of the companies which will be of 2012.
As suggested by Krippendorff (1980), the researcher should answer the following questions to
conduct qualitative content analysis:
1. What type of data should be analyzed?
2. Explanation of the data.
3. Sample size for the research.
4. Relation of research context and data analysis.
5. Limitations of data analysis.
The problems which can occur when conducting this analysis is that while collecting data the
substantial documents that is annual reports or CSR reports are missing then the qualitative content
analysis will be discarded.
16
1.6 Dissertation Structure:
The structure of the dissertation is:
1) Chapter 1: Introduction
2) Chapter 2: Literature Review
3) Chapter 3: Research Methodology
4) Chapter 4: Data Interpretation and Results
5) Chapter 5: Conclusion and Recommendation
17
Chapter 2: Literature Review
18
In this chapter the researchers aim is to talk about the theoretical background of corporate social
responsibilities, the three main theories of corporate environmental and social disclosures that are
legitimacy, institutional and stakeholder theory, further the researcher will talk about the types of
environmental and social disclosure required to be disclosed by the companies, examples for CSR
in different Arab countries and impacts on environmental performance through public disclosure.
Following are the areas included in this chapter:
Introduction.
Theoretical Background of CSR.
Corporate environmental and social disclosure theories.
o Legitimacy theory.
o Stakeholder theory.
o Institutional theory.
Types of environmental and social disclosures required to be disclosed by the
companies.
Examples for CSR in different Arab countries.
Impacts on environmental performance through public disclosures.
Conclusion.
19
2.1 Introduction:
CSED refer to companies as the disclosure about the company’s performance towards the
economy, environmental and social reporting respectively. (Thompson and Zarina 2004; Othman
and Rashid 2009). Environmental and social reporting/disclosure is commonly referred as CSR
reporting (Deegan, 2007). Society in general has to adjust in almost all periods of evolution. This
process of environmental issues has caused irreversible damages to the environment and has
caused a serious effect on the balance of nature. These effects were only taken seriously by people
in the 20th century and people started to raise concerns about protecting the environment, this
process mainly resulted in expressing the sustainable progress and development as defined by the
Brundtland Commission as: “The development that meets the needs of the present without
compromising the ability of future generations to meet their own needs”.
This was later presented to the United Nations to be implemented and worked upon further
(Dvořáková Dana, 2009 pg.6). CSR accounting/reporting in regard means to extend the
accountability of organizations outside the traditional role of disclosing financial accounts to the
financial statements users which include the owner, the outside financers and the public in general
((Gray, Owen, & Maunders, 1987; Gray, Owen, & Adams, 1996; Gray, Dey, Owen, Evans, &
Zadek, 1997). The main purpose of economic, social and environmental reporting would be to
enable accounting to contribute in accomplishing the wellbeing of the society at large.
Bebbington (1997, pg. 29) “mentions in this respect that environmental and social accounting is
concerned with exploring and developing new forms of accounting which are more socially and
environmentally benign and which have the potential to create a fairer more just society’’.
The progress of these practices which mainly began in the early and the mid 1990’s took a trend
to from disclosures within the annual reports mainly about the environmental and social rules and
regulations, their impacts and practices on their reporting of the organization. Reporting practices
became extensive and SED prepared by organizations became more extensive to report, the
companies now had to disclose these reports in a separate sustainability or CSR report (Deegan,
2007).
20
2.2 Theoretical Background of CSR:
“Corporate Social Responsibility is the process of communicating the environmental and social
effects of organizations economic actions to interest groups that are either within the society or to
the society at large”. (Gray et. Al., 1987, p. ix).
The corporate environmental and social disclosure practices have improved significantly both in
developing and developed countries in past 2 decades (KPMG, 2008; GRI 2010). The reasons for
increase in corporate environmental and social reporting is that helps to build, maintain or enhance
corporate reputation to market companies product and services to eliminate the company’s cost of
equity capital and to gain competitive advantage for the develop company markets to provide
economic, environmental and social performance information either by annual reports, CSR
reports, sustainability reports or any other medium of disclosing this type of information ((Adams
2002; Solomon and Linda 2002; Bichta 2003; Dwyer 2003; Navickaite, Juozas 2007, Dhaliwal,
Zhen et al. 2011, US & UK: Cheah et al., 2007 cited in Ziaul-Hoq., Mohammad et al. 2010, Haniffa
and Cooke 2005, Branco and Lu Rodrigues. 2008).
A combination of three main theories like institutional, legitimacy and stakeholder theory are
necessary to clarify, describe and explain the incentives behind CSER practices on a company, an
industry or a country. For example the theory used to describe the government participation on the
environmental and social disclosure in Malaysia is known as institutional theory (Amran and
Susela, 2008).
However “CSD is considered a subject of substantial accounting research, it still lacks a coherent
theoretical framework” (Gray, Kouhy and Lavers, 1995). Gray (2000) claimed that from 1990’s
there has been a development in environmental and social reporting and auditing. The explanation
that could be derived from this particular trend is not separated with the organizations’ desire to
make or maintain their social legitimacy. Legitimacy theory tends to be a more feasible explanation
for growth in environmental reporting since early 1980’s (O’ Donovan, 2002). The researchers
and experts include (O’Donovan, 1999; Walden and Schwartz, 1997; Gray et al, 1995a;
Hooghienstra, 2000 and Wilmshurst and Frost, 2000) have decided that the supremacy of
Legitimacy theory has more profound and thoughtful explanation to CSER.
21
2.3 Economic Disclosure:
Economic disclosures mentions the concern of CSR that has got great popularity from past some
decades from different researchers and academics, there are very less researches have been carried
out in the context of developing countries (Tsang, 1998, Belal, 2001, Islam and Deegan, 2008).
Many of these studies were carried out on the industrialized countries of Japan, USA, Europe and
Australia. (Mathews, 1997; Gray et al., 1995; Deegan, 2002).
The economic development stage along with the national and cultural variations have strongly
influenced CSR, therefore it would be wrong to conclude the findings of the researches based on
the developed nations compared to the developing countries (Tsang, 1998; 624). Research has
improved especially over the last decade, a few notable researchers carried out studies in context
of Bangladesh, Thailand, Singapore, Malaysia, South Africa, China, Ghana, Nigeria and Middle
East (Belal and Momin, 2009).
The economic development level for a country also influences the disclosure pattern. However the
results collected from the literature suggest that it provides mixed views. Adhikari and Tondkar
(1992) and Ahmed (1995) find no relation whereas Cooke and Wallace (1990), Doupnik and Salter
(1995) and Salter (1998) indicate economic framework as important clarification for accounting
differences.
Companies have more social pressure in the developed countries for higher level of CSR as greater
economic progress that will be accompanied by the growth factor in the number and strength of
pressure and monitoring groups.
22
2.4 Corporate Environmental and social Disclosure Theories:
The most common theories used by the researchers to explain company’s economic, social and
environmental reporting practices are institutional, legitimacy and stakeholder theory, and
institutional theory (Deegan and Jeffry 2006).
The established theory assists in developing an understanding on the underlying legitimacy gap so
as to eliminate the chances of facing legal actions or dangers of endurance. It is perceived under
the legitimacy theory that companies that function under a specified social contract are more prone
to thrive and advance in the market. Carroll (1989) was able to highlight the factors underlying the
social contract that exists between the company the society. The contract is primarily formulated
by observing the regulations, policies and shared understanding. The market forces and the
regulations also help in the evaluation and appraisal process on the performance of the company.
It needs to be borne in mind any changes within these parameters, regulations and policies, will
impact the company activities. Alternations are quite common phenomena.
Moreover other theories that have been recognized for their worthiness and significance on both
social and environment accounting disclosures comprises of Stakeholder theory (Guthrie and
Parker, 1990; Roberts, 1992; Gray et al, 1995a; and Roberts and Mahoney, 2004); Institutional
theory (Cormier et al, 2005; Meyer and Rowan, 1977) and Resource Dependence theory (Pfeffer
and Salancik, 1978, 2003). A detailed information is provided below.
23
Figure 2.3: Legitimacy, Stakeholder and Institutional Theories (Source: International
Journal of Asian Social Science, 2013, 3(3):590-609 601)
Legitimacy Theory
Stakeholder Theory
Government
Trade Unions
Customer Associations
International Buyers
Media
Employees
Investors
Financial Institutions
Multinational Companies
Industry Standards
Competitors
Company Characteristics
CSR Frameworks
NGOs
CSR Labels
Standard Setting
Institutions
Academic Institutions
Corporate Social and
Environmental
Disclosure
Coercive
Stakeholder/Institutions
Mimetic
Stakeholder/Institutions
Normative
Stakeholder/Institutions
24
2.4.1 Legitimacy Theory
Legitimacy theory can be implicit as well as explicit and it is dominant to the societal contract,
(Shocker and Sethi 1975; Mathews 1993). The societies expectations is defined in social contract
(Shocker and Sethi 1974), it can be changed in future (Islam and Craig 2008). It is the company’s
responsibility to fulfill the society’s expectation in an ethical way. If the company is unable to
fulfill the society’s expectations, the legitimacy of the company is at risk and if the company is
able to fulfill the society’s requirement and expectations which conclude that the organization is
treating the society in a legitimate manner (Woodward, Pam et al. 1996; Deegan and Jeffry 2006).
If the company is able to fulfill the society’s requirement and expectations, only then the company
has the right to use environmental and human resources (Mathews 1993; Deegan and Jeffry 2006).
It is also necessary for the organizations to respond positively towards the changing expectations
of the society in which they are operating, only by this the company can sustain their legitimacy
(Islam and Craig 2008).
Dowling and Pfeffer (1975) have mentioned three ways to legitimize the company’s activities.
