Sustainability Performance and Disclosure in Charities: The Case of British Heart Foundation

Background and Introduction:

Today, sustainability performance and reporting, has become imperatively an important part of Integrated Reporting, which combines financial and non-financial parameters. This is to enable organisations to take in account the impacts of wide range of sustainability issues, to be more transparent to the risks and opportunities.

Sustainability reports are a modern concept of interdisciplinary reporting. That mean the fact to include simultaneous the area economic, environmental and social elements (Quick, 2008).

The British Heart Foundation (BHF) is a registered Charity organisation in the United Kingdom which was set up in 1961 by a group of medical specialists, concerned about the increasing death rate from cardiovascular disease. According the BHF corporate strategy, the main objective is to fight against cardiovascular diseases and cancers. it funds cutting-edge research to prevent, treat and cure all heart and circulatory diseases, including heart attacks, strokes and vascular dementia, and risk factors like high blood pressure and diabetes, (Source, BHF).

In this report we assess developments in sustainability reporting instruments worldwide since the publication of the last Carrots & Sticks report in 2013.

In this report will assess the sustainability reporting performance of the three recent BHF report. To do so, we will considers the concept of sustainability roughly as covering environmental, economic, and societal performance, which has been referred as the  “triple bottom line” (TBL) (Butler et al., 2011). firstly, will analyses the sustainability performance and reporting practices of British Foundation Heart through the Global reporting initiative (GRI) indicators, in exploring the recent annual reports of the organization (2016 to 2018). In the second task, will Specially, talk about the stakeholder theorical framework and asses the trends and patterns of the BHF sustainability performance in the disclosure practices and lastly we will give our opinions on the practices sustainability disclosure of BHF reporting disclosure to contrast with the skepticism of someone might argues to not be interested on BHF achieving.

ii. Findings

Task one

Global Report Initiative (GRI) indicators. The GRI is an independent structure that has pioneered corporate sustainability reporting since 1997. GRI supports stakeholders (businesses, governments, NGOs and others) to understand and communicate the effect of the business on critical sustainability issues relating to the aspect of climate change, human rights, corruption and others. For that purpose, they developed a framework that establishes a standard of indicators including the measure the performance in the basis of different levels of economic, social and environmental performance of sustainability disclosure of the organizations.

These items (GRI indicators)  in terms of eeconomic considerations means that the company’s effects on the economic situations of the stakeholders and on economic systems at local, national and global levels.

Environmental Issues—disclosing the company’s impacts on living and non-living natural systems (land, air, water and ecosystems), including effects connected to inputs such as energy and water), outputs (such as emissions, effluents and waste) as well as environmental compliance and expenditures and the Social Impact—disclosing the company’s impacts on the social systems within which it operates, including those relating to human rights, society and product responsibility.

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to analyse the level of sustainability disclosure of BHF, we will use three recent annual report of BHF (over 2016 to 2018) through the GRI indicators by which will be given one if it was disclosed and 0 otherwise. Then the total number of the disclosure items will be divided on the total number of items within the GRI. This un- weighted content analysis technique will help us to comments on the British foundation heart performance in matters of reporting disclosure.

List of Performance Indicators by Category under GRI Framework

Level indicators

               Scores

Economic Performance Indicators

2016

2017

2018

1. Economic performance

4 Indicators

1

1

1

2. Market presence

3 Indicators

1

1

1

3. Indirect economic impacts

2 Indicators

0

0

0

Environmental Performance Indicators

1.Materials

2 indicators

1

1

1

2.Energy

5 indicators

1

1

1

3. Water

3indicators

0

4. Biodiversity

5 Indicators

1

1

0

5. Emission

10 Indicators

1

1

1

6. Products and services

2 Indicators

1

1

1

7. Compliance

1 Indicators

1

1

1

8. Transport

1 Indicators

0

0

0

9. Overall

1 Indicators

0

0

0

Social Performance Indicators

A. Labour Practices and Decent Work Performance Indicators

 

 

 

 

