J Bus Ethics
DOI 10.1007/s10551-015-2878-8
An Evaluation of the Quality of Corporate Social Responsibility
Reports by Some of the Worlds Largest Financial Institutions
S. Prakash Sethi1 Terrence F. Martell1 Mert Demir1
Received: 8 September 2014 / Accepted: 23 September 2015
 Springer Science+Business Media Dordrecht 2015
Abstract This study investigates the variations in the
quality and comprehensiveness of 104 corporate social
responsibility (CSR) reports published by the worlds lar-
gest financial institutions in 2012. Using a novel measure
of CSR report quality, we examine the impact of certain
national, legal, and firm-level factors that might explain
differences in the overall quality and extent of coverage of
various issues in these reports. Our findings show that legal
factors and CSR environment in a firms country of
headquarters play an important role in firms CSR report-
ing quality. Common law countries exhibit systematically
higher overall CSR reporting quality than code law coun-
tries. Countries with higher CSR standards, policies, and
regulations in place also produce significantly higher
quality CSR reports. Firm size, on the other hand, has no
major impact on the overall quality of CSR reports. In
further analysis of the individual aspects of CSR disclo-
sures, namely environment, philanthropy, bribery and
corruption, and integrity assurance, we document that lar-
ger firms report at a higher quality on philanthropy and
bribery and corruption. Bribery and corruption is reported
at a higher quality in countries with common law tradition,
high-quality legal regimes, and high CSR standards and
An earlier version of this paper was presented at the 18th International
Symposium on Ethics, Business and Society: Ethics in Accounting,
Finance and Banking: Toward a more comprehensive integration.
IESE Business School, Barcelona, Spain, June 30July 1, 2014.
Research Assistants: Alex Schwarz, Danhua Zhang, Shivani Trehan
& S. Prakash Sethi
Prakash.Sethi@baruch.cuny.edu
1 manner that would engender greater public trust and
Weissman Center for International Business, Baruch College,
The City University of New York, One Bernard Baruch Way,
Box J-1034, 10010 New York, NY, USA
regulations in place. We also observe higher quality
integrity assurance in common law countries. CSR-minded
countries and countries with low-quality legal environment
also report on philanthropy at a higher quality. Finally, we
offer guidelines for companies toward improving the
quality of their reports, and suggestions for scholars and
researchers for further avenues of research.
Keywords Corporate social responsibility (CSR)
reports  Environment social and governance (ESG)  CSR
monitor  Global financial institutions  Country-of-origin
effect (EOC)  GRI  ISO 26000  Bribery and corruption 
Philanthropy
Introduction
From all accounts, publishing CSR reports is a high-growth
industry. 72 % of the S&P 500 companies published some
form of CSR report in 2013, an increase from 52 % in
2010.1 The importance of publishing CSR reports has
become all too apparent especially in the light of large-
scale financial crisis and resulting public opprobrium
inflicted upon the worlds largest financial institutions. It
would seem that business as usual and being prof-
itable are no longer sufficient to garner public trust and
sustain an enduring social license to operate. Instead,
companies must convincingly demonstrate that their busi-
ness operations create lowest level of negative externalities
or harm to the commons. It behooves, therefore, that
these institutions must take all possible actions to improve
their operations and respond to publics concerns in a
1
Governance, and Accountability Institute (2014).
123

rebuild corporate reputation. For all the above-stated rea-
sons, CSR reports present a viable and highly perfect
opportunity for financial institutions. While CSR disclosure
has received considerable attention by researchers over the
past several years, our understanding of its implications for
financial services companies is very limited due to lack of
adequate (i) research focusing on this particular industry
group, (ii) coverage of existing studies by focusing only on
a particular country or region (e.g., Branco and Rodrigues
2008; Bravo et al. 2012; Carnevale et al. 2012; De la
Cuesta-Gonzalez et al. 2006; Jizi et al. 2014), and (iii)
framework for the evaluation of the content and compre-
hensiveness of CSR reports that are highly non-standard-
ized and mostly voluntary in nature (Scholtens 2009).
This study aims to fill this gap in the literature by
investigating the role of firm characteristics, and legal and
CSR tradition of the country of origin on the CSR reporting
quality of the largest financial institutions worldwide. We
hypothesize a considerable influence of corporate, institu-
tional, and legal processes on the overall quality as well as
the quality of particular aspects of CSR reports such as
environment, philanthropy, bribery and corruption, and
integrity assurance due to variations in the scope of regu-
lations by governing bodies across countries and regions.2
In particular, larger firms are more visible in the public
domain, attract higher media attention, and, hence, are
subject to higher public and regulatory pressure (Bowen
2000; Brammer and Pavelin 2004). Accordingly, we pre-
dict that these firms are more likely to publish higher
quality CSR reports to establish and maintain credibility
with their various stakeholders and their license to oper-
ate. We further examine the national patterns of CSR
disclosures by finance companies, hypothesizing a positive
impact on the overall quality of CSR reports of the national
state of corporate responsibility in the headquartered
country. Legal tradition of a country also has considerable
influence on corporate governance systems and managerial
decisions (La Portaet al. 1997, 1998; Lopez de Silanes
et al. 1999) including disclosure choices, which extends
well beyond financial disclosure. While a common law
regime grants higher protection to shareholders, a code law
country enables interactions with management and a
broader group of stakeholders than merely shareholders
(Ball et al. 2000; Smith et al. 2005), leading to expectations
of higher quality, more comprehensive disclosures from
firms originating from such countries.
We use a novel measure of CSR report quality, provided
by the Corporate Social ResponsibilitySustainability
(CSR-S) Monitor (Weissman Center for International
2 icance of firm size and related features (i.e., media
KPMG, Center for Corporate Governance in Africa, Global
Reporting Initiative and United Nations Environment Programme
(2013).
123
S. P. Sethi et al.
Business 2014), to examine the variations in the quality of
CSR reports among our sample of financial institutions
worldwide.3 The CSR-S Monitor offers a unique frame-
work to assess the content of a CSR report along with the
accompanying third-party integrity assurance in consider-
able detail and depth with regard to the comprehensiveness,
quality, and accuracy of the information disclosed.
Our sample of financial institutions comprises 104 of the
worlds largest companies that have published CSR reports
in 2012. We focus on financial institutions for a number of
reasons. First, they are invariably global in character and
cover most aspects of financial transactions involving the
worlds largest corporations, state-owned enterprises,
national governments, multi-lateral agencies. Second, as
global financial institutions, their activities can expose
countries and companies to significant risks, which coun-
tries must take steps to protect. Consequently, these insti-
tutions are subjected to a high level of regulatory oversight
by various national, regional, and international authorities.
Finally, notwithstanding the multiplicity of regulatory
regimes, their global operations are highly intertwined and
integrated. Therefore, their regulatory oversight must also
be coordinated.
We conduct our analysis at two levels. First, we carry
out our analysis in terms of firm size, state of CSR envi-
ronment in a country, legal tradition of a firms home
country, and other exogenous factors. Second, we conduct
our analysis in terms of overall quality and the quality of
information on four contextual elements, i.e., environment,
philanthropy, bribery and corruption, and the provisions of
integrity assurance as to the accuracy and substantive
nature of the reports content. The selection of these con-
textual elements as ESG issues reflects their importance to
the industry, its major stakeholders, and society-at-large,
and thus (a) called for a need for greater explanation for an
issue that is likely to be of public concern because of its
potentially negative connotation, (b) provides an opportu-
nity to expand on companies activities that would be seen
as positive contributions to community welfare, and
(c) enhances reports overall credibility from the perspec-
tive of the companys important stakeholders.
In terms of exogenous variables, our initial analysis of
exogenous variables did not show any impact of firm size
on the overall quality of the CSR reports. However, this
result changes when we consider disaggregated scores of
contextual elements. In particular, firm size is a major
determinant of philanthropy- and bribery and corruption-
related information in CSR reports, while it does not
explain variations in the quality of environment disclosures
and integrity assurance. These results highlight the signif-
3
http://www.csrsmonitor.org.
An Evaluation of the Quality of Corporate Social Responsibility Reports
attention, public visibility) based on which firms switch
among various contextual elements and fine-tune their
disclosure practices to accommodate the diversity in and
the magnitude of demands made by their stakeholders and
that of large society which provides these institutions their
raison detre.
Regarding legal origin, common law countries demon-
strate higher quality disclosures for financial firms when
compared with their code law counterparts. On the other
hand, our analyses of the association with the four con-
textual elements provide evidence of variations across
elements. In particular, common law countries systemati-
cally put more emphasis on philanthropy, while the quality
of environment, bribery and corruption, and integrity
assurance follow similar patterns in countries from these
two legal traditions. This supports the argument of a more
unilateral approach pursued by firms in common law
countries where shareholder influence is paramount
drowning out the voices of other stakeholders (Ball et al.
2000; Jaggi and Low 2000). In such regimes, firminvestor
relations typically determine the content of firm disclo-
sures, which is led by the demand for comprehensive and
high-quality information.
Finally, we observe higher quality CSR reporting in
countries where CSR is widespread and there is higher
social provision in and largely held traditions and societal
expectations for such contexts. This finding is also sup-
ported by higher quality philanthropy and bribery and
corruption disclosures as well as third-party assurance in
such countries. This is consistent with the legitimacy the-
ory suggesting an implicit contract between firms and
society, the terms of which firms are required to fulfill to
attain their license to operate (Brown and Fraser, 2006;
Cormier et al. 2004; Deegan 2002; Patten 1992).
The rest of the paper is structured as follows. First, the
conceptual framework is portrayed by outlining a back-
ground of the current situation in CSR reporting. Second,
research hypotheses are developed linking systematically
our variables of interest and CSR report quality of financial
institutions. Third, data and methodology are explained
with special mention to the CSR-S Monitor. Fourth, a
discussion of the empirical results is provided, and the
article concludes with the main conclusions and recom-
mendations for future research.
Conceptual Framework
Corporate Challenges in Creating Effective
and Meaningful CSR Reports
CSR reports serve an important business purpose. They
allow corporations to disseminate information for the
impact of their normal business practices on larger public
concerns dealing with issues of economic, socio-political,
and governance, i.e., public accountability or environment,
social, and governance (ESG) issues. The voluntary nature
of these reports, and the fact that their content and
reporting environment, i.e., medium of communication, are
entirely controlled by the sponsors, affords the companies
two important advantages. First, it allows them to present
the positive ESG elements pertaining to the companys
operations in a manner most favorable to the company.
Second, when a companys ESG issues have a negative
public impact, the companys CSR report can play a crit-
ical role in presenting the companys response in a more
favorable and balanced context.
The voluntary character of the CSR reports, however,
places a heavy burden on the company to ensure that its
report is accurate and objective, and the information pro-
vided is relevant to the issues discussed and is verifiable for
its accuracy. Otherwise, it runs the risk of losing credibility
and being dismissed by the very stakeholders that a com-
pany is trying to reach and convince of the veracity of its
position.
Another major challenge to overcome is the non-stan-
dard character of these reports as to content and manner of
reporting. Unlike financial reports, where the content and
reporting format are strictly regulated and thus make these
reports easily comparable, CSR reports have not yet
evolved some measure of consistency in their reporting
practices. Notwithstanding, a number of private and public
agencies have created various formats for reporting CSR
information and also criteria for measuring and ranking
systems. These systems, which in large part are paid by the
reporting corporations, do not make public their criteria for
evaluating and ranking these reports, or confine themselves
to providing systems that should help companies prepare
such reports.
The growth in the quantityand to some extentthe
quality of these reports, has had two positive impacts. First,
reports are increasingly being scrutinized by long-term
institutional investors and other important stakeholders in
order to gauge future risks, which the company may have
down-played or ignored in their public communications.
Second, companies risk adverse public reaction when CSR
reports by other industry members are viewed in a more
favorable light.
Current Research on the Quality of CSR Reports
There have been a number of published research papers
examining CSR reports issued by financial institutions. For
the most part, these papers have focused on the financial
industry behavior in specific countries and regions. These
include Spain (Callado-Munoz and Gonzalez 2011),
123

