Degree Project
Master’s degree
Differences in CSR Disclosure
Does the Content of CSR Disclosure vary between Code Law and Common Law Countries?
Author: Mona Zimmerer-Benz
Supervisor: Asif M Huq
Examiner: Peter Hultén
Subject/main field of study: Business Studies
Course code: FÖ3027
Higher education credits: 15
Date of examination: August 24, 2020
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ii
Declaration of own Work
I hereby declare that I am the sole author of this master thesis and that I have not used any
sources other than those listed in the bibliography and identified as references. I further
declare that I have not submitted this thesis at any other institution in order to obtain a degree.
(Signature)
In Reutlingen, Germany, 24.08.2020 _____________________
iii
Acknowledgements
First and foremost, I would like to express my sincere gratitude to my thesis supervisor, Asif
M Huq, for his continuous support, guidance and advice in my research process and his valuable
feedback.
I would like to show my appreciation to Wensong Bai for reading through my many
unstructured drafts and giving me a valuable second opinion throughout the process.
I would also like to thank my parents, Uta Zimmerer and Rainer Benz, for encouraging me in
my decision to study in Sweden and for supporting me.
Lastly, I would like to thank my friend Polona Cigoj for her support and work as research
assistant.
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Abstract
Only a handful of studies focuses on the relationship between the legal origin
and the content of CSR reports, based on the institutional differences. The
previous studies have contradicting results. The paper aims to add to the body
of research by analyzing the relationship between the legal origin and its
effect on the content of CSR disclosure. To analyse the content a scoring
index is developed following Clarkson, Li, Richardson, & Vasvari, 2008 and
Ong 2016. 45 CSR reports from 8 different countries are analysed and the
research period is 2018 or FY 2019.
The findings suggest that companies from code law countries do publish more
in-depth CSR reports. The key findings are that code law countries disclose
more employment related information and that institutional regulations lead
to better disclosure. Overall, this study extends the discussion on the effects
of the legal origin.
Key words:
CSR reports, sustainability reports, legal origin, code law, common law, content of CSR
reports, institutional theory, isomorphism, scoring index
v
Table of Contents
Declaration of own work ……………………………………………………………………… ii
Acknowledgements ………………………………………………………………………….. iii
Abstract ………………………………………………………………………………………. iv
List of Tables …………………………………………...…………………………………… vii
List of Figures ………………………………………………………………...……………... vii
List of Abbreviations ……………………………………………………………………….. viii
1 Introduction ............................................................................................................................. 1
2 Key Concepts & Theoretical Framework ................................................................................ 5
2.1 Corporate Social Responsibility (CSR) ............................................................................ 5
2.1.1 Global Reporting Initiative ........................................................................................ 6
2.1.2 Paris Agreement ........................................................................................................ 7
2.2 New Institutional Theory ................................................................................................. 7
2.3 Institutions and Stakeholders in Code Law and Common Law Countries .................... 11
3 Research Design .................................................................................................................... 15
3.1 Sampling & Data Collection Method ............................................................................. 15
3.1.1 Different Institutional Settings ................................................................................ 17
3.2 Disclosure Assessment Method ..................................................................................... 19
3.2.1 Scoring Index .......................................................................................................... 19
3.2.2 Content Analysis Method ........................................................................................ 21
3.2.3 Statistical Method .................................................................................................... 25
3.3 Limitations ..................................................................................................................... 26
4 Results ................................................................................................................................... 27
5 Discussion ............................................................................................................................. 35
5.1 Country Level ................................................................................................................. 35
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5.2 Legal Origin ................................................................................................................... 36
5.3 Sectors ............................................................................................................................ 38
6 Conclusion ............................................................................................................................. 39
7 References ............................................................................................................................. 41
8 Appendix ............................................................................................................................... 48
Appendix A: Overview of Articles from Chapter 2.2 .......................................................... 48
Appendix B: Overview Companies ..................................................................................... 49
Appendix C: Detailed Scoring Criteria ................................................................................ 53
Appendix D: Detailed Scoring Index and Differences to Clarkson et al’s (2008) and Ong’s
(2016) Scoring Indices ......................................................................................................... 54
Appendix E: Reports used to develop Search Words & Search Words ............................... 58
Appendix F: Statistical Analysis .......................................................................................... 60
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List of Tables
Table 1 Overviews of Laws & GRI Standards Accordance ..................................................... 17
Table 2 All Score Results ......................................................................................................... 25
Table 3 Results for the Total Score based on Countries .......................................................... 27
Table 4 ANOVA Results Countries ......................................................................................... 28
Table 5 ANOVA Results Legal Origin .................................................................................... 29
Table 6 ANOVA Results Sectors ............................................................................................. 30
Table 7 Overwiev of the accepted and rejected null hypothesis .............................................. 31
Table 8 ANOVA Results GRI-Standards ................................................................................. 32
Table 9 ANOVA Results Legal Origin excl. Canada .............................................................. 33
Table 10 ANOVA Results Legal Origin of European Countries ............................................. 34
List of Figures
Figure 1 Shortened Scoring Index ............................................................................................ 20
Figure 2 Extraxt 1 CSR Report Groupe PSA (PSA Groupe, 2018, p. 208) ............................. 23
Figure 3 Extract 2 CSR Report Groupe PSA (PSA Groupe, 2018, p. 193) ............................. 23
Figure 4 Extract 3 CSR Report Groupe PSA (PSA Groupe, 2018, p. 209) ............................. 24
viii
List of Abbreviations
CSR – Corporate Social Responsibility
GHG – Greenhouse Gas
GDP - Gross Domestic Product
GRI – Global Reporting Initiative
1
1 Introduction
The reactions of investors and the public to the Volkswagen Emission Gate Scandal
2015 show the importance of corporate socially responsible behaviour. After Volkswagen
admitted to manipulating the emissions of diesel cars, by using a software, that lowered the
emission when the car was being tested, their stocks fell drastically. Previous to the scandal,
the stocks were at their peak with approximately €250 and they fell to approximately €100
within months (Börse Frankfurt, 2020). Corporate social responsibility (CSR) reports help
corporations to communicate information about the effects of their business practices on issues
of public concern, such as public accountability, environment and governance (Sethi, Martell,
& Demir, 2017). The demand of the stakeholders for transparency has increased, as well as the
research dedicated to environmental and social accounting topics (Bini & Bellucci, 2020).
The institutional determinants of the environment, in which the company operates,
affect the reporting behaviour of companies. Companies are set in a vast area of political, legal,
social and economic institutions, that influence their behaviour (Campbell, 2007). Institutional
and regulatory initiatives lead companies to disclose non-financial information. Furthermore,
in the last years different governments, market regulators and operators started to adopt policies
and regulations which require the disclosure of the environmental and social impact of
companies (Bini, Bellucci, & Giunta, 2018). The author of this paper will narrow down their
focus solely to the influence of the legal environment on CSR reporting behaviour. Attention
will be given to the code law and common law legal systems and their institutions and
accounting standard settings. The author chose the legal environment, because the state is the
biggest and most influential institution. Also, the findings in this area are limited and past
research is contradictory. The importance of stakeholders and shareholders varies between the
two legal systems. Code law countries are stakeholder-oriented, while common law countries
are shareholder-oriented. Van der Laan Smith, J., Adhikari, and Tondkar (2005) argue, that
stakeholders in countries with a stakeholder orientation hold more power and legitimacy,
compared to countries with a shareholder orientation, which results in management being more
likely to engage and disclose CSR activities. Ball, Kothari, and Robin (2000) argue that
shareholder orientation leads to a demand from the investors for high quality reports and that
the external equity and debt markets monitor the management better. According to Matten and
Moon (2008) worker rights are an important topic in CSR reports from common law countries
(in the article’s case the USA), while CSR reports from code law countries (in the article’s case
2
Europe) address these issues less, because they are mandated by the law. When it comes to
environmental issues, the USA have less regulations compared to Europe, which leads to
voluntary actions of companies, while Europeans try to fulfill the mandatory standards. Another
difference that can be expected is the focus on philanthropic activities in common law countries.
The voluntary nature and sole control of the content presents the companies with certain
advantages and the public with concerns surrounding CSR reports. It enables companies to
portray themselves and their behaviour in the most favourable way. Moreover, it allows the
companies to engage in window dressing, highlighting the issues and actions, that shed a good
light, rather than disclosing relevant and detailed information. In case of Volkswagen, they
stated in their report 2014 that they will invest “€85,6 billion in new models, environmentally
compatible drive technologies and optimized production processes” between 2014 and 2019
(Volkswagen AG, 2014, p. 37), which portrays them as an environmentally responsible and
innovative company. However, they never addressed, that the engineers cheated on the
emission tests in 2005. Furthermore, the Chairman Hans-Dieter Pötsch confessed on December
10, 2015 that even after engineers found a solution, they “they chose to keep on cheating, rather
than employ it” (Goodman, 2015). Another issue presented by CSR reports is their non-
standardized character, both concerning the content and the style of reporting. The lack of a
strictly regulated format makes the quality of these reports hard to compare (Sethi et al., 2017).
Many researchers identified the absence of a standardised sustainability reporting framework
as an issue (Gray, Javad, Power, & Sinclair, 2001; Dingwerth & Eichinger, 2010; Lenssen,
Bevan, Fontrodona, Perrault Crawford, & Clark Williams, 2010). Furthermore, Gray (2010,
p. 50) claims that CSR reports do not portray genuine accounts of sustainability but are
“powerful fictions” and that companies use them to proclaim CSR and to distract from the
actual CSR performance. The findings of Patten and Zhao (2014) support this argument. They
found companies from the retail industry in the United States were disclosing more information
about the strategy and initiative programmes than relevant performance data. The companies
which were assessed to be environmentally responsible did not have a high environmental
performance. While Volkswagen did address the actual performance, they committed fraud by
using the manipulated data.
However, CSR reports can be a valuable source of information and the rise of the
information-based economy has increased the importance of non-financial indicators among
the management and the stakeholders. Some academic studies state that including non-financial
indicators in a company’s performance measuring system supports its strategic alignment and
3
has a positive impact on the organisational effectiveness (Bini, Dainelli, Giunta, & Simoni,
2019). Moreover, non-financial indicators are necessary “to understand past performance,
future potential and make well-informed investment decisions” (PwC, 2015 as citied by Bini et
al., 2019, p. 6), because they also include information about critical aspects of the business,
which cannot be characterized by financial measures, e.g. human capital, relational capital or
organisational capital (Bini et al., 2019). Therefore, it is crucial for companies, report users,
like investors or the general public, and policy makers, to understand how the content of CSR
reports varies between different countries. Understanding the differences between countries
will help the report users in forming their expectations for the reports and judging their
credibility. Furthermore, it enables policy makers and regulators to target areas of deficiencies
country or aspects wise (Van der Laan Smith, J. et al., 2005). Additionally, the information
about sustainability impacts and performance support the management in their decision-
making, planning, implementing, and controlling activities (Yusoff, Yusoff, Abd Rahman, &
Darus, 2019).
