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Martha Fani Cahyandito

Corporate Sustainability Reporting


Corporate Sustainability Reporting

A New Approach for Stakeholder Communication

Schriften aus dem Institut für Forstökonomie

der Universität Freiburg

Band 23

www.forstbuch.de

Mit Unterstützung der

Corporate Sustainability & Citizenship ‐ Nachhaltigkeitskommunikation

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1. Auflage, Mai 2005

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ISBN 3-935638-68-X

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Table of Contents

List of Figures and Tables _______________________________________ v

Abstract ____________________________________________________ viii

Zusammenfassung ____________________________________________ x

1 INTRODUCTION _________________________________1 1.1 Research Background ______________________________1 1.2 Research Goal and Questions ________________________5 1.3 Research Approach ________________________________6 1.4 Research Structure_________________________________6

2 THEORETICAL FRAMEWORK_______________________9 2.1 The Corporation and Its Stakeholders___________________9

2.1.1 Corporation ______________________________________ 9 2.1.2 Stakeholders and the Stakeholder Model ______________ 11 2.1.3 Mutual Relationships between the Corporation and its

Stakeholders as a Precondition for Business Success____ 18 2.2 Communication and Corporate Communication __________22

2.2.1 Communication __________________________________ 22 2.2.2 Corporate Communication _________________________ 28

2.2.2.1 Corporate Identity and Organisational Identity ___ 30 2.2.2.2 Corporate Image __________________________ 34

2.3 Sustainability Reporting ____________________________38 2.3.1 Overview of Sustainability Reporting _________________ 38 2.3.2 Benefits of Sustainability Reporting __________________ 39 2.3.3 Pressures on Companies to Produce Sustainability Reports 41

2.3.3.1 Pressures exerted by Corporate Stakeholders___ 41 2.3.3.2 Pressure exerted by Governments and Authorities 42 2.3.3.3 Pressures exerted by International Organisations 43

2.3.4 Guidelines for Sustainability Reporting ________________ 45 2.3.5 Contents of Sustainability Reports ___________________ 47 2.3.6 Trustworthy Sustainability Reporting__________________ 53

2.3.6.1 Inclusion of Stakeholder Interests in the Report __ 53 2.3.6.2 Verification from External Parties _____________ 55

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2.3.6.3 Stakeholder Comments ____________________ 56 2.3.7 Publication of Sustainability Reports__________________ 56

2.4 Exploring the Effectiveness of Communication by means of a Sustainability Report ____________________________ 58 2.4.1 Phases of Communication Effects ___________________ 58 2.4.2 Step Models of Communication Effects _______________ 60 2.4.3 How to Explore the Effectiveness of Communication by

means of a Sustainability Report_____________________ 68

3 METHODOLOGICAL FRAMEWORK OF THE CASE STUDIES______________________________________ 79 3.1 Collection of Social Data ___________________________ 79

3.1.1 Selection of Companies as Research Objects __________ 79 3.1.2 Selection of Respondents __________________________ 82

3.1.2.1 Population _______________________________ 82 3.1.2.2 Sampling ________________________________ 84

3.1.3 Interviews as a Data Collection Technique _____________ 88 3.1.3.1 Interview Types: Oral or Written ______________ 90 3.1.3.2 Form/Situation of Interview: Weakly, Semi and

Fully Structured___________________________ 93 3.1.3.3 Questionnaire as an Interview Guideline _______ 94 3.1.3.4 Scaling _________________________________ 96

3.2 Recording of Social Data __________________________ 98 3.3 Valuation and Analysis of Social Data_________________ 98

3.3.1 Content Analysis as Data Analysis Technique __________ 99 3.3.2 Statistical Methods: Frequency Distribution and

Contingency Coefficient __________________________ 100

4 RESULTS AND DISCUSSIONS OF CASE STUDY 1: SUSTAINABILITY REPORTING AT DEUTSCHE TELEKOM AG _________________________________ 105 4.1 Deutsche Telekom AG ___________________________ 105 4.2 The Effectiveness of Deutsche Telekom’s Sustainability

Reporting _____________________________________ 107 4.2.1 The Interview Partners ___________________________ 107 4.2.2 Managers’ Perception of the Sustainability Report and the

Corporate Stakeholders __________________________ 108 4.2.2.1 Understanding the Term ‘Sustainability Report’ _ 109 4.2.2.2 The Importance and Value of Sustainability

Reporting_______________________________ 109

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4.2.2.3 Motives for and Goals of Sustainability Reporting 109 4.2.2.4 The Most Important Stakeholders____________ 110 4.2.2.5 The Making Process ______________________ 110 4.2.2.6 The Contents of the Report and Communicated

Sustainability Issues ______________________ 111 4.2.2.7 The Distribution Process___________________ 114 4.2.2.8 Corporate Image from the Managers’ Point of

View __________________________________ 115 4.2.2.9 Improving the Sustainability Report __________ 116

4.2.3 Pre-communicative Phase: Stakeholders’ Perception of the Corporation and Sustainability Report ____________ 116 4.2.3.1 Familiarity ______________________________ 117 4.2.3.2 Interest in Sustainability Reports ____________ 126

4.2.4 Communicative Phase: Stakeholders’ Acceptance of the Report ______________________________________ 127 4.2.4.1 Comprehension__________________________ 128 4.2.4.2 Preference______________________________ 138 4.2.4.3 Conviction ______________________________ 146

4.2.5 Post-communicative Phase: Effects of Communication by means of the Sustainability Report __________________ 150 4.2.5.1 Understanding the Corporation and its Activities 151 4.2.5.2 Image _________________________________ 152 4.2.5.3 Intention/Behavioural tendencies ____________ 155

4.3 The Interrelations of the Communication Components of Telekom’s Sustainability Report _____________________157

5 RESULTS AND DISCUSSIONS OF CASE STUDY 2: SUSTAINABILITY REPORTING AT WELEDA AG ______164 5.1 Weleda AG _____________________________________164 5.2 The Effectiveness of Weleda’s Sustainability Reporting ___165

5.2.1 The Interview Partners ___________________________ 166 5.2.2 Managers’ Perceptions of the Sustainability Report and

Corporate Stakeholders __________________________ 167 5.2.2.1 Understanding the Term ‘Sustainability Report’ _ 167 5.2.2.2 The Importance and Value of Sustainability

Reporting_______________________________ 167 5.2.2.3 Motives for and Goals of Sustainability Reporting 168 5.2.2.4 The Most Important Stakeholders____________ 169 5.2.2.5 The Making Process ______________________ 169 5.2.2.6 The Contents of the Report and Communicated

Sustainability Issues ______________________ 170 5.2.2.7 The Distribution Process___________________ 173 5.2.2.8 Corporate Image from the Managers’ Point of

View __________________________________ 174

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5.2.2.9 Improving the Sustainability Report __________ 175 5.2.3 Pre-communicative Phase: Stakeholders’ Perception of

the Corporation and Sustainability Report ____________ 175 5.2.3.1 Familiarity ______________________________ 176 5.2.3.2 Interest in Sustainability Reports ____________ 183

5.2.4 Communicative Phase: Stakeholders’ Acceptance of the Report ______________________________________ 184 5.2.4.1 Comprehension__________________________ 184 5.2.4.2 Preference______________________________ 194 5.2.4.3 Conviction ______________________________ 203

5.2.5 Post-communicative Phase: Effects of Communication with the Sustainability Report ______________________ 207 5.2.5.1 Understanding the Corporation and its Activities 207 5.2.5.2 Image _________________________________ 208 5.2.5.3 Intention/Behavioural tendencies ____________ 211

5.3 The Interrelations of the Communication Components of Weleda’s Sustainability Report _____________________ 212

6 SYNTHESIS, CONCLUSIONS AND RECOMMENDATIONS __________________________ 217 6.1 Synthesis _____________________________________ 217

6.1.1 Point of Departure _______________________________ 217 6.1.2 Contents of the SR ______________________________ 221 6.1.3 Layout / Understandability_________________________ 223 6.1.4 Style and Communication Method __________________ 226

6.2 Recommendations ______________________________ 228 6.2.1 Recommendations to Design and Contents of the SR ___ 228 6.2.2 Reception of the Sustainability Report _______________ 229

List of Literatures_____________________________________________231

List of Appendices ____________________________________________248

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List of Figures and Tables

List of Figures

Figure 1: Research Structure ______________________________________ 8 Figure 2: The Corporation and Its Stakeholders _______________________ 15 Figure 3: ‘One-sided Communication’ Model (Asymmetric) ______________ 23 Figure 4: ‘Two-sided/Reciprocal Communication’ Model (Symmetric) ______ 25 Figure 5: Communication Scheme _________________________________ 26 Figure 6: Elements of the Corporate Identity Mix ______________________ 33 Figure 7: Relation between Corporate Identity and Corporate Image_______ 35 Figure 8: Benefits of Sustainability Reporting _________________________ 40 Figure 9: Relationship between Communication Effect Categories ________ 60 Figure 10: Models of Communication Effects _________________________ 65 Figure 11: Communication Scheme of a Sustainability Report____________ 70 Figure 12: Interview Situation as a Reaction System ___________________ 89 Figure 13: Questions and Answers as a Process ______________________ 90 Figure 14: Data Collection Process________________________________ 104 Figure 15: Stakeholders’ Association with Deutsche Telekom (n=24) _____ 118 Figure 16: Telekom Stakeholders’ Understanding of the Term ‘Sustainability

Report’ (n=30) _______________________________________ 122 Figure 17: SR in Comparison with Other Kinds of Reports from Telekom

Stakeholders’ Point of View (n=29) _______________________ 123 Figure 18: Feeling of Being Addressed by Telekom’s SR (n=32) _________ 124 Figure 19: The Interest of Telekom Stakeholders in Sustainability Report

(n=31)______________________________________________ 126 Figure 20: Percentage of Telekom’s SR Read (n=31) _________________ 128 Figure 21: Time Spent on Reading the Telekom’s SR (n=31)____________ 129 Figure 22: Structure/Theme Classification of Telekom’s SR (n=31) _______ 130 Figure 23: Language Style of Telekom’s SR (n=31) ___________________ 131 Figure 24: Font Type and Size in Telekom’ SR (n=31) _________________ 132 Figure 25: Length of the Telekom’s SR (n=31) _______________________ 133 Figure 26: Favoured Amount of Pages of Telekom’s SR (n=11)__________ 134 Figure 27: Readability of Telekom’s SR (n=31)_______________________ 134 Figure 28: Design and Colour of Telekom’s SR (n=31)_________________ 135 Figure 29: Reading Enjoyment of Telekom’s SR (n=31)________________ 136 Figure 30: Distribution of the Telekom’s SR (n=31) ___________________ 137 Figure 31: Percentage of the Environmental Issues Found in Telekom’s SR

(n=26)______________________________________________ 138 Figure 32: Expected Environmental Issues Found in Telekom’s SR (n=26)_ 139 Figure 33: Missing or Poorly Presented Environmental Issues in Telekom’s

SR (n=26)___________________________________________ 140 Figure 34: Percentage of the Social Issues Found in Telekom’s SR (n=27)_ 141 Figure 35: Expected Social Issues Found in Telekom’s SR (n=27) _______ 142

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Figure 36: Missing or Poorly Presented Social Issues in Telekom’s SR (n=27)______________________________________________ 143

Figure 37: Percentage of the Economic Issues Found in Telekom’s SR (n=17)______________________________________________ 144

Figure 38: Expected Economic Issues Found in Telekom’s SR (n=17) ____ 144 Figure 39: Missing or Poorly Presented Economic Issues in Telekom’s SR

(n=17)______________________________________________ 145 Figure 40: Reliability of Telekom’s SR (n=28)________________________ 147 Figure 41: Improving the Reliability of Telekom’s SR and Making It Look

More Interesting (n=32) ________________________________ 149 Figure 42: Comparison with the Previous Telekom’s SR (n=31)__________ 150 Figure 43: Stakeholders’ Understanding of Deutsche Telekom and Its

Activities (n=31) ______________________________________ 151 Figure 44: Cloud Figure Showing the Relation between the Two Variables

‘Length of the Report’ and ‘Percentage Read’ _______________ 159 Figure 45: The Interrelation of the Communication Components of

Sustainability Reporting at Deutsche Telekom AG ___________ 161 Figure 46: Stakeholders’ Association with Weleda (n=23) ______________ 177 Figure 47: Weleda stakeholders’ Understanding of the Term ‘Sustainability

Report’ (n=12) _______________________________________ 180 Figure 48: SR in Comparison with Other Kinds of Reports from Weleda

Stakeholders’ Point of View (n=25) _______________________ 181 Figure 49: Feeling of Being Addressed by Weleda’s SR (n=30)__________ 182 Figure 50: The Interest of Weleda Stakeholders in Sustainability Report

(n=29)______________________________________________ 183 Figure 51: Percentage of Weleda’s SR Read (n=27) __________________ 185 Figure 52: Time Spent on Reading the Weleda’s SR (n=27) ____________ 186 Figure 53: Structure/Theme Classification of Weleda’s SR (n=27)________ 186 Figure 54: Language Style of Weleda’s SR (n=27) ____________________ 187 Figure 55: Font Type and Size in Weleda’ SR (n=27)__________________ 188 Figure 56: Length of the Weleda’s SR (n=27) ________________________ 189 Figure 57: Favoured Amount of Pages of Weleda’s SR (n=19) __________ 190 Figure 58: Readability of Weleda’s SR (n=27) _______________________ 190 Figure 59: Design and Colour of Weleda’s SR (n=27) _________________ 191 Figure 60: Reading Enjoyment of Weleda’s SR (n=27)_________________ 192 Figure 61: Distribution of the Weleda’s SR (n=30) ____________________ 193 Figure 62: Percentage of the Environmental Issues Found in Weleda’s SR

(n=26)______________________________________________ 195 Figure 63: Expected Environmental Issues Found in Weleda’s SR (n=26) _ 196 Figure 64: Missing or Poorly Presented Environmental Issues in Weleda’s

SR (n=26)___________________________________________ 197 Figure 65: Percentage of the Social Issues Found in Weleda’s SR (n=22) _ 198 Figure 66: Expected Social Issues Found in Weleda’s SR (n=22) ________ 199 Figure 67: Missing or Poorly Presented Social Issues in Weleda’s SR

(n=22)______________________________________________ 200 Figure 68: Percentage of the Economic Issues Found in Weleda’s SR

(n=17)______________________________________________ 201

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Figure 69: Expected Economic Issues Found in Weleda’s SR (n=17) _____ 201 Figure 70: Missing or Poorly Presented Economic Issues in Weleda’s SR

(n=17)______________________________________________ 202 Figure 71: Reliability of Weleda’s SR (n=30)_________________________ 203 Figure 72: Improving the Reliability of Weleda’s SR and Making it Look

More Interesting (n=26) ________________________________ 205 Figure 73: Comparison with the Previous Weleda’s SR (n=27) __________ 207 Figure 74: Stakeholders’ Understanding of Weleda and Its Activities (n=27) 208 Figure 75: The Interrelation of the Communication Components of Weleda’s

Sustainability Reporting ________________________________ 214

List of Tables

Table 1: Stakeholder Demands and Contributions to Business Success ____ 13 Table 2: Content Matrix of the SR Guidelines _________________________ 52 Table 3: Step Models of Communication Effects with a Sustainability Report 67 Table 4: Questions of the Stakeholder Interviews______________________ 77 Table 5: Types of Interviews ______________________________________ 94 Table 6: Corporate Stakeholders of the Deutsche Telekom AG __________ 110 Table 7: Contents of the Deutsche Telekom’s SR “Future-driven: The 2003

Human Resources and Sustainability Report”_______________ 113 Table 8: Stakeholders’ Trust in Deutsche Telekom (n=31) ______________ 120 Table 9: The Corporate Image of Deutsche Telekom according to Each

Stakeholder Group (n=31) ______________________________ 153 Table 10: Comparison between ‘Stakeholders’ Trust in the Company’ and

‘Corporate Image’ of Deutsche Telekom ___________________ 154 Table 11: Contingency Coefficient Table of the Relation between ‘Length

of the Report’ and ‘Percentage Read’ of Deutsche Telekom’s SR (n = 31)_____________________________________________ 158

Table 12: Corporate Stakeholders of Weleda AG _____________________ 169 Table 13: Contents of the Weleda’s SR ‘Transparenz 3’________________ 172 Table 14: Stakeholder Trust in Weleda (n=30) _______________________ 178 Table 15: The Corporate Image of Weleda According to Each Stakeholder

Group (n=27) ________________________________________ 209 Table 16: Comparison between ‘Stakeholders’ Trust in the Company’ and

‘Corporate Image’ of Weleda ____________________________ 210

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Abstract

The discussions and debates in the field of sustainability management point out that communication and transparency play an important role in demonstrating corporate responsibilities to the society. Furthermore, communication and transparency are not only considered as corporate responsibility towards the stakeholders, but communication and transparency are also considered to have a large role in building business competitiveness.

One corporate communication instrument which is now gaining its popularity is the sustainability reporting. Pressures to corporation in particular multinational and medium-sized enterprise are coming from their stakeholders who demand transparency and require information about the corporate activities in all aspects of sustainability. Despite all discussions and developed guidelines for sustain-ability reporting, e.g. Guidelines from the Global Reporting Initiative (GRI), Cor-porate Social Responsibility (CSR), Institute of Ecological Economy Re-search/Institute of Market Environment and Society (IÖW/imug), and World Business Council for Sustainable Development (WBCSD), the next question arises: is sustainability reporting an effective communication instrument bet-ween a corporation and its stakeholders?

The study at hand is an attempt to explore the effectiveness of corporate sus-tainability reporting as a communication instrument between a corporation and its stakeholders. The case studies were conducted with the Deutsche Telekom AG and Weleda AG – two pioneers of German industries in sustainability per-formances, who have been actively producing and publishing sustainability re-ports since years ago. The selection of Deutsche Telekom and Weleda is not designated to make a comparison between these two corporations but rather two have two representative studies from two different company sectors in Germany to see how effective can the sustainability report function as commu-nication instrument.

In exploring the effectiveness of sustainability reporting as a communication instrument, the step models of communication effects (i.e. Bruhn 2003, Kotler-Bliemel 2001, Meffert 2000, Beger et al. 1989, Kroeber-Riel 1986) and the model of communication with a sustainability report based on the two-sided communication model (i.e. Naschold 1973, Aufermann 1973, Merten 1977, Bentele 1984, Linke et al. 1996) were developed. The telephone interviews were conducted with 8 managers and 44 stakeholders of Telekom and 5 managers and 48 stakeholders of Weleda during September 2003 and January 2004 to find out how the communication with the SR in both companies work – how the managers’ understanding about the sustainability report and the stakeholders and how the stakeholders’ understanding and acceptance of the sustainability report and the company correlate to each other.

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Using the two-sided communication model it can be found out that there were many differences between the understanding of the company about the stake-holders and the understanding of the stakeholders about the company, and also between the understanding of the company about the sustainability report and the understanding of the stakeholders about the sustainability report such as:

• Part of the stakeholders did not know the company that good and did not feel as the right addressee of the report. The degree of stakeholder trust in the company varied also.

• According to the managers, sustainability report is important and has definitely more values, but part of the stakeholders did not even familiar and understood what sustainability report is. They did not know the function of sustainability report. Not all of them believed that sustain-ability report has more values than other reports and the interest in sustainability report was also not found in each stakeholder.

• The managers have tried their best in fulfilling the desires and informa-tion needs of the stakeholders. Unfortunately, not all stakeholders read the report made by the company. Only a small amount of respondents who get in touch with the report, read the report completely. Part of the stakeholders could not understand the report contents easily. The stakeholders meant that the report could not completely satisfy the de-sires and information needs of each stakeholder and the degree of re-port‘s reliability varied.

These findings show that the sustainability report has not functioned effectively as a communication instrument between a company and its stakeholders. Se-veral things hindered the effectiveness of sustainability report as communication instrument between a company and its stakeholders. The research results point out that the main problem lies not on the report itself but the main problem lies on the reception of the report. Some reasons are for example the stakeholders did not feel as addressee of the report, not all stakeholders have a high interest in sustainability report so that they read the report only because of the upcoming interview, and what is pretty sad to find is that only a very small amount of stakeholders read the report completely.

Thus, besides the report appearance and contents, the matter of reception of the report must be seriously handled by the company, because it does not mat-ter how good and how beautiful the company makes its sustainability report or in other words even if the appearance and contents of the report fulfils 100% the desires and preferences of the stakeholders, these will bring no communication effect whatsoever if the sustainability report is not even read by the stake-holders.

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Zusammenfassung

Die vorgelegte Studie versucht, die Effektivität von Nachhaltigkeitsberichten als Kommunikationsinstrument zwischen Unternehmen und deren Stakeholdern zu erforschen. Die Fallstudien wurden in Zusammenarbeit mit der Deutschen Tele-kom AG und der Weleda AG durchgeführt – zwei Unternehmen, die zu den Vor-reitern bezüglich nachhaltiger Unternehmensführung zählen und seit Jahren aktiv die Herstellung und Veröffentlichung von Nachhaltigkeitsberichte betrei-ben. Die Auswahl der zwei Unternehmen hatte nicht den Zweck, einen Unter-nehmensvergleich durchzuführen, sondern zwei repräsentative Studien zu zwei unterschiedlichen Industriebereichen in Deutschland vorzulegen.

Die Beurteilung der Effektivität des Nachhaltigkeitsberichtes als Kommunika-tionsinstrument basiert dabei auf dem sog. „Stufen-Modell der Kommunika-tionswirkung“ (i.e. Bruhn 2003, Kotler-Bliemel 2001, Meffert 2000, Beger et al. 1989, Kroeber-Riel 1986) und dem Modell der „Zweiseitigen Kommunikation“ (i.e. Naschold 1973, Aufermann 1973, Merten 1977, Bentele 1984, Linke et al. 1996).

Für den empirischen Teil der Untersuchung wurde eine telefonische Befragung mit 8 Managern und 44 Stakeholdern von Telekom und 5 Managern und 48 Stakeholdern von Weleda im September 2003 und Januar 2004 durchgeführt; Ziel der Befragung war es, Ablauf und Funktion der Kommunikation mittels Nachhaltigkeitsbericht in den zwei Unternehmen darzustellen und zu analysie-ren, Erwartungen und Kommunikationsziele seitens des Managements und der Stakeholder zu ermitteln und zu kontrastieren sowie zu untersuchen, in wieweit die Wirksamkeit von Nachhaltigkeitsbericht im Kreis der Stakeholder mit der Akzeptanz des Unternehmens korreliert ist.

Vor dem Hintergrund des „Zweiseitigen Kommunikationsmodells“ konnte aufge-zeigt werden, dass es gravierende Unterschiede zwischen der Wahrnehmung der Stakeholder seitens des Unternehmens und der Wahrnehmung des Unter-nehmens seitens der Stakeholder über das Unternehmen gibt, dass Selbst—und Fremdwahrnehmung des Unternehmens auseinanderklaffen und dass Nachhal-tigkeitsbericht unterschiedlich wahrgenommen werden:

• Ein Teil der Stakeholder kannte das Unternehmen nicht besonders gut und fühlte sich nicht als richtiger Adressat des Berichtes. Auch der Grad des Stakeholdervertrauens gegenüber dem Unternehmen variierte.

• In der Wahrnehmung der Managern spielen Nachhaltigkeitsberichte eine sehr wichtige Rolle und die Erwartungen an ihre Wirkung sind dementsprechend hoch - ein großer Teil der Stakeholder waren jedoch mit dem Instrument „Nachhaltigkeitsbericht“ nicht vertraut und hatten

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zudem Verständnisprobleme. Nicht alle Stakeholder waren mithin da-von überzeugt, dass Nachhaltigkeitsberichte besonderen Wert besitzen und zeigten kein gesteigertes Interesse an ihrer Lektüre.

• Die Manager haben große Aufmerksamkeit darauf gelegt, die Wünsche und Informationsbedürfnisse der Stakeholder zu erfüllen; dennoch hat nur ein kleiner Teil der Ansprechpartner, der mit dem Bericht in Berüh-rung kam, den Bericht vollständig gelesen. Ein Teil der Stakeholder konnte den Berichtsinhalt nicht problemlos verstehen. Die Stakeholder waren nur selten der Auffassung, dass der Bericht die eigenen Wün-sche und Informationsbedürfnisse vollständig erfüllt und dass die dar-gestellten Inhalte stets vertrauenswürdig sind.

Diese Befunde zeigen, dass die Effektivität von Nachhaltigkeitsberichten als Kommunikationsinstrument zwischen Unternehmen und dessen Stakeholdern deutlich verbesserbar ist. Einige Punkte haben die Effektivität des Nachhaltig-keitsberichtes als Kommunikationsinstrument zwischen einem Unternehmen und dessen Stakeholdern gemindert. Die Untersuchungsergebnisse weisen jedoch darauf hin, dass das Hauptproblem nicht in der Gestaltung des Berichtes selbst liegt, sondern mit der mangelnden oder fehlenden Rezeption des Be-richtes zu tun hat: Stakeholders fühlten sich oft nicht als Adressat des Berichtes, nicht alle Stakeholder sind mit dem Instrument „Nachhaltigkeitsbericht“ vertraut und reagieren mit Desinteresse (und lasen im Rahmen der empirischen Unter-suchung den Bericht nur wegen des bevorstehenden Interviews).

Das Problem der mangelnden oder fehlenden Rezeption des Berichtes muss von dem Unternehmen ernsthaft angegangen werden, möchte man die Mö-glichkeiten der Nachhaltigkeitsberichterstattung im Sinne einer effektiven Public Relation ausschöpfen. Auch wenn das Auftreten und der Inhalt des Berichts 100-prozentig die Wünsche und Bedürfnisse der Stakeholder erfüllen, wird dies keinerlei Kommunikationswirkung erbringen, wenn der Nachhaltigkeitsbericht nicht einmal von den Stakeholdern gelesen wird.

Introduction 1

1 INTRODUCTION

1.1 Research Background

Since the Rio-Conference in 1992 corporations are increasingly challenged to constructively deal with the vision of sustainability and to contribute to it. A number of programmes and approaches were developed at different company levels. Internally, at the management or organisational level, as well as exter-nally, with respect to the relationship between the company and society. All these programmes and approaches highlight a greater sense of responsibility of the companies with regard to sustainable development. In other words, it is the company’s responsibility towards society.

The issue of social responsibility has been discussed in various fields of the social science, business administration and management theory, for example, regarding the concept of corporate ethics1. Apart from the rather theoretical debate on corporate ethics in the management science, several practical ap-proaches to management are also discussed. For example, the implementation of new approaches in the field of environmental management (ISO 14001 and EMAS)2 at the organisational level, which has been internationally discussed since 19933. A completely different approach is a sustainability programme, which focuses on the products (IPP, Product Stewardship)4.

Furthermore, comprehensive international and policy-oriented approaches which concentrate on the relationship between the company and society are of growing importance. Approaches which are based on the idea of ‘Corporate Governance’5, ‘Corporate Social Responsibility (CSR)’6 or ‘Corporate Citizen-ship’7 are often discussed separately, but at least when discussing the relation-ship between the company and society, they seem to possess common origins8. Corporate governance deals with management in a narrow sense, for example with leadership and the control of a company. Various other concepts suggest that the definition of concrete company goals and policies leads to a balancing

1 Cf. e.g. as overview Beschorner et al. 2004, Leisinger 1997. 2 See ISO 1996, EMAS 2001. 3 See e.g. BMU 1999, Rubik 2004, 2003, 2002, Rubik and Teichert 1997. 4 See e.g. Rubik 2003. 5 Cf. e.g. Theisen 2003, Witt 2000. 6 Cf. e.g. Commission of the European Communities 2001:6, 2002:5, Witt 2000, Theisen 2003. 7 Whereby Schrader (2003:64-67) emphasises, that in literature the distinction between Corporate Social Responsibility and Corporate Citizenship is not clear at all. 8 Pfriem 2004.

2 Introduction

of the different interests of the company’s stakeholders’, mostly of the share-holders, lenders, employees and the management9. The concepts of ‘Corporate Social Responsibility’ (CSR) or ‘Corporate Citizenship’ are based on a similar idea. The concept of CSR highlights the aspect of responsibility, but, without accentuating the company’s role in modern society. On the contrary, according to the Corporate Citizenship concept the company plays a central role in civil society, which is already indicated by the term Corporate Citizenship itself. In this view, the company has rights, which it can claim, but it must also fulfil its obligations, so that a community may function10. Herewith, the company has its part in the social control; an approach that goes beyond the classical micro-economic schemes “in which product efficiency dominated and communication intelligence was of peripheral importance”11.

Based on the analysis of the theoretical and practical discussions of the ap-proaches to corporate sustainability management, it may be concluded that both the essentials of the company’s sustainability management system and the sustainability communication system are important. However, summarising the above examples, it seems that communication within the company and between the company and society receives a clearly stronger value as a new-art mana-gement task. In this context, communication becomes an important instrument of sustainability management. For this, a row of normative rules are developed, which can be found in the guidelines for corporate communication (GRI)12. Moreover, the Global Compact was established as the first global forum to ad-dress critical issues related to globalisation. It calls on companies to adopt the nine universal principles of human rights, labour standards and the environ-ment13. As a result the research will focus on the corporate communication deal-ing with issues of sustainability.

Sustainability communication can be described as an open and comprehensive dialogue with internal and external stakeholders on the company’s performance and activities, as well as their effects14. It is primarily a matter of demonstrating the company’s responsibility towards society and improving the company’s reputation through its willingness to communicate and transparency. This ‘communication factor’ is essential for the corporation in winning a competitive advantage15. For example Davies (2003), Schönborn (2001), and Bruhn (1995) highlight that the implementation of communication instruments enables the

9 Witt 2000:159. 10 Schrader 2003:9ff (See also Matten and Crane 2004). 11 Pfriem 2004. 12 See GRI 2000, 2002a, 2002b (See also http://www.globalreporting.org), PricewaterhouseCoopers 2001. 13 Global Compact Office-UN 2001 (See also http://www.unglobalcompact.org). 14 Hardtke and Prehn 2001:216. 15 Bruhn 1995:2.

Introduction 3

company to create a positive image or reputation in the eyes of the actual and potential customers and other stakeholder groups. Additionally, the company is able to differentiate itself from the others16.

This could be the reason, why a growing number of business leaders are ac-knowledging the power of long-term, positive stakeholder relationships. John Browne, CEO of British Petroleum talked about the importance of building mu-tually beneficial stakeholder relationships in a Harvard Business Review article (September/October 1997). He wrote,

“You can’t create an enduring business by viewing relationships as a bazaar activity – in which I try to get the best of you and you of me – or in which you pass off as much risk as you can to the other guy. Rather, we must view relationships as a coming together that al-lows us to do something no other two parties could do – something that makes the pie bigger and is to your advantage and to my ad-vantage” 17

It seems clear that nowadays communication is one of the key factors and a portal for achieving business success18. Disregarding the importance of communication will decrease stakeholders’ trust in the company which most probably leads to a negative impact on the financial success19.

One corporate communication instrument which is now gaining its popularity is the so-called sustainability reporting. Sustainability reporting is the action of producing and publishing a sustainability report (SR).

According to the World Business Council for Sustainable Development (WBCSD) (2003), at present key stakeholders, such as employees, shareholders, suppliers and customers exert increasing pressure on the com-panies to be transparent about their values, principles and performances with regard to sustainable development20.

Dr. Erich Becker, President of the Austrian Business Council for Sustainable Development (ABCSD) stated that a sustainable corporation, which enters a trustworthy dialogue with its environment, recognises warning signals at an early stage and can thus avoid risks and use opportunities. It was also pointed out that reliable external communication is evidence of the corporation’s ability to survive21. A study published by ‘Kommunalkredit Austria’ (Communal Credit Austria) in 2003 dealing with the success of 170 companies quoted on the stock

16 Bruhn 1995:2, Davies et al. 2003::xi, Schönborn and Steinert 2001:VI. 17 Prokesch 1997:154, Svendsen 1998:2. 18 Bruhn 1995:2, Kim 2003:1, Schönborn and Steinert 2001:VI. 19 Davies et al. 2003:201, Münderlein 2002:100. 20 WBCSD 2002:3. 21 Becker 2002:6 (http://www.nachhaltigkeit.at/reportagen.php3id=22).

4 Introduction

exchange, which are also members of the World Business Council for Sustain-able Development, concluded: “Companies that have prescribed itself with the concept of sustainable business show an entirely better performance than the total market”22. The superiority of a company that implements sustainability management and communication is also reflected in the Dow Jones Sustain-ability Index (DJSI). A comparison between the Dow Jones Global Index (DJGI) and the DJSI between January 1997 and April 2002 also showed that the Sus-tainability Index significantly outperformed the former23.

So, nowadays, it is realised that sustainability reporting is an essential condition for success in business. Sustainability reporting is becoming a worldwide trend and every corporation or organisation wants to join in and does not want to be left behind. Also, in Germany all sectors take the matter of sustainability report-ing seriously. The Federation of German Industry (BDI) established a ‘Forum for Sustainable Development (Econsense)’ in July 2000 to agree on a common sustainability concept and its integration into their business strategies. The fo-rum is designed to offer a platform for stakeholder dialogues24. In April 2001, the German government established the ‘German Council for Sustainable Deve-lopment’ (RNE) to promote sustainability as an issue of public discussions and to support the German government in all matters of sustainability (including sustainability reporting)25. Around the world many studies were conducted to discuss and develop guidelines for sustainability reporting 26.

This unique challenge and opportunity of sustainability reporting is indeed re-cognised by academicians, politicians and practitioners. But, unfortunately the matter of how to make use of sustainability reporting effectively has hardly been explored yet. 22 Kanatschnig et al. 2003:5. 23 Schönborn and Steinert 2001:5, WBCSD 2002:9. 24 Econsense (http://www.econsense.de/eng/mitglieder.htm). 25 Office of the German Council for Sustainable Development (RNE) (http://www.nachhaltigkeitsrat.de/council/index.html). 26 Relevant research on sustainability reporting : (a) studies on the Guideline for sustainability reporting from the Global Reporting Initiative/GRI (GRI 2000, 2002a, 2002b), Institute for Ecological Economy Research Berlin/IÖW & Institute for Market-Environment-Society Hannover/imug (Clausen et al. 2001a), Corporate Social Responsibility/CSR (CSR 2000), Austrian Business Council for Sustainable Development (Kanatschnig et al. 2003) (b) studies on preparing assistance tools to pursue sustainability from the Institute for Energy and Environment/ifeu Heidelberg (Frings 2003), Deloitte Tohmatsu (Lehni and Pedersen 2002) (c) studies on ranking of companies sustainability reports from the SustainAbility Ltd. (SustainAbility/UNEP 2003) (d) studies on defining stakeholder groups for sustainability report from Hoppe and Ferdinand (Hoppe and Ferdinand 2002), Kim (Kim 2003) (e) studies on international survey about stakeholders’ preferences on sustainability report from the ECC Kohtes Klewes GmbH (ECC Kohtes Klewes 2002) and ECC Kohtes Klewes GmbH and Fishburn Hedges Ltd. (ECC Kohtes Klewes and Fishburn Hedges 2003).

Introduction 5

1.2 Research Goal and Questions

This study aims to explore the effectiveness27 of sustainability reporting as a communication instrument between a corporation and its stakeholders. It at-tempts to investigate if sustainability reporting affects the company image.

By means of empirical research, the following research questions will be dealt with28:

1. The stakeholders as the message receivers of the SR: Is the SR re-ceived by the intended stakeholders?

2. The stakeholders’ willingness to read the SR: Do the variables ‘interest in SR’, ‘trust in the company’, and ‘feeling of being an addressee of the report’ play an important role in prompting stakeholders to read the SR?

3. The readability of the SR: Do the stakeholders understand the informa-tion in the sustainability report? Does the structure of the report play an important role in making the report easy to read?

4. The contents of the SR (Relevance of the information to the needs and desires of stakeholders): Do the contents of SR meet the information needs of stakeholders with regard to the environmental, social and eco-nomic dimension? Which sustainability dimension do the stakeholders mainly expect? What are the variables that influence the ‘reading en-joyment’ of the SR?

5. The trustworthiness of the information in the SR (reliability): Do the stakeholders trust the information in the report?

6. Communication effects of the SR (Effects of SR on the company image and the stakeholders’ behaviour towards the company): Is SR an effec-tive communication instrument to improve or maintain the company image? Is SR an effective communication instrument to maintain the relationships between the company and its stakeholders? Does the communication with an SR have different effects on the various stake-holder groups? If yes, which stakeholder group is affected most by the SR in relation to the company image?

27 The term ‘communication effectiveness’ was defined by Bruhn 2003:389, Farace et al. 1992, QM-Lexikon (http://www.quality.de/lexikon/wirksamkeit.htm). 28 The research questions are partially adapted from the “Qualitative characteristics of Information Quality” from Schaltegger 1997:89-95 and the “The Criteria of Good Communication” from Steidl and Emery 1997:76.

6 Introduction

1.3 Research Approach

This study adopts an explorative research approach based on empirical analy-ses and focuses on corporate communication by means of a special communi-cation instrument, the ‘sustainability report’. The effectiveness of sustainability reporting as a communication instrument between a company and its stake-holders will be analysed.

Explorative research also includes a theoretical framework29. For this, a comprehensive literature study is required. Accordingly, the study starts with the theoretical part, in which a heuristic analytical framework for analysing the ef-fectiveness of sustainability reporting as a communication instrument between a corporation and its stakeholders will be developed. A communication model and step by step models of communication effects are developed and serve as a basis for the heuristic approach.

Heuristics often play an important role in solving problems, because in most complex situations there is no algorithmic solution, as is the case in this study. The heuristic approach can only point in a rough direction and does not gua-rantee straightforward results30.

Based on the research theme, the defined targets of this study, as well as the heuristic approach, case studies will be conducted to illustrate the application of the theoretical framework. The findings will be supported by statistical data.

1.4 Research Structure

Chapter 1 presents the research background, which describes the efforts of the companies to act according to its responsibilities towards society. Furthermore, it emphasises the importance of communication and transparency for the achievement of business success. This is followed by a description of sustain-ability reporting which is a popular instrument used by corporations to commu-nicate with their stakeholders. This chapter also presents the major research goal of analysing the effectiveness of SR as a communication instrument to improve or maintain corporate image, the research questions and the metho-dology.

Chapter 2 presents the research theoretical framework. It deals with the com-munication between a corporation and its stakeholders by means of a ‘sustain-

29 Cf. Bortz and Döring 2002, Schwaninger 1989. 30 Cf. Bortz and Döring 2002:360.

Introduction 7

ability report’. Thus, this chapter presents theories of corporate and relational asset, stakeholders and stakeholder models, communication and corporate communication, image and reputation, and sustainability report. The last part of this chapter explains the approach to exploring sustainability report’s communi-cation effectiveness, which is mostly based on communication and marketing theories.

Chapter 3 presents the research methodology. It explains how the companies of the case studies were selected and which managers and stakeholders served as data sources. Additionally, the process of data collection, recording, evalua-tion and analysis including all the supporting theories is described.

The results of the case studies are presented in Chapter 4 and 5. In these chapters, it is clarified: who participated in the sustainability reporting process, how the communication process by means of an SR can be described, what the motives for and goals of an SR are, what the expectations of the stakeholders with regard to the SR are, which communication components of SR influence the improvement or the maintenance of the corporate image, etc.. The interpre-tations of the research results are based on communication theories and will also be dealt with in this chapter.

Finally, in Chapter 6 conclusions are drawn. The analysis of the sustainability report’s effectiveness as a communication instrument between a corporation and its stakeholders will be reviewed and certain answers to the research ques-tions will be highlighted. Criticism and suggestions to optimise SR are also pre-sented in this chapter. The research structure can be illustrated as follows:

8 Introduction

Figure 1: Research Structure

CHAPTER 1: INTRODUCTION

CHAPTER 4: RESULTS AND DISCUSSIONS OF CASE STUDY 1: SUSTAINABILITY REPORTING AT

DEUTSCHE TELEKOM AG

Chapter 4.1: Deutsche Telekom AG

Chapter 4.2: The Effectiveness of Telekom’s Sustainability Reporting

Chapter 4.3: The Interrelation of the Communication Components of Telekom’s Sustainability Report

CHAPTER 5: RESULTS AND DISCUSSIONS OF CASE STUDY 2: SUSTAINABILITY REPORTING AT

WELEDA AG

Chapter 5.1: Weleda AG

Chapter 5.2: The Effectiveness of Weleda’s Sustainability Reporting

Chapter 5.3: The Interrelations of the Communication Components of Weleda’s

Sustainability Report

CHAPTER 2: THEORETICAL FRAMEWORK

Chapter 2.1: Corporation and Its Stakeholders

Chapter 2.2: Communication and Corporate Communication

Chapter 2.3: Sustainability Reporting

CHAPTER 3: METHODOLOGICAL FRAMEWORK FOR THE CASE STUDIES

Chapter 3.1: Collection of Social Data

Chapter 3.2: Recording of Social Data

Chapter 3.3: Evaluation and Analysis of Social Data

CHAPTER 6: SYNTHESIS, CONCLUSIONS AND RECOMMENDATIONS

Chapter 2.4: Exploring the Effectiveness of Communication by means of a Sustainability Report

Theoretical Framework 9

2 THEORETICAL FRAMEWORK

2.1 The Corporation and Its Stakeholders

The aim of this chapter is to present, first, the readers with an overview of the company’s dependence on its stakeholders and, second, the importance of relationships and trust between the company and its stakeholders to achieve the company goals. Thus, the company goals, the stakeholder model, the benefits of mutual relationships and the role of trust will be described.

In the next section, the role of the communication instrument ‘sustainability re-port’ is introduced. It will be examined how it influences the company image and prompts the company and the stakeholders to enter a relationship. First of all, an elaboration on communication will be presented, followed by explanations dealing with the corporate communication, sustainability reporting and the communication effects of the sustainability report on the company image.

2.1.1 Corporation

The current discussions on approaches regarding a sustainable management or ethical management went away from traditionally sight of companies, by high-lighting that corporation’s goal not only in the production and activity of some kind of service or in profit attainment, but also in fulfilling the needs of the vari-ous stakeholders31. At their best, firms try to create wealth for their employees in the form of compensations, working conditions, and career opportunities; for their customers in the form of products and services, which benefit them; for investors, either as shareholders or lenders; for suppliers, communities, and governments32.

Compared to less successful companies, wealthier firms can pay higher wages and offer better career opportunities, take greater risks, provide greater cus-tomer benefits, respond better to adversity, provide more values for sharehol-ders, and maintain better relationships with their stakeholders. They can also increase their capacity to generate wealth in the future by reinvesting in their

31 Cf. Schaltegger and Sturm 1992:11 (See also e.g. Albach et al. 2000, Fandel et al. 2004, Casson 1996, Porter 1980, Sveiby 1997). 32 Post et al. 2002:35.

10 Theoretical Framework

business, launching new and innovative ventures, buying other companies, and creating their own internal enterprises.

In regard to the Resource Based View33, Post et al (2002) and Sveiby (1997) mentioned that a company could utilise the following three resources as capital to create wealth34:

• The market value of physical and financial assets or less liabilities (tangible assets)

• The value of individually separable intangible assets such as specific human capital, patents and licences

• The value of relational assets both internal and external, involving stakeholder linkages, collaborations, processes and reputational factors (relational assets may combine both tangible and intangible elements, as in the case of collaborative R&D projects).

Scholars and practitioners in the field of management, strategic management and marketing management are aware of the fact that there are sources of cor-porate value other than physical and financial assets. At the moment the achievement of business success greatly depends on the contribution of rela-tional assets35. This is also confirmed by KPMG Germany and the Stakeholder Reporting GmbH (2002), who said that the relational assets are of greater stra-tegic importance for business success than tangible assets36.

The following statement by Leana and Rousseau (2000) serves as an introduc-tion to the analysis of relational assets:

“Work – and how it is carried out in organisations – is fundamentally about relationships: relationships between a firm and its emplo-yees; relationships of employees with one another; relationships between a firm and its investors, suppliers, partners, regulator and customers” 37

Dyer and Singh (1998)38, Keep et al. (1999)39 and Donaldson/Dunfee (1999)40 agree that a network of relationships, both internal and external, can have posi-

33 The concept of Resource Based View as a strategic environment of a company was introduced in the management literature by Penrose (1959). Wernerfelt (1984) argued that a resource-based analysis includes access to capital, labour, locations, and technologies. 34 Post et al. 2002:45, Sveiby 1997 (Cf. Schaltegger and Sturm 1992:11). 35 Post et al. 2002:36-38, 44-45, Sveiby 1997, Kaplan and Norton 1996:35. 36 Schmackpfeffer and Henkel 2002. 37 Leana and Rousseau 2000:3. 38 Dyer and Singh 1998. 39 Keep et al. 1999. 40 Donaldson and Dunfee 1999.


tive or negative effects on a corporation’s overall performance and value, de-pending on the structure and management.