Portugal (Branco and Rodrigues 2008), Latin America
(Aldama and Zicari 2012), and Europe (Carnevale and
Mazzuca 2014; Carnevale et al. 2012). Other authors have
addressed overall aspects of financial industrys CSR
reporting (Chih et al. 2010; Attig et al. 2014; Scholtens
2009; Wu and Shen 2013; Jizi et al. 2014). We intend to
build on this research by taking a global perspective that
includes a larger sample and a more systematic analytical
framework.
There are a number of organizations that focus on
identifying, measuring, and certifying the quality of
reports. Among these, two organizations, i.e., Global
Reporting Initiative (GRI)4 and ISO 260005 have focused
on developing systems and procedures to assist and guide
corporations in preparing CSR reports. GRI provides
specific guidelines for reporting on economic, environ-
mental, and social impacts and risks of organizations. Its
G4 sustainability reporting framework outlines key
performance indicators that organizations can monitor,
measure, and report in accordance with the sustainability
reporting principles set out by GRI. Unlike GRI, ISO
26000 does not specifically set out guidelines for CSR
reporting but rather provides guidance to organizations on
organizing their environmental, social, and economic
activities, which can then be monitored, measured, and
reported to present a clear picture of the reporting organi-
zations performance on CSR to its various stakeholders.
It should be noted, however, that GRI and ISO 26000 do
not provide any mechanism to assure uniform quality of
information included in CSR reports using their guidelines;
nor do they assure any independent external verification of
the information contained in the CSR report. The endeavor
is collaborative and depends entirely on the commitment of
the companies to prepare their CSR report using the ISO
26000 and GRI guidelines.
GRI and ISO 26000 also emphasize strengthening the
credibility of the CSR reporting and encourage attaining
some measure of quality assurance in the CSR reports.
While both GRI and ISO 26000 underscore the need for
comparability of reporting over time as well as among peer
organizations and aim to achieve this through standard-
ization, they do not provide any mechanism to monitor and
assess the extent to which organizations follow procedures
outlined in these frameworks in the reporting process. The
CSR-S Monitor used in our analysis in the current paper
aims to fill this gap. We provide a framework which
enables us to assess the content of a CSR report along with
4
For Global Reporting Initiative (GRI), please see Global Reporting
Initiative (2014).
5 information that the company identified as CSR report
For ISO 26000, please see Moratis, L. and Cochius, T. (2011);
Craig N. Murphy and JoAnne Yates (2009); International Standards
organization (2010).
123
S. P. Sethi et al.
the accompanying third-party integrity assurance in con-
siderable detail and depth with regard to the appropriate
implementation of any reporting and assurance standard
regardless of the approach followed by the reporterand
particularly to the comprehensiveness, quality, and accu-
racy of the information disclosed.
Types of CSR Reports
Stand-Alone versus Integrated Reports
Current trends in developing CSR reports indicate two
directions, i.e., either a stand-alone report or as part of
the companys annual financial report (integrated report).
Both approaches offer some advantages and also certain
drawbacks in terms of their ability to engender trust among
the companys stakeholders and also the flexibility they
provide in creating and disseminating relevant information
(Jensen and Berg 2012; Willis 2010). At present, a large
majority of reports follow the stand-alone model. While
these reports may follow the style and certain contextual
categories of the regulatory-mandated financial reports,
they provide a large measure of discretion for the company
to add qualitative information that may not be strictly
germane to the required elements of financial reporting.
Stand-alone reports, however, sufferat least initially
some public skepticism because companies may be temp-
ted to engage in window dressing or managerial cap-
ture in the sense that they may emphasize issues and
performance measures that would put corporate manage-
ment in a good light rather than detailed information that is
relevant to societal expectations (Delmas and Burbano
2011; Palazzo and Richter 2005).
The second approach calls for the companies to create
integrated reports where financial and ESG elements are
containedgenerally in separate sectionsin the same
report (Eccles and Armbrester 2011; Eccles and Krzus
2010; Schaltegger and Wagner 2011). This approach sim-
plifies the task of report creation by standardizing the
treatment of various contextual elements (IIRC 2011).
Unfortunately, it also regresses the treatment of ESG issues
to narrower financial terms and thus limits the scope of
discussion in terms of broader issues of public policy where
the companys external stakeholders would be interested in
learning about both the positive and negative externalities
emanating from a companys core business operations.
In our sample, we include both types of reports. How-
ever, integrated reports constitute only 7 % of the total
sample and do not allow for meaningful separate analysis.
In the case of integrated reports, we have used only the
or ESG elements of the integrated approach compatible
with our data set.
An Evaluation of the Quality of Corporate Social Responsibility Reports
Development of Hypotheses
Influence of Internal Factors on the Quality
of Reporting on CSR
Extant literature documents firm size as a major determi-
nant of CSR disclosures (e.g., Branco and Rodrigues 2008;
Chih et al. 2010; Cowen et al. 1987; Patten 1992). On the
other hand, firm size measured by various accounting- or
market-based measures often extend beyond merely size
(Bowen 2000). In this respect, larger firms are more likely
to publish high-quality CSR reports to command better
credibility with important stakeholders, improve their
reputation, and thus maintain and enhance their social
license to operate (Brammer and Pavelin 2004; Bravo
et al. 2012; Campbell 2007; Trotman and Bradley 1981;
Watts and Zimmerman 1978). Larger firms are also argu-
ably more diversified geographically, by product/activity
type (Bowen 2000; Brammer and Pavelin 2004), and thus
offer a higher level of detail than smaller ones. In line with
these arguments, we contend that larger firms will be more
likely to publish higher quality CSR reports than their
smaller counterparts.
H1a Firms that are larger are more likely to publish
higher quality CSR reports.
Following our analysis of overall trends in CSR reports,
we focus our attention on the quality of information con-
tained in some of the contextual elements in CSR reports.
The CSR-S Monitor scores eleven contextual elements on a
scale of 0100, higher scores indicating higher quality
disclosure. As previously stated, we have selected four
particular elements for detailed analysis in this paper.
These are environment, philanthropy, bribery and corrup-
tion, and integrity assurance. We postulated that in their
CSR reports, companies would provide greater detail and
relevance on those issues where industry and individual
companies may have been the subject of negative infor-
mation through the mass media, e.g., bribery and corrup-
tion, environment, and sustainability. Conversely, we also
argued that companies would provide greater detail and
higher quality of issues where they have a positive record
of accomplishments but which may not have received
sufficient news media attention, e.g., philanthropy and
assurance.
A similar line of reasoning applies to the analysis of four
selected contextual elements and their association with firm
size, and the overall quality score of the firms CSR report.
Furthermore, given the voluntary nature of CSR reports, it
would be logical for the companies to emphasize those
factors where (a) there is high likelihood of negative news
media reports, (b) there is considerable public skepticism
about corporate statements, and (c) corporations have
positive information to communicate, but which has not
received enough attention in the news media. Of the four
contextual elements selected for our analysis, environment
and bribery and corruption are intended to test for coun-
tering of negative information, while philanthropy is
viewed as lending positive support for the companys
image, and integrity assurance points to the companys
strength with regard to the accuracy and substantive nature
of the information contained in the CSR reports.
We expect larger firms to disclose higher quality
information on environment, philanthropy, bribery and
corruption, and integrity assurance to improve and sustain
their public impression and mitigate any potential negative
perceptions:
H1b Larger firms are more likely to provide higher
quality information on environment, philanthropy, bribery
and corruption practices, and integrity assurance in their
CSR reports.
Influence of External Factors on the Quality of CSR
Reports
An important aspect of CSR disclosure is the country in
which a firm is headquartered. Previous research has
focused on the determinants of variations in voluntary
reporting across countries/regions (e.g., Azzone et al.
1996; Gamble et al. 1996; Meek et al. 1995; Fekrat et al.
1996). The legal environment of a country determines the
behaviorincluding disclosure decisions of firms domi-
ciled in that country (Ball et al. 2000; La Porta et al.
1997). Similarly, firms originating from stakeholder-ori-
ented, code law countries are documented to provide
higher quality disclosures than those from common law
countries with a narrower focus on shareholders (e.g.,
Smith et al. 2005). Considering the variety of issues that
arise when dealing with a range of stakeholders with
varying interests, we expect that firms headquartered in
code law countries will undertake higher quality of CSR
disclosures due to pressures for increased accountability
from institutional and societal mechanisms in place.
Campbell (2007) points to the influence of institutional
factors on firms CSR behavior and suggests that firms are
more likely to adopt socially responsible practices in well-
established institutional environments. Chih et al. (2010)
test Campbell (2007)s argument using a sample of
financial firms in 34 countries during 20032005 and find
supporting evidence in countries with better legal
enforcement, while they also document an opposite rela-
tionship between the extent of shareholder rights and
responsible corporate behavior.
123