1. Employment

3 Indicators

1

1

1

2. Labour

2 Indicators

1

1

1

3. Occupational health and safety

4 Indicators

1

1

1

4. Training and education

3 Indicators

1

1

1

5. Diversity and equal opportunity

2 Indicators

1

B. Human Rights Performance Indicators

1. Investment and procurement practices

3 Indicators

0

0

1

2. Non‐discrimination

1 Indicators

1

1

1

3. Freedom of association and collective bargaining

1 Indicators

1

1

1

4. Child labour

1 Indicators

0

0

0

5. Forced and compulsory labour

1 Indicators

0

0

0

6. Security practices

1 Indicators

1

1

1

7. Indigenous rights

1 Indicators

0

0

0

C. Society Performance Indicators

1. Community

1 Indicators

1

1

1

2. Corruption

2 Indicators

0

0

0

3. Public Policy

3 Indicators

1

1

1

4. Anti‐competitive behaviour

1 Indicators

0

0

0

5. Compliance

1 Indicators

0

0

0

D. Product Responsibility Performance Indicators

1. Customer health and safety

2 Indicators

1

1

1

2. Product and service labelling

3 Indicators

1

1

1

3. Marketing communications

1 Indicators

1

1

1

4. Customer privacy

2 Indicators

1

1

1

5. Compliance

1 Indicators

0

0

0

Total

22/34

22/34

23/34

Source: Global Reporting Initiative (2016) Sustainability Reporting Guidelines

Comments

The analysis of the reports established the following key sustainability reporting themes.

As illustrated in GRI framework above, 62 % of the GRI’s items were used for reporting by BHF organizations in the all three recent annual report. The highest disclosures were in the social performance practices category (41%) of possible disclosures. However, only 15% of disclosures were in the environment performance items category and almost 6% of disclosures were for the economic category.

Comparing this analysis to two organisations (Save the Children and Red Cross), to strengthen our analysis on BHF of sustainability disclosure, we found that the application of GRI indicators differs within the organisation. The BHF focus more in the economic, environment and social items while others they consider more GRI indicators in the reports. Our findings were that the report on GRI framework, for instance with Save the Children, had followed them and have taken in account more items (indicators) because of the biggest of the activities (programme) that they implement. The issue is the BHF, has only one programme who consist to tackled the heart diseases and its source of funding come from legacy and by fundraising (stores and Volunteers) only while Save the children for instance, the government and some big companies fund them is not broadly as Save the children of selecting indicators and not providing all the indicators.

Task two:

Academic work in recent years has paid particular attention to the concept of stakeholder. It was in the 1960s that the term Stakeholder emerged. According to Freeman (1984, p. 31), he appears for the first time in 1963 during a reflection on strategy conducted at the Stanford Research Institute (SRI) by Ansoff and Stewart. This neologism comes, at the time, from a deliberate desire to play with the term of Stockholder (designating the shareholder) to indicate that other parties have an interest (Stake) in the business.

Bowin (2013), stated, Stakeholder Theory, is a conception of capitalism placed on the interrelated relationships between customers, suppliers, employees, investors, communities. interests and others who have a stake in the organization. The theory argues that a firm should create value for all stakeholders, not just shareholders.

There are different definitions of stakeholders, but overall, definitions comprehend an indication of the nature of the connection and it includes an adjective of either the organization or stakeholder (Gao & Zhang, 2006; Friedman & Miles, 2006). A commonly used definition is of Freeman: “any group or individual who can affect or is affected by achievement of the organisation’s objectives” (Freeman R. E., 1984, p. 46).

According to Mercier (1999), stakeholders are all agents for whom the development and good health of the company are important issues.

For T. Donaldson & L. E. Preston, (1995), stakeholders are defined by their legitimate interest in the organization, which implies that rights holders are groups and persons with legitimate interests; they are known and identified and the interests of all stakeholder groups have intrinsic.

The ethical theory model of stakeholder (Donaldson and Preston, 1995), indicated that charity managers, in line with the ethical values and mission of their organisations, would feel a moral responsibility to engage with stakeholders, including the provision of a transparent account of their performance (Najam, 2002; Dhanani and Connolly, 2012).

– Stakeholders are groups and people with legitimate interests. They are known and identified;

– The interests of all stakeholder groups have intrinsic value Based on the theory of social differentiation developed by Archer (1996), Friedman and Miles (2002) distinguish between four groups of stakeholders. They consider that relations between the organization and the stakeholders may be, on the one hand, compatible or incompatible with the interests of the company and, on the other hand, necessary (internal) or contingent (external).

in line with the typology conducted by Donaldson and Preston (1995, 74). These authors distinguish three uses of Stakeholder Theory: in a descriptive perspective, the company is apprehended as a constellation cooperative and competing interests; in an instrumental vision, research the nature of the connections between stakeholder relationship management and organisational performance; finally, from a normative point of view, the analysis center on the legitimacy of stakeholder interests.