For several years many authors highlighted the concept of relational assets, which emphasises the importance of relationships. Granovetter (1992) pro-posed ‘relational embeddedness’ which describes the kind of personal relation-ships people developed with each other based on a history of interactions41. Holm, Eriksson and Johansson (1996) studied the relationships between sup-pliers and customers and called their concept the ‘relationship understanding’42. Dyer and Singh (1998) identified four potential sources of inter-organisational competitive advantage: relation-specific assets, knowledge sharing routines, complementary resources/capabilities, and effective governance. Their theory is known as ‘relational rent’43. Kale, Singh and Perlmutter (2000) created the term ‘relational capital’ to include such qualities as mutual trust, respect, and friend-ship among individuals in partnerships44. Dunning (2000) argued that social capital plays a critical role in business, if social capital comprises many re-sources that are embedded in a network of relationships45. That is why he pro-posed the new concept of ‘relational assets’. Richardson, Vidaurreta and Gor-man (2002) discussed the idea of ‘Relationship Assets Management’ (RAM), which is based on their experiences with friends, associates, colleagues, and stakeholders of every type46.

On the basis of the aforementioned descriptions of the term ‘relational asset’, it may be concluded that relational assets, which represent mutual relationships between the corporation and its stakeholders, are without doubt indispensable for the corporation’s economic success. Relational assets determine the com-pany’s sustainability in the future.

Before exploring the relationship between the company and its stakeholders as a precondition of business success in more detail, it is necessary to observe the issues surrounding the corporate stakeholders.

2.1.2 Stakeholders and the Stakeholder Model

There are different definitions and understandings of the term ‘stakeholder’, for example by Davies/Chun/da Silva/Roper (2003)47, Dyllick/Belz/Schneidewind 41 Granovetter 1992. 42 Holm et al. 1996. 43 Dyer and Singh 1998. 44 Kale et al. 2000. 45 Dunning 2002. 46 Richardson et al. 2002. 47 Davies et al. 2003.


(1997)48, Schaltegger and Sturm (1992)49, Dyllick (1990)50, and Achleitner (1985)51.

The term ‘stakeholder’ was first used in the strategic management literature by Freeman in 1984. He highlighted that the purpose of a firm is to serve as a vehi-cle for coordinating stakeholder interests52. Most subsequent analysts quoted Freeman’s loose statement that a stakeholder in an organisation is (by defini-tion)

“Any group or individual who can affect or is affected by the achievement of the activities of an organisation” 53

The fundamental idea is that stakeholders have a stake in the operation of the firm, in the same sense that business partners have a common stake in their venture or players on a team have a common stake in the outcome of a game. Stakeholders share a common risk, a possibility of gaining benefits or experi-encing losses or harms, as a result of corporate operations. Their common de-sire is that the corporation should be run in such a way as to improve their situation, or at least to keep it.

The corporation cannot survive, if it does not take responsibility for the welfare of its constituents (or stakeholders), and for the well-being of the larger society within which it operates54. The resources provided by stakeholders can include social acceptance, the ‘license to operate’, as well as more obvious contribu-tions such as capital, labour, and revenue. The risks include not only financial exposure but employment and career opportunities, the quality of products and services, environmental and community impacts, and so forth. The power of stakeholders may arise from their ability to mobilise social and political forces, as well as their ability to withdraw resources from the firm55.

Since stakeholders are related to the company by delivering certain benefits to the company, they see themselves legitimated to make demand addressed to the company. Some examples of the demands and contributions of the stake-holder groups are presented in Table 1.

48 Dyllick et al. 1997. 49 Schaltegger and Sturm 1992. 50 Dyllick 1990. 51 Achleitner 1985. 52 Freeman 1984, Evan and Freeman 1993:102-103. 53 Freeman 1984:46. 54 Chuang 2004, Post et al. 2002:16-17. 55 Post et al. 2002:20.


Table 1: Stakeholder Demands and Contributions to Business Success

Stakeholders Demands Contributions

Shareowners and Lenders

High yield/dividends, security

Provision of capital, equity, and/or debt, Financial market recognition and status (reducing borrowing costs and risks)

Employees High wages, short working days

Development of specific human capital, Team production and routines based on understanding and trust, Collaborative relations in the work-place

Unions High wages, short working days, good social conditions

Workforce stability and conflict reso-lution

Customers/ Users

Cheap high-quality products

Brand loyalty and reputation, Re-peated/related purchases, Collabora-tive design, development and pro-blem solving

Supply chain associates

High margins, good customer relations

Network and value chain efficiencies, Collaborative cost-reducing routines and technologies

Local communi-ties and citizens

Boost neighbourhood relations

Mutual support and accommodation, Planning, municipal services, ‘Li-cense to operate’

Governments and Regulatory authorities

Regulations and super-vision

Macroeconomic and social policies, Supportive relationships with policy makers, Validation of specific pro-ducts/services, characteristics and quality levels, Reputation for compli-ance, integrity and best practice

Private organisa-tions

Representing interests of the members

Constructive collaboration with indi-vidual organisations and groups, Favourable public opinion, Voluntary normative standards (e.g. ISO 9000, UN Global Compact)

Media Winning readers Support of positive image Universities/ Research insti-tutes

Knowledge maximisa-tion

Constructive collaboration with uni-versities/research institutes

Source: adapted from Post et al. 2002:47 and Schaltegger/Sturm 1992:19-21.

Investors, employees and customers associate themselves voluntarily with the corporation in the hope of obtaining benefits. Other stakeholders adversely af-fected by pollution or congestion may be involuntarily involved with the firm, and may seek to minimise its negative impact on their welfare. However, their tacit


acceptance of the firm’s ‘license to operate’ is nevertheless a significant contri-bution to its welfare. The status and interests of some stakeholders (shareown-ers and employees, for example) are at least partially protected by law in most developed countries, and most stakeholders have the possibility to resolve any serious conflict between themselves and the corporation in court. However, the possibility of being affected by greater or lesser harm or benefits applies to all stakeholders; some may be confronted with both benefits and harms at the same time56.

Mutual relationships between a company and its stakeholders evidently do not only bring benefits to the company but also to the stakeholders themselves. These various stakeholder groups have, however, different needs and de-mands, say e.g.: local communities have certain expectations in terms of cleanliness, quietness and health with regard to their environment, consumers want quality products and guarantees, information and customer service, em-ployees demand a secure and safe workplace, particularly assurance on issues such as business unit closures, vocational retraining, etc. A harmonious rela-tionship between the two parties convinces a company that there are plenty of benefits to be gained from such mutual relationships. Therefore, the company will try to fulfil the demands of their stakeholders in order to continuously main-tain its relationship with its stakeholders57.

It is clear now that stakeholders play a vital role in the company’s existence. Consequently, the foremost task of a company is to get to know the stake-holders and the relationships between the company and its stakeholders.

Kochan and Rubenstein (2000) suggested three criteria for identifying signifi-cant stakeholders58:

1. They supply resources that are critical to the success of the enterprise

2. They ‘risk’ something of value; i.e. their own welfare is directly ‘affected by the fate of the enterprise’

3. They have ‘sufficient power’ to affect the performance of the enterprise, either favourably or unfavourably

Furthermore, regarding the relationship between a company and its stake-holders, the extension of this kind of relationship has been discussed for years, among others by Hunt and Morgan (1994), Doyle (1995), Gummesson (1996, 1997), as well as Richardson, Vidaurreta and Gorman (2002)59. Hunt and Mor-gan (1994) and Doyle (1995), similarly classified the stakeholders into four groups: supplier partnerships, lateral partnerships, buyer partnerships and in- 56 Post et al. 2002:20. 57 Cf. Dyllick 1990. 58 Kochan and Rubenstein 2000:373. 59 Doyle 1995, Gummesson 1996, 1997, Hunt and Morgan 1994, Richardson et al. 2002.


ternal partnerships60. Gummesson (1994) recommended applying the ‘Thirty Relationships Approach’, which classifies relationships into four types. The first two belong to market relationships, which are relationships between customers and suppliers. The next two types belong to non-market relationships that indi-rectly influence the efficiency of market relationships61. Richardson, Vidaurreta and Gorman (2002) suggested that for most publicly held companies, the key stakeholder groups could consist of twenty stakeholder groups from employees to educational institutions62.

The theories of stakeholder networks show that there are various stakeholders who should be taken into account by the companies. Schaltegger and Sturm (1992) separate the stakeholders into internal stakeholders, e.g. management and employees and external stakeholders, e.g. lenders, suppliers, unions, au-thorities etc. A diagram of the stakeholder model developed by Schaltegger and Sturm (1992) describes the connections between the corporation and its diverse stakeholders, as presented in Figure 2.

Figure 2: The Corporation and Its Stakeholders

Source: Schaltegger/Sturm 1992:10 and Janisch 1993:131.

60 Hunt and Morgan 1994, Doyle 1995. 61 Gummesson 1994. 62 Richardson et al. 2002.

Media/ Press agency Labour

union

Investor

NGO

Shareowner

Government and Authority

Education and Research

Genaral public

Financial community

Neighbourhood

Socio-cultural field Political field

Technological field Economical field

Institutional-social field

General social field

Ecosphere

Supplier Customer

Competitor

Corporation

Management

Employee


The company together with its internal and external stakeholders are subject to a continuous altering influence of the community field, which is marked by the economic, technological, socio-cultural and political aspects (see Figure 2).

• Economic claims contain the relationship between output and input. It asks at what expense is a target achieved

• Technological demands deals with the question to which degree goals are achieved

• The socio-cultural claims focus on the goal contents and goal restric-tions and raise the question: which goals are legitimate in the sense of moral and ethical responsibility?

• Finally, political claims refer to interest enforcement. The central ques-tion is: how can the autonomy of the company be guarded against the many different interests of the stakeholders?

As illustrated in Figure 2, there are numerous company stakeholders. No matter how many stakeholder groups are part of the overall network, it is important that corporations map their own relationship network, i.e. firms should have a clear understanding of the interrelations.

However, a few aspects of the linkages between a corporation and its stake-holders, as shown in Figure 2 above, must be pointed out63:

1. Benefits/Risk Flows: The flows between the firm and its stakeholders run in both directions; the company and stakeholders are perceived as contributing something and receiving something from each other. This also means that both sides may receive a combination of benefits and harms from each other.

2. Multiple Linkages: All of the linkages may be operational at once; hence, contact with the firm creates indirect linkages or networks among the various stakeholders themselves – who may also, of course, be interlinked in other ways (as members of the same community, for example). The frequently encountered statement that ‘the corporation is a nexus of contracts’ suggests that the firm is engaged in a series of un-related bilateral arrangements with various parties that have no rela-tionship with each other. This is not an accurate description of stake-holder relationships for two reasons:

• First, it omits the interests of involuntary and passive stakeholders, who may lack even an implied contractual relationship to the firm,

63 Cf. Post et al. 2002:22-33.


• Second, it fails to recognise the fact that, because of their mutual connection with the firm, all stakeholders are interlinked, at least in-directly, and often these links are quite important.

3. Simultaneous Roles: Particular individuals and groups may simultane-ously occupy several roles. It means an employee could also be a cus-tomer, shareowner, and also a neighbour of the corporation. Identifica-tion of these overlaps should lead both managers and others involved to acknowledge the varied impacts of corporate activity, and to think of corporate performance in multidimensional and comprehensive terms, rather than from the perspective of a single interest64.

4. Issue-related Variance: Relationships between corporations and their stakeholders vary from issue to issue and from time to time. Some is-sues are more important to one group of stakeholders than to another. Concerns and priorities change over time; new types and configurations of stakeholders appear in response to changing circumstances. Long-term relations, favourable or unfavourable, with various categories of stakeholders depend on the company’s development; trust builds up over time, and so does distrust and opposition. Hence, the stakeholder map is not a permanent chart in which each recognised interest has a fixed significance or priority, but rather a flexible vision of a dynamic situation, akin to a hologram.

5. Managers as Stakeholders: The normative implications of the stake-holder model make it very difficult to define the role of managers within the corporate system. In this case ‘manager’ refers to a person or group with decision-making authority and consequential responsibility, re-gardless of level or title. On the one hand, managers are stakeholders in their own right and it is reasonable to expect them to try to advance their own interests. But they are also arbiters and mediators of all the stakeholder interests and are responsible for the success and viability of the enterprise as a whole65. Often these two roles cause conflicts. Beyond this constraint, managers have obligations towards all stake-holders, even when it requires balancing their own stakeholder interests against those of others. The reason for attracting more explicit attention and commitment to the concept is to generate greater managerial awareness of the diversity of stakeholder interests and the possibility of mutual gains and unavoidable tradeoffs in the distribution of benefits among stakeholders, including themselves66. Hence, in this study, the role of managers as stakeholders is not taken into account because

64 See also Schaltegger and Sturm 1992:10. 65 Jones and Hill 1992. 66 Jones 1995.


managers are understood as the message senders who deliver com-munication messages to the stakeholders by means of the sustainability report.

It can thus be summarised that the stakeholder model is one of the important concepts applied in this research to examine the role of each actor because sustainability reporting deals with various actors from the company’s point of view: managers, executives, shareholders, and employees (internally) and sup-pliers, customers, lenders, authorities, NGOs, etc. (externally).

2.1.3 Mutual Relationships between the Corporation and its Stakeholders as a Precondition for Business Success

The corporation’ stakeholder concept implies that favourable relationships and linkages with stakeholders, both internal and external, are important assets of the firm. Indeed, they are part of its current wealth and its capacity to generate more wealth in the future. Some statistical analysts stated that there is a con-nection between financial performance and various indicators of stakeholder orientation. None of those prove that companies can ‘do business well’ without stakeholder orientation. Mutually beneficial stakeholder relationships can en-hance the wealth-creating capacity of the corporation67. The industrial network theory is a suitable example of this. It assumes that interconnected actors and resources, including stakeholders, have a greater economic effect than compa-nies doing business alone. One reason for this is e.g. sinking transaction costs68.

In contrast, the importance of some critical stakeholder relationships was also revealed by ‘negative evidence’, i.e. unfavourable consequences associated with the absence or neglect of their interests. In their analysis of ‘What went wrong at IBM’ Mills and Friesen (1996), for example, declared that “any busi-ness runs on two relationships: with its customers and with its employees…..IBM broke its contracts with both…; the whole story of its decline can be told in these terms” 69.

Another case of General Motors (GM) during the 1980s is much the same. Maryann Keller (1989) describes GM’s traditional posture towards stakeholders as ‘contemptuous paternalism’70. Employees, for example, were assured of good wages, job security and little performance pressure, but their own concern

67 See e.g. Fombun 1996, Fombrun and Wiedmann 2001, Post et al. 2002. 68 Hakansson and Snehota 1995 (See also Sydow 1992). 69 Mills and Friesen 1996:180-181. 70 Keller 1989:30.


and goals received little attention. The views of customers were similarly disre-garded; GM knew it best. According to Keller (1989), the GM-Toyota NUMMI joint venture of 1983 was a revelation:

“The Toyota secret was, finally, no secret at all, and it was as old as history. Treat both white- and blue-collar workers with res-pect….Combine that culture with a good car and quality parts, and the results were obvious……At NUMMI, Toyota would demonstrate a business strategy based on trust, respect and teamwork” 71

Coff and Rousseau (2000) further mentioned:

“By its very nature, relational wealth mediates among the attributes and capacities of people, groups and firms (including firm’s human and financial capital) and affects successful work coordination, task performance and goal achievement. For inimitable benefits to ac-crue from inputs, they must be bound together in an inimitable way”72

As for the role of relationships as sources of competitive advantage, they note that even if competitors know that a firm’s strategic capability is based on stake-holder connections ‘such ties are so complex and idiosyncratic that they cannot be readily copied’73.

A harmonious operating environment is of value itself, easing the tasks of indi-viduals in charge of managerial responsibilities and facilitating adaptation to change. The development of a culture of learning within an organisation re-quires a network of reciprocal trusting and trustworthy relationships based on mutual understanding and widely distributed benefits. In addition, favourable stakeholder relations can generate favourable response cycles, good commu-nity relations may help attract superior employees, strengthen customer loyalty, and so forth. Moreover, it is obvious that unfavourable relation with stakeholders can reduce organisational wealth, and that negative impacts often spread from one stakeholder group to another – as in the case of strikes or consumer boy-cotts that have repercussions on the stock market, increasing the costs and risks of a firm’s financing arrangements74. One example for this is the Brent Spar case.

In 1995 Royal Dutch/Shell – one of the world’s three largest companies – faced a great problem because it proposed to dump an aging offshore drilling platform – the Brent Spar – at sea. Careful research conducted by Shell had supported the dumping at sea as the least environmentally damaging alternative for disposing

71 Keller 1989:114. 72 Coff and Rousseau 2000:29. 73 Coff and Rousseau 2000:27. 74 Post et al. 2002:46.


of the rig. Nonetheless, Shell became the target of a Greenpeace campaign that portrayed Shell as a greedy and irresponsible company whose support of dumping the platform at sea was motivated by purely economic reasoning be-cause it happened to be the cheapest alternative. The boarding of the inopera-tive Brent Spar by Greenpeace militants drew worldwide media coverage that sullied the Shell image, provoked massive boycotts of Shell stations in Germany and ultimately forced the publicly humiliated company to back down in June 199575.

The term of ‘mutual relationship’ is connected with the term ‘trust’. The role of trust in personal and social life has recently become an important focus of analysis and discussion throughout the social science76. Social scientists and philosophers have long argued that trust is essential for stable social relation-ships because it promotes cooperation and with it the potential for mutual bene-fits77. Fukuyama (1996) emphasises that trust is a kind of ‘social glue’ that en-ables people to work together without reducing every interaction to explicit bar-gaining and formal contracting78.

The scientific definition of the term ‘trust’ is found in a number of disciplines that deal with this term. This has manifold causes: although the term ‘trust’ seems to be familiar, there exists no common definition accepted by all the disciplines of science79. Peter Kenning sought to investigate the elements of trust in a number of disciplines in his study on trust management in 2001 and came up with the following definition of trust:

“The feeling of ‚able-to-depend-on-something’ which is aimed to-wards an uncertain situation in the future, which is based on previ-ous experiences of a person or organisation, which is tied with a loss risk and an absence of control ability“ 80

In simpler terms, trust is the expectation that others will behave honourably and that there will be a mix of give and take in the relationship. In trusting relation-ships, both partners have each other’s best interest at heart and therefore they are willing to both relinquish some of their independence and increase their level of interdependence81.

Svendsen (1998) mentioned that trust is rarely all encompassing; people often trust others only to do certain things. For example, a man trusts his mechanic to

75 Fombrun and Rindova 2000. 76 Beccerra and Gupta 1999. 77 Svendsen 1998:142. 78 Fukuyama 1996. 79 See e.g. Hosmer 1995, Luhmann 1989, Petermann 1996, Rotter 1980, Rousseau et al. 1998, Sjurts 1998. 80 Kenning 2002. 81 Svendsen 1998:142-143.


keep his car in good running order, but he would not trust the mechanic to look after his children. Similarly, an organisation might trust one supplier but not an-other to supply and consolidate materials for a manufacturing process, de-pending on its experience and track record82.

It is clear that trusting relationships between an organisation and its stake-holders can be a source of competitive advantage apart from other aspects, such as power and transparency. Trusting relationships can have significant benefits to companies. As Nirmalya Kumar points out in a Harvard Business Review article on the power of trust in manufacturer-retailer relationships, retail-ers with trusting relationships with manufacturers generated more sales and therefore more profits for both retailer and manufacturer83. His research showed that retailers with ‘high trust’ relationships generated 78 percent more sales than those with ‘low trust’ relationships. This is because trust encourages sharing information, innovation, better pricing, and lowering monitoring costs84.

Short Summary

As shown in the last sections on the basis of new approaches of the resource based view, external resources, so-called relational assets, play an important role for generating competitive-related bonds and debentures in order to secure the success of the company. The discussion on relational assets can be tied to the so-called stakeholder concept, so that the holders of resources become the focus. Here, besides company internal stakeholders mostly company external stakeholders are viewed. It can be seen that these stakeholders do not only address different interests to the company. Tied with these different interests are different needs, which can be observed also in regard to the information and communication needs. In the following research process of this study it is im-portant to find out which interests of each stakeholder group are addressed to the company and how and in which form are each of them met.

82 Svendsen 1998:142-143. 83 Kumar 1996. 84 Svendsen 1998:143.


2.2 Communication and Corporate Communication

The first part of this section explains the theory and the models of one-sided and two-sided communication, using the example of the simple pattern of communi-cation between two individuals. First of all, the weaknesses of the one-sided communication model will be illustrated. At the same time the argumentations of the seemingly more realistic two-sided communication model will be brought up. The complexity and goals of this communication model will also be described. The next part of this section deals with the elaboration of the corporate commu-nication. Corporate identity mix and corporate image, which are related to com-munication through sustainability reports, are also described. Moreover, the issue of contradicting views of how the company sees itself and how the stake-holders see the company is raised. It will be made clear that the company can not produce the image by itself and it cannot manipulate the stakeholders’ per-ception of the company either.

2.2.1 Communication

There are a variety of communication theories and definitions developed by different authors85. The manifold communication definitions can be traced back to research about communication in various scientific disciplines86. Each disci-pline claims that several aspects of communication are part of their field and create their own definition of communication. As a consequence, a jumble of definitions and approaches emerged, often contradicting each other87.

An overview and discussion of those diverse communication theories will not be provided, as it is not the main focus of this research. The approach taken in this research even restricts the communication theory to a pragmatic approach. Communication, based on the structure of the communication process, is di-vided into two basic models: one-sided, purposeful communication (asymmetric) and two-sided or reciprocal communication (symmetric). This differentiation refers to the activities of the sender and receiver or to the goal of the communi-cation, whether communication is only seen as a process to transmit information or also as a sense-producing process88.

One-sided and purposeful communication is defined as a “transmission of cer-tain messages or information from sender to receiver” or a “one-sided action of 85 See e.g. Maletzke 1963:18, Zerfaß 1996:150, Bruhn 2003:1. 86 Kirchner 2001:79. 87 Merten (1977:9) cited by Mesterharm 2001:46. 88 Merten 1977:40-42.


the sender towards the receiver”89. The definition of communication as one-sided transmission was introduced by Maser (1971). He interprets communica-tion as transmission and an exchange of messages. In this case communication “exists between a sender who sends out the message and a receiver who re-ceives this message”. Communication is therefore

“The transmission of messages with the goal to share mutual in-formation from the so-called sender’s side as well as to receive it by the receiver” 90

The one-sided communication model is also known as the ‘container model’. The information is understood as container into which the sender loads the in-formation (just like loading cargo into a container). The sender then hands over the container to the receiver (sender talks to the receiver). The receiver simply must unpack this container and will find the important information in it. Figure 3 illustrates this one-sided communication (container) model.

Figure 3: ‘One-sided Communication’ Model (Asymmetric)

Source: See i.e. communication model of Shannon and Weaver 1976:34, Kotler and Bliemel 1995:910.

In this model, communication includes a content and self-revelation aspect. The term ‘content aspect’ refers to the actual object of communication (the theme, the content/message), whereas the ‘self-revelation aspect’ reveals information about the sender (the personality, the way the sender communicates, the sender’s knowledge of language, etc.)91. In this model, it can be said that the task of the sender is fulfilled, once the receiver gets the message. This is not an easy task because the communication process will be affected by various sources of interferences. Humans are constantly exposed to numerous com-mercial and other forms of messages. Kotler and Bliemel (1995) give three rea-sons why members of the target audience do not receive the desired mes-sage92:

1. the selective perception, viz. they do not perceive all the transmitted sti-muli,

89 Merten 1977:40-42. 90 Maser 1971:9-13. 91 Cf. Schulz von Thun 203:26-27. 92 Kotler and Bliemel 1995:911.

Sender Receiver

Information


2. the selective distortion, viz. they ‘manipulate the message’ and perceive only those things which they want to accept, and

3. the selective memory, viz. they memorise only a small part of the mes-sage that reaches them.

Additionally, Krippendorff (1994) explains that the one-sided communication process (container model) is only successful if both – sender and receiver – have the same information at their disposal. Krippendorff assumes the following:

• Any kind of received information must be identical with the information that was sent.

• The receiver of that message directly receives the intention of a sender, without needing interpretation.

• When two persons receive the same message, they can also draw out the same content from it.

• All those who are exposed to the same mass-media messages, are of the same character, comply with the same rules and conventions, go through the same media-socialisation process, develop and represent the same values – they will think the same way93.

• But if communication does not lead to shared knowledge, it is a result of a mistake especially on the receiver’s side. In this case the receiver was not willing or able to draw out the content of the sender’s message94.

However, the above explanation was criticised by Mesterham (2001): Krippen-dorff’s preconditions of communication, in the sense of information transmis-sion, show an inadequacy and simplification of the term ‘communication’. Fur-thermore Mesterharm (2001) criticises the neglect of subjectivity and recursive action in the communication process. The influence of special characteristics of human perception and the awareness of communication is not sufficiently stressed in Krippendorff’s definition either95.

It is clear that the described image of ideal one-sided communication, the con-tainer model, barely applies to reality and cannot satisfactorily explain the actual process of understanding96. On the one hand, it can be observed that this strongly simplified ‘inappropriate’ model is still used in daily life and in politics, as well as in marketing. On the other hand, it is also clear that this model can-not function anymore, although communication was always believed to be very easy. According to this old model of one-sided communication (container

93 Krippendorff 1994:88-89. 94 Ibid. 95 Mesterharm 2001:49. 96 Oesten and Roeder 2001:289.


model), in daily life people misunderstand each other and the numerous misun-derstandings can only be recognised afterwards.

The one-sided communication (container) model should not be applied any-more, as it does not correspond to reality. Thus, we need an alternative model, which is known as two-sided communication (constructive model). In contrast to the one-sided communication model, the so-called two-sided/reciprocal com-munication model, as illustrated in Figure 4, depicts the actual process of un-derstanding between dialogue partners more realistically97.

Figure 4: ‘Two-sided/Reciprocal Communication’ Model (Symmetric)

Source: See i.e. Naschold 1973, Aufermann 1973, Merten 1977, Bentele 1984, Linke et al. 1996.

According to Schulz (1994) two-sided communication involves concurring cog-nition in a sense of knowledge, experience or valuation between the communi-cation participants (sender and receiver), which enables the signal transmission to take place. In addition, in his definition of a two-sided communication, both communication participants play an active role. The dominance of the sender is replaced by symmetry, involving both participants equally98. Linke et al. (1996) illustrate the two-sided communication process as follows:

97 Oesten and Roeder 2001:289. 98 Schulz 1994:140.

Sender Receiver

Interpretation

Statement

Selection


Figure 5: Communication Scheme

Source: Linke et al. 1996:175.

In the two-sided communication model above, speaker 1 and speaker 2 have a partly concurring knowledge of their social environment (i.e. cultural and ethical background) and a comprehensive, corresponding knowledge of language. The physical, social and psychological dimensions of the joint communication situa-tion is individually processed and valuated. Therefore, both speakers interpret the situation differently (but some interpretations also correspond). Statements are formulated or understood on the basis of the speakers’ intentions and inte-rests and the interpretation of the situation. As soon as it is formulated, each statement is part of the joint situation, which is at the same altered by this statement (indicated by the arrow that interconnects ‘statement’ and ‘situation’ in Figure 5)99. Thus, communication can be understood as a reciprocal prepara-tion of such statements or signals. The communication partners perceive com-munication differently, based on their knowledge of the social environment, their

99 Linke et al. 1996:174.

Speaker 1

Intention, Motivation

Knowledge of social environment (culture,

ethics, etc.)

Knowledge of language

‘Objective’ Situation

Statement/Message

Speaker 2


Interpretation of the situation of the speaker 1

Interpretation of the situation of the speaker 2


individual competence and their own interests and ideals, which is mostly ac-centuated with different meanings. Thus information is processed differently100.

According to this model, the communication goes beyond pure verbal communi-cation and involves a ‘content’, ‘self-revelation’, ‘relation’ and ‘appeal aspect’. The term ‘relation aspect’ refers to the relation between the two communication partners based on their interpretations of the message (‘what does the sender think about the receiver and vice versa, and how do the sender and receiver relate to each other?’). Meanwhile, the ‘appeal aspect’ alludes to the function of the message to influence the receiver101. Consequently, a message always contains four elements: the main statement, information about the sender, in-formation on the personal relationship between sender and receiver at the time of communication, and the goal of the message which is supposed to influence the receiver.

It is important to note that ‘understanding’ (or ‘communicating’) is more than just mere ‘understandability’. Therefore, it is more than the right or wrong under-standing (‘reading ability’) of a message. If a statement should ‘make sense’, it must be jointly negotiated by both dialogue partners – by reciprocally ‘under-standing’ the different experiences, perceptions and ideals of each other102.

Having been introduced to the two-sided communication model, some crucial differences between the two-sided communication model and the one-sided communication model can be depicted:

1. The participating dialogue partners (sender and receiver) are individual characters and are different from each other. The differences are due to their experiences and knowledge, as well as their personal interests and values. Also, their expectations or motives with regard to the com-munication situation will vary. In each communication situation people meet each other, who interpret one and the same statement from differ-ent viewpoints103.

2. Instead of the misleading term ‘information’, the term ‘statements’ is used. Depending on the individual perceptions and experiences of sender and receiver, these statements are understood and also evalu-ated differently. A statement always has at least two meanings104.

3. The process of understanding does not have anything to do with the simple sending or receiving of information, viz. it is not simply an active sender delivering his/her message directly to a passive receiver as usu-

100 Oesten and Roeder 2001:290. 101 Schulz von Thun 2003:27-30. 102 Oesten and Roeder 2001:291. 103 Oesten and Roeder 2001:289-290. 104 Ibid.


ally understood (see Figure 3). Just like the speaker who must choose the right words to express himself/herself, the dialogue partner recon-structs the meaning of the statement in that particular situation accord-ing to his/her own abilities and perceptions. The process of under-standing is reciprocal: sender and receiver are both actively involved105.

The aforementioned descriptions show that communication – whether with the aim of delivering information as shown in the one-sided communication model or, more importantly, with the goal to build or improve a harmonious relationship between sender and receiver as suggested by the two-sided communication model – is not an easy matter. Successful communication is difficult to achieve because it depends on many factors. Particularly in the case of communication by means of a sustainability report, it is not easy because a company’s sustain-ability reporting includes several different goals, diverse contents and also ad-dresses various stakeholder groups. The fact that communication is always a two- way system, which means that a statement always has two meanings (from the company’s and stakeholders’ point of view), makes communication with the help of a sustainability report more complicated. All these aspects prove that communication by means of a sustainability report is quite a challenging pro-cess. Hereby, it must be understood that communication by means of sustain-ability reports involves much more than information. In this case communication is significantly influenced by characters/attitudes, feelings of trust, transparency, etc. of both the company and its stakeholders.

The basis of any successful understanding is therefore by looking for a mutual basis in a dialogue as well as working out separating differences. It is a matter of designing a complicated communication process as openly as possible, in order to achieve a reciprocal and tension-free exchange process at any time. The goal is to agree on shared interests and views or to perceive each others standpoints. This means that communication with the help of a sustainability report should be seen as a part of a long-lasting task of mutual exchange bet-ween a company and its stakeholders.

2.2.2 Corporate Communication

The previous section described the complexity of communication, especially, communication between a company and its stakeholders by means of the sus-tainability report as a communication instrument. This section deals with some essential elements, which accompany the sustainability report’s communication

105 Oesten and Roeder 2001:289-290.


process. In the following, the concept of corporate communication with its two main components ‘corporate identity’ and ‘corporate image’106 will be explained.

Similar to the term ‘communication’, there are also numerous definitions of ‘cor-porate communication’. Some definitions of corporate communication, which apply to the sustainability report’ communication process are as follows:

• “Corporate communication is the total communication activity generated by a company to achieve its planned objectives” (Jackson 1987)107.

• “Corporate communication translates the identity of a company in communication and builds the strategic roof for the most differentiated communication activities inwards and outwards” (Raffée and Wiedmann 1989)108.

• “Corporate communication is the integrated approach to all communica-tion produced by an organisation, directed at all relevant groups. Each item of communication must convey and emphasise the corporate iden-tity” (Blauw 1994)109.

• “Corporate communication is an instrument of management by means of which all consciously used forms of internal and external communi-cation are harmonised as effectively and efficiently as possible, so as to create a favourable basis for relationships with groups upon which the company is dependent” (van Riel 1995)110.

• “Corporate communication encompasses all communicative actions of organisation participants, with whom a contribution to task definition and fulfilment in profit-oriented business units is to be made” (Zerfaß 1996)111.

• “Corporate communication is the entirety of a number communication instruments and measures of a company, which are implemented to present the company and its performances to the relevant internal and external target groups of communication” (Bruhn 2003)112.

A few aspects of these definitions are summarised in the following113:

1. Corporate communication possesses an identity deliverer function, which conveys the identity of a company to its stakeholders. This also

106 van Riel 1995:26. 107 Jackson 1987. 108 Raffée and Wiedmann 1989:665. 109 Blauw (1994) cited by van Riel 1995:25. 110 van Riel 1995:25-26. 111 Zerfaß 1996:287. 112 Bruhn 2003:2, 1995:12. 113 adapted from Mast 2002:14 and Mesterharm 2001:113.


means that corporate communication has an encompassing perform-ance presentation function, to present the company and its entire per-formances to the relevant stakeholders.

2. Corporate communication does not only have an information function that analyses and interprets developments and issues in the company’s environment and on the stakeholders’ side, but most importantly a con-necting function between the company and the internal and external stakeholders to build mutual relationships between them.

The illustrations above show that a management approach which incorporates the concepts of corporate identity and corporate image creates a favourable basis for relationships with the stakeholders114. Corporate identity and image help producing mutual trust between the company and its stakeholders. A posi-tive image of the company (positive corporate image) and its products should not only be in the heads of customers but also other relevant groups upon which the company is dependent. This is indeed the classical goal of marketing, em-phasising the concept of sales. Consequently, to achieve effective communica-tion by means of an SR, it is absolutely necessary that the company presents a clear, uniform picture of itself in the SR. It must be trustworthy, consistent and understandable. If this is not the case, the information in the sustainability report will be ignored or drowns in the flood of media offer115.

2.2.2.1 Corporate Identity and Organisational Identity

Two concepts of identity emerged simultaneously, following two relatively dis-tinct paths, one known as organisational identity and the other as corporate identity116.

Organisational Identity

In general, the concept of organisational identity refers to how organisational members perceive and understand ‘who we are’ and/or ‘what we stand for’ as an organisation117. The organisational identity is believed to create a feeling of belonging among the members of that organisation. Due to the feeling of be-longing and the resulting commitment, organisational identity provides a cogni-

114 van Riel 1995:26. 115 adapted from Merten 1994. 116 Hatch and Schultz 2000:12. 117 Hatch and Schultz 2000:15, Gregory and Wiechmann 1999:64, Körner 1995:14.


tive and emotional foundation on which organisational members create mean-ingful relationships among themselves and with their organisations. Organisa-tional identity tends to be unmediated or directly experienced through everyday behaviour and language118.

The idea of organisational identity is related to the concept of culture, which refers to everyday organisational life as experienced by organisational mem-bers119. In organisation or management science, this is known as corporate culture. The term corporate culture is undeniably very complex. However, in this research, the manifold definitions and aspects of corporate culture will not be thoroughly examined, as it is not the main focus of this research. Within this context it will only be highlighted that this commonly used term is related to the concept of organisational identity and corporate identity.

Corporate culture can be defined as all values which determine the behaviour of the managers and employees and herewith the appearance of the company to the inside and the outside120. As a part of organisational identity, corporate cul-ture is principally not reflected (not mediated/communicated to stakeholders), but is a natural basis of the daily activities of the organisation’s members. Un-consciously, it marks the self-understanding and identity of the organisation121.

Corporate Identity

The concept of corporate identity refers to how a corporation expresses and differentiates itself in relation to its stakeholders122. Originally, corporate identity was synonymous with logos, company house style, and other forms of symbol-ism used by an organisation. However, the concept has gradually been broad-ened and become more comprehensive. Now, it is used to indicate the way in which a company presents itself through symbols, communication and behav-iour123. Corporate identity can be determined as124

118 Hatch and Schultz 2000:16-18. 119 Hatch and Schultz 2000:19-20. 120 Mast 2002:52 (See also Bromann and Piwinger 1992, Denison 1990, Graves 1986, Hinterhuber 1996, Schein 1992, 1985, Scholz and Hofbauer 1990. 121 Oesten and Roeder 2001:131-132. 122 Alvesson (1990), Olins (1995), van Riel and Balmer (1997) cited by Hatch and Schultz 2000:13, Gregory and Wiechmann 1999:64. 123 van Riel 1995:28-33, Birkigt and Stadler 2000:23, Glöckler 1995:25, Harbrücker 1992:186, Cf. Wiedmann and Jugel 1987. 124 van Rekom et al. (1991) cited by van Riel 1995:36 (See also Antonoff 1985, Birkigt and Stadler 2000,Glöcker 1995:22, Hannebohn and Blöcker 1983, Harbrücker 1992:184, Henrion 1980, Lux 1986, Margulies 1977, Olins 1989, Selame and Selame 1975, Tanneberger 1987).


“The self-presentation of an organisation; it consists in the cues which an organisation offers about itself via the behaviour, com-munication and symbolism which are its forms of expression”.

In the following the elements ‘behaviour’, ‘communication’ and ‘symbolism’ will be explained:

1. Behaviour By far the most important and effective medium through which corpo-rate identity is created is the behaviour of the company. Ultimately, tar-get groups will judge the company by its actions. However, it is possible to emphasise particular aspects of company behaviour by means of communication and/or symbols. The behaviour of the company is cha-racterised by its vision, mission and philosophy125.

2. Communication/Language By ‘communication in the narrow sense’, Birkigt and Stadler (1986) mean verbal or visual messages. This is the most flexible corporate identity instrument and it can quickly be put to use as a tactical tool. The flexibility of communication is due to the fact that more abstract signals can be transmitted directly to the target groups. A company can, for in-stance, informs its target group directly that it is innovative. If the same message were to be conveyed only by the behaviour of the company, the process would take much longer and would be more laborious. At the same time, there is no point in telling the target group things that are not apparent in the company’s behaviour.

3. Symbolism126 According to Birkigt and Stadler (1986), this element should harmonise with the other expressions of corporate identity. It gives an implicit indi-cation of what the organisation stands for, or at least what it wishes to stand for. This is also in accordance with Olins (1995) who wrote that the symbol of corporate identity should project four things: Who you are, what you do, how you do it and where you want to go127.

Balmer (1995) traced the roots of the corporate identity symbolism to the graphic design community, which traditionally concerned itself with the creation of company names, logos, colours, house styles, trademarks and other ele-ments of the visual identity programme (e.g. Mollerup 1997)128. Schwanzer (1992) classifies these instruments as elements of the corporate design129. The symbolism of corporate identity includes also corporate architecture (buildings,

125 Olins 1989, 1995, van Riel 1995. 126 In this case symbolism means the materialistic/visual objects. 127 Olins 1995. 128 Balmer 1995, Mollerup 1997. 129 Schwanzer 1992.


landscape, decor of retail outlets, etc.) and aspects of corporate graphics in products and services such as product design, packaging, labelling, etc130. Re-cently, sound, touch and smell have been added as elements of symbolism. For example, Schmitt and Simonson (1997) noted that the characteristics scents of a Body Shop retail outlet are an intrinsic part of the identity of the Body Shop131.

All these elements together (behaviour, communication and symbolism) consti-tute the corporate identity mix and interact with one another (see Figure 6).

Figure 6: Elements of the Corporate Identity Mix

Source: adapted from Birkigt and Stadler 2000, Mast 2002.

In fact, the communication, behaviour and symbolism of a company represent the company’s personality. Thus corporate personality is “the manifestation of the company’s perception of itself”. This implies that the company must know itself well, i.e. it must have a clear picture of its real situation in order to present itself clearly through its behaviour, communication and symbolism. Van Rekom (1992) added that the personality of a company includes its intention and the way in which it reacts to stimuli from the environment132.

Expressions of corporate identity (behaviour, communication, and symbolism) are frequently planned and transmitted to the stakeholders via communication channels i.e. televisions, newspapers, magazines, videos and the internet133.

Nearly all writings on corporate identity focus on its relevance to the business. According to this view, the economic value of a firm dealing in commoditised products or services is based on generating strong corporate images or corpo-

130 Olins 1995, Argenti (1998) cited by Hatch and Schultz 2000:13; e.g. Schwanzer 1992, Cf. Wied-mann 1987:61, Hinterhuber et al. 1989:39, Birkigt and Stadler (1992:21) in Kaiser (1996) cited by Bentele et al. 1996:115. 131 Schmitt and Simonson 1997. 132 van Rekom (1992) cited by van Riel 1995:33. 133 Cf. Hatch and Schultz 2000:13, Gregory and Wiechmann 1999:63.

Symbolism Communication

Behaviour

Corporate Identity

Mix


rate brands (essentially, corporate image refers to people’s perception of the corporation and corporate brand to the brand of products or services)134.

2.2.2.2 Corporate Image

In the previous section, it was explained how companies make use of corporate identity present themselves. It consists of the cues sent out by an organisation via its behaviour, communication and symbols. Image can be defined as “the set of meanings by which an object is known and through which people describe, remember and relate to it. That is the result of the interaction of a person’s be-liefs, ideas, feelings and impressions about an object”135. Further, corporate image can be understood as136

“The entirety of all perceptions, knowledge, experiences, opinions, valuations, views, beliefs and feelings that an individual connects with a company”

As the definition above illustrates ‘image’ is a complex concept. Image involves rational, emotional and social elements. On the one hand, an image is charac-terised by knowledge, experience and perceptions (cognitive components). On the other hand there are valuations, prejudices, expectations, wishes, hopes, reservations, fears, sensations, moods, feelings, sympathy and antipathy, thus mostly elements of emotional origin (affective components). Moreover, the community type, the personal environment and existing taboos influence an image (social component)137.

The terms ‘image’ and ‘identity’ are frequently used in descriptions of company communication strategies. Therefore, a precise differentiation and definition of ‘corporate identity’ and ‘corporate image’ is necessary: corporate identity is how a company perceives and presents itself through company behaviour, commu-nication and appearance (symbol). Corporate image is the picture of and the imagination about the company that is built and formed from the implementation of instruments of corporate identity into the consciousness of people. Thus, corporate identity identifies how the company sees itself, whereas corporate image describes how others perceive it138. Managers or others who deal with corporate communication in a company must bear in mind that the company

134 Hatch and Schultz 2000:13. 135 Dowling 1986 (See also Demuth 1987, Johannsen 1971:37, Aaker and Myers 1982, Topalian 1984, Erickson et al. 1984, Reynolds and Gutman 1984, Ford 1987, Koschnick 1996:447). 136 Kirchner 2001:113 (See also Alvesson 1990, Dowling 1986, Huber 1987:19). 137 Mast 2002:61. 138 Mast 2002:52, Buß and Fink-Heuberger 2000.


image cannot be fully controlled by the company as it is also shaped by the per-ception of the company’s stakeholders.

The relation between corporate identity and corporate image is illustrated by Birkigt and Stadler (2000) in Figure 7 below.

Figure 7: Relation between Corporate Identity and Corporate Image

Source: Birkigt and Stadler 2000:28.

According to Birkigt and Stadler (2000) corporate identity is a projection of the company image. However, this model is criticised by van Riel (1995) for the following reasons139:

1. The model does not take into account that ‘image’ is not just a reflection of identity or reflection of behaviour, communication and symbolism, which is carefully planned and communicated to relevant stakeholders. Environmental aspects can also influence the corporate image (local characteristics, competitors’ behaviour, socio-demographic trends within the main stakeholder groups, etc.).

2. The image is not an end in itself, rather a ‘mere’ means to achieve bet-ter performance.

3. The model does take into account any reciprocal effects of changes in behaviour, communication and symbolism on the organisation’s per-sonality. At the same time it is the driving force of these three corporate identity mix elements.

The first two points are strongly related to the goal of this research. The com-pany image is a result of a range of stimuli received by the stakeholders – di-

139 van Riel 1995:34.

Corporate personality

Behaviour

Communication

Symbolism

Corporate Identity

Corporate Image


rectly or indirectly. Aim of this research is to investigate how the corporate iden-tity contributes to the company image and how does the company image con-tribute to the relationship between the company and its stakeholders.

The information provided by the sustainability report will first be processed in the stakeholders’ mind before they can form an opinion on the company. The more signals the stakeholders receive and the more interest and involvement they show, the larger the possibility that the picture of the company will become clearer. This means, that the company’s perception of itself, as well as the stakeholders’ perception of the company can be increasingly harmonised, the more information is available to an individual or a stakeholder and the more reliable the image appears. If the individual (stakeholder) is too detached from the object (company), there is a growing danger of a simplified, stereotyped and inappropriate image being formed in the mind of that individual. It must be re-membered that image always involves subjective perceptions of the stake-holders that can more or less differ from the company’s perception of itself. Company images fulfil an orientation function for the stakeholders and influence their behaviour and actions towards the company140.

Evidently, company image can be understood as a basic prerequisite for build-ing a direct or indirect commercial relationship with various kinds of stake-holders141. Nevertheless, the great interest in ‘corporate image’, which mainly originated in the field of marketing, is primarily based on the assumption that a positive corporate image, which can be constructed or actively ‘built up’ by the company, is an improper understanding. The understanding of SR as a pure or mere manipulating marketing instrument or a tool to construct the company image is misleading because the perception of the stakeholders about the com-pany cannot be produced or manipulated by the company.