However, the literature on the influence of legal/insti-
tutional factors on the quality of CSR reporting particularly
by financial firms is scarce. We aim to fill this gap in the
literature hypothesizingin line with the above argu-
mentsthat in countries with strong institutional/legal
settings, firms will be more likely to publish high-quality
information in their CSR reports:
H2a Firms will be more likely to issue CSR reports at a
higher overall quality in countries where there are adequate
regulatory/institutional standards to promote and ensure
greater disclosure.
We hypothesizein line with the arguments discussed
previously in this reportthat in countries with strong
institutional/legal settings, firms will be more likely to
publish high-quality information on environment, philan-
thropy, bribery and corruption, and external assurance in
their CSR reports:
H2b Firms will be more likely to issue higher quality
information on environment, philanthropy, and bribery and
corruption in and to obtain higher quality assurance on
their CSR reports in countries where there are adequate
regulatory/institutional standards to promote and ensure
greater disclosure.
Data and Methodology
Our universe of financial institutions comprises 104 of the
worlds largest companies that have published CSR reports
in 2012. Three regions account for almost 92 % of com-
panies in our data set. These are Western Europe (46),
North America (35), and East Asia (15). There are signif-
icant differences among the companies with regard to
diversity and quality of information. Our intent is to look
for possible explanations for the differences using a variety
of independent variables. We also attempt to find intra-data
differences, i.e., contextual variables, with a view to
examine their relationships in the context of the overall
quality of the CSR reports.
The CSR-S Monitor
One of the primary goals of our research is to address and
minimize the problems of data incompatibility and there-
fore facilitate comparison between different types of CSR
reports. The scoring framework used in this paper, the
CSR-S Monitor, is designed to offer an analytical approach
that would (a) allow a companys report to be objectively
analyzed and compared with any report published by
another company, or with the average scores of all com-
panies sorted by country, region, or industry, and
123
S. P. Sethi et al.
(b) improve the quality of information available in the
public domain and therefore help important stakeholders
make informed judgments on a companys ESG
performance.6
The CSR-S Monitor has been developed by academic
researchers and scholars at the Weissman Center for
International Business at Baruch College, the City
University of New York. To the best of our knowledge, this
analytical framework and scoring system for contextual
elements is the first of its kind in the world. The CSR-S
Monitor
Offers a range of objective measures for comparing
reports in terms of their comprehensiveness, specificity
of detail, quality, and accuracy of reporting;
Provides internal corporate accountability officers with
an external and independent evaluation tool, and
provides guidance for companies initiating their own
CSR reporting;
Enables companies to compare their reports across their
industry, region, and market capitalization;
Minimizes the free rider problem; the facilitated
comparison of report quality will induce all compa-
niesboth those currently publishing corporate social
responsibility reports and those planning to do so in the
futureto create high-quality reports; and
Creates a market-driven incentive for companies to
improve their CSR reporting to gain competitive
advantage, as an alternative to greater regulation in
this area.
Statistical Analysis
We perform multivariate analysis using ordinary least
squares (OLS) model to test our hypotheses. The multi-
variate analysis is undertaken both at an aggregate as well
as disaggregate level, where we distinguish between the
overall CSR report quality and the quality of the infor-
mation in the CSR reports pertaining to each of the four
contextual elements analyzed in this study. The multi-
variate regression model used to test the hypotheses is
presented below:
CSRS SCORE a b1 FSIZE b2 ROE b3 LAW
b4 NCSR b5 ADRI b6 DIVERSE
b7 EQUATOR b8 WOLFSBERG
1
6
Appendices 1, 2 and 3 provide description of the CSR-S Monitors
analytical framework, research methodology, and its applications to
CSR reports. They also include case examples; three companies with
low, medium, and high quality scores.
An Evaluation of the Quality of Corporate Social Responsibility Reports
The dependent variable, CSRS SCORE, represents the
CSR-S Monitors assessment of the quality of the infor-
mation in a CSR report in its entirety.7 In further analysis,
we replace overall CSR report quality with the quality of
disclosure on environment, philanthropy, bribery and cor-
ruption, and integrity assurance in these reports. ENVIR,
PHIL, CORR, and ASSUR represent corresponding con-
textual element scores from the CSR-S Monitor. This
variable takes values between 0 and 100 for the overall
score, 0 and 10 for environment and philanthropy, 0 and 5
for bribery and corruption, and 0 and 15 for integrity
assurance, where higher values indicate higher quality of
disclosure.
Firm size (SIZE) is measured by the natural log of a
firms total assets and helps test the first set of hypotheses
(i.e., H1a and H1b). We estimate profitability by return on
equity (ROE) measured by the ratio of earnings before
interest and taxes scaled by total equity. Extant research
suggests that firms with better financial performance will
act more socially responsibly as they have more resources
to spare for socially responsible activities (e.g., Campbell
2007; Waddock and Graves 1997). Thus, profitability will
reflect a firms socio-political profile and induce such firms
to disclose their achievements at a higher quality in the
public domain (Hibbitt 2004). Profitability will also pro-
vide more public visibility and lead to closer public scru-
tiny, which will eventually incentivize firms to convey a
positive social image through publishing higher quality
CSR reports. On the other hand, neo-classical view sug-
gests that when financial performance is poor, managers
will resort to environmental and social activities and rela-
ted disclosures to promote a positive public image and thus
divert attention from poor financial performanceman-
agerial opportunism (Preston and OBannon 1997). In
contrast, they will be more likely to spend less on socially
responsible activities and rather act to increase short-term
profitability and personal gains when financial performance
is high, suggesting a negative relation between firm prof-
itability and CSR. Due to these conflicting arguments in the
literature, we do not have any prior expectation on the
direction of the relationship between the quality of CSR
reporting and firm profitability. Accounting data come
from the Compustat database.
LAW represents the legal tradition of a firms head-
quarter location in the country or region. It indicates
whether a firms headquarter country possesses a common
law or a code law tradition and takes values of 1 and 0,
respectively. We also control for the legal environment of a
country. Following La Porta et al. (1998), we use Anti
Director Rights Index, ADRI, to represent the quality of the
7
See Appendices 13 and www.csrsmonitor.org for a more detailed
description of the methodology and sample list of companies.
legal environment and the degree of shareholder protection
in a country. It ranges between 0 and 6, where a higher
value indicates higher quality legal regime and greater
shareholder rights. Both legal environment variables, LAW
and ADRI, are collected from La Porta et al. (1998).
National CSR index, NCSR, is the National Corporate
Responsibility Index (NCRI) measured by and collected
from AccountAbility.8 It represents the overall CSR envi-
ronment in a country in the year 2005. This variable helps
us account for the variation across countries with respect to
the nature of CSR including relevant reporting on envi-
ronmental and social matters and thus also provides a
measure of the public awareness and consequent pressure
on firms to disclose on environment, social, and gover-
nance issues. A number of studies have provided evidence
of increased environmental and social disclosure in
response to public perception of relevant risks (e.g.,
Berthelot et al. 2003; Deegan et al. 2002; Lee and Hutch-
ison 2005). According to the legitimacy theory, changes in
public and institutional pressures induce companies to
adjust the extent of their environmental and social disclo-
sures so as to fulfill their implicit contracts with society and
achieve/maintain their license to operate (Brown and Fra-
ser 2006; Deegan 2002; Patten 1992). In line with these
studies, we expect higher CSR reporting quality for firms
operating in countries with higher institutional and public
pressure towards sustainable business practices.
DIVERSE is the number of different industry sectors in
which a firm operates (i.e., number of different six-digit
North American Industry Classification System (NAICS)
codes assigned to a particular firm by the CSR-S Monitor)
and ranges between 0 and 5, 5 representing the most
diversified and 0 representing the non-diversified. The data
for different industry sectors are collected from the CSR-S
Monitor. Firms with diverse set of operations spread over
multiple industries will be subject to a more diverse set of
stakeholders and hence will be more likely to issue higher
quality CSR reports.
Most industries organize themselves into one or more
industry-based organizations where membership is volun-
tary and open to all companies in the industry. The primary
focus of a vast majority of these groups is to promote and/
or defend the industrys position to various legislative and
regulatory bodies, public at large, with the explicit purpose
of protecting the industrys business model. More recently,
a new form of industry grouping has become en vogue.
These groups aim to persuade individual members to vol-
untarily participate in policies and programs that are being
advocated by important stakeholders and are yet not
required by law. Managing such voluntary groups is often
quite challenging because of political and philosophical
8
AccountAbility (2005).
123
 S. P. Sethi et al.