Firstly, the company can adopt those goals, values, and operations which are consistent to existing
legitimacy definition. Secondly, it can use the communication strategy to legitimize its present
practices by influencing existing legitimacy definition. Lastly, the company can use
communication strategy to be known with those symbols (e.g. ISO 14000, ISO 9000 standards) or
values, which have strong base for legitimacy. Under this theory, CSED (communication medium)
can be used as tool by the companies to communicate information about their operations and
activities (practices) to meet the society expectations to maintain its license to operate in the society
(legitimacy).
Legitimacy theory (Lindblom, 1994; Suchman, 1995) is value system centered. Institutional
theory, unlike legitimacy theory specifies how society expectations are met and gained by
institutionalizing norms and rules. Some code of behavior to earn, nurture and maintain societal
expectations; and thus create a positive organization-society interface. Hogner (1982) studied the
amount and type of social information disclosed in the annual reports of US Steel from 1901 to
1980. He argued that the disclosures, as revealed in the reports, are responses made by the company
to societal forces experienced at different periods of time, and the results support legitimacy theory.
In another study, a significant increase in environmental disclosures by petroleum firms (other
than Exxon) after the Exxon Valdez oil spill was discovered (Patten, 1992).
25
Besides reacting to environmental factors, companies may actively manage CSR in order to
improve their corporate image and to justify their continued existence. The present study included
two tobacco companies, British-American Tobacco (Singapore) and Rothmans Industries. Anti-
smoking campaigns are increasingly popular around the world, particularly in developed countries.
Tobacco companies in general face mounting social pressures and unfriendly public policies. It is
fair to say that they are a sunset industry, which struggles to prolong its life.
26
2.4.2 Stakeholder Theory
This particular theory is considered to be a social contract that is aimed to be both implicit and
explicit in which the firms consider to be in a contract with the society as a whole (Shocker and
sethi, 1974) (Dowling and Pfeffer, 1975).
Social contracts are mainly expressed according to what is expected from the society which are
not fixed and continue to change over time periods (Shocker and sethi, 1974) (Islam and Craig,
2008). The moral obligation that is considered for the company is to meet the expectations of the
members of the society in general. If the company succeeds in fulfilling the demands and lives up
to the expectations of the whole society, then that particular company would be considered to be
legitimate otherwise it would be considered as a risk (Woodward, pam et al. 1996, Deegan and
Jeffry 2006). The legitimate companies have been provided the right to utilise the natural and
human resources that belong to the society, which is considered to be one of the prime reasons
why these organizations are required to keep responding to the changes in the expectations of the
society and adjusting to them. (Mathews 1993, Deegan and Jeffry, 2006) (Islam and Craig, 2008).
There are three particular ways that are mentioned by Dowling and Pfeffer, (1975) that mention
the company’s activities. Beginning with the adoption of goals, values and operations that are
considered to be explaining the legitimacy theory mentioned in the literature.
Apart from that, the second way is by using the communication strategy that legitimizes the present
practices which influences the existing legitimacy definition.
The last detail that the company can use is the communication strategy that are known by these
symbols or values that are considered to have a strong base for legitimacy. The corporate social
and economic disclosure can be used as a tool to live up to the expectations of the society in order
to maintain its license to operate.
The theory is considered to be value centered (lindblom, 1994, Suchman, 1995). Institutional
theory, unlike this theory focuses on the societies expectations that are mainly gained by following
the norms and the rules. The code of behavior that needs to be followed by the organization to
earn, nurture and maintain expectations which overall creates a positive organization-society
border.
27
Hogner (1982) mentioned in his studies the amounts and the types of social information that he
found out to be disclosed in the annual reports of US Steel from 1901 to 1980. He mentioned
through his findings that the disclosures are mainly the responses that were made by the company
to the society experienced at different periods of time, which resulted in support of the legitimacy
theory.
In another study, a noteworthy increase in environmental disclosures occurred by the petroleum
firms (other than Exxon) after the Exxon Valdez oil spill was discovered (Patten, 1992).
Besides responding to the environmental factors that are in place, the companies have to actively
manage CSR in order to improve their corporate image and be able to explain the reasons for their
continued existence. A study included two tobacco companies, British-American Tobacco
(Singapore) and Rothmans Industries. These companies did Anti-smoking campaigns which were
increasingly popular around the world, particularly in developed countries.
Tobacco companies however face high social pressures and many unfriendly public policies. It is
fair to say that they are a sunset industry, which struggles to survive in the market.
28
2.4.3 Institutional Theory
This particular theory mainly focuses on explaining the adaption policies of different organizations
and their practices and forms which they perform within a specific organization field (Deegan,
2009). The institutional theory has two main dimensions which are known as isomorphism and
decoupling. These mainly explain the adoption of the voluntary types of the social and the
environmental disclosures (Deegan and Jeffry 2006; Deegan 2009).
DiMaggio and Walter (1983) defined isomorphism as: “a constraining process that forces one
unit of population to resemble other units that face the same set of environmental conditions”.
Dillard, John et al. (2004) defined it as: “Isomorphism refers to the adaptation of an institutional
practice by an organization”.
Isomorphism actually refers to the process that the firms need to adopt the institution practices of
other organizations (DiMaggio and Powell 1983) (Dillard, John et al. 2004).
Deegan (2009) explains that the reporting of the environmental and social information of an
organization is considered an institutional practice, and by the way, the environmental and social
reporting practice mainly adapts and brings changes in the organization which is mainly known as
the isomorphism process.
This isomorphism process is mainly affected by the different stakeholders’, their pressures, the
professionals own willingness and the institutional pressures (Deegan, 2009). Isomorphism mainly
consists of three types of isomorphism namely coercive, mimetic and normative isomorphism
(DiMaggio and Walter 1983).
“Coercive isomorphism results from both formal and informal pressures exerted on organizations
by other organizations upon which they are dependent and by cultural expectations in the society
within which organizations function. Such pressures may be felt as force, as persuasive, or as
invitation to join in collusion” (DiMaggio and Walter 1983).
In coercive isomorphism, stakeholders mainly play a significant role that forces and persuades the
firms to adopt the different institutional practices that would provide a similar look to others firms
operating in the same institutional environment. Coercive pressure mainly comes from different
sources that include political rules and regulations and the society at large, which forces these
particular firms to join certain collusions (Amran and Susela 2008).
29
Mimetic isomorphism mainly refers to the companies’ willingness to copy the organizational
practices of the other organizations (DiMaggio and Walter 1983). This type of mimetic
isomorphism arises mainly due to the uncertain situation within the environment where the
organization could not find any guidelines for operating then a firm that tries to become a
successful model for others organizations (DiMaggio and Powell 1983).
Normative isomorphism mainly comes from professionalism, which refers to the professionals‟
hope to fulfil some standard set up and to accept the institutional practices (DiMaggio and Walter
1983). The two main sources included are the education and professional networks that create
normative pressure for the professionals (Amran and Susela 2008). Isomorphism cultural and
ethical values also play a very important role to impact the potentials of the professionals (Deegan
2009), who will then eventually adopt the institutional practices.
It is difficult to differentiate between the three types of isomorphism pressures that are applied on
the firm to adopt certain institutional practice to become similar to other firms that are operating
in the same environment. The three types of isomorphism discussed are not mutually exclusive
(Deegan and Jeffry 2006; Deegan 2009).
2.5 Types of Environmental and social disclosures required to be disclosed by
companies:
There are many different types of economic, environmental and social factors that need to be listed
by companies with different Geographical and different business activities. Environmental issues
include Air pollution, noise pollution, water pollution, etc. Whereas, Social factors include
discrimination in gender, wages, issues regarding responsibility towards labors, etc.
30
2.6 Examples for CSR in different Arab countries
Jahamani (2003) studied in the Middle East and North Africa region, he studied companies
operating in different sectors, their annual reports of Jordanian firms and UAE firms during the
year 1998. The findings collected by the researcher suggested that the existence of almost 9 to 11
Companies only present the important environmental disclosures in annual reports out of which
86 and 94 firms that were based and operated in Jordan and UAE respectively.
Al-Khater and Naser (2003) in another study that was conducted in Qatar, examined the different
aspects of CSR disclosure by insights of several user groups. They settled that the addition of CSR
in the annual reports of companies would reflect the social responsibility to the public as well as
companies that seek to justify their existence within the society, by clearly pointing out the social
responsibility of the company in their reports thereby supporting the results gathered mentioning
the suggestions of the low level of disclosure in companies in the developing world, including
companies in the Arab region, that caused and offered a study on the environmental reporting in
the UAE companies that was presented by Jahamani (2003) which clearly mentioned that only 12
percent of the companies in the UAE issued environmental reports. This particular result of the
low level of disclosure in companies in the developing world mostly included companies that are
mainly operating in the Arab region.
Ahmad (2004), in Libya had provided a study on environmental disclosure that mainly consisted
of using different 18 companies from major industrial organizations established in Libya indicating
that there was hardly any evidence present from the environmental disclosure in annual reports of
industrial companies in Libya.
Kamla (2007) had carried out a study in nine Middle Eastern countries to examine the quality,
volume and nature of the social reporting practices performed in the annual reports of 68
companies from almost 8 different Arab Middle East countries. The finding clearly mentioned that
only about 10 companies, 15% mainly of the sample size, had been providing information that
related to some form of environmental information.
31
Rizk et al. (2008) had studied corporate environmental and social reporting practices of different
Egyptian organizations. The findings of the study indicate a significant variation regarding
environmental and social disclosure practices in 60 companies operating in industrial sections. The
researchers also mentioned that reviews of disclosure practices in different parts of the world are
always welcome and are arguably somewhat limited to the information present for companies
established in developing countries.
Furthermore, Hossain and Hammami (2009) and Naser et al. (2006) had conducted various studies
in Qatar regarding the environmental disclosure that included companies that were listed in Doha
Securities Market. These studies had established the result that there are variations that have been
seen in the corporate social disclosure in the sampled Qatari companies. It is also been specified
that these disclosure are very much associated with the firm size measured by the firm’s market
capitalization, corporate growth and business risk measured by leverage. Other than that, the
findings indicate that complexity, size, age and assets-in-place are significant and the profitability
variable is irrelevant in explaining the level of voluntary disclosure.