However, a company that has a strong positive image can have greater effects on its various target groups. A positive corporate image has the following bene-ficial consequences142:

• Raising motivation among employees A strong corporate identity, which is reflected in the positive company image, creates a feeling of belonging. It enables employees to identify with their company. Their increased commitment to the company affects their behaviour, which then has an effect on the outside world. This leads to better use of the company’s ‘human capital’. According to Blauw (1994), a sound corporate image is also useful in helping the company recruit the right employees.

140 Mast 2002:61. 141 van Riel 1995:78. 142 adapted from van Riel 1995:29.


• Creating confidence in the company among the company’s external tar-get groups A positive corporate image, based on a strong and consistent corporate identity, is essential, to improve the company’s credibility from the target groups’ point of views. A sound corporate image can also create a posi-tive emotional attitude towards the company, which ensures that a company is always one step ahead of its competitors. A sound corpo-rate image is competitive, which means distinctive and credible. A good image can help a company to attract the people necessary for its suc-cess: analysts, investors, customers, partners, and employees143.

• Acknowledging the vital role of customers

Many companies see their customers as their most important target group, since they ultimately ensure the existence of the company. The use of a positive corporate image to inspire customer confidence estab-lishes the basis of a continuing relationship, thus securing the future of the company. It can serve as an incentive to the customer to buy the products and services. Mackiewicz (1993) stated that “Research has found 9 out of 10 consumers reporting that when choosing between products that are similar in quality and price, the image of the company determines which product or service they buy” 144.

• Acknowledging the vital role of financial target groups A sound corporate image is important to the financial world and to in-vestors and it generates faith among them. Suppliers of capital are often perceived as a company’s second most important target group. They must have confidence in the company, because they usually take the highest risks in supplying considerable sums of money.

At last, one question must be raised: Can all those used communication terms such as ‘identity’ and ‘image’, which are normally used with respect to commu-nication between two individuals, also be applied to the communication between a company and its stakeholders?

Communication between a company and its stakeholders must be examined carefully because such a form of communication is complex. Even the commu-nication between two people – as has been explained in Chapter 2.2.1 – is al-ready quite complex. So a number of crucial points could easily be neglected. Thus, communication, particularly between a company and its stakeholders, is not an easy process and should not be classified as a simple matter.

It is very dangerous if communication is simplified as in the ‘S R model’, which describes communication as a process in which one person sends out informa- 143 Chajet 1989. 144 Mackiewicz 1993.


tion and at the other end another person will receive and understand this infor-mation according to the sender’s intentions. In fact, communication is not like that at all, especially not the communication between a company and its stake-holders. It is more complicated issue because on the one hand, the company has several goals, possesses many values, etc., and on the other hand, the stakeholders come from various backgrounds.

2.3 Sustainability Reporting

This section explains what SR or sustainability reporting is, what the reasons are that cause companies to produce and publish SR. The analysis will deal with the benefits of SR, as well as the demands of the company stakeholders, local government, and also international organisations. In addition, the current guidelines for producing a sustainability report will be presented in the following. There will also be a brief comparison of the guidelines. Finally, the chapter will deal with the question how to produce a trustworthy SR and other aspects that should be taken into account when publishing an SR145.

2.3.1 Overview of Sustainability Reporting

WBCSD defines sustainability report as

“Public reports by which companies provide internal and external stakeholders with a picture of corporate position and activities on economic, environmental and social dimensions” 146.

SR as an instrument of sustainability communication is a new form of reporting adopted by companies and integrates all three forms of reporting: environ-mental, social and financial reports. It can thus be published in already esta-blished company reports, as well as replace previously published company re-ports147. However, producing an SR is not a spontaneous action. SR is a result of years of company experiences and activities in sustainable development.

145 For the reason that sustainability reporting is quite a new theme in the discussion of sustainability communication in Germany as well as in international level, at the moment, there are still few litera-tures that comprehensively explore the production and publication process of an SR. Some of these literatures are guidelines for sustainability reporting which were developed by GRI, IÖW/imug, WBCSD, and the Austrian Institute for sustainable development. Therefore, these literatures play an important role in building this section 146 WBCSD 2002:7. 147 Umweltbundesamt (2002a) cited by Klaffke and Krick 2003:6.


Companies must have a good management and information system in order to be able to provide reliable data for an SR. Companies will find it difficult to pro-duce relevant and reliable reports without having internal management and in-formation systems that support this undertaking. The key challenge is to inte-grate sustainable development issues into mainstream business processes and systems148.

Demands for sustainability reporting are not only coming from company stake-holders but also from the business associations and national governments149 (The demands for sustainability reporting will be discussed more comprehen-sively in the Chapter 2.3.3).

Against this background, it is not surprising, that the number of sustainability reports by companies is increasing worldwide from year to year. Based on the market research by CorporateRegister.com, there were 582 non-financial re-ports produced in the year 2000, of which 5% were sustainability reports. The amount of produced sustainability reports rose to 15% (out of 653 reports) in 2002150.

The increasing numbers of sustainability reports are also related to the advan-tages that can be a result of communicating the company’s vision, plans, strate-gies, and efforts with respect to sustainable development (The advantages of sustainability reporting for the company will be discussed more extensively in the next chapter).

2.3.2 Benefits of Sustainability Reporting

Researchers generally agree on that fact that there are plenty of benefits of sustainability reporting. For example, a company can make use of the SR inter-nally as an instrument to raise employees’ awareness and working motivation, as well as to improve corporate management systems. The information of the SR is also useful to a wide range of internal and external stakeholders in making decisions regarding their involvement with a company. For instance, it can help them to assess management stewardship or accountability, decide whether to hold or sell their shares in the company, whether to become or remain an em-ployee, or whether to start or continue to buy its products or services151. 148 WBCSD 2002:3. 149 Loew 2002:2. 150 CorporateRegister (http://www.corporateregister.com/charts/Types%20of%20reports%20published%20in%202000. htm), (http://www.corporateregister.com/charts/Types%20of%20reports%20published%20in%20 2002. htm). 151 WBCSD 2002:27.


In short, sustainability reporting has various advantages: from raising staff awareness about the company’s activities with regard to sustainable develop-ment to attracting long-term capital and favourable financing conditions. Thus, the production of a report can be a benefit in itself. A report requires the com-pany to take a more systematic approach to sustainable development and it becomes a part of the learning process within the organisation152.

Figure 8 shows ten direct and indirect benefits of sustainability reporting153.

Figure 8: Benefits of Sustainability Reporting

Source: WBCSD 2002:15.

152 WBCSD 2002:15. 153 Ibid.

Transparencyto stakeholders

Creating financial value

Improvingmanagement

systems

Enhancingreputation

Continuousimprovement

Raising awareness, motivating and aligning staff

Maintaininglicense to operate

Risk awareness

Encouraging innovation

Attracting long-term capital &

favourable financing conditions

SR can help to build a reputation that will contribute will

contribute to increased brand value, market share and

customer loyalty for a long time. It demonstrates how

performance backs up rhetoric

SR may stimulate leadership thinking and performance,

therefore, supporting competitiveness

SR can mirror how a company manages risks

SR supports continuous improvements and learning. Reporting prompts senior management to take action for further progress, which will be reported upon the

following year

SR may encourage and facilitate the implementation

of management systems to better handle environmental, economic and social impacts.

In short, it can lead to an improved collection of data

SR can assist the company in demonstrating how it lives up

to its business values and principles related to its

environmental and social issues, both internally and in the external labour market

Internal &

externalbenefits

SR provides information to targeted stakeholders

(shareholders, local community members, government officials, NGOs, etc.), and thus enhances corporate visibility and helps to demonstrate transparency

SR can provide a soundbasis for dialogues and

discussions with stakeholders, thereby helping to maintain or

strengthen a company‘s license to operate

SR tends to indirectly reflect the ability and

readiness of companies to enhance long-term shareholder values of their intangible assets

SR helps to attract ‘patient‘ shareholders with a long-term vision and may help to justify lower risk premiums from financiers and

insurers


Apart from the stimulus to reap the benefits promised by sustainability reports, the high enthusiasm of companies to produce sustainability reports is also due to outside demands, which put the company under pressure. The next chapter will deal with the different forms of pressure and their origins.

2.3.3 Pressures on Companies to Produce Sustainability Reports

Essentially, pressure on the corporations to produce sustainability reports comes from three sources: the stakeholders, the governmental authorities and the international organisations.

2.3.3.1 Pressures exerted by Corporate Stakeholders

Key stakeholders such as shareholders, employees, and financial institutions want the business to be responsible, accountable and transparent about the values, principles and performance regarding sustainable development154. Peer pressure is also influencing companies to become more transparent about their activities and to report publicly on their sustainable development performance. The efforts of certain pioneering companies exert pressure on other companies to follow their example and also raise the expectations of interested parties155.

Financial markets also demand more and more information about the compa-nies’ environmental and social performance because there is increasing evi-dence that good performance in these areas has a positive effect on the overall performance. A comparison between the Dow Jones Global Index and the Dow Jones Sustainability Index between January 1997 and April 2002 showed that the Sustainability Index significantly outperformed the other index. Some very important investors, such as pension funds in major European and North Ameri-can markets, evaluate the sustainability of companies before making investment decisions156. In comparison with conventional funds there is indeed a growing share of investments in sustainability funds. Shell as one of the world’s biggest oil corporation estimates that in 2001, Socially Responsible Investment (SRI) funds were worth approximately three trillion USD in the US alone157.

154 WBCSD 2002:3. 155 WBCSD 2002:9-10. 156 Ibid. 157 Shell 2001:18.


2.3.3.2 Pressure exerted by Governments and Authorities

Another motivating factor for companies to produce and publish sustainability reports is due to governmental regulations that obligate companies to do so158. Governments in certain countries such as Denmark, The Netherlands and France introduced mandatory requirements159. WBCSD (2002) pointed out that at first, reports on sustainable development issues was voluntary in Germany. But, this is changing with mandatory requirements introduced by the govern-ment160.

In spring 2000 the German Federal Government announced the first resolution on a sustainable strategy. This effort promotes the further development of sus-tainability reporting. Among other aspects the resolution includes161:

• A permanent state secretary committee for sustainable development was established under the auspices of the chancellor’s office as an all-encompassing controlling and coordination body. The committee must develop a concept for a national policy on sustainable development and implement concrete projects. The state secretary committee will report to the federal cabinet regularly, so that the Federal Government can make the appropriate decisions. For the preparation of the special ge-neral assembly of the United Nations in July 2002, the state secretary committee had to present a balance on the policy of the sustainable de-velopment to the ministry.

• In addition, a council for sustainable development with its own branch office was established. This council must make recommendations for the policies prior to governmental decisions and measures. It must de-fine the requirements of a national sustainability strategy from a social point of views. It should accompany the implementation of sustainable development measures through self-initiatives and strengthen the social consensus about sustainable development.

The sustainable strategy and its concrete projects aim at tackling economic, ecological and social issues to achieve extensive optimisation. This basically encompasses the entire spectrum of measures to improve the efficiency of re-sources, land use and energy. Due to the inclusion of environmental protection into the government’s strategy of sustainable development, it is necessary to increasingly draw the attention of the social actors to the integrative concept of sustainability. The corporate communication by means of sustainability reporting

158 ACCA and CorporateRegister.com 2004:12. 159 Loew 2002:2. 160 WBCSD 2002:10. 161 Häßler et al. 2000:20.


would be in a similarly integrative manner, which open the opportunity to pre-sent the company’s problems, performances, goals and intentions to the go-vernment by using ‘the same language’.162.

Apart from the German government there is the German Federal Association of Industry (BDI) also supports company efforts to improve the communication between companies along the value-added chain, as well as with the cus-tomer163. The BDI cooperates with the parliament and the government and func-tions as a top association of the German industry with 36 industrial branch as-sociations. For future policies on sustainable production, the BDI developed three key conditions164:

1. Integration; the key to success is the integration of environmental im-pact assessment into the development of products,

2. Cooperation; cooperation between politics and the economy is the key to successful policies on production,

3. Communication; both key to the product-related environmental protec-tion, integration and cooperation, as well as to joint success or failure. Communication between the company and politics, between the com-pany and the supplier chain, between the company and the customers.

BDI embraces the industries in German that engage in sustainability reporting as a concrete application of the third point above.

2.3.3.3 Pressures exerted by International Organisations

In an address to The World Economic Forum on 31 January 1999, United Na-tion Secretary- General Kofi Annan challenged business leaders to join an in-ternational initiative – the Global Compact – that would bring companies together with UN agencies, labourers and the civil society (i.e. UN Office of the High Commission for Human Rights, ILO, UNEP, UNDP, UNIDO) to support nine principles of human rights, labour and the environment165.

The principles are as follows166:

162 Häßler et al. 2000:20. 163 BDI (http://www.bdi-online.de/oben.htm), IFAV (http://ww.ifav.de/ei/BDI/body bdi.html). 164 IFAV (http://ww.ifav.de/ei/BDI/body_bdi.html). 165 Global Compact (www.unglobalcompact.org/Portal/Default.asp). 166 Global Compact Office-UN 2001 (See also http://www.unglobalcompact.org/Portal/?Navigation Target=/roles/portal_user/aboutTheGC/nf/nf/theNine Principles).


Human Rights:

Principle 1: Business should support and respect the protection of internationally proclaimed human rights, and

Principle 2: Make sure that they are not complicit in human rights abuses.

Labour Standards: Principle 3: Businesses should uphold the freedom of association and

the effective recognition of the right to collective bargain-ing,

Principle 4: The elimination of all forms of forced and compulsory la-bour,

Principle 5: The effective abolition of child labour, and Principle 6: The elimination of discrimination in respect of employment

and occupation.

Environment: Principle 7: Businesses should support a precautionary approach to

environmental challenges, Principle 8: Undertake initiatives to promote greater environmental

responsibility, and Principle 9: Encourage the development and diffusion of environmen-

tally friendly technologies.

In addition to the UN Global Compact, there are also numerous instruments that encourage corporations in pursuing accountability and transparency such as the codes and principles of OECD ‘OECD Guidelines for Multinational Enterprises’, the management standards of the ISO 14001-Series and EMAS, the specialised performance standards of SA 8000 and the reporting and performance assur-ance of AA 1000167.

These instruments of corporate responsibility management have been imple-mented by quite a number of corporations around the world and are considered by them as a foundation to promote the dialogue between organisa-tions/corporations and the public.

To make it easier for corporations to communicate, some institutions such as GRI, CSR, WBCSD and IÖW/imug in Germany developed guidelines for sus-tainability reporting.

167 Cf. OECD 1999, 2001a, 2001b; ISO 1996; EMAS 2001; SAI 2001; AccountAbility 2003, 1999a, 1999b.


2.3.4 Guidelines for Sustainability Reporting

As mentioned above, the GRI, CSR, IÖW/imug and WBCSD developed Sus-tainability Reporting Guidelines168. In the following the different sets of guide-lines will briefly be introduced:

1. Global Reporting Initiative (GRI)

The GRI was established in 1997 by the Coalition for Environmentally Responsible Economies (CERES) in partnership with the UNEP, to de-velop a common framework for sustainability reporting. The GRI intends to follow a process based on a broad and inclusive dialogue. In April 2002, the GRI became an independent and permanent institution169. The GRI issued its first guideline in June 2000 titled ‘Sustainability Re-porting Guidelines on Economic, Environmental, and Social Perform-ance’. GRI then conducted a multi-stakeholder consultative process to test this guideline. Since then, GRI received feedback from its working groups. After the draft was published in April 2002, the final version was published in September 2002 titled ‘Sustainability Reporting Guide-lines’170.

2. Corporate Social Responsibility (CSR)

On a European level, the Corporate Sustainability Reporting (CSR), for-merly known as ‘The European Business Network for Social Cohesion’ (EBNSC), published its guidelines in November 2000 with the title ‘Communicating Corporate Social Responsibility: Transparency, Re-porting, Accountability – Voluntary Guidelines for Action’ 171.

3. Institute for Ecological Economy Research (IÖW) and Institute for Mar-ket, Environment and Society (imug)

In Germany, the IÖW and imug published their guideline in a similar way in June 2001: ’Der Nachhaltigkeitsbericht: Ein Leitfaden zur Praxis glaubwürdiger Kommunikation für zukunftsfähige Unternehmen’. This Guideline was the product of a joint project between IÖW/imug with some German small and medium-sized enterprises (SME) such as Wilkhahn Wilkening & Hahne GmbH, Weleda AG, Gundlach GmbH&Co

168 Recently, in September 2003, the Institute for Energy and Environmental Research (ifeu) Heidel-berg published a guideline titled ‚Zukunftsfähiges Wirtschaften: Ein Leitfaden zur Nachhaltigkeits-berichterstattung von Unternehmen’ (Frings 2003). Similarly, in November 2003, the Austrian Busi-ness Council for Sustainable Development developed also a guideline titled ‘Reporting about Sustain-ability: In 7 Schritten zum Nachhaltigkeitsbericht’ (Kanatschnig 2003). 169 WBCSD 2002:31. 170 Cf. GRI 2000, 2002a, 2002b. 171 Cf. CSR 2000.


and Otto Versand. The project was sponsored by the Deutsche Bundesstiftung Umwelt (DBU)172.

4. World Business Council for Sustainable Development (WBCSD)

The WBCSD is a coalition of 170 international companies from various industrial sectors in 35 countries which share their commitment to sus-tainable development173. WBCSD published their guideline in Decem-ber 2002 with the title ‘Sustainable Development Reporting: Striking the Balance’. The main purpose of this guideline is to help corporations to understand the added value that reporting can lead to. This guideline also provides guidance on how to report, thus complementing other ini-tiatives which guide corporations on what to report174.

It is voluntary if organisations make use of these guidelines to reporting on their economic, environmental, and social activities, products, and services. These guidelines should contribute to make sustainability reports of organisations or companies more comparable, accountable, complete and trustworthy. Clausen et al. (2001) makes clear that aspects such as the report’s format, structure and content should be somehow harmonised175.

GRI’s Guideline is presently the most frequently used guideline for compiling an SR around the world. There are currently 455 organisations out of 44 countries using the guidelines176. GRI incorporates the active participation of representa-tives of business, accountancy, investment, environmental, human rights, and research and labour organisations from around the world. These are the same people who initiated the development of guidelines for sustainability reporting177. In principle, other organisations (such as CSR and IÖW/imug178) also acknowl-edge and value the work of GRI and integrate the GRI’s Guideline into their own concepts when making recommendations to companies. The contents of sus-tainability reports, which are based on different guidelines, can thus show simi-larities.

It is obvious that good sustainability reports should definitely contain certain contents. It is not quite that relevant, in which order these contents are pre-sented. This can be determined individually by the corporation.

172 Cf. Clausen et al. 2001a. 173 WBCSD (http://www.wbcsd.ch), WBCSD 2002:59. 174 WBCSD 2002:3. 175 Clausen et al. 2002:80. 176 GRI (www.globalreporting.org/guidelines/companies.asp#af). 177 GRI (www.globalreporting.org/about/brief.asp). 178 CSR 2000:4, Clausen et al. 2001a:2.


2.3.5 Contents of Sustainability Reports

This chapter examines the guidelines on the contents of the SRs as recom-mended by GRI, CSR, IÖW/imug and WBCSD. These guidelines for the SR contents are not completely the same, but do show similarities.

The analysis of the documents by GRI, CSR, IÖW/imug and WBCSD showed that nine specific terms should be dealt with in a sustainability report: key fig-ures/key indicators and table of contents, CEO statement, vision and strategy, company profile, company policy (corporate governance) and management systems including stakeholder engagement and performances179.

Besides, GRI, CSR, IÖW/imug and WBCSD also recommend corporations to include information about achievements or rewards that were awarded by exter-nal parties, including external assurance statements on the report (this will be discussed further in section 2.3.6.2).

The explanations for the aforementioned main contents that an SR should con-tain are:

1. Key Figures/Indicators and Table of Contents

The most important key figures or key indicators must be displayed on the inner side of the report cover as an eye catcher. For this a table or several graphs are particularly well suited180. In order to help the readers to gain a quick overview of the entire content, a table of contents should also be pre-sented on inner side of the report cover181.

2. CEO Statement

A CEO Statement that presents the company’s vision of the future, particu-larly with respect to managing the challenges associated with economic, environmental and social performance. This enables the readers to estimate the seriousness of the company manager’s intentions regarding the pro-gress that the business makes in the direction of sustainability182. This part should, at least, include highlights of the report’s contents, emphasise the commitment to goals and point out the successes and failures183. The CEO statement may be combined with the statement of vision and strategy184.

3. Vision and Strategy

179 GRI 2002b, Clausen et al. 2001a, CSR 2000, WBCSD 2002. 180 Clausen et al. 2001a, 2002. 181 GRI 2002b:44. 182 GRI 2002b:38-39, Clausen et al. 2001a, 2002. 183 GRI 2002b:38-39. 184 PricewaterhouseCoopers 2001:6.


In the sustainability report the company should describe its visions on which the long-term development strategies are based. It should also be clarified how these visions affect concrete strategies185.

4. Company Profile

The Company Profile provides the reader with an overview of the company and its main activities. It should contain186:

• Name of the reporting company

• Major products/services, including brands, if appropriate

• Description of major divisions, operating companies, subsidiaries, and joint ventures

• Countries in which the company’s operations are located

• Details about ownership; legal form

• Size of the reporting company: number of employees (by coun-try/region), quantity or volume of the products produced or services of-fered, net sales, and total capitalisation broken down in terms of debt and equity.

In addition, it is essential to show the address of the company and in some cases also the addresses of important company sites. Furthermore, the res-ponsible contact person, especially for important themes, should be listed along with their phone number and/or e-mail addresses so that the readers have the possibility to contact these.187.

5. Policy (Corporate Governance) and Management Systems

This section provides an overview of the management structure, overarch-ing policies, and management systems which are responsible for imple-menting the company’s vision of sustainable development and manage the company’s performance (i.e. environmental and social policy, charters, and codex). In contrast, the last section ‘performance’ addresses the results and breadth of the company’s activities188.

The description of the management system presents the responsibilities and the company’s daily activities. If the environmental management sys-tem fulfils the requirements of EMAS, EMAS II or ISO 14001, or if the social management fulfils the demands of SA 8000, it should be displayed189.

185 PricewaterhouseCoopers 2001:6. 186 GRI 2002b:39-40. 187 Clausen et al. 2002:89. 188 GRI 2002b:41. 189 Clausen et al. 2002:90, 2001a:21.


The activities to engage stakeholders should also be presented in this sec-tion. It should be reflected on190:

• Basis for identification and selection of major stakeholders

• This includes the processes of defining an organisation’s stakeholders and determining which target groups to engage.

• Approaches to the consultation of stakeholders, including information about the frequency of consultations, the type of consultation and which stakeholder group was approached

• This could include surveys, focus groups, community panels, corporate advisory panels, written communication, management/union structures, and other vehicles.

• Type of information generated through consultations of stakeholders

• Include a list of key issues and concerns raised by stakeholders and identify any indicators specifically developed as a result of stakeholder recommendations.

6. Performance

The SR should provide the target groups with an honest portrait of the com-pany’s strengths and weaknesses. Moreover, the goal of the company is to improve the image of the company by presenting the strengths and also to win the readers trust in the company by communicating its weaknesses openly191. The all three dimensions of sustainability must be referred to.

6.1. Economic Performance

According to IÖW/imug, with regard to economic performance the re-port has two tasks: it should present the economic situation of the company (turnover, revenue use, development of branches, etc.) and it should discuss special aspects that are connected to sustainability and the economy (at least report about products and markets as well as the global and regional responsibility of the company) 192.

The following indicators of economic performance should be presented in the SR193:

• Turnover,

190 GRI 2002b:42. 191 Clausen et al. 2002:90. 192 Clausen et al. 2002:103-105, 2001a:34-36. 193 Clausen et al. 2002:106, 2001a:36.


• Division of the turnover to advances, labour costs and additional expenses, governmental shares (taxes and dues) and the result of the usual business activity (profit before taxes),

• Profit use (non-profitable donations, dividends/disburse-ments/withdrawals, reserves),

• In joint-stock companies the relation of the market capitalisation to the carrying value, i.e. each component of the carrying value which envelopes the capital assets, should be taken into account, as well as

• Equity or debt to equity ratio.

6.2. Environmental Performance

The discussion of the company’s environmental performance can be categorised into two parts: environmental performance of products and services and environmental performance of the production194. This in-cludes the following indicators195:

• Total material use, of which regenerated, recycled and especially hazardous substances should be highlighted,

• Total energy use, broken down according to energy carriers (coal, oil, electricity, etc.),

• Used amount of electricity, itemised according to type of production (renewable/ non-renewable, etc.),

• Total water utilisation,

• Emission of GWP gasses converted in CO2-equivalents according to the Kyoto Protocol,

• Emission of gasses hazardous to the ozone layer (according to the Montreal Protocol), as well as

• Total amount of waste that is disposed of.

6.3. Social Performance

On the one hand, the social responsibility of the company includes the perception of the interests of the employees. On the other hand, it also encompasses global justice, tackling poverty and the maintenance of minimum social standards. The analysis of the social performance fo-cuses on five categories: workplace and employment, emancipation of

194 Clausen et al. 2002:101-102, 2001a:32-33. 195 Clausen et al. 2002:103, 2001a:33.


women, health and safety at the workplace, interests of social and eth-nic minorities and global social responsibility196. The indicators of so-cial performance are197:

• The number of workplaces and the proportion of the part-time jobs and the gender proportions,

• The number of trainees and the gender proportions,

• The fluctuation rate,

• The employment of disabled people in proportion to the entire amount of employee,

• The proportion of women among the middle and high managerial positions,

• The proportion of foreigners among the middle and high manage-rial positions,

• The social standard and performance implemented by the com-pany at branches in foreign countries (if the company also ope-rates abroad),

• The number of days committed to further education per employee and gender proportions,

• The number of reported accidents (including each person em-ployed by subcontract),

• The lost days and absence rates (including each person employed by subcontract),

• Investment into health support per employee.

It should always be noted that all the past and current economic, envi-ronmental and social goals and measures are presented in the report.

6.4. Overall Performance

The presentation of the company’s performance in the SR should not confine itself to the three dimensions of sustainability. Readers will be particularly interested in how the company manages to combine the different dimensions and their often conflicting targets, what priorities are set and how exactly the dimensions are weighted198. The conflicts that exist due to economic, social or ecological measures in other

196 Clausen et al. 2002:96-99, 2001a:27-30 197 Clausen et al. 2002:100, 2001a:31. 198 Clausen et al. 2001b:39.


areas are also interesting for the target groups. The ‘eco-efficiency’ concept points out how economic and ecological interests can be com-bined with each other. The development of indicators and key figures for the evaluation of the dimension ‘integrated performance’ is still in the initial phase199.

After a comparison of the four guidelines by GRI, CSR, IÖW/imug and WBCSD, it can be concluded that none of the guidelines completely contain the nine is-sues above. The following table presents a comparison of the four guidelines with regard to the SR contents.

Table 2: Content Matrix of the SR Guidelines

No Contents GRI CSR IÖW/ imug

WBCSD

1 Key Figures (Key Indicators) 2 Table of Contents 3 CEO Statement 4 Vision and Strategy 5 Company Profile

6 Governance Structure (Rooted Business Practices)

7 Management Systems (Opera-tions and Strategies)

8 Stakeholder Engagement (Communication)

9 Performance

Included in the Guideline Not included in the Guideline

The matrix shows that the four guidelines differ from each other with respect to the key indicators, company profile, stakeholder engagement and table of con-tents.

It can be concluded that the GRI and WBCSD guideline cover more contents than the other two guidelines. However, corporations must not strictly follow the systematic order or conclude all suggested contents from those four guidelines. Companies may benefit from those guidelines by using them as a framework to develop their own sustainability report based on their creativity and their stake-holders’ interests.

199 Clausen et al. 2002:106-109, 2001a:37-39.


2.3.6 Trustworthy Sustainability Reporting

Up to now in Germany, sustainability reports are voluntarily published by com-panies and must not comply with any generally accepted, standardised form. As in the case of all information that is designed and released by a company itself, it may be that the public is suspicious of the sustainability reports, assuming that only positive facts are published and unfavourable facts are hidden. Conse-quently, one important precondition for successful sustainability reporting is trust. The report can only support the dialogue between the company and its stakeholders, if the contents and statements of the report are not doubted by the readers. Once this is accomplished the goals of sustainability reporting are achieved as well. Apart from the fact that companies should better follow the guidelines for sustainability reporting, there are various initiatives and ap-proaches to make the report more trustworthy and transparent200.

2.3.6.1 Inclusion of Stakeholder Interests in the Report

In order to make sure that the SR reaches its addressees, it should concentrate on the target groups, which are really connected to the company. The efforts to integrate the stakeholders should be noticed in the report. Stakeholder repre-sentatives could be quoted in the report, for example, and increase the trust-worthiness. Generally, it is easier to catch the target groups’ attention, if the report includes actual news and references to current themes.

In making the report managers must truly pay attention to the information de-mands of each stakeholder because various stakeholders read sustainability reports to satisfy their particular needs of information. The information needs of key stakeholder groups are described in the following201:

• Employees and labour unions: Employees and their representative groups are interested in information which enables them to judge if the company is a stable employer and a respected corporate citizen. They increasingly want to work for compa-nies that are contributing to society besides being economically suc-cessful. They are also interested in information about levels of remu-neration, retirement benefits and the nature and extent of their employ-ment opportunities.

• Customers and end users:

200 Clausen et al. 2002:80. 201 adapted from WBCSD 2002:18.


Many customers also want to know that the products they are buying are environmentally and socially friendly.

• Suppliers: Some suppliers may be dependent upon the company if it is a major customer. Sustainable development information can help them deter-mine risks, which could ultimately lead to the inability of debtors to pay, or increase their risk exposure by associating them with questionable business practices. A report can also inform suppliers of the company’s demands they may face as part of its supply chain.

• Governments and regulatory authorities: The interests of governments and their agencies are broad. Their infor-mation needs may only be met to a limited extent by sustainability re-ports. Government authorities require information in order to regulate the activities of corporations and to determine policies on competition, taxation, the environment, consumers and social affairs. Reports can enhance the credibility of a corporation applying for permits or trying to influence policy. Reports may also be used as a source of data when compiling national statistics related to sustainable development.

• NGOs: A variety of non-governmental organisations (NGOs) represent a broad range of interests and concerns such as environmental protection, hu-man rights or consumer issues. NGOs may use sustainability reports as a basis for understanding companies’ values, principles, attitudes, per-formance and goals.

• Investors: The providers of risk capital and their advisors are concerned with the risk inherent in, and return provided by, their investment. They need in-formation to help them determine whether they should buy, hold or sell, or attempt to influence the company’s direction.

• Lenders: Lenders are interested in information that will enable them to determine whether their loans and interests will be paid in due time. Sustainable development information can help lenders to determine risk factors as-sociated with the company’s business practices.

• Financial community: Of all the various stakeholder groups, the financial community is one audience most companies identify as being highly relevant to their re-porting efforts. Though the annual financial report is targeted primarily at this audience, sustainability reports are increasingly used and valued by financial players. Investors and financial analysts are not just inte-


rested in financial information. Information on the risks and opportuni-ties associated with a company’s social responsibility and environ-mental impact can be used to support their investment decisions202.

Sustainability reports should meet the general needs of most users but should not strive to deal with everything that everyone is interested in. It is not the quantity but the quality of information that counts203.

2.3.6.2 Verification from External Parties

The verification of the report through external reviewers is an instrument with which a number of companies attempt to increase the trustworthiness of their reports. The external reviewers/verifiers evaluate the accurateness of the data and the methods of data collection and award the company with a certificate if all the information can be confirmed204. The result can be published in the re-port. The guidelines of GRI, IÖW/imug, CSR and WBCSD recognise the impor-tance of this and support the inclusion of the verification statement from the external party. Another alternative is, for example the appraisal of the report through a critical consultancy institute (e.g. in form of a challenger-report)205. A Challenger Report, according to the concept of the ”four institutes”, is based on an external appraisal of the report’s contents (ecological, economical and social themes) through the cooperation partners of the German research institutes ifeu, imug, IÖW and Öko-Institut206.

According to the KPMG study, almost one third of the published corporate re-ports of the 100 largest companies from 19 countries were appraised by an au-diting company. However, the importance that one can point out these external evaluations is as disputable as their contribution to the trustworthiness of a re-port207. This is so because it is not part of the verification to evaluate if the com-pany reports about all relevant aspects and if both positive and negative aspects of the entire company’s activities are provided in the sense of ‘true and fair viewpoint’. Nevertheless, this is as meaningful for the readers as the correct-ness of the data.

However, according to a study conducted by ECC Kohtes Klewes in 2002, 43.9% of the respondents (out of 1677 people) had the opinion that an external review of the contained information increases the trustworthiness of the re- 202 WBCSD 2002:19. 203 WBCSD 2002:18. 204 Clausen et al. 2002:86. 205 Klaffke and Krick 2003:38. 206 Graulich 2002:5. 207 KPMG (2002) cited by Klaffke and Krick 2003:38-39.


port208. Thus, in the opinion of the readers the effectiveness of an external verification of the SR does increase the trustworthiness209.

2.3.6.3 Stakeholder Comments

Trustworthy people of the company’s environment are also potential commen-tators of the report, e.g. representatives of interest groups or independent sci-entists. Such comments should be an appropriate tool to inform the public about the company’s development and the positive or negative effects on sustainabi-lity. Such comments should primarily examine if the essential relations between the company and the community are dealt with appropriately. At the same time, the public should be informed about the commentator’s viewpoint on the com-pany’s contribution to sustainable development210.

2.3.7 Publication of Sustainability Reports

The company must not only pay full attention to the contents of their sustainabi-lity reports but also to the design of the SR, to appeal to the different target groups211. The design has to be developed and it must be decided, which information should be printed and which could be presented in the internet or ina any other way (e.g. CD). In the following, several propositions on how the SR should be designed and distributed will be made.

Paper or electronic version (Internet, CD, etc.)?

The report can be published in a printed form or electronically. Due to the low cost the internet is an attractive option. The print and delivery costs are elimi-nated and each interested party can access the report directly. But it is difficult to reach people that should preferably be addressed, e.g. important customers, handlers, and business partners. Sustainability reports are rather read occa-sionally, e.g. on the train or in the waiting room of an airport. A large number of the addressees cannot be reached by means of online publications. Thus, at least a short summary should be printed“212.

208 ECC Kohtes Klewes (2002) cited by Klaffke and Krick 2003:39. 209 Ibid. 210 Clausen et al. 2002:86-87. 211 Klaffke and Krick 2003:35, Clausen et al. 2002:113. 212 Clausen et al. 2002:114.


Which elements of design can be used?

Not everything can be described verbally. It is often better to present develop-ment and complex relationships through graphics. Photos can give the readers a better impression of the company, the products and the employees. Quotes loosen up the report and increase the authenticity, as well as – in the case of quoted external people – the trustworthiness213.

Which size should the report have?

According to Clausen et al. (2002), the report should be as short as possible. Presumably, a longer report is only read when it has a special design and is interesting to read. To keep the report short, detailed information can be pu-blished in the internet or it can be pointed out that more detailed information can be found in other reports, such as the financial report. Data appendixes may also be useful214.

How should the report be distributed?

Klaffke and Krick (2003) mentioned that, according to their research in the year of 2000, the distribution methods of the analysed companies were very similar. Each interviewed company distributed its SR during the main meeting. In addi-tion, all companies had partial stakeholder lists, which included renowned rating agencies, NGOs, the media, scientific institutions, public establishments as well as unions, association and public authorities. Managers received the report automatically. Other employees, just as small suppliers, customers and partners are usually informed about the existence of the report. On request, these stake-holders receive the report free of charge. The reports can also be laid out on IC and ICE trains. In other cases, the publication of the reports was also connected to the event of a large conference or seminar on this theme215.

How often should the report be published?

One must bear in mind that a number of ecological and social questions cannot be changed within a short period of time. Although most of the stakeholders prefer annual reports, under certain circumstances, publications every two or three years are also sufficient. To create trust and reliability it is important to report regularly. Therefore, if possible, the planned publication date of the next report should always be mentioned in the previous report216.

213 Clausen et al. 2002:114. 214 Ibid. 215 Klaffke and Krick 2003:35. 216 Clausen et al. 2002:115.


2.4 Exploring the Effectiveness of Communication by means of a Sustainability Report

First of all, the three phases of communication effects (cognitive, affective and conative phases) will be presented to provide a general overview of the mecha-nisms of a communication process, which aims at reaching the communication goals. The next section deals with a model, which describes the different steps of the SR’s communication process. The analysis of the SR’s effectiveness is based in this. The last part introduces the interview questions, which explore the effectiveness of SRs as a communication instrument between the company and its stakeholders. For this purpose the stepwise approach communication model by Linke et al. will be combined.

2.4.1 Phases of Communication Effects

Every communicational activity has its own goal. According to Meffert (2000) communication goals can be categorised into two groups. These are on the one hand, economic goals in terms of monetary success units, such as returns or profit; and on the other hand, psychological goals217. However, in communica-tion policy, the psychological goals are stressed. The investigation of the psy-chological goals is indeed the core task of this research. In the long-term, the pursuit of the psychological goals should contribute to achieving the economic goals. At the same time, the psychological goals are secondary goals within communication and serve as necessary sub or preliminary goals in the whole communication and marketing goal system218. Particularly in the branch of con-sumption goods and services, the economic goals, which are the main goals, can only be achieved through determining psychological goals first219.

The characterisation of psychological goals or psychological effects as a result of communication may vary220. It can be differentiated between cognitive (refer-ring to awareness), affective (referring to feelings) and conative (referring to activities) psychological effects that must be achieved by implementing various

217 Meffert 2000:680, Bruhn 2003:133. 218 Derieth 1995:37. 219 Bruhn 2003:135. 220 Schweiger and Schrattenecker 1995:55, Meffert 2000:680, Rogge 2000:59, Steffenhagen 2000:8, Bruhn 2001:207, Kotler and Bliemel 2001:934.


communication instruments221. In the following brief explanations of the three communication effects are presented222:

1. Cognitive effects Cognitive effects include knowledge about a person’s perception of an object223. Cognitive effects manage the information processing without having to manage activities. Through the delivery of information the fol-lowing should be achieved:

• Awareness and perception • Acknowledgement of brands and products (familiarity, knowing the

name) • Knowledge and information about new products or product advan-

tages.

2. Affective effects Affective effects are added to the cognitive goals, if a company or its services are distinguished from its competitors, or if the company posi-tions itself. It also comes into play to create specific perceptions, images and preferences224. Affective effects address the emotional valuation of the surrounding stimuli of a person225. Affective effects are for example:

• Interest in offered services • Perception and image • Product und brand positioning • Emotional experience • Customer satisfaction

3. Conative effects Conative effects encompass the reaction of the receivers to influences, for example prompted intentions to do something, willingness to buy something or purchase behaviour. They express the resulting attitude a person may tend to226. Conative effects can be:

• Purchase intentions • Test purchases • Repeated purchases • Further recommendation • etc.

221 Bruhn 1995:38, 2001:207, 2003:135. 222 Bruhn 2003:135-136. 223 Weislämle 1995:27. 224 Derieth 1995:38, Bruhn 2003:136. 225 Weislämle 1995:27. 226 Ibid.


Steffenhagen (2000) describes cognitive, affective and conative effects in Fi-gure 9. He identifies cognitive effects as a momentary reaction, which is a pre-requisite for continual effects (affective effects). This leads to the conative ef-fects, such as intentions to do something and/or wishes to use the purchased object (final behaviour)227.

Figure 9: Relationship between Communication Effect Categories

Source: Steffenhagen 2000:11228.

The figure shows how a stimulus can be effectively maintained, if all the stages of information processing are accomplished. It is therefore in the interest of the message sender of the information to guide these stimuli through all the stages. But, even if the message sender succeeds in drawing attention to the message, there may still be a considerable barrier to be overcome, since there are still several phases that must be completed (from the cognitive to the conative phase). Thus, the final goal of a communication process is a result of the com-bination of the communication effects in all three phases229.

2.4.2 Step Models of Communication Effects

Bruhn (2003) defines the analysis of how successful communication is as fol-lows:

227 Steffenhagen 2000:73. 228 See also Bruhn 2003:395, Engel et al. 1990. 229 adapted from Bruhn 2003:136.

Momentary reaction

… are prerequisites for …

… benefits/leads to …

… benefits/leads to …

… strengthens ..

(Cognitive effects)

(Affective effects)

(Conative effects)

Continual effects

Final behaviour

Stimulus


”A systematic analysis of changes in contents of communication targets which are influenced by the implementation of communica-tive activity with the goal to arrange decision supports through re-cursive ways for planning, organisation and execution of communi-cation measures“ 230

According to this definition Bruhn (2003) identifies two communication aspects, which must be analysed to explore the success of communication231:

1. Exploring the success by comparing the communication goals and the actual achievements, and

2. Exploration of communication-goal-related effects of communication campaigns.

On the basis of this, there are two approaches to analysing the effectiveness of sustainability reporting as a communication instrument. The first approach in-vestigates the two sides of communication, i.e. message sender and message receiver. First, the goals of the company’s communication by means of a sus-tainability report are explored. Next, the message receivers are examined to assess whether the goals of communication through sustainability reporting are achieved as expected by the message sender, the company. The second ap-proach aims to discover what further effects the achieved communication goals through sustainability reporting have. This control is conducted on the message receiver’s side, the stakeholders.

Kotler and Bliemel (1995) said that232

“The end-goal of a communication process in marketing is basi-cally the purchase and the satisfaction of the customers. However, this does not happen until after a long decision making process on the stakeholders’ side”.

Hence, certain phases have to be gone through before reaching the last phase of the communication effects: from the cognitive via the affective to the conative phase. The message senders must know how they can influence the message receivers from the first phase of communication effects, which creates ‘familiar-ity’, to the last.

Thus, referring to the above statement by Kotler and Bliemel, ‘models of com-munication effects’ are applied as a basis to explore the effects of communica-

230 Bruhn 2003:389. 231 Ibid. 232 adapted from Kotler and Bliemel 2001:916-917.


tion by means of a sustainability report. The models233 that are used to explore the effectiveness tend to adapt methodologies employed in marketing234.

The approach to explore the success of communication is derived from numer-ous models of communication effects, of which the the AIDA-rule by Lewis (1898) is the most popular model235:

Attention – Interest – Desire – Action

The AIDA-model is an old model of communication effects, which was con-stantly modified in the course of time. This model was mostly developed within the framework of media advertisement but is transferable to several communi-cation instruments of impact assessment. Moreover, a division according to the different forms of reactions to a stimulus can be made, i.e. cognitive, affective and conative reactions.

Based on various references in his book ‘Kommunikationspolitik’ (Communica-tion policy) Bruhn (2003) identifies a number of steps that are part of the com-munication effects236:

• Kroeber-Riel (1986)237:

Attention – Affective action – Rational meaning –Purchase intention – Purchase

• Steffenhagen and Juchems (1985)238:

Knowledge effect – Emotion effect – Information effect – Memory effect – Percep-tion effect – Behaviour effect

233 Maletzke (1980) explains ‘model’ elaborately as follows “Model is a simplified, abstracting representation of a reality field with the goal to highlight and make the relevant aspects (according to a certain problem definition) clear. Models are abstraction accomplishment of human thinking. The ability to abstract is regarded in anthropology as one of the determining capability that makes a human able to live in the first place. Assuming that the individual experiences the world with the impression of a bundle of constantly changing external stimuli, then it is accepted that the biologically underdeveloped human can only assert itself in this world if he reduces these manifolds to a few factors und thus making them understandable and practical. He achieves this through selection and abstraction: he chooses certain, for him seeming to be important aspects and leaves others out, and he abstracts from concrete single cases. In the model building the scientist executes only this choice and abstraction process consciously. He investigates these factors and structural relationships of his research field, which seems relevant for him, according to plan. To make the reality which is reduced to a foreseeable level obvious, the scientist displays – each time it is possible – the model in form of schemes. Hereby, a model – this is to be borne in mind – should in no way be considered as a theory but as help for order and understand-ing. The same applies also in the communication research: we observe the conventional model of mass communication” (Maletzke 1980:55-56). 234 The methods of marketing that are mentioned here refer to several publications e.g. Bruhn 2003, Kotler and Bliemel 2001, Meffert 2000. 235 Bruhn 2003:394, Strong (1925) cited by Kotler and Bliemel 2001:917. 236 Bruhn 2003:40. 237 Kroeber-Riel 1986. 238 Steffenhagen and Juchems 1985.


In the book ‘Marketing: Grundlagen marktorientierter Unternehmensführung’ (Marketing: Fundamentals of market-oriented management) Colley (1961)239 subdivides communication effects into the following steps, as cited by Meffert (2000)240:

Awareness – Comprehension – Conviction – Action

In ‘Unternehmenskommunikation’ (Corporate communication) Beger et al. (1989) divides the communication effects into five steps241:

Knowledge/Consciousness/Ideas of new objects – Change of opinions – Change of perception – Change of behaviour – Cultural and social change

Bruhn (1995) explains the steps of communication effects in his book ‘Integrierte Unternehmenskommunikation’ (Integrated corporate communication) as fol-lows242:

Attention – Knowledge – Interest/Acceptance – Memory – Image/Perception/Satisfaction

Apart from the above models, Kotler and Bliemel (1995) present are other sci-entists who investigated communication effects in their publication ‘Marketing Management: Analyse, Planung, Umsetzung und Steuerung’ (Marketing Ma-nagement: Analysis, Planning, Implementation and Controlling)243:

• Lavidge and Steiner (1961)244:

Familiarity – Knowledge – Feeling – Preference – Conviction – Purchase

• Rogers (1962)245:

Familiarity – Interest – Judgement – Attempt – Take over

239 Colley 1961. 240 Meffert 2000:677. 241 Beger et al. 1989:67. 242 Bruhn 1995:245. 243 Kotler and Bliemel 2001:917. 244 Lavidge and Steiner 1961:61. 245 Rogers 1962:79-86.