Stakeholder theory was considered to explain sustainability reporting disclosure only on for the performance who has been reduce to its financial dimension. This performance consisted to achieve the market profit for the shareholders and preserving the long-term viability of the company. The theory was self-sufficient and was oriented toward one goal – profit. It did not fall back on itself by ignoring the society in which it operates.

But in recent years, we saw a schematically shifted from financial performance to more approach including social and environmental dimensions with other who made their appearance and the concept of performance known under a revival of use. At the present, the sustainability of companies is no longer depends solely on the financial aspect of their activities, but also how they behave.

According to Porter & Kramer, 2006, the stakeholders’ theory was employed by improved awareness of stakeholders and organisation has controlled to more stakeholder pressure on firms and to increased hostility of action. Stakeholders would like to know how companies considers corporate social responsibility (CSR) issues with the corporate decision-making process. Stakeholders request corporate transparency. If firms are not pointed out to their mistakes by stakeholders, firms carry on doing business as usual (Amran & Ooi, 2014). Therefore, it is expected that the quality of sustainability report increase, because of the increased stakeholder pressure.

Therefore, the responsibility of companies is expanding, it is no longer limited to shareholders, but integrates other stakeholders (associations, NGOs, trade unions, customers, suppliers,). These new actors required to be heard and become a target for performance and sustainability of the companies.

According to stakeholder theory, organizations are expected to take on activities to satisfy stakeholders’ expectations (Guthrie et al., 2004). The legitimacy theory, which is narrowly linked to stakeholder theory, companies, in order to gain legitimacy amongst different stakeholders, have to continuously demonstrate that they conform to stakeholder requirements.

British heart Foundation has adopted the sustainability reporting disclosure to ensure that all of his stakeholders participate in achieving the year objectives and goals. The motivation to do that it can be in terms of redevability to their donors, communities and all others stakeholders who participate in their activities. BHF chairman stated, “there have been reminded of the importance that all charities continue to operate to the highest moral and ethical standards. Across areas such as the safeguarding of potentially vulnerable individuals, data protection, diversity and workplace conditions, our team have been working hard to ensure that the BHF operates to standards that our supporters, volunteers and staff have the right to expect”,(BHF report,2018).

Public benefit in reviewing our aims and objectives, and planning future activities, the Trustees have taken into account the Charity Commission’s general guidance on public benefit. The Trustees always ensure that the activities undertaken are in line with the charitable objectives and aims of the BHF. The health promotion, care and communications initiatives are specifically targeted at those population groups most at risk of heart and circulatory diseases, due to ethnic, social or economic factors. However, by their very nature, all our charitable activities are undertaken for the benefit of the public.

Comparatively to others charities, we can see most of them, try to be accountable to their stakeholders in sustainability reporting disclosure, in terms of economic, environment and social factors.

Task 3:  

the annual report is the primary tool for any organisation to fulfill its reporting responsibility and its accountability and management responsibility. From the point of view of stakeholders, the annual report is a statutory document that is regularly published and easily accessible.

The acknowledgement that companies are accountable to a diverse group of stakeholders and the decision to address their requirements for information has initiated new forms of reporting.

According to (Yongvanich and Guthrie, 2006), sustainable reporting is the answer to the responsibility of companies vis-à-vis environmental and social issues of different stakeholders. In this regard, sustainability reporting serves as a mechanism for implementing and demonstrating accountability and creating transparency by providing quantitative, qualitative economic, social and environmental information to a wide range of non-participating stakeholders.  extending beyond the narrow circle of shareholders, as is the case for financial reporting (Hahn and Kuhnen, 2013, Yongvanich and Guthrie, 2006, Kolk, 2004, Gray et al., 1996).

With the increased of the stakeholders claim for transparency and accountability, the government has become aware of this evolution, which is why a large number of companies have established sustainability reports (Gray, 2001, Kolk, 2008). Regulators, rating agencies, stock exchanges, investors, consumers and civil society organizations are asking companies to monitor and disclose their sustainable development practices (Cormier and Magnan, 2007).

Hence if someone argues. that BHF will never be interested in achieving all three sustainability areas (economic, social and environmental areas) may be wrong or not, because BHF in terms of economic area, have stores who help the organisation to make profit for its activities. As argue the chairman of BHF, ‘’that the reuse millions of items that would have then gone to waste to help fund lifesaving research, as well as operating as vibrant community hubs that provide heart health information and CPR training’, (BHF, annual report 2018)’. In addition, almost 17,000 volunteers raise thousands of donations for sale and the shops plus stores raised £27.7m profit. All investment managers need to show effective systems of control, including annual compliance with the requirements of the AAF assurance framework on internal controls. The total return on investments for the year (including net investment income) was a net gain of £7.2m (2017: £49.2m), (Source BHF).

In terms of environment, BHF, most of the environment items are not in their agenda, but the only aspect that there is more interest is to collect all the materials to consider the environmental impact caused by clothes being dumped and how to reduce this. but the purpose for that is for raising money. e.g. BHF shops have collected, reused and recycled 73,000 tones of donations in our shops. Additionally, installing low energy lighting in all our shops, reducing electricity usage on lighting by up to 50%. Hence, the positive impact that they have on the environment through waste reduction. As indicated in the report, they reuse and recycle phenomenal amounts in our mission to raise funds to beat heart disease, turning unwanted items into world class research. This year, 65,000 tonnes of goods that may have otherwise been disposed of have been collected, sorted and resold by our shops. This included over 130,000 sofas, 50,000 TVs and 5 million books. Social (people)

The ’Pack For Good’ campaign targets students in the UK and 97 universities support the BHF by encouraging students to donate unwanted clothes, furniture and electrical items. This has led to over £1.8m being raised and this has aided the vital research.  All these measures are vital for research onto heart conditions whilst simultaneously protecting the environment for future generations by encouraging recycling of unwanted clothes and goods and services.

In terms of Social area, BHF take in account the vulnerable person that why, there are fully committed to respecting the wishes and diversity, as outlined in their Supporter and Vulnerable Person policies. They also regularly hold BHF Supporter Conferences, which brings together volunteers, supporters, patients, scientists, health professionals and staff. 

The social dimension of sustainability is encrypted as Corporate Social Responsibility (CSR) (Sodhi, 2015). Social sustainability describes the responsibilities of companies to society and includes issues related to poverty and disease reduction, access to health care and education, and general well-being of society (Closs et al., 2011, Haugh and Talwar, 2010, Sarkis et al., 2010).

Iv. Conclusion

Freeman (1984) look at companies’ responsibilities as consisting of a two-way responsibility between business and groups of stakeholders in a society. This is the stakeholder theory perspective which postulates that there are various groups in the society that an organization can impact on. These groups have a right on the organization for their interest to be addressed by the organization because of agency relationship. Business operations affect interests of multiple parties having stake in a business. Similarly, behaviour of multiple parties also affects business interests. Therefore, businesses should incorporate stakeholder expectations into their planning and policies.

The sustainability reporting has become an essential element of performance for any organization through taking into account the environmental and social aspects. According to (Waddock, 1998). 2004), several studies show that the stakeholders are increasingly exercising a pressure to governmental organizations, non-governmental organizations (NGOs), academics, trade unions, etc. in order for companies to act social and environmentally responsible.

Sustainable reporting become a very concerning key factor for enterprises to create economic, social and environmental value while avoiding or minimizing damage to economic, social or natural capital. They operate on principles of transparency and accountability.

That why, BHF made a commitment to include all generous donations made through careful planning and monitoring i.e.  ensuring that they manage risks effectively, having robust assurance and compliance functions by taking advantage of the benefits of new technology.  This can be achieved successfully by having continuous improvement function that aims to empower staff to review and improve all operating processes.

The work of NGOs is essential to promote disclosure, transparency and public accountability of companies.  The main conclusion of this report is that BHF social and environmental accounting and that enhance their public accountability vis a vis of their stakeholders.  That why, BHF made a commitment to include all generous donations made through careful planning and monitoring i.e.  ensuring that they manage risks effectively, having robust assurance and compliance functions by taking advantage of the benefits of new technology.  This can be achieved successfully by having continuous improvement function that aims to empower staff to review and improve all operating processes.

References

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