The study that was conducted by Elsayed and Hoque (2010) in the year 2010 found out that 55
firms out of 100 Egyptian corporations provided environmental information. Al-Gamrh (2010)
studying the companies of Saudi Arabia concluded that the level of disclosure in the annual reports
of 93 companies that were originally surveyed is very low. The results of the study refers to only
one company that had disclosed all the items of disclosure whereas other than that there were
almost 13 other companies which did not record any disclosure items. Al-Janadi et al. (2011) in
the year 2011, examined a few annual reports for the available financial years 2006 and 2007 in
Saudi Arabia and the UAE. The findings had proven that the level of voluntary disclosure is low
compared with an average of almost 36 per cent for the whole sample of companies that was
collected. The voluntary disclosure was found to be missing for most of the items of environmental
and social information. Apart from that particular detail there was an additional information, the
results of Ahmad and Mousa (2011) research confirmed that the notion that had a little
improvement in the corporate environmental disclosure occurred in Libya between 2001 and 2007
compared with a study conducted during 1998 and 2000 earlier.
32
Furthermore, In Jordan, Islam (2011) inspected the levels of the environmental disclosure in
Jordanian firms which was figured out by taking a sample of almost 60 companies in the
manufacturing and service sectors. Results figured out that almost 85% of the companies disclosed
some environmental and social information. Islam (2011) had commented on the results of his
studies that there was an improvement as compared to other studies conducted on Jordanian
companies such as (Al-Khadash 2003) which determined that almost 26% of the companies
covered only in the study were known to release the detailed environmental information. As well
the study of Jahamani (2003) who found from his research that almost 10 percent of out of 86
Jordanian firms presented environmental reports as part of their annual reports in study which had
examined the detailed extent, awareness and the level of environmental responsibility of Jordanian
companies.
Two studies that were originally conducted in Tunisian context during 2011 by Gana and
Dakhlaoui (2011) that explained that the average disclosure score has actually slightly improved
over the past years of the study. This finding also explained from this particular study that
explained on the 36 Tunisian firms sample sected over the period 2000 to 2005.
31 Tunisian firms were examined for environmental disclosure and related it to financial
performance and environmental performance in 2007 by Belhaj and Damak-Ayadi (2011). These
findings pointed out that the mean disclosure score of this particular sample is 9.77 and the firms
from industries with higher compassion to the environment tends to provide more environmental
disclosure than those particular firms from less environmentally sensitive industries. It is worth to
note and understand that out of the 500 largest Tunisian firms, there were only 53 companies that
have published environmental information in their annual reports or in their websites (Belhaj &
Damak-Ayadi 2011).
During the period 2012, it has been clearly observed that some attempts of some researchers in an
approach to add some similar studies that deal with environmental issues.
33
Ismail and Ibrahim (2012) figured out that almost 85% of the Jordanian companies do disclose
some environmental information where the sample they were using for their particular research
included almost 60 companies in the manufacturing and service sectors. As well, Bayoud et al.
(2012) found out that annual reports show 60% of companies from different sectors that disclose
four categories namely employee disclosure, environmental disclosure, community involvement
disclosure and consumer disclosure of corporate social responsibility (CSR) whereas as seen
before only 5% of these companies did not present the CSR information in their annual reports.
However, the trend suggests that the environmental disclosure for companies in MENA mainly
refers to an increase in the number of companies that mainly disclose the environmental
information.
2.7 Dubai CSR:
Dubai has made its first customary attempt to inspire the importance of CSR in 2004; this was the
period when the Dubai Chamber of Commerce had created an ethical resource center that was later
named the Center for Responsible Businesses. It worked towards the goal of strengthening the
CSR awareness and practices by organizing detailed teaching sessions, round-tables and meetings
with the respected government officials. It also conducted different surveys on the business
practices in Dubai that focused on the issues CSR labels and distributed a yearly CSR award. The
companies which had originally picked up on the call for CSR are the principally large
multinationals and the State-Dominated Enterprises (SDEs). The Center for Responsible Business
highlighted the CSR achievements of a few reputed companies such as Aramex, FedEx, Nakheel
and Emaar. However, as seen for the Emirates Environmental Group that serves as crucial point
for the GCC Global Compact Network and also handed out the CSR award, which was presented
to a list of winners and runners up for what it calls the 2009 “CSR Arabia award” that was
completely dominated by SDEs (Emirates Environmental Group). In Dubai lives Jumaa al-Majid,
the owner of a multinational of different enterprises in automotive, contracting, manufacturing,
trading and real estate (Jumaa al-Majid Group). At the age of 79 he dedicates most of his energy
to a number of humanitarian projects, including; a charitable association; a charity school; a
college; and a cultural center (Jumaa al-Majid Center for Culture and Heritage). On top of this,
according to one of his associates, he is known to have paid for the construction of “some 20
mosques in the United Arab Emirates and abroad”.
34
2.8 Impacts on Environmental performance through Public disclosure:
The "third wave" of environmental regulation is characterized by the public disclosure of
environmental performance, after market-based approaches and command and control approaches
(Tietenberg, 1998).
There are several effects and disclosure, Tietenburg (1998) listed a thin but a constant growing
literature on public disclosure. From this literature he identified 7 channels that he thought would
affect the behavior of the environmental performance of reliable information regarding firms.
Public disclosure may specifically include:
Affects the demand and supply and firms capability to retain the employees and hire new talent,
convince the general public to take serious actions according to law against pollution makers,
support and build new techniques to control pollution.
Based on the literature discussed, we add two more categories:
The first category is community pressures through this the organizations may improve the level of
disclosure. The second category includes providing managerial information which may provide
new information to managers about their machinery, equipment, chemicals and plants that how
they are reducing harmful effects on environment. Empirical research intended at identifying the
effects of these categories are limited.
By considering at these problems, researchers have used cross-sectional, plant level econometric
analysis of the determinants of environmental and social performance (Tietenburg 1998).
A number of available papers who explain public disclosure initiatives other than environmental
performance rating programs and effects on environmental performance.
Bennear and Olmstead “find that a 1996 amendment to the U.S. Safe Drinking Water Act,
mandating that community drinking water systems publicly report regulatory violations, reduced
the incidence of subsequent violations”.
Similarly, Delmas et al. (1996) “find that regulations requiring U.S. electric utilities to mail bill
inserts to consumers reporting the extent of their reliance on fossil fuels led to a significant
decrease in fossil fuel use”.
Foulon et al. (1998) “find that a policy of publicly disclosing the identity of plants that are
noncompliant or “of concern” spurred emissions reductions in a sample of pulp and paper plants
in British Columbia”.
35
Conclusion:
CSR is a combination of three main theories like legitimacy, stakeholder and institutional theory
are necessary to clarify, describe and explain the incentives behind CSER practices on a company,
an industry or a country. For example the theory used to describe the role of the government on
the environmental and social disclosure in Malaysia is known as institutional theory (Amran and
Susela, 2008).
Legitimacy theory is central to the social contract, which can be implicit and explicit (Shocker and
Sethi 1974) in which the firms have contract with the society as a whole (Dowling and Pfeffer
1975; Mathews 1993). Social contract is expressed by the expectations of the society (Shocker and
Sethi 1974), which are not fixed and changing over time (Islam and Craig 2008). It is moral
obligation of the company to meet the expectations of the societal members. If the company fulfils
the expectations of the whole society then it would be treated as legitimate otherwise its legitimacy
would be at risk (Woodward, Pam et al. 1996; Deegan and Jeffry 2006). Only legitimate company
has the right to utilize society’s natural and human resources (Mathews 1993; Deegan and Jeffry
2006). So organizations are required to respond to the changing expectations of the society (Islam
and Craig 2008) to maintain their legitimacy.
This particular theory is considered to be a social contract that is aimed to be both implicit and
explicit in which the firms consider to be in a contract with the society as a whole (Shocker and
sethi, 1974) (Dowling and Pfeffer, 1975).
Social contracts are mainly expressed according to what is expected from the society which are
not fixed and continue to change over time periods (Shocker and sethi, 1974) (Islam and Craig,
2008). The moral obligation that is considered for the company is to meet the expectations of the
members of the society in general. If the company succeeds in fulfilling the demands and lives up
to the expectations of the whole society, then that particular company would be considered to be
legitimate otherwise it would be considered as a risk (Woodward, pam et al. 1996, Deegan and
Jeffry 2006). The legitimate companies have been provided the right to utilise the natural and
human resources that belong to the society, which is considered to be one of the prime reasons
why these organizations are required to keep responding to the changes in the expectations of the
society and adjusting to them. (Mathews 1993, Deegan and Jeffry, 2006) (Islam and Craig, 2008).
36
There are three particular ways that are mentioned by Dowling and Pfeffer, (1975) that mention
the company’s activities. Beginning with the adoption of goals, values and operations that are
considered to be explaining the legitimacy theory mentioned in the literature.
Institutional theory mainly focuses on explaining the adaption policies of different organizations
and their practices and forms which they perform within a specific organization field (Deegan,
2009). The institutional theory has two main dimensions which are known as isomorphism and
decoupling. These mainly explain the adoption of the voluntary types of the social and the
environmental disclosures (Deegan and Jeffry 2006; Deegan 2009).
DiMaggio and Walter (1983) defined isomorphism as: “a constraining process that forces one
unit of population to resemble other units that face the same set of environmental conditions”.
Dillard, John et al. (2004) defined it as: “Isomorphism refers to the adaptation of an institutional
practice by an organization”.
Isomorphism actually refers to the process that the firms need to adopt the institution practices of
other organizations (DiMaggio and Powell 1983) (Dillard, John et al. 2004).
Deegan (2009) explains that the reporting of the environmental and social information of an
organization is considered an institutional practice, and by the way, the environmental and social
reporting practice mainly adapts and brings changes in the organization which is mainly known as
the isomorphism process.