Based on the numerous aforementioned models of communication effects246, a new ‘step by step model of communication effects’ was developed. It summa-rises all the models mentioned above to create a chain of step by step models. To simplify this process, the subdivided the models into three categories ac-cording to the three main levels of communication effects: cognitive, affective and conative247. The result of this summary is presented in Figure 10.

246 Many more step by step models of communication effects are presented in the book ‘Multivariate Werbewirkungskontrolle’ (Multi Variety Advertising Effects Control) by Schwaiger (1997) and ‘Kommuni-kationspolitik’ (Communication Policy) by Bruhn (2003) e.g. step by step models by Kitson (1928), Rowse and Fish (1945), Hottchkiss (1950), Lisowski (1951), Maecker (1953), Goldmann (1953), Koch (1958), Meyer (1963), Behrens (1963), Seyffert (1966), Kotler (1967), Fischerkoesen (1967), Howard and Sheth (1969), McGuire (1969), Montgomery and Urban (1969), Junk (1971), Bidlingmaier (1975), etc. However, in Meffert (2000) ‘Marketing: Grundlagen marktorientierter Unternehmensführung’, Steffenha-gen (1984:69) and Schweiger and Schrattenecker (1995:58) compared empirical research and hypothe-ses on the hierarchy of communication effects by various authors and concluded that there is no generally accepted hierarchy. Meffert (2000) also said that the actual information processing is not a clear step by step process. Therefore, only the suitable step by step models were chosen for this research. 247 Cf. Weislämle 1995, Bruhn 2003.


Figure 10: Models of Communication Effects

248 Bruhn 1995:245. 249 Rogers (1962) cited by Beger et al. 1989:67. 250 Lavidge und Steiner (1961) cited by Beger et al. 1989:67. 251 Beger et al. 1989:67. 252 Colley (1961) cited by Meffert 2000:677. 253 Steffenhagen and Juchems (1985) cited by Bruhn 2003:40. 254 Kroeber-Riel (1986) cited by Bruhn 2003:40. 255 Strong (1925) cited by Kotler and Bliemel 2001:917.

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After the models were subdivided, each of the three main levels was examined (cognitive, affective and conative level). Step by step models with the same understanding of each level are once again grouped together. As an example, the cognitive level will be looked at in more detail. The communication effects of several step by step models belong to this category, such as ‘Attention’ (Strong, Kroeber-Riel), ‘Perception’ (Steffenhagen and Juchems), ‘Familiarity’ and ‘Knowledge’ (Lavidge and Steiner), ‘Awareness’ (Colley), ‘Opinion’ (Beger et al.), and ‘Notice’ (Rogers). These seven terms have the same or similar mean-ings:

• Attention: notice, thought or consideration; concentration of the mental powers upon an object; observing or listening closely or carefully.

• Perception:

► translated as perception: an awareness of things through the senses, especially sight.

► translated as cognition: a conscious mental action or process; acquiring knowledge through awareness, perception, reasoning, and judgement.

• Familiarity: a good knowledge of something.

• Knowledge: understanding of or information about a subject which has been obtained by experience or study, and which is either in a person’s mind or possessed by people generally.

• Awareness: knowing that something exists, or having knowledge or ex-perience of a particular thing or having special interest in or experience of something and so being well informed of what is happening in that subject at the present time.

• Opinion: a view, judgement, or appraisal formed in the mind about a particular matter.

• Notice: to see or become aware of something or someone; the act of noting or observing; perception or attention.

Afterwards, a term which represents all these definitions provided by the various step-by-step models was sought. The term ‘familiarity’ was then chosen as the generic term because it encompasses all of the definitions of the other terms in this column. This classification process was also applied to the other communi-cation effects of the different models. The results are presented in Table 3.


Table 3: Step Models of Communication Effects with a Sustainability Report

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Table 3 shows the communication effects of sustainability reports as presented by seven step by step models. The effects are: ’familiarity’, ‘interest’, ‘compre-hension’, ‘preference’, ‘conviction’ & ’image’, ‘intention’, and ‘behaviour’.

In this research, it is necessary to differentiate between ‘intention’ and ‘behav-iour’. Bruhn (2003) defines ‘intention’ as:

“The willingness of a person, within a certain time frame and while considering specific situational conditions, to choose a certain form of behaviour” 256

The ‘behaviour’ was not investigated in this study because the analysis of actual behaviour requires specific methods and a very long research time. However, it must be borne in mind that an intention does not necessarily lead to the cor-responding behaviour. In turn, an experienced behaviour does not have to be a direct reflection of a former opinion257.

Thus, the ‘step by step communication effects models’, which are applied in this research to explore the effectiveness of sustainability reporting as a communi-cation instrument between the corporation and its stakeholders, consist of the following levels:

Familiarity – Interest – Comprehension – Preference – Conviction & Image – Inten-tion/Behaviour Tendency

2.4.3 How to Explore the Effectiveness of Communication by means of a Sustainability Report

It must be kept in mind that the understanding of the communication effects as used in this research varies slightly from the original sources, which are the models or levels of communication effects derived from several marketing and communication theories. In the following the levels of communication effects as presented by the ‘AIDA’ approach will be dealt with. In this case, the attention,

256 Bruhn 2003:408. 257 How an expressed opinion does not always foretell the corresponding behaviour, is shown by the following example. In an experiment on tolerance behaviour towards smokers, students were asked how they would react, if a colleague would sit in a non-smoking section in the cafeteria and start smoking. The answers of the interviewees were not surprising: “I would ask this person politely to stop smoking. When this person does not respond and keeps on smoking, then of course, he or she will have to face the consequences”. Not long after these interviews, several students were instructed to sit in the non-smo-king section of the cafeteria and start to smoke. Did anyone ask them to stop smoking or did they have to face any consequence of being kicked-out of the cafeteria? Not one case proved the results of the interview. There was no trace of “asking politely” or “face the consequences” (Atteslander 1995:144).


interest, desire and action are the results of a communication campaign. Through an advertising campaign, for instance, the seller explains to the cus-tomer what the product is all about. The seller proceeds stepwise: first of all the seller gets the customer’s attention, obtains his/ her interest, awakes his/ her desire for the product and finally, leads him/ her to make the purchase (ac-tion)258. All these levels from getting attention to prompting action are the effects of communication. On the other hand, the terms that were developed on the basis of the step by step models of communication effects are not entirely ef-fects of communication. They are rather steps of a communication process be-fore reaching the actual effects of communication by means of an SR, which are the improvement of the corporate image and the stakeholders’ intentions to-wards the corporation. The steps from ‘familiarity’ to ‘conviction’ are, hence, preconditions for the stakeholders’ perception of the company image and their attitudes towards the company.

To develop the interview questions for the case studies, the ‘step by step model of communication effects achieved by means of a sustainability report’ (‘famili-arity’, ‘interest’, ‘comprehension’, ‘preference’, ‘conviction’ and ‘image’, and ‘in-tention’) were combined with the communication scheme by Linke et al. (1996). The adaptation of the communication scheme by Linke et al. (1996) generated the scheme of the communication process as described in Figure 11 below. In this figure, the straight line represents the investigation of the effectiveness of sustainability reporting.

258 Kotler and Bliemel 2001:1073.


Figure 11: Communication Scheme of a Sustainability Report

Source: adapted from Linke et al. 1996:175.

In this model, based on its background the company interprets its own situation. The result of this interpretation is the so-called corporate identity, which con-tains the corporate vision, strategies and performances including the environ-mental, social and economic dimensions. Afterwards, the company communi-cates its corporate identity to the internal and external stakeholders through the communication instrument ‘SR’. Thus, the SR is a communication instrument, which a company uses to communicate all aspects of sustainability as a result of the interpretation of its own situation. On the other side, the stakeholders with their own backgrounds are supposed to interpret the information communicated to them by means of the SR. The results of the stakeholders’ interpretation will then be the effects of communication.

To make sure that the message is effective, the process of the message trans-formation on the company’s and the stakeholders’ side must be compatible.

Knowledge of social environment

(culture, ethics, etc.)

Knowledge of language

‘Results of stakeholders’ interpretation of the SR’

Corporate Image

Statement/Message

Sustainability Report

Interpretation of corporate’s own

situation

Interpretation of SR as communication

tool (Perception filter)

Corporation


Internal & external stakeholders


1

4

3

2


Schramm (1971) basically considers signals as messages, only if the receiver (stakeholder) is familiar with the signals. The broader the experience amplitude of the communicator (company) and the recipient (stakeholder) is, the more effective the message will be. The sender and the receiver can undertake the transformation of signals into meaningful relations only on the basis of their pre-vious experience259.

The company as the message sender and the stakeholders as the message receivers have their own intentions and motivations. One of the many motiva-tions is to deliver a positive corporate image to the stakeholders, which reflects how the company interprets its own situation and presents it in an SR in an un-derstandable and reliable way. At the other end, the stakeholders interpret the company’s message contained in the report on the basis of with their own inten-tions and motivations. Corporate image is a result of the stakeholders’ interpre-tation of the contents of the report.

The analysis of the effectiveness of communication by means of a sustainability report also considers the following statement by Burkart (1983)260:

“Because communication as a means of social interaction always depends on the attitude of others, it is important that the opposite parties (recipient) understand and interprets the delivered informa-tion ‘correctly’261”

Similarly, Maletzke (1963) postulates that an optimal effect of corporate com-munication is based on a ‘suitable’ perception of the information between the two parties of the corporate communication (corporation and its stake-holders)262. He therefore subdivides corporate communication into three rough phases263:

• Pre-communicative phase: This phase deals with the information that the stakeholders already have about the corporation and the sustain-ability report before they are confronted with the information provided by the company’s sustainability report.

• Communicative phase: After the stakeholders received the sustainabi-lity report, they begin to enter the communicative phase with the corpo-

259 Schramm 1971:4, Kotler and Bliemel 1995:911. 260 This is translated by the authors from the German citation (Burkart (1983:14) cited by Schulz 1995:43). 261 Correctly here means correct for themselves. It must be understood that there is no “absolutely correct or right” interpretation because each party (person or organisation) has its own background and its own way to interpret messages. Therefore there will be no identical interpretation results. 262 Maletzke 1963:147, Kim 2003:15. 263 adapted from Maletzke 1963:147.


ration. This phase explores how the stakeholders deal with the informa-tion in the sustainability report.

• Post-communicative phase: In this phase, the effect of communication with the sustainability report will be investigated.

The interview questions were developed on the basis of a combination of the communication scheme of a sustainability report as shown in Figure 11 with the ‘step-models of communication effects’ as described in Table 3 and the state-ments by Burkart (1983) and Maletzke (1963). The questions are subdivided into three categories as marked by the numbers in Figure 11.

1. The Corporation

This concerns the understanding of the corporation of its own situation and the sustainability report in general:

1.1. What are the motives and goals of sustainability reporting?

1.2. How valuable and important is the sustainability report?

Apart from these two questions, the making of the report including what guide-line(s) or standard(s) the company used and why the company used this (these) guideline(s) in creating the report is explored. Furthermore, it is analysed in what way the company considered the stakeholders’ interests in the report. This part also deals with the company’s understanding of its stakeholders i.e.:

1.3. Who are the company stakeholders who receive the report?

1.4. What are the themes that must be communicated to the stakeholders?

1.5. How many copies of the report are produced and which is the best me-dia to deliver the report to the stakeholders?

These three questions 1.3, 1.4 and 1.5 are based on the theories by Kotler and Bliemel (1995) who stated that a corporation must have a clear perception of its target group in order to achieve optimal corporate communication264.

In addition, a company must be aware of which view the target audience already has to the communication object (company). To obtain an idea about the stake-holders’ view towards the company an image analysis will be conducted. The perceived image and other attitudes of the stakeholder should influence the company to form the contents of communication such as which information should be communicated, how the information should be communicated, when and where it should be communicated and who should communicate it265.

264 Kotler and Bliemel 2001:913. 265 Ibid.


The attitudes and actions of the stakeholders towards the reference object (company) is essentially marked by how high their trust in the object (company) is and how they perceive the company. It is therefore advantageous to identify the stakeholders’ reception of the company. Kotler and Bliemel (1995) define image as a person’s reception of a reference object. This includes everything that the person knows about the object, what the person thinks about this ob-ject, how the person defines it and what he/she associates with the object266.

This implies that, first of all, the company must explore how the stakeholders perceive the company. Interview questions dealing with this are for example:

1.6. What is the managers’ perception of the corporate image?

1.7. What effect does the sustainability report have on the stakeholders, par-ticularly with regard to the stakeholders’ reception of the corporate image?

The answer to question 1.6 can be cross-checked with the answers to questions 2.1 and 2.2 (stakeholders’ opinion about and perception of the company). The answer to question 1.7 can be verified by comparing it with answers to the questions 4.1 and 4.2. Dukerich and Carter (2000) point out that sometimes a mismatch can occur between the corporate image (how stakeholders see the corporation) and what the corporation believes the image to be. These mis-matches may have a profound influence on the amount of resources that a cor-poration allocates to improving the firm’s reputation267. To make sure that the interviewed respondents did take part in the report making, some explorative questions are asked at the beginning of the interview. This ensures reliable in-terview results. These questions focus on personal details about the respon-dents i.e.: since when is he or she an employee of the company and what is his or her function in the production of the sustainability report making. The inter-views with the managers are concluded with the following question:

1.8. Is there any way to improve or optimise the sustainability report?

The complete list of questions addressed to managers can be found in Appen-dix B.

2. The Stakeholders

This part refers to the pre-communicative phase, which is also in accordance with the first and the second step of the communication effects model (‘familiar-ity’ and ‘interest’). It explores the stakeholders’ understanding of the corporation:

2.1. How well do the stakeholders know the company?

266 Kotler and Bliemel 2001:913. 267 Dukerich and Carter 2000.


2.2. What degree of trust do they have in the company?

The following questions deal with stakeholders’ understanding of the report in general:

2.3. How familiar are they with the sustainability report?

2.4. How do the stakeholders define sustainability report?

2.5. What value does the sustainability report have in comparison with other kinds of reports e.g. financial, social or environmental reports?

2.6. How do they feel about being the addressee of the corporate’ sustainability report?

2.7. How interested are they in the sustainability report in general?

At last, the stakeholders’ perception of the company’s intention, pursued by producing a sustainability report, is investigated:

2.8. What is the intention of the company in making and publishing the sus-tainability report?

3. Stakeholders’ Acceptance of the Report

This is part of the communicative phase, which consists of a detailed investiga-tion of the report’s layout and contents:

3.1. How do you like the layout of the report (i.e. length, design and colour, font type and size, structure, language style) and which is the best way of publishing the sustainability report in the future?

3.2. What kind of sustainability issues do the stakeholders wish to find in the report?

3.3. How reliable is the report in their opinion?

3.4. What do they think about the current sustainability report in comparison with the previous one?

Question 3.1 is derived from the step of the communication effects model refer-ring to ‘comprehension’; question 3.2 refers to ‘preference’; and 3.3 and 3.4 to ‘conviction’.

The issues that belong to the category of ‘comprehension’ are adapted from the ‘Four dimensions of comprehensibility’ by Schulz von Thun (2003). According to Schulz von Thun (2003), to explore comprehensibility, four elements should be considered. These are simplicity, formation-structure, briefness-conciseness,


additional stimulant268. This is in accordance with Kotler and Bliemel (1995) who stress that the communicator must strive to formulate easy, clear and interesting messages in order to deliver the most important contents to the target audi-ence269.

According to Kotler and Bliemel (1995), the communicator attempts to push the information provided by the SR from the momentary reaction (Question 3.1 and 3.2) to the phase of continual memory contents (Question 3.3). They said “if the message reaches the continual memory contents (long-term memory) of the receiver, then it can change the conviction and perception of the receiver”270.

The exploration of the communication effects models (from ‘familiarity’ to ‘con-viction’) – leads to the examination of the communication effects of a sustain-ability report (this is compatible with the post-communicative phase). Questions, which refer to the steps ‘familiarity’, ‘interest’, ‘comprehension’, and ‘preference’, are needed to recall the interviewees’ memories of the company and the sus-tainability report. Then, they can answer to questions about their perception of the corporate image and their intentions with regard to their relationship with the corporation after reading the company’s sustainability report. Questions relating to the step by step models are necessary to explore the communication effect and help the stakeholders in deciding which attitude to adopt towards the com-pany.

4. Communication Effect of a Sustainability Report

In this part (post-communicative phase), the ‘affective quality’271 of the communication effects is explored. This is in accordance with the step ‘image’ of the communications effects model. This can be understood as the first step to control the success of communication (see page 56). After having read the SR the stakeholders were asked if they have the impression that they have reached a better understanding of the corporation and its activities and if the corporate image is perceived in a more positive light than before:

4.1. How is the stakeholders’ understanding of the company and its activities after having read the report?

4.2. How is the corporate image after the stakeholders read the report?

Finally, it was dealt with the question what the stakeholders’ intentions are (conative goals) after having read the company’s sustainability report. This re-

268 Schulz von Thun 2003:142-151. 269 Kotler and Bliemel 1995:911. 270 Ibid. 271 Affective quality is one criterion of measuring the effect of communication in which the verbal statements of beliefs are explored (Cf. Bruhn 2003:397, Underwood (http://www.cultsock.ndirect.co.uk/MUHome/cshtml/psy/att1.html).


fers to their relationship with the company and represents another way of con-trolling the success of communication. This question complies with the step ‘intention’ of the communication effects model:

4.3. What are the stakeholders’ intentions with regard to their behaviour to-wards the company after having read the report?

Gillham (2000) points out that the questions can be divided into three main categories272:

1. Questions concerning facts

2. Questions about opinions, beliefs, judgements

3. Questions about behaviour

The interview questions addressed to the stakeholders were organised accord-ing to Gillham’ question categories, as shown in Table 4.

272 Gillham 2000:26.


Table 4: Questions of the Stakeholder Interviews In

tent

ion

(Be

havi

our

tend

ency

)

Co

nvic

tion

and

Imag

e

- Is

this

rep

ort,

the

first

SR

from

co

mpa

ny X

that

you

hav

e ev

er

read

or

have

you

alr

eady

rea

d th

e pr

evio

us o

ne?

- D

o yo

u th

ink

the

new

rep

ort i

s be

tter

or w

orse

com

pare

d w

ith

the

old

one?

-

Do

you

thin

k th

e co

mpa

ny is

tr

ustw

orth

y?

- D

o yo

u th

ink

the

info

rmat

ion

cont

aine

d in

the

repo

rt is

re

liabl

e? If

not

, whi

ch p

arts

are

un

trus

twor

thy

in y

our

eyes

? -

Wha

t cou

ld m

ake

the

repo

rt m

ore

relia

ble

& m

ore

inte

rest

ing?

-

Wha

t do

you

thin

k is

the

inte

ntio

n of

the

mak

ing

of th

e S

R?

- D

o yo

u th

ink

that

afte

r ha

ving

re

ad th

e co

mpa

ny’s

SR

, you

now

ha

ve a

bet

ter

unde

rsta

ndin

g of

th

e co

mpa

ny a

nd it

s ac

tiviti

es?

- D

o yo

u th

ink

that

afte

r ha

ving

re

ad th

e co

mpa

ny’s

SR

, you

now

se

e th

e co

mpa

ny im

age

in a

be

tter

light

?

Pre

fere

nce

- D

o yo

u fin

d en

viro

n-m

enta

l iss

ues

in w

hich

yo

u ar

e in

tere

sted

in th

e re

port

? W

hat a

re th

ese?

W

hat d

o yo

u m

iss?

-

Do

you

find

soci

al is

sues

in

whi

ch y

ou a

re

inte

rest

ed in

the

repo

rt?

Wha

t are

thes

e? W

hat

do y

ou m

iss?

-

Do

you

find

econ

omic

is

sues

in w

hich

you

are

in

tere

sted

in th

e re

port

? W

hat a

re th

ese?

Wha

t do

you

mis

s?

- If

the

SR

is c

ompa

red

with

oth

er r

epor

ts

(env

iron

men

tal,

soci

al, o

r fin

anci

al r

epor

t), i

s th

e S

R m

ore

valu

able

?

Co

mpr

ehe

nsio

n

- D

id y

ou r

eaqd

the

who

le r

epor

t or

did

you

just

bri

efly

flip

th

roug

h th

e pa

ges?

-

How

long

did

it

take

you

to r

ead

the

repo

rt?

- W

as th

e re

port

ea

sy to

rea

d?

- D

id y

ou e

njoy

re

adin

g th

e re

port

?

- D

o yo

u th

ink

that

th

e la

ngua

ge s

tyle

is

und

erst

anda

ble?

-

Doe

s th

e st

ruc-

ture

/them

e cl

assi

ficat

ion

help

yo

u to

und

erst

and

the

repo

rt b

ette

r?

- W

hat d

o yo

u th

ink

abou

t the

font

type

&

siz

e in

the

repo

rt?

- W

hat d

o yo

u th

ink

abou

t the

leng

th o

f th

e re

port

? -

Wha

t do

you

thin

k ab

out t

he d

esig

n &

co

lour

of t

he

repo

rt?

Inte

rest

- A

re y

ou

in

tere

sted

in

SR

in

gene

ral?

- W

hat

expe

ctat

ions

di

d yo

u ha

ve

whe

n yo

u st

arte

d re

adin

g th

e re

port

? -

Thr

ough

w

hich

med

ia

shou

ld th

e ne

xt r

epor

t be

pu

blis

hed?

Fam

iliar

ity

- H

ave

you

ever

hea

rd o

f th

e te

rm

“sus

tain

abili

-ty

rep

ort

(SR

)”?

- H

ave

you

ever

hea

rd

abou

t the

co

mpa

ny’s

S

R, b

efor

e w

e se

nt it

to

you?

How

di

d yo

u he

ar

abou

t it?

- W

hat d

o yo

u kn

ow a

bout

th

e co

mpa

ny?

- W

hat d

o yo

u th

ink

is th

e m

eani

ng o

f th

e te

rm

“sus

tain

abili

-ty

rep

ort”

? -

Do

you

feel

yo

u ar

e ad

dres

sed

by

the

repo

rt?

By

wha

t do

you

feel

ad

dres

sed?

If

not,

for

who

m d

o yo

u th

ink

the

repo

rt w

as

wri

tten?

Fac

t

Opi

nion

/ B

elie

f/ Ju

dgem

ent


Inte

ntio

n (B

eha

viou

r te

nden

cy)

- W

hat a

re y

our

inte

ntio

ns w

ith

rega

rd to

you

r be

havi

our

tow

ards

th

e co

mpa

ny a

fter

havi

ng r

ead

the

com

pany

’s

sust

aina

bilit

y re

port

?

Co

nvic

tion

and

Imag

e

Pre

fere

nce

Co

mpr

ehe

nsio

n

Inte

rest

Fam

iliar

ity

Beh

avio

ur

* The complete questions of the interview for stakeholders can be seen in Appendix C.

Methodological Framework 79

3 METHODOLOGICAL FRAMEWORK OF THE CASE STUDIES

The first part of this chapter will give the readers a description of the process and fundaments of the selection of the company for the case study. Further, the process and the basis that the author used in selecting the managers and stakeholders of the selected company as data sources will also be explained. In the next section of this chapter, the author will also portray the process of data collection from the managers and stakeholders of the selected company. Fi-nally, the techniques and process of data analysis will be presented in the last part of this chapter.

3.1 Collection of Social Data

3.1.1 Selection of Companies as Research Objects

The aim of the research is to conduct an explorative study of selected German companies because German industries and the government put great emphasis on sustainable development by which sustainability reporting is considered to be an important part of the implementation of the vision of sustainable develop-ment. Besides, according to CorporateRegister.com – an online directory of pu-blished corporate environmental, social and sustainability reports273 – German companies were only second to UK companies in submitting reports. They seem to be very enthusiastic about producing sustainability reports274.

As sustainability reporting is a trend in multinational and medium-sized enter-prises in Germany275 now, it is interesting to investigate how sustainability reporting works in multinational and medium-sized enterprises. It is assumed

273 ACCA and CorporateRegister.com 2004:59. 274 Data is based on research about 1320 reporting companies by CorporateRegister.com, published in March 2004 (http://www.corporateregister.com/charts/Companies%20 reporting%20per%20country.htm). 275 See e.g. ACCA and CorporateRegister.com 2004, Braun et al. 2000, Clausen et al. 2001a, Clausen and Mathes 1998, DBU (http://www.dbu.de/pro/projekt45.html), ECC Kohtes Klewes 2002, ECC Kohtes Klewes and Fishburn Hedges 2003, Fichter et al. 1998, Graulich 2002, Häßler et al. 2000, Klaffke and Krick 2003, Klenner et al. 2001, Schönborn and Steinert 2001.

80 Methodological Framework

that differences in company size could also lead to differences in communica-tion processes between multinational and medium-sized enterprises. Therefore, multinational and medium-sized enterprises were chosen as research objects of the case studies. It should be borne in mind that sustainability reporting is not an instant process but it is the result of years of a company’s experiences and ac-tivities in sustainable development. Apparently, good management and informa-tion systems enable multinationals and medium-sized corporations to provide reliable data for producing an SR276. Meanwhile, small-sized enterprises still seem to face difficulties in producing relevant and reliable reports. They lack the internal management and information systems. Hence, small-sized enterprises were not considered in the selection of companies in this research.

To select the multinational and medium-sized corporations of the case study, literature research was conducted to explore which German multinational and medium-sized corporations have produced sustainability reports so far.

One German multinational was selected on the basis of a publication by Sus-tainAbility/UNEP (2003) titled ‘Trust Us – The Global Reporters 2002: Survey of Corporate Sustainability Reporting’277. In this paper, SustainAbility/UNEP listed 100 multinationals worldwide whose SR are rated best. Fifteen of them are German multinationals. Meanwhile, a publication by IÖW/imug ‘Der Nachhaltig-keitsbericht: Ein Leitfaden zur Praxis glaubwürdiger Kommunikation für zu-kunftsfähige Unternehmen’ (Sustainability report: A Guideline on Practical and Convincing Communication for Future-Oriented Companies) was used to choose one German medium-sized corporation278. In this paper, IÖW and imug explain their pilot project aimed at creating the sustainability reporting guideline for medium-sized enterprise in cooperation with four medium-sized corpora-tions.

Accessibility was also an important factor in choosing one multinational and one medium-sized enterprise. It had already been attempted to contact several German multinational and medium-sized corporations of those listed in the pu-blication of SustainAbility/UNEP and IÖW/imug in order to find out if they were willing to be part of this research. Based on this factor, Deutsche Telekom AG was chosen as a representative of the multinational corporations (in the follow-ing often referred to as Telekom) and Weleda AG Schwäbisch Gmünd as a re-presentative of the medium-sized corporations279 (from here on named Weleda).

276 Cf. WBCSD 2002:3. 277 SustainAbility/UNEP 2003. 278 Clausen et al 2001a. 279 Weleda AG Schwäbisch Gmünd calls itself a medium-sized enterprise together with three other corporations which participated in the pilot project of IÖW and imug in the development of sustain-ability reporting guidelines during February 2000 and June 2001 (Clausen et al 2001a:4).


The selection of Deutsche Telekom and Weleda as research objects was sup-ported by the argumentation that they are pioneers of sustainability performance and sustainability reporting in Germany. The criteria ‘leader in sustainability performances’ and ‘best appraised SR’ are related to the goal of the research, which aims at investigating the effectiveness of sustainability reporting. The aim was to explore whether the SR of the corporations, which are considered to be pioneers in sustainability performances and whose SR was appraised as one of the best, has been used effectively as a communication instrument between the corporation and its stakeholders.

Both selected corporations are outstanding leaders in sustainability perform-ances and sustainability reporting. Deutsche Telekom received numerous awards from various rating organisations in Europe:

• Deutsche Telekom was included in DJSI (Dow Jones Sustainability In-dex) in 1999 by Sustainable Asset Management (SAM). The SAM-ana-lysts ranked Telekom among the three best telecommunication corpo-rations in their sustainability ranking280,

• Bank Sarasin (Basel) praised Telekom as the second best corporation in the telecommunication branch in recent years281,

• the Swiss’s financial service provider ‘Dr. Höller’ honoured Deutsche Telekom as second best for its social and ecological performance in 2003 282,

• Deutsche Telekom was awarded the first rank for its ecological engage-ment by the Swiss’s rating agency ‘Inrate’ in November 2002283,

• at the end of 2002, the rating agency ‘oekom research AG’’ in Munich ranked Telekom in the top position in the social and ecological perform-ances out of 38 telecommunication corporations284,

In addition to those awards mentioned above, Deutsche Telekom actively sup-ported the Global Reporting Initiative (GRI), an independent institution whose mission it is to develop and disseminate globally applicable Sustainability Re-porting Guidelines285. It also belongs to the organisations that use the Guideline of GRI in producing their sustainability report286. Deutsche Telekom is also a member of Econsense, Global Compact, European Business Council for Sus-

280 Deutsche Telekom AG (http://www.telekom3.de/de-p/konz/9-na/inha/030213-nachhaltigkeit-rating-ar.html). 281 Ibid. 282 Ibid. 283 Ibid. 284 Ibid. 285 GRI Online (http://www.globalreporting.org/about/brief.asp). 286 GRI Online (http://www.globalreporting.org/guidelines/companies.asp#af).


tainable Energy Future, B.A.U.M. e.V. and participates in the ‘Engaging Stake-holder Program’ which is run by SustainAbility/UNEP and supports the local Agenda 21287.

Similar to Deutsche Telekom, Weleda AG also received awards for its environ-ment and social performances288:

• in 2001, Weleda was highly complimented by the Environmental Minis-try of Baden-Württemberg Germany for its outstanding performances in the field of environmental protection,

• in 2002, the Weleda’s CEO was ‘Eco-Manager of the Year 2002’ of me-dium-sized enterprises by the WWF and the economic magazine ‘Capital’,

• in 2003, Weleda received an award as best German employer among medium-sized enterprises by INMIT (Institute for Middle Economics at the University of Trier Germany)289.

On the basis of the aforementioned reasons Deutsche Telekom and Weleda were selected as research objects of the case studies290.

3.1.2 Selection of Respondents

3.1.2.1 Population

To be able to collect social data, the case study’s populations had to be defined first. According to Neuendorf (2002), population can be defined as:

“The set of units being studied; the set of units to which the re-searcher wishes to generalise. For the content analysis, this is of-ten a set of messages; it may, however, be a population of people, whose messages are then collected and analysed (as is frequently

287 Deutsche Telekom 2003:104-109. 288 Data were based on the information received from Ms. Susi Lotz – Head of Corporate PR of Weleda – in July 13, 2004 via e-Mail. 289 INMIT conducts “TOP JOB” – a study on the performances of the employers towards their employees – annually. In this study, Weleda has been proven to be a company caring for its emplo-yees and received an award for this in 2003. It is important to keep in mind that one of the criteria of a sustainable corporation is that the company pays much attention to the well-being of its employees (http://www.weleda.de/Presseinformation/Presseinformation.asp?W=752). 290 A brief company profile of Deutsche Telekom and Weleda will be presented in Chapter 4.1 and 5.1, respectively.


the case in psychological and interpersonal communication appli-cations of content analysis). People speak from a census if all units in the population may be included in the study. In the case of a small population, there may be no need to draw a smaller repre-sentative sample of the population. But more commonly, the population is quite large and a sample is drawn from it” 291.

The population in this research consists of the population of managers and stakeholders. The former are message senders and the latter are message re-ceivers. The sustainability report is the instrument through which Deutsche Telekom and Weleda communicate.

Deutsche Telekom and Weleda both stated that there is only a small population of managers (5 managers at Deutsche Telekom and 8 managers at Weleda) who were actively involved in producing the company’s sustainability report292. Hence, no sampling is necessary as all 5 managers of Deutsche Telekom and all 8 managers of Weleda were included in the study to serve as data sources.

The five managers of Deutsche Telekom AG represent the following depart-ments: Sustainability Communication, Communication, Environmental Protec-tion and Sustainability. These three departments are located in Darmstadt, Bonn and Berlin and together they form the company’s Department of Corporate Sustainability and Citizenship (CSC). They have been part of the corporation for years and took part in the making of the company’s sustainability report.

Meanwhile, the eight managers of Weleda are representatives of the eight com-pany departments: Directors, Environmental Office, Corporate Communication Department, Human Resources Department, Marketing Department293, Interna-tional Sourcing Department, Supply Chain Management Department, as well as Sales and Distribution Department. They are members of the Environmental Committee and were actively involved in the making of the report.

To explore the effectiveness of sustainability reporting at Deutsche Telekom and Weleda, not only data from the managers as message senders was needed, but also information from the message receivers. In the cases of Tele-kom and Weleda, the message receivers are the stakeholders. Therefore, the companies were asked for a list of stakeholders, because they would know best who their stakeholders are and with whom they want to communicate with the help of their sustainability reporting. Additionally, it was necessary to receive the

291 Neuendorf 2002:74, Cf. Wright 1997:7. 292 The research project was presented to the managers of Deutsche Telekom and Weleda separately in August 2003. After the presentation, the managers of Telekom and Weleda stated their willingness to cooperate in this research. In the discussion the managers, were asked to deliver a stakeholder list. 293 The Head of the Marketing Department stated clearly in the interview on October 10th, 2003, that he did not take part in all of the steps of the report’s production. Bearing this in mind, all of his statements must be dealt with carefully in the analysis.


details about the stakeholders from the companies. This way of determining the population of the company stakeholders as data sources made it possible to test if the stakeholders actually understand themselves as part of the correct target group of the sustainability reports. At the end of August 2003, both companies provided stakeholder lists with some information about the stakeholders. Deutsche Telekom listed 88 stakeholders and Weleda named 152 stakeholders, which could serve as data sources.

Deutsche Telekom subdivided its 88 stakeholders into eleven groups: employee (13), financial service provider (28), rating agency (6), certified accountant (6), media/press agency (6), NGO union (2), NGO politics/Agenda 21 Transfer (5), NGO environmental group (4), NGO customer protection (1), authority body (3), and university/research institute (14).

Similarly, Weleda subdivided its 152 stakeholders into twelve groups: employee (10), supplier (60), customer (20), advisory board (4), media/press agency (6), NGO (13), authority (8), union (5), university/research institute (9), health insur-ance company (1), industrial consultant (9), and financial service provider (7).

As the samples provided by the companies were still quite large and due to a number of research restrictions294, it was decided that the number of data sources must be reduced. A further sampling process was undertaken.

3.1.2.2 Sampling

Neuendorf (2002) defines sampling as

“The process of selecting a subset of units for study from the larger population” 295

He divides the random sampling from the non-random sampling process. First, random sampling will be explained.

In order to derive information representative of the entire population, the sample collected for this analysis should be randomly selected296. Randomness may be defined as follows297:

“Every element (unit) in the population must have an equal chance of being selected” 298

294 This research is restricted by time and funding. The data collection had to be accomplished within 4 months. 295 Neuendorf 2002:83. 296 Neuendorf 2002:83, Lamnek 1995b:21-22. 297 Neuendorf 2002:83.


In non-random or non-probability sampling, the researcher may not generalise findings about a population. According to Neuendorf (2002), there are several common types of non-random sampling299:

1. Convenience sampling This method relies on the selection of readily available units. Kolbe and Burnett (1991) sadly note the prevalence of convenience sampling among consumer behaviour content analysis. Their review showed that 80.5% of these analyses are based on convenience samples. Further, Babbie (1998) notes that the technique is used ‘all too frequently’ in survey research.

2. Purposive or judgement sampling This type of sampling involves that the researcher selects appropriate units to include in the sample. For example, for a text analysis Fan and Schaffer (1989) selected handwritten essays on the basis of legibility. Graham, Kamins and Oetomo (1993) selected print ads from three countries on the basis of recency and if they advertised ‘product pairs’ – e.g. comparing German and Japanese cars. In this kind of sampling, the researcher or other ‘experts’ (in our case: the companies) rely on their own judgement to select the units from the population for study based on the population’s parameters300.

3. Quota sampling With this technique key variable categories are identified. Then, a cer-tain number of units from each category are included in the study. A common example of quota sampling in survey research is the mall in-tercept: Interviewers employed by marketing research firms to interview shoppers are routinely instructed to question a certain number of con-sumers that fit the description of a specific target group, such as 20 fe-males with children or 20 males over 40.

In order to choose between random and non-random sampling, Lamnek (1995) mentioned that there are three substantial criteria to be considered: space, time, and subject boundaries301. In this case study the criterion ‘subject’ is believed to be the most important. The reason for this is that the stakeholder population sampling process is based on the research question which stakeholder must be chosen as the source of data in investigating the effectiveness of sustainability reporting at Deutsche Telekom and Weleda.

298 In some instances, this may be a known but not necessarily equal chance of being selected (Neuen-dorf 2002:93). 299 Neuendorf 2002:87-88. 300 Joppe (http://ww.ryerson.ca/~mjoppe/ResearchProcess/JudgementSampling.htm). 301 Lamnek 1995a:193.


These three criteria are in accordance with the statement of Fink and Gantz (1996) who provide a brief description of the options:

“For the social science tradition, generalising from the sample to the population is important. As a result, probability (random) sam-pling serves as the ideal. When constrained (e.g., by time or money), social scientists turn to non-probability (non-random) samples” 302

Therefore, the non-random sampling, a combination of the convenience and the purposive/judgement sampling technique is the most appropriate technique to select Telekom and Weleda stakeholders as interview partners from the pro-vided lists of stakeholders. These types of sampling techniques are the most appropriate as some stakeholders are more suitable interviewees than others (more active and more knowledgeable with regard to sustainability reporting, more willing, etc.)303. Joppe (2003) said, “Relying on the judgement of some knowledgeable experts may be far more productive in identifying potential inter-viewees than trying to develop a list of the population in order to randomly select a small number” 304. In this research, the purposive or judgement sampling makes it possible to gather in-depth and detailed information about the prob-lems surrounding the Deutsche Telekom’s and Weleda’s sustainability report-ing.

One selection criterion is that the stakeholders, who will serve as data sources, must represent all the stakeholder groups. It was also considered that on the one hand, the validity of data is higher if data are collected from various stake-holders in each group (the more the better), but on the other hand, the amount of time available for data collection was limited. Therefore, it was decided that four stakeholders per group were chosen to be the data sources. As a result 44 Telekom stakeholders (11 groups) and 48 Weleda stakeholders (12 groups) were chosen.

In a next step, the number of stakeholders in each group at both companies was analysed. The stakeholder lists show that the amount of stakeholders in each group varies. This difference may be caused by the consideration of the com-pany that the degree of importance of the various stakeholders varies (there are usually more key stakeholders).

302 Fink and Gantz 1996:117, Neuendorf 2002:83. 303 The selection of the stakeholders in the groups rating agency, financial service provider, NGO, university research institute is based on knowledge about actors in the field of sustainability reporting. The selection was also guided by Dr. Frank Ebinger, an expert who has been active in the field of management, sustainability and sustainability reporting for years and who is consistently active in the interaction with actors of sustainability reporting. 304 Joppe (http://ww.ryerson.ca/~mjoppe/ResearchProcess/JudgementSampling.htm).


Hence, in this research, it is not always strictly four stakeholders who represent one stakeholder group. Both companies list some stakeholder groups with less than four stakeholders, for example, Telekom’s ‘NGO-Customer protection’ and Weleda’s ‘health insurance company’ both consist of one stakeholder.

Due to this it was decided that stakeholder groups with only a few people should be first prioritised besides the key stakeholders. Since there are a number of stakeholder groups represented by less than four stakeholders, more stake-holders of those groups with more representatives had to be interviewed. These stakeholder groups, which had more than four stakeholders, belong to the key stakeholders of the respective company, i.e. employees, suppliers, and cus-tomer s305.

Random sampling was also applied to select the stakeholders of the groups ‘employee’, ‘supplier’, ‘advisory board’, and ‘customer’ because of lacking knowledge about who is involved and who is more knowledgeable or more will-ing to be a respondent.

Finally, at the beginning of October 2003, the list of stakeholders representing all stakeholder groups of both companies was completed306. The 44 Telekom stakeholders represent 11 stakeholder groups:

• employees (6)

• financial service providers (6)

• rating agencies (5)

• certified accountants (5)

• press agencies/journalists (4)

• NGO-Union (2)

• NGO-Politics/Agenda 21 (4)

• NGO-Environmental group (4)

• NGO-Costumer protection (1)

• authorities (3)

• universities/research institutes (4)

Meanwhile, the forty-eight stakeholders of Weleda are subdivided into 12 diffe-rent stakeholder groups:

• employees (4)

• suppliers (5)

• customers (4)

• the advisory boards (4)

• press agencies (4)

• NGOs (6)

• authorities (4)

• unions (4)

• universities/research institutes (4)

• health insurance company (1)

• industrial consultants (4)

• financial service providers (4) 305 Information about key stakeholders was attained from both companies. 306 The list of managers and stakeholders is confidential and it was agreed that it will neither be shown to a third party nor published.


This list was then confirmed and approved by each of the two companies.

3.1.3 Interviews as a Data Collection Technique

Atteslander (1995) determined the qualitative method of empirical social re-search as

“The conformed and applicable use of data inventory instruments such as content analysis, questionnaire (interview), observation and experiment (depending on the degree of control over the course of research)” 307

This is in accordance with Lamnek (1995a) whose qualitative methodology re-fers to research strategies such as participatory observation, in-depth interview, total participation in the investigated activity, field research and so on. These methods provide the investigator with first-hand empirical data about the object of research308.

To explore the effectiveness of sustainability reporting as a communication in-strument between the corporation and its stakeholders, observation will not be used as a method because it requires a lot of time, which is not available for this research. Additionally, the fact that the SR is in a written form, offers the possi-bility of examining the direct communication between the stakeholders and the corporation. Again, this method was not applied due to the time restrictions. The content analysis is an appropriate technique to analyse data collected during the open question interviews, but it is not a means of data collection (this will be discussed in Chapter 3.3.1: Content Analysis as Data Analysis Technique). Meanwhile, an experiment does not apply to this kind of research, which fo-cuses on collecting data from managers and stakeholders. Consequently, the most appropriate technique to investigate the effectiveness of communication between the company and its stakeholders through the sustainability report is the interview with managers and stakeholders involved in the communication process of Telekom’s and Weleda’s sustainability report. This decision is in ac-cordance with Mast (2002) who said that

“to investigate the success of communication concepts, there are several control instruments available to serve this need; especially suitable are social scientific methods such as content analyses or using an interview/a questionnaire“ 309

307 Atteslander 1995:13, 85-258. 308 Lamnek 1995a:195. 309 Mast 2002:156.


In the following the applied method of interviewing will be explained further.

Interview means communication between two or more people. Verbal stimuli (questions) prompt verbal reactions (answers). This happens in certain situa-tions and is marked by reciprocal expectations. The answers relate to experi-ences and memories of the interviewees and represent opinions and evalua-tions. The interview does not document the social attitude in general but just the verbal attitude310.

As has been explained above, as a form of communication interviews are based on the following Stimulus – Reaction Model (see Figure 12 below).

Figure 12: Interview Situation as a Reaction System

Source: Atteslander 1995:138.

This S P R model documents the interview situation as a reaction system. Within the social context of the interview, the questions are understood as stim-uli. In a wider context the participating person only perceives separate stimuli. When the stimulus in form of an oral or written question reaches the individual, it activates a row of mechanisms, which are analytically distinguished in the above figure. The interviewee interprets the stimulus; he/she valuates it and considers an answer311.

310 Atteslander 1995:132. 311 Atteslander 1995:137-138.

Stimulus: Environment-time-interviewer

Impulse/ stimulus

assessment

Impulse/ stimulus in-terpretation

Reaction determina-

tion

(Verbal) Answer

Norm conceptions

Stimulus (S) Person (P) Reaction (R)

Situation characteristics

Stimulus: Single

question


The process of questions as stimuli and answers as reactions is illustrated in Figure 13.

Figure 13: Questions and Answers as a Process


Apart from these verbal aspects of communication, non-verbal expressions of-ten make a difference as well, such as facial expressions and gestures of the interview partner or the attitude of the person312.

The classical interview, in which the interviewer meets the interviewee, is be-coming rarer due to many reasons. Presently, telephone interviews are also customary in Europe313.

3.1.3.1 Interview Types: Oral or Written

Whether it is done orally or in a written form depends on the whole research modus operandi. Orally or written refer to the type of the stimulus: of course combinations are a possibility (written drafts are to be answered orally by the 312 Facial expressions and gestures do not play a role in this case study because the interview was conducted via phone. Nevertheless, several intonations of sentences were noted and underlined during the transcription and may be considered as facial expressions and gestures. Apart from that, not the complete dialogue of the interview was used as data source. The dialogues were first evalu-ated and only usable data was extracted. This will be explained in more detail in the following chap-ter. 313 Atteslander 1995:133.