differences, disparate cost effect on participating members, Table 1 Descriptive statistics

and problems with free rider and adverse selection. N Mean Median SD Min Max
Accordingly, in the case of financial institutions, we
have used participation in the Equator and Wolfsberg Panel A dependent variables
principles as two of the elements of industry participation. CSRS 104 42.26 40.00 14.37 15.25 71.00
Equator principles were jointly created by the International ENVIRONMENT 104 6.11 6.00 1.89 1.00 10.00
Monetary Commission and industry members whereby PHILANTHROPY 104 7.20 7.50 1.79 0.00 10.00
participants agreed to ensure that in granting infrastructure CORRUPTION 104 2.34 2.50 1.69 0.00 5.00
loans, member bank would ensure that the borrowers ASSURANCE 104 4.12 2.50 4.03 0.00 12.00
adhere to certain standards of environmental sustainability, Panel B explanatory variables
land use, and protection of the rights of indigenous people FSIZE 104 13.09 13.13 1.98 8.37 20.27
(Schepers 2011; Macve and Chen 2010).9 Similarly, ROE 104 0.10 0.09 0.14 -0.49 1.17
Wolfsberg principles have been developed by eleven glo- LAW 104 0.56 1.00 0.50 0.00 1.00
bal financial institutions to address a diverse range of NCSR 104 42.31 39.65 4.80 34.85 57.93
issues, particularly financial crimes, in global banking such ADRI 104 3.49 3.00 0.95 1.00 5.00
as of anti-money laundering, corruption, terrorist financing, DIVERSE 104 2.96 3.00 1.64 0.00 5.00
and sanctions.10,11 EQUATOR and WOLFSBERG are EQUATOR 104 0.38 0.00 0.49 0.00 1.00
dummy variables representing a firms commitment WOLFSBERG 104 0.11 0.00 0.31 0.00 1.00
towards such industry-level CSR initiatives. These dummy
variables take values of 1 if a firm follows the Equator or
Wolfsberg principles, and 0 otherwise. In line with
Campbell (2007) and Chih et al. (2010), we expect higher and WOLFSBERG, indicate certain degree of participation
quality CSR disclosures from financial institutions that are from our sample of firms in industry-level CSR initiatives.
signatories of either initiative in an effort to show adher- Table 2 shows the correlations across model variables.
ence to environmental and social responsibility. In all We document high positive correlations between overall
regressions, we use robust standard errors clustered by CSR report quality and contextual elements, albeit the
region to account for the lack of independence among units correlation is the weakest between CSRS and PHILAN-
within the same region. THROPY (q = 0.34). We also document significant cor-
relations between CSRS and other model variables such as
firm size (FSIZE; q = 0.19), profitability (ROE;
Results q = -0.31), legal origin (LAW; q = -0.20), national CSR
index (NCSR; q = 0.41), and industry self-regulations
The descriptive statistics are shown in Table 1. CSR report (EQUATOR; q = 0.30 and WOLFSBERG; q = 0.17). Our
quality (CSRS) ranges from 15.25 to 71, with a median decision to use multivariate analysis was based on the fact
score of 40/100. This wide range in scores along with high that there was significant correlations among the model
variation of 14.37 indicates a lack of consensus in CSR variables. This allowed us to isolate the unique association
reporting and resulting dispersion in CSR reporting prac- between each of the model variables and the quality of
tices across financial institutions worldwide. An interesting CSR reporting. On the other hand, none of the correlation
finding of our data was the quality/consistency of CSR coefficients exceed the 80 % threshold, indicating that the
reports and the extent to which sponsoring companies were validity of the inferences drawn from the multivariate
active in industry-wide initiatives pertaining to environ- regression model is not threatened by multi-collinearity
mental, societal, and governance (ESG) issues. As pre- (Gujarati 2003).
sented by DIVERSE, a typical firm in our sample is
involved in an average of 3 different industry sectors. Overall CSR Report Quality
Finally, two industry-level regulation proxies, EQUATOR
In Table 3, CSR reports by financial institutions have an
average score of 42.26 out of a maximum of 100. We group
9
reporting firms into six regions. The analysis of the dif-
http://www.equator-principles.com/. ferences in reporting quality across these regions indicates
10
http://www.wolfsberg-principles.com/.
11
significant dispersion across firms in their CSR reporting
Current members of the Group are Banco Santander, Bank of
practices (F statistic = 2.17; p value \ 0.10). Among the
Tokyo, Mitsubishi UFJ, Barclays, Citigroup, Credit Suisse, Deutsche
Bank, Goldman Sachs, HSBC, J.P. Morgan Chase, SocieteGenerale, top three regions, West Europe-based companies have the
and UBS. highest overall average CSR report quality (CSRS) with a