37
Chapter 3: Research Methodology
38
In this chapter (research methodology), the researcher presents the research philosophy, the
approach which will be applied for the analysis of the research project, the technique, choice of
the method to analyze, the source of data, what will be the time horizon, sample size, the procedure
of data collection and analysis, the limitations while conducting the research and ethical
consideration. Following are the areas take into consideration in this chapter:
Introduction
Research Methodology
o Research Philosophy
o Research Approach
Research Design and Procedures
o Research Design
o Research Procedures
Research Method
Research Context
o Sample Size
o Reliability and Validity of the Research
Time Horizons
Limitations of the study and Ethical Consideration
Conclusion
39
3.1 Introduction:
In order to fulfill the aims and objectives of the research project as stated in chapter one:
To examine the level and quality of environmental and social disclosure by top twenty
U.A.E companies.
To explore the reasons for level and quality of disclosure by the top twenty U.A.E
companies.
By looking at most of the previous research on CSR corporate environmental and social reporting,
the researcher chooses the technique of qualitative data analysis to analyze which will be collected
from the company’s annual report of 2012, to fulfill the aims and objectives of the research project.
3.2 Research Methodology:
3.2.1 Research Philosophy:
As stated by Saunders in 2009, the research philosophy describes the development and nature of
the knowledge. There are different types of research philosophies:
1. Positivism: It helps to gain knowledge from the evidence of recognizable knowledge.
2. Realism: In the eyes of a researcher it indicates the truth.
3. Interpretive: This type of method is used for the understanding an action before analyzing
there benefits and cause and effect relationship.
4. Pragmatism: This type of research philosophy presents the view of a researcher in the
topic.
To conclude, the method which will be used in the research project would be interpretive which
would help the researcher in qualitative data analysis.
40
3.2.2 Research Approach:
There are several types of research approaches; the most common approaches are qualitative and
quantitative approach. The Quantitative research approach emphasis on the collection of numerical
data and the analyzing process; it focuses on quantifying the frequency, scale and range of
observable facts. This type of research approach initially is much difficult to design, because it is
highly comprehensive and structured but the findings can be easily assembled and statistically
presented (Mary Alberici, 2010). Qualitative research is more biased in nature than quantitative
research. It is dazzling on the less tangible characteristics of the research project which involves
examining. Even though qualitative research approach can be easier to design but it can be tricky
to understand and present the result and it can be challenged with a lot of doubts (Tashakkori and
Teddlie, 2003). The following table shows the uniqueness of quantitative and qualitative research
approach:
Quantitative Research Approach Qualitative Research Approach
Pre-determined Emerging Methods
Instrument based questions Open-ended questions
Performance, attitude, observational
and census data
Interview, observation, document,
audio and visual data
Statistical analysis Text and image analysis
Statistical interpretation Themes and patterns interpretation
Table 3.2: Research Methods (Source: Research Methods and Statistics, 2010: 01-11 05)
From the overview of different research approaches above, the researcher decided to choose
qualitative research approach for this research project because the research data will be collected
from the annual reports of the companies in U.A.E.
41
3.3 Research Design and Procedures:
3.3.1 Research Design:
To make a research design the researcher should know how to collect data, it can be either primary
or secondary or it can be both. The secondary data is the information that has been collected by
the previous studies, annual reports, articles or books which is generally accessible in internet
(electronic form) or published. The main advantage of using secondary data is that it will save the
time of the researcher and cost. Primary data is gathered specially to deal with the problem and
conducted by the professionals or the researchers. The main difference in secondary and primary
data is that primary data cannot be found elsewhere and it can only be collected through surveys,
focus groups, interviews or through experiments. In this research project the researcher will
include the secondary data. As stated by (Greener 2008) secondary data not the one which is
collected directly by the researcher. This data is collected from the journals, books, articles and
from the sources like annual reports of different companies in UAE in the field of environmental
and social reporting.
3.3.2 Research Procedures:
This main factor of the research methodology section illustrates the course of actions and
procedures the researcher applied throughout the research project. This part of research
methodology will provide a positive logic of direction of the researcher. It will also present the
readers with a definite perceptive and understanding of the research project. The explanations of
research procedures also present a foundation for readers to understand the characteristics,
reliability, and reality of the researchers finding. In qualitative research, the research procedure
should be unambiguous and clear for the future research Barrett, E. (2005).
The researcher should answer some questions that are:
From which source the data should be collected?
How it will be analyzed?
3.3.2.1 Gathering Data:
The researcher is going to collect the data from the annual reports of the selected companies from
different sectors in U.A.E. The companies which are selected are ranked top in their respective
sectors.
42
3.3.2.2 Data Analysis:
The technique which will be used to analyze the data is called checklist, the researcher includes
the three main factors that are environmental disclosure, social disclosure and economical
disclosure (GRI 3.1, 2006), through this checklist the researcher will get to know that how many
times a company talks about these disclosures. The checklist will be used in this research project
will be from GRI 3.1. For each sector there will be a separate checklist (eleven checklist table for
eleven different sectors). In the checklist table the first section is of categories and each category
is sub-divided, the second is for whether the companies disclose the information (yes/no) and in
the third column there will be the name sector and name of each company. Under each company’s
name the researcher will include the page number in which the companies disclose the information
according to the different categories. Below is the sample of checklist table which the researcher
is going to use for the data interpretations in chapter 4. The categories in checklist table will include
the following categories (GRI 3.0, 2006):
1. The first category named as economic disclosure which include three divisions that is
economic performance, market presence and indirect economic impacts.
2. Second category named as environmental disclosure which include nine divisions that is
materials, energy, water, biodiversity, emissions, effluents and waste, products and
services, compliances, transport and overall.
3. Third and last category is named as social disclosure which is further divided in four
categories.
a. The first sub category named as labor practices and decent work which includes six
divisions that is employment, labor/management relations, occupational health and
safety, training and education, diversity and equal opportunity and equal
remuneration for women and men.
43
b. The second sub category in social disclosure is named as human rights which
includes nine divisions that is investment and procurement practices, non-
discrimination, freedom of association and collective bargaining, child labor,
prevent of forced and compulsory labor, security practices, indigenous rights,
assessment and remediation.
c. Under social disclosure, third sub category is named as society which includes five
divisions that is local community, corruption, public policy, anti-competitive
behavior and compliance.
d. The fourth and last sub category in social disclosure is named as product
responsibility which also includes five divisions that is customer health and safety,
product and service labeling, marketing communication, customer privacy and
compliance.
The sample of checklist table which the researcher will use for the data collection and analysis is
mentioned below:
Categories Yes/No Sector’s Name
Company’s Name Company’s Name
Economic Disclosure
Economic performance
Market Presence
Indirect Economic
Impacts
44
Environmental
Disclosure
Materials
Energy
Water
Biodiversity
Emissions, effluents
and waste
Products and Services
Compliance
Transport
Overall
45
Social Disclosure
Labor practices and
decent work
Employment
Labor/Management
Relations
Occupational Health
and Safety
Training and Education
Diversity and Equal
Opportunity
Equal Remuneration for
Men and Women
46
Human Rights
Investment and
procurement practices
Non Discrimination
Freedom of Association
and Collective
Bargaining
Child Labor
Prevent of forced and
compulsory labor
Security Practices
Indigenous Rights
Assessment
Remediation
47
Society
Local Community
Corruption
Public Policy
Anti-Competitive
Behavior
Compliance
48
Product Responsibility
Customer Health and
Safety
Product and Service
Labeling
Marketing
Communication
Customer Privacy
Compliance
Table 3.3: Checklist Table (Source: GRI 3.1 (2006), Standard Disclosures: Performance
Indicator: 1-5).
49
The researcher explains each category mentioned in the following table:
Categories Explanation
Economic Disclosure
Economic Performance
Direct economic value generated and distributed, including
revenues, operating costs, employee compensation, donations
and other community investments, retained earnings, and
payments to capital providers and governments. Financial
implications and other risks and opportunities for the
organization's activities due to climate change. Coverage of the
organization's defined benefit plan obligations. Significant
financial assistance received from government.
Market Presence
Range of ratios of standard entry level wage by gender
compared to local minimum wage at significant locations of
operation. Policy, practices, and proportion of spending on
locally-based suppliers at significant locations of operation.
Procedures for local hiring and proportion of senior
management hired from the local community at significant
locations of operation.
50
Indirect Economic Impacts
Development and impact of infrastructure investments and services
provided primarily for public benefit through commercial, in-kind, or
pro bono engagement. Understanding and describing significant
indirect economic impacts, including the extent of impacts.
Environmental Disclosure
Materials
Materials used by weight or volume. Percentage of materials used that
are recycled input materials.
Energy
Direct energy consumption by primary energy source. Direct energy
consumption by primary energy source. Energy saved due to
conservation and efficiency improvements. Initiatives to provide
energy-efficient or renewable energy based products and services, and
reductions in energy requirements as a result of these initiatives.
Initiatives to reduce indirect energy consumption and reductions
achieved.
Water
Total water withdrawal by source. Water sources significantly
affected by withdrawal of water. Percentage and total volume of water
recycled and reused.
51
Biodiversity
Location and size of land owned, leased, managed in, or adjacent to,
protected areas and areas of high biodiversity value outside protected
areas. Description of significant impacts of activities, products, and
services on biodiversity in protected areas and areas of high
biodiversity value outside protected areas. Habitats protected or
restored. Strategies, current actions, and future plans for managing
impacts on biodiversity. Number of IUCN Red List species and
national conservation list species with habitats in areas affected by
operations, by level of extinction risk.
