Controlling and Auditing CSR

The 2015 Eneco report covers various social and environmental issues that are related to the wellbeing of the firm and its relation to the environment in which it is operating.  These include environmental pollution, energy sustainability, safety performance in relation to preventing accidents in the energy production facilities and grid. The case of environmental pollution relates to the sensitive issue of global warming which has been attributed to emission of carbon, a gas that is being considered as a great contributor to this challenge. The global warming and pollution issue is of great challenge to the firm given the increasing political pressure for companies to take responsibility and uptake various measures that can reverse this trend. The production of energy is highly dependent on coal with many of the production plants using it due to its low price compared to relatively expensive gas plants (Eneco Holding N.V, 2015).  The issue has been how the company can maintain low carbon emissions for environmental sustainability.

In the case of safetly performance, the firm has to deal with the issue of minimal accidents for employees in the production plants by devoting attention to the working condition and raising safety awareness.  The performance for the firm in this sector has not been sufficient or satisfying since accidents continued to occur. Another issue is the provision of sustainability of energy for employees especially given that the firm has to undergo performance evaluation from the various NGO’s and customers.  The firm follows the One Planet Thinking principle with the consideration that energy consumption should be within the planets limit (Eneco Holding N.V, 2015). The report also highlights the issue of company’s mission especially in relation to new business model and focusing on being the best service provider which is measured through durations of energy supply interruptions and customer satisfaction.  The firm had been ranked 7^th among the providers of energy with measurement parameters being assets and investments in power production and environment-friendliness of the provided power. To this end, the firm invested heavily on infrastructure and energy generation sustainability with 25 % of supplied energy having been produced. The claims  on commitment to sustainability in energy production is corroborated by report that the firm has invested in various renewable energy initiatives like buying out part of Germany’s Lichtblick , that specializes in renewable energy (Eneco Holding N.V, 2015). 

The company has also invested heavily on renewable energy sources in form offshore wind firms which makes the information provided in the report assured to a large extent. However, all has not been well as portrayed in the report as the firm has previous faced opposition from campaign group against establishing such offshore wind firms especially when they are considered to be too close to the show. Other major companies have also portrayed their activities as having attained energy sustainability and improved engagement in environment conservation measures both at the national and international arena. In addition, just like the Eneco has previously faced objections to investing on more energy production facilities such as offshore wind firms, other firms have encountered similar challenges (Eneco Holding N.V, 2015). This is true for firms that have considered such endeavors as likely to lead to more emission of pollutant gases and thus increasing global warming. Therefore, these firms have been faced with various risks and dilemmas especially when their activities are opposed by local residents, regulatory authorities and even some campaign groups.

Discussion

Corporate social responsibility reporting assist in measuring the actual social performance of a firm against those social goals it aims at achieving and how the decision making process, guiding principles, business conduct and mission statement are aligned with the social responsibilities.  This reporting helps in highlighting how the firm has served the social interest of all its stakeholders.  The social and environmental endeavors undertaken by Eneco Holdings can be explored through the legitimacy and stakeholders’ theory.  Legitimacy theory provides various disclosing strategies that are adopted by firms to justify their existence and that if the services they offer in the market.   Organizations constantly seek to make sure that their operations are within the norms of the society in which they are located and hence, these companies embark on voluntary reporting on their activities (Horrigan, 2010). This is essential for any organization if the management view the activities they engage are anticipated by the communities in which their operations are located. There exist a social contract between the organization and the community and management has to showcase the extent to which it has fulfilled the terms of the contract.   In addition, the society has a range of expectations on how the operations of the organization should be carried out and the survival of the organization will be endangered if the society feels   the social contract has been breached (Horrigan, 2010).

 The social contract between the society and Eneco Holdings involves ways in which the firm will undertake its energy generation activities while ensuring that it has put measures of taking care of the environment. The firm then embarks on avoiding information asymmetry that may undermine its image if the perception in the society is that environmental pollution and global warming   has resulted from the operations and activities of the firm. By including information on the extent to which it has reduced emission of carbon as a pollutant, the organization is laying openly the impacts of its activities to the environment and the measures it is undertaking to counter them.    The firm highlights various measures it has undertaken to offset emissions of carbon from internal operations from the year 2008.   These measures include having climate neutral business operations in relation to employees, vehicles and even offices. The firm also engages in sustainability investment in other countries in form of certificates and credits, where it purchases carbon dioxide certificates, reducing carbon emission from forest degradation and deforestation .Such certificates relate to preservation of natural areas that are valuable to the community. It is clear that the report shows  the accountability of the firm which starts by fast owning up to the fact that its activities lead to  environmental  degradation and then undertaking various measures to offset or compensate such  effects especially where it is impossible to avoid them. The firms also disclose it is frequently changing its sustainability efforts as the society expectations are changing. The expectations of the society are not permanent but are always changing and hence the conditions of the socials contracts have also to change overtime. Eneco Holdings aims at gaining social approval by being responsive to the environment and the needs of the society that goes beyond its profits needs to the needs of the community. The firm shows accountability by filling the legitimacy gap, which is the difference between how the organization acts and society expectations especially in relation to the perception of how the organization should act.