Previous research ( Chih, Chih, & Chen, 2010; Fernandez-Feijoo, Romero, & Ruiz,
2014; Sethi et al., 2017) on the influence of the legal system and institutions on reporting
behaviour have found contradicting results. Chapter 2.3 includes a detailed review on the
previous research based on the new institutional theory. The contradicting findings show that
further research regarding the differences in CSR reports is necessary. The aim of the paper is
to identify if the CSR disclosure varies between code law and common law countries.
Therefore, the research question is: Does the content of CSR disclosure vary between code law
and common law countries?
This research differs from previous research through its mixed methods approach. Most
researchers relied on quantitative data like the amount of published reports in a certain
timeframe or the length of the reports. A limitation of these studies is their focus on the surface
manifestation of data and not the content (Khan, Lockhart, & Bathurst, 2018). The author’s
mixed methods approach includes a qualitative content analysis, based on a self-developed
scoring index, followed by a statistical analysis. The scoring index is divided into different
categories, the environmental and the social category. As far as the author knows, only Sethi
et al. (2017) use a similar mixed methods approach by applying a self-constructed quality index.
Therefore, this research adds to an underrepresented area of study and to the literature of CSR
disclosure.
4
The key findings of the study show significant differences between code law and
common law countries regarding the total score and the social score. The environmental score
was not significantly different, though. The findings implicate that the institutional regulations
in code law countries do lead to more in-depth CSR disclosure.
The paper is structured into five chapters. First, the key concepts and theoretical
framework are explained, in order to understand the terms CSR, legal origin and to understand
the new institutional framework. Then the research methods and the development of the scoring
index are explained. In the third chapter, the results are presented which are followed by the
discussion of the results. In the conclusion the research question is answered, and future
research options are discussed.
5
2 Key Concepts & Theoretical Framework
In this chapter CSR and the new institutional theory are explained furthermore CSR
reporting behaviour will be analysed based on the institutional theory and the influences of
isomorphism.
2.1 Corporate Social Responsibility (CSR)
There is not one universal definition of CSR. There are various aspects that seem to be
important for CSR, but their inclusion in the definitions varies considerably. In order to
approach a definition of CSR, some theoretical approaches are presented here (Tanner,
Bamberg, & Gude, 2018).
Corporate responsibility is often associated with the term sustainability or sustainable
action by organizational members. According to the concept of Elkington (1994), sustainability
of organizations comprises three areas (triple bottom line), which are characterized by
economic, environmental and social goals. Only the equal implementation of these three areas
leads to long-term success of the organization. This equal implementation is, however, partly
seen as inadequate. It is argued, that in the practical application of the triple bottom line only
the economic goals are actually considered and that there is a vague commitment to social and
environmental goals, so that the latter goals cannot be effectively pursued (Norman &
MacDonald 2004). Others see a strength in the flexible application of the approach, since
organizations can adapt the concept to their needs (Slaper 2011).
One model that deals more specifically with the social responsibility of organizations is
the pyramid model by Carroll (1991). This distinguishes four levels of responsibility. The basis
is economic responsibility, which means that organizations should at least cover their costs.
Building on this, there is a legal responsibility according to which organizations are expected
to comply with the statutory provisions. The third level is ethical responsibility. This describes
the expectation that organizations will act fairly, ethically and without damage beyond the legal
framework. The top level, philanthropic responsibility, describes a charitable commitment to
improve the general quality of life. Carroll (1991) emphasizes that the social responsibility of
organizations goes beyond the economic and legal level. This means that ethical and
philanthropic responsibility are of particular importance in this model. At the same time,
6
economic and legal responsibility are a kind of the basis for the upper levels, which must be
given in order to be able to carry out the other levels.
Another central approach is the stakeholder theory (Freeman, R. E., 1994). The theory
assumes that the long-term economic success of an organization depends on the extent to which
it considers the interests of its stakeholders or is able to build relationships with the different
interest groups. The term stakeholder includes, according to Freeman (1984), all individuals
and groups that can influence or can be influenced by the corporate goal. Thus, the capital
providers, supervisory board, board of directors, employees, customers, suppliers, as well as
the general public and the public sector, the media, trade unions, competitors or economic
chambers and special interest groups such as Greenpeace. This theory represents an expansion
of the shareholder theory (Friedmann, 1970),which sees responsibility only towards the
shareholders1.
These three briefly described approaches form the essential foundations for
understanding CSR. In summary, the following implications can be derived:
• CSR goes beyond an economic responsibility of organizations and
• CSR includes the interests of the relevant stakeholders.
Two factors that can possibly influence the CSR reporting behaviour are the GRI standards
and the Paris Agreement. The use of the GRI standards is widely spread and the Paris
Agreement was signed by all countries of the sample. Both will be shortly explained in the
following sub-chapters.
2.1.1 Global Reporting Initiative
KPMG (2017) reported that the GRI guidelines are the most adopted guidelines for
voluntary CSR reports. The GRI guidelines were developed at the end of the 1990s and
introduced in 2002. Since then, the guidelines have been continuously developed and since
2016, they are GRI-Standards and not guidelines.
1 “[…] there is one and only one social responsibility of business – to use it resources and engage in activities
designed to increase its profits so long as it stays within the rules of the game, which is to say, engages in open
and free competition without deception or fraud.” (Friedman September 13, 1970; p. 6)
7
Companies have three options according to which they can meet the GRI standards. The “in
accordance – core” option is chosen by most companies. It requires at least one associated
disclosure to be reported for each topic that has been defined essential. The “in accordance –
comprehensive” option makes answering all disclosures that are assigned to an essential topic
mandatory. Also, a third option is available with the GRI standards: GRI-Referenced. It can be
selected by all organizations whose reports are based on the GRI but are not in accordance with
the options “core” or “comprehensive”. A common misunderstanding is to compare the
reporting options with quality standards. A report that fulfills the comprehensive option does
not need to be better than a core or referenced report. The options merely represent opportunities
for companies to tailor their reporting to their individual possibilities and needs. The use of a
framework also has little to say in this context. The quality of a report cannot be assessed on
the basis of its structure, but only on the basis of its content (Bini & Bellucci, 2020).
2.1.2 Paris Agreement
The Paris Agreement was signed by 189 countries and is a combined effort to battle
climate change and to adapt to its effects. It entered into force in 2016. The central aim is to
keep the global temperature rise under 2°C above pre-industrial levels and to further limit the
increase to 1,5°C. Another aim is to strengthen the abilities of countries to handle the impacts
of climate change. The agreement stated that “appropriate financial flows, a new technology
framework and an enhanced capacity building framework will be put in place, thus supporting
action by developing countries and the most vulnerable countries, in line with their own national
objectives. The Agreement also provides for enhanced transparency of action and support
through a more robust transparency framework” (UNFCCC, 2020). All parties had to come up
with nationally determined contribution. Therefore, they had to translate the agreements into
national law. All of the sample countries signed the Paris Agreement. Even though the United
States have resigned, this enters into force in 2020. Therefore, all the countries were part of the
agreement during the research period 2018.
2.2 New Institutional Theory
The theoretical foundation of this research is the new institutional theory. As previously
mentioned, company behaviour varies based on the institutional determinants of its
environment. Hence, this research aims to analyse if the legal systems, as an institutional
8
determinant, cause differences in reporting behaviour between code law and common law
countries. Therefore, it is crucial to understand the new institutional theory, which will be
explained in this following chapter.
The neoclassical organizational theories assume perfect and complete markets and
rational actors. These approaches are questioned in the new institutional economics (Hochhold
& Rudolph, 2009). Coase (1984, p. 230) stated, that the “objection essentially is that the theory
floats in the air. It is as if one studied the circulation of blood without having a body. Firms
have no substance. Markets exist without laws and therefore without any clear specification of
what is bought and sold.” The core idea of the new institutional economics is that institutions
are important for economic processes. The aim is to analyse institutions, their structure,
efficiency and change. New institutional economics are based on methodological
individualism. They explain collective phenomena by establishing a connection to individual
behaviour. Thus, collective phenomena, such as organisations or companies, have no identity
of their own and no options for action of their own; every action can be traced back to
individuals. The individuals are utility maximisers, which only act rational to a limited extend
(Alparslan, 2006). According to North (1990) institutions form the basic rules for exchanges
between people in a political, economic or social context. Institutions primarily serve to avoid
uncertainties by giving the individual certain rules of behaviour that limit their options in
everyday life. This can e.g. the way of greeting another person or guidelines for their behaviour
in traffic. During this reduction of uncertainties, a stable public order is established. Institutions
form the framework for human interaction and can both be formally written down and also be
present in unwritten norms of behaviour. There is a clear differentiation between institutions
and organizations: Institutions are to be understood as rules that determine how the "game" is
played. Organizations are individuals who come together to achieve a common goal. From this
point of view, they are the “players” who move within the framework of the rules. However,
institutions are creations of individuals and are evolved and altered by individuals. Variations
in relative prices and in players’ tastes are the main source for institutional change. Changes in
relative prices include changes in the ratio of factor prices or cost of information and changes
in technology. But, not all changes can be explained based solely on economic factors, North
(1990) explains that the change of societal norms (changes in taste), can also bring institutional
9
change. Especially, if the structure of institutions enables the individuals to express their
ideologies at a low cost for themselves2.
Matten and Moon (2008) state that the new institutionalism predicts the amplified
homogenization of CSR in different countries. This occurs through a regulative, normative, and
cognitive processes that leads to standardized and rationalized standards in CRS practices. This
process is called isomorphism.
Erckrath (2020) explains isomorphism based on Meyer and Rowan (1977). According
to Meyer and Rowan (1977) isomorphism in the institutional environment is closely connected
with the acquisition of legitimacy and has various consequences for the organization. The
organization demonstrates the appropriateness of its actions through institutional isomorphism.
It adopts elements that are legitimized externally rather than in terms of their efficiency. By
aligning the formal structures, organizations also adopt external or ceremonial evaluation
standards for the assessment of structural elements, and they promote stability. Overall, the
isomorphism with the institutional environment supports the success and survivability of the
organization. DiMaggio and Powell (1983) identify three mechanisms that lead to structural
adjustments: isomorphism through coercion, through mimesis and through normative pressure.
The distinction between these three mechanisms has more of an analytical character; in reality,
overlaps are to be expected. Coercive isomorphism is triggered by formal and informal
pressures on the organization. The legal environment that organizations share with one another
can be seen as an essential impetus for structural adjustments and similar behavior. At the same
time, however, the dependence on other organizations (e.g. of a technical nature in suppliers in
the automotive industry) or cultural expectations in society can lead to an implementation of
certain practices or structures that is viewed as without alternative. Even if these structures
primarily have a ceremonial character, DiMaggio and Powell assume that they have an impact
on the organization. The second mechanism, isomorphism through mimesis, arises from the
uncertainty that can arise, for example, from ambiguous goals or unclear technologies. In such
situations, organizations tend to copy other organizations that are perceived as successful or
their structures and practices. This imitation, which can take place even without the knowledge
of the model organization, is what DiMaggio and Powell (1983) call modeling. It is quite
conceivable that an inadequate attempt at modeling leads to unexpected but successful side
2 North (1990) uses the abolition of slavery in the USA as an example. It was still profitable, however the societal
perception changed, and the electoral process enabled people to express their beliefs. However, the institutional
structure did not allow slave owners to influence the voters, for example by bribing them.