Emissions, effluents and
waste
Total direct and indirect greenhouse gas emissions by weight. Other
relevant indirect greenhouse gas emissions by weight. Initiatives to
reduce greenhouse gas emissions and reductions achieved. Emissions
of ozone-depleting substances by weight. NOx, SOx, and other
significant air emissions by type and weight. Total water discharge by
quality and destination. Total weight of waste by type and disposal
method. Total number and volume of significant spills. Weight of
transported, imported, exported, or treated waste deemed hazardous
under the terms of the Basel Convention Annex I, II, III, and VIII, and
percentage of transported waste shipped internationally. Identity, size,
protected status, and biodiversity value of water bodies and related
habitats significantly affected by the reporting organization's
discharges of water and runoff.
52
Products and Services
Initiatives to mitigate environmental impacts of products and services,
and extent of impact mitigation. Percentage of products sold and their
packaging materials that are reclaimed by category.
Compliance
Monetary value of significant fines and total number of non-monetary
sanctions for non-compliance with environmental laws and
regulations.
Transport
Significant environmental impacts of transporting products and other
goods and materials used for the organization's operations, and
transporting members of the workforce.
Overall Total environmental protection expenditures and investments by type.
53
Social Disclosure
Labor practices and decent
work
Employment
Total workforce by employment type, employment contract, and
region broken down by gender. Total number and rate of new
employee hires and employee turnover by age group, gender, and
region. Benefits provided to full-time employees that are not provided
to temporary or part-time employees, by major operations. Return to
work and retention rates after parental leave, by gender.
Labor/Management
Relations
Percentage of employees covered by collective bargaining
agreements. Minimum notice period(s) regarding significant
operational changes, including whether it is specified in collective
agreements.
54
Occupational Health and
Safety
Percentage of total workforce represented in formal joint
management-worker health and safety committees that help monitor
and advice on occupational health and safety programs. Rates of
injury, occupational diseases, lost days, and absenteeism, and number
of work-related fatalities by region and gender. Education, training,
counseling, prevention, and risk-control programs in place to assist
workforce members, their families, or community members regarding
serious diseases. Health and safety topics covered in formal
agreements with trade unions.
Training and Education
Average hours of training per year per employee by gender and by
employee category. Programs for skills management and lifelong
learning that support the continued employability of employees and
assist them in managing career endings. Percentage of employees
receiving regular performance and career development reviews by
gender.
Diversity and Equal
Opportunity
Composition of governance bodies and breakdown of employees per
employee category according to gender, age group, minority group
membership, and other indicators of diversity.
Equal Remuneration for Men
and Women
Ratio of basic salary of men to women by employee category.
55
Human Rights
Investment and procurement
practices
Percentage and total number of significant investment agreements and
contracts that include human rights clauses or that have undergone
human rights screening. Percentage of significant suppliers,
contractors, and other business partners that have undergone human
rights screening and actions taken. Total hours of employee training
on policies and procedures concerning aspects of human rights that
are relevant to operations, including the percentage of employees
trained.
Non Discrimination
Total number of incidents of discrimination and corrective actions
taken.
Freedom of Association and
Collective Bargaining
Operations and significant suppliers identified in which the right to
exercise freedom of association and collective bargaining may be at
significant risk, and actions taken to support these rights.
Child Labor
Operations and significant suppliers identified as having significant
risk for incidents of child labor, and measures taken to contribute to
the elimination of child labor.
56
Prevent of forced and
compulsory labor
Operations and significant suppliers identified as having significant
risk for incidents of forced or compulsory labor, and measures to
contribute to the elimination of all forms of forced or compulsory
labor.
Security Practices
Percentage of security personnel trained in the organization's policies
or procedures concerning aspects of human rights that are relevant to
operations.
Indigenous Rights
Total number of incidents of violations involving rights of indigenous
people and actions taken.
Assessment
Percentage and total number of operations that have been subject to
human rights reviews and/or impact assessments.
Remediation
Number of grievances related to human rights filed, addressed, and
resolved through formal grievance mechanisms.
57
Society
Local Community
Percentage of operations with implemented local community
engagement, impact assessments, and development programs.
Operations with significant potential or actual negative impacts on
local communities. Prevention and mitigation measures implemented
in operations with significant potential or actual negative impacts on
local communities.
Corruption
Percentage and total number of business units analyzed for risks
related to corruption. Percentage of employees trained in
organization's anti-corruption policies and procedures. Actions taken
in response to incidents of corruption.
Public Policy
Public policy positions and participation in public policy development
and lobbying. Total value of financial and in-kind contributions to
political parties, politicians, and related institutions by country.
Anti-Competitive Behavior
Total number of legal actions for anti-competitive behavior, anti-trust,
and monopoly practices and their outcomes.
Compliance
Monetary value of significant fines and total number of non-monetary
sanctions for non-compliance with laws and regulations.
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Product Responsibility
Customer Health and Safety
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. Total
number of incidents of non-compliance with regulations and
voluntary codes concerning health and safety impacts of products and
services during their life cycle, by type of outcomes.
Product and Service
Labeling
Type of product and service information required by procedures, and
percentage of significant products and services subject to such
information requirements. Total number of incidents of non-
compliance with regulations and voluntary codes concerning product
and service information and labeling, by type of outcomes. Practices
related to customer satisfaction, including results of surveys
measuring customer satisfaction.
Marketing Communication
Programs for adherence to laws, standards, and voluntary codes
related to marketing communications, including advertising,
promotion, and sponsorship. Total number of incidents of non-
compliance with regulations and voluntary codes concerning
marketing communications, including advertising, promotion, and
sponsorship by type of outcomes.
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Customer Privacy
Total number of substantiated complaints regarding breaches of
customer privacy and losses of customer data.
Compliance
Monetary value of significant fines for non-compliance with laws and
regulations concerning the provision and use of products and services.
Table 3.3.2.2: Categories Explanation (Source: GRI 3.1 (2006), Standard Disclosures:
Performance Indicator: 1-5).
3.4 Research Method:
The research method which the researcher is going to use in this research project will be qualitative
content analysis. As stated by (Berelson, 1952; Krippendorff, 1980; Weber, 1990) Data content
analysis is a systematic, replicable technique which is used to compress many words of text into
fewer content categories. As referred by Holsti (1969) content analysis as, “any technique for
making inferences by objectively and systematically identifying specified characteristics of
messages”. Content analysis is mostly used in the research which is qualitative in nature and
regarded as semiotic informed analysis. This type of analysis examines the different levels and
quality aspects of environmental and social disclosures of the sample organizations.
Conducting of qualitative data analysis, according to Krippendorff (1980), five questions must be
answered in each and every qualitative content analysis:
1. What type of data should be analyzed?
2. Explanation of the data.
3. Sample size for the research.
4. Relation of research context and data analysis.
5. Limitations of data analysis.
Around the more basic meanings of content analysis, that of Abbott and Monson (1979) is likely
the most generally cited in the CSR literature. Abbott and Monson characterize content analysis
as:
60
… a technique for gathering data that consists of codifying qualitative information in anecdotal
and literary form into categories in order to derive quantitative scales of varying levels of
complexity (1979, p.504).
3.5 Research Context:
3.5.1 Sample Size:
For qualitative content analysis, the essential attention is what amount of data to protect for
analysis. One must be careful so as not to limit the results by doing so, but the researcher must also
take special care not to take on so much that it will be difficult to conclude properly. The sample
size which the researcher is using for the research is top twenty companies’ (annual report of 2012)
and these companies are ranked top in their respective sectors. List of the companies and the
sectors are:
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Company Sectors Total
Etisalat Telecommunication 2
Du
Abu Dhabi Commercial
Bank Financial Services 3
National Bank of Abu Dhabi
Dubai Investments
Abu Dhabi Gas Industries
Limited
Energy 5
Dolphin Energy
Masdar
Abu Dhabi National Oil
Company
Abu Dhabi Company for
Onshore Oil Operations
Department of
Transportation Abu Dhabi Public Agency 2
Dubai Customs
Aramex Logistics 2
Tri Star
Emirates Foundation Aviation 1
Family Development
Foundation Non Profit 1
Dubai Aluminum Metal Products 1
RAK Ceramics Conglomerates 1
Borounge Chemicals 1
Cemex Construction Materials 1
Total 11 20
Table 3.5.1: Sample Size
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The purpose of selecting these sectors is that they are well known sectors in U.A.E. By selecting
different sectors the researcher can easily do the interpretation and analyzing part and can easily
compare the results with previous studies.
3.5.2 Reliability and Validity of the Research:
Reliability and validity are two vital function essential for the success of any company. Therefore
it is important to be able to establish appropriate definitions from the perceptive of academic
researchers and scholars. Reliability is thought to be an approach that helps to interpret the different
researches initiated by other (Golafshami, N. 2003). Extraction of relevant information from the
data is recognized to be a function of qualitative research as it ensures to extricate information that
has value and excellence. It has been observed that the qualitative research ensures a researcher to
interpret complex data into simpler form (Eisner, 1991, p.58). The evaluation of reliability is
crucial in qualitative study therefore one needs to be cautious when using reliability in qualitative
study since it can be misleading at time. If both are in opposite directions then the findings are said
to be irrelevant (Stenbacka, 2001 p.522). On the other hand, validity can be expressed in terms for
wide range of expressions in qualitative research. The approach is said to be neither fixed nor
universal (Winter, 2000 p.1). Although many researchers do not anticipate validity in qualitative
research however the one that utilize the concept are ensured that the work produced is authentic
and valid. Creswell and Miller (2000) suggest that many exaggerate the use of validity, it is simply
the ability to make a choice on assumption. Due to a controversy against validity many researchers
introduced for appropriates techniques that includes quality, severity and trustworthiness (Davies
& Dodd, 2002; Lincoln & Guba, 1985; Mishler, 2000; Seale, 1999; Stenbacka, 2001). For the
arguments mentioned earlier of different qualitative research it can help to establish that research
is both reliable and valid. From the above mentioned definitions of different qualitative
researchers, the researcher recognize that this research is reliable and valid because the research
information/data is collected from the annual reports of different companies in different sectors in
U.A.E and the finding and results are stable, reproducible and accurate.