123
An Evaluation of the Quality of Corporate Social Responsibility Reports

(13)
median of 46.13/100, followed by companies in East Asia

1
37.5/100 and North America as the laggard with a median
score of 34/100. Surprisingly, the average reporting quality

0.25**
for the other three regions is remarkable, i.e., 46.56/100,
(12)

the highest overall. This indicates that only those firms that

1
are committed to CSR disclosure choose to report in these

0.03
0.16
(11)

regions, pushing the overall quality above those for other

1
regions.
The comparisons of environmental disclosure quality

0.22**
across the three regions provide no evidence of a major

0.06

0.02
(10)

1
difference. These results are reflected as very close regio-
nal averages. When taken together with relatively high

0.24**
-0.03
-0.08
overall average and low dispersion in environmental dis-
(9)

closure quality (6.11/10 average and 1.89/10 standard

1

0
deviation), we can argue that a certain level of standard-
-0.49***

ization in disclosure of this particular aspect of CSR has

0.38***
0.28***

been achieved across all regions and countries. We observe

-0.03
-0.07
(8)

similar results for philanthropy. On the other hand, regio-

1

nal factors play an important role in determining the

quality of reporting on bribery and corruption and integrity
-0.28***

assurance. Regarding the former, Western Europe has the

-0.07

-0.08
-0.14
0.19*

-0.1

highest average quality of 2.98/5. East Asia comes next

(7)

with 2.28/5 average, while North America ranks the lowest

with 1.59/5 average reporting quality, all together leading
-0.41***

0.31***

to a statistically significant cross-regional difference in

0.23**
-0.12

-0.15
-0.09
0.06

reporting quality (F statistic = 5.18; p value \ 0.01). The

(6)

quality of integrity assurance also varies significantly

across regions. Specifically, regional differences in average
-0.20**
-0.21**
0.28***

0.20**

quality of assurance are so large that the gap in reporting

-0.16

0.17*
0.09

0.12

quality between the top (Western Europe with an average

(5)

of 5.32/15) and bottom (North America with an average of

only 2.2/15) is more than twofold (F statistic = 6.22;
-0.33***
-0.25**
0.41***
0.28***

0.45***

0.34***

p value \ 0.01).
-0.13
0.12

0.13
(4)

Multivariate Analysis
0.28***

0.24**
0.24**
-0.11

Overall CSR Report Quality

0.16*
0.12
0.16

0.01
0.07
0.13
(3)

In our first model, we regress aggregate CSR reporting quality

scores (CSRS) on a set of explanatory variables to isolate any
-0.27***
0.26***
0.39***
0.44***

0.25***
0.20**

0.23**

potential impact of the variables of interest on CSR disclosure

-0.07

-0.03
-0.01
0.1
(2)

quality. Table 4 shows estimates for the OLS regression

1

* p \ 0.10, ** p \ 0.05, *** p \ 0.01

models using aggregate CSR score as the dependent variable.

These results show that firm size does not have any major
-0.31***
-0.20**
0.70***
0.34***
0.69***
0.71***

0.41***

0.30***

impact on CSR reporting quality, whereas less prof-

-0.07
0.19*

0.17*
0.01
Table 2 Correlation matrix

itable firms publish higher quality CSR reports.

(1)

Regarding institutional factors, the effect of legal origin

(LAW) is significant, suggesting a tendency towards higher
PHILANTHROPY
ENVIRONMENT

quality CSR reporting for firms headquartered in common

CORRUPTION

WOLFSBERG
ASSURANCE

law countries, contrary to our expectations outlined above.

EQUATOR
DIVERSE

The coefficient on the national CSR index, NCSR, is sig-

FSIZE

NCSR
CSRS

ADRI
LAW

nificantly positive, suggesting that the extent of institu-

ROE

tional factors that favor and encourage corporate

123
 S. P. Sethi et al.

Table 3 Aggregate statistics per region

Region CSRS ENVIRONMENT PHILANTHROPY CORRUPTION ASSURANCE

East Asia
N 15 15 15 15 15
Mean 39.00 5.82 7.23 2.28 3.43
Median 37.50 5.50 7.50 1.75 4.00
SD 11.18 2.38 1.32 1.55 3.03
Min 22.00 2.00 5.00 0.00 0.00
Max 54.75 9.50 9.50 5.00 10.50
Latin America & the Caribbean
N 1 1 1 1 1
Mean 66.75 9.00 6.00 4.50 11.00
Median 66.75 9.00 6.00 4.50 11.00
SD . . . . .
Min 66.75 9.00 6.00 4.50 11.00
Max 66.75 9.00 6.00 4.50 11.00
North America
N 35 35 35 35 35
Mean 38.43 5.99 7.60 1.59 2.20
Median 34.00 5.50 7.50 1.50 1.50
SD 14.64 1.93 1.14 1.47 2.84
Min 16.00 2.00 5.00 0.00 0.00
Max 63.25 10.00 9.50 4.50 11.50
Oceania
N 5 5 5 5 5
Mean 35.60 5.15 6.90 0.30 4.80
Median 36.00 4.75 7.00 0.00 2.50
SD 8.99 2.50 1.98 0.54 4.62
Min 26.50 2.00 4.50 0.00 0.00
Max 49.00 9.00 9.50 1.25 10.00
Sub-Saharan Africa
N 2 2 2 2 2
Mean 63.88 8.63 6.75 5.00 10.00
Median 63.88 8.63 6.75 5.00 10.00
SD 0.53 0.53 1.77 0.00 0.71
Min 63.50 8.25 5.50 5.00 9.50
Max 64.25 9.00 8.00 5.00 10.50
Western Europe
N 46 46 46 46 46
Mean 45.49 6.22 6.96 2.98 5.32
Median 46.13 6.25 7.50 3.25 3.00
SD 14.15 1.56 2.28 1.55 4.37
Min 15.25 1.00 0.00 0.00 0.00
Max 71.00 9.00 10.00 5.00 12.00
Total
N 104 104 104 104 104
Mean 42.26 6.11 7.20 2.34 4.12
Median 40.00 6.00 7.50 2.50 2.50
SD 14.37 1.89 1.79 1.69 4.03
Min 15.25 1.00 0.00 0.00 0.00
Max 71.00 10.00 10.00 5.00 12.00
Test of differences (region) 2.17 0.33 1.03 5.18 6.22
(F-statistic)
(p-value) (0.09) (0.80) (0.38) (0.00) (0.00)