Legitimacy  acts as a resource on which Eneco depends for survival  given that whenever managers of the firm consider the supply of any resources to be important for its continuity , they will adopt strategies that aims at continued supply of that resource . The firm will target disclosures and collaborate with other parties who are also viewed as legitimate by the society or stakeholders.  The company indicates that it prefers doing business with suppliers who have similar passion in relation to sustainability. This is based on the conviction that a shared focus on sustainability and quality results to innovation and optimization. For the firm to be considered accountable, the report highlights how the process of supplier selection is carried, where it assumes responsibility of the process and in the supply chains operations. As such suppliers are selected according to their performance and other factors such as service, price and quality.  In relation to the achievement of their goal, which is sustainable energy for everyone, the firm requires a specific degree of corporate social responsibility to be demonstrated by these suppliers (Eneco Holding N.V, 2015). As such the report explores the Supplier Code of Conduct which all the suppliers must sign, and through this, the firm portraying its level of accountability to the society and the environment. In addition, the firm earns its legitimacy by adhering to integrity seen in the high standards of conduct, where the rules, value standards applying to the company and Code of Conduct forms part of actions’ framework (Eneco Holding N.V, 2015).  The values that are implemented in the firm include collaboration, building trust, placing customer first and taking responsibility and these values guides behavior so that the firm is able to connect and strengthen its relation with various stakeholders.

 The reports also outlines how the firm comply with regulations or legislations which enables it avert risks relating to operation license and customer reputation. The compliance policy adopted by the firm and the compliance officer offers the necessary support required in this particular area.  In addition, the collaboration between the firm and outside parties who rank the firm’s performance in terms of environmental sustainability and community oriented programs indicates the social accountability of the firm.  This aligns to the desire of the firm to be viewed as a legitimate business in the community which is not only driven by the desire to maximize profits , but also an aim to have better services to customers and  being environmentally conscious.  The management also is shown to take remedial action if the operations of the firm deviate from the compliance policy and the ultimate social goal. Where managers think that the operations of an organization are not commensurate with intended social outcome or social contract for that matter, they may undertake remedial steps that will approve their legitimacy, pursuant to the aforementioned legitimacy theory (Horrigan, 2010).   Or such remedial action to be felt by external parties, publicized disclosure accompanies it as shown by the Eneco’s annual report.  Therefore, it I important to have corporate disclosures similar to the ones made in the annual reports of a firm.   For Eneco management to have the firm legitimized by all the stakeholders, it outlines the various disclosures that show its social accountability.  

Suggestions

Enhancing the ability of the firm to discharge its duty of accountability through reporting, the management should look at the CSR reporting as an opportunity for strengthening their business while contributing positively to society welfare (Mullerat, 2010). Reporting should be viewed as a way of communicating to the society the extent to which the firm cares about the issues affecting the society especially those that relates to its operation. To improve social accountability, the firm should embark on emphasizing the duties of directors and management, engage relevant authorities, engage the citizens, carry out internal audit on social reporting and take corrective measures where those duties are not carried out in accordance to provisions. The duty of management includes ensuring that reports inform the external stakeholders fully and truthfully of how the services offered can benefit the society and the impacts of its operations. They should ensure that no misrepresentation or withholding information about a specific service or product that would affect consumers or the environment in which they operate.

 Engaging the relevant authorities is important to ensure that the information provided in the report is correct according to legal assessment of facts provided and such information is what is required of them. Engaging the citizens will enable to deal with increased social movement visibility and demands from the society so as to avoid any collusion with the operations of the firm (Mullerat, 2010). Fully informed society will respond positively to social efforts undertaken by the firm.  Moreover, the audit on social reporting should include assessment on whether the availed information is truthful and relevant to external stakeholders. Afterwards corrective measures can be taken to align reporting to the intended purpose of reporting.

Reference

Horrigan, B. (2010). Corporate social responsibility in the 21st century: Debates, models and practices across government, law and business. Cheltenham, U.K: Edward Elgar.

Mullerat, R. (2010). International corporate social responsibility: The role of corporations in the economic order of the 21st century. Austin: Wolters Kluwer Law & Business.

Eneco Holding N.V, (2015).Eneco, connection and innovation. Annual report.