Questions Comprehension Evaluation Judgement Answers

Classification in experience or

realisation world

Remembering Hoping

Choosing

Affect: Benefit-damage consideration

Cognitive Emotional Rational

Processing

Stimulus (S) Person (P) Reaction (R)


interviewee). The existence of verbal communication in response to written in-terviews is also possible and happens often314.

Oral Interview

Atteslander (1995) divided the oral interview into soft, hard and neutral inter-view315.

According to Atteslander (1995), Rogers (1945:279-283) presented the concept of the soft interview for the first time, followed by research in business-sociology by Roethlisberger et al. (1949). The soft interviews are as follows: “After the interviewer explains the interview program, the interviewee is allowed to choose his/her own topic. As long as the interviewee talks spontaneously, the inter-viewer has to follow the interviewee’s thoughts and show interest in them. As long as the interviewee continues talking, it is not allowed to try to change the topic. The interviewer may neither cut the dialogue nor move over to another topic that is more interesting for the interviewer. He/she must carefully listen to everything that is being described by the interviewee and can only join the dia-logue when it is necessary to motivate the interviewee to keep talking. If there are any questions from the interviewer’s side to be asked, then it should be in a non-committal form and by no means suggestive” 316. The interviewer plays a passive role and lets the interviewee freely determine the course of the inter-view. This is based on the assumption that a friendly relationship between inter-viewer and interviewee most likely promotes openness; the interviewee feels free to state his/her opinions without any fear of reproach317.

The hard interview was primarily used in Kinsey’s research on sexual behav-iour. Kinsey describes his own method as follows: “To achieve a maximum of material from just one interview, it is necessary to pose the questions as quickly as the interviewee can understand and answer them. This has a further advan-tage which is to force spontaneous answers without giving the interviewee time to think over too long. Such bombardments of questions offer one of the most effective tools to uncover tricks, just as the police are familiar with”. The hard interview structures the situation in a most influential way. But it only makes sense if explorative interviews already take place prior to the interview, which requires pre-knowledge that allows the categorisation and valuation of an-swers318.

314 Atteslander 1995:163-164. 315 Atteslander 1995:164. 316 Roethlisberger et al. (1949:203) cited by Atteslander 1995:164. 317 Philips 1970:111, Atteslander 1995:164. 318 Kinsey (1964) cited by Atteslander 1995:165.


In the so-called neutral interview, feelings between the interviewer and inter-viewee should be eliminated. The interviewer acts only as a transmitter of stim-uli and a receiver of reactions. The aim is a uniform interview situation. Through the neutrality of the interview, one tries to increase the comparability of the in-terviews. Maccoby and Maccoby (1974) mentioned that

“The interviewer should hold himself back to a certain degree; he/she should make a serious impression and make it clear that he/she takes the interview seriously. At the same time, he/she should not deliver a too stiff impression: it is of utmost importance for the interviewer to show a real interest on what the interviewee is saying” 319

The interviewer must limit his/her reaction not to give away too much – it is even a basic principle of every interview that the interviewer must try to hide his/her own opinion about the research object. He may neither show any surprise or dislike towards anything that is said by the interviewee nor react enthusiastically when the interviewee expresses the interviewer’s own opinion320.

Written Interview

The advantages of the written interview are primarily of financial value. It is prin-cipally cheaper; and it can often reach a larger number of interviewees in a short period of time with less human resources. A cover letter must provide the inter-viewee with information, introducing who is responsible for the interviews, why the interview is conducted, why it is in the interest of the interviewee him-self/herself to answer the questionnaire. The indication that the answers will be evaluated anonymously must not be missing321.

Telephone Interview

Atteslander (1995) mentioned some advantages of the phone interview322:

• Increased accessibility,

• Quick processing of received data, and

• Relatively quick replacement for cancellations.

The phone interview has also a disadvantage, which is the more difficult control of the interview situation (who is really in charge?)323.

319 Maccoby and Maccoby in König (1974) cited by Atteslander 1995:166. 320 Atteslander 1995:166-167. 321 Ibid. 322 Atteslander 1995:169. 323 Ibid.


3.1.3.2 Form/Situation of Interview: Weakly, Semi and Fully Structured

In less or weakly structured interviews, the burden of control is transferred to the interviewer. The researcher works without a questionnaire. He/she has a lot of freedom because the researcher can adjust the organising or formulation of his/her questions to each interviewee. If it seems reasonable to scrutinise a problem or to refuse certain terms that bear prejudices, the interviewer changes the course of the interview324.

The characterisation ‘weakly structured’ also indicates that the course of the interview is flexible, that that the interviewee pursues a certain goal with his/her answers, but that the interviewer explores the experiences of the interviewee to a high extent, which means the interviewer must listen carefully. Clues given by the interviewees are noted. The interview does not follow questions of the inter-viewer but the following questions are a result of the interviewee’s statements. The less-structured interview requires a highly trained researcher. He/she does not only have to pay attention to the course of the interview, not only perceive clues during the dialogue and connections between interpretations, but he/she must also observe the entire environment of the interview325.

The semi-structured interviews are dialogues based on a set of prepared ques-tions, whereby the answer to the question is open. As in the less structured in-terviews it is possible to follow up on new themes if they emerge. Basically, it is a guideline interview, following a certain train of thought326.

The fully structured interview is quite different. Before the actual field work can begin, a questionnaire must be developed. An exact and thorough procedure is particularly important because the questionnaire primarily predefines the con-tent, the quantity and the order of questions. The questions are determined with the help of the theoretical framework in order to gain information needed to fulfil the research goals. It must be borne in mind though that there are restrictions to the length of an interview, due to the failing fading receptivity of the interviewee as well as his/her willingness to answer questions at all. The average interview length is 30-60 minutes327.

Regarding the interview type and structure, Atteslander (1995) divides the inter-view into seven categories as shown in Table 5.

324 Atteslander 1995:161. 325 Atteslander 1995:161-162. 326 Ibid. 327 Ibid.


Table 5: Types of Interviews

Interview structure

Communica tion type

Weakly structured Semi-structured Fully structured

Oral

Type 1: - Informal conversa-tion - Expert interview - Group discussion

Type 3: - Guideline interview - Intensive interview - Group interview - Expert interview

Type 5: - Single interview (phone interview) - Group interview - Panel interview

Written

Type 2: Informal inquiry addressing the target groups

Type 4: - Expert interview

Type 6: - Interview via post - Personal distribution & collection - Collective completion of questionnaire - Panel interview

Type 7 (Combination of oral and written): - Telephone notifica-tion of questionnaire delivery - Delivery or handing over of written ques-tionnaire - Telephone control, possible additional interview via phone


The most common type of interview used is by far the fully structured, con-ducted orally as a single interview (type 5). Written and combined interviews were not used frequently until recently (type 7)328.

3.1.3.3 Questionnaire as an Interview Guideline

The questionnaire is a structured interview written strategically. In a guideline interview, questions are managed flexibly, although they may be provided in a writing329.

A questionnaire must be designed according to logical, as well as psychological aspects. Questions on the same theme should be asked in sequence, so that the interviewee will not be forced to jump from one topic to the next. The logical

328 Atteslander 1995:159, 177. 329 Atteslander 1995:193-194.

Documentation of qualitative aspects ’Interpretation’

Documentation of quantitative aspects ’Measurement’

High Reactivity Low


construction depends on the research object, the research goal and the theo-retical research rules330.

Standardised or Non-standardised Interview

The difference between the standardised and non-standardised interview refers to the usage of the answer categories. For a standardised interview possible answers to the questions are identified and categorised in advance to achieve comparability. In non-standardised interviews questions are not categorised prior to the interview, nut it may be done afterwards331.

Open or Closed Questions

The open questions contain no certain answer categories. The questioned per-son is completely free to formulate his/her answer and the interviewer has the task to write down the statements of the interviewee as correctly as possible. The organisation of the answers is done later during the valuation process of certain categories. A closed question presents the interviewee with all the pos-sible or at least all the relevant answers – grouped according to the different categories. The interviewee must merely choose ‘his/her’ answer of the offered possibilities332.

A few types of closed questions have been identified. Richardson names the following333:

• Identification type: a question which demands the identification of a per-son, group, a place, time, number etc. by asking who, where, when, how many or which?

• Selection type: a question with pre-given alternatives, whereby the interviewee must choose from two or more possible answers. The se-lection type is also called the alternative-question type if it deals with questions offering two possible answers. It is called multiple choice if more than two answer categories are available. A special form of the multiple choice question is the so-called scale-question, which measure the intensity or frequency of values, opinions, feelings or behaviour (e.g. always-often-sometimes-rarely-never) (The scaling technique will be discussed in the following chapter).

• Yes-No type: a question that can be sufficiently answered with yes or no.

330 Atteslander 1995:193-194. 331 Atteslander 1995:178. 332 Atteslander 1995:180. 333 Atteslander 1995:180-183.


In this research a questionnaire was prepared for the interviews. The questions are standardised using a combination of open and closed questions. In the case of closed questions, respondents are allowed to choose one of several possible answers. These answers reflect the interviewees’ opinions or feelings about specific matters.

3.1.3.4 Scaling

Scaling techniques according to Atteslander (1995) are

“Techniques, by which different dimensions (such as behaviour, idea/opinion, motive) can qualitatively be detected, and with scales can quantitatively be measured and illustrated” 334

Scaling is usually used for statements of attitude or belief. By applying the scal-ing technique numbers can be assigned to objects statements. Scaling can be done independently, without directly asking the respondent, through assigning numerical values to the different given options335.

There are two reasons why scaling is used: to test hypotheses and for scoring purposes. The latter is the most common reason and, at the same time, it is the main reason for scaling in this study. It is applied to get to know the scale of agreement or disagreement on the related matters. When participants give their responses to a set of items, often a single number representing that person’s overall attitude or belief was assigned336.

A scale can have any number of dimensions in it. In this case dimension may mean a simple number lien. If we want to measure a construct, we must decide whether the construct can be measured sufficiently with one number line or may require more. For instance, height is a concept that is unidimensional or one-dimensional. We can measure the concept of height very well with only a single number line (e.g. a ruler). In general, unidimensional concepts are easier to understand. You have either more or less. In contrast, measuring academic achievement is not as easy since it is multidimensional. How can we score the academic achievement of someone who is a great mathematician but a terrible linguist or vice-versa? A unidimensional scale cannot capture that type of achievement337.

334 Atteslander 1995:261. 335 Trochim (http://socialresearchmethods.net). 336 Ibid. 337 Ibid.


There are three major types of unidimensional scaling methods. They are simi-lar in that they each measure the concept of interest on a number line. But they differ considerably in how they arrive at scale values for different line. The three methods are338:

1. Thurstone or Equal-Appearing Interval Scaling,

2. Guttmann or Cumulative Scaling or Scalogram Analysis,

3. Likert Scaling.

After having compared the Thurstone, Guttman and Likert scaling methods339, it was decided to use the Likert scale in this research due to the straightforwardness of the Likert scale technique.

The Likert scale technique presents a set of attitudinal statements. Interviewees are asked to express agreement or disagreement on a five-point nominal scale340. Each degree of agreement is assigned a numerical value from one to five. Thus a total numerical value can be calculated from all the responses341.

Procedure of constructing Likert scales342:

1. Gathering statements: the first step is to develop a large number of attitudinal statements about the object in question. The statements should be an expression of desired behaviour or value. The statements should be worded in a way, which allows reactions toward both ends of the scale.

2. Formatting the statements: each of these statements is assigned to a graphic scale of either five, seven, or nine intervals on a continuum ranging from ‘agree’ to ‘disagree’. In this research study, the five-inter-val scale was employed.

3. Scale administration: interviewees are instructed to indicate the extent to which they agree or disagree with each statement by choosing, for example, the scale one for ‘absolutely agree’ or scale five for ‘absolutely disagree’.

4. Scoring the Likert scale: in the case of the five-interval scale, the end of the continuum that expresses the ‘unfavourable’ attitude is scored as

338 Trochim (http://socialresearchmethods.net). 339 Cf. Mayntz et al. 1974:54-60, Underwood (http://www.cultsock.ndirect.co.uk/MUHome/cshtml/psy/att1.html), Trochim (http://socialresearchmethods.net), Arias-Llobet (http://www.ciadvertising.org/student_account/temp/measurement_procedures.htm). 340 Cf. Wright 1997:3-5. 341 Bortz 1984:152. 342 Mayntz 1974:55-58.


one and a score of five represents the ‘favourable’ attitude343. The res-ponses to the individual item are then summed up to produce a total score for each subject.

3.2 Recording of Social Data

Before entering the field, empirical researchers plan their approach to data re-cording344. Data recording can be done by means of handwritten notes, audio recording, or videotaping. This way the interview processes and all conversa-tions with the respondents, as well as the interpretation of the conversations can be controlled345. Before each interview the managers and stakeholders of Deutsche Telekom and Weleda were asked for permission to record the con-versation. The interviews were organised in such a way that, first of all, it was ensured that all questions are clearly understood and afterwards the intervie-wees gave their answers and opinions. The collection of social data is only reli-able and valid if the interview process and atmosphere are tolerant, permissive and the interviewee does not need to fear any negative repercussions because of his/her statements346.

In this research, the interviews were recorded with an audio tape. Some re-marks of the respondents were also noted by handwriting during the interview.

3.3 Valuation and Analysis of Social Data

According to Lamnek (1995b) there are four phases of interview valuation, these were applied in this research and are as follows347:

1. Transcription.

As has been mentioned above, the interviews were recorded. Then, the audio data was converted into a written form (transcribed). This was done from January to March 2004.

2. Single analysis.

343 Bortz 1984:152. 344 Creswell 2003:188. 345 Lamnek 1995b:99, Creswell 2003:190. 346 Lamnek 1995b:99. 347 Lamnek 1995b:108-110, Creswell 2003:191-195.


The irrelevant matters of each transcription were removed and the cen-tral (relevant) matters were highlighted.

3. General analysis.

In this valuation phase, the aim is to arrive at a more generalised (theo-retical) knowledge. Similarities between all or several interviews were identified. If there are several different types of interviewees, state-ments, information, etc., all these were presented and interpreted ac-cording to each single case.

4. Controlling.

To prevent/minimise mistakes in the interpretation, the following steps were followed:

• The original recording was listened to again (once or several times in several cases) in order to refresh the memory.

• A research team was formed at the Institute of Forestry Economics Freiburg. The whole team listened to the interviews several times, in order to discuss the findings and interpretations and modify the results accordingly.

After those four steps of data valuation were implemented, the data were ana-lysed. Two methods – the content analysis and the statistical method of fre-quency distribution and contingency coefficient – were utilised to analyse the data in this research.

3.3.1 Content Analysis as Data Analysis Technique

Mayntz et al. (1974) determines content analysis as

“A method, which identifies and defines the linguistic characteris-tics of a text objectively and systematically, in order to deduce con-clusions about non-linguistic characteristics of people and commu-nity aggregates” 348

Another definition of content analysis is

“Transformed to the content analysis means that a text presents the collected information of a past communication process, which was analysed by a researcher according to scientific-logical rules

348 Mayntz et al. 1974:151 (See also Berelson 1954:488, Lamnek 1995b:172, 186).


and thus conclusions on the level of social actuality could be made” 349

The content analysis was utilised to analyse the answers to open questions (qualitative data) of the interviews. The qualitative data were objectively and systematically analysed with the content analysis technique. They were then classified into different groups. Data with similar or the same meaning were grouped together. Finally, all groups of data were quantified through statistical methods.

3.3.2 Statistical Methods: Frequency Distribution and Conti-ngency Coefficient

According to Engel et al. (1995)350, as well as Mayring (1988)351 the basis of a statistical analysis is the distribution of the research unit into single answer categories of the variables. This is called frequency distribution. In a frequency table it is listed, how often the characteristic features of a variable appear. The characteristic features are organised according to size. Generally, for the inter-pretation of tables, relative frequency or percentage values are used352. Thus, all data from open and closed questions in this research are quantified with the relative frequency distribution technique.

Engel et al. (1995) defined the formula for the relative frequency technique as follows:

nf

h kk =

The formula was explained as the relationship between the amount of the cha-racteristic carrier (fk) in a characteristic class (k) and the total number of analysis units (n). The relative frequency (hk) is presented in percent353.

Furthermore, due to the nominal scale of the investigated variables, the answers to the closed questions were analysed with the contingency coefficient tech-nique354. This technique is applied in this research to identify the relations bet-ween the different communication components of sustainability reporting355. In

349 Mayntz et al. 1974:151, Lamnek 1995b:172. 350 Engel et al. 1995:25. 351 Mayring 1988. 352 Kühnel and Krebs 2001:44. 353 Engel et al. 1995:25, Cf. Kühnel and Krebs 2001:45. 354 Engel et al. 1995:67. 355 Cf. Hartung 2002:449, Scharnbacher 1991:168.

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doing so, the dependencies of the various communication components can be derived.

The Pearson contingency coefficient (C) was used. It measures the degree of the relation between (X1) and (X2). In this research (X1) represents one vari-able of sustainability reporting i.e. ‘Length of the SR’ and (X2) is another vari-able of sustainability reporting i.e. ‘Percentage read of the SR’. The contingency coefficient (C) is closely related to the factor ‘chi square’ (x²)356. The observed frequency of the scale combinations determined by the respondents (N) is in-serted into a table with numbered rows (r) and columns (c).

In order to calculate (x²), the expected frequency (Eij) for each field (i, j) must be determined with the following formula357:

NZiSjEij .

=

Sj = the sum of the frequency of each selected scale for statement j

Zi = the sum of the frequency of each selected scale for statement i

N = amount of respondents

Then the value of x² can be derived by using the formula358:

NEij

ijBx −= ∑ )²(²

B2ij = the square value of the frequency in each field (i, j)

With the help of (x²), the Pearson contingency coefficient (C) can now be deter-mined using the formula359:

NxxC+

=²

²

A large disadvantage of the contingency coefficient is that the maximum value, which (C) can produce is always smaller than one. Additionally, it depends on the row and column numbers of the contingency table. For a 3x3 table, for ex-ample, the maximum value (C max ) is 0.82, for a 4x4 table, in contrast, C max = 0.87360.

356 Köhler et al. 2002:62. 357 Köhler et al. 2002:64. 358 Ibid. 359 Hartung 2002:450, Köhler et al. 2002:65. 360 Köhler et al. 2002:65.

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(3.3)

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Due to these fluctuations of different tables, the corresponding (C) values are not always directly comparable. A value of C = 0.82 represents the maximum degree of relation in a 3x3 table, but in 9x9 tables the same (C) value describes a low degree of relation.

With the help of a correction factor the contingency coefficients can be made comparable, using the formula:361

)1)(²(²

−+⋅

=mNx

mxCcorr

m = the highest number of a row or column in the table

0 < C corr < 1362

The value of (C corr) can be interpreted as follows: the relation between variable (X1) and (X2) is very significant if (C corr) is above 0.5 and only partly significant if (C corr) is below 0.5. In chapters 4.4 and 5.4 the calculation of the conti-ngency coefficient will be exemplified with concrete data.

The process of data collection began with the determination of companies, which could serve as case studies, and the determination of respondents from which data will be collected. As the population of managers was small it was not necessary to do any sampling. Principally, the determination of stakeholders was conducted by the non-random sampling. In combination with that conve-nience and purposive sampling was applied because some members of the stakeholder groups were thought to be more active and knowledgeable with regards to sustainability reporting than others. In the cases of the stakeholder groups ‘employee’, ‘customer’, ‘supplier’ and ‘advisory board’ random sampling was employed due to lacking information about these stakeholders.

In a next step, the interview was chosen as a means of data collection Inter-views provide in-depth and detailed information about the problems surrounding the sustainability reporting at Deutsche Telekom and Weleda. Two research-ers363 interviewed 49 Telekom respondents (managers and stakeholders) and 54 Weleda respondents (managers and stakeholders) by telephone between the end of September 2003 and mid-January 2004. Before the interviews were conducted, an invitation letter along with a sustainability report was sent to each external stakeholder of the two companies. Afterwards, appointments for inter-

361 Köhler et al. 2002:62, Klemm 2002:266. 362 Hartung 2002:450, Köhler et al. 2002:66. 363 Martha Fani Cahyandito and Tobias Möller.

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view were made and the interviews could take place. Appointments for inter-views with the managers and employees of both companies were arranged by representatives of the companies – Mr. Schriever (Deutsche Telekom) and Mr. Biller (Weleda).

The interviews with the managers aim at gathering information about the under-standing of the company about the sustainability reports in general and com-pany stakeholders. The motives and goals of sustainability reporting and the making process of the report were explored (see Chapter 4.2.2 (Telekom) and 5.2.2 (Weleda)). The interviews with stakeholders are aimed at gathering data about the stakeholders’ view of the sustainability report and the company, their acceptance of the contents of the report and lastly their perception of the com-pany image.

The interviews were fully structured using a questionnaire as an interview guideline so that the interview process can be controlled better and the analysis of the answers will be easier364. The questions were standardised and could be categorised according to the level of the communication impact (from ‘Familiar-ity’ to ’Intention/Behaviour tendency’). Altogether, the questionnaire contains seven open and 23 closed questions. The interviewer remained neutral throughout the interview, i.e. did not show any surprise or dislike to what the respondents said, but always took a neutral position. Before the interviews were conducted, the questionnaire had been tested at the Institute of Forestry Eco-nomics Freiburg in August 2003365.

The steps of empirical social data collection are shown in Figure 14. The tech-niques applied in this research are marked grey.

364 Gillham 2000:2. 365 Gillham 2000:19.


Figure 14: Data Collection Process

The data gained from the interviews is analysed by using content analysis and quantified with frequency distribution and contingency coefficient. The conti-ngency coefficient method allows exploring the relations between different ele-ments of sustainability reporting366.

366 It can be summarised that the research method procedures used for the case studies – as described in this chapter – are the mixed research methods where data are collected through interviews with open and closed questions and are analysed with text and statistical analysis (See i.e. Creswell 2003:17-21).

Collection of social data

Experiment Content analysis Observation Interview

Oral Written

Telephone interview

Soft HardNeutral

Weakly structured

Questionnaire

Semi structured

Fully structured

Standardised interview

Non-standardised interview

Open questionClosed question

Question

Sustainability Reporting at Deutsche Telekom AG 105

4 RESULTS AND DISCUSSIONS OF CASE STUDY 1: SUSTAINABILITY REPORTING AT DEUTSCHE TELEKOM AG

This chapter begins with a brief description of the Deutsche Telekom AG. The results of the interviews with managers and stakeholders of Deutsche Telekom are the main focus of this chapter. To illustrate the research findings, some re-sults are quantified by means of relative frequency distribution367 and shown in tables or graphical illustrations. This is in accordance with Engel et al. (1995) who stated that “another way to record/deliver ‘the essentials’ in a frequency distribution is the graphical presentations” 368. The last part of Chapter 4 deals with the interrelations of the communication components of sustainability re-porting which are analysed with the help of the contingency coefficient techni-que.

4.1 Deutsche Telekom AG

Deutsche Telekom AG is one of the world’s leading telecommunications and information technology service providers. The corporation is publicly traded in the stock exchange market since 1996369. It is represented in 65 countries around the world370. In December 2003, it employed around 249,000 employees worldwide. In 2003, Telekom’s revenue was as much as 55.8 billion Euros371.

The company’s four divisions cover the entire spectrum of the modern informa-tion society372:

• T-Com: One of Europe’s biggest fixed-line and broadband providers,

367 Cf. Blalock 1972:41. 368 Engel et al. 1995:27. 369 Ries (http://www.download-dtag.t-online.de/englisch/company/9-sustainability/sarasin_ ra-ting_dt_profile.pdf). 370 Deutsche Telekom AG (http://www.telekom3.de/en-p/comp/1-co/home/corporate-profile-ar.html). 371 Deutsche Telekom AG (http://www.telekom3.de/en-p/comp/1-co/1a-f/home/facts-and-figu-res-ar.html). 372 Deutsche Telekom AG (http://www.telekom3.de/en-p/comp/1-co/home/corporate-profile-ar.html).

106 Sustainability Reporting at Deutsche Telekom AG

• T-Mobile: One of the leading mobile communications providers world-wide,

• T-Online: One of the biggest Internet-Service-Providers in Europe, and

• T-Systems: One of the largest IT systems in Europe.

The fixed-line services (T-Com) account for 47% of the revenues, mobile (T-Mobile) for 34%, the IT systems unit (T-Systems) for 15% and internet (T-Online) and other services for 4%. International business of Deutsche Telekom mainly concentrates on Eastern Europe and Northern America, where more than 30% of the workforce is located. The German government owns 43% of the corporation373.

Telekom’s vision is to network society for a better future as a telecommunication and information technology corporation and to serve customers with top quality, efficiency and innovation in every respect. To achieve this, Telekom has estab-lished its corporate values known as T-Spirit. T-Spirit does not just stand for a wind of change blowing through the Corporate Group, but it also refers to six concrete, key corporate values, which can be systematically derived from the individual letters in the word “SPIRIT”374:

• Superior Value: “We constantly enhance the value of Deutsche Tele-kom”.

• Passion for our Customers: “We delight our customers by providing them with excellent products and services”.

• Innovation: “We create a culture of innovation in which we enjoy work-ing”.

• Respect: “We benefit from our cultural diversity, respect and help each other”.

• Integrity: “We communicate in an open and honest way and deliver what we promise”.

• Top Excellence: “We think and act resolutely and strive constantly for greater efficiency with the right people in the right jobs. We consistently reward performance while taking action against misconduct”.

The Deutsche Telekom Group is committed to the principle of sustainability and its activities are based on economic, as well as social and ecological criteria. Deutsche Telekom AG is a member of the UN Global Compact and supports the

373 Ries (http://www.download-dtag.t-online.de/englisch/company/9-sustainability/sarasin_ ra-ting_dt_profile.pdf). 374 Deutsche Telekom AG (http://www.telekom3.de/en-p/comp/1-co/1b-c/home/031021-corpo-rate-value-vision-ar.html).


development of global sustainability reporting standards such as standards by GRI.

4.2 The Effectiveness of Deutsche Telekom’s Sustainability Reporting

This section starts with a brief description of Telekom’s stakeholders and ex-plains which stakeholders were successfully interviewed and which could not be interviewed (The description of the managers of Telekom was already pre-sented in Chapter 3.1.2.1) Afterwards, the results of the interviews with the Telekom managers will be presented. The understanding of the Telekom ma-nagers’ towards the stakeholders and SR in general is described. This is then followed by results of the interviews with the Telekom stakeholders, illustrating the stakeholders’ understanding of the Telekom and SR in general. Further-more, the stakeholders’ acceptance of the contents of Telekom’s SR and the effects of communication by means of Telekom’s SR are presented.

4.2.1 The Interview Partners

As has been explained in Chapter 3.1.2.2, in October 2003, 5 managers and 44 stakeholders were chosen as interviewees.

Unfortunately, not all of the selected people/organisations on the list could be interviewed due to the following reasons:

• Two financial service providers did not feel to be the right or appropriate stakeholders of the company as they thought that they had nothing to do with the company or with the company’s SR.

• One certified accountant could not be interviewed. He said that he did not have time for an interview.

• One stakeholder belonging to the group ‘Press Agency’ mentioned that he had no time for the interview.

• One NGO-Union refused the interview without giving an exact explana-tion.

• Two NGO-Environmental Groups could not be reached after several phone calls and e-mails.


• Two stakeholders who belonged to the stakeholder group ‘Univer-sity/Research Institute’ could not be reached after several phone calls and e-mails. Another stakeholder had mentioned that they did not have time until the end of 2003.

• Of the stakeholder group ‘Authority’: One had no time and another one could not be reached after several attempts. They were contacted se-veral times via telephone, but unfortunately the calls were not returned.

Thus, there were 5 managers375 and 32 internal and external stakeholders376 who could successfully be interviewed. These thirty-two stakeholders can be subdivided into the following groups:

• 6 employees,

• 5 rating agencies,

• 4 financial service providers,

• 4 certified accountants,

• 4 NGOs-Politics/Agenda 21,

• 3 press agencies/journalists,

• 2 NGOs-Environmental group,

• 1 university/research institute,

• 1 NGO-Union,

• 1 NGO-Consumer protection, and

• 1 authority body.

The interviewed stakeholders were not only located in Germany, but also in the UK and Switzerland.

The interview results are presented in the following sections. Unfortunately, due to various reasons, not all of the 32 interviewed stakeholders could give an-swers to every question. However, this does not have a large impact on the research result because the assessment of the interview was not based on the individual manager or stakeholder, but the whole group of managers or the dif-ferent stakeholder groups.

4.2.2 Managers’ Perception of the Sustainability Report and the Corporate Stakeholders

This part presents the interview results about the Telekom managers’ view on the definition of sustainability report, the importance and value of the SR, the motives and goals of Telekom’s sustainability reporting, the Telekom significant stakeholders, the issues that should be mediated to stakeholders, and the com-

375 An interview with one of Telekom’s manager took place on Tuesday, the 14th of October 2003. The interview went well but unfortunately there was something wrong with the recorder appliances so that it did not record the interview. Thus, there was no recorded that could be used. 376 The interviewees remain anonymous.


pany image. Furthermore, the making process, distribution, contents of Tele-kom’s SR, and the Telekom managers’ opinion to improve the SR are also pre-sented in this section.

4.2.2.1 Understanding the Term ‘Sustainability Report’

The managers of Deutsche Telekom provided ‘suitable’ definitions of the term ‘sustainability report’. A few of these are listed below:

• “A report for internal and external stakeholders that describes strate-gies, activities and performances of the Deutsche Telekom in all as-pects of sustainability: environmental, social and economic”.

• “A report that describes how the company is on its way to be a sustain-able corporation”.

• “Sustainability report shall not be an image brochure, but it shall not also be pure critics”.

4.2.2.2 The Importance and Value of Sustainability Reporting

It could be concluded that the report was important for the company. All mana-gers of Deutsche Telekom had the same opinion that due to its contents the sustainability report is more valuable than other kinds of reports, such as finan-cial, environmental or social reports. Some statements on this matter are among others:

• “Sustainability report reaches more stakeholder groups than any other types of reports. Financial report, for example, only touches financial community, but with sustainability report, company can address its em-ployees, rating agencies, NGOs, professional public etc”.

• “Sustainability report gives an integrated view of all activities of the company’s single branches and their impacts”.

4.2.2.3 Motives for and Goals of Sustainability Reporting

The Telekom managers pointed out some motives for sustainability reporting as follows:


• Showing transparency (e.g. by presenting critical themes in the report)

• A must to fulfil stakeholders’ demands

• Differentiating from other companies/positioning in the market

• Following the motto “Do the right things and tell them”

• As a tradition to produce SR

• Improving company image

Meanwhile, the goals of Telekom’s sustainability reporting are:

• Improving the understanding about Telekom and its activities

• Improving the company image

• Affecting intention/behavioural tendency

4.2.2.4 The Most Important Stakeholders

As a sustainability report encompasses many themes, the Telekom managers who are the SR makers, admitted that it was not easy to define the target group of Deutsche Telekom’s SR. At first SR was addressed to all stakeholder groups. Nonetheless, according to the leader of the making process and some other managers, the stakeholders can be divided into two main groups of stake-holders. The most important stakeholders include employees, financial commu-nities (shareholders and financial service providers), suppliers and customers. Other stakeholder groups such as NGOs, rating agencies, unions/associations, universities/research institutes, the press, etc. form the second group (see Ta-ble 6). These groups became the target groups of the report.

Table 6: Corporate Stakeholders of the Deutsche Telekom AG

Group 1 Group 2

(The most important groups) Employee, Supplier, Customer,

Financial Community (Shareholder, Financial Service Provider)

(Other groups) Rating agency, Authority, Press

agency, Industrial consultant, NGO, University/Research Institute

4.2.2.5 The Making Process

Prior to preparing the report, it was discussed who will produce the report be-cause of organisational changes within the company. By the time the Depart-


ment of Environmental Protection and Sustainability had merged with the De-partment of Human Resources, an agreement was made that the Department of Corporate Sustainability and Citizenship (CSC) to which both departments be-long will produce the report titled ‘Human Resources and Sustainability Report’. The next step was the appointment of a manager from the Department of CSC to lead and to be responsible for the whole making process of the sustainability report. This manager arranged the schedules and deadlines and was also res-ponsible for corrections. This person appointed four other representatives of each division belonging to the department. They discussed the contents or main focuses of the report, how many pages there should be, etc. They agreed to apply the GRI-Guideline with regard to the report’s contents as it was believed to be the only international guideline for sustainability reporting. They felt that the GRI-Guideline suited the company as a global player.

After it had been decided what the contents of the report should approximately be, an external consulting agency was asked for advice with respect to this matter. In a next step the representatives of each division of the CSC depart-ment was asked to deliver data according to the table of contents that had been developed. Each representative delivered data from his/her division, such as data on energy, waste, etc. They data was collected and passed on to the agency, which made a rough draft and returned it to Telekom for revision. In this phase, the layout was also discussed. After several reviews it was given to an-other external agency, which would be responsible for the ‘wording’, the layout and the printing. The external stakeholders participated indirectly in the report making process.

As a global corporation, Deutsche Telekom produced the report not only in German version but also in English. It took about 4 to 5 months to produce the report. In October 2003, the Deutsche Telekom AG published its latest sustain-ability report titled “Future-driven: The 2003 Human Resources and Sustainabi-lity Report”.

4.2.2.6 The Contents of the Report and Communicated Sustain-ability Issues

The report consists of 114 pages. On the back of the report cover, Telekom presented figures about the corporate group’s key figures. The table of contents and the forewords by the CEO and a Member of the Board for Human Re-sources are found on the first few pages. This is followed by the corporation’s highlights and lowlights in 2002 and 2003. This prologue part ends with some information about the vision and mission of the four corporate divisions (T-Com,


T-Mobile, T-Online, T-Systems) with regard to the vision of sustainable deve-lopment.

Basically, Telekom divides its SR into six main sections: Management culture and values, People-driven, Our products in society, Efficient business, Global citizen Telekom, and Putting ourselves to the test.

In this report, the environmental, economic and social dimension of sustainabi-lity are not looked at separately. Due to this, issues such as the company pro-file, governance structure, management systems and stakeholder engagement and communication can hardly be found. Each section of the report is divided by picture.

The issues within each section are presented in Table 7.


Table 7: Contents of the Deutsche Telekom’s SR “Future-driven: The 2003 Human Resources and Sustainability Report”

Put

ting

our

selv

es

to t

he t

est s

ectio

n

Deu

tsch

e T

elek

om

asse

ssm

ent

Glo

bal c

itize

n T

elek

om s

ectio

n

1. C

omm

itte

d to

a

sust

aina

ble

soci

ety

2. C

orpo

rate

citi

zen

3. D

igita

l Div

ide

4. O

ur e

mpl

oye

es’

soci

al

com

mitm

ent

5. D

eut

sche

T

elek

om

spon

sori

ng

6. S

take

hol

der

di

alog

ue

Effi

cien

t bu

sine

ss

sect

ion

1. C

ons

ervi

ng

reso

urce

s

2. K

now

ledg

e a

nd

idea

s m

ana

gem

ent

3. E

ner

gy

man

age

men

t

4. M

obili

ty

man

age

men

t

5. W

aste

m

ana

gem

ent

6. F

acili

ty

man

age

men

t

7. T

elew

orki

ng

Ou

r pr

oduc

ts in

so

ciet

y se

ctio

n

1. D

esig

ning

su

stai

nabl

e te

chno

logi

es a

nd

serv

ices

2. F

utur

e-dr

iven

pr

odu

cts

3. S

usta

inab

ility

of

our

pro

duct

s a

nd

serv

ices

4. R

ese

arch

an

d de

velo

pme

nt

5. P

rocu

rem

ent

6. R

etu

rn a

nd

recy

clin

g

7. S

afe

trea

tme

nt o

f ha

zard

ous

su

bsta

nces

8. C

ons

umer

pr

otec

tion

9. C

usto

mer

foc

us

Peo

ple-

driv

en

sect

ion

1. S

usta

inab

le

HR

m

ana

gem

ent

2. W

e h

ave

a sp

ecia

l re

spo

nsib

ility

as

an

empl

oyer

3. “

We

stri

ve to

st

ay th

e be

st in

th

e fu

ture

”

4. G

ood

rel

atio

ns

to s

ocia

l pa

rtn

ers

5. S

ecur

ing

the

futu

re m

ean

s pr

omo

ting

know

led

ge

6. W

e e

nsur

e he

alth

and

sa

fety

at w

ork

7. E

qua

l op

port

uni

ties

and

dive

rsity

Ma

nag

emen

t cul

ture

a

nd

valu

es s

ectio

n

1. W

e ta

ke o

ur

resp

ons

ibili

ties

seri

ousl

y

2. N

ew G

rou

p m

issi

on

intr

odu

ced

3. G

roup

str

ate

gy

stre

ngt

hen

ing

our

divi

sion

s

4. T

he b

asis

for

succ

ess:

Gro

up H

R

stra

tegy

5. F

utur

e o

utlo

ok:

Gro

up

sust

ain

abili

ty

stra

tegy

6. E

mpl

oyee

or

ien

tatio

n w

ithin

th

e G

rou

p

7. O

ur d

iver

sity

is th

e co

rner

ston

e o

f our

su

cces

s

8. C

orpo

rate

go

vern

anc

e: a

ctin

g fr

ankl

y, h

ones

tly &

re

spo

nsib

ly

9. M

ana

gem

ent

sy

stem

s

Source: Deutsche Telekom 2003.


The last part ‘Putting ourselves to the test’ also consists of the report‘s addi-tional information, a glossary, contact details and the imprint.

The managers had different opinions on what themes should be delivered to the company stakeholders. They admitted that it was difficult to determine which issues should be included in the report and which were really expected by the stakeholders. This was so even though they used information provided by stu-dies on the stakeholders’ interests and demands such as the research con-ducted by Kohtes and Klewes, Sustainability Ltd. (UK), Future e.V., etc.. In ad-dition, it could be made use of: feedback to the previous SR from numerous stakeholders, stakeholder comments collected on the Deutsche Telekom’s Sustainability Day, and suggestions made by the external consultants prior to drafting the report. The themes, which the managers thought to be important and should be delivered to stakeholders, are listed from top to bottom according to their importance in the following:

• Treatment of staff (e.g. staff lay-off, Personal Service Agency)

• Working time model (reduction of working hour)

• Energy management (consumption)

• Facts and figures (especially in economic theme)

• Raw material management (natural resources protection)

• Debt reduction

• Product declaration (impact to the environment and society)

• Doing business efficiently (eco-efficiency)

• Social engagement

• Relationships with social partners

• Link/integration of 3 aspects of sustainability

• Contribution of Telekom to counselling, emergency call

Some of the Telekom managers admitted that the company still faced some difficulties in presenting several data e.g. ‘Facts and figures of the corporation’. One of them also said that the issue of ‘Relationship with social partners’ could be presented in more detail.

4.2.2.7 The Distribution Process

Besides the printed-version, Deutsche Telekom also tried to present its SR in the internet. The managers agreed that the internet-version or PDF-File can


supplement the printed version but it cannot replace it because people of the target group can only be reached by means of the printed version. According to the managers this complied with the results of the ECC Kohtes Klewes study. The internet version can be used as background information for the stake-holders and as a means to deliver current information. In the internet the stake-holders can look up information according to their needs. But unfortunately, because of some technical problems, the internet-version or PDF-File could not be published until several months after the publication of the printed version. Telekom printed 20,000 copies of the German version and 5,000 of the English version. The reports had been dispatched to company stakeholders by post and were also distributed at numerous events such as the Working Council meeting.

The Deutsche Telekom’s SR “Future-driven: The 2003 Human Resources and Sustainability Report” can be downloaded at http://download-dtag.t-online.de/ englisch/company/9-sustainability/ 040402_humanresources sustainability re-port_2003.pdf (for the English version) and http://download-dtag.tonline.de/ deutsch/konzern/9-nachhaltigkeit-umwelt/DT_Personal_und Nachhaltigkeitsbe-richt_2003.pdf (for the German version).

4.2.2.8 Corporate Image from the Managers’ Point of View

From the interviews with the managers of Deutsche Telekom, it can be con-cluded that, from their point of view, the corporate image is currently positive (2 said positive and the other 2 said average). One manager said that in the past few years, the corporate image was not quite so good because the Deutsche Telekom had many debts due to its participation in rebuilding the eastern part of Germany. But at the moment, the corporate image is improving.

The managers pointed out that the Telekom’s SR is an optimal tool to reach the stakeholders and influence the stakeholders’ perception of the corporate image. They think that the SR can improve or maintain the positive corporate image. They mentioned that feedback was received from a few stakeholders, confirm-ing this. They also argued that there was a study on the international rating of corporate sustainability and Telekom had one of the top positions. That would not be the case, they said, if the report did not reach the company stakeholders.

Furthermore, one manager remarked that their SR can better influence the fi-nancial community than the other stakeholder groups (including employees). This indicates that the SR was created so that it would satisfy the needs of the financial community first of all.


4.2.2.9 Improving the Sustainability Report

The managers admitted that there were several things that can be done in the future to improve the SR as shown below:

• Improving source of data and process of data collection

• Mentioning also uncomfortable issues to not to make the report like a glossy brochure

• Posing the integration of each dimension of sustainability stronger

• Presenting the report in an interactive way through the combination of internet and paper version

• Making the report briefer

In this figure, we can see that the issues of ‘Improving source of data and pro-cess of data collection’ and ‘Mentioning also the uncomfortable issues to not to make the report like a glossy brochure’ are emphasised by the managers to improve the report quality and credibility.

4.2.3 Pre-communicative Phase: Stakeholders’ Perception of the Corporation and Sustainability Report

This part is subdivided into several sections in accordance with the levels ‘fa-miliarity’ and ‘interest’ of the ‘step by step models of communication effects’ which were developed as part of this research (FAMILIARITY – INTEREST – Comprehension – Preference – Conviction and Image – Intention/Behavioural tendencies).

Aspects and variables of sustainability reporting which are contained in these two steps are:

• ‘Familiarity’:

► Knowing the corporation and trust in it,

► Familiarity with and understanding of the term ‘sustainability report’,

► Value of the sustainability report in comparison with other kinds of re-ports,

► Feeling of being an addressee of company’s sustainability report,


► Intention of corporate sustainability reporting from the stakeholders’ point of view.

• ‘Interest’:

► Interest in sustainability report in general.

4.2.3.1 Familiarity

Knowing the Corporation and Trust in It

In the matter of knowing the Deutsche Telekom AG, the stakeholders were asked:

“What do you know about the company (Deutsche Telekom)?”

Most of the respondents stated that they do know the company but there were also some of them who said that they did not know the company that well. The stakeholders, who assumed that they know the Deutsche Telekom Group, as-sociated the corporation with several positive and negative aspects (see Figure 15).


Figure 15: Stakeholders’ Association with Deutsche Telekom (n=24)

51,8%

37,5%

33,3%

20,8%

12,5%

12,5%

8,3%

8,3%

8,3%

4,2%

4,2%

25%

German/European largesttelecommunication company

Former state-owned enterprise, developed toa privatised corporation

Global Player

Oriented to sustainable development

Selling shares in the stock market

Good positioning in the market

Facing financial problems (slowly beginningto improve)

Facing many challenges

Facing barriers (recent problem in findingCEO)

Sponsoring culture and sport events

Long tradition

Huge amount of employee

* Eight stakeholders did not comment on this matter.

The interviews with twenty-four respondents show that some of the stake-holders’ associations are contradicting. The first contradiction is related to the issue ‘Innovation and communication technique and equipment’. Two stake-holders (one employee and one certified accountant) mentioned that Deutsche Telekom is innovative and fully equipped with modern communication techno-logy, whereas another stakeholder (NGO-Union) stated that the corporation performs poorly in innovating telephone appliances.

Another contradiction applies to the matter of ‘Stakeholders’ daily experiences with the company i.e. with the customer service’. Six stakeholders (1 financial service provider, 1 rating agency, 1 environmental NGO, 1 non-governmental


union and 2 political NGOs/Agenda 21) said that they associated the company with something positive in their daily life. In contradiction, 2 stakeholders (1 fi-nancial service provider and 1 non-governmental union) said the opposite. They said that the company’s customer service in terms of hospitality is poor. There are also two negative associations with the corporation (‘Facing financial pro-blems’ and ‘Facing barriers in finding the CEO’).

The interviews also revealed, that one stakeholder of the group ‘rating agency’ and one stakeholder belonging to the group ‘authority’ stated that they did not know much about Deutsche Telekom377:

• One representative of a rating agency said that they did not know much about Deutsche Telekom and categorised themselves as a customer in their relationship with the company. They meant that what they knew was just the same as what people would know from the media.

• One representative of an authority said that they actually did not know a lot about Deutsche Telekom but compared with the average person, they said that for sure they knew more. They were present on the com-pany’s ‘Sustainability Day’ and they knew about some of its devices and services.

These findings indicate that Deutsche Telekom still has difficulties in determi-ning the real stakeholders and reaching them.

Furthermore, the ‘Stakeholders’ association about the company’ is then put in relation to the ‘Stakeholders’ trust in the company’. The stakeholders were re-quested to give an answer to the question:

“Do you think the company is trustworthy?”