10
effects that lead to new innovations, which in turn stimulate imitation. Structural adjustments
that are stimulated due to mimetic processes can also serve the organization to legitimize its
practice and perform ritual functions. The authors identify normative pressure as the third
source of structural changes in organizations. Professions play an important role in this
isomorphism mechanism (DiMaggio & Powell, 1983). They generate normative pressure and
offer their members an orientation framework that develops normative ties and leads to the
preference for specific problem-solving patterns across all cases and organizations (Hasse &
Krücken, 2009). Professions are characterized by a common cognitive basis and legitimation
that grows from their professional (mostly university) qualification. In addition, members of a
profession are organized in networks that extend beyond the individual organization and are
thus conducive to the rapid spread of organizational models. DiMaggio and Powell emphasize
the importance of educational institutions as well as professional and business associations in
the formation of professional standards. The selection of personnel increases the normative
pressure on organizations, as new employees are often selected from the same industry, from
certain training institutions and with the help of certain recruitment strategies, so that career
paths are similar and almost interchangeable (DiMaggio & Powell, 1983; Erckrath, 2020).
Based on the isomorphism process, the author assumes that there will be no significant
differences between the countries, legal origin or sectors, because the best performing
companies of the countries with the highest GDP are chosen. They operate under similar
circumstances. Thus, the first hypothesises is:
Hypothesis 1a: There will not be significant differences between countries regarding
the content of CSR disclosure.
Hypothesis 1b: There will not be significant differences between legal origin regarding
the content of CSR disclosure.
Hypothesis 1c: There will not be significant differences between sectors regarding the
content of CSR disclosure.
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2.3 Institutions and Stakeholders in Code Law and Common Law Countries
Countries without a written set of rules, that follow a body of unwritten laws, which are
legal precedents established by the courts, follow the common law (Segal, 2019). Common law
focuses on “dispute resolving” (Damaška, as cited in La Porta, Lopez-de-Silanes, & Shleifer,
2008). Countries categorized as common law countries are Australia, Canada, Hong Kong,
India, New Zealand, the UK and the USA (Segal, 2019). Usually, these countries are also
shareholder oriented (Van der Laan Smith, J. et al., 2005).
If countries have a codified set of rules and the government has more regulatory power,
they are code law countries (La Porta et al., 2008). Code law can be considered as “policy
implementing” (Damaška, as cited in La Porta et al., 2008). Usually, these laws have been
developed and updated over long periods of time, some origination in Roman law (La Porta et
al., 2008). Countries considered as code law countries are European countries like France,
Germany, Italy and the Scandinavian countries, as well as Japan (Segal, 2019). These countries
normally have a stakeholder oriented approach to corporate governance (Van der Laan Smith,
J. et al., 2005).
Matten and Moon (2008) claim that CSR behavior of companies in different countries
differs, due to historically embedded national institutional frameworks. According to Carroll
(1991), CSR behavior is defined as a set of legal, economic, ethical and voluntary actions, that
affect the future financial performance of the firm, either directly or indirectly. Sethi et al.
(2017) add that an institutional framework that encourages CSR behavior of companies also
influences the disclosure of CSR reports. Companies originating from countries, with CSR
encouraging institutional frameworks, are more prone to report high quality CSR information.
Campbell (2007) presents the opinion that companies CSR behavior varies, based on the
regulatory sanctions of these institutions. Matten and Moon (2008) have found significant
differences regarding the language of CSR reporting between European and American
companies. More US companies claim CSR involvement compared to their European
counterparts.
Whitley (1999) first identified the political system, as a part of the institutional
framework. Matten and Moon (2008) identify the power of the state as a key difference between
the US and Europe. In Europe, the governments are usually more active in the economic and
social activities of the state. It is also easier for external stakeholders to influence the public
policy making processes. Regarding the financial system, the stock market is central source of
12
capital for US companies, therefore US companies need to prove accountability to their
investors. Chih et al. (2010) add that legal systems, which protect the external investors,
discourage companies to act socially irresponsible. In Europe, a small number of large
investors, mostly banks, play a key financing role. And finally, regarding the labour system,
labour unions have strong position in Europe, which made the labour issues part of the
negotiations at the national/government level, opposed to the corporate/firm level in the US.
Consequently, it could be argued that European CSR is rooted in labour law, industrial relations
and corporate governance. Following this it can be concluded, that the lack of employment
reporting in European CSR disclosers, can be linked to these countries’ institutional
frameworks, with its established laws and codified rules (Matten & Moon, 2008).
Institutional frameworks, such as the ownership structure and corporate governance
systems, influence the role stakeholders have in a society. According to Van der Laan Smith, J.
et al. (2005), the definition of the stakeholder’s role in a society affects the quality of CSR
reports. The authors claim that companies from countries with a stakeholder oriented corporate
governance system, in the article's case Norway and Denmark, provide higher quality CSR
reports, than companies located in countries with a shareholder orientation, in the article's case
the USA. Stakeholders in countries with a stakeholder orientation generally hold more power
and legitimacy, compared to countries with a shareholder orientation. This results in
management being more likely to engage and disclose CSR activities (Van der Laan Smith, J.
et al., 2005).
Sethi et al. (2017) claim that corporate governance systems and managerial decisions
on disclosure are also influenced by the legal system of a country. A common law legal regime
offers higher protection to shareholders and according to Ball et al. (2000) its accounting
practices are set in the private sector. A code law legal regime enforces the role of stakeholders
in the interaction with management and according to Ball et al. (2000) is highly influenced by
the political system. Here Ball et al. (2000) argue, that the political influence on accounting
standards weakens the quality of disclosers. The author classifies the USA, the UK, Canada and
Australia as common law countries and Germany, France and Japan as code law countries.
On the other hand, Van der Laan Smith, J. et al. (2005) claim that the ownership
structure, as found in code law countries, where ownership is more concentrated and
government ownership is present, influences the stakeholder-company relationship, increasing
the quality of CSR reports. Equally, Campbell (2007) argues that the effectiveness of state
regulations may be enhanced by stakeholder monitoring. The likelihood that corporations will
13
act in a socially responsible way is increased by the importance of stakeholders. In code law
countries, the government establishes and monitors the enforcement of national accounting
standards, usually with the help of political stakeholder groups such as labour unions. This
political influence encountered by companies, leads to a stakeholder orientated corporate
governance system. According to Ball et al. (2000) this stakeholder orientation leads to an
accounting income disclosure, influenced by the stakeholder’s immediate payouts of “dividends
to shareholders, taxes to governments, and bonuses to managers and employees” (Ball et al.,
2000, p. 3). Instead of reflecting the information needed by investors. Thus, giving managers
more space to misstate financial statements and to window dress on CSR reports, as there is
also less external independent auditing. While in common law countries the law originates from
individual actions in the private sector and following legal procedures, also regarding
accounting standards, that evolve by practice. All accounting standards arise in an accounting
market, not by the government. Typical for common law countries is the shareholder oriented
corporate governance system, where shareholders alone elect the members of the board of
directors. Compared to code law countries, members of the board will unlikely hold
concentrated blocks of stocks, so there will be more monitoring of the management by external
equity and debt markets. Thus, the immediate payouts influence the accounting income
disclosure less, increasing the overall quality of the firm’s annual disclosure (Ball et al., 2000).
Campbell (2007) presents a counter argument to Ball et al. (2000), that the concentrated
blocks, of stocks which are held by banks and other financial institutions, result in a higher
accountability of the management to shareholders. In common law countries stock ownership
is a lot more diffused, there is much less holding of concentrated blocks of stocks by financial
institutions, resulting in less consultations with the management. This gives the management
more decision-making autonomy and less accountability to investors. Additionally, the
maximization of profit and shareholder value present in common law countries, prevents
companies from acting in socially responsible ways. Matten and Moon (2008) present some
reasons why the quality of CSR disclosures might seem better in common law countries. The
authors claim that companies in code law countries act in accordance with set laws and ethics,
but do not claim ownership and authorship of these CSR actions thus not disclosing them. Their
actions are considered as reflections of the institutional environments they are embedded in.
Fernandez-Feijoo et al. (2014) observed similar behaviour in the countries of northern Europe,
they categorized their behaviour as cautious. Companies with cautious behaviour do not
disclose in depth however they do include credibility tools. Companies in common law
14
countries perceive their CSR actions as voluntary, deliberate and strategic decisions, thus
disclosing them in their CSR reports (Matten and Moon, 2008). Contrariwise, Gallego-Álvarez
and Quina-Custodio (2017) found companies headquartered in code law countries to disclose
more information. These companies were also more likely to report on stakeholder issues.
The findings from Chih et al. (2010) support the arguments presented by Campbell
(2007), Matten and Moon (2008) and Van der Laan Smith, J. et al. (2005) and disclaim the
arguments presented by Ball et al. (2000). By analysing 2.500 companies from the Dow Jones
World Index, they showed that companies in countries with a strong legal framework
enforcement, participate in more CSR activities and that companies in countries with a
shareholder orientation conduct and report less CSR activities. The reason for this is, that
countries with greater shareholder protection will be led towards maximizing the shareholders
welfare on the expanse of all the other stakeholders.
Chih et al. (2010) findings also argue against the claims of La Porta, Lopez-de-Silanes,
Shleifer, and Vishny (1997), which focused on the positive impact of shareholder protection
rights. La Porta et al. (1997) argue that common law countries protect shareholders and creditors
the most from the expropriation of the management, while the code law, especially French code
law countries the least. The authors linked that with the fact, that code law countries have
smaller equity markets and lower access to equity finance, making them have highly
concentrated ownerships of stocks. As already mentioned, Ball et al. (2000) link this high
concentration of stock with lower quality annual disclosure information.
On the other hand, the findings presented by Sethi et al. (2017) support Ball et al.’s
(2000) argument that a shareholder orientation leads to a demand from the investors for high
quality information, contrary to the authors’ expectations. The statistical analysis of 104 firms’
CSR reports showed that common law countries presented higher quality CSR disclosures,
compared to companies situated in code law countries.
Based on the literature presented above, the following hypothesis was formed:
Hypothesis 2: Companies headquartered in code law countries will publish more in-
depth CSR disclosure.
A table containing the main themes of the articles can be found in the Appendix A.
15
3 Research Design
This thesis is based on the deductive approach, as the hypothesises were derived from
existing theory and will be empirically tested with the collected data. The mixed methods
approach was chosen. The content analysis of the CSR reports is qualitative, while the following
empirical testing is quantitative. The legal origin of a company is determined by its headquarter.