123
An Evaluation of the Quality of Corporate Social Responsibility Reports

Table 4 Multivariate
(1) (2) (3)
regression analysis of aggregate
CSRS CSRS CSRS
CSR reporting quality
FSIZE 0.817 (1.07) 1.173 (1.22) 0.723 (1.02)
ROE -21.78*** -19.54*** -20.62***
(-6.23) (-5.25) (-6.22)
LAW 2.613 (1.65) 4.022** 2.957 (1.86)
(2.67)
NCSR 1.003** 1.217*** 1.045**
(3.91) (4.27) (3.93)
ADRI -0.723 (-0.94) -0.246 (-0.26) -0.737 (-0.98)
DIVERSE -0.730* -0.905* -0.894**
(-2.13) (-2.45) (-3.15)
EQUATOR 5.503* 4.785*
(2.48) (2.07)
WOLFSBERG 6.420 (1.88) 5.017 (1.63)
Constant -7.638 (-0.63) -22.11 (-1.30) -8.221 (-0.66)
Observations 104 104 104
Adjusted R2 0.213 0.204 0.216
t statistics in parentheses
* p \ 0.1, ** p \ 0.05, *** p \ 0.01

responsibility also affects corporate disclosures. Financial
firms originating from such countries are significantly more
likely to report CSR-related information at a higher quality,
consistent with our hypothesis. Legal environment (ADRI),
however, has no significant association with the quality of
CSR reports.
The relation between CSR report quality and the extent
to which firms diversify their operations in multiple
industry sectors, DIVERSE, is negative, suggesting that
financial firms such as bank holding companies operating
in multiple industry sectors produce lower quality CSR
reports than their less diversified counterparts.
Membership in industry-level voluntary CSR organiza-
tions has positive association with CSR reporting quality,
consistent with Campbell (2007) and Chih et al. (2010).
The coefficients on both proxies for a firms involvement in
industry-level CSR-related initiatives, EQUATOR and
WOLFSBERG, are positive, while only those on the former
are significant. These results underscore the role of private
regulations and voluntary industry-level initiatives in pro-
moting environmentally and socially conscious business
models including effective disclosure of related risks and
opportunities.
Quality of Reporting on Contextual Elements
In the second regression, we substitute aggregate CSR
reporting quality with the scores for each of the contextual
elements and run similar regressions using the same set of
explanatory variables. Table 5 shows the results of our
multivariate analyses of the four contextual elements
selected for detailed analysis. These are environment,
philanthropy, bribery and corruption, and integrity assur-
ance. Overall, these results document wide variations in the
determinants of the scores of these elements. In particular,
larger firms tend to report at a significantly higher quality
on philanthropy and bribery and corruption (shown in
columns 49). Profitability (ROE) significantly affects the
quality of reporting in environment, philanthropy, and
integrity assurance. Specifically, whereas profitable firms
report at a lower quality on environment and integrity
assurance, they tend to disclose high-quality information
on their philanthropic activities.
Contrary to our expectations, legal origin of a country
(LAW) has significant positive relation (at the 1 % level) with
reporting quality only for philanthropy-related disclosures,
suggesting higher quality reporting on philanthropic activi-
ties by firms from common law countries, presented in col-
umns 46. National CSR rating (NCSR) has all positive
association with disclosure quality. It has the strongest
relation with the quality of reporting on philanthropy.
Additionally, the quality of legal environment in a country
(ADRI) has significant relations with philanthropy- and
bribery and corruption-related disclosures. Surprisingly, its
association with the former is negative, while that with the
latter is positive, both being highly significant. Diversity of
operations is not a major factor that determines the quality of
reporting on any of the four contextual elements analyzed.
Finally, the relation between industry-led voluntary CSR
initiatives and reporting quality provides some evidence of

123
123
Table 5 Multivariate regression analysis of contextual elements
(1) (2) (3) (4) (5) (6) (7) (8) (9) (10) (11) (12)
ENVIR ENVIR ENVIR PHIL PHIL PHIL CORR CORR CORR ASSUR ASSUR ASSUR

FSIZE 0.0298 (0.60) 0.00538 0.346** 0.352** 0.327** 0.131** 0.180** 0.127** -0.0291 0.00400 -0.0658
(0.40) (0.09) (3.28) (3.16) (3.75) (3.08) (2.74) (3.22) (-0.11) (0.02) (-0.30)
ROE -3.356*** -2.921*** -3.058*** 0.884 1.179** 1.120* -1.264 -1.086 -1.214 -3.636** -3.018** -3.186***
(-7.50) (-5.76) (-5.96) (1.33) (2.77) (2.50) (-1.35) (-1.10) (-1.21) (-3.70) (-3.93) (-4.13)
LAW 0.473 0.697 0.562 1.533*** 1.662*** 1.603*** -0.456 -0.315 -0.442 -1.098 -0.799 -0.964
(1.35) (1.96) (1.62) (5.07) (5.32) (5.44) (-1.34) (-0.90) (-1.22) (-1.24) (-0.81) (-0.98)
NCSR 0.0513 0.0841 0.0623 0.117*** 0.135*** 0.126*** 0.105** 0.127** 0.107* 0.121 (1.87) 0.165* 0.138*
(1.21) (1.85) (1.44) (4.11) (4.54) (4.57) (2.62) (3.48) (2.46) (2.36) (2.04)
ADRI -0.263 -0.205 -0.267 -0.435*** -0.411** -0.438*** 0.283*** 0.341** 0.283*** 0.626 (1.17) 0.696 0.620 (1.17)
(-1.30) (-0.92) (-1.33) (-5.06) (-4.00) (-5.26) (5.37) (3.63) (5.37) (1.27)
DIVERSE -0.0662 -0.110 -0.109* 0.133 0.0984 0.0990 -0.0844 -0.0928 -0.0914 -0.329 -0.395 -0.393
(-1.17) (-1.86) (-2.24) (1.92) (1.70) (1.89) (-1.38) (-1.69) (-1.46) (-1.57) (-1.66) (-1.60)
EQUATOR 0.792 (1.99) 0.607 0.411 0.265 0.600 (1.77) 0.569 (1.44) 1.022** 0.743***
(1.40) (1.84) (1.33) (3.42) (4.56)
WOLFSBERG 1.473*** 1.295*** 1.102* 1.025* 0.383 (0.81) 0.216 (0.43) 2.170 1.952 (1.48)
(3.56) (2.78) (2.23) (2.16) (1.64)
Constant 4.421 (1.73) 2.508 4.270 -2.255 -3.142 -2.374 -4.401 -6.077** -4.426 -1.279 -3.661 -1.506
(0.76) (1.65) (-0.95) (-1.17) (-1.05) (-1.85) (-2.87) (-1.80) (-0.22) (-0.62) (-0.25)
Observations 104 104 104 104 104 104 104 104 104 104 104 104
2
Adjusted R 0.075 0.098 0.108 0.194 0.219 0.215 0.284 0.265 0.278 0.094 0.109 0.106
t statistics in parentheses
* p \ 0.1, ** p \ 0.05, *** p \ 0.01
S. P. Sethi et al.
An Evaluation of the Quality of Corporate Social Responsibility Reports
the impact of industry-led CSR initiatives on the quality of
disclosure for contextual elements. In particular, observed
associations are significantly positive for environment and
integrity assurance, while the effect is only weakly sig-
nificant for philanthropy and insignificant for bribery and
corruption. These results are consistent with our findings of
an overall weak association between membership in such
CSR initiatives and aggregate CSR reporting quality doc-
umented above.
Conclusion
Our overall findings provide some encouraging signs but
also indicate areas of potential concern:
1. Most large financial companies are publishing CSR
reports on a regular basis. They also show a consis-
tencyalbeit at a lower level in terms of overall
qualityin the CSR reports.
2. Companies originating in Common Law tradition
countries have not positively used their flexibility to
create higher quality reports with greater detail. They
have further undermined the credibility of their CSR
reports by either completely ignoring any measure of
integrity assurance, or have scored quite poorly in this
category.
3. Corporations that demonstrate a proactive approach
with other members of the industry demonstrate
greater inclination toward providing more detailed
information.
4. From the perspective of financial industry, bribery and
corruption is one of the most important contextual
elements. However, financial institutions do not seem
to have taken advantage of CSR reports on a forum for
discussing this issue. Once again, companies from the
Common law tradition countries score poorly on
these elements when compared with companies from
code rule countries where greater disclosure is gener-
ally required.
In conclusion, we believe that financial institutions are
missing an important opportunity by using CSR reports as
a pro-company communication document rather than a
powerful and potentially influential communication vehicle
where corporate views are presented and explained in an
objective manner and are protected from potentially hostile
and biased content which surrounds corporate news in the
general news media.
From the perspective of researchers and scholars, CSR
reports offer a fertile ground for identifying and testing
new sets of hypotheses and therefore create a proactive
environment where companies are encouragedunder
competitive pressureto produce good reports and thus
also add to the pool of good information in the public
domain.
In terms of financial institutions, an interesting avenue
of future research could be to analyze the component
business units of globally integrated large financial cor-
porations with a view to examine the impact of various
business unitsand their relative weighton the quality
of their CSR reports, the level of specificity provided for
various contextual elements, and the quality, scope of
integrity assurance, as well as the qualifications and inde-
pendence of assurance providers, among others.
Funding The funding for this project was provided by the Weiss-
man Center for International Business and is gratefully
acknowledged.
Appendix 1: Scope of Coveragea Brief
Description of Analytical Framework
The CSR-S Monitor scores CSR reports published in the
year 2012 by the worlds largest corporations. The com-
panies are selected from the Fortune 250 US, Fortune 250
Global indices along with those included in the previous
edition of the CSR-S Monitor. The 2014 sample of com-
panies comprises the worlds 614 largest companies,
spanning 20 industry sectors and 43 countries. In our
analysis, we include 104 financial institutions from around
the world that have published CSR reports.
Using a content analysis-based framework, the CSR-S
Monitor assesses the breadth and depth of information in
these CSR reports. The scoring framework reflects the
quality and credibility of information in CSR reports based
on a set of the 11 most common areas of sustainability
covered in these reports including environmental manage-
ment, stakeholder engagement, supply-chain management,
human right, and bribery and corruption. The number and
definition of various contextual elements, and their relative
weight, were determined based on the information contained
in large cross section of CSR reports. The significance of this
approach rests on the primary object of the CSR monitor, i.e.,
to compare and analyze the information that is currently
contained from the CSR reports, and not what should be
contained in these reports and prescribed by someone other
than the corporations preparing these reports.
The CSR-S Monitor provides a total score for the CSR
report as well as scores for each of the 11 contextual ele-
ments. The scores on each contextual element are added up
to achieve an overall quality score for each report, ranging
from 0 to 100 with a higher score indicating higher quality
reporting. Table 6 shows the list of individual elements and
their respective weights.
123
 S. P. Sethi et al.