The interview results express that the level of trust in the company varies bet-ween very trustworthy (3.2%), trustworthy (67.8%), more or less trustworthy (22.6%), and not always trustworthy (6.4%) (see Table 8).

377 Two financial service providers on the list of Telekom’s stakeholders, which unfortunately refused to be interviewed, mentioned that they felt they were not appropriate stakeholders of Telekom. They stated that they had nothing to do with Telekom or with the Telekom’s SR (see Chapter 4.2.1).


Table 8: Stakeholders’ Trust in Deutsche Telekom (n=31)

Stakeholder group

(1) Very trust-

worthy

(2) Trustworthy

(3) More or

less trust-worthy / No comment

(4) Not always trustworthy

(5) Not trust-worthy at

all

Employee 6

Financial service provider 4

Certified accountant 1 3

Rating agency 4 1

Press agency 1 1

University/Research institute 1

Authority 1

NGO-Politics/Agenda 21 3 1

NGO-Environmental group 1 1

NGO-Union 1

NGO-Customer protection 1

1 21 7 2 0

3.2 % 67.8 % 22.6 % 6.4 % 0% * One representative of a press agency did not give any comment because they said that they did not know the company well enough.

Table 8 illustrates that a great number of respondents have trust in the com-pany. Only few of them said the contrary:

• One authority body said that before reading the report, they character-ised Deutsche Telekom as being very trustworthy. But after heaving read the report, they only consider it to be trustworthy.

• One NGO-Politics/Agenda 21 could not specifically state the level of trust because trust always relates to something specific. If it is about the pricing system of the Deutsche Telekom, they would not trust the com-pany very much. But if it refers to the customer service, they would trust the company.

• One NGO-Environmental group said that from their daily experiences, Telekom had a bad reputation and to them Telekom was not trustwor-thy.

The cross-check of the ‘Stakeholders’ trust in the company’ with the ‘Corporate image from the managers’ point of view’ shows that there is a match between how the Telekom managers see the Telekom and how the stakeholders per-ceive the corporation. The interview results show that some of the managers of


Telekom mentioned that the corporate image is positive at the moment and some others said that the corporate image is not purely positive. This is relevant to the stakeholders’ trust in the company as some of the stakeholders of Tele-kom mentioned that they can trust the company, whereas some others said that Telekom is not trustworthy.

Familiarity with the Term ‘Sustainability Report’

The stakeholders were asked:

“Have you ever heard the term ‘sustainability report’ before?”

Of all the 32 interviewed stakeholders all but one (a financial service provider) are familiar with the term ‘sustainability report’: 97% were familiar and 3% were not familiar with the term ‘sustainability report’. This result indicates that the stakeholders of Telekom are mostly professionals or people/organisations who deal with or dealt with sustainability reports.

Understanding the Term ‘Sustainability Report’

The question to explore this matter is:

“Can you please define the term ‘sustainability report’ with your own words?”

Unfortunately, two stakeholders (one press agency and one financial service provider) did not answer to this question. The remaining thirty respondents of the Telekom’s stakeholders have a different understanding of the term ‘sustain-ability report’ (see Figure 16).


Figure 16: Telekom Stakeholders’ Understanding of the Term ‘Sustainability Report’ (n=30)

73,3%

13,3%

3,3%

3,3%

3,3%

3,3%

Report on env., soc. & econ. dimension *

Report on env. & soc. (human resources)dimension

Report on env. dimension

Report on env. & econ. dimension

Report on soc. (human resources) & econ.dimension

PR instrument to improve company image

* Some statements about the sustainability report are as follows: “report on environ-mental, social and economic dimension as a way of communication to stakeholders to show transparency in order to prove insurance, to differentiate the company from the others and to show where the company stands on sustainability”.

Figure 16 above shows that some of the stakeholders understood SR as a re-port, which only deals with one or two aspects of sustainability, such as:

• environmental dimension (1 employee),

• environmental and social dimension (1 employee, 2 rating agencies, 1 customer protection NGO),

• environmental and economic dimension (1 employee), or

• social and economic dimension (1 employee).

Meanwhile, one press agency understood SR as a PR instrument to improve the company image.

Figure 27 illustrates that generally the Telekom stakeholders (except for the stakeholder group ‘employee’) have an appropriate understanding of the term ‘sustainability report’.

The stakeholders’ understanding of the sustainability report is strongly related to the expectations of the stakeholders with regard to the Telekom’s SR. This will be discussed in the following chapters.


Value of the Sustainability Report in Comparison with Other Kinds of Reports (Environmental, Social or Financial Report)

To determine the stakeholders’ opinion about the sustainability report in com-parison with other reports, the following question was asked:

“If we compare the sustainability report with other reports such as business, financial, environmental or social report, does the construction of the sustain-

ability report have more value according to your opinion (Even though the sus-tainability report has fewer pages)?”

Most of the respondents (75.9% of 29 respondents) stated that SR has more value than financial, environmental or social reports; 6.9% said that SR is only of limited value, but 17.2% think that a sustainability report does not have more value than other reports (see Figure 17).

Figure 17: SR in Comparison with Other Kinds of Reports from Telekom Stake-holders’ Point of View (n=29)

71,5%

6,9%

17,2%

More value

Limited value

Less value / It depends! / Yes and No

* Three stakeholders did not answer to this question.

Some of the statements were, for example:

• One representative of a financial service provider said that the sustainability report was more valuable but it had only a limited value with regard to financial matters, because several financial issues were not dealt with as extensively as in the financial report.

• One representative of a rating agency said that it depends on the stake-holder. For a stakeholder from the financial community, the sustainabi-lity report is not as valuable.

• Another representative of a rating agency pointed out that if you are an NGO, the sustainability report is more valuable than the financial report, but not as valuable as an environmental or social report.

• One representative of a press agency mentioned that a sustainability re-port is not of more value than other reports, especially in comparison with a financial report.


• One representative of a political NGO/Agenda 21 said that they did not see that the sustainability report of Deutsche Telekom has more value than other kinds of reports because they did not find the themes in the intensity as they imagined before.

With the exception of some stakeholders, especially those belonging to the fi-nancial community, overall the managers and stakeholders of Telekom agree that SR is more valuable than the environmental, social or financial reports.

Feeling of Being an Addressee of the Company’s Sustainability Report

Another important aspect in the pre-communication process which may also affect the willingness to read the Telekom’s SR is the ‘Feeling of being as ad-dressee of Telekom’s SR’. The stakeholders were asked:

“Did you feel yourself addressed by the report?”

The thirty-two respondents gave different answers. The statements varied between ‘very much’ (21.9%), ‘addressed’ (37.5%), ‘neutral’ (31.2%), ‘hardly addressed’ (6.3%), and ‘not addressed at all’ (3.1%) (see Figure 18).

Figure 18: Feeling of Being Addressed by Telekom’s SR (n=32)

21,9%

37,5%

31,2%

6,3%

3,1%

Very much

Addressed

Neutral

Hardly addressed

Not addressed at all

Those who took a neutral position are:

• Two financial service providers: One said that it was simply their job. Meanwhile, another one mentioned that there were several themes which directly affect them (future-oriented product, corporate gover-nance) and also several other themes which did not affect them at all (waste management),

• Three certified accountants did not feel addressed by the report and took a neutral standpoint. One said that they felt that the report was


written for the communities of investors, students and employees, and not especially for certified accountants,

• Three rating agencies took a neutral position on this matter. One said that they should take a neutral position to guarantee the neutrality of the company’s assessment. Anyway, they said that the report mainly ad-dressed the employees, the financial community and NGOs. Another one did not feel addressed and pointed out that the texts in the report were rather like advertisements and only appropriate for some groups,

• One customer protection NGO said that it was probably written for the internal stakeholders (employees) and stock analysts, and

• One environmental NGO also took a neutral position.

Those who did not feel addressed by the report were:

• Two press agencies felt absolutely not addressed by the report.

• One political NGO/Agenda 21 said that they did not feel addressed by the report as they felt that the report was just a usual advertisement.

The interview results show that Deutsche Telekom has not fully identified its actual/relevant stakeholders since some of the stakeholders did not feel ad-dressed by the report.

Intention of Corporate Sustainability Reporting from the Stakeholders’ Point of View

The results of the 32 stakeholder interviews show that most of the respondents believed that the intention of Deutsche Telekom in producing and publishing the SR is to use it as an information instrument to show transparency to its stake-holders (46%) and to use it as PR or a marketing instrument to create a positive corporate image (44%). A minor part of the respondents thought that the Tele-kom SR intends to address employees and professionals (4%) or the financial market only (4%), or is seen as an instrument to justify the company’s activities (2%).

The stakeholders’ perception of the Telekom’s intentions is in accordance with the motives for sustainability reporting and the goals as mentioned by the ma-nagers (see Chapter 4.2.2.3). The only motive the stakeholders did not mention was ‘market positioning’.


4.2.3.2 Interest in Sustainability Reports

Before dealing with the actual reading of the report, one aspect of communica-tion, which may also influence the stakeholders’ willingness to read the report, will be presented. It is the interest in sustainability reports. The stakeholders were asked:

“Are you interested in the sustainability report at all?”

The level of general interest in sustainability report varied between ‘very inte-rested’ (61.3% out of thirty-one respondents), ‘interested’ (25.8%), ‘not so inte-rested’ (9.7%), and ‘not interested at all’ (3.2%) (see Figure 19). One reason why some stakeholders stated that they were really interested in SR is because the report is related to their job (i.e. financial service providers). These organi-sations have to analyse the results of Telekom’s activities and advise the com-pany.

Figure 19: The Interest of Telekom Stakeholders in Sustainability Report (n=31)

61,3%

25,8%

9,7%

3,2%

0%

Very interested

Interested

Only somew hat interested

Not so interested

Not interested at all

Figure 19 illustrates that most of the respondents were interested in sustainabi-lity reports (87.1%) and some of them were not (12.9%). Those who were not interested in SR are:

• One press agency said that they absolutely had no interest in it at all.

• One political NGO/Agenda 21 said that they were not too interested.

• One environmental NGO said that they were not interested in it because in their opinion the sustainability report was just used to justify the com-pany’s activities and to create a positive image of the company.

• One non-governmental union was not that interested because they did not normally deal with it.


Telekom must make optimal use of the stakeholders’ interest in the sustainabi-lity report as a communication instrument between the corporation and the stakeholders to improve its corporate image.

4.2.4 Communicative Phase: Stakeholders’ Acceptance of the Report

This is the phase during which the stakeholders, who are the message receivers of the sustainability report, are confronted with the contents of the SR. It is the communicative phase: the stakeholders read the report and interpret the con-tents of the report based on their knowledge and social environment (culture, ethics, etc.). This phase relates to the levels of ‘Comprehension’, ‘Preference’, and ‘Conviction’, which are taken from the ‘step by step models of communica-tion effects’ (Familiarity, Interest, COMPREHENSION, PREFERENCE, CONVICTION and Image, Intention/Behavioural tendencies).

Some aspects and variables of sustainability reporting which are included in these three steps are:

• ‘Comprehension’:

► Percentage report read and how much time is spent on reading

► Language style,

► Structure,

► Design and colour,

► Font type and size,

► Length of the report and preferred amount of pages,

► Readability,

► Reading enjoyment, and

► Distribution of the report.

• ‘Preference’:

This aspect focuses on environmental, social and economic issues, which the stakeholders want to find in the report:

► Preferred environmental issues,

► Preferred social issues,


► Preferred economic issues, and

• ‘Conviction’:

► Reliability of the report, and

► Comparison between the current and the previous sustainability report.

4.2.4.1 Comprehension

Percentage Read

In the interview, the author asked the interview partners:

“Did you read the whole report or did you briefly flip through the pages? Or were you only interested in special parts of the report?”

There was one stakeholder (press agency) who admitted that they did not read the report at all. They said that they only wanted to read the report if they have something to report about it. So there were only 31 stakeholders who could an-swer the question above. The matter of how much of the report is read is con-nected to other qualities of the SR such as ‘time spent on reading’, ‘structure’, ‘language style’, ‘design and colour’, ‘font type and size’, etc.

The results are shown in Figure 20. The majority of the respondents (29% of 31 respondents) read 75% or more and another 29% read more than 50% or more of the report. The respondents who read the whole report (16.1%) are 2 em-ployees, 1 financial service provider, 1 rating agency and 1 union. Meanwhile, 19.4% of the respondents who read 25% of the report or more and the respon-dents who read only less than 25% of the report (6.5%) are 2 press agencies and 1 environmental NGO.

Figure 20: Percentage of Telekom’s SR Read (n=31)

6,5%

19,4%

29%

16,1%

29%

100%

≥ 75%

≥ 50%

≥ 25%

< 25%


However, it is found out that there were several interviewees (e.g. press/journalist, NGO-Union, NGO-Politics-Agenda 21) mentioning that they read the report just because they were asked for the interview. A number of interviewees also mentioned that they read the report only for the reason that it was related to their jobs for example for the stakeholder groups ‘rating agency’ and ‘financial analyst’. Several others stated that they read the report because they have to make a report about the company (e.g. NGO- Environmental group).

Time spent on Reading

The stakeholders gave different answers to the following question:

“How much time did you spend on reading the report?”

Most of the respondents stated that they spent more than one hour on reading the report (58.1% of 31 respondents). There are 25.8% who said that they spent 30 minutes or more on reading and 9.7% of the respondents invested 15 minu-tes or more in reading the report. Meanwhile, there are two respondents (6.4%) who went through the report in less than 15 minutes (see Figure 21).

Figure 21: Time Spent on Reading the Telekom’s SR (n=31)

58,1%

25,8%

9,7%

6,4%

0%

≥ 1 hour

≥ 45 min

≥ 30 min

≥ 15 min

< 15 min

Structure

With regard to the structure of the Telekom’s SR, the following question was asked:

“Did the structure help you to understand the report better?”

According to the interviewees 25.8% of the 31 respondents thought the struc-ture of Telekom’s SR was ‘very helpful’ to understand the contents of the report. Nine respondents (29%) said it was ‘helpful’ and another nine (29%) rated it as


‘somewhat helpful’. Meanwhile, three respondents (9.7%) said that the structure of the report was ‘not helpful’ and two respondents (6.5%) were of the opinion that the structure of the report was ‘rather confusing’ (see Figure 22).

Figure 22: Structure/Theme Classification of Telekom’s SR (n=31)

25,8%

9,7%

6,5%

29%

29%

Very helpful

Helpful

Only somewhat helpful

Not helpful

Rather confusing

The stakeholders who felt that the structure of Telekom’s SR was not helpful to understand the report’s contents or even confusing gave the following answers:

• “The structure was unclear and not understandable” (Certified accoun-tant)

• “The structure could have been built up in a more structured way be-cause an average reader would not be comfortable with the present structure” (Rating agency)

• “Several themes were placed under the wrong titles” (Rating agency)

• “The structure was confusing. We had to really struggle with understanding where we were because it seemed that the issues touched on each side and there was cross reference between each other. We wish to have a better layout for the structure” (Authority)

• “It was difficult to get into the theme in which we were interested. The ti-tle of the theme in the table of contents was not clear” (NGO-Poli-tics/Agenda 21)

• The systematic of the theme could not guide the readers’ eye in finding the theme we were looking for. Even if people took a look at the title, people would notice that the theme of sustainability doesn’t appear there” (NGO-Politics/Agenda 21)

• “The systematic of the report was irritating. It doesn’t suit our logic” (NGO-Environmental group)


Language Style

The stakeholders were asked to comment on the language style of the Tele-kom’s SR:

“Did you think that the language style in the report was understandable?”

Most of the respondents (63.3%) said that the language style of the report was ‘understandable’, 16.7% were of the opinion that ‘only most of it was under-standable’, 13.3% said that it was ‘very understandable’. At the other end 6.7% of the respondents (one rating agency and one authority) thought that the language style in Telekom’s SR was ‘difficult to understand’ (see Figure 23).

Figure 23: Language Style of Telekom’s SR (n=31)

13,3%

63,3%

16,7%

6,7%

Very understandable

Understandable

Only most of itunderstandable

Difficult to understand

Some critical statements about the language style of Telekom’s SR are:

• “There were too many abbreviations and terms which were not ex-plained and there were many English terms that need to be looked up in the dictionary. It is a pity because actually we could spare our energy if only the company would avoid such difficult words in the report” (em-ployees)

• “There were too many difficult words. It was actually a pity that too many technical jargons were used in the report. It was made to sound more interesting than it really was. However, it was too text heavy (too much text), which made it a little over-complicated” (rating agency)

• “There was quite a lot of use of management jargons” (press agency)

• “The translation from German into English was unsatisfactory. Some of the language in German was fine, but in English it was a little bit clumsy, for example, a statement on page 22 which is very dense. An-other example is statement on page 35 about Social Charter. Social Charter was spelled wrongly. So the content of the report is difficult to


understand and people have to be serious in reading it because it wasn’t a coffee-table read” (authority)

• “The language style was not so easy to understand, due to the many usage of English words” (political NGO/Agenda 21)

But the language style was also appraised by one rating agency: ”It was nice to see a glossary behind the report, which allowed people to have a better under-standing of some special terms”.

Font Type and Size

The font type and size were also examined. The question for this was:

“What do you think about the font type and size in the report?”

Most of the stakeholders (63.4% out of thirty-one respondents) said that the font type and size utilised in the Telekom’S SR were ‘appropriate’; some others (20%) said that the font type and size were ‘only quite appropriate’ and the other 13.3% felt that they were ‘very appropriate’. Meanwhile 3.3% thought that they were ‘inappropriate’ (see Figure 24).

One respondent (press agency) said that the report included too much text. Another stakeholder (financial service provider) said that the font was too small.

Some stakeholders expressed certain wishes related to the font size in the re-port, which are:

• bigger font size (authority, NGO-Politics/Agenda 21, NGO-Environ-mental group)

• greater space between the lines (NGO-Politics/Agenda 21)

Figure 24: Font Type and Size in Telekom’ SR (n=31)

3,3%

63,4%

13,3%

20%

Very appropriate

Appropriate

Only quite appropriate

Inappropriate


Length of the Report and Preferred Amount of Pages

A question about the length of Telekom’s SR was also raised in the interview:

“What do you think about the size/length of the report?”

The answers varied between ‘appropriate’ and ‘entirely inappropriate’ (Figure 25). No stakeholder thought that the length of Telekom’s SR was ‘very appro-priate’. Most of the stakeholders (41.9% out of 31 respondents) said that the length of the report was ‘appropriate’. An employee gave one reason for this: the report covered too many themes. Of 31 respondents 32.3% answered that the length of the report was ‘only quite appropriate’. Meanwhile, 25.8% stated it was ‘inappropriate’ and 6.4% ‘entirely inappropriate’. They said that the Tele-kom’s SR was too long. Some of them also said that the report was too thick (financial service provider). Some similar opinions were expressed:

• “It would be better if the report was shorter than it is now” (Research institute)

• “The report was too long. The report parts: business, human resource management and sustainability were too ambitious and those 3 themes didn’t join together quite so well” (Authority)

Figure 25: Length of the Telekom’s SR (n=31)

41,9%

19,4%

6,4%

32,3%

0%Very appropriate

Appropriate

Only quiteappropriate

Inappropriate

Entirely inappropriate

In the interview, the stakeholders were also asked to suggest an optimal length of the SR if they did not agree with the current length. The question was:

“The report has now 114 pages. How many pages should it have in your opi-nion?”

Some of the respondents made suggestions varying between 50, 60 or 80 pages378. Most of them suggested over 90 pages (63.6% of 11respondents);

378 Not all of the respondents expressed their opinion.


27.3% 60 and 89 pages would be an optimal length; and 9.1% said the optimal length is between 30-59 pages, but none of them suggested less than 29 pages (see Figure 26).

Figure 26: Favoured Amount of Pages of Telekom’s SR (n=11)

9,1%

27,3%

63,6%

0%1 - 29 pages

30 - 59 pages

60 - 89 pages

≥ 90 pages

* Only 11 stakeholders made suggestions. The other 20 stakeholders did not comment on this matter.

Readability

The readability of the report was also dealt with:

“Was it easy to read (the report)?”

This matter was closely related to the structure of the report (see the question about structure of the report). In Figure 27, it is presented that more than half of the stakeholders (54.8% out of 31 respondents) mentioned that they could ea-sily follow and read the contents of the report; 32.3% said that it was ‘only mo-derately easy’; 9.7% thought it was ‘very easy’ and one respondent (financial service provider) mentioned that the report was ‘difficult to read’ (3.2%).

Figure 27: Readability of Telekom’s SR (n=31)

9,7%

54,8%

32,3%

3,2%

Very Easy

Easy

Only moderately easy

Difficult


Design and Colour

Questions about the design and the colours utilised in the Telekom’s SR were also asked:

“What do you think about the design and the colours of the report?”

Various opinions were expressed. The majority of interviewed stakeholders thought that the design and colour of the report were ‘very good’ (40% of 31 respondents) and ‘good’ (26.66%). But some stated that they were ‘only mode-rately good’ (16.67%) or ‘were not good’ (16.67%) (see Figure 28).

Figure 28: Design and Colour of Telekom’s SR (n=31)

16,7%

40%

26.6%

16.7%

Very Good

Good

Moderate

Not good

Some positive and critical opinions about the design and colour of Telekom’s SR are listed below:

• “People could recognise right away from who produces the report” (Em-ployee)

• “The colour suits the Corporate Identity of Deutsche Telekom and the utilisation of environmental friendly paper is just wonderful” (NGO-Poli-tics/Agenda 21)

• “The colours strongly indicate the colours of Telekom” (Rating agency)

• “The colour inside had no positive effect on me, it even made me aggressive” (Employee)

• “The colour of the table of contents was magenta which hurt the reader’s eye” (Employee)

• “The design was totally inappropriate to what their image actually was and to what the covered subject was. For example, there was a picture of a tea-bag and that was related to the company’s product but actually there was no link whatsoever” (Rating agency)


• “We don’t like the colours although people might think that the pink and green colours were trendy. The colour for the table of contents made our eyes dance around” (Authority)

• “The colour was not good because as it could be seen in the table of contents, the usage of black on red made the texts difficult to be read” (NGO-Politics/Agenda 21)

Reading enjoyment

The matter of reading enjoyment of Telekom’s SR was referred to by the ques-tion:

“Did you enjoy reading the report?”

The results are shown in Figure 29. The figure illustrates that 12.9% very much enjoyed reading the report and 48.4% enjoyed it. Altogether 32.3% said that they only moderately enjoyed it. The remaining 6.4% (2 respondents) stated that they did not quite enjoy reading the report.

Figure 29: Reading Enjoyment of Telekom’s SR (n=31)

12,9%

48,4%

32,3%

6,4%

Very much

Enjoyed

Only moderately enjoyed

Did not quite enjoy

A couple of comments with regard to the reading enjoyment of Telekom’s SR are:

• “I enjoyed reading it in general, but at some points, especially in the part of Human Resources, I didn’t quite enjoy reading it because the issues were too superficial” (Employee)

• “After we read the report for a while, we stopped reading it at once be-cause we felt that the report was pure PR” (Press agency)

Distribution of the Report

A question about the distribution of the report was also included in the interview:


“Through which media should the (next) report be best published?”

Figure 30 shows that almost every respondent had the same opinion about the form of publication. The stakeholders prefer indeed a printed report over an electronic version. A combination of the two was stressed. Most of the stake-holders (29 of 31 respondents) stated that the printed version should be kept but could be combined with other forms of publication. It can be seen in Figure 30 that most of the respondents (67.7%) prefer to have a short report, which pro-vides information about available internet links or PDF-files with more detailed information. Only a small number prefer to receive the report partly on paper and partly on CD (9.7%) or to read the report in the internet (website, PDF-file or MS-Word-digital version (6.4%).

Figure 30: Distribution of the Telekom’s SR (n=31)

16,2%

6,4%

67,7%

9,7%

Only on paper

Only internet (PDF File/Word)

Mix of short printed version + link to internet (PDF)

Mix of short printed version + CD

Some points from the interview that can be noted here:

• “There is no other form that could replace the paper form”. One financial service provider mentioned the reason for this is that “there were things in the report, in which people want to skim through and in which people want to stick on”. This opinion is confirmed by a research institute who said that “in no case to publish the report only in internet. We would not read the report in internet. We would only read the report in the public transportation (in train, subway, tram, plane, etc.)”. But in contradiction, one authority said that they did not need the report in a printed version. They were already very happy to find it on the web (in PDF format).

• One rating agency expected a summarised version (10 pages) with web-based links for additional sources and information. They said “shorter is definitely better”.

• One environmental NGO wished to have a shorter report because they said “shorter is better and it was really a coincident that we had to travel 5 hours with train so that we could read the report. If not, we would not read it”.


The descriptions above show that Deutsche Telekom recognised the stake-holder’ interests concerning the distribution of the report. The corporation and its stakeholders agree that the internet version or PDF-file could be used to sup-plement the printed version, but it cannot replace the printed report because some members of the target groups could only be reached by means of the printed version.

4.2.4.2 Preference

In this section it is explored, which environmental, social and economic issues the stakeholders’ expect to find in Telekom’s SR. The questions in the inter-views did not only focus on the expected issues that were found but also those that were missing in the stakeholders’ opinion.

Environmental Issues

The following question was asked with regard to environmental issues:

“Did you find the environmental issues in which you are interested in the re-port?”

Of twenty-six respondents 22.2% stated that they found all expected environ-mental issues in the report. Another 55.6% said that they found 75% or more of the environmental issues they expected. Meanwhile, there were 22% who found 50% or more environmental issues that they wished to see in the report (see Figure 31).

Figure 31: Percentage of the Environmental Issues Found in Telekom’s SR (n=26)

0%

0%

22.2%

55.6%

22.2%

100%

≥ 75%

≥ 50%

≥ 25%

< 25%

* Five stakeholders did not comment on this matter.


The stakeholders were also asked to name the expected issues that they found in the report:

“What (environmental issues) are these?”

The expected environmental issues which were found by the interviewed stake-holders in the Telekom’s SR are listed in Figure 32 below. Altogether 11 issues were mentioned. The issue of ‘Energy management, consumption and effi-ciency’ and the issue of ‘Waste management (i.e. recycling)’ (42.3%) were men-tioned most frequently. The environmental issues which were mentioned least were ‘Raw material management’, ‘Hazard management’ and the issue of ‘Posi-tion of the company in the sustainability rating’ (3.8%).

Figure 32: Expected Environmental Issues Found in Telekom’s SR (n=26)

42,3%

42,3%

26,9%

15,4%

11,5%

7,7%

7,7%

7,7%

3,8%

3,8%

3,8%

Energy (inc. electricity) management, consumption, efficiency *

Waste management (incl. Recycling)

Environmental protection action (incl. Environmental tariffagreement, climate protection)

Environmental impact such as CO2 emission (i.e. mobile phoneradiation)

Technology management (i.e. Teleworking, data system)

Transport/mobility management

Building management (room stoking)

Strategy to integrate sustainability into business policy

Raw material management/treatment**

Hazard management

Position of the company in the sustainability rating

Concerning the issue of ‘Energy consumption’ (*) one respondent (financial service provider) was not satisfied with the presentation of this issue in the re-


port. More detailed information about energy consumption was expected; par-ticularly information about how much renewable energy was consumed.

There was also a contradiction with regard to “Raw material manage-ment/treatment’ (**). One respondent (employee) mentioned that this issue was covered whereas another respondent (NGO-Union) said the opposite.

Besides the eleven expected environmental issues found in the report as listed in Figure 32, according to the twenty-six respondents, there were also 11 ex-pected environmental issues which were missing or not presented well enough (including the issue of ‘Energy consumption’ and ‘Raw material manage-ment/treatment’) (see Figure 33). The stakeholders were asked:

“What (environmental issues) did you miss in the report? Or were there themes that should have been more emphasised?”

Figure 33: Missing or Poorly Presented Environmental Issues in Telekom’s SR (n=26)

26,9%

15,4%

7,7%

7,7%

3,8%

3,8%

3,8%

3,8%

3,8%

3,8%

3,8%

Environmental policy, goal/target & facts/figures of the corporategroup

Detail explanation of environmental impact (i.e.emission/radiation/electro smog from the usage of telephone line)

Statement of achievement/unachievement of the goals in theenergy/waste division

Information about research & contribution of the company’sproduct to the sustainability of a society

Detail information about energy consumption (i.e. renewableenergy consumption for the whole corporation)*

Raw material management/treatment**

Identification process of the sustainability issues (i.e. why thecompany prioritise those issues)

Company structure (i.e. T-Mobile USA to the whole companystructure)

Better graphic presentation for water cost & consumption

More information about relationship between company &environmental group

Explanation whether internet supports or disturbs sustainability inthe long-term


As can be seen in Figure 33, the environmental issue missed most is the ‘Envi-ronmental policy, goals/targets and facts/figures of the corporate group’. Most of the respondents wished to see more quantitative data regarding environmental aspect so that they could compare the company with others (26.9%).

Social Issues

In the interviews questions referring to social issues dealt with in the report were also asked:

“Did you find the social issues in which you are interested in the report?”

Of the twenty-seven respondents, most respondents (40%) found 75% or more of the social issues which they had expected; 36% of the respondents found all of the social issues they wished to see in Telekom’s SR; 12% found 50% or more, 8% found 25% or more and 4% found less than 25% of the expected so-cial issues (Figure 34).

Figure 34: Percentage of the Social Issues Found in Telekom’s SR (n=27)

36%

40%

12%

8%

4%

100%

≥ 75%

≥ 50%

≥ 25%

< 25%

In the interview, the stakeholders were also asked to name the expected social issues:

“What (social issues) are these?”

The social issues expected by the 27 interviewed stakeholders found in the report are listed in Figure 35 below.


Figure 35: Expected Social Issues Found in Telekom’s SR (n=27)

44,4%

22,2%

18,5%

14,8%

11,1%

7,4%

7,4%

3,7%

3,7%

3,7%

3,7%

3,7%

3,7%

3,7%

3,7%

Staff development (education, training, qualification andpromotion) incl. number of training days, number of trainee

Social charter, standard, policy and engagement (i.e. donation)of the company

Matter of staff lay-off, retirement and old-age provision

Equality

Personal Service Agency

Health and safety at work

Family orientation

Working time model

Diversity of culture within employee

Accident rate

Working satisfaction of the employee

Supply Chain Management

Activities of the company as a Global Player (i.e. small projectsoverseas)

Relation to social partner (union, worker’s representative)

Efficiency of working equipment

Figure 35, it is illustrated the issues expected by most respondents were ‘Staff development (education, training, qualification and promotion)’ (44.4%). Among others the issue of ‘Efficiency of working equipment’ was expected by least respondents (3.7%).

Some stakeholders mentioned several issues related to the working conditions, such as “Health and safety at work” (7.4%), “Family orientation” (7.4%), “Acci-


dent rate” (3.7%), “Working time model” (3.7%) and “Diversity of culture within employee” (3.7%). Some stakeholders stated that they missed this issue in the report (18.5%) as shown in Figure 36. So again, there the respondents’ opinions contradicted each other with respect to the report’s contents dealing with the working conditions.

A few stakeholders (3.7%) answered that they found information about ‘Supply Chain Management’ as expected. But other stakeholders (25.9%) stated that the issue was missing and would like to get more detailed information about this issue (see Figure 36).

Figure 36: Missing or Poorly Presented Social Issues in Telekom’s SR (n=27)

25,9%

18,5%

3,7%

3,7%

More info on special issues (i.e. DigitalDivide, SCM, staff lay-off)

Working condition, performances & socialstandard (incl. supplier/employee overseas)

Explanation of the determination of socialissues

Social aspects of the production process

Economic Issues

As part of the aspect of sustainability, the economic issue was also dealt with in the interviews:

“Did you find the economic issues in which you are interested in the report?”

The results of the interviews indicate that a large amount of stakeholders were not interested in the economic issues. According to the interviewees one reason for this is that they would not expect economic issues in the sustainability report but rather in the financial report. It was also pointed out that the SR was not the ideal source for financial information (1 employee, 2 financial service providers, 1 certified accountant, 2 political NGOs/Agenda 21). So, there were only se-venteen respondents who commented on this matter.

As can be seen in Figure 37, 35.3% of the respondents found all the economic issues which they had expected to find in the Telekom’s SR; 41.2% found 75% or more; 17.6% found 50% or more. The remaining 5.9% said that they found 25% or more of the expected economic issues.


Figure 37: Percentage of the Economic Issues Found in Telekom’s SR (n=17)

35,3%

41,2%

17,6%

0%

5,9%

100%

≥ 75%

≥ 50%

≥ 25%

< 25%

Figure 38 below lists the economic issues which were expected and found in Telekom’s SR by seventeen respondents. The expected economic issues which were missing or not presented well enough according to the stakeholders’ opi-nion are listed in Figure 39.

Figure 38: Expected Economic Issues Found in Telekom’s SR (n=17)

35,3%

17,6%

17,6%

17,6%

11,8%

5,9%

5,9%

5,9%

Profit, annual balance, revenue for eachdivision/employee

Goal and strategy of the economicperspective

Business development w ithin each sector &new sub-divisioning w ithin the corporation

Employee structure (i.e. amount of employeein Germany & for the w hole corporation,

Debt reduction

Saving potential

Corporate governance

Position/strength of the company in theEuropean market


Figure 39: Missing or Poorly Presented Economic Issues in Telekom’s SR (n=17)

11,8%

5,9%

5,9%

5,9%

5,9%

5,9%

5,9%

Economic condition (hard financial figures)

Job creation or community development

Sustainability issues measurement (i.e. problems, challenges) &its financial impact on the company

Explanation whether Corporate Governance belongs to thefinancial sector or not

More explanation about company’s economic positioning

Economic aspect of the company as a Global Player wasn’tproperly discussed

Strategies & activities in financial aspect

A comparison of the two previous figures above reveals more contradictions with regard to the following four issues:

1. ‘Profit, annual balance, revenue for each division/employee’ (Figure 38) contradicts with the issue of ‘Economic condition (hard financial figures’” (Figure 39),

2. ‘Goal and strategy of the economic perspective’ (Figure 38) contradicts with ‘Strategies and activities in financial aspect’ (Figure 39),

3. ‘Position/strength of the company in the European market’ (Figure 38) is in contradiction with the issue of ‘More explanation about company’s economic positioning’ (Figure 39), and

4. ‘Corporate governance’ (Figure 38) contradicts with ‘Explanation whether Corporate Governance belongs to the financial sector or not’ (Figure 39).

The comparison of managers statements concerning the sustainability issues that they want to communicate to the Telekom stakeholders as presented in Chapter 4.2.2.6 with the stakeholders statements about the expected environ-mental, social and economic issues that the stakeholders found in the Tele-kom’s SR Figures as shown in Figure 32, 35 and 38, shows that the results match each other. All issues that the managers of Telekom wanted to highlight in the Telekom’s SR are indeed the issues that the Telekom stakeholders wished to see in the Telekom’s SR. But it must be noted that in some cases the


stakeholders would like more detailed information. On the basis of the men-tioned contradictions, such as the contradictory economic issues, and the com-ments on poorly presented and missing environmental, social and economic issues, e.g. with regard to ‘Energy consumption’, ‘Raw material manage-ment/treatment’, ‘Working conditions’, ‘Supply Chain Management’, it can be assumed that the five managers of Deutsche Telekom tried to include favour-able environmental, social and economic issues in the SR. The stakeholders perceived the information as too artificial and demanded more detailed explana-tions. This can lead to the conclusion that the Telekom’s SR does not fully meet the stakeholders’ demands with respect to the environmental, social and eco-nomic issues.

4.2.4.3 Conviction

In this section, the reliability of the information in the Telekom’s SR was ex-plored. Another aspect which was investigated in this section is what the stake-holders think about the quality of the current SR compared with the previous one.

Reliability of the Report

Reliability must be dealt with when analysing sustainability reporting. Thus, the following question was asked:

“Do you think that the information contained in the report is reliable? Or do you have the feeling that Deutsche Telekom uses the report to create a good

image?”

Altogether 28 stakeholders responded to this question. One press agency – as mentioned earlier – did not read the report at all, so that they could not comment on the reliability of the report. The other three stakeholders who did not give an answer either were:

• One certified accountant: They did not rate the reliability because in their opinion the report was incomplete. To them it was not a matter of reliability but of completeness.

• One political NGO/Agenda 21: They felt they could not comment on the reliability of the report because there is no way to prove the information right, which is a typical problem of SR in their eyes.


• One environmental NGO said: They could not comment on this because they think that the report served as PR, which tried to create a positive company image. So the reliability of the report is quite a problematic matter.

Figure 40 illustrates the results of the 28 interviews with regard to this question. It is shown that most of the stakeholders (twenty respondents) stated that they trust the information in the Telekom’s SR (21.4% said ‘very trustworthy’ and 50% said ‘trustworthy’). Three respondents (1 certified accountant, 1 press agency and 1 political NGO/Agenda 21) felt that the Telekom’s SR was not al-ways trustworthy (10.7%). Meanwhile, one respondent (press agency) thought that the report was absolutely untrustworthy (3.6%).

Figure 40: Reliability of Telekom’s SR (n=28)

21,4%

14,3%

10,7%

3,6%

50%

Very trustworthy

Trustworthy

More or less trustworthy

Not always trustworthy

Absolutely untrustworthy

Some comments about the reliability or trustworthiness of the information in the Telekom’s SR:

• “The report was only more or less trustworthy because the valuation of the report was only made by certain persons in a small group” (Em-ployee)

• “We could not mention the scale of trust towards the report contents be-cause the report content was simply not complete. So it was not the matter of trustworthiness, but the matter of completeness” (Certified ac-countant)

• “The information was absolutely untrustworthy because the report was pure PR. We deeply believed that it was pure PR and so nothing can be done to improve the trustworthiness of the report (Press agency)

• “The information was not always trustworthy, for example the story about the cooperation between the company and the Potsdam Institute


for Climate Impact Research. There isn’t any further information about it so it can not be tracked (political NGO/Agenda 21)

• “We could not say anything about the reliability of the information be-cause it was really a typical matter of sustainability reports that there was no way to prove the information” (political NGO/Agenda 21)

• We think that the information was reliable. Although there were some missing information, but we think that the data was very honest. Ho-wever, Telekom should think twice about combining the human re-sources report and the sustainability report because it did not work well. Besides, the report was too thick and too dense and it was difficult to get people to read that” (Authority).

Furthermore, the stakeholders made several suggestions to make the report more reliable and to make the report look more interesting when asked:

“How can the reliability of the report be improved in your opinion?”

“Do you have any idea, what could make the report look more interesting?”

The results are presented in Figure 41 below. The issues are divided into three sections. The first section (upper part) represents issues which could improve the reliability of the report. The second section (middle part) lists issues which can make the report more interesting. The third section (lower part) is a combi-nation of the two.

According to the thirty-two respondents, of the first section the issue ’Compara-ble data (long-term goals, fact and figures) and clear main focus/highlights’ is the most important one. In the second section, respondents thought a ‘Brief report/few texts’ was the most important criteria to make the report more inte-resting. And in the third part, the issue of including ‘Verification from external party with provable norms/standards’ plays the most important role, followed by including ‘stakeholders’ comments’ to improve the reliability of the report as well as to make the report look more interesting.


Figure 41: Improving the Reliability of Telekom’s SR and Making It Look More Interesting (n=32)

34,4%

40,6%

3,1%

3,1%

3,1%

3,1%

3,1%

3,1%

18,7%

6,2%

18,7%

31,2%

50%

Critical issues (problem, weakness, unachievement) ornegative aspect of activi ties

Stakeholders’ comments (in form of preface, commentsfrom customers, etc.)

Veri fication from external party with provablenorms/standards

Utilising proper paper type

Util ising nice/proper color in the report

Explaining cases through interview

Company’s beneficence (sponsoring for cul ture and sport,telephone for kids, etc.)

Avoiding special term/definition or explaining usedterm/abbreviation

Interesting pictures (photos of people) anddiagrams/graphics

Compact/brief report (few texts)

Information on the performance measurement internal ly

Detai l explanation of matters and concreteexamples/practical experiences

Comparable data (long-term goals, fact and figures) andclear main focus/highlights

Two additional opinions about this matter were expressed:

• One press agency suggested that Deutsche Telekom should permit journalists to examine internal data in order to improve the reliability of the report, and

• One environmental NGO said that to improve the reliability of the report, the company should first improve the reliability of the company itself. According to them the reliability of the company had nothing to do with

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the report. The company must prove its reliability in everyday life, which requires time.

As quite a large number of stakeholders rated the Telekom’s SR as ‘more or less trustworthy’, ‘not always trustworthy’ and ‘absolutely untrustworthy’ it can be concluded that Telekom is lacking trustworthiness.

Comparison with the Previous Sustainability Report

After having read the Telekom’s SR, the stakeholders were asked to judge if the current SR is better or worse is than the previous report. The question was:

“Do you think that the new sustainability report is better or worse, compared to the previous one?”

Most of the respondents (64.5% of 31 respondents) were not sure whether the actual SR is better or worse because they had not read the previous report or they could not remember it anymore. Ten of the interviewees (32.3%) stated that the actual SR of the Deutsche Telekom titled “Future driven – The 2003 Human Resources and Sustainability Report” was better compared with the previous SR. Meanwhile, one respondent (3.2%) (financial service provider) said that the current report was worse because it did not contain objec-tives/targets, thus it has no powerful message (Figure 42).

Figure 42: Comparison with the Previous Telekom’s SR (n=31)

32,3%

64,5%

3,2%

0%

Better

Constant (No improvement/Nodegradation)

Not sure/haven’t read/couldn’t rememberprevious SR

Worse

4.2.5 Post-communicative Phase: Effects of Communica-tion by means of the Sustainability Report

In this phase, the effects of communication by means of the sustainability report were investigated. The post-communication phase can be divided into several


sections, which are in accordance with the levels ‘image’ and ‘inten-tion/behavioural tendency’ of the step by step model of communication effects. (Familiarity – Interest – Comprehension – Preference – Conviction and IMAGE – INTENTION/ BEHAVIOURAL TENDENCIES). First of all the ‘the stakeholders’ understanding of the Deutsche Telekom and its activities’ is analysed, as it also considered to be a communication effect of sustainability reporting.

4.2.5.1 Understanding the Corporation and its Activities

At the end of the interviews, it was examined if the stakeholders’ understanding of the Deutsche Telekom and its activities changed after having read the com-pany’s sustainability report. The question was:

“Do you have the feeling that after having read the sustainability report, you now have a different or better understanding of the company and its activities?”

Figure 43 shows that, after having read the Telekom’s SR, almost all of the stakeholders (83.87% of thirty-one respondents) felt to have a better under-standing of the company and its activities (‘definitely better’: 6.45%; ‘better’: 77.42%). Five respondents (1 employee, 1 financial service provider, 1 certified accountant, 1 political NGO-Politics/Agenda 21 and 1 environmental NGO) said that their understanding of the company and its activities had not changed be-cause they already knew a lot about Deutsche Telekom beforehand (16.13%).

Figure 43: Stakeholders’ Understanding of Deutsche Telekom and Its Activities (n=31)

6,45%

77,42%

0%

0%

16,13%

Definitely better

Somewhat better

Neutral

Somewhat worse

Definitely worse

As illustrated above, almost all stakeholders had reached a better understand-ing of Deutsche Telekom and its activities due to the company’s SR. This may also affect the stakeholder perception of the company image.


Most of the stakeholders, who thought that the report was not reliable, also stated that their understanding of the company did not change. There is a clear connection between the two stated facts as it is hardly possible to change a stakeholder’s understanding of a company if that stakeholder does not fully trust the information in the report.

4.2.5.2 Image

With regard to the corporate image the stakeholders were asked:

“Do you have the feeling that after having read the sustainability report, the company image improved in your eyes?”

The degree of effectiveness of the Telekom’s SR in relation to changing the corporate image varies among the different stakeholder groups. Table 9 shows that 77.4% of the thirty-one respondents said that having read the company’s SR their image of the company had improved (6.4%: ‘definitely better’ and 71%: ‘somewhat better’). Meanwhile, six respondents (19.4%) said that the company image did not change. There was one respondent (3.2%), representing ‘autho-rity’, who said that after having read the SR of Deutsche Telekom, they knew the company and its activities better, but the company image was worse. Based on the information in the SR, they concluded that Telekom was not as good as they thought it was.


Table 9: The Corporate Image of Deutsche Telekom according to Each Stakeholder Group (n=31)

Stakeholder group (1)

Definitely better

(2) Somewhat

better

(3) Neutral

(4) Somewhat

worse

(5) Definitely

worse

Employee 5 1

Financial service provider 1 2 1

Certified accountant 1 2 1

Rating agency 5

Press agency 1 1

University/Research institute 1

Authority 1

NGO-Politics/Agenda 21 3 1

NGO-Environmental group 1 1

NGO-Union 1

NGO-Customer protection 1

2 22 6 1 0

6.4 % 71 % 19.4 % 3.2 % 0%

Most of the stakeholders, who thought that report’s reliability was poor and did not perceive any changes in their understanding of the corporation and its ac-tivities, also stated that their perception of the corporate image had not changed either.