The legal origin is the independent variable and the dependent variable is the content of the
CSR disclosure. The research design was based on Sanders et al. (2016) who explain that data
collection and analysis based on numerical data are linked to the quantitative research design.
The study itself is explanatory, because the aim is to explain the relationship between two
variables.
First, the following chapter will explain the methods used for sampling and data
collection. And give some more background information about the institutional setting of the
chosen countries. Afterwards the methods used for disclosure assessment are explained, the
development of the scoring index, the method for the content analysis and the statistical
methods.
3.1 Sampling & Data Collection Method
The data was collected from listed companies of different countries in the chemical and
automotive sectors. The author chose these sectors, because previous research (Chih et al.,
2010; Sethi et al., 2017) focused on the financial sector and the author wanted to take a different
approach and add further to the research body. Both sectors have a high impact on the
environment, because they are responsible for a large part of the usage of resources and generate
a lot of waste (OECD, 2009; Brammer & Millington, 2005). The chemical sector is perceived
as one of the sectors with a high environmental impact (Brammer & Millington, 2005).
Furthermore, both sectors are similar and part of the producing industry.
Listed firms were chosen, because they have a greater impact on the stakeholders.
Furthermore, findings from Sethi et al. (2017) show the significance of firm size and to it related
features, such as media attention and public visibility, on their CSR disclosure practices.
Unsurprisingly, larger firms have more public visibility and attract more media attention. This
makes them subject to both higher public and regulatory pressures. Also, listed companies are
16
usually subject to higher regulatory standards hence, they have to disclose more information.
To homogenize the sample, the author decided to select companies with a similar setting. Also,
a lot of small enterprises do not publish CSR reports.
The sampling technique is non-probability sampling and using the purposive sampling
technique. The countries are selected based on their gross domestic product (GDP) and weather
they are classified as code law or common law countries. For each legal system the top four
countries were chosen. The data was retrieved from “worldometers.com,” The countries with
the highest GDP are chosen, as it is a measure for the economic performance of a country,
therefore ensuring comparability. The chosen common law countries are, the United States,
India, the United Kingdom and Canada. The code law countries are China, Japan, Germany and
France3.
For each country and sector, the author planned to choose the three listed companies
with the highest revenue. Thus, the author planned to analyse at least 48 companies. If one
company did not publish a CSR report or an integrated report or it was not available anymore,
the author excluded it from the study and replaced it with the company with the next highest
revenue. The author gathered the data about the revenue from various articles and websites:
Gerginov, 2018; Tullo, 2019; “Fortune 500,” 2018a; “Fortune India,”; “Global 500,” 2018b.
The author was only able to gather and analyse 45 reports, because several companies
did not publish CSR reports in English and the author could not find replacement companies.
11 of these reports are integrated reports and 34 reports are stand-alone reports. The number of
45 reports is appropriate for a master thesis, because Sethi et al. (2017), using a similar
approach, analysed 104 reports and Clarkson, Li, Richardson, and Vasvari (2008), who only
analysed environmental factors, analysed 191 reports.
The overview of the companies, including the excluded companies, the report name and the
GRI standard can be found in Appendix B.
The thesis relies on secondary data in form of stand-alone CSR reports or integrated
CSR reports from selected companies. The reports were acquired from the company websites.
The research period is 2018, as not all companies have published the reports for 2019, yet. For
3 The author chose to exclude Brazil, because the legal system cannot be categorized as purely code law or common
law, as a change in 2015 included common law elements into the system (Serec and Barbuto Neto (2018).
17
companies, that report based on the fiscal year, the reporting period is the fiscal year 2019. This
way the reporting period overlaps by nine months instead of three, moreover the reports were
usually published around the same time. The data collection strategy is based on digitalized
secondary data (Sanders et al., 2016). The use of secondary data is not a limitation in this study,
as the source of the secondary data, the CSR report, is the subject of the study.
3.1.1 Different Institutional Settings
This chapter shows which countries have regulations or laws in place related to the scoring
criteria. Table 1 is an overview whether a country has laws regulating the emissions, a women-
in-management-positions-quota or a disability-quota. The “X” indicates that the country does
have a law related to the issue, while a “–“ shows it does not. Some, not all, states in the USA
have a quota for women in management positions, hence it says partly in the table. All countries
are part of the Paris Agreement and have regulations for emissions in place. The last column
shows how many companies of the sample reported in accordance with the GRI-Standards and
on which level. These regulations will be used to evaluate, if institutional regulations do have
an impact on reporting behaviour.
Table 1 Overviews of Laws & GRI Standards Accordance (source: retrieved from European Commission, 1999; Onishi, 2016;
Takahashi & Cislo, 2017; Tödtmann, 2018; Landeszentrale für politische Bildung Baden-Würrtemberg, 2020; UNFCCC,
2020)
18
* the UK and Japan do not have a quota, but it is necessary to report on the issue
It is notable, that Canada differs from the other countries of the sample, because there are no
Canadian car brands. Their biggest company from the automotive sector (Magna International)
supplies automotive parts to bigger companies from other countries (e.g. Volkswagen, BMW,
General Motor, Ford). However, they have the fifth highest revenue of Canadian companies.
Country
Legal
Origin Emissions
Women in
Management
Positions
Quota
Disability-
Quota GRI-Standard
USA Common
Law X partly -
2x GRI
referenced
2x core
2x comprehensive
India Common
Law X X X
2x GRI
referenced
3x core
1x comprehensive
UK Common
Law X -* -
1x Non GRI
2x GRI
referenced
2x core
1x comprehensive
Canada Common
Law X - -
4x Non GRI
1x GRI
referenced
China Code Law X - X
2x Non GRI
3x GRI
referenced
Germany Code Law X X X
1x GRI
referenced
5x comprehensive
Japan Code Law X -* X
2x Non GRI
2x GRI
referenced
1x core
1x comprehensive
France Code Law X X X
3x GRI
referenced
3x core
19
3.2 Disclosure Assessment Method
The following sub-chapters explain, how the scoring index is structured and how the
content analysis and the statistical analysis were conducted.
3.2.1 Scoring Index
The scoring index used in this research, is based on the scoring indexes of Clarkson et
al. (2008) and Ong (2016) and the GRI G4 guidelines. Clarkson et al. (2008) developed a
scoring index for the environmental performance indicators, based on the GRI G2 guidelines.
They categorised the disclosed information into hard and soft items. Hard disclosure items
represent the actual commitments of the company and are difficult to be mimicked by poor
performers, thus they are rewarded with higher scores. Soft disclosure items can be easily
mimicked by low performing companies and are ascribed lower scores. Soft disclosure items
were for example the company’s vision or environmental strategy. Ong (2016) developed
Clarkson et al.’s (2008) scoring index further, to also include the social dimension and the
disclosure on the management approach.
Based on these indexes, soft disclosure items will be awarded either a score of 1
(present) or 0 (absent), while the scores for hard disclosure items will range between 0 and 5.
For hard disclosure items, a point is awarded for each of the scoring criteria (detailed
explanation of scoring criteria in Appendix C):
• Performance data is presented;
• Performance is presented relative to previous periods (trend analysis);
• Performance data is presented relative to targets;
• Performance data is presented both in absolute and normalised form; and
• Performance data is presented at a disaggregated level.
Substantive CSR actions can be measured with the hard disclosure items, while symbolic
CSR actions can be measured with soft disclosure items. Therefore, a high score will indicate
in-depth disclosure.
Figure 1 shows a shortened version of the scoring index, with one emission disclosure
criteria. In each category, environmental and social, the company can score 50 points. These
20
scores are based on the scores of the sub-categories, emissions and water; and employment and
occupational health and safety, which have the possible scores of either 30 or 20 points.
The complete scoring index with the individual criteria for each category can be found in
Appendix D. Appendix D also includes further explanation about the scoring criteria for the
hard disclosure items and a detailed explanation about the differences between the scoring index
used in this research and Clarkson et al.’s (2008) and Ong’s (2016) scoring indexes.
Figure 1 Shortened Scoring Index
Economic factors were not examined, as only the best performing companies were
chosen. Thus, the author assumes the economic foundation for CSR activities is given.
As environmental factors, emissions and water management are chosen. Emissions are
chosen, because they are an important factor for global warming. Water management is chosen,
because water is becoming a scare resource and water overuse is a concern. Moreover, the
automotive and the chemical sector are both producing industries. The industrial sector was
Detailed Scoring Index
Hard Disclosure Items
Environmental
GRI
Standard
(if
applicable)
Data
Present
Relative
to
Previous
Period
Relative
to
Targets
Absolute
and
Normalis
ed Form
At
Disaggre
gate
Level
Min-Max
Score (0-
6)
Emissions (max. Score 30) 0
Total direct greenhouse gas (GHG) emissions by weight
(Scope 1) / total GHG emissions305-1 0
Water (max. Score 20) 0
Employement (max. Score 30) 0
Occupational Health and Safety (max. score 20) 0
Soft Disclosure Items
Min-Max
Score (0-
1)
Vision and Strategy (max. Score 2) 0
Management Approach (max. Score 4) 0
Social
21
responsible for 21% of the global greenhouse gas emissions in 2010, not including the
emissions generated by their electricity use (Edenhofer et al., 2014). According to the
International Energy Agency (2020), if you relocate the electricity and heat, the industry
produces approximately 39% of the global CO2 emissions.
The chosen social factors are employment and occupational health and safety.
Employment was chosen, because different countries have laws in place regarding some of the
chosen criteria (e.g. minimum disability quota). Occupational health and safety is chosen as the
manufacturing sector is more prone to accidents. Furthermore, the data that is collected is
numerical.
The measure is reliable, as the criteria for the hard measures relies on numerical data
and does not leave room for interpretation. A possible problem is human error, the author may
overlook information. To further increase the validity of the research, a qualified research
assistant (MSc. in Business Studies) analysed a sample of eight the reports. The results varied
by maximum 2 points.
3.2.2 Content Analysis Method
To analyse the CSR reports a content analysis is conducted. Content analysis is a
common technique used in analysing company reports and the extent of their sustainability
disclosures (Gray, Kouhy, & Lavers, 1995; Guthrie & Abeysekera, 2006; Steenkamp &
Northcott, 2007; Ong, 2016).
Because content analysis is a research technique, it is expected to be reliable and to bring
valid results. Therefore, the results should be replicable. The research is replicable, if another
researcher, who uses the same technique and data, comes to the same results (Krippendorff,
2019; Ong, 2016).
The content analysis was done by awarding scores for sustainability information
disclosed in the integrated reports or the sustainability reports. The scores are based on the
developed scoring index explained in the previous chapter. To ensure consistency during the
scoring process there are comprehensive guidelines.
The content analysis was done by reading the reports. To identify relevant parts the
search word feature was used. Based on the GRI G4 standards and by analysing one example
report, a template of phrases and key words to identify relevant sections in the CSR reports was
22
developed. The report used to develop the template is the CSR report of Groupe PSA, because
its 2019 version is ranked first by the CSR-Sustainability Monitor. The CSR-Sustainability
Monitor is a tool created by Baruch College's Weissman Center for International Business to
analyse and rank CSR reports. The CSR-Sustainability-Monitor measures the scope and quality
of the information published in the CSR reports (Baruch College's Weissman Center for
International Business, 2020).
To avoid the bias of a single researcher, the research assistant also developed a list
search words. Both lists were tested on a sample of 6 reports. The reports were chosen by
random sampling. However, the researcher ensured that the reports, used for testing the search
words, were from different countries, that there were three reports for each sector and legal
origin. The differences were reviewed by the researcher and the research assistant and the
search words adapted accordingly. When using the search word feature the researcher used the
word stem of the words, in order to receive all possible variations of the word. E.g. “disab-“ to
get results like disability or disabled; or to get the singular and the plural. The complete list of
search words can be found in Appendix E, as well as the table of the sample reports.
Examples for the search words for the first emission criterion are: “emission”, “indirect
emissions”, “scope 1”.
For a better understanding of the content analysis and the scoring method, it will be
explained with the example of the of the CSR report of the Groupe PSA on the first emission
criterion, which can be seen in figure 2. The data was gathered by reading the report and using
the search word feature to identify relevant passages.
PSA published the total amount of the direct GHG emissions, and therefor got one point for the
first scoring criterion, data presented (see figure 2, number 1).
They also published the data of the previous year(s), therefore they also get one point for the
second scoring criterion, relative to pervious period (see figure 2, number 2).
23
Figure 2 Extraxt 1 CSR Report Groupe PSA (PSA Groupe, 2018, p. 208)
PSA compares the results of 2018 with the targets set for 2018, so they also score one point for
compared to targets (see figure 3).
Figure 3 Extract 2 CSR Report Groupe PSA (PSA Groupe, 2018, p. 193)
24
They also calculated and published the emissions emitted in relation to one car produced, so
they published the raw data and also presented it in ratio (see figure 4, number 4).
Figure 4 Extract 3 CSR Report Groupe PSA (PSA Groupe, 2018, p. 209)
The also presented the data at a disaggregate level, e.g. by showing the emissions based on the
business segment, automotive division and automotive trade (see figure 2, number 5). Another
example here would be the separation by geographical data:
“The geographical breakdown of direct greenhouse gas emissions in 2018 was as
follows: 97.1% for the European Union and 2.9% for the rest of the world.”
(PSA Groupe, 2018, p. 209)
So, the score for the first emission criteria is 5/5 points. There are six emission criteria in total,
thus the maximum score of the emission category is 30 points.
25
Table 2 shows the descriptive statistics for all the scores, including the minimum and maximum
score, the mean and the standard deviation.
Table 2 All Score Results
N Minimum Maximum Mean Std. Deviation
Total_Score 45 6 72 39,18 15,323
Environmental_Score 45 0 34 17,40 8,231
Social_Score 45 1 32 15,24 8,389
Emission_Score 45 0 21 11,84 5,681
Water_Score 45 0 13 6,11 3,157
Employment_Score 45 0 22 9,51 5,907
Safety_Score 45 0 12 6,04 3,323
3.2.3 Statistical Method
The data collected from the sample was imported into the statistical analysis software
IBM SPSS statistics 24. The chosen significance level is α = 0,05.
The correlation between the score variables and the law variable was calculated. The
Spearman’s rho and the Kendalls tau-b correlation were calculated. They are both recognized
methods for calculation rank correlation. Spearman’ rho considers the exact rank position and
looks at the absolute deviations of the two rank positions. Kendalls tau-b counts how often the
rankings contradict each other, by dividing them into concordant and discordant pairs (Capéraà
& Genest, 1993). Feidel (2019) says there should be hardly any discrepancies between
Spearman’s rho and Kendall’s tau-b. However, Allen and Bennet (2012 p. 279) state that the
Kendall’s tau-b coefficient is considered to be more rigorous than the Spearman’s rho
coefficient, because “it tends to provide a better estimate of the true population correlation, and
is not artificially inflated by multiple tied ranks” (Ong, 2016). However, correlation results can
be misleading if there is another confounding variable that is numerically related. Hence, the
partial correlation was also calculated for the legal origin and the total score with the industry
type as control variable. Common law countries were coded as “0”, while code law countries
were coded as “1”.
ANOVA tests were used to determine if there are significant differences in the reporting
behaviour on the country level, based on the legal origin and the industry. An ANOVA
measures the influence of qualitative factors on a quantitative factor, based on the sample. The
ANOVA tests the influence of a nominal-scaled variable on an interval-scaled variable, by
26
comparing the means of the dependant and independent variables (Wewel, 2014). In this case,
the qualitative, nominal-scaled variable, are the countries, legal origin or the industry while the
scores are the quantitative interval-scaled variables. Because the ANOVA only shows if there
is a difference between groups, it is necessary for the country test (because there are more than
two groups) to apply a post hoc test, to determine the exact differences. The tukey-test was
chosen, because it is one of the most widely used tests and the variance of the sample was
homogeneous. The test compares each group to all other groups to determine where the
statistically significant difference is.
The two-sample t-test was used a robustness test, for the results of the legal origin. The
t-test is a hypothesis test which uses the arithmetic mean of two independent samples. It
compares whether the differences of means between the two samples are statistically significant
or not.
3.3 Limitations
Based on the institutional theory, the author speculates that the results can be applied to
companies of similar size in similar settings, e.g. the textile sector.
But, the findings of the study cannot be positively statistically generalized as the study
only focuses on listed companies from countries with a high GDP and only includes two
manufacturing sectors. Previous studies (Van der Laan Smith, J. et al., 2005; Fernandez-Feijoo
et al., 2014; Sethi et al., 2017) suggest that the company size influences the quality and therefore
the content of CSR reports. Therefore, the results cannot be generalized for smaller companies.
Also, through the usage of the content analysis method, the study itself is not objective. The
author tried to resolve this issue by including a research assistant, however it is still an important
limitation.
27
4 Results
Some of the descriptive results are presented first, to get a better understanding of the
data and the results. Table 3 shows the mean and standard deviation of the different countries
for the total score. Japan has the highest score, but it is interesting that the three European
Countries are next. The country with the lowest score is Canada.
Table 3 Results for the Total Score based on Countries
N Mean Std. Deviation Minimum Maximum
Total_Score USA 6 32,67 9,893 17 42
India 6 36,67 10,113 26 52
UK 5 47,40 11,929 31 59
Canada 5 20,60 12,219 6 37
China 5 36,60 14,826 16 56
Germany 6 43,00 14,283 20 57
Japan 6 48,67 13,307 28 64
France 6 45,67 20,539 10 72
Total 45 39,18 15,323 6 72
In SPSS the skewness was analysed first, in order to see the distribution of the values.
The skewness is a measure of asymmetry in a frequency distribution. To see whether the
skewness varied from the normal distribution the measure of the skewness was divided by its
standard error. If the z-value is 1,96 or more, it is statistically significant at the 95% or 0,05
two-tailed level (Cramer & Howitt, 2004). The results of the z-value for all the scores were <
1,96 and therefore the skewness is not statistically significant, all statistical results can be found
in Appendix F.
To ensure that the distribution of the data is not statistically different compared to the
normal distribution the Kolmogorov-Smirnov and the Shapiro-Wilk test were performed. The
test compares the variables of the sample to a normally distributed set of scores with the same
standard deviation and mean. If the test result is significant with a p-value > 0,05, the
distribution of the sample is not significantly different from a normal distribution. Therefore, if
the p-value is < 0,05, the distribution of the sample does not follow a normal distribution. If the
sample size is small, the Shapiro-Wilk test is considered to be more appropriate (Ong, 2016).
28
Besides the occupational health and safety category, all categories have a p-value > 0,05. Thus,
they follow a normal distribution.
All three correlation tests showed a positive relationship between the legal origin and
the total score. The Kendall's tau-b was 0,265, the Spearman's rho was 0,319 and the partial
correlation with the industry as control variable was 0,310. The partial correlation showed that
there was no co-variation between the variables, thus the results of the Kendall's tau-b and
Spearman's rho are valid and there is a positive relationship between the legal origin and the
total score.
The ANOVA was first run, to see if there are significant differences in reporting
behaviour among the countries. If the significance value is smaller than 0,05 the null hypothesis
will be rejected.
H0: µ1 = µ2 There is no difference between the scores of the countries.
H1: µ1 ≠ µ2 There is a difference between the scores of the countries.
Table 4 ANOVA Results Countries
Mean Std. Deviation F Sig.
Total Score 39,18 15,323 2,448 ,036
Environmental Score 17,40 8,231 2,284 ,049
Social Score 15,24 8,389 3,499 ,006
Emission Score 11,84 5,681 2,511 ,032
Water Score 6,11 3,157 1,991 ,083
Employment Score 9,51 5,907 4,277 ,002
Safety Score 6,04 3,323 2,336 ,044
Note: bold face is significant at the 5% level
The null hypothesis was rejected for the total score, environmental score, social score, emission
score, employment score and the health and safety score. There is at least one difference among
the countries. The null hypothesis was accepted for the water score, thus there is no difference
between the countries for this score.
29
The post hoc test showed that the differences for the environmental score, emission score and
health and safety score were not significant at the chosen significance level α = 0,05. And
therefore, the null hypothesis is accepted.
However, Japan scored significantly higher than Canada for the total score (p<0,035). For the
social score Japan (p<0,038) and France (p<0,013) scored significantly higher compared to
Canada. And for the employment score Japan scored significantly higher than the USA
(p<0,013) and also compared to Canada (p<0,005). Also, France scored significantly higher
than Canada (p<0,014). There was no statistically significant difference between all the
remaining countries for all scores. Therefore, the null hypothesis is rejected for these scores.
Since all the higher scoring countries are code law countries, the next ANOVA run was
to identify if there are statistically significant differences between the legal origin.
H0: µ1 = µ2 There is no difference between the scores of code law and common law
countries.
H1: µ1 ≠ µ2 There is a difference between the scores of code law and common law
countries.
Table 5 ANOVA Results Legal Origin
Mean Std. Deviation F Sig.
Total Score
Common Law (n=22) 34,36
13,824 4,596 ,038
Code Law (n=23) 43,78
15,550
Environmental Score
Common Law (n=22) 16,09 8,223 1,091 ,302
Code Law (n=23) 18,65 8,222
Social Score
Common Law (n=22) 10,86 5,858 15,646 ,000
Code Law (n=23) 19,43 8,393
Emission Score
Common Law (n=22) 11,14 5,258 ,664 ,420
Code Law (n=23) 12,52 6,097
Water Score
Common Law (n=22) 5,95 3,062 ,104 ,749
Code Law (n=23) 6,26 3,306
30
Employment Score
Common Law (n=22) 6,18 3,996 19,388 ,000
Code Law (n=23) 12,70 5,732
Safety Score
Common Law (n=22) 5,41 2,789 1,595 ,213
Code Law (n=23) 5,65 3,725
Note: bold face is significant at the 5% level
The results of the ANOVA show that there are statistical significant differences between code
law and common law countries for three of the scores: the total score (p<0,038), the social score
(p<0,0001) and the employment score (p<0,0001). Therefore, the null hypothesis is rejected for
these three scores and accepted for the remaining scores (environmental score, the emission
score, the water score, health and safety score). It is noticeable that the code law countries score
higher in all categories, while the standard deviation is rather similar.
Lastly, the ANOVA was run for the sectors and the hypothesis were:
H0: µ1 = µ2 There is no difference between the scores of the chemical and the
automotive sector.
H1: µ1 ≠ µ2 There is a difference between the scores of the chemical and the automotive
sector.
Table 6 ANOVA Results Sectors
Mean Std. Deviation F Sig.
Total Score
Chemical Sector (n=24) 37,92 14,179 ,343 ,561
Automotive Sector (n=21) 40,62 16,770
Environmental Score
Chemical Sector (n=24) 16,38 7,282 ,794 ,378
Automotive Sector (n=21) 18,57 9,239
Social Score
Chemical Sector (n=24) 14,25 7,985 ,718 ,401
Automotive Sector (n=21) 16,38 8,885
Emission Score
Chemical Sector (n=24) 11,54 5,493 ,143 ,707
Automotive Sector (n=21) 12,19 6,005
31
Water Score
Chemical Sector (n=24) 5,88 2,193 ,283 ,597
Automotive Sector (n=21) 6,38 4,031
Employment Score
Chemical Sector (n=24) 8,38 5,182 1,943 ,170
Automotive Sector (n=21) 10,81 6,524
Safety Score
Chemical Sector (n=24) 6,46 3,501 ,794 ,378
Automotive Sector (n=21) 5,57 3,124
The null hypothesis was accepted for all scores, as the p-value is > 0,05.
To test the robustness of the results related to the differences in scores from code law
and common law countries, a t-test was conducted. The results of the t-test (which can be found
in Appendix F) show, that the scores are significantly different for the total score, the social
score and the employment score. The null hypothesis is rejected for these three scores and the
results confirm all the results of the ANOVA.
Table 7 provides an overview which hypothesises were accepted and rejected.
Table 7 Overwiev of the accepted and rejected null hypothesis
Score /
Hypothesis Total Score
Environm
ental
Score
Social Score Emissions
Score
Water
Score
Employment
Score
Health
and
Safety
Score
There is no
difference
between the
scores of the
countries.
Rejected:
Japan >
Canada
Accepted
Rejected:
Japan >
Canada
France >
Canada
Accepted Accepted
Rejected:
Japan > USA
Japan > Canada
France > Canada
Accepted
There is no
difference
between the
scores of code
law and
common law
countries.
Rejected:
Code law >
common law
Accepted
Rejected:
Code law >
common law
Accepted Accepted
Rejected:
Code law >
common law
Accepted
There is no
difference
between the
scores of the
chemical and
the automotive
sector.
Accepted Accepted Accepted Accepted Accepted Accepted Accepted
32
To further analyse the data, another ANOVA was run to see if the application of the
GRI-Standards influences the content of CSR reporting.
Table 8 ANOVA Results GRI-Standards
Mean Std. Deviation F Sig.
Total Score 39,18 15,323 3,043 ,039
Environmental Score 17,40 8,231 4,471 ,008
Social Score 15,24 8,389 1,716 0,179
Emission Score 11,84 5,681 3,538 0,023
Water Score 6,11 3,157 3,152 0,035
Employment Score 9,51 5,907 1,153 0,339
Safety Score 6,04 3,323 1,564 ,213
Note: bold face is significant at the 5% level
The ANOVA showed significant differences for the total score, environmental score, emission
score and water score. For the social score, the employment score and the health and safety
score there are no difference among these scores regarding the application of the GRI-
Standards.
The post hoc test showed that the differences for the total score were not significant at the
chosen significance level α = 0,05. And therefore, there are no significant differences.
However, for the environmental score in “in accordance – core” (p<0,026) and “in accordance
– comprehensive” (p<0,028) scored significantly higher compared to “non GRI”. “In
accordance – core” scored significantly higher than “non GRI” for the emission score
(p<0,035). And for the water score “in accordance – core” also scored significantly higher than
“non GRI” (p<0,040). Thus, there are significant differences for the environmental score, the
emission score and the water score.
Because Canada scored significantly lower than other countries, another ANOVA was
run excluding Canada from the common law countries. As previously mentioned, Canada
stands out from the sample, because it does not have a large automotive industry or their own
car brand. The author wants to ensure that these factors do not influence the results.
33
Table 9 ANOVA Results Legal Origin excl. Canada
Mean Std. Deviation F Sig.
Total Score
Common Law (n=17) 38,41 11,700 1,427 ,240
Code Law (n=23) 43,78 15,550
Environmental Score
Common Law (n=17) 18,00 7,738 ,065 ,801
Code Law (n=23) 18,65 8,222
Social Score
Common Law (n=17) 12,18 5,626 9,517 ,004
Code Law (n=23) 19,43 8,393
Emission Score
Common Law (n=17) 12,47 4,611 ,001 ,977
Code Law (n=23) 12,52 6,097
Water Score
Common Law (n=17) 6,82 2,721 ,328 ,570
Code Law (n=23) 6,26 3,306
Employment Score
Common Law (n=17) 7,00 3,984 12,335 ,001
Code Law (n=23) 12,70 5,732
Safety Score
Common Law (n=17) 6,12 2,571 ,258 ,614
Code Law (n=23) 6,65 3,725
Note: bold face is significant at the 5% level
The results show that only the social score and the employment score are statistically different.
This is a variation of the first ANOVA run regarding the legal origin. While there are still
differences, they do not affect the total score anymore.
34
It is interesting that the three European countries were under the four best scoring
countries. The UK was the country with the second highest score, although it is common law
country. Hence, an ANOVA was conducted for only the European countries, the UK, Germany
and France. The results showed that there were no significant differences between the scores of
the European countries.
Table 10 ANOVA Results Legal Origin of European Countries
Mean Std. Deviation F Sig.
Total Score
Common Law (n=1) 47,40 11,929 ,134 ,720
Code Law (n=2) 44,33 16,924
Environmental Score
Common Law (n=1) 24,60 7,635 1,516 ,237
Code Law (n=2) 19,25 8,346
Social Score
Common Law (n=1) 16,80 5,495 ,402 ,535
Code Law (n=2) 19,67 9,345
Emission Score
Common Law (n=1) 16,40 3,507 ,612 ,446
Code Law (n=2) 14,08 6,142
Water Score
Common Law (n=1) 8,20 4,207 1,974 ,180
Code Law (n=2) 5,42 3,528
Employment Score
Common Law (n=1) 8,60 3,507 2,231 ,156
Code Law (n=2) 12,92 5,977
Safety Score
Common Law (n=1) 8,20 3,421 ,693 ,418
Code Law (n=2) 6,58 3,728
35
5 Discussion
After presenting the study results in the previous chapter, this chapter discusses the
findings, in comparison to the studies theoretical framework. The results will be discussed first
on the country level, then based on the legal origin and lastly regarding the sectors.
The descriptive statistics regarding the scores of the countries shown in table 3, report
that the total scores ranges from 6 to 72, with an average score of 39,18. The wide range of
scores and the high standard variation of 15,323 indicate a lack of consensus in CSR reporting.
This further highlights the absence of a standardised sustainability reporting framework as an
issue, especially since Sethi et al. (2017) reported similar results for the financial sector.
The results of the GRI-ANOVA support the institutional theory, because reporting with
the application of the GRI-Standards lead to significantly higher results for the environmental
score and its sub-scores. Hence, the institutional pressure leads to better disclosure. However,
code law countries do not necessarily apply higher GRI-standards than common law countries.
5.1 Country Level
Comparing the results of the country ANOVA with the descriptive statistics, it is not
surprising that Japan scored higher than Canada and the USA. Japan had the highest mean total
score of all the countries, while Canada and the USA scored the lowest. France had the third
highest mean, with the UK scoring the second highest, therefore it is interesting that there were
statistically significant differences between France and Canada, but not Canada and the UK.
Based on the results H1a was overall rejected. However, there were no significant
differences between every score and every country. H1a was rejected for the total score for
Japan and Canada, for the social score for Japan, France and Canada and for the employment
score for Japan, France, Canada and the USA.
The results of the environmental score and its sub-scores support the isomorphism
theory, because there are not statistically significant differences among countries. As previously
mentioned, all countries are part of the Paris Agreement and have regulations to reduce
emissions in place. This can be seen as coercive isomorphism (DiMaggio & Powell, 1983)
which is triggered by formal (and informal) pressure on the companies. In this case, all the
companies operate in a legal environment, which is affected by the Paris Agreement. This
shared environment leads to structural adjustments and similar behaviour. Thus, the companies
36
disclose more information related to the environmental issues. Based on North (1990) the author
argues that the changes in the environmental politics have occurred through a change of taste.
The awareness regarding climate change and its issues has increased globally and influenced
the institutions. It is fair to assume that the voters elected politicians or put pressure on
politicians to regulate the emissions, especially since this does not affect the voters as
individuals directly, therefore there is no cost for them.
5.2 Legal Origin
As previously mentioned in the chapter 4, code law countries scored higher than
common law countries for every score. H2 is accepted, because the differences in mean for the
total score were statistically significant. The mean of the code law countries was 9,42 points
higher, compared to the common law countries. The ANOVA also showed significant
differences between code law and common law countries for the social score and its sub-scores.
Because H2 is accepted, logically H1b is rejected.
The findings support the statement of Van der Laan Smith, J. et al. (2005) that the quality
of CSR reporting is better in stakeholder-oriented countries. The results of Chih et al. (2010)
and Gallego-Álvarez and Quina-Custodio (2017) corroborate the findings of this study. Both
found companies headquartered in countries with a strong legal framework enforcement, to
disclose more information. Examples for the strong legal framework are the disability-quota
and the women-in-management-positions-quota. All code law countries have a disability-quota,
while only one common law country (India) has a disability-quota. Only two of the code law
countries have women-in-management-positions-quota and the country with the highest
employment score (which both disclosure scores are part of) is Japan, which does not have a
women-in-management-positions-quota. It is mandatory in Japan to report on women in
management positions, henceforth there is still a strong legal framework. The findings of the
employment score also contradict Matten and Moon’s (2008) statement that there is a lack of
employment reporting in code law countries. The mean of the social score of code law countries
was 8,57 points higher compared to the mean of common law countries and statistically
significant for all conducted ANOVAs. Overall, these results support Cambell’s (2007)
argument, that state regulations, the importance of stakeholders and monitoring improve CSR
behaviour of companies. In this case, the women and people with disabilities became important
stakeholders and their interests are therefore included in the reports.
37
When conducting an ANOVA for only the European countries, there is no significant
difference in means between the code law and common law countries. This could mean that the
institutional framework is similar, even though there are different legal systems. Which seems
very plausible, because the European economy is tight-knit. This could also explain, why the
UK generally scores high. The similarities in the reporting behaviour could be explained by
isomorphism through mimesis, where companies copy organisations that are perceived as
successful. For instance, automotive companies could try to copy the behaviour of the PSA
Group, because their report is mentioned to be one of the best, in order to compete for the
stakeholders’ favour. However, the more logical explanation is, that the same level of disclosure
is actually related to the European Union Directive 2014/95/EU, also called the non-financial
reporting directive, which requires large firms to disclose of non-financial and diversity
information since 2018 (European Parliament, 2014). Thus, it is coercive isomorphism, caused
by formal pressure. The author argues that the European Union Directive 2014/95/EU
represents law making practices that are conform with the code law system rather than the
common law system. Hence, the UK is subjected to higher regulatory standards compared to
other common law countries. This could also explain, why the mean of the total score from the
UK is the second highest after Japan.
It is notable, that Canada has the lowest mean for every score. It is fair to assume that
Canada drags down the average of the common law countries. When excluding Canada from
the ANOVA, only the social score and the employment score were statistically different. On
one hand, one can theorise that Canada has the weakest legal framework enforcement, which
leads to these bad scores. A supporting argument is that there are no quotas for women or
disabled people, which leads to a low importance of these stakeholders and thus to low
disclosure. Moreover, Canadian companies used the GRI-Framework the least, which could be
another explanation for the low scores. On the other hand, Canada has no car brand and the
two sample companies are significantly smaller compared to the big car brands, like Toyota,
Volkswagen or Ford. So, size could be an issue as well. Sethi et al.’s (2017) findings showed
that there was a significant relationship between the firm size and its related features, like media
attention and public visibility, on the disclosure behaviour. It is difficult to judge if that is a reason
here, because Magna International, the company with by far the lowest score, is the company
with the fifth highest revenue in Canada, thus it should get media attention and public visibility
in the country. Furthermore, other companies with a similar revenue scored a lot higher, e.g.
the Zhejiang Geely Holding Group and Jardine Matheson from China. The companies are also
38
not the top performing companies of China’s automotive industry, but the sixth and seventh,
thus they should be less important to the public and receive less media attention in China
compared to Magna International in Canada. Globally, it is fair to state that Canada receives
less media attention compared to China, the reason could be the differences in the GDP, China’s
GDP is about 7,5 times higher than Canadas’ GDP. Hence, media attention could play a role
after all. It is not possible to identify which factor, the weak legal framework or the company
type, is responsible for Canada’s low score.
5.3 Sectors
The results of the ANOVA regarding the sector show no statistically significant
differences among the automotive and the chemical sector. Thus, H1c is accepted. Both sectors
are seen as highly polluting, generating a lot of waste and having a huge impact on the
environment. They are also both producing industries. That their scores do not vary establishes
further, that companies operating in a similar environment behave similar.
39
6 Conclusion
The aim of this research was to determine if the content of CSR disclosure varies
between code law and common law countries. The focus of this study were the top performing
countries (based on the GDP) for each legal system, and their top performing companies from
the chemical and automotive sector. The scores of the reports were based on a self-developed
scoring index and the analysis done with the content analysis method. The results were than
statistically analysed with ANOVAs with a t-test for robustness. In order to get a wider picture
of the variances between the scores, they were analysed based on countries, legal origin and the
sector.
The empirical findings, based on the sample of 45 companies, from the chemical and
automotive sector, show the following: Code law countries do publish in more in-depth CSR
disclosure compared to common law countries. Especially the higher social scores show that
institutional regulations do influence the reporting behaviour in a positive way. The laws
concerning women in management position and people with disabilities lead to more disclosure
and transparency in these areas. The influence of the GRI-Standards on the (environmental)
reporting also shows, that institutions influence the CSR disclosure. The similar environmental
scores between code law and common law countries can also be used to argue for a better more
in-depth disclosure in code law countries. The implementation of rules and regulations lead to
stricter legal frameworks not only in the code law but also in the common law countries.
Therefore, they are adapting practices from code law countries. Also, the similarities in
European reporting can be traced back to institutional regulations. The author concludes that
institutional pressure and regulations have a positive impact on CSR reporting. At the moment
the legal origin influences the scope of reporting. However, the author questions whether
implementation of cross-country regulations has started an isomorphism process, which
subjects companies from common law countries to stronger institutional regulations. Thus, the
environment in which the companies operate now is not isomorph, but it might be in the future.
The research and results contribute to the shortfall in literature, analysing the effect of
the legal origin on reporting behaviour. It contributes to a better understanding of the CSR
disclosure content through the development of the scoring index which actually focuses on the
published data and not only on the surface data. Furthermore, it raised the question if cross-
country regulations started an isomorphism process regarding the CSR reporting behaviour.
Future research should investigate further if the reporting behaviour is actually starting to align
40
by conducting a long-term study. Since the results of this study are opposing from the result of
Sethi et al.’s (2017) study (common law countries engage in higher quality CSR reporting,
therefore they disclose more information), future research should also look into the differences
in reporting behaviour between different sectors, especially between the manufacturing and the
financial sector. Another suggestion for future research is, to analyse a bigger sample that
includes countries with a lower GDP and smaller firms, in order to generalise the findings. It
would also be appropriate to extend the scoring index, to include more criteria, for example
philanthropic activities and donations.
41
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48
8 Appendix
Appendix A: Overview of Articles from Chapter 2.2
(source: own table)
Institutional Setting Ownership Structure Reporting Behaviour Institutional Setting Ownership Structure Reporting Behaviour
Ball et al. (2000) -accounting practices are set in the private
sector
- accounting standards arise in an
accounting market
- more monitoring of the management by
external equity and debt markets
- code law legal regime enforces the role
of stakeholders in the interaction with
management
- political influence on accounting
standards weakens the quality of
disclosers
- immeadiate payouts influence income
disclousure
- less external auditing
high concentration of stock is linked with
lower quality annual disclosure
information
Campbell (2007) maximization of profit and shareholder
value present in common law countries,
prevent companies from acting in socially
responsible ways
- no concentrated ownership of stocks -
less shareholder consultation of
management
- more decision making autonomy and
less accountability to investors
effectiveness of state regulations may be
enhanced by stakeholder monitoring
stakeholder orientation increases
likelihood for socially responsible
behaviour
managers highly accountable to
shareholders, due to concentrated
ownership of stocks
Chin et al.
(2009)
greater shareholder protection will led
towards maximizing the shareholders
welfare on the expanse of all the other
stakeholders
companies in countries with a shareholder
orientation conduct and report less CSR
activities
companies in countries with a strong
legal framework enforcement, participate
in more CSR activities
Fernandez-
Feijoo, Romero
and Ruiz (2013)
companies provided minimum amount of
information without assurance
- northern Europe: categorized behaviour
as cautious. Companies with cautious
behaviour do not disclose in depth
however they do include credibility tools
- Portugal, Spain: leading behaviour, high
level of disclosure and credibility
Gallego-Álvarez
Quina-Custodio
(2017
companies headquartered in code law
countries to disclose more information.
These companies were also more likely to
report on stakeholder issues.
La Porta et al.
(1997)
common law countries protect
shareholders and creditors the most from
the expropriation of the management
less shareholder protection code law countries have smaller equity
markets and lower access to equity
finance, making them have highly
concentrated ownerships of stocks
Matten and
Moon (2008)
CSR actions as voluntary, deliberate and
strategic decisions, thus disclosing them
in their CSR reports
act in accordance with set laws and ethics,
but do not claim ownership and
authorship of these CSR actions thus not
disclosing them
Sethi et al.
(2015)
shareholder orientation leads to a demand
from the investors for high quality
information
common law countries presented higher
quality CSR disclosures
Smith et al.
(2005)
ownership is more concentrated and
government ownership is present,
influences the stakeholder-company
relationship, increasing the quality of
CSR reports
Common Law Countries Code Law
49
Appendix B: Overview Companies
Chemical Sector Automotive Sector
Common Law Countries
United States of America Reporttype GRI-Standard Score United States of America Reporttype GRI-Standard Score
DuPont not found -
exclued - - General Motors
Sustainabiliy
Report
in accordance -
comprehensive 41
Sherwin-Williams
CSR Report +
Investor
Download
GRI referenced 31 Ford Motor Sustainabiliy
Report
in accordance -
comprehensive 39
PPG Industries website - excluded - - Lear not found -
exclued - -
Monsanto not found -
exclued - - Goodyear Tire & Rubber
Corporate
Responsibility
Report
GRI referenced 26
Ecolbab Sustainibility
Report
in accordance -
core 17
Huntsman not found -
exclued - -
Eastman Chemical not found -
exclued - -
Airproducts Sustainibility
Report
in accordance -
core 42
50
India India
Reliance Industries Integrated Report GRI referenced 30 Tata Motors CSR Report +
annual report
in accordance -
comprehensive 29
Grasim Industries Sustainibility
Report
in accordance -
core 26 Mahindra & Mahindra
Sustainibility
Report
in accordance -
core 44
Sun Pharmaceutical
Industries Ltd. Integrated Report GRI referenced 14 Maruti Suzuki India Integrated Report
in accordance -
core 39
United Kingdom United Kingdom
GlaxoSmithKline not found -
exclued - - Fiat Chrysler Automobiles
Sustainibility
Report
in accordance -
comprehensive 59
Linde
Sustainable
Developement
Report
in accordance -
core 56 Rolls Royce Holding
not found -
exclued - -
AstraZeneca
Sustainibility
Report + Sust.
Data Summary
GRI referenced 39 Aston Martin
Sustainibility
Summary +
Annual
non GRI 31
Johnson Matthey Integrated Report in accordance -
core 52
Canada Canada
Nutrien
Sustainable
Development
Report
GRI referenced 28 Magna International Sustainibility
Report non GRI 6
Methanex
Responsible Care
and Sustainability
Report
non GRI 37 Linamar not found -
exclued - -
Bausch Health CSR Report non GRI 17 NFI Group Inc.