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3.6 Time Horizons:
The time horizons will assist the researcher to conduct research since different aim and objectives
of the research project or issues include time in various ways. There are two types of time horizons
longitudinal research, which includes data collection more than one time in different scenarios, it
is more time consuming and expensive whereas cross sectional research which is also called one
shot studies in which data is only collected once during a limited time frame of either weeks or
months (Saudners, 2009). Cross sectional research is less time consuming than longitudinal
research and it is not costly to collect the information in cross sectional research. Both types are
designed for different types of research as mentioned in the table below:
Cross Sectional Research Longitudinal Research
How things are now? Trend analysis (looks at the characteristics of
the selected sample over a year)
Qualitative research (content analysis) Cohort Study (looks at sub divided samples
during a year)
Qualitative research (questionnaires) Panel Study ( looks at the same sample over a
long period of time)
Table 3.6: Time Horizons (Source: Harvard University (2010), Research Methods: Time
Dimension: pg. 4)
Due to lack of time the researcher choose the cross sectional time horizons because it will help the
researcher in two ways which are less time consuming and inexpensive to collect data for the
research project as compared to longitudinal research.
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3.7 Limitations of the study and Ethical Consideration:
There are some limitations and ethical issues which the research faced during his research. These
limitation and ethical issues include:
The quality of research is closely relay on the skills of the researcher that how he will do
the interpretation part and it can be easily influenced by the personal opinions and biases
(Claire Anderson. 2010).
The size of the sample is small due to time limitations. Hence it is difficult to do the analysis
and interpretation properly.
Sometimes qualitative data analysis is not well written and understood by the researcher as
compare to the quantitative research which is more acceptable (Claire Anderson. 2010).
While presenting the findings of the research project there can be an issue raised of
misunderstanding the data. (Claire Anderson. 2010).
The problems which can occur when conducting this type of analysis is that while
collecting the data the substantial documents are missing then the content analysis will be
abandoned; inappropriate records should be discarded.
The research project constrained to U.A.E banking, service, telecommunication, real estate,
insurance and energy sectors, hence it does not give a summed up outline as whole.
The previous researchers who investigate about the CSR environmental and social
reporting had done the longitudinal research but due to lack of time this research project is
only focusing on the cross sectional research because of that the findings are limited to just
one year 2012.
The companies which researcher chosen as a sample are U.A.E based companies. There
are several international companies in U.A.E who are disclosing the information about
environmental and social reporting are ignored in this research project.
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There are hindrances for utilizing yearly reports. Twelve-month reports are not by any
means the only source that organizations reveal environmental and social information.
It is totally voluntary for the organizations to have environmental and social disclosures,
and organizations may pick not to unveil any data in yearly reports.
There are no as such rules and regulations or compulsory disclosure rules that organizations
can follow. What organizations have uncovered might match the rules that are fitting for a
specific study. In this manner, data revealed does not have a standard and it might be
challenging for the researcher to gather the information properly.
The main the problem with this research project is that the sample size is very small to
conclude about the level and quality of CSR in U.A.E
Another problem is that in the selected sample there companies who operates globally and
on the other hand there are some companies who only operates locally, so there is a large
gap between the reporting style.
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Conclusion:
The researcher is only focusing on secondary data which will be collected through top twenty
U.A.E companies (annual report 2012) these companies are ranked top in their respective sectors.
The method which is used for this research project is qualitative data analysis but due to time
limitation it is difficult for the researcher to do the analysis and interpretations properly. The
technique which the researcher used is called checklist to know that how many times the selected
sample of the companies reported about environmental and social disclosures. The researcher is
going to do the interpretation and discuss the results in the next chapter.
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Chapter 4: Data Interpretations and Results
68
In this Chapter the researcher is going to do the interpretation of the selected sample size annual
reports mentioned in the previous chapter. The researcher will discuss the finding and results, link
and compare them with the literature review for each category separately. There are two sections
in each category, first section will include that whether every company talked about economic,
social or environmental disclosure or not and second section will include that whether only one or
more than one company disclosed about economic, social or environmental disclosure (see
appendix A for economic disclosure, appendix B for environmental disclosure and appendix C, D,
E and F for social disclosure. Following categories are taking into consideration by the researcher
for interpretation and result:
Economic Disclosure
Environmental Disclosure
Social Disclosure
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4.1 Economic Disclosure:
The economic disclosure consists of economic performance, market presence and indirect
economic impacts. All these details present different details and are vital for companies to be
disclose in the financial statements. The economic disclosure information that was collected by
the researcher mentions that majority of the companies that were analyzed show that majority of
the companies disclose details that relating to the economic disclosure that effect their business.
Almost all the companies that were analyzed have provided information about their economic
performance. This clearly mentions that majority of the companies operating in the UAE do
mention about their economic performance.
Market presence is an important element and needs to be disclosed by businesses. The researcher
has identified through his findings that the market presence element has been included by almost
all the companies that were used for this research. This clearly shows that majority of the
companies in this the UAE would be providing the details of market presence which is considered
to be a vital part in the economic disclosure.
Indirect economic impacts is an important element and looking at the researchers’ information
mentioned in the appendix, it mentions that not all the companies mention economic impacts,
however majority of the companies operating in the UAE economy do find it important to publish
these details. This information does not seem to be a compulsory disclosure for companies, but
those companies that consider it important are the ones that mostly disclose this particular
information.
Looking at the literature, Economic disclosures mentions the concern of CSR that has got great
popularity from past some decades from different researchers and academics, there are very less
researches have been carried out in the context of developing countries (Tsang, 1998, Belal, 2001,
Islam and Deegan, 2008). Many of these studies were carried out on the industrialized countries
of Japan, USA, Europe and Australia. (Mathews, 1997; Gray et al., 1995; Deegan, 2002).
The economic development stage along with the national and cultural variations have strongly
influenced CSR, therefore it would be wrong to conclude the findings of the researches based on
the developed nations compared to the developing countries (Tsang, 1998; 624). Research has
improved especially over the last decade, a few notable researchers carried out studies in context
70
of Bangladesh, Thailand, Singapore, Malaysia, South Africa, China, Ghana, Nigeria and Middle
East (Belal and Momin, 2009).
The economic development level for a country also influences the disclosure pattern. However the
results collected from the literature suggest that it provides mixed views. Adhikari and Tondkar
(1992) and Ahmed (1995) find no relation whereas Cooke and Wallace (1990), Doupnik and Salter
(1995) and Salter (1998) indicate economic framework as important clarification for accounting
differences.
Companies have more social pressure in the developed countries for higher level of CSR as greater
economic progress that will be accompanied by the growth factor in the number and strength of
pressure and monitoring groups.
There are few quotations collected from the companies which mention their details on the issue of
the economic disclosure perspective. These include:
“Etisalat focuses on delivering innovative solutions to transform the communities in which it
operates and accelerate social development and economic growth”.
(Etisalat Report 2012, pg. 5)
“Throughout Aramex’s journey, we seized opportunities and thrived on them, remaining local
wherever we went and mastering every market, not just commercially, but also economically,
socially and culturally”.
(Aramex Report 2012, pg. 7)
By looking at the details in the academic literature and the findings done by the researcher, it
clearly mentions that the economic disclosure is a vital part and requires disclosure both in
developing and developed countries. Developed countries face more social pressures to disclose
information compared to the developing countries. Businesses in the UAE do face social pressures
and they even produce economic data in their reports to give consumers a better view about their
businesses. Majority of the businesses providing this data makes it clear that this is an important
element not only in the UAE companies but also globally listed companies.
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4.2 Environmental Disclosure:
Environmental disclosure is also an important element considered in the disclosure, there are many
elements that are included in this particular disclosure namely materials, energy, water,
biodiversity, emissions, effluents and waste, product and services, compliance and transport.
Materials is an important element in the environmental disclosure. Materials disclosure in the UAE
was provided by a majority of companies that were studied by the researcher.
Energy is also considered an important element and all the companies studied had disclosed this
particular information, this shows that the businesses in the UAE disclose this information as this
is considered a vital information in relation to the disclosures required.
Water is another important element that needs to be disclosed in the financial statements. The
researcher has collected information regarding this particular issue and found out through his
research that all the companies that were used for the findings had published information relating
to this issue. This shows the importance of water disclosure in the UAE.
Biodiversity is another important component that needs to be disclosed in the financial statements.
The researcher has collected information through his research that majority of the companies that
were used for the findings had published information relating to this issue. This shows the
importance of biodiversity disclosure in the UAE.
Emissions, Effluents and Waste disposal are important elements that needs to be disclosed in the
financial statements. The researcher has collected information regarding this particular issue and
found out by his research that majority of the companies that were used for the findings had
published information relating to this issue. This shows the importance of these disclosures
presented in the financial statements in the UAE.
Products and services is an important element in the environmental disclosure. This particular
disclosure in the UAE was provided by a majority of companies that were studied by the
researcher.
72
The compliance disclosure is a vital part in the environmental issues and the information collected
by the researcher states that very few companies researched have published this detail. The details
are mentioned in the table provided in the appendix.
The transport issue is another important factor that needs to be taken into consideration.
Transportation disclosure details collected by the researcher states that most major companies
analyzed do discuss this particular information.
A few companies have provided information on this particular environmental disclosure issue that
has been mentioned below:
“ADCO is committed to the prevention of pollution, protection of the environment, and the
conservation of natural resources. Our operations have the potential to adversely impact the
surrounding environment and we are constantly striving to minimize and mitigate impacts. In the
planning phase of new projects, our HSEIA process assists us in identifying, avoiding, and
mitigating impacts at the project design phase of a project. We have undertaken environmental
impact assessments for all of our operating sites and are in the process of implementing
management plans targeted at mitigating the risks identified. In our existing projects, we are
minimizing impacts and conserving resources through progressively reducing emissions,
discharges, and wastes”.
(ADCO Report 2012, pg. 54)
“We are deeply aware of our responsibility to the environment and we carefully monitor our
environmental impact and aim to reduce our resource consumption while adhering to
international standards for environmental protection”.
(Aramex Report 2012, pg. 14)
The present literature states that the Jahamani (2003) studied in the North Africa and Middle East
region, he studied companies operating in different sectors, Jordanian and United Arab Emirates
Company’s annual reports during the year 1998. The findings collected by the researcher
suggested that the existence of almost 9 to 11 Companies only present the important environmental
disclosures in annual reports out of which 86 and 94 firms that were based and operated in Jordan
and UAE respectively.
73
Al-Khater and Naser (2003) in another study that was conducted in Qatar, examined the different
aspects of CSR reporting by insights of several groups of user. They settled that the addition of
CSR in the company’s annual reports that would reflect the companies who are trying to justify
their existence within the society as well as trying to be socially responsible to the general public,
by clearly providing the information in the company’s annual reports about the social
responsibility and supporting the results collected and mentioning the suggestions of the poorly
provided information about environmental disclosure by the companies in the developing world,
including companies in the Middle East region, that caused and offered a study on the
environmental reporting in the UAE companies that was presented by Jahamani (2003) which
clearly mentioned that environmental reporting issues/concerns in UAE. This particular result of
the low level of disclosure in companies in the developing world mostly included companies that
are mainly operating in the Arab region.
Ahmad (2004), in Libya had provided a study on environmental disclosure that mainly consisted
of using different 18 companies from Libya’s major industrial organizations indicating that there
was hardly any indication, suggestion and evidence present from the environmental disclosure in
Libya’s industrial company’s annual reports.
Kamla (2007) had carried out a study in nine Middle Eastern countries to examine the quality,
volume and nature of the social reporting practices performed in the annual reports of 68
companies from almost 8 different Arab Middle East countries. The finding clearly mentioned that
only about 10 companies, 15% mainly of the sample size, had been providing information that
related to some form of environmental information.
Rizk et al. (2008) had studied corporate environmental and social reporting practices of different
Egyptian organizations. The findings of the study suggests that a significant variation regarding
environmental and social disclosure practices in 60 different organizations operating in industrial
sector. He also mentioned that reviews of disclosure practices in different countries are always
welcome and are arguably somewhat limited to the information present for companies established
in developing countries.
Furthermore, Hossain and Hammami (2009) and Naser et al. (2006) had examine various
researches in Qatar regarding the environmental disclosure that included Doha Securities Market
listed companies. These researches had established the result that there are variations that have
been seen by the Qatari organizations in their corporate social reporting. It is also been specified
74
that these disclosure are very much linked with the corporate growth, firm’s size market
capitalization and business risk measured by leverage. Other than that, the findings indicate that
complexity, size, age and the profitability variable is irrelevant in explaining the level of voluntary
disclosure.
The study that was conducted by Elsayed and Hoque (2010) found out that out of 100 almost 55
percent Egyptian companies provided some information about environmental disclosure. Al-
Gamrh (2010) studying the companies of Saudi Arabia concluded that the level of disclosure in 93
company’s annual reports that were originally surveyed is very low. The results of the research
refers to only one company that had disclosed all the information of disclosure whereas other than
that there were almost 13 other companies which did not record any information about disclosure.
Al-Janadi et al. (2011) in the year 2011, examined some Saudi and Emirati company’s annual
reports for the available financial years 2006 and 2007. The findings had proven that the level of
disclosure is very low as compared with an average of almost 36 per cent for the whole sample of
companies that was collected. The voluntary disclosure was found to be missing for most of the
items of environmental and social information. Apart from that particular detail there was an
additional information, the results of Ahmad and Mousa (2011) research confirmed that
comparison in Libya (2001 and 2007) with (1998 and 2000) the notion that had a very little
progress in the corporate environmental disclosure.
Furthermore, In Jordan, Islam (2011) examined the levels of the environmental disclosure in
Jordanian firms which was figured out by taking a sample of almost 60 companies in the services
and manufacturing sectors. Results figured out that almost 85% of the companies disclosed some
environmental and social information. Islam (2011) had commented on the results of his studies
that there was an improvement as compared to other studies conducted on Jordanian companies
such as (Al-Khadash 2003) which determined that almost 26% of the companies covered only in
the study were known to release the detailed environmental information. As well the study of
Jahamani (2003) who found from his research that almost 10 percent of out of 86 Jordanian firms
presented environmental reports as part of their annual reports in research which had examined
the detailed awareness, level and extent of environmental responsibility of Jordanian companies.
Two researches that were originally examined in Tunisian context during 2011 by Gana and
Dakhlaoui (2011) that explained that the overall disclosure is scored average and has essentially
75
to some extend improved in last few years. This finding also explained from this particular study
that explained on the 36 Tunisian firms sample selected over the period 2000 to 2005.
31 Tunisian firms were examined for environmental disclosure and related it to environmental and
economic performance in 2007 by Belhaj and Damak-Ayadi (2011). These findings pointed out
that the mean disclosure score of this particular sample is 9.77 and the organizations with high
sensitivity are required to provide more information about environmental tends as compare to those
organizations who are less sensitive environmentally. It is the main point to note and understand
that out of the 500 largest Tunisian firms, there were only 53 companies that have published the
information about environment disclosure in their annual reports or in their websites (Belhaj &
Damak-Ayadi 2011).
In 2012, it has been clearly observed that the researchers attempts in an approach to add some
similar studies that deal with environmental issues. Ismail and Ibrahim (2012) figured out that
almost 85% of the Jordanian companies do provide some information about environmental
disclosure where the sample they were using for their particular research included almost 60
companies in the services and manufacturing sectors. As well as, Bayoud et al. (2012) conclude
that 60% of company’s annual reports from different sectors that disclose four types of information
that is information about employees and consumers, involvement of the community and provide
the information about corporate environmental disclosure and social responsibility whereas as seen
before only 5% of these companies did not disclose the information about CSR in their annual
reports. However, the trend suggests that the environmental disclosure for companies in MENA
mainly refers to an increase in the number of companies that mainly disclose the environmental
information.
The information gathered by the researcher and that presented by the previous researchers in the
existing literature shows that the results gathered are not very similar to what the previous
researchers found. Majority of the previous researchers presented the issue that environmental
issues are not commonly disclosed in the Arab region, however the researcher has studied the
detail reports presented by the companies established in the UAE and has gathered data that relates
to the environmental disclosures that are being disclosed by the sample selected by the researcher.
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4.3 Social Disclosure:
Social disclosure is divided into 4 main broad categories. Each category consists of many sub-
parts that relate to it which indirectly all present details about the social disclosures presented in
the table provided below in the appendix.
The four main headings include human rights, labor practices and decent work, society and product
responsibility.
Labor practices and decent work include sub headings like Employment, labor/management
relations, occupational health and safety, training and education, diversity and equal opportunity
and equal remuneration for men and women.
Human rights include sub headings like investment and procurement practices, non-
discrimination, freedom of association and collective bargaining, child labor, prevent of forced
and compulsory labor, security practices, indigenous rights, assessment, and remediation.
Society includes sub headings like local community, corruption, public policy, anti-competitive
behavior and compliance.
Product responsibility includes sub headings likes customer health and safety, product and service
labeling, marketing communication, customer privacy and compliance.
Customer health and safety information collected by the researcher states that majority of the
sample companies selected by the researcher in the UAE provide this information. Product and
service labeling collected by the researcher states that less than half the companies selected in the
UAE sample have provided this particular information. Marketing Communication collected by
the researcher states that more than half of the companies selected by the researcher in UAE
provide this information. Customer privacy collected by the researcher states that less than half of
the companies sample selected by the researcher in the UAE provide this following information.
Compliance collected by the researcher states that almost few of the companies sample in UAE
provide this information.
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The following quote has been taken from a report of a sample company studied by the researcher,
it states that:
“RAK ceramics takes into consideration all the necessary standards and regulations while
applying product information and labeling considering the customer and the geographical
destination of the product. There are no incidents recorded so far regarding non-compliance
with regulations and voluntary codes concerning product and service information and labeling”.
(RAK Ceramics Report 2012, pg. 36)
Employment, included in the labor practices and decent work shows that the sample of companies
suggested by the researcher shows that majority of the sample has disclosed this particular
information in their reports.
Labor/Management relations, included in the labor practices and decent work shows that the
sample of companies suggested by the researcher shows that half of the sample has disclosed this
particular information in their reports.
Occupational health and safety, included in the labor practices and decent work shows that the
sample of companies suggested by the researcher shows that all of the sample has disclosed this
particular information in their reports.
Training and education, included in the labor practices and decent work shows that the sample of
companies suggested by the researcher shows that all of the sample has disclosed this particular
information in their reports.
Diversity and equal opportunity, included in the labor practices and decent work shows that the
sample of companies suggested by the researcher shows that majority of the sample has disclosed
this particular information in their reports.
Equal remuneration for men and women, included in the labor practices and decent work shows
that the sample of companies suggested by the researcher shows that more than half of the sample
has disclosed this particular information in their reports.
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The following quote has been taken from a report of a sample company studied by the researcher,
it states that:
“We foster a workplace with opportunities for all and free from harassment while championing
the values of respect, trust, support and accountability. Security and discretion is core in this
super- competitive business, but we also provide for the health, safety and wellbeing of our
employees. We want our employees to aspire and flourish, and, achieve their professional goals
through our performance management process. We are also improving employment
opportunities for physically disadvantaged UAE Nationals in association with Dubai Community
Development Authority"
(Du Report 2012, pg. 30)
Local community, included in the society disclosure shows that the sample of companies suggested
by the researcher shows that majority of the sample has disclosed this particular information in
their reports.
Corruption, included in the society disclosure shows that the sample of companies suggested by
the researcher shows that majority of the sample has disclosed this particular information in their
reports.
Public policy, included in the society disclosure shows that the sample of companies suggested by
the researcher shows that more than half of the sample has disclosed this particular information in
their reports.