To be able to determine on which stakeholder group the Telekom’s SR has the greatest positive effect with regard to improving the corporate image two vari-ables/communication components of sustainability reporting are analysed: ‘trust in the company’ and ‘corporate image’. The variable ‘trust in the company’ de-scribes the stakeholders’ perception of the company before they have read the SR or before they enter the communication process (pre-communicative phase). After having read the SR the stakeholders move on to the communicative phase, which analyses the communication effects of the SR and how it may change the corporate image. The stakeholders’ perception of the variable ‘cor-porate image’ represents the post-communicative phase. The comparison of these two variables of pre-communicative and post-communicative phase en-ables the author to determine the stakeholder group which is influenced most by the SR.

The following table presents the comparison between the variable ‘trust in the company’ and ‘corporate image’:


Table 10: Comparison between ‘Stakeholders’ Trust in the Company’ and ‘Corporate Image’ of Deutsche Telekom

Scales of attitude Stakeholder (n=31)

(1) (2) (3) (4) (5) Variables of SR

100% Trust in the company Employee (6)

83.3% 16.7% Corporate image 100% Trust in the company

Financial service provider (4) 25% 50% 25% Corporate image 25% 75% Trust in the company

Certified accountant (4) 25% 50% 25% Corporate image

80% 20% Trust in the company Rating agency (5)

100% Corporate image 50% 50% Trust in the company

Press agency (2) 50% 50% Corporate image 100% Trust in the company

University/Research institute (1) 100% Corporate image 100% Trust in the company

Authority (1) 100% Corporate image 75% 25% Trust in the company

NGO-Politics/Agenda 21 (4) 75% 25% Corporate image 50% 50% Trust in the company

NGO-Environmental group (2) 50% 50% Corporate image 100% Trust in the company

NGO-Union (1) 100% Corporate image 100% Trust in the company

NGO-Customer protection (1) 100% Corporate image

Scale of ‘Trust in the company’: (1) Very trustworthy (2) Trustworthy (3) More or less trustworthy/No comment (4) Not always trustworthy (5) Not trustworthy at all

Scale of ‘Corporate Image’: (1) Definitely better (2) Somewhat better (3) Neutral (4) Somewhat worse (5) Definitely worse


Table 10 illustrates for example that all of the interviewed employees of Deutsche Telekom (100%) consider the company to be trustworthy before ha-ving read the SR. After having read the SR, five employees (83.3%) felt that the corporate image is somewhat better, whereas one employee (16.7%) felt that the corporate image stayed the same. This illustration shows that the emplo-yees’ perception of the Deutsche Telekom changed and that the Telekom’s SR does not have a large positive effect on the employees.

The results in Table 11 also show that Telekom’s SR has different effects on the stakeholder groups in relation to the corporate image. Altogether, according to the following stakeholder groups the Telekom’s SR has a positive effect on the corporate image:

• Financial community (Certified accountant and Rating agency) and

• NGOs (NGO-Politics, NGO-Environmental group, NGO-Union and NGO-Customer protection)

For the following groups the corporate image stayed the same:

• Press agency and

• University/Research institute.

Even though Telekom’s SR influenced the corporate image of the stakeholder group “Authority” negatively, in general, it can be concluded that Telekom’s SR “Future-driven: The 2003 Human Resources and Sustainability Report” has a positive effect by improving or maintaining the corporate image of Deutsche Telekom.

4.2.5.3 Intention/Behavioural tendencies

Finally, the SR’s effect on the stakeholders’ intentions or behavioural tendencies towards the company is analysed. This refers to the stakeholders’ attitudes and activities towards the Deutsche Telekom. The interviewees were asked:

“What are your intentions after having read Deutsche Telekom’s sustainability report?”

The interview results show that Telekom’s SR works affect the internal stake-holders (employees) better than the external stakeholders. Based on the results of the interview, it can be concluded that Telekom’s sustainability reporting af-fects the employees’ motivation. Some employees made the following state-ments:


• “Sustainability report boosts my working motivation”

• “I intend to try my best to maintain a good work with my colleagues so that in the next publication of the report, in particular in the field of Health and Safety at Work in which we were involved, there will be a good documentation, at least the same quality with the one in this year’s report”

• “The report strengthens my competency in my relation with customers. After having read the report, I have more background information about the company and that gives me also a kind of working motivation, a kind of self confidence to represent the company to the external party”

• “The report was such a trigger to react to the weaknesses of the division I represent. The report is a stimulus to react or to transform ideas into actions”

• “I use the report as a special information media to understand what can be improved and what contribution the employees can give to the com-pany”

Of the interviewed external stakeholders two pointed out that they will act on Deutsche Telekom SR i.e.:

• One financial service provider mentioned that Telekom is taking part in their fund system. They pointed out that more company participation will be considered if the analysis of Telekom’s performances is better than in the previous years.

• One authority body stated that they will respond immediately to the Head of the Department of Corporate Citizenship and Sustainability to make suggestions and offer help in improving some aspects, especially concerning the ‘Supply Chain Management’.

The other external stakeholders (certified accountants, rating agencies, the press, university/research institute, NGOs and some of the financial service providers) mentioned that they are not prompted to change their behaviour to-wards Telekom and will continue with their business as usual.


4.3 The Interrelations of the Communication Compo-nents of Telekom’s Sustainability Report

As has been mentioned in section 3.3.2, dealing with the dependencies of the various variables of sustainability reporting, the data gained from the closed questions were analysed by means of the contingency coefficient technique.

For example, the answers of the 31 respondents to the questions about the ‘length of the report’ and ‘percentage read of the report’ can be compared and put into relation (see Table 11). In this case, there are 5 rows (r) and columns (c):

Possible answers for rows (r) (length of the report): (1) very appropriate (2) appropriate (3) only quite appropriate (4) inappropriate (5) entirely inappropriate

Possible answers for columns (c) (percentage read): (1)100% of the report (2) 75% or more (3) 50% or more (4) 25% or more (5) less than 25%.

Using the formula 3.3 ( NEij

ijBx −=²² ), we can obtain the value of x² as follows:

86.193186.5017915² =−→=−= CHABx

With the help of x², the Pearson contingency coefficient (C) can now be deter-mined using the formula 3.5. Subsequently, the (C) correction of the variables ‘length of the report’ and ‘how much is read’ can be achieved by applying for-mula 3.6:

)1)(²(²

−+⋅

=mNX

mXCcorr

70.019)15)(917(

)517(==

−+⋅

= CHC

CCcorr


Table 11: Contingency Coefficient Table of the Relation between ‘Length of the Report’ and ‘Percentage Read’ of Deutsche Telekom’s SR (n=31)


From this calculation, we obtain the value of contingency coefficient of ‘length of the report’ and ‘percentage read’ equals 0.70. This means that there is a strong positive relation between these two variables of sustainability reporting379.

To better describe the relation between these two variables, the author presents them in the figure below. It shows clearly the positive and strong relation bet-ween the variables ‘length of the report’ and ‘percentage read’.

Figure 44: Cloud Figure Showing the Relation between the Two Variables ‘Length of the Report’ and ‘Percentage Read’

By applying the same procedure, the contingency coefficient of other statements can be obtained, too. The calculated correlations between variables or commu-nication components of sustainability reporting are as follows:

• Trust in the company – feeling of being addressed by the report (Ccorr = 0.74)

• Trust in the company – interest in sustainability report (Ccorr =0.73)

379 Kühnel and Krebs 2001:402.

Inappropriate (4) Appropriate (2)

Percentage read (%)

Length of the report

100% (1)

75% or more (2)

50% or more (3)

25% or more (4)

Less than 25% (5) ● ●

●● ● ● ●

● ●●●●●●

●●●

●●●

●● ●●●

●●●●●●

Entirely inappropriate (5) Only quite appropriate (3) Very appropriate (1)


• Feeling of being addressed by the report – interest in the sustainability report (Ccorr = 0.87)

• Interest in the report – how much is read (Ccorr = 0.83)

• Trust in the corporation – how much is read (Ccorr = 0.61)

• Feeling of being addressed by the report – how much is read (Ccorr = 0.77)

• Length of the report – time spent on reading the report (Ccorr = 0.65)

• Length of the report – how much is read (Ccorr = 0.70)

• Language style – Readability (Ccorr = 0.47)

• Font type and size in the report – Readability (Ccorr = 0.82)

• Language style – Reading enjoyment (Ccorr = 0.62)

• Structure of the report – Readability (Ccorr = 0.65)

• Structure of the report – Reading enjoyment (Ccorr = 0.75)

• Font type and size in the report – Reading enjoyment (Ccorr = 0.72)

• Design and colour of the report – Reading enjoyment (Ccorr = 0.56)

• Readability – Reading enjoyment (Ccorr = 0.70)

• Expected environmental issues found in the report – Reading enjoyment (Ccorr = 0.52)

• Expected social issues found in the report – Reading enjoyment (Ccorr = 0.73)

• Expected economic issues found in the report – Reading enjoyment (Ccorr = 0.52)

• Trust in the company – Reliability of the report (Ccorr = 0.73)

• Feeling of being addressed by the report – Reliability of the report (Ccorr = 0.83)

• Understanding of the company and its activities – Corporate image (Ccorr = 0.90)

• Trust in the company – Corporate image (Ccorr = 0.76)

Furthermore, the variables of SR are subdivided into categories according to the three phases of communication: pre-communicative phase, communicative phase and post-communicative phase. Figure 45 illustrates the relation among communication components of Deutsche Telekom AG sustainability reporting.


Figure 45: The Interrelation of the Communication Components of Sustainability Reporting at Deutsche Telekom AG


Based on the illustration of the relations among variables or communication components of sustainability reporting as shown in Figure 45, several points can be made:

1. Relation between Pre-communicative phase and Communicative phase:

Figure 45 shows that variables or communication components of the pre-communicative phase of sustainability reporting, such as ‘interest in sus-tainability report’, ‘feeling of being addressed by the report’, and “trust in the company’ have a large positive effect on the variables of the SR’s commu-nicative phase, i.e. ‘how much is read of the SR’. The correlation between the three variables of the pre-communicative phase with the variable of the communicative phase is:

• ‘interest in SR in general’ and ‘how much is read of Telekom’s SR’ = 0.83

• ‘feeling of being addressed by the Telekom’s SR’ and ‘ how much is read of Telekom’s SR’ = 0.77

• ‘trust in Deutsche Telekom’ and ‘how much is read of Telekom’s SR’ = 0.61

The calculation of the contingency coefficient above shows that the variable ‘interest in SR in general’ influences the stakeholders most to read the Deutsche Telekom’s SR. Another variable that strongly affects the variable ‘how much is read of Telekom’s SR’ is the ‘length of the Telekom’s SR’ (0.70).

2. Relations among variables of sustainability reporting that help improve or maintain the corporate image:

The readability of the Deutsche Telekom’s SR depends mainly on three variables380:

• Structure of the report

• Font type and size utilised in the report (0.82)

• Partly related to design and colour of the report (0.55)

Meanwhile, there are a number of aspects that are related to the reading enjoyment of Telekom’s SR:

• Structure of the report (0.75)

380 The reading easiness of the Deutsche Telekom’s SR is only a minor part related to the “Language style” (0.47).


• Font type and size (0.72)

• Language style (0.62)

• Length of the report (0.62)

• Partly related to Design and Colour (0.56)

• Social issues which the readers expected (0.73). The environmental (0.52) and economic (0.52) issues are only partly related with the reading enjoyment. Thus, it can be interpreted that the stakeholders of Deutsche Telekom are more interested in social issues rather than the other issues.

The language style is more related to the reading enjoyment (0.62) than to the readability (0.47). In turn, the font type and size are more related to the read-ability (0.82) than to the reading enjoyment (0.72).

The reliability of the information in the Telekom’s SR is strongly related to the following two aspects: ‘trust in the Deutsche Telekom’ (0.73) and ‘feeling of be-ing addressed by Telekom’s SR’ (0.83).

Figure 45 also shows that the corporate image of Deutsche Telekom is related to two variables of SR:

• ‘Understanding of the company and its activities’ after having read the SR (0.90) and

• ‘Trust in the company’ (0.76).

These calculations of the contingency coefficients illustrate that by means of sustainability reporting, Deutsche Telekom can improve its corporate image as shown by the strong relationship between ‘understanding about the company and its activities through a sustainability report’ with the ‘company image’ (0.90). Thus, the contribution of Deutsche Telekom’s sustainability reporting to the im-provement of its corporate image is larger than the contribution of the Telekom’s activities relating to its stakeholders, which is represented by the variable ‘trust in the company’ (0.90 to 0.76).

164 Sustainability Reporting at Weleda AG

5 RESULTS AND DISCUSSIONS OF CASE STUDY 2: SUSTAINABILITY REPORTING AT WELEDA AG

In the previous chapter, the reader was briefly acquainted with Deutsche Tele-kom AG and presented with the results of the interviews with the company’s managers and stakeholders. Similar to Chapter 4, this chapter includes a short description of Weleda AG and summarises the results of the interviews with the managers and stakeholders of Weleda AG. This chapter ends with an illustra-tion of the relationship between the communication components of sustainability reporting at Weleda, measured using the contingency coefficient technique.

5.1 Weleda AG

Weleda was established in 1920. It is a Europe-wide operating company group that serves to maintain and strengthen human health. Weleda develops and sells medicines, dietary and personal hygiene381as it was successfully applied to the medical industry382 by Rudolf Steiner and Ita Wegman.

Anthroposophy as a science of the mind completes the materialistic nature and earth vision, which refer to the physics with extrasensory perception levels: life, soul and mind. On this basis, Weleda develops in its business its appliances, production processes, social form and business practices. Through its activities, Weleda seeks to contribute to the improved health of the living organisms on earth. Hence, Weleda runs a bio-dynamic cultivation for its medicinal plant cul-ture, and considers biodiversity protection in its wild plant collection. Further-more, Weleda pays careful attention to all aspects of environmental protection and environment-oriented requirements383.

In 1924, Weleda had only 12 employees in Schwäbisch Gmünd. The company has grown significantly from year to year. In 1980, the turnover was approxi-mately 19 million EUR; in 1990 36 million EUR with 410 employees. The as-sortment from the pharmaceutical, cosmetic and dietary field consisted of over

381 Anthroposophy was derived from anthropos (man) and sophia (wisdom), in reference to the wisdom that comes to humans when they are able to perceive the spiritual as well as the material world (Jarvis (http://ww.ncahf.org/articles/a-b/anthrohtml)). 382 Weleda AG (http://www.weleda.de/Unternehmen/Qualitaet.htm). 383 Ibid..

Sustainability Reporting at Weleda AG 165

10,000 different products. In 1992 it employed 446 workers. The company con-tinued to grow and in 2002, it had 570 employees working in Schwäbisch Gmünd384.

In 1996, Weleda passed an environmental audit, meeting the requirements of the EG-Eco-audit regulation and the globally recognised environmental mana-gement norm ISO 14001. In this year, an interview in the pharmaceutical maga-zine confirmed Weleda as “the best pharmacy partner in the field of supple-mentary therapeutics”, and Weleda also achieved first place in the category ‘most recommended’ in the pharmacy field. In 1997, Weleda was again awarded the title ‘best pharmacy partner in the field of supplementary therapeutics’. Weleda also received the prize ‘product of the year 1997’ at the Bio-Fair for children’s toothpaste385.

Weleda is very concerned with nature protection. Starting on January 1st 2001, Weleda began utilising green electricity. The entire electricity demand was met by regenerative energy sources (Naturstrom AG). The result was a saving of 2000 t carbon dioxide386.

Again and again Weleda received praise for its products. Öko-test rated Weleda’s Wild Rose Day and Night Care and Ratanhia Mouthwash ‘very good’. The Calendula Children Series was ranked ‘very good’ four times by Öko-test. The Stiftung Warentest rated Weleda’s moisturising Iris Day Cream ‘very good’. According to a consumer interview in the Reader’s Digest’s ‘European Trusted Brands 2002’, Weleda was praised as one of the top three skin care brands in which German consumers trust387.

5.2 The Effectiveness of Weleda’s Sustainability Re-porting

This part begins with a concise description of the Weleda stakeholders who were successfully interviewed and those who were not (The description of Weleda managers can be found in Chapter 3.1.2.1). The interview results will then be presented, beginning with the Weleda managers’ perceptions of the stakeholders and SR in general. Subsequently, the interview results with the Weleda stakeholders are discussed, revealing the stakeholders’ understanding of Weleda and SR in general. This section concludes with the presentation of

384 Weleda AG (http://www.weleda.de/Unternehmen/Topbar.htm). 385 Ibid. 386 Ibid. 387 Ibid.


the stakeholders’ acceptance of the contents of Weleda’s SR and the effects of communication through Weleda’s SR.

5.2.1 The Interview Partners

As described in Chapter 3.1.2.2, there were 8 managers and 48 internal and external stakeholders on the list of interviewees developed by the author.

Unfortunately not all persons/organisations on the list of stakeholders could be interviewed due to the following reasons:

• All of the customers (drugstores, bio market, natural food/product shops, etc.) claimed that they had no time to read the report and could not spare time for the interview. One customer even asked for some money for the interview.

• One member of the Advisory Board refused the interview without providing any explanation. Another one could not be reached despite several phone calls.

• One NGO could not be reached after several attempts.

• One authority body refused the interview on the grounds that they did not consider themselves being a stakeholder in the company. Another one could not be reached despite several phone calls and e-mails.

• Two universities could not be reached despite several phone calls and e-mails.

• Two press agencies, one union, two industrial consultants and two financial service providers said that they did not have time for the inter-view.

Thus, 8 managers and 30 internal and external stakeholders388 were inter-viewed successfully. These 30 internal and external stakeholders consisted of:

• 4 employees

• 5 suppliers

• 2 members of Advisory Board

• 2 press agencies

• 5 NGOs

• 2 authorities

• 2 universities/research institutes

• 3 unions

• 1 health insurance company

• 2 industrial consultants, and

• 2 financial service providers

388 The names of the stakeholders will not be shown in this report as there was a confidentiality agreement made between the author and the respondents.


The interviewed stakeholders were not only located in Germany, but also in Switzerland.

The results of the interviews with Weleda managers and stakeholders are pre-sented in the following sections. Unfortunately, due to a number of reasons, not all 30 stakeholders interviewed could provide answers to all of the questions. However, this does not have a large influence on the research results because the assessment of the interview was not based on each manager or each stakeholder group, but was made for each of the groups as a whole; for the manager and for the stakeholder group.

5.2.2 Managers’ Perceptions of the Sustainability Report and Corporate Stakeholders

The division of this part is similar with the division of Chapter 4.2.2 which deals with Weleda managers’ view on the definition of sustainability report, the im-portance and value of the SR, the motives and goals of Weleda’s sustainability reporting, the Weleda significant stakeholders, the issues that should be medi-ated to stakeholders, and the company image. Moreover, the making process, distribution, contents of Weleda’s SR, and the Weleda managers’ opinion to improve the SR are also presented.

5.2.2.1 Understanding the Term ‘Sustainability Report’

All eight managers were involved in the development process of the sustainabi-lity report, and had more or less the same opinions on the definition of sustain-ability report. According to them, sustainability report could be understood as:

“A reliable report that presents and documents the company’s vi-sion, strategies, goals and actions across the three dimensions of sustainability to its stakeholders. The report should also present how the company lives with its anthroposophical perspectives, what has been done and what has not been achieved”.

5.2.2.2 The Importance and Value of Sustainability Reporting

It could be concluded from the interviews that SR was important for Weleda because the report was part of the company philosophy (four managers said


that it was very important for the company, three managers said that the report was important and one manager said that the report had only an average grade of importance).

Almost all managers believed that SR, due to its contents, is more valuable than other kinds of reports such as financial, environmental and social reports. None of them said that SR has less value than financial, social or environmental re-porting. Some statements made by managers in relation to the value of SR:

• “The sustainability report covers not only more aspects of sustainability, but also presents how the company works in all aspects of sustainabi-lity, which in other words gives a better portrait of the company”

• “An environmental report was prepared only for a specific stakeholder group, but SR can be distributed to a wide range of stakeholder groups”

• “A financial report only describes the economic part, but a sustainability report brings a vision and also an attempt to link economic, environment and social together. A sustainability report describes the impact of eco-nomic activities to ecology, to social, and vice versa”

However, one manager was not certain of the value of sustainability report in comparison to the other kinds of reports. But this manager was sure that SR covers more aspects than other reports. From this manager’s point of view, SR more comprehensive than the social or environmental report.

5.2.2.3 Motives for and Goals of Sustainability Reporting

The Weleda managers mentioned a number of motives for sustainability re-porting as follows:

• Showing transparency to internal and external stakeholders (also by presenting critical themes in the report)

• As part of company’s culture and philosophy to run business in a sustainable manner and to produce SR

• A must to fulfil stakeholders’ demands especially customers

• Formal motive to fulfil the obligation of EMAS II to publish environ-mental report as part of SR

• Following the motto “Do the right things and tell them”

• Differentiating from other companies/positioning in the market

Meanwhile the goals of Weleda’s sustainability reporting are:


• Improving the understanding about Weleda and its activities by present-ing trustable information in the report

• Improving the company image

• Affecting intention/behavioural tendency especially to customer and em-ployee

5.2.2.4 The Most Important Stakeholders

The managers, those responsible for SR, said that their corporate SR was ad-dressed to all stakeholder groups (customers, employees, authorities, financial communities, health insurance companies, NGOs, suppliers, press agencies, etc.). Nevertheless, Mr. Biller, in his capacity as Head of Environmental Office, with the greatest responsibilities in relation to sustainability reporting at the Weleda AG, explained that the stakeholders, according to their importance to the company with regard to sustainability reporting, could be listed according to three groups, contained in Table 12 below.

Table 12: Corporate Stakeholders of Weleda AG

Group 1 Group 2 Group 3 Employee, Supplier,

Advisory Board, Customer

NGO, Press agency, Authority, Univer-

sity/Research insti-tute

Union, Consultant, Health Insurance company, Financial Service Provider

It could be concluded from the interviews with these managers that the report was not oriented towards meeting the specific information interests of one or two stakeholder groups. They mentioned:

• “If one would articulate that specific information should be prepared for a specific stakeholder, that was definitely not the case at Weleda”

• “The report was prepared in such a way so that there were interesting themes for each and everyone”

5.2.2.5 The Making Process

The environmental committee of Weleda AG discussed the environmental goals and actions every year. The reporting process began with discussions between the Head of Environmental Office and representatives from several departments


in order to decide what themes were relevant, important and interesting for the SR. These included goals which have been defined, actions which have been taken, achievements which have been accomplished and also goals that were not achieved. In this phase they also worked together with an external consul-tant. They tried to tie the latest report in with the previous one. Then they started the internal data collection. Subsequently, the company contracted an external firm to create the design and layout. Afterwards, the company (each depart-ment) made several corrections to the contents. Another external firm also took part in correcting the spelling (orthography). It took six months – from March to August 2003 – to create the sustainability report. Finally, in September 2003 the Weleda sustainability report ‘Tranparenz 3’ was published.

External stakeholders participated indirectly in the reporting process, but they argued that they have a very good relationship with the stakeholders, for exam-ple through their joint projects. However, the reporting process was primarily an internal task. They also mentioned some studies considered during the report-ing process. One of these studies was that of Kohtes and Klewes, entitled “Was ihr wollt” (‘What the stakeholders want’), which was conducted to survey the stakeholders’ information needs in relation to SR. There was also cooperation with an expert from FH-Nürnberg who masters the field of report writing in the sustainability reporting process.

The managers admitted that they very much oriented the report along the Guideline of IÖW/imug because Weleda was part of the pilot project in the crea-tion of the IÖW/imug’s Guideline. They also said that in the future they would create the report not only according to the IÖW/imug Guidelines, but also inter-national guidelines, such as CSR and GRI. The ISO 14001 standard was also considered in the reporting process, especially the part relating to environmental management systems.

5.2.2.6 The Contents of the Report and Communicated Sustain-ability Issues

The report consists of 52 pages (including the report cover). The very first page features a preface by Prof. Ernst Ulrich von Weizsäcker – former President of the Wuppertal Institute for Climate and Energy and author of the book ‘Faktor Vier’ (‘Factor Four’), who is currently a member of the German Parliament. The next page contains the CEO statement which describes the vision and strategy of Weleda. The table of contents is inserted at the bottom of this page.

Principally, Weleda divides its SR ‘Transparenz 3’ into four main sections, namely environmental, economic, social, as well as a rewards and sustainable


projects section. Weleda presents a kind of dialogue between two competent persons from the company as a prologue for each section, complete with photos of these dialogue participators, which is then followed by the content index. A dialogue between Mr. Biller (Head of Environmental Office) and Ms. Blank (one of the teachers in the company’s kindergarten) precedes the environmental part. An interview between Mr. Frisch and Mr. Schneiders (Head of Purchasing De-partment) leads the reader to the economic part, and finally, a dialogue between Dr. Peschke from the medicinal science department and Mr. Urbschat (person in charge in the area of staff development) provides a foreword to the social part.

Weleda distributes the themes of company profile, governance structure, ma-nagement systems, stakeholder engagement and communication, and perform-ance between the environmental, economic and social sections. The theme of achievements, awards and sustainable projects are featured in the last section ‘rewards and sustainable projects’. The themes within these four sections are listed in the Table 13.

In each section, Weleda presents the goals, implemented actions, responsible departments and status of achievement. Readers can see the ISO 14001 certifi-cate and validation of environmental report in the environmental section. Weleda also points out the highlights of each section in tabular or graphic form.

Many photos are included in the report. Each content index is presented in dif-ferent colours: yellow for the environmental part; purple for economic; blue for the social; and green for the reward and sustainability projects part.


Table 13: Contents of the Weleda’s SR ‘Transparenz 3’

Rew

ard

and

Sus

tain

abi

lity

Pro

ject

s S

ectio

n

1. E

co M

ana

ger

2002

2. W

eled

a P

rize

for

Env

iron

men

t an

d H

eal

th

3. R

ose

culti

vatio

n pr

ojec

t in

Tur

key

4. R

atan

hia

pro

ject

in P

eru

Soc

ial S

ectio

n

1.

Wor

kin

g pl

ace

2.

Wor

kin

g tim

e

3.

Hea

lth c

are

4.

Wor

kin

g sa

fety

5.

For

eig

n st

aff

6.

Han

dica

p st

aff

7.

Ed

ucat

ion

8.

Hig

her

edu

catio

n pr

actic

e

9.

Com

pan

y’s

day

car

e fa

cilit

y fo

r ch

ildre

n

10. P

aren

t tra

inin

g

11. C

lture

life

12. S

ocia

l pro

gram

20

03

Eco

nom

ic S

ectio

n

1.

Mar

ket

and

prod

ucts

2.

Res

ear

ch a

nd

deve

lopm

ent

3.

Qua

lity

4.

Su

pplie

r re

latio

ns

5.

Dis

trib

utio

n of

val

ues

6.

Eco

logi

cal a

cco

untin

g

7.

Sus

tain

abi

lity

and

corp

orat

e st

rate

gy

8.

Su

pply

Cha

in

Man

age

men

t

9.

Sta

ff d

evel

opm

ent

10. E

con

omic

pro

gram

200

3

Env

iron

men

tal S

ectio

n

1.

Dev

elo

pme

nt o

f env

iro

nme

ntal

pr

otec

tion

2.

Env

iro

nmen

tal g

uide

lione

3.

Env

iro

nmen

tally

-ori

ente

d th

inki

ng

and

actio

n (E

nvir

onm

ent

al

resp

ons

ibili

ty, E

nvir

onm

ent

al

man

age

men

t, E

nvir

onm

ent

al &

su

stai

nabi

lity

com

mun

icat

ion)

4.

Eco

-bal

anc

e

5.

Env

iro

nmen

tal i

ndic

ator

s

6.

Raw

mat

eria

l (E

colo

gica

l raw

m

ater

ial c

ultiv

atio

n, M

edi

cal p

lant

ga

rde

n, B

iodi

vers

ity p

rote

ctio

n)

7.

Pac

kagi

ng

8.

Haz

ardo

us m

ate

rial

9.

Wa

ter

and

sew

age

10. E

nerg

y

11.

Was

te

12. E

mis

sion

13.

Tra

ffic

& tr

ansp

ort (

Com

mut

er

traf

fic, r

aw m

ate

rial

& p

rodu

cts

deliv

ery)

14. S

ites

and

bui

ldin

gs

15. E

nvir

onm

enta

l pro

gram

Source: Weleda AG Schwäbisch Gmünd 2003.


As can be seen in Table 13, Weleda focuses firstly on the environmental sector, then on the social sector and lastly on the economic sector.

The report makers mentioned that there were some specific issues that they wanted to mediate in the SR which are listed in the following:

• Raw material management and procurement (natural resource policy)

• Medicinal plant protection and cultivation to yield a high product quality

• Energy management

• Environmental programs, goals and guidelines

• Product declaration/customer protection (information about raw material utilised in the product)

• Profit and expenses

• Economic programs and strategies

• Water management and consumption (e.g. consumption of drinking wa-ter)

• Building management (room stoking)

• Social program

• Amount of employee

• Education and training for parents

• Health care

• Family and wok program

• Sustainability project

• Cooperation with partners

• Integration among sustainability dimensions

5.2.2.7 The Distribution Process

Besides the printed-version, four further alternatives for the distribution of the SR were provided by the report makers. One alternative was to present the SR in the form of a more modern media, through the internet or as a CD (Compact Disc). As yet, the report has only been published in the internet (in PDF-format). Almost all agreed that even though there are several ways to publish the report, none can replace the print version completely. Some argued that if people have


the report in print form (something that they can see and feel with their hands), they would be more pleased. They added that the company also has to notify potential readers that they can find the information in the internet. Otherwise they may not come across it. The information provided in the internet is also a useful means of supplying further explanations regarding the contents of the report, such as to give more detail information relating to specific projects. Be-sides, through the publication in internet, stakeholders can choose for them-selves the information they need. Two report makers desired another alternative to the comprehensive print version, namely a brochure as a form of report summary. One manager thought that the only suitable option was the print ver-sion.

The company has produced 6,000 reports to be distributed to the internal and external stakeholders. As a medium enterprise running its business mostly in Germany and Switzerland, Weleda AG Schwäbisch Gmünd published its SR in German only. There were several ways of distributing the reports. The first one was to send the reports to all of the names on the stakeholder list. The reports were also sent to all departments/divisions, to the advisory board and to the environmental committee. The second was to distribute the reports at events, such as the ‘Weleda Open House Day’, which took place at the end of Septem-ber 2003. The third was to send the reports on request. The report can be re-quested through Weleda customer services or via internet. The last method was to store the reports at the front office. So, any visitors to the company can take a copy home.

The Weleda SR ‘Tansparenz 3’ can be ordered at www.weleda.de or down-loaded at http://www.weleda.de/images/Unternehmen/Transparenz 3.pdf

5.2.2.8 Corporate Image from the Managers’ Point of View

From the interviews with the managers of Weleda, it can be concluded that the corporate image is very positive (two said very positive; four said between posi-tive and very positive; and the other two said positive). One manager said that the ‘Weleda Open House Day’ at the end of September 2003 received 20,000 visitors. He claimed this would not have been the case if Weleda did not have a positive corporate image.

The results of the interviews show that managers believed that the stakeholders can obtain from the sustainability report the information they desire without diffi-culty. Some managers’ argumentations for this are:


• “The report is based among other things on a public survey, so the re-port content has been compiled in such a way that everyone will find his/her theme”.

• “There were some conversations with and feedback from stakeholders, especially with customers, through which the report was complimented”.

• “At the ‘Weleda Open House Day’ I met some customers and they said that the company has done and achieved a lot of things”.

• The Head of the Human Resource Department said, “I had many conversations with applicants who considered sustainability to be an important thing. The applicants said that they were interested in working at Weleda because Weleda represent their interests”. He further said that, “Based on this, I presume that the information in the SR would reach the stakeholders very well. I also had some conversations with company visitors who gave compliments that they found it very good, how the company dealt with its resources”.

5.2.2.9 Improving the Sustainability Report

The managers had different opinions on the issue of improving the report. Some said that there was nothing more to do with the report. They said that what the report makers produced was very successful and the report was already very good. However, some others said that there were several things that can be done to make the report better, as shown below:

• Improving source of data, process of data collection and editorial pro-cess

• Presenting the report in an interactive way through the combination of internet and paper version

• Making the report briefer

• Placing a better picture for the cover of the SR

5.2.3 Pre-communicative Phase: Stakeholders’ Perception of the Corporation and Sustainability Report

The division of this section is similar to the division of the pre-communicative phase in Chapter 4.2.3. It starts with the step ‘familiarity’ which contains know-


ing the corporation and trust in it, familiarity with and understanding of the term ‘sustainability report’, value of the sustainability report in comparison with other kinds of reports, feeling of being an addressee of company’s sustainability re-port, and intention of corporate sustainability reporting from the stakeholders’ point of view. Afterwards, the variable stakeholders’ interest in SR in general is presented.

5.2.3.1 Familiarity

Knowing the Corporation and Trust in It

The stakeholders were asked the following question to determine their familiar-ity with the Weleda AG:

“What do you know about the company (Weleda)?”

Many answers were gained from the stakeholders. All of the respondents claiming to be familiar with the Weleda AG, associated the company with a number of features389 (see Figure 46).

389 One authority body, which is listed in the Weleda stakeholder list but could not be interviewed, mentioned that they did consider themselves to be stakeholder in Weleda.


Figure 46: Stakeholders’ Association with Weleda (n=23)

73,9%

52,2%

34,8%

8,7%

8,7%

8,7%

8,7%

4,3%

4,3%

4,3%

4,3%

4,3%

4,3%

4,3%

4,3%

4,3%

4,3%

26%

13%

13%

High quality natural medicine & cosmetic producer (nature-based product producer, proved by Öko-Test)

Anthroposophist (Walldorf/Steiner) philosophy

Headquartered in Schwäbisch Gmünd, Germany

Excellent production process (environmental friendly process,based on approved standards)

Production sites in France, Germany and Switzerland

Excellent working condition & working security

Utilising only natural not synthetic materials

Innovative in product development (market & customer’sneeds oriented)

Receive many awards (i.e. CEO awarded as Manager of theYear 2002)

Sell products in drugstores, pharmacies & naturalfood/product shop

Relative high prices products

Pioneer in the field of sustainability

Support the protection of plant biodiversity (medicinal plants)

Excellent energy concept

Oriented mostly on health not economic aspect (profit)

Trustable company (Always do what it says)

Developing business world wide

Small amount of employees (250)

Many projects

Take loan from GLS Bank

* One press agency did not comment on this and several employees mentioned only


that they knew much about the company but provide any details. So, in total, only 23 organisations/persons listed the features they associate with the company.

The issue of familiarity with the company was then related to the variable ‘trust in the company’. The stakeholders were requested to give an answer to the question:

“Do you think the company is trustworthy?”

The results of the interviews with thirty stakeholders show that the level of trust in the Weleda AG varied from ‘very trustworthy’ (60%), to ‘trustworthy’ (36.67%), to ‘more or less trustworthy’ (3.33%) (see Table 14).

Table 14: Stakeholder Trust in Weleda (n=30)

Stakeholder group

(1) Very trust-

worthy

(2) Trustworthy

(3) More or

less trust-worthy / No comment

(4) Not always trustworthy

(5) Not trust-

worthy at all

Employee 1 3

Supplier 1 3 1

Advisory Board 1 1

Press agency 1 1

NGO 5

Authority 2

University/Research institute 1 1

Union 3

Health insurance company 1

Industrial consultant 2

Financial service provider 2

18 11 1 0 0

60 % 36.7 % 3.3 % 0% 0%

From Table 15, one can conclude that a great number of respondents trust Weleda, and none mistrust the company. All industrial consultants stated that based on their cooperation and experiences with Weleda, they are convinced that the company is very trustworthy. This table indicates that Weleda has built quite a strong and mutual relationship with its stakeholders, which results in a high degree of stakeholder trust in the company.

A cross-check of the stakeholder responses to the matter of ‘stakeholder trust in the company’ with those of ‘corporate image from the managers’ point of view’ shows that there is a match between how the Weleda managers see the com-


pany (Weleda AG) and the stakeholders’ perception. The interview results show that all of the Weleda managers viewed the corporate image as positive. This is confirmed by the stakeholders’ trust in the company, with almost all of the Weleda stakeholders (96.7%) mentioning that they can trust the company (most of them even claimed a high level of trust in Weleda, 60% of the 30 respon-dents).

The points made above indicate that Weleda as a medium-sized enterprise knows its stakeholders quite well and has maintained good relationships with its stakeholders, which is shown by the high level of stakeholder’s trust in Weleda.

Familiarity with the Term ‘Sustainability Report’

The stakeholders were asked the question:

“Have you ever heard the term ‘sustainability report’ before?”

From the interviews with thirty respondents, it was identified that most of the stakeholders (63.3%) were familiar with the term ‘sustainability report’ whereas 36.7% were not familiar with this term.

All two interviewed members of the advisory board, two press agencies, two authority bodies, one university, one research institute, one health insurance and two financial service providers stated that they had heard the term ‘sustain-ability report’ before.

Some of the stakeholders not familiar with the term ‘sustainability report’ in-cluded two employees, one NGO, and one union. All five suppliers interviewed and two industrial consultants for the Weleda AG were also unfamiliar with the term ‘sustainability report’.

These interview results indicate that Weleda as a medium-sized enterprise is surrounded with numerous stakeholders, consisting of professionals and non-professionals, who are not dealing with the theme of sustainability reporting in their work.

Understanding the Term ‘Sustainability Report’

The question posed in relation to this matter was:

“Can you please define the term ‘sustainability report’ with your own words?”

Unfortunately, there were only twelve stakeholders who commented on this. From the interviews with these twelve respondents, one can conclude that al-most all respondents (83.3%) could provide an accurate definition of sustain-


ability report. The remaining 16.7%, however, associated sustainability report with the environmental dimension only (Figure 47).

Figure 47: Weleda stakeholders’ Understanding of the Term ‘Sustainability Report’ (n=12)

16.7%

83.3%Report on env., soc. & econ. dimension/Report onwhat company does for the future

Report on environmental dimension

* One press agency, one member of the Advisory Board, one employee, two suppliers, and one NGO did not comment on this matter. One authority gave an unclear answer. Several other stakeholders (one industrial consultant, one union, one employee, one financial service provider) misunderstood the question and gave the definition of sustainability, but not sustainability report. In total, there were only 12 stakeholders who commented.

The interview results indicate that a great number of Weleda stakeholders pos-sessed relatively little knowledge of sustainability reporting. This issue is strongly related with the expectations of the stakeholders in the Weleda SR, which will be discussed in the next chapters.

Value of the Sustainability Report in Comparison with Other Kinds of Reports (Environmental, Social and Financial Reports)

The following question was asked to determine the stakeholders’ opinions con-cerning the value of sustainability reporting in comparison with other kinds of reports:

“If we compare the sustainability report with other reports such as business, financial, environmental or social report, does the construction of the sustain-

ability report have more value according to your opinion (Even though the sus-tainability report has fewer pages)?”

Unfortunately, five stakeholders did not answer this question. However, 92% of 25 respondents admitted that SR has more value than the financial, environ-mental and social reports. The other 8% (1 supplier and 1 NGO) did not agree with this, but unfortunately they did not give the reasons why (Figure 48).


Figure 48: SR in Comparison with Other Kinds of Reports from Weleda Stake-holders’ Point of View (n=25)

92%

0%

8%

More value

Limited value

Less value/Itdepends!

Some statements made by the respondents expressing that SR has greater value than other kinds of reports were:

• “SR is more valuable than previous reports which present only one as-pect of sustainability such as financial report. It makes more sense to read all 3 reports together because one without the others has no sense, if people want to know about sustainability” (Employee)

• “SR has more value than other reports because it encompasses more themes than for example financial report which only presents numbers” (Supplier)

• “We wouldn’t read a financial report and also not a social report. A sustainability report, in contrast, was a good mix which enabled people to have an overview about the company” (NGO)

• “SR is more valuable because it wasn’t very ‘dry’. If one compared it with a financial report, SR was better because there wasn’t too many statistics inside” (Authority)

• “SR with respect to its complete information which considered and com-bined all 3 themes of sustainability was better or more valuable than other reports” (University/Research institute)

• “SR is more valuable than other reports because one could get an over-all picture of the company’s targets and goals which might not be at-tained if one read the financial report” (Industrial consultant)

These findings show that almost all Weleda AG managers and stakeholders share the opinion that SR has more value than environmental, social and finan-cial reporting, although it has fewer pages than those three reports together.

Feeling of Being an Addressee of the Company’s Sustainability Report

Another important aspect in the pre-communication process, which may also affect the willingness to read the report, is the ‘feeling of belonging as an ad-dressee of the Weleda SR’. The stakeholders were asked:


“Did you feel yourself addressed by the report?”

Thirty respondents gave different statements. The statements varied from ‘very much addressed’ (33.3%), ‘addressed’ (46.7%), ‘neutral’ (16.7%), to ‘not ad-dressed’ (3.3%) (see Figure 49).

Figure 49: Feeling of Being Addressed by Weleda’s SR (n=30)

33,3%

46,7%

16,7%

3,3%

0%

Very much

Addressed

Neutral

Not addressed

Not addressed at all (More put off)

Those taking a neutral position were 3 suppliers, 1 member of the advisory board and 1 press agency. They gave several reasons:

• “The report was not particularly written for me or my group, but actually it was written for employees and politicians” (Advisory board)

• “We consider ourselves to stand in neutral position regarding this mat-ter. We think the report was probably written for people in the industry” (Press agency)

The only stakeholder who did not feel addressed was one press agency. The reason for this was because they thought that the report was not written for them but for shareholders, employees and rating agencies.

The interview results show that Weleda AG knows its stakeholders quite well because almost all respondents felt they were addressed by Weleda’s SR. Only one stakeholder stated that they did not feel they were addressed by the SR.

Intention of Corporate Sustainability Reporting from the Stakeholders’ Point of View

The results of the interview with thirty-two stakeholders show that most of the respondents believed that Weleda’s intention in producing and publishing the SR was to use it as an information instrument to show transparency to its stake-holders (34.6%), and to use it as a PR or marketing instrument to build a posi-tive corporate image (43.6%). A minor part of the respondents thought that


Weleda intended the SR as an information instrument for employees and pro-fessionals (7.3%), and for customers (7.3%) as an instrument to justify its activi-ties (3.6%) and as an instrument to differentiate Weleda from other corporations (market positioning) (3.6%).

The stakeholders’ perceptions of the intention of Weleda’s sustainability report described above are in accordance with the motives and goals of sustainability reporting as stated by the managers of Weleda, as shown in Chapter 5.2.2.3.

5.2.3.2 Interest in Sustainability Reports

Before entering the phase of reading process, there is one further communica-tion aspect which may also affect one’s willingness to read the report, namely interest in the sustainability report. The stakeholders were asked:

“Are you interested in the sustainability report at all?”

The level of stakeholder interest in the sustainability report in general varied between ‘very interested’ (31%), ‘interested’ (31%), ‘only somewhat interested’ (34.5%), and ‘not very interested’ (3.5%) (see Figure 50).

Figure 50: The Interest of Weleda Stakeholders in Sustainability Report (n=29)

34,5%

3,5%

31%

31%

0%

Very interested

Interested

Only somewhatinterested

Not so interested

Not interested at all

* One stakeholder (press agency) did not mention their level of interest in SR.

From Figure 50 above, it can be seen that 31% of 29 respondents stated that they were very interested in sustainability report, 31% were ‘interested’ and 34.5% ‘only somewhat interested’. One stakeholder was not very interested in it (3.5%). Some statements made by the stakeholders with only an average level of interest included:


• “The report had too many pages; too many long texts and several is-sues were not interesting for us” (Supplier).

• “The report was strongly related to marketing and because of that the company had presented more than it really was” (Advisory board).

• “We always received such report which has similar contents, similar ‘make-up’” (Press agency).

• “The whole themes of sustainability were not so relevant with our daily life and had no effect to our work” (Union).

5.2.4 Communicative Phase: Stakeholders’ Acceptance of the Report

The division of this chapter is analogous with that of Chapter 4.2.4.

5.2.4.1 Comprehension

Percentage Read

In the interview, the author asked the interview partners the question:

“Did you read the whole report or did you briefly flip through the pages? Or were you only interested in several parts of the report?”

Figure 51 shows that the enthusiasm of the interviewed stakeholders to read the Weleda SR was high. The results of the interviews with 27 respondents who read the report were as follows: many of them (22.3%) read 100% of the report; 37% of the respondents read 75% or more of the report; 33.3% of them read 50% or more of the report; and only 7.4% of them read 25% or more of the re-port. None of these 27 respondents read less than 25% of the report.


Figure 51: Percentage of Weleda’s SR Read (n=27)

22,3%

33,3%

7,4%

37%

0%

100%

≥ 75 %

≥ 50 %

≥ 25 %

< 25 %

Three respondents admitted that they had not read the report. The reasons why they had not read the report were:

• “We still have too many things to do in our work and we could not yet find time to read the report” (Industrial consultant)

• “The report was too long/thick so that it reduces our desire to read the report” (Supplier)

• “We receive a large amount of reports every day so that we could not yet read them one by one” (Press)

Nevertheless, it must be noted that there were several interviewees (e.g. uni-versity/research institute, health insurance company, supplier, union, supplier, authority, press), mentioning that they read the report just because they were asked for the interview and wanted to prepare themselves for the interview.