Environmental
Social
Governance
Report
non GRI 19
51
Code Law Countries
China China
Sinopec
Sustainable
Development
Report
GRI referenced 44 SAIC Motor not found -
exclued - -
ChemChina not found -
exclued - - Dongfeng Motor
not found -
exclued - -
Sinopharm not found -
exclued - - Beijing Automotive Group
not found -
exclued - -
Hengli Group not found -
exclued - - China FAW Group Corporation
not found -
exclued - -
PetroChina
Environmental,
Social and
Governance
Reprot
GRI referenced 32 Guangzhou Automobile
Industry Group
not found -
exclued - -
Sinochem* Sustainibility
Report GRI referenced 16 Zhejiang Geely holding Group
Social
Responsibility
Report
non GRI 55
Jardine Matheson Sustainibility
Report non GRI 35
Germany Germany
BASF SE Integrated Report in accordance -
comprehensive 46 Volkswagen AG
Sustainability
Report
in accordance -
comprehensive 54
Bayer AG Integrated Report in accordance -
comprehensive 57 BMW Group
Sustainable
Value Report
in accordance -
comprehensive 50
Fresenius SE & Co. KG Integrated Report GRI referenced 20 Daimler Sustainability
Report
in accordance -
comprehensive 32
Japan Japan
52
Mitsubishi Chemical Sustainibility
Report non GRI 38 Toyota Motor
Sustainibility
Data Book GRI referenced 52
Sumitomo Chemical Sustainibility
Report GRI referenced 64 Honda Motor
Sustainibility
Report
in accordance -
comprehensive 52
Toray Chemical Integrated Report non GRI 28 Nissan Motor Sustainibility
Report
in accordance -
core 58
France France
Sanofi CSR Report in accordance -
core 54 PSA Groupe (Peugeot) CSR Report
in accordance -
core 72
Arkema
Reference
Document
(Integrated
Report)
in accordance -
core 50 Renault
not found -
exclued - -
Air Liquide
Reference
Document
(Integrated
Report)
GRI referenced 39 Michelin
Annual and
Sustainable
Development
Report
GRI referenced 10
Faurecia
Registration
Document
(Integrated
Reprot)
GRI referenced 49
*only Sinochem Int. Is listed, it was the only CSR report the author could find
reports also analysed by the research assistent
53
Appendix C: Detailed Scoring Criteria
Disclosures: Scoring Criteria Scoring Method
Performance data is
presented
Performance data is
disclosed (in
any form or nature).
Information provided may be
presented:
• in any form or nature;
• by descriptions in words or
quantified in numeric terms; or
• in a general or specific context.
Performance data is
presented relative to
previous periods
Performance data of
previous periods is
presented.
Information that relates to performance
compared to previous period.
Performance data is
presented relative to
targets
Performance data is
reviewed against
previously set targets.
Information related to set targets is
included. Information may include:
• actual performance compared
to the set targets
Performance data is
presented both in
absolute and
normalised form
Performance data is
disclosed in raw data and
also presented in ratio or
percentage.
Information is presented in both raw
and comparative data. Raw data may be
presented in absolute numeric terms
and also reflected as a ratio or
percentage of comparable data.
Performance data is
presented at
disaggregate level
Performance data is
presented
with breakdown.
Information may be presented with
breakdown details relative to:
• Business unit; or
• Geographic segments; or
• Projects; or
• Gender; or
• Age; or
• Subcategories
54
Appendix D: Detailed Scoring Index and Differences to Clarkson et al’s
(2008) and Ong’s (2016) Scoring Indices
Detailed Scoring Index
Company Name
Hard Disclosure Items
Environmental
GRI
Standard (if
applicable)
Data
Present
Relative
to
Previous
Period
Relative
to
Targets
Absolute
and
Normalised
Form
At
Disaggregate
Level
Min-
Max
Score
(0-6)
Emissions (max. Score 30) 0
Total direct greenhouse gas (GHG)
emissions by weight (Scope 1) / total
GHG emissions
305-1 0
Energy indirect GHG emissions
weight (Scope 2) 305-2 0
Other indirect GHG emissions weight
(Scope 3) 305-3 0
Initiatives to reduce greenhouse gas
emissions and reductions achieved. 305-5 0
Emissions of ozone-depleting
substances by weight. 305-6 0
NOx, SOx, and other significant air
emissions by type and weight. 305-7 0
Water (max. Score 20) 0
Total water withdrawal / Water
Consumption 303-3 0
Total water discharge 303-4 0
Recycled and reused water - 0
Initiatives to reduce water
use/withdrawal
- 0
55
Social
Employment (max. Score 30)
0
Total workforce - 0
Total number of new employee hires 401-1 0
Employee turnover 401-1 0
Parental leave 401-3 0
Equality in management
positions/women in management
positions
405-1 0
Employment of people with
disabilities 405-1 0
Occupational Health and Safety
(max. score 20)
0
Rates of injury or accidents or work
related fatalities - 0
Occupational diseases. 403-10 0
Education, training 403-5 0
Initiatives to improve employee’s
health - 0
Soft Disclosure Items
Min-
Max
Score (0-
1)
Vision and Strategy (max. Score 2) 0
Senior decision maker (CEO, chair)
statement on sustainability
performance in letter to shareholders
and/or stakeholders
102-14
A statement of corporate sustainability
policy, values and principles, codes of
conduct
-
Management Approach (max. Score
4) 103 0
56
Disclosure on Management Approach
Emissions -
Disclosure on Management Approach
Water
303-1
303-2
Disclosure on Management Approach
Employment -
Disclosure on Management Approach
Occupational Health and Safety -
Scoring Index
Hard Disclosure Items (max. Score
100)
Environmental (max. Score 50) 0
Emissions 0
Water 0
Social (max. Score 50) 0
Employment 0
Occupational Health and Safety 0
Soft Disclosure Items (max. Score 6)
Vision and Strategy (max. Score 2) 0
Management Approach (max. Score 4) 0
Total Score (106) 0 / 106
57
Differences to Clarkson et al’s (2008) and Ong’s (2016) Scoring Indices
The scoring index differs from Clarkson’s (2008) and Ong’s (2016) indices, because it does not
include the scoring criteria “relative to peers”. The author decided to delete it, because after
analysing more than 10 reports, not a single company had scored a point.
It differs from Ong’s (2016) index for following criteria:
• Added:
o Water discharge
o Water recycled and reused
o Initiatives to reduce water withdraw
o Employment of people with disabilities
o Initiatives to improve employee’s health
• Split: “Total direct and indirect GHG emissions” into:
o Total direct greenhouse gas (GHG) emissions by weight (Scope 1) / total GHG
emissions
o Energy indirect GHG emissions weight (Scope 2)
o Other indirect GHG emissions weight (Scope 3)
• Split: “Total number and rate of new employee hires and employee turnover by age
group, gender, and region” into:
o Total rate of employee hires
o Total employee turnover
Ong’s (2016) index covers more topics and compared to this scoring index, missing categories
cover: governance structure; credibility; spendings on sustainability related expenditures;
economic performance; market presence; indirect economic impacts; materials; energy;
biodiversity; waste; products and services; compliance; transport; labour performance
indicators; equal remuneration for women and men; non-discrimination; freedom of association
and collective bargaining; child labour; forced and compulsory labour; security practices;
indigenous rights; assessment; remediation; local communities; corruption; public policy; anti-
corruption behaviour; compliance; customer health and safety; product and service labelling;
marketing communications; customer privacy; compliance; vision and strategy claims and
sustainability initiatives.
58
Appendix E: Reports used to develop Search Words & Search Words
Reports used to develop the Search Words:
Legal Origin Country Sector Company Name
Code Law France Automotive Groupe PSA
Code Law Japan Automotive Nissan Motor
Common Law Canada Chemical Nutrien
Common Law United States of America Chemical Sherwin-Williams
Search Words:
Target goals result
Emissions
Emission indirect emission
Greenhouse GHG
Scope 1 2 3
Reduce save
Ozone-depleting VOC ozone-producing volatile organic compounds
SO2 AND NO2
tonnes CO2
kg/car kg/sales unit usage
Water
Water water management
Water withdrawal water abduction
Water discharge
Reuse recycle reduce save
59
Employment
Employees workforce number of employees total employees
Hire
Turnover attrition
Parental maternity paternity
Management position personnel women female
Disability
Occupational Health and Safety
Rate of injury accident incident
Disease illness
Prevent improve
Training education
Nonfinancial target goal
Soft measures
Code of conduct ethics values governance compliance
60
Appendix F: Statistical Analysis
Skewness
Total
Score
Environmental
Score
Social
Score
Emission
Score
Water
Score
Employment
Score
Safety
Score
N Valid 45 45 45 45 45 45 45
Missing 0 0 0 0 0 0 0
Skewness -,198 -,095 ,268 -,315 ,170 ,263 ,200
Std. Error of
Skewness
,354 ,354 ,354 ,354 ,354 ,354 ,354
Total Score: z-value = -0,198/0,354 = -0,559 < 1,96
Environmental Score: z-value = -0,095/0,354 = -0,268 < 1,96
Social Score: z-value = 0,268/0,354 = 0,757 < 1,96
Emission Score: z-value = -0,315/0,354 = -0,889 < 1,96
Water Score: z-value = 0,170/0,354 = 0,480 < 1,96
Employment Score: z-value = 0,263/0,354 = 0,743 < 1,96
Safety Score: z-value = 0,2/0,354 = 0,564 < 1,96
T-Test:
Law N Mean Std. Deviation
Total Score common 22 34,36 13,824
code 23 43,78 15,550
Environmental Score common 22 16,09 8,223
code 23 18,65 8,222
Social Score common 22 10,86 5,858
code 23 19,43 8,393
Emission Score common 22 11,14 5,258
code 23 12,52 6,097
Water Score common 22 5,95 3,062
code 23 6,26 3,306
Employment Score common 22 6,18 3,996
code 23 12,70 5,732
Safety Score common 22 5,41 2,789
code 23 6,65 3,725
61
Levene's Test for Equality of Variances
t-test for Equality of
Means
F Sig. Sig. (2-tailed)
Total_Score Equal variances assumed ,330 ,569 ,038
Equal variances not assumed ,037
Environmental_Score Equal variances assumed ,036 ,851 ,302
Equal variances not assumed ,302
Social_Score Equal variances assumed 3,806 ,058 ,000
Equal variances not assumed ,000
Emission_Score Equal variances assumed ,707 ,405 ,420
Equal variances not assumed ,418
Water_Score Equal variances assumed ,414 ,523 ,749
Equal variances not assumed ,749
Employment_Score Equal variances assumed 4,659 ,037 ,000
Equal variances not assumed ,000
Safety_Score Equal variances assumed 3,872 ,056 ,213
Equal variances not assumed ,211
If Levene’s test for equality of variances is p>0,05 the variance in scores is not statistically relevant
Total Score: p-value = 0,569 > 0,05 → 0,038 < 0,05 → accept H0: scores are not significantly different
Environmental Score: p-value = 0,851 > 0,05 → 0,302 > 0,05 → reject H0: scores are significantly different
62
Social Score: p-value = 0,058 > 0,05 → 0,0001 < 0,05 → accept H0: scores are not significantly different
Emission Score: p-value = 0,405 < 0,05 → 0,418 > 0,05 → reject H0: scores are significantly different
Water Score: p-value = 0,523 > 0,05 → 0,749 > 0,05 → reject H0: scores are significantly different
Employment Score: p-value = 0,037 < 0,05 → 0,0001 < 0,05 → accept H0: scores are not significantly different
Safety Score: p-value = 0,056 > 0,05 → 0,213 > 0,05 → reject H0: scores are significantly different
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