Anti-competitive behavior, included in the society disclosure shows that the sample of companies
suggested by the researcher shows that minority of the sample has disclosed this particular
information in their reports.
Compliance, included in the society disclosure shows that the sample of companies suggested by
the researcher shows that minority of the sample has disclosed this particular information in their
reports.
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The following quote has been taken from a report of a sample company studied by the researcher,
it states that:
“We understand the importance of engaging with our communities and sharing best practices
within our sphere of influence, especially through our supply chain.”
(NBAD Report 2012, pg. 83)
Investment and procurement practices, included in the human rights disclosure shows that the
sample of companies suggested by the researcher shows that majority of the sample has disclosed
this particular information in their reports.
Non Discrimination, included in the human rights disclosure shows that the sample of companies
suggested by the researcher shows that majority of the sample has disclosed this particular
information in their reports.
Freedom of association and collective bargaining, included in the human rights disclosure shows
that the sample of companies suggested by the researcher shows that less than half of the sample
has disclosed this particular information in their reports.
Child labor, included in the human rights disclosure shows that the sample of companies suggested
by the researcher shows that more than half of the sample has disclosed this particular information
in their reports.
Prevent of forced and compulsory labor, included in the human rights disclosure shows that the
sample of companies suggested by the researcher shows that half of the sample has disclosed this
particular information in their reports.
Security practices, included in the human rights disclosure shows that the sample of companies
suggested by the researcher shows that less than half of the sample has disclosed this particular
information in their reports.
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Indigenous Rights, included in the human rights disclosure shows that the sample of companies
suggested by the researcher shows that minority of the sample has disclosed this particular
information in their reports.
Assessment, included in the human rights disclosure shows that the sample of companies
suggested by the researcher shows that a small minority of the sample has disclosed this particular
information in their reports.
Remediation, included in the human rights disclosure shows that the sample of companies
suggested by the researcher shows that a very small minority of the sample has disclosed this
particular information in their reports.
The following quote has been taken from a report of a sample company studied by the researcher,
it states that:
“With the aim of achieving a better work environment and more qualitative corporate
governance, we provided a greater number of employees with the Code of Conduct and Ethics
training, which covers several topics including and not limited to anti- corruption policies and
Human Rights”.
(Aramex Report 2012, pg. 38)
The literature available suggests that famous researchers Al-Khater and Naser (2003) in another
study that was conducted in Qatar, examined the different aspects of CSR disclosure by insights
of several user groups. They settled that the addition of CSR in the annual reports of companies
would reflect the social responsibility to the public as well as companies that seek to justify their
existence within the society, by clearly pointing out the social responsibility of the company in
their reports thereby supporting the results gathered mentioning the suggestions of the low level
of disclosure in companies in the developing world, including companies in the Arab region, that
caused and offered a study on the environmental reporting in the UAE companies that was
presented by Jahamani (2003) which clearly mentioned that only 12 percent of the companies in
the UAE issued environmental reports. This particular result of the low level of disclosure in
companies in the developing world mostly included companies that are mainly operating in the
Arab region.
81
Ahmad (2004), in Libya had provided a study on environmental disclosure that mainly consisted
of using different 18 companies from Libya’s major industrial organizations indicating that there
was hardly any indication, suggestion and evidence present from the environmental disclosure in
Libya’s industrial company’s annual reports.
Kamla (2007) had carried out a study in nine Middle Eastern countries to examine the quality,
volume and nature of the social reporting practices performed in the annual reports of 68
companies from almost 8 different Arab Middle East countries. The finding clearly mentioned that
only about 10 companies, 15% mainly of the sample size, had been providing information that
related to some form of environmental information.
Rizk et al. (2008) had studied corporate environmental and social reporting practices of different
Egyptian organizations. The findings of the study suggests that a significant variation regarding
environmental and social disclosure practices in 60 different organizations operating in industrial
sector. He also mentioned that reviews of disclosure practices in different countries are always
welcome and are arguably somewhat limited to the information present for companies established
in developing countries.
Furthermore, Hossain and Hammami (2009) and Naser et al. (2006) had examine various
researches in Qatar regarding the environmental disclosure that included Doha Securities Market
listed companies. These researches had established the result that there are variations that have
been seen by the Qatari organizations in their corporate social reporting. It is also been specified
that these disclosure are very much linked with the corporate growth, firm’s size market
capitalization and business risk measured by leverage. Other than that, the findings indicate that
complexity, size, age and the profitability variable is irrelevant in explaining the level of voluntary
disclosure.
82
The study that was conducted by Elsayed and Hoque (2010) found out that out of 100 almost 55
percent Egyptian companies provided some information about environmental disclosure. Al-
Gamrh (2010) studying the companies of Saudi Arabia concluded that the level of disclosure in 93
company’s annual reports that were originally surveyed is very low. The results of the research
refers to only one company that had disclosed all the information of disclosure whereas other than
that there were almost 13 other companies which did not record any information about disclosure.
Al-Janadi et al. (2011) in the year 2011, examined some Saudi and Emirati company’s annual
reports for the available financial years 2006 and 2007. The findings had proven that the level of
disclosure is very low as compared with an average of almost 36 per cent for the whole sample of
companies that was collected. The voluntary disclosure was found to be missing for most of the
items of environmental and social information. Apart from that particular detail there was an
additional information, the results of Ahmad and Mousa (2011) research confirmed that
comparison in Libya (2001 and 2007) with (1998 and 2000) the notion that had a very little
progress in the corporate environmental disclosure.
This particular details mentions that previous researchers have found it difficult to analyze the
reports and collect information regarding the social impacts that were disclosed by companies in
different Arab countries. However as for the information collected by the researcher, it states that
most issues are not stated for social disclosure but there are many details that are clearly mentioned
by the sample that was selected for the research. Looking at the information collected by the
researcher it states that most of these companies do present detailed information and that
information can be vital for future research.
83
Chapter 5: Conclusion and Recommendations
84
In this final Chapter the researcher is going to present the conclusion of the research project,
contribution to existing knowledge and suggestions for the future research. The researcher divides
this chapter into three parts:
Conclusion
Contribution to Existing Knowledge
Suggestions for Future Research
85
5.1 Conclusion:
CSR, corporate environmental and social disclosure refer to companies as the disclosure about the
company’s performance towards the environmental and societal performance respectively. The
corporate environmental and social disclosure practices have improved considerably both in
developing and developed countries in last two decades. Some other theories that is stakeholder,
legitimacy and institutional provides a comprehensive theoretical basis to demonstrate the value
of economic, social and environmental accounting research.
Legitimacy theory can be implicit as well as explicit and it is dominant to the societal contract,
(Shocker and Sethi 1975; Mathews 1993). The societies expectations is defined in social contract
(Shocker and Sethi 1974), it can be changed in future (Islam and Craig 2008). It is the company’s
responsibility to fulfill the society’s expectation in an ethical way.
These particular theories were considered by the researcher and detailed tables were designed that
were used to gather data from the annual reports of the top companies in UAE regarding the social,
environmental and economic disclosure. These three issues were researched and compared with
the existing literature available on the different gulf countries to understand the differences in the
disclosure methods and to figure out on average how many industries provide information and to
what extent do they provide details of their disclosures.
5.2 Contribution to Existing Knowledge:
The information gathered by the researcher focuses on the most popular companies in the
respective sector in the UAE. This information was not presently been researched upon in detail
before and this would be a vital addition to the literature as the readers would get a clear view of
the companies that disclose information and to what extent they disclose details.
86
5.3 Suggestions for Future Research:
If the research topic (Environmental and Social Disclosure by U.A.E Companies; The levels and
quality of environmental and social disclosure of U.A.E Companies) carried out successfully
researched in future, other researchers will get more knowledge and can provide the results more
accurately. Due to lack of time the researcher was unable to look into more organizations annual
reports and the technique used for the interpretation was only qualitative content analysis, so in
future other researchers can look into more organizations annual report in U.A.E and with more
techniques like detailed interviews from the managers, C.E.O’s and employees and detailed
questionnaires for each research objectives to stakeholders which includes employees, managers,
suppliers, shareholders and customers.
87
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Appendix
Appendix A:
Table for Economic Disclosure:
Economic Disclosure No of Companies % of Companies
Economic Performance 20 100%
Market Presence 20 100%
Indirect Economic Impacts 16 80%
93
Appendix B:
Table for Environmental Disclosure:
Environmental Disclosure No of Companies % of Companies
Materials 11 55%
Energy 20 100%
Water 20 100%
Biodiversity 12 60%
Emissions, Effluents and
Waste 17 85%
Product and Services 14 70%
Compliance 8 40%
Transport 15 75%
Overall 11 55%
94
Appendix C:
Table for Social Disclosure Labor Practices and Decent Work:
Social Disclosure No of Companies % of Companies
Labor Practices and Decent
work
Employment 19 95%
Labor/Management Relations 10 50%
Occupational Health and
Safety 20 100%
Training and Education 20 100%
Diversity and Equal
Opportunity 19 95%
Equal Remuneration for Men
and Women 13 65%
95
Appendix D:
Table for Social Disclosure Human Rights:
Social Disclosure No of Companies % of Companies
Human Rights
Investment and Procurement
Practices 15 75%
Non Discrimination 13 65%
Freedom of Association and
Collective Bargaining 8 40%
Child Labor 11 55%
Prevent of Forced and
Compulsory Labor 10 50%
Security Practices 7 35%
Indigenous Rights 8 40%
Assessment 5 25%
Remediation 4 20%
96
Appendix E:
Table for Social Disclosure Society:
Society
Local Community 15 75%
Corruption 14 70%
Public Policy 12 60%
Anti-Competitive Behavior 6 30%
Compliance 5 25%
97
Appendix F:
Table for Social Disclosure Product Responsibility:
Product Responsibility
Customer Health and Safety 12 60%
Product and Service Labeling 9 45%
Marketing Communication 11 55%
Customer Privacy 6 30%
Compliance 3 15%