As has been stated in the Telekom case study (see Chapter 4.2.4.1), this matter of the percentage of the report read correlates to some other issues, which are connected to the contents of the SR, such as ‘time to read’, ‘structure’, ‘language style’, ‘design and colour’, ‘font type and size’, etc.. These issues are presented in the following sections.

Time spent on Reading

The stakeholders gave several answers to how much time they invested in reading the Weleda’s SR by responding to the question:

“How much time did you spend on reading the report?”

From the interviews with twenty-seven respondents, it was determined that the time the stakeholders spent reading the report varied from 5 minutes (NGO) to 2½ hours (NGO). Most of the respondents admitted that they spend more than 1


hour reading the report (51.9%). A further 14.8% said they spent 45 minutes or more reading the report; 25.9% of the respondents invested 30 minutes or more; 3.7% invested 15 minutes or more; and another 3.7% spent less than 15 minutes reading the report (see Figure 52).

Figure 52: Time Spent on Reading the Weleda’s SR (n=27)

51,9%

14,8%

25,9%

3,7%

3,7%

≥ 1 hour

≥ 45 min

≥ 30 min

≥ 15 min

< 15 min

Structure

The following question was asked in relation to the structure or theme classifi-cation of the report:

“Did the structure help you understand the report better?”

Through the interviews, the author found that most interviewed stakeholders viewed the structure of Weleda’s SR as helpful (63%) or very helpful (29.6%) in terms of understanding the contents of the report. Only two stakeholders said the structure was only somewhat helpful (1 employee and 1 supplier). None of the interviewed stakeholders found the structure to be not helpful (see Figure 53).

Figure 53: Structure/Theme Classification of Weleda’s SR (n=27)

29,6%

7,4%

63%

0%

0%

Very helpful

Helpful

Only somewhat helpful

Not helpful

Rather confusing


Some comments made by stakeholders concerning the structure of Weleda’s SR:

• “The structure was a logical segmentation to divide the report into parts of social, economy and ecology” (Employee)

• “One could see clearly, where one could find his/her main emphasis and orientates on it” (NGO)

• “One can get an overview of the whole report” (University/Research institute)

Language Style

The stakeholders were also asked about the language:

“Did you think that the language style in the report was understandable?”

From the interviews with twenty-seven respondents, 34.6% of the respondents said the language style was ‘very understandable’; 50% it was ‘understandable’; and 15.4% said ‘most of it was understandable’. None of them said that the language style was difficult to understand (Figure 54).

Figure 54: Language Style of Weleda’s SR (n=27)

34,6%

15,4%

50%

0%

Very understandable

Understandable

Only most of itunderstandable

Difficult tounderstand

Two critical statements about the language style were:

• “There were too many utilisations of terms of business management” (Supplier)

• “The report had too many special terms, partially too text-heavy and se-veral texts were too long” (University/Research institute)


Font Type and Size

The matter of font type and size in the Weleda SR was also investigated. The question placed was:

“What do you think about the font type and size in the report?”

Most of the respondents (51.9% out of twenty-seven respondents) said that the font type and size utilised in the report were ‘appropriate’. Some (29.6%) even said that they were ‘very appropriate’. The others (18.5%) thought that they were ‘only quite appropriate’ (Figure 55).

Figure 55: Font Type and Size in Weleda’ SR (n=27)

29,6%

51,9%

18,5%

0%

Very appropriate

Appropriate


Not appropriate

From the interviews, it was discovered that none of the respondent criticised the ‘font type’, but some of them commented on the ‘font size’. They said:

• “The character of texts should have been bigger” (Employee)

• “The font was too small and too compressed” (Supplier)

• “In some parts, the font was too smooth so that it took a lot of energy to read it in the evening” (Supplier)

• “The font size was too small and we wish the font size could be more eye-friendly” (Union).

Length of the Report and Preferred Amount of Pages

A question about the length of the Weleda SR was raised in the interview:

“What do you think about the size/length of the report?”

The answers varied between ‘very appropriate’ and ‘inappropriate’ (Figure 56). Most of the respondents (46.67% out of 31 respondents) said that the length of the report was ‘appropriate’. Two respondents (university/research institute and advisory board) said that the length of the report was ‘very appropriate’ (7.2%).


They stated, “the length of an SR corresponds to the size of the company. A large company should have a longer report compared to a smaller company and the length of the report now is suitable for Weleda AG”.

There were ten respondents who said that the length of the report was ‘only quite appropriate’ (35.7%) and three respondents (10.7%) said that the length was ‘inappropriate’. They said the report was too long (supplier, press agency and NGO).

One industrial consultant stated that the length of the report was not an impor-tant theme for discussion. They said that the company should write whatever it was that they wanted to deliver.

Figure 56: Length of the Weleda’s SR (n=27)

7,2%

46,4%

10,7%

35,7%

0%

Very appropriate

Appropriate


Inappropriate

Entirely inappropriate

* Three respondents did not comment on this matter.

In the interviews, the stakeholders who felt that the length was only quite appro-priate or inappropriate were also asked to suggest an optimal length. The ques-tion was:

“The report has 52 pages. How many pages should it have in your opinion?”

Figure 57 shows that not all respondents gave a suggestion on the optimal number of pages. Those who commented on this matter, suggested between 30 and 59 pages, and under 29 pages. Nevertheless, most of them felt 30 pages would be sufficient.


Figure 57: Favoured Amount of Pages of Weleda’s SR (n=19)

10,5%

89,5%

0%

0%

1 - 29 pages

30 - 59 pages

60 - 89 pages

≥ 90 pages

Readability

The matter of readability was also highlighted in the interview:

“Was it easy to read (the report)?”

This matter was strongly related to the issue of the structure of the report (see question concerning the ‘structure of the report’). In Figure 58, we can see that most of the stakeholders (59.3% out of twenty-seven respondents) mentioned that they could easily follow the contents of the report; 25.9% said that it was ‘very easy’; and 14.8% said ‘only moderately easy’. None of the respondents stated that the report was difficult to read.

Figure 58: Readability of Weleda’s SR (n=27)

25,9%

59,3%

14,8%

0%

Very Easy

Easy

Only moderately easy

Difficult

Some critical comments from the respondents about the reading easiness of the report:

• “At certain parts of the report we had to be 100% fit and had to read it more intensively to be able to understand it” (Supplier).

• “Too many special terms” (University/Research institute).


• “Partially too text-heavy and several texts were too long too text-heavy” (Union, University/Research institute, Employee and Financial service provider).

• “It was a sophisticated and ambitious report which requires concentra-tion to read it” (Health insurance company).

Design and Colour

The matter of the design and colour utilised in the Weleda SR was not ne-glected in the interview either. The question the stakeholders were asked was:

“What do you think about the design and colour of the report?”

Opinions varied in relation to this matter. Figure 59 demonstrates that most of the respondents (48.2% out of twenty-seven respondents) found the design and colour of the Weleda SR ‘very good’. A large number of stakeholders (44.4%) stated that the design and colour of the report were ‘good’. However, there was 1 respondent from the stakeholder group ‘employee’ (3.7%) who said that they were ‘only moderately good’. Another 3.7%, also from the ‘employee’ group, said that they were ‘not good’ because the design and the colour and paper type used presented a utilisation of resources in contradiction of the theme of sus-tainability.

One financial service provider was also curious about the paper type. They were curious to know whether the paper was an environmental-friendly type or not. They found it unfortunate that they could not find the answer to this in the report.

Figure 59: Design and Colour of Weleda’s SR (n=27)

48,2%

44,4%

3,7%

3,7%

Very Good

Good

Moderate

Not good

There were also a number of positive statements made in relation to the design and colour of the Weleda SR:

• “It was comfortable to see the content of the report with many pictures and which brought employee into the surface. It was also great to see


the interviews in each 3 aspect which gave an overlook about the inte-gration of two or three elements of sustainability” (NGO).

• “The report had a good mix between pictures, texts and tables” (NGO)

• “Each section had its own colour which was very comfortable to see” (University/Research institute).

• “There were also a lot of interviews and photos that please people” (University/Research institute).

Reading Enjoyment

The matter of reading enjoyment was also broached in the interview:

“Did you enjoy reading the report?”

The results are shown in the Figure 60. From this figure, one can see that all of the respondents stated that they enjoyed reading the Weleda SR (37.3% out of twenty-seven respondents ‘very much enjoyed’; 55.6% ‘enjoyed’; and 7.4% ‘only moderately enjoyed’.

Figure 60: Reading Enjoyment of Weleda’s SR (n=27)

55,6%

7,4%

37%

0%

Very much

Enjoyed

Only moderatelyenjoyed

Did not quite enjoy

Some comments related to the reading enjoyment:

• “The quality of the information in the report made the report very enjoy-able to read” (University/Research institute)

• “The pictures inside the report made the reading comfortable” (Union)

Distribution of the Report

This matter was also discussed in the interviews with the question:


“Through which media should the (next) report be best published?”

Figure 61 shows that thirty respondents were divided into two main stakeholders groups when it came to the best possible distribution of the report. The first group was those who wished to have the report in a mixed form consisting of little paper and the internet (PDF-format) (53.3%). The second group wanted the report in paper format only (43.4%). A minority of stakeholders (3.3%) were pleased to receive the report in a mixed form of both paper and CD.

Figure 61: Distribution of the Weleda’s SR (n=30)

43,4%

53,3%

3,3%

0%

Only paper form

Only internet (PDF File/Word)

Mix form (Short paper + additional link tointernet (PDF)

Mix form (Short paper + CD)

From the interviews, it was determined that most of the Weleda stakeholders believed that there is no other format that could completely replace paper. The reasons for this were mentioned by some respondents:

• “Tendentiously people want to have the report in their hand so they can skim through it or stick on certain pages” (NGO)

• “One of the strengths of such reports lied in its colours, outside appear-ance, so it must be in paper form” (NGO)

• “There are more people reading the report in paper form than those who download it from internet or upload it from CD. There must be a lot of limitations with internet or CD. It is better the way it is now (in paper form)” (NGO)

• “If one has it in its hand (as a paper), then it would affect more than if one has it in a CD” (Authority)

• “One should have the printed version anyhow. We wouldn’t read it in internet” (Financial service provider)

• “The report in such a paper form can be brought every where” (Sup-plier)

Some of the respondents mentioned that an announcement should be made by the company prior to publishing the report, be it:


• in a NGO magazine dealing with environmental issues (employee)

• through a press conference (NGO) or

• through events hosted by Weleda, such as the ‘Weleda Open House Day’ (union)

The descriptions above show that Weleda recognised the interests of its stake-holders in relation to the matter of report distribution. Weleda and its stake-holders share the opinion that no format can entirely substitute paper. As a complement to the paper format, other publication methods, such as an internet version (PDF-file) and CD could also be used. However, the readers must be given prior notification detailing where they can find the information (in the inter-net, CD, etc.).

5.2.4.2 Preference

The structure of interview results presentation in this chapter is similar with that of Chapter 4.2.4.2.

Environmental Issues

The stakeholders were asked a question with respect to the environmental is-sues:

“Did you find the environmental issues in which you are interested in the re-port?”

From the interviews with twenty-six respondents, it was revealed that 59.3% found all of the expected environmental issues in the report. Another 34.6% and 7.7% stated that they found 75% or more and 50% or more of the environmental issues they expected, respectively. Meanwhile, 3.8% mentioned that they found 25% or more environmental issues that they wished to see in the report (see Figure 62).


Figure 62: Percentage of the Environmental Issues Found in Weleda’s SR (n=26)

53,9%

34,6%

7,7%

3,8%

0%

100%

≥ 75%

≥ 50%

≥ 25%

< 25%

* Four respondents did not comment on this matter.

The stakeholders were also requested to mention what kind issues they ex-pected to find in the report with the question:

“What (environmental issues) are these?”

The environmental issues expected by the interviewed stakeholders which were found in the report are shown in Figure 63 below. There were twelve issues in total. The most commonly expected environmental issue found in the report was the issue of ‘energy management and consumption’ (41.7%), followed by the issue of ‘transport management’ (37.5%) and ‘raw material management’ (33.3%), ‘waste management’ (29.2%), ‘packaging reduction’ (20.8%), ‘water management and consumption’ (16.7%), and so on as can be seen in Figure 63.


Figure 63: Expected Environmental Issues Found in Weleda’s SR (n=26)

41,7%

37,5%

33,3%

29,2%

20,8%

16,7%

12,5%

12,5%

8,3%

8,3%

8,3%

4,2%

Energy (i .e. electric ity) management & consumption (i.e. renewableenergy consumption, energy flow)

Transport management (i .e. commuter traffic)

Raw material mgt. (procurement & consumption) (i.e. animal rawmaterial consumption & ecol. raw material cul tivation)

Waste management (i.e. distinction between disposal & recycledwaste)

Packaging reduction (product innovation)

Water management & consumption

Hazard management & emission (i.e. impact to the soil)

Eco balance (i.e. energy balance)

Environmental program

Species protection (Information that there is no animalexperimentation)

Product declaration (Information about impact of the product toconsumer/information that there is no synthetic preservatives)

Building management (Room stoking)

In the interview, the stakeholders were asked:

“What (environmental issues) did you miss in the report? Or were there themes that should have been more emphasised?”

Apart from the twelve expected environmental issues found in the report and listed in the Figure 63 above, twenty-six respondents referred to six environ-mental issues they expected to find in the report, but which were not discussed or were poorly presented (see Figure 64).


Figure 64: Missing or Poorly Presented Environmental Issues in Weleda’s SR (n=26)

4,2%

4,2%

4,2%

4,2%

4,2%

4,2%

Information about what was happening and how did ithappen within the corresponding department

Information about production site (it doesn’t make sense)

Background information for the statistics of raw materialconsumption

Explanation of why there was no efficiency by energy andmaterial consumption

More diagram of environmental data rather than verbalexplanation

More explanations about customers and suppliers

The results indicate that the issues the stakeholders wanted to see in the report were actually there, but they wished to see more explanation in relation to spe-cific matters.

Social Issues

Apart from environmental issues, the information about social issues in the re-port was also raised in the interview with the question:

“Did you find the social issues in which you are interested in the report?”

From the interviews with twenty-two respondents, it was discovered that most of the respondents (63.7%) found all of the social issues they expected; 27.3% of the respondents found 75% or more of the social issues they wished to see in the report; 4.5% of them found 50% ore more and another 4.5% of the respon-dents claimed that they found 25% or more of the social issues (Figure 65).


Figure 65: Percentage of the Social Issues Found in Weleda’s SR (n=22)

63,7%

27,3%

4,5%

4,5%

0%

100%

≥ 75%

≥ 50%

≥ 25%

< 25%

* Eight stakeholders did not comment on this matter.

In the interviews, the stakeholders were also requested to mention the particular social issues they expected and found in the Weleda SR:

“What (social issues) are these?”

The expected social issues which these twenty-two respondents found in the report are listed in Figure 66 below.


Figure 66: Expected Social Issues Found in Weleda’s SR (n=22)

72,7%

22,7%

18,2%

18,2%

18,2%

9,1%

9,1%

9,1%

4,5%

4,5%

Promoting family and work (i.e. company’s kindergarten)

Staff development (i.e. education, training), qualification &promotion

Parent education & training

Working organization and time (incl. part time job)

Amount of employee (incl. amount and nationality of foreignemployee)

Health care

Equality

Social standard (i.e. social standard for staffs in foreigncountry from where the company gain the raw materials)

Work safety

Design interior in the office (to bring harmony with theeurhythmics)

Figure 66 reveals that the respondents’ most highly anticipated issue which was found in the report was the issue of ‘promoting family and work’ (72.7%) and the least commonly expected issue found in the report was the issue of ‘design inte-rior to bring harmony with the eurhythmics’ (4.5%).

In the interviews, the stakeholders were asked what social issues they missed or felt were not well presented in the Weleda SR:

“What social issues did you miss in the report? Or were there themes that should have been more emphasised?”

The results to this question are presented in Figure 67 below.


Figure 67: Missing or Poorly Presented Social Issues in Weleda’s SR (n=22)

4,5%

4,5%

4,5%

4,5%

4,5%

Concrete program or example how work & family can beintegrated (esp. for a mother)

Explanation about job type of staff man & woman

Explanation concerning the matter of customer service(information about the product & complaining procedure)

Explanation concerning the matter of product price

Old-age provision (case of illness and nursing care)

Economic Issues

As part of the aspect of sustainability, the economic issue was also broached in the interviews:

“Did you find the economic issues in which you are interested in the report?”

The results of the interviews indicate that a large number of stakeholders were not interested in the economic issues as there were only seventeen stake-holders who gave their opinion on this matter.

As can be seen in Figure 68, 52.9% out of seventeen respondents admitted that they found all the economic issues they expected in the report; 35.3% found 75% or more; and 11.8% found 50% or more of the economic issues in which they were interested.


Figure 68: Percentage of the Economic Issues Found in Weleda’s SR (n=17)

52,9%

35,3%

11,8%

0%

0%

100%

≥ 75%

≥ 50%

≥ 25%

< 25%

* Thirteen respondents did not comment on this matter.

Figure 69 below shows the economic issues which were expected and found in Weleda SR by seventeen respondents, whereas Figure 70 lists the economic issues which were expected but were missing or not well presented in the re-port.

Figure 69: Expected Economic Issues Found in Weleda’s SR (n=17)

33,3%

20,0%

20,0%

13,3%

13,3%

6,7%

6,7%

6,7%

Prof it (incl. distribution of added value)

Supply Chain Management (incl. rawmaterial purchase and control)

Market development and positioning

Ecological accounting

Research and development

Relation w ith customer and supplier

Sustainability in company’s economicstrategy

Project in foreign countries


Figure 70: Missing or Poorly Presented Economic Issues in Weleda’s SR (n=17)

6,7%

6,7%

6,7%

20%Too few quantitative data (incl. data of recyclingmanagement)

Economic balance (profit/revenues and expenses)

Explanation about why the company use truck as transportvehicle and not the other transportation media)

Profit pro employee is wrong presented

If we compare the sustainability issues the Weleda managers wish to mediate to the Weleda stakeholders as discussed in Chapter 5.2.2.6 with the environ-mental, social and economic issues expected by the stakeholders and found in the Weleda SR as shown in Figures 63, 66, and 69, we can see that there is a match between them. All of the issues that the Weleda managers wanted to highlight in the SR were indeed issues that the Weleda stakeholders wished to see. However, it must be noted that the Weleda stakeholders wanted more de-tail explanations in relation to certain issues. For example, in the case one issue in the environmental dimension, the managers of Weleda, on the one hand, presented the issues ‘raw material management and consumption’. The stake-holders, on the other hand, expected a mention of this issue (Figure 63), but they wanted to see a more detailed explanation. They needed background in-formation relating to the statistics pertaining to this issue (see Figure 64).

The stakeholders’ also wanted more in-depth explanations in the social dimen-sion. For example, in the case of the issue ‘promoting family and work (e.g. company kindergarten)’. The stakeholders expected to find this issue in the report (see Figure 66), but they wanted to see more examples and a more con-crete program for the realisation of this aim (especially the mothers interviewed) (see Figure 67).

In the economic dimension, the main issue sought by the stakeholders was ‘profit’. Even though profit was presented in the report, the stakeholders felt this issue was not properly presented.

The descriptions above indicate that Weleda’s eight SR makers (managers) understood the environmental, social and economic issues the stakeholders wished to see in the report.. Unfortunately the stakeholders found them too su-perficial and demanded more detailed explanations on certain issues.


5.2.4.3 Conviction

In this section, the matter of the reliability of the information in the report was explored. Another aspect which was also investigated in this section was the judgement of the stakeholders in comparing the quality of the current Weleda sustainability report with the previous one.

Reliability of the Report

The reliability of the SR is one aspect which cannot be ignored if one talks about sustainability reporting. Thus, in the interview, there was also a question in rela-tion to this:

“Do you think that the information contained in the report is reliable? Or do you have the feeling that Weleda uses the report to create a good image?”

The results, shown in Figure 71, reveal the high degree of the Weleda stake-holders’ trust in the report. In this figure, we can see that all of the interviewed stakeholders stated that they could trust the information in the Weleda SR. None of them said that the information in the report was not trustworthy. The level of trust in the information in the Weleda SR ranged from ‘very trustworthy’ (46.7%), ‘trustworthy’ (50%) to ‘only more or less trustworthy’ (3.3%).

Figure 71: Reliability of Weleda’s SR (n=30)

50%

0%

0%

46.7%

3.3%

Very trustw orthy

Trustw orthy

More or less trustw orthy

Not alw ays trustw orthy

Not trustw orthy

Although the Weleda SR was believed to be reliable, there were still some criti-cisms concerning the trustworthiness of the information:

• “I found some misprints in the report which at the end limited the level of trustworthiness. If one ever found a misprint in the report as I did, then


one would ask himself whether there are still other mistakes in the re-port” (Employee)

• “Every company always tries to present something positive. This thought limits the level of my trustworthiness in the information” (Sup-plier)

• “The level of trustworthiness in the report was limited because it was difficult to control the collection process of the wild plant for raw mate-rials as described by the approved norms/standards” (Union)

Some stakeholders have different opinions in relation to the ‘Preface’ by Prof. Weizsäcker. Some respondents said that the ‘Preface’ improved the credibility of the Weleda SR:

• “The report was already audited and the preface of the report which was written by Prof. Weizsäcker made us directly trust the information in the report” (Press).

• “The contribution of Prof. Weizsäcker in the report was very good and it improved the reliability of the report” (NGO)

• “The ‘Preface’ from a respectable person (Prof. Weizsäcker) made the report already trustable” (Health insurance company)

However, one NGO said: “The preface from Prof. Weizsäcker brought no posi-tive effect to the report because of his bad track record”

The stakeholders mentioned several things to make the Weleda SR more reli-able and to make it look more interesting when asked:

“How can the reliability of the report be improved in your opinion? Do you have any idea, what could make the report look more interesting?”

The results can be seen in Figure 72. The issues discussed are divided into three sections. The first section (upper part) contains issues which might im-prove the reliability of the report. The second section (middle part) presents issues which might make the report look more interesting. The third section (lower part) is the combination of issues to both improve the reliability of the report and to make the report look more interesting.

In the first section, the ‘detailed explanation of matters and concrete exam-ples/practical experiences’ is considered the most important issue for the im-provement of the report’s reliability. In the second section, respondents named a ‘brief report/few texts’ as the most important criteria for making the report more interesting. And in the third part, the insertion of ‘stakeholder comments (i.e. customer, employee and partner) or Challenger Report’ were deemed most important – more than the inclusion of ‘verification from external party’ – in im-


proving the reliability of the report, as well as in making the report look more interesting.

Figure 72: Improving the Reliability of Weleda’s SR and Making it Look More Interesting (n=26)

19,2%

26,9%

42,3%

3,8%

3,8%

3,8%

7,7%

11,5%

11,5%

15,4%

23,1%

3,8%

7,7%

15,4%

Critical issues (problem, weaknesses, unachievement) ornegative aspect of activities

Verification from external party with provable norms/standards

Stakeholders’ comments (i.e. customers, employee, partner)or Challenger Report

Avoiding redundancy of theme

Utilising proper paper type

Avoiding special term/definition or explaining usedterm/abbreviation

Proper font size (bigger than it is now)

Illustration of company’s position towards medicine/globalmarket

Explaining cases/relation among departments throughinterview

Interesting pictures (photos of people) and diagrams/graphics

Compact/brief report (few texts)

Avoiding misprint

Comparable data (long-term goals, facts and figures) andclear main focus/highlights

Detail explanation of matters and concrete examples/practicalexperiences

Impr

ovin

g re

liabi

lity

Mak

ing

repo

rt lo

ok m

ore

inte

rest

ing

Com

bina

tion


However, there was one important opinion mentioned by an industrial consul-tant. He said that the trustworthiness of the report was not the result of the re-port alone, but also from the practical experiences one had with the company.

Comparison with the Previous Sustainability Report

After having read the Weleda SR ‘Transparenz 3’, the stakeholders were re-quested to give a judgement on whether the current SR was better or worse than the previous report. The question was:

“Do you think that the new sustainability report is better or worse, compared to the previous one?”

Only twenty-seven stakeholders commented on this. 27.6% out of 27 respon-dents said that the current SR entitled ‘Transparenz 3 – Nachhaltigkeitsbericht mit Umwelterklärung 2002’ was better than previous sustainability report (see Figure 73). Some reasons for this were:

• “The actual report was formed in such a way so that the dialogues were put in detail and the compilation of the 3 reports enriches the value of the report” (University/Research institute)

• “The actual report was better because the information was brighter and clearer (Financial service provider)

• “The actual report was touchier for the reason that it showed more pic-tures, more people. The report was more alive” (Financial service pro-vider)

Only 3.4% said that the reporting had remained constant, which meant no im-provement or worsening had taken place. Meanwhile, 69% of the respondents could not give their judgement on this matter as they had not read or could not remember the previous report. However, none of the respondents said that the current report was worse than the previous one.


Figure 73: Comparison with the Previous Weleda’s SR (n=27)

27,6%

3,4%

69%

0%

Better

Constant (No improvement/No degradation)

Not sure/Haven’t read/Couldn’t remember theprevious SR

Worse

5.2.5 Post-communicative Phase: Effects of Communica-tion with the Sustainability Report

The stakeholders’ understanding about Weleda and its activities, Weleda image and stakeholders’ intention towards Weleda after having read Weleda’s SR are presented in this section.

5.2.5.1 Understanding the Corporation and its Activities

In the interviews, the author explored whether there was a change of the stake-holders’ familiarity with the Weleda AG and its activities after having read the company’s SR. The question posed in the interviews was:

“Do you now have the feeling that after having read the sustainability report, you now have a different or better understanding of the company and its activities?”

Figure 74 shows that after having read ‘Transparenz 3’, almost all of the 27 respondents felt they had a better understanding of Weleda and its activities (74.1%). Of the respondents 14.8% felt their understanding was ‘definitely bet-ter’ and 59.3% ‘somewhat better’. The remaining 25.9% (mostly employees and members of the advisory board) said that nothing had changed as they were already familiar with almost everything concerning Weleda without having read the report.


Figure 74: Stakeholders’ Understanding of Weleda and Its Activities (n=27)

14,8%

59,3%

25,9%

0%

0%

Definitely better

Somew hat better

Neutral

Somew hat w orse

Definitely w orse

As illustrated above, almost all of the stakeholders (74.1%) had a better under-standing of Weleda and its activities through the SR. This resulted in a change of the respondents’ perception in relation to the company image.

5.2.5.2 Image

The stakeholders were asked the following question in relation to the company image:

“Do you now have the feeling that after having read the sustainability report, the company image improved in your eyes?”

Table 15 shows that some respondents said that the Weleda company image is improved in their view (74.1% of twenty-seven respondents). Altogether 18.5% said ‘definitely better’ and 55.6% said ‘somewhat better’. Some said their per-ception had not changed (25.9%). None of the respondents said that the com-pany image had worsened.


Table 15: The Corporate Image of Weleda According to Each Stakeholder Group (n=27)

Stakeholder group (1)

Definitely better

(2) Somewhat

better

(3) Neutral

(4) Somewhat

worse

(5) Definitely

worse

Employee 1 2 1

Supplier 1 2 1

Advisory Board 2

Press agency 1

NGO 1 2 2

Authority 1 1

University/Research institute

1 1

Union 2 1

Health insurance company

1

Industrial consultant 1

Financial service pro-vider

1 1

5 15 7 0 0

18.5% 55.6% 25.9% 0% 0% * One supplier, one press agency and one industrial consultant did not comment on the corporate image because they did not read the SR as has been explained in Chapter 5.2.4.1.

The interviewed stakeholders who said that their familiarity with Weleda and its activities had not changed after reading the company’s SR (25.9% from twenty-seven respondents), also stated that the corporate image of Weleda had re-mained the same. There were no changes in their perception of Weleda’s cor-porate image.

To investigate upon which stakeholder group the SR had the largest positive effect in terms of improving the corporate image, as was presented for Deutsche Telekom in Chapter 4.2.5.2, the author looked at two variables/communication components of sustainability reporting: ‘trust in the company’ and ‘corporate image’.

The comparison between the variable ‘trust in the company’ and the variable ‘corporate image’ can be seen in the following table:


Table 16: Comparison between ‘Stakeholders’ Trust in the Company’ and ‘Corporate Image’ of Weleda

Scales of attitude Stakeholder (n=27) (1) (2) (3) (4) (5) Variables of SR

25% 75% Trust in the company Employee (4)

25% 50% 25% Corporate image 25% 50% 25% Trust in the company

Supplier (5) 25% 50% 25% Corporate image 50% 50% Trust in the company

Advisory board (2) 100% Corporate image 100% Trust in the company

Press agency (1) 100% Corporate image

100% Trust in the company NGO (5)

20% 40% 40% Corporate image 100% Trust in the company

Authority (1) 50% 50% Corporate image

50% 50% Trust in the company University/Research institute (2)

50% 50% Corporate image 100% Trust in the company

Union (3) 66.7% 33.3% Corporate image

100% Trust in the company Health insurance company (1)

100% Corporate image 100% Trust in the company

Industrial consultant (1) 100% Corporate image

100% Trust in the company Financial service provider (2)

50% 50% Corporate image

Scales for the issue ‘trust in the company’: (1) Very trustworthy (2) Trustworthy (3) More or less trustworthy/No comment (4) Not always trustworthy (5) Not trustworthy at all

Scales for the issue ‘corporate image’: (1) Definitely better (2) Somewhat better (3) Neutral (4) Somewhat worse (5) Definitely worse


We can see from Table 16 that the degree of effectiveness of the Weleda SR in influencing the perception of the stakeholders in relation to the corporate image is different for each stakeholder group. Table 16 shows that although the Weleda SR did not damage the corporate image of Weleda, it did not improving the corporate image either, only sustaining the corporate image as already per-ceived by each stakeholder group:

• supplier,

• press agency, and

• university/research institute.

One explanation for this is because Weleda, as a medium-sized enterprise, has always maintained good relationships with its stakeholders. Weleda already possessed a high level of stakeholder trust and a positive corporate image so that the SR did not improve the company image. The SR merely reinforced the corporate image as already perceived by the specific stakeholder groups (sup-plier, press agency, and university/research institute). However, Weleda con-sidered SR to be an important corporate communication tool, providing informa-tion to the stakeholders and as an instrument to show responsibility and trans-parency to the stakeholders and society as a whole.

5.2.5.3 Intention/Behavioural tendencies

The final communication effect of sustainability reporting investigated in this research is the stakeholders’ intent or behaviour tendency with respect to the company. This means what the stakeholders want to do in regard to their rela-tionship with Weleda AG. This matter was approached in the interview through the question:

“What are your intentions after having read Weleda’s sustainability report?”

Several statements of stakeholder intent towards the Weleda AG are listed be-low:

• “The report serves not only as a media to improve work motivation but also as a trigger to do something specific with the company in relation to the SR. I saw a savings possibility in the report and as a result, I want to make some suggestions to the directors/managers” (Employee)

• “As I found improvement chances in the report, it has pushed me to know much more abut the company” (Employee)


• “After having read the report, we found something that can be used to improve our relationship with the company. We would discuss several issues with the company (in particular with Mr. Biller). We intended to work in a more interesting way with the company in the future. We got an idea how to work together better now” (Suppliers)

• “We intended to announce Weleda’s SR in our newsletter so that all col-leagues could order or download it” (NGO)

• “We would contact Weleda’s CEO to discuss about some contents. Af-ter having read the report, we would accept the high price of Weleda’s product if we buy the products next time” (NGO)

• “We would write the Weleda’s environmental department to discuss some points because there were several things from Weleda which could be taken as examples” (NGO)

• “If we would make a ranking of the best companies in the field of sustainability, we would rank Weleda in the top position” (Union)

• “We have been working together with Weleda since a long time ago and surely, the report strengthened our cooperation. We intended to give a phone call to Mr. Biller (the project leader of the report making process) to discuss with him about several things” (Financial service provider)

Nevertheless, most of the stakeholders mentioned that they did not have any particular intent regarding their relationship with Weleda and stated that they just wanted to do business as usual.

The stakeholder statements above reveal that Weleda’s sustainability reporting affected the intent of some internal stakeholders (employee) as well as that of some external stakeholders.

5.3 The Interrelations of the Communication Compo-nents of Weleda’s Sustainability Report

The same procedures for the measurement of the communication components of sustainability reporting as those applied to Deutsche Telekom using the con-tingency coefficient, as presented in Chapter 4.3, were conducted here. The author also measured the following variable or communication components of Weleda’s sustainability reporting:

• Trust in the company – Feeling of being addressed by the report (Ccorr = 0.61)


• Feeling of being addressed by the report – Interest in the sustainability report (Ccorr = 0.67)

• Interest in the report – Percentage read (Ccorr = 0.67)

• Trust in the corporation – Percentage read (Ccorr = 0.42)

• Feeling of being addressed by the report – Percentage read (Ccorr = 0.52)

• Length of the report – Percentage read (Ccorr = 0.83)

• Language style – Readability (Ccorr = 0.59)

• Font type and size in the report – Readability (Ccorr = 0.45)

• Language style – Reading enjoyment (Ccorr = 0.45)

• Structure of the report – Readability (Ccorr = 0.45)

• Structure of the report – Reading enjoyment (Ccorr = 0.53)

• Font type and size in the report – Reading enjoyment (Ccorr = 0.43)

• Design and colour of the report – Reading enjoyment (Ccorr = 0.44)

• Reading easiness – Reading enjoyment (Ccorr = 0.46)

• Percentage found environmental issue – Reading enjoyment (Ccorr = 0.67)

• Percentage found social issue – Reading enjoyment (Ccorr = 0.43)

• Percentage found economic issue – Reading enjoyment (Ccorr = 0.38)

• Trust in the company – Reliability of the report (Ccorr = 0.36)

• Feeling of being addressed by the report – Reliability of the report (Ccorr = 0.65)

• Understanding the company and its activities – Corporate image (Ccorr = 0.85)

• Trust in the company – Corporate image (Ccorr = 0.36)

Figure 75 gives an overview of the relationships between the communication components of Weleda’s sustainability reporting.


Figure 75: The Interrelation of the Communication Components of Weleda’s Sustainability Reporting


As with the case study of Deutsche Telekom, presented in Chapter 5.3, several points must be made based on the illustration of the relationship between the variables or communication components of sustainability reporting as shown in Figure 75:

1. Relationship between Pre-communicative phase and Communicative phase:

Variables of SR which belong to the pre-communicative phase such as ‘in-terest in sustainability report’, ‘feeling of being addressed by the report’, and ‘trust in the company’ have quite a large positive effect on the communica-tive phase, which is the ‘percentage read of SR’, as much as 0.67, 0.52, and 0.47 respectively. Another variable of SR that strongly affects the ‘percen-tage read’ is ‘length of the report’ (0.83).

2. Relationship between the variables of sustainability reporting in improving or sustaining the corporate image:

The variable ‘readability’ depends mainly on two variables390:

• Structure of the report, and

• Partly related to the language style (0.59)

Meanwhile, three variables of SR are related to the ‘reading enjoyment’391:

• Partly related to the length of the report (0.55)

• Partly to the structure of the report (0.53)

• Environmental issues expected by the readers (0.67). The other is-sues only partly related to the reading enjoyment were: social is-sues (0.43) and economic issues (0.38). This gives rise to the con-clusion that the Weleda stakeholders are more interested in envi-ronmental issues than other issues.

The language style was more closely related to the readability (0.59) than to the reading enjoyment (0.45). The font type and size were also more closely related to the readability (0.45) than to the reading enjoyment (0.43).

The reliability of the information in the report was related to the ‘feeling of being as addressee of the report’ (0.65)392.

390 The variable ‘readability’ is only partly related to the ‘font type and size’ (0.45) and ‘design and colour’ (0.45). 391 The variable ‘reading enjoyment’ is only partly related to the ‘language style’ (0.45), ‘design and colour’ (0.44), and ‘font type and size’ (0.43). 392 The reliability of the information in the report is partly related to the ‘trust in the company’ (0.36).


The company image was strongly related to the ‘understanding of the cor-poration and its activities’ (0.85). The aspect ‘trust in the company’ was only partly related to the ‘corporate image’ (0.36). This calculation indicates that the contribution of Weleda’s sustainability reporting to the improvement of its corporate image is larger than the contribution of the practical experi-ences between Weleda and its stakeholder, which are in this case repre-sented by the variable ‘trust in the company’ (0.85 to 0.36).

Synthesis, Conclusions and Recommendations 217

6 SYNTHESIS, CONCLUSIONS AND RECOMMENDATIONS

This concluding chapter synthesises the findings presented in chapter 4 and 5 with the aim of giving some answers to the central question of this research: “how must communication via an SR be shaped to make an effective, that is, successful exchange possible between the company and its stakeholders, in the sense of an image improvement, meaning the build-up of credibility and under-standing”. The structure of this synthesising and concluding chapter follows the structure of the questionnaire and of the thesis as a whole. The results are summarised with respect to the following four areas:

1. Point of departure (pre-communicative phase): Expectations and goals of the senders in comparison to the information needs and interests of the stakeholders

2. Content of the SR in comparison to the information needs of the stake-holders

3. Layout, structure and rhetorical features of the SR: comprehensibility as a precondition for successful communication

4. Style and communication method

After presenting the core results, some case specific conclusions and some general conclusions are drawn in each instance. Finally, recommendations shall be derived from the obtained research results, which might be useful for de-signing sustainability report.

6.1 Synthesis

6.1.1 Point of Departure

Prior Attitudes towards the SR/Issue of Sustainability (Pre-communica-tion Phase)

Main results:

The senders of the sustainability reports, for whom several managers were in-terviewed, primarily mentioned the obligation of each company to publish an

218 Synthesis, Conclusions and Recommendations

SR, thereby proving its sustainable management approach and making it verifi-able. Especially the criterion of transparency is repeatedly emphasised as a commitment of the managers towards their stakeholders. The possible market-ing character of the SR is only pointed out occasionally though. This is some-what surprising, in view of the considerable amount of resources dedicated to the compilation and production of an SR. Nevertheless, the majority of mana-gers state that the main goals of the report are to improve the stakeholders’ attitude towards the company’s image. Thus altogether, distinct, positive mar-keting effects are stated as expectations on the effectiveness of the SR. The hope is often mentioned that the reading of the SR might lead to changes in the stakeholders’ behaviour beyond the image perception change. The members of their own company are explicitly included as addressees of the report.

The stakeholders generally have a positive attitude towards the SR – more than 85% stated that they are interested or even very interested in SR. However, inquiries about concrete expectations associated with the reading of the SR yield no specific results. A broad and rather unspecific answer was that an SR should provide “information about the sustainable management and/or produc-tion of the company”. Very rarely is a lack of interest in the SR explained with the reference towards the current fashion of the buzz word “sustainability”, or the claim that companies use it as an alibi to legitimise their traditional mana-gement and resource use practices.

In the vast majority of cases, the opposite effect can be observed: the current huge interest in sustainability is the reason that stakeholders devote their atten-tion to sustainability reports. Generally, stakeholders have a great deal of trust in the respective sustainability reports. Despite several respondents of Telekom who mentioned that the information in Telekom’s SR was not trustworthy, ge-nerally, most of Telekom’s and Weleda’s stakeholders could trust the informa-tion in companies’ SR: In the case of Telekom, 71.4% out of 28 respondents stated that the information in Telekom’s SR was trustworthy, whereas 14.3% said more or less trustworthy. 14.3% mentioned that the information in the re-port was not always trustworthy or even absolutely untrustworthy. In the case of Weleda, almost all of the respondents (96.7% from 30 stakeholders) stated that the information in Weleda’s SR was trustworthy, whereas 3.3% mentioned that the information in the report was more or less trustworthy.

Concerning the issue of ‘feeling of being as addressee of the report”, in the case of Telekom, 59.4% out of 32 stakeholders felt as addressees of Telekom’s SR. Meanwhile, 31.2% only felt neutral in their position towards Telekom and the other 9.4% stated that they did not feel like stakeholders or addressees of the report. In the case of Weleda, 80% out of 30 stakeholders felt as addressees of Weleda’s SR. Meanwhile, 16.7% only felt neutral in their position towards Weleda and the other 3.3% stated that they did not feel like stakeholders or


addressees of the report. Particularly the rate of over 40% for Telekom, but also the 20% for Weleda are somewhat surprising, since the whole sample of inter-viewees had been given a list by the companies of who the companies per-ceived as their stakeholders. Those figures are even more significant, if one takes into account that hardly any interviewee had read the SR prior to contact, but instead only had had a look at it because of the agreed and upcoming inter-view.

Case specific conclusion:

Despite a rather small willingness to engage with the content and the arguments of the SR (see above, see below), the large majority of the stakeholders view themselves as addressees of the reports and emphasise the importance of it. Therefore, the basic preconditions for a successful and effective communication via SR with most stakeholders are rather good. Not feeling addressed by the report has severe consequences on the effectiveness of communication, which might be either far more difficult or will not even take place at all.

In this respect, it is interesting to observe the huge discrepancy between very high and optimistic expectations of managers towards the publishing of an SR on the one hand, and the rather low and unspecific expectations towards the SR on the side of the addressees. They often have neither any understanding of what an SR should comprise, nor can they state what the main goal or intention of the reports has been. They just vaguely place it as something in-between a collection of reports/data and a pure advertising brochure of the company.

General conclusion:

It can be reasoned that the unclear expectations of the readership towards an SR – which could either be understood as mirroring the unclear vision of the senders, but that could also result from unfamiliarity with this tool – leads to a rather cautious and careful approach to it. This certainly reduces the effective-ness of the communication process: in most cases the report is not read. The research shows that many stakeholders have a clear and pronounced interest in the topic of sustainability and sustainability reporting, which could be seen as optimal preconditions for the communication process. Nevertheless, the report is either quickly browsed through, or only consulted because of the upcoming interview393. Despite this fact, there are many vague statements of stakeholders,

393 Compare to the conclusions in Chapter 4.2.4.1 and 5.2.4.1, in particular the section “percentage read”: It has to be said that hardly any of the interviewees had read the SR before they were con-tacted, but most stakeholders only used the announced interview about the SR as a reason for reading


who underline their interest in SR and its positive contribution towards the image of the company. This leads to an overestimation of the possible effects of such a report by the sender.

Factors determining the interest of the stakeholders in the particular SR prior to communication

Main results:

Various factors, which can be taken as a given for a particular SR, influence the stakeholders’ willingness to engage with the report. The research takes a closer look to the variables “interest in SR”, “trust in the company” and “feeling of being as addressee of the report” and looks at how far these variables are correlated to the amount read in the report.

In the case of Telekom, the values of contingency coefficient of the variable “interest in SR”, “trust in the company”, and “feeling of being as addressee of the report” are 0.83, 0.77, and 0.61, respectively. Meanwhile in the case of Weleda, the values of those variables are 0.67, 0.52, and 0.47, respectively.

The variable “stakeholders’ trust in the company” together with the other vari-ables of SR in the pre-communicative phase, such as “interest in SR” and “feel-ing of being an addressee of the company’s SR”, have a large contribution to the willingness of stakeholders to read SR, which in this case is represented by the variable “percentage read of the report” (variable of the communicative phase). This indicates that there are several factors outside the matter of creat-ing and publishing sustainability reports that make the stakeholders want to read the report. These factors should essentially be considered by the compa-nies. If not, SR will be useless because it is not read by the stakeholders.


The findings show that in general the self-perception and the stakeholder per-ception of the company correspond to one another – especially at Weleda, which is characterised by a closer customer loyalty. However, a slight tendency to over-estimate their own image reveals itself in the managers, who do not go into potential image problems – this also reflects itself in the sustainability reports, where potentially critical attitudes towards their own company are hardly ever dealt with pro-actively.

it. In both cases some potential interviewees refused to read the report at all (See chapter 4.2.4.1, p. 128 and 5.2.4.1, p. 184).


General conclusions:

The image of the sender, especially his credibility and trustworthiness, is one of the central factors that determine the comprehension and finally also the effec-tiveness of SR. In the case of a negative prior attitude towards the company, the role that an SR can play in correcting this attitude is naturally restricted: it will hardly be possible to dispel any prejudice. At most, one might successfully dis-cover such preconceived notions and contend with them pro-actively. This means, “picking up” the recipients’ negative judgment, thereby entering into an anticipated dialogue, and thus possibly creating the willingness for the recipient to deal with the company anew and to be more open-minded.

Conversely, it holds that the better, meaning the tighter, the bond of the stake-holders is to the company, the more favourable is the prior attitude towards the SR, but the smaller will be the expected image improvement by reading the SR. Within the scope of the research at hand, a different survey result presents itself astonishingly though: especially the stakeholders already positively disposed noted that the SR had contributed to a further strong improvement of their view of the company.

Further inquiries showed that the interest in details apparently increases again at a certain level of close bonding to the company – and that the preoccupation with the SR contributes to a deepened knowledge of the company.

6.1.2 Contents of the SR

Main results:

The results of the survey amongst the managers regarding the information sup-ply, which was to be published within the scope of SR, indicates a strongly non-uniform picture – apparently, no clear perceptions or schemes are existent in the circle of the surveyed managers about which central issues should be mediated to the stakeholders.

Independent from that, the majority of the surveyed managers believes that the information published in the sustainability report reaches the target groups, and consequently that the selection of the presented information corresponds with the information demands of the stakeholders. The SRs thