Corporate Social Reporting: a case study of Pearson and Reed Elsevier

This report contains critical analysis of corporate social reporting practices at Pearson and Reed Elsevier. CSR programs and initiatives of both companies are discussed in great details in this part of the report and performance of these companies against their own CSR targets is critically evaluated.

Corporate Social Responsibility (CSR) can be explained as “the set of obligations an organisation has to protect and enhance the societal content in which it functions” (Griffin, 2012, p.44). Views on CSR can be divided into two categories – narrow and broad, and these relate to the nationals of shareholder capitalism and stakeholder capitalism respectively.

According to narrow view, sole objective of business organisation consists of profit maximisation for owners. Broad view on CSR, on the other hand, expands role and objectives of business organisations beyond profit maximisation to address possible negative affects of their practices and contribute to sustainability of environment, support local communities and engage in a wide range of other charitable acts (Gosling, 2012).

Overview of CSR Programs of Pearson and Reed Elsevier

Attempts by both companies – Pearson and Reed Elsevier to be perceived as socially responsible corporation have reflected on their respective annual reports.

Pearson Annual Report boasts that “Our approach to ethics and how we behave is grounded by our culture and values – to be brave, imaginative and decent”. However, an important fact that compromises the quality of Pearson CSR programs and initiatives relates to the lack of application of SMART principle in formulating targets where the abbreviation stands for specific, measurable, achievable, realistic, and timely.

For example, Pearson CSR target of ‘Raising literacy levels’ can be justly criticised as too vague and general, and therefore the extent of achievement of this specific target cannot be effectively assessed. The target of ‘Raising literacy levels’ could have been formulated more appropriately by specifying assessment criteria of its achievement including specific figures and dates. Similarly, Pearson specifies engagement in conducting informed business as an important CSR target, but this target fails to incorporate measurable benchmarks and specific deadline.

Furthermore, core focus of Pearson CSR programs is closely associated with more consumption of its products and services which contributes to the primary objective of profit maximisation. Specifically, Pearson management have selected raising literacy levels and improving learning outcomes as its priority social responsibility tasks, but the achievement of this task is partially associated with more consumption of products and services offered by Pearson taking into account their educational nature.

Pearson commits on annual community investments on access to learning, literacy and great teaching. The figure below illustrates changes on the levels of investments in this direction during the period of 2008 – 2012.

corporate-social-reporting

The levels of community investments by Pearson

Adapted from Annual Report and Accounts (2012)

Nevertheless, CSR reports of Pearson can be assessed as meaningful to a certain extent because it meets basic requirements associated with CSR reports.

Reed Elsevier, on the other hand, engages in CSR activities in seven directions: unique contributions, governance, people, customers, community, supply-chain management, and environment. A set of targets are formulated to be achieved for each of these directions and achievement of most of the targets have been assessed through application of numbers and percentages.

Reed’s certain CSR policies and targets can be branded as questionable in terms of their primary motives. For example, development of CR Sales Academy and accessibility policy for customers as part of Reed’s CSR policies serves profit maximisation objective of the company to a greater extent than it does address environmental issues or the needs of local communities.

Materiality assessment can be specified as an important component that is missing in CSR reports of Pearson and Reed Elsevier. Materiality assessment can be defined as “an exercise in stakeholder engagement designed to gather insight on the relative importance of specific environmental, social and governance issues” (King, 2013, online).

Advantages of materiality analysis include identification of the most pressing issues to be addressed, developing relevant effective programs to address these issues, and communicating outcome of programs to organisational stakeholders in efficient ways (Lowitt, 2011).

It is important to mention that CSR reports of Pearson and Reed Elsevier have not been subjected to independent reviews, thus their overall quality have been compromised to a certain extent. Moreover, there are no practical ways of verifying information within Pearson and Reed Elsevier CSR reports because annual reports of respective companies are only source of for relevant data.

Secondary data research has identified no information in the public domain about CSR issues related to Pearson and Reed Elsevier that were not mentioned in respective reports of these companies.

Comparisons between Pearson and Reed Elsevier CSR Programs and Initiatives

No two businesses employ exactly the same set of CSR programs and initiatives due to differences in CSR budget, organisational culture, organisational leadership etc. Moreover, differences between organisations also extent on the manners of application of the same CSR techniques.

There are two major differences between CSR programs of Pearson and Reed Elsevier:

1. Range of areas addressed. Pearson CSR Report acknowledges the importance of all areas of CSR such as environment, supply-chain management, community etc., however specific CSR programs have been initiated mainly in relation to two area – environment and social impact. CSR report completed by Reed Elsevier, on the other hand, contains information about specific tasks and the levels of their achievement in relation to seven CSR areas: unique contributions, governance, people, customers, community, supply-chain management, and environment.

2. Adherence to reporting standards. Global Reporting Initiative (GRI) – G3.1 standard has been used Reed Elsevier to prepare its CSR reports for 2012, whereas CSR report of Pearson does not meet popular reporting standards such as GRI and AA1000.

Performance of Companies against their Own Targets

The following table illustrates the extent of achievement of CSR targets set of Pearson strategy level management.

CSR Area Pearson
Target Performance during 2012
 

 

Environment

Be ever more efficient in the use of paper Total use of paper decreased by 10% compared to 2011
Maintaining commitment to climate neutrality Amount of energy derived from renewable resources increased by 23.7%
 

 

 

 

 

Social

 

 

Raising literacy levels

8 million books donated within the scope of Booktime programme to children in England and Wales

1.5 million books donated to literacy charities globally

Became the largest donor to Book Aid charity

 

Improving learning outcomes

Almost 50 reviews conducted to assess achieve improvement of learning outcomes

Events organised with the participation of more than 1200 people presenting approach of the company to the issues of  sustainability

 

Contributing to competitiveness

Research activity mapped for online research portal

Pearson Executive Research Council organised with the purpose of facilitating collaboration of research professionals

Table 1 Pearson CSR performance against targets

Source: Annual Report (2012)

 

The levels of achievement of its own CSR targets by Reed Elsevier are presented in the following table:

CSR Area

Reed Elsevier
Target Performance during 2012
Unique contributions Increasing bono partnerships Access to Research4KLife expanded to ScienceDirect
Expanding coverage for Reed Elsevier Environmental Challenge Registrations increased by 90%
Governance Employees need to undergo Code of Ethics and Business Conduct training within 90 days of joining the company 100% of employees attended the courses
Continuing bribery law compliance activities 100% employees completed online training
 

People

Completing Global Employee Opinion Survey Conducted (response rate 77%)
Piloting diversity and inclusion training program Piloting conducted for all units
 

Customers

Developing CR Sales Academy CR Sales Academy is launched
Developing the accessibility policy for the company The policy has been drafted
Community 25% of workforce volunteering via RE Cares 30% of workforce has volunteered
  Help 10,000 young people in disadvantaged positions via donations and volunteering 20,000 young people helped
Supply-chain management Getting 75% of main suppliers signed the Supplier Code of Conduct 75% of suppliers have signed the code
Conduct external audits for 50 high-risk suppliers 56 external audits conducted
 

Environment

Derive 25% of energy from renewable sources 33% of energy is derived from renewable sources
50% of key locations need to gain 5+ RE Environmental standards

58% of locations have gained such a standard

Table 2 Reed Elsevier CSR performance against targets

Source: Annual Report (2012)

As it is illustrated in Table 2 the majority of CSR targets set by Reed Elsevier contribute to profit maximisation primary objective of the business at the same time when generating CSR-related benefits. For example, Reed Elsevier has completed Global Employee Opinion Survey with the response rate of 77 per cent during 2012 (Annual Report, 2012). This specific initiative can be interpreted as an effective CSR program in terms of caring about employees, and at the same time findings of the survey can be used to increase the levels of effectiveness of various business processes with positive implications on the levels of profits.

Similarly, Reed Elsevier has set of target of deriving 25 per cent of energy from renewable sources and 33 per cent of energy has been derived from renewable sources during the year of 2012. While positive environmental implications of this specific CSR program are obvious, the program also benefits the company in terms of cost-saving.

Depending on the choice and quality of implementation of CSR initiatives and the levels of management competency the outcome of CSR activities can benefit or harm the society with positive or negative implications on the levels of levels of business profitability.

The following matrix illustrates this principle in an effective manner:

  Benefits society Harms society
Raises profits Good management Pernicious CSR
Reduces profits Borrowed virtue Delusional CSR

Table 3 CSR Matrix

Source: Economist (2005, online)

According to the matrix above, CSR activities of Pearson and Reed Elsevier can be specified as good management, because they offer practical benefits to society in manners discussed above, at the same time when contributing to the level of profitability through using CSR initiatives as marketing tool and gaining positive attention.

Conclusions  

CSR plays a critical role in performance of business organisations and this role is forecasted to increase further due to intensifications of environmental issues and intensive coverage of these issues by media. This part of the report has presented analysis of CSR aspect of Pearson and Reed Elsevier business practices in a brief manner.

This report has found that according to CSR matrix performances of both companies can be classified as ‘good management’. Nevertheless, there may be vast differences in terms of the extent of ‘good management’ within organisations, and from this perspective, Reed Elsevier scores more points compared to Pearson due to its more extensive range of CSR programs and initiatives, formulation of its CSR targets in measurable manners, and compliance of the CSR report with GRI reporting standard.

 

References

Annual Report and Accounts (2012) Pearson

Annual Reports and Financial Statements (2012) Reed Elsevier

Gosling, T. (2012) “Corporate Social Responsibility and Business Performance: Theories and Evidence about Organisational Responsibility” Edward Elgar Publishing

Griffin, R.W. (2012) “Fundamentals of Management” 6th edition, Cengage Learning

King, B. (2013) “Materiality assessments: The missing link for sustainability strategy” Available at: http://www.greenbiz.com/blog/2013/09/10/materiality-assessments-missing-link-sustainability-strategy

Lowitt, E. (2011) “The Future of Value: How Sustainability Creates Value Through Competitive Differentiation” John Wiley & Sons

The Ethics of Business (2005) Economist, Available at: http://www.economist.com/node/3555286