Background
“My company spends $7 million per year on community programs. We still face work interruptions from the communities we help. Obviously (sic) the money does not buy us the goodwill we need, but I have no idea where we are missing the point.” This quote by the managing director of a resource company (Moffat & Zhang, 2014) demonstrates that allegorical corporate social responsibility (CSR) alone is no longer enough to safeguard developments and operations from being delayed, obstructed, or even shut down.
Corporate Social Responsibility (CSR)
In 2006, Wan-Jan proposed that corporate social responsibility is a management system utilised by organisations to address stakeholder’s social and environmental concerns by implementing ethical and sustainable management practices (Wan-Jan, 2006). However, Freeman & Hasnaoui (2011) provided empirical evidence that Corporate Social Responsibility has several diverse definitions by multiple authors, each with their own agenda. In the literature on Corporate Social Responsibility there seems to be general agreement that although several definitions exist, underpinning terms such as corporate responsibility, corporate sustainability, ethical processes, and environmental and social concerns remain consistent (Freeman & Hasnaoui, 2011).
The increase in challenges against mining activities has led to a upsurge in CSR investments within the industry, resulting in pivotal changes to corporate structures. These changes include the implementation of board-level positions with CSR responsibility, increased staffing of CSR teams and departments, and expanded community investments (Frederiksen, 2018).
However, critics of CSR argue that the practice is employed by mining companies as a PR stunt to appease restless communities. In 2012, Keith Slack noted that there is evidence of deception in the mining sector, leaving their CSR promises empty of substance (Slack, 2012). Slack’s opinion is supported by Fulmer et. al., who found evidence that regardless of CSR investments, numerous companies continue operating with no changes to their processes. Instead, they utilise more refined PR and marketing techniques (Fulmer, Godoy, & Neff, 2008).
The aversion to stakeholder engaged dialogue when it comes to sustainability reporting could be attributed to risk management by the organisation. A number of scholars noted that while Corporate Social Responsibility is about mitigating and managing risks or potential risks external to the organisation, it can result in a more insular management and decision-making process (Wan-Jan, 2006; Freeman & Hasnaoui, 2011; Frederiksen, 2018). Despite the wide-spread allusion to risk management in CSR literature, relatively little is understood about organisations’ perceptions of risk associated with CSR activities.
It is generally agreed that over the past few decades, the methods resource organisations conduct their operations and harvest natural resources has been increasingly influenced by changing societal norms (Moffat, Lacey, Zhang, & Leipold, 2016). Recent research shows communities, now more than ever, are demanding more involvement in the decision-making processes of resource mining that directly affect them, as well as challenging the fairness and nature of associated costs (Kaur & Lodhia, 2018). These costs are not only economic in nature; they are increasingly centred around the societal and environmental impact of the mining activities.
As a result, the need to meet regulatory requirements to obtain a formal licence to operate is no longer enough to ensure an uninterrupted workflow (Moffat & Zhang, 2014). Getting support from the community, or social licence to operate, is becoming essential in the resource sector where highly visible environmental activities are a fundamental component of core operations (Dare, Schirmer, & Vanclay, 2014).
Social Licence to Operate (SLO)
While a range of CSR activities can legitimise an organisation’s operations in the mind of the stakeholder, definitive positive public perception is crucial to an organisation or project’s success. This positive public perception is known as social licence to operate. In the mining sector, disruptions to operations are costly. Social licence to operate can mitigate disruptions caused by social activism, positively affecting the organisation’s bottom line. Frederiksen (2018) introduces the idea that “a disruption won’t stop an organisation but losing their social licence to operate will break them” (Frederiksen, 2018).
A social licence to operate is not tangible or issued. Resource organisations with high visibility operational social and/or environmental impacts face a multitude of challenges in gaining the community approval required for a social licence to operate. These organisations are expected to earn their social licence to operate through ethical and transparent engagement with stakeholders who have diverse perceptions of acceptable business and operational practices. Research suggests that perceived acceptability of an organisation is not based exclusively on operating practices, rather individuals, communities and the media establish their acceptability of an organisation’s practices on its image as a whole (Dare, Schirmer, & Vanclay, 2014), (Bellantuono, Pontrandolfo, & Scozzi, 2016).
A considerable component of gaining a community’s trust and social licence to operate is through honest and transparent dialogue with stakeholders to identify their concerns. Once these concerns are identified, the organisation needs to rectify or integrate them into operational processes and/or policies as a priority to secure said communities’ social licence to operate and manage the risk of disruption (Kaur & Lodhia, 2018).
In 2001, Gotsi & Wilson defined corporate communications as any communication or dialogue generated by an organisation to achieve its objectives (Gotsi & Wilson, 2001). Roper and Fill (2012) suggested that this umbrella definition of corporate communications could be broken down into three distinct categories: management, marketing, and organisational communications. Roper and Fill (2012) go on to define organisational communications as communications focused on developing relationships with the community, rather than focusing on an organisation’s products or services. In the social media space, companies use organisational communications almost exclusively to achieve their social licence to operate goals (Lodhia, Kaur, & Stone, 2020).
Digital sustainability reporting
Sustainability reporting is a management tool used by organisations to inform stakeholders of methods being employed to protect the environment they impact, foster good relationships with their stakeholders, and support their local community (Amoako, Lord, & Dixon, 2017).
According to the Global Reporting Initiative, sustainability reporting is also a process for measuring an organisation’s sustainability, economic and social performance (GRI, 2022). However, empirical evidence appears to confirm the notion that while companies may disclose financial information in their annual reports, they rarely reveal the environmental or social impact of their sustainability processes in the digital space (Reilly & Hynan, 2014), (Lodhia, Kaur, & Stone, 2020). Sustainability reporting, both voluntary and mandated, has become more entrenched in business practices globally as stakeholder information power increases (Lodhia, Kaur, & Stone, 2020).
Resource organisations with a high societal and/or environmental impact attempt to maintain their social licence operate by adapting their sustainability reporting behaviours (D’Souza, et al., 2022). However, in their study of sustainability reporting, Kaur & Lodhia (2018) observed that the mining companies in their research adopted a “tick-box” style of reporting but contend that the contents of these reports differ from the reality of the organisation’s sustainability measures.
Sustainability reporting is for the most part discretionary and unregulated, resulting in reports lacking in substance and failing to effectively address stakeholders’ concerns (Amoako, Lord, & Dixon, 2017). The work of Dienes, et. al., (2016) draws the conclusion that the foremost driver for sustainability reporting is legislative and that the quality of an organisations sustainable reporting is intrinsically linked to its organisational culture (Dienes, Sassen, & Fischer, 2016).
Factors influencing digital sustainability reporting
The need to communicate social and environmental activities and issues through various online media platforms such as mass media, company websites and social media has increased with the shift from traditional to digital sustainability reporting (Lodhia, 2014; Kaur & Lodhia, 2018).
Digital platforms have ability to create more timely, dynamic, engaging and widely accessible sustainability reports than traditional printed media. Presentation features such as hyperlinks, portals, annotations, and animation allow organisations to better engage stakeholders. Even though digital communication is increasing, the potential of digital media is not being used to its full extent for sustainability reporting (Lodhia, Kaur, & Stone, 2020).
Prior research appears to support the notion that digital platforms are not generally employed by organisations for sustainability reporting is that audiences apply their own prejudices and expectations to online content, often reading between the lines arriving at a desired outcome by determining what is being reported and asking why and if anything is being left out (Windschuttle & Elliott, 2001) (Manetti & Bellucci, 2016). Manetti & Bellicci (2016) further indicate that when there is a lack of substantive dialogue between an organisation and its stakeholders, these prejudices can negatively affect the organisation’s reputation. A negative perception by one person, who then distributes their prejudices either by word of mouth or social media, can adversely affect an organisation’s social licence to operate within that community (Frederiksen, 2018).
The use of narrative content on social media presents sustainability communicators with a substantiated technique to effectively engage with non-scientific audiences. Dahlstrom (2014) hypothesises that negative prejudices can be curtailed by using a narrative form of communication to impart information to non-scientific stakeholders on social media. In his study, Dahlstrom (2014) concluded that narratives create communications that can be more persuasive as they are easier for the reader to comprehend.
The use of social media for sustainable reporting
With news and organisational content included on social media and across digital channels, consumers have moved beyond ‘tell me’ push communications to requiring ‘engage me’ content that catches their interest or entertains them (Lodhia, Kaur, & Stone, 2020). The need for effective stakeholder engagement is even more crucial in digital sustainability reporting and communications to ensure relationships with stakeholders remain positive and to pre-empt online shaming leading to Outrage Culture (Sacerio, 2020).
Where organisations and stakeholders engage in a two-way dialogue on social media, not only is the stakeholder afforded a voice, but it also provides the organisation with a tool to better understand the stakeholder’s concerns. While Kaur & Lodhia (2018) found evidence that more organisations are turning to social media for rapid and open dialogue with stakeholders, Manetti & Bellucci (2016) argue that open dialogue with stakeholders is avoided on social media which is congruent with the results of this research.
Lodhia, Kaur & Stone (2020) found eco-friendly organisations were more active on social media for sustainability reporting than their non-green counterparts. In his study, Frederiksen (2018) noted that eco-friendly organisations also appear to have an aversion to open two-way dialogue with stakeholders preferring instead the perceived mitigation of risk by employing push communications on their digital channels (Frederiksen, 2018).
In conclusion, the literature on the use of social media for sustainability reporting seem to support the notion that the full potential of social media for two-way stakeholder engagement in sustainability reporting has not yet been realised. Past studies provide empirical evidence that social media platforms are primarily used by organisations for product and service promotion, and promotion of philanthropic activities. It is also generally accepted in the literature that only a small number of organisations use one or more social media platforms to open a dialogue with stakeholders regarding sustainability issues.