Table 6 Individual component of the CSR-S Monitor and the irrespective weights
15 points each 10 points each 5 points each

Individual components and the irrespective weights

Integrity assurance Environment Corporate governance
Codes of conduct Corporate citizenship, philanthropy, and community relations Bribery and corruption
Company codes (5) Stakeholder engagement Human rights
Industrial codes (5) Supply-chain management Executive message
Universal codes (5) Labor outsourcing

The overall score as well as the scores on each contextual
element reflects the comprehensiveness (scale) and level of
specificity (scope) of information disclosed in a companys
CSR report. The scoring methodology takes into account
variations in CSR practices and related disclosures across a
variety of countries and regions, industry sectors, and legal
and regulatory systems. This allows for objective compar-
isons among reports and emerging trends in reporting.
The CSR-S Monitor provides the user with the ability to
compare any of the companies analyzed in the report.
Some industries have more regulation or public scrutiny,
creating an environment that encourages companies to
write more complete reports. Similarly, some countries
require more specificity as to what a company must include
in its CSR report. Therefore, we present the CSR-S Mon-
itor scores by country and region. Each report is analyzed
by multiple analysts, and their findings are randomly
examined by experienced supervisors to ensure that the
scoring framework is objectively and consistently applied.
Appendix 2: Definitions of Contextual Elements
and List of Illustrative Topics

Contextual Definition Illustrative sub-elements

element

Chair/executive The chair/executive message contextual element measures the Message signatory
message quality of information provided by the company in the CSR key topics
introductory statement of their CSR report about their
management commitment and effectiveness across all CSR Current achievements
subjects, in terms of current achievements and future targets Future targets
Environment The environment contextual element measures the quality of Waste management
information provided by the company about their management Climate change
commitment and effectiveness regarding environmental issues
such as waste management, climate change, and biodiversity, Water management
as well as disclosure about product or process innovation Biodiversity
opportunities, reducing the firms environmental impact Sourcing
through their supply chain, and any environmental accidents
Accidents/spills/fines
Environmental opportunities/innovation
Packaging materials
Philanthropy and The philanthropy and community involvement contextual Cash donations
community element measures the quality of information provided by the In-kind donations
involvement company about their management commitment and
effectiveness regarding their charitable activities, including the Employee engagement
type (cash, in-kind, employee engagement), purpose, and Donation matching
geographic scope of contributions, and how their philanthropy Purpose of activities (healthcare, education, environment,
is tied to their business disaster relief, small business development/entrepreneurship/
microfinance, poverty reduction/rural development)
Geographic scope of activities
Integration with business
External The external stakeholder engagement contextual element Engagement for business operations
stakeholder measures the quality of information provided by the company Engagement for CSR-related projects
engagement about their management commitment and effectiveness toward
integrating the advice of external stakeholders in their business Engagement for governance/oversight
operations, including CSR-related projects. Engagement at both Engagement for field-level and corporate-level projects and
the field level (single-site) and corporate level (company-wide) policies
is examined

123
An Evaluation of the Quality of Corporate Social Responsibility Reports

Contextual element Definition Illustrative sub-elements

Supply chain The supply chain contextual element measures the quality of Union relations
information provided by the company about their Employee health and safety
management commitment and effectiveness regarding the
CSR aspects of their relationship with suppliers, including the Supply-chain labor standards
procurement process, contract terms, and monitoring/auditing Child labor
of suppliers (including contractors, sub-suppliers, joint- Women and minority contracting
venture partners, or other major business associates)
Supply-chain certifications
Local/global sourcing
Labor relations The labor relations contextual element measures the quality of Union relations
information provided by the company about their Cash profit sharing
management commitment and effectiveness regarding its
treatment of employees, both direct (employed by the Employee involvement (in ownership, stocks)
company) and indirect (employed by a partner, such as a Employee health and safety
supplier). Areas covered include compensation and benefits, Supply-chain labor standards
health and safety, professional development opportunities,
Compensation and benefits
commitment to diversity and equal opportunity, and union
relations Professional development
Child labor
Employment of underrepresented groups
Workforce diversity/equal opportunity
Governance The governance contextual element measures the quality of Board composition
information provided by the company about their Top management compensation
management commitment and effectiveness toward following
the best practice governance principles in areas including the Governance codes/policies
composition and level of independence of their board of Shareholder engagement
directors, compensation of top management, commitment to
relevant governance codes, and shareholder engagement
Anti-corruption The anti-corruption contextual element measures the quality of Policies for preventing corruption
information provided by the company about their Discussion of publicized cases of corruption
management commitment and effectiveness regarding the
prevention of bribery and corruption, through policies and Political instability
procedures for monitoring activities which are vulnerable, as
well as describing any investigation currently underway by
regulatory authorities and the steps the company is taking to
address the situation
Human rights The human rights contextual element measures the quality of Community impact
information provided by the company about their Indigenous peoples relations
management commitment and effectiveness regarding their
impacts on local communities and the rights of indigenous Support for controversial regimes
peoples, support for any controversial regimes, and their Freedom of expression/censorship
commitment to protecting freedom of expression and Discussion of publicized cases of human rights
preventing censorship. Note that human rights topics tied to violations
labor issues are covered under the labor relations and/or
supply-chain contextual elements
Codes of conduct The codes of conduct contextual element measures the quality Individual company codes of conduct
of information provided by the company about their Industry codes of conduct
management commitment and implementation of internal and
external codes of conduct in the CSR area, including an Universal codes of conduct
individual company code of conduct, industry codes of Involvement in code governance structure
conduct (such as the International Council on Mining and
Metals), and universal codes of conduct (such as the UN
Global Compact)
Integrity assurance The integrity assurance contextual element measures the Independent third-party verification statement
quality of information provided by the company about their Internal assessment
management commitment and effectiveness regarding
independent verification of the CSR report, either in its External assessment
entirety or for specific contextual elements. Specific contextual element assurance

123

Appendix 3: Sample Scoring Criteria
Environment
Level Criteria
0 Report does not discuss activities toward reducing/mitigating the
environmental impacts of the companys business in a
meaningful way
I Report provides minimal depth of information on the scope of
coverage of the companys activities toward reducing/mitigating
the environmental impacts of the companys business.
Discussion categorized as vague and incomplete
II Report provides fair depth of information on the scope of coverage
of the companys activities toward reducing/mitigating the
environmental impacts of the companys business, including
measurable results. Discussion categorized as reasonably detailed
and comprehensive
III Report provides good depth of information on the scope of
coverage of the companys activities toward reducing/mitigating
the environmental impacts of the companys business, including
measurable results and comparisons of outcomes at a company or
industry level. Discussion categorized as detailed and
comprehensive
IV Report provides excellent depth of information on the scope of
coverage of the companys activities toward reducing/mitigating
the environmental impacts of the companys business, including
measurable results and comparisons of outcomes at the company
or industry level. Discussion categorized as detailed and
comprehensive, and is noted for reaching an exceptional level of
disclosure
Source The CSR-S Monitor (2014)
Depth (of information) defined as the level of specificity and type of detail included in the report about the different relevant topics and locations
of operations. Strong depth of information means the company discussed the Element both narratively (citing specific cases or events) and
quantitatively, with a focus on the managerial aspects of the communication, including information on how the relevance of different topics is
determined; Scope of Coverage defined as the range of topics and locations discussed in the report. A wide scope of coverage means the company
includes information about many of the relevant topics of the Element, both domestic and international
123
S. P. Sethi et al.
Illustrative examples
The Group has three specific sustainability management goals
which are: being wise, being smart and being sustainable We
endeavor to minimize social and environmental risks through
green management KB Financial Group has been dedicated to
resolving global environmental issues which are becoming
increasingly more serious (KB Financial Group Inc., 2014)
Johnson Controls generally remained on track to achieve our
10 year greenhouse gas, energy, water and waste intensity goals
in 2013. We are committed to an annual 1 percent absolute
reduction of greenhouse gas emissions across all our businesses.
The improvements we make also enhance our financial results.
Over the past 10 years, revenue has increased 78 percent while
our carbon footprint has increased only 10 percent (Johnson
Controls, Inc., 2014)
Freescale established a goal in 2010 to reduce our water
consumption by our manufacturing operations by 50 % over our
2008 baseline. In 2013, we had a significant production increase
over 2012, increasing our absolute water consumption amount;
however, we still hope to achieve this 2015 goal We
implemented conservation projects that saved more than 42
million gallons of water and 14.9 million kWh per year
(Freescale Semiconductor, Ltd., 2014)
In 2013, the total extrapolated amount of carbon emissions from
our business operations decreased from 209 to 169 kilotons
compared to 2012 and per FTE from 2.4 to 2.2 tons In the
spring of 2012, we partnered with an electric taxi service to
support the transportation needs of employees in the Netherlands.
Through this initiative, we have greened 18,000 km of journeys
up to year-end 2013 Our Sustainable Procurement program,
which began in the Netherlands in 2012, takes this a step further
by embedding INGs procurement policy towards suppliers into
our processes (ING Groep N.V. 2014)
Since fiscal 2009, we have decreased our total water use by
44.8 % and achieved a one-year reduction of nearly 9.8 % in
fiscal 2012. Over the past 4 years, we have lowered water use by
more than 2,750 million liters Hazardous waste makes up only
0.04 % of our total waste output. In fiscal 2013, our volume of
waste produced rose by 44 % from the previous year. This
increase was due to activities relating to cleaning out an old fuel
oil tank at one of our distilleries, which caused 30 tons of
redundant fuel to be sent to a facility to be filtered and then
blended as fuel for a power plant Three major air pollutants are
sulfur dioxide (SO2), nitrogen oxides (NOX) and particulate
matter (PM). These emissions increased by nearly 12 % in fiscal
2013, from 1010 metric tons to 1134 metric tons, primarily due to
our burning a greater amount of heavy fuel oil to compensate for
our decreased biogas generation (Bacardi Limited 2014)
An Evaluation of the Quality of Corporate Social Responsibility Reports

Appendix 4: List of Companies

1 3i Group plca 27 BNP Paribas SA 53 Intesa Sanpaolo S.p.A. 79 Regions Financial

Corporation
2 ACE limited 28 British Land Company PLC 54 ITOCHU Corporation 80 Royal Bank of Canada
3 AEGON N.V. 29 Caja de Ahorros y Pensiones 55 JPMorgan Chase and Co. 81 Royal Bank of Scotland
de Barcelona Group plc
4 Aetna Inc. 30 Canadian Imperial Bank of 56 KB Financial Group Inc. 82 RSA Insurance Group
Commerce plc
5 Aflac Incorporated 31 China Construction Bank 57 KBC Groep NV 83 Segroplc
Corp
6 Agricultural Bank of China 32 CIGNA Corporation 58 Landesbank Baden- 84 SocieteGenerale S.A.
Ltd Wurttemberg
7 Aker ASAa 33 Citigroup Inc. 59 Legal and General Group Plc 85 Standard Bank Group
Limited
8 Allianz SE 34 CNP Assurances SA 60 Lloyds Banking Group plc 86 Standard Chartered PLC
9 Allstate Corporation 35 Commonwealth Bank of 61 Manulife Financial 87 Standard Life plc
Australia Corporation
10 American Express Company 36 Credit Agricole S.A. 62 Marsh and McLennan 88 State Street Corporation
Companies, Inc.
11 Aon PLC 37 Credit Suisse Group AG 63 MetLife, Inc. 89 Sumitomo Mitsui
Financial Group, Inc.
12 Assicurazioni Generali S.p.A. 38 Dai-ichi Life Insurance 64 Mitsubishi UFJ Financial 90 Sun Life Financial Inc.
Company Limited Group, Inc.
13 Australia and New Zealand 39 Danske Bank A/S 65 Mizuho Financial Group, Inc. 91 Swiss Reinsurance
Banking Group Ltd Company
14 Aviva plc 40 Deutsche Bank 66 Morgan Stanley 92 T&D Holdings, Inc.
Aktiengesellschaft
15 AXA S.A. 41 Deutsche Borse AG 67 MS&AD Insurance Group 93 Tokio Marine Holdings,
Holdings, Inc. Inc.
16 Baloise Holding AGa 42 DZ BANK Deutsche Z-G 68 MunchenerRuckversicherungs 94 Toronto-Dominion Bank
AG AG [The]
17 Banca Monte deiPaschi di 43 Fifth Third Bancorp 69 National Australia Bank 95 U.S. Bancorp
Siena S.p.A. Limiteda
18 Banco Bilbao 44 First Data Corporation 70 Nedbank Group Limiteda 96 UBS AG
VizcayaArgentaria, S.A.a
19 BancoBradesco S.A. 45 Glencore International plc 71 Nomura Holdings, Inc. 97 UniCreditS.p.A.
20 BANCO SANTANDER, S.A. 46 Goldman Sachs Group, Inc. 72 Nordea Bank AB 98 UnitedHealth Group
Incorporated
21 Bangkok Bank Public 47 GPT Group 73 Northern Trust Corporation 99 Unum Group
Company Ltda
22 Bank of America Corporation 48 Hartford Financial Services 74 Old Mutual plc 100 WellPoint, Inc.
Group, Inc.
23 Bank of Montreal 49 HSBC Holdings plc 75 PNC Financial Services 101 Wells Fargo and
Group, Inc. Company
24 Bank of New York Mellon 50 Humana, Inc. 76 Prudential Financial, Inc. 102 Westpac Banking
Corp Corporation
25 Bank of Nova Scotia 51 Industrial and Commercial 77 Prudential PLC 103 Wyndham Worldwide
Bank of China Ltd Corporation
26 Barclays PLC 52 ING Groep N.V. 78 PT Bank Mandiri (Persero) 104 Zurich Insurance Group
Tbk.a Limited
a
Part of annual report (Integrated report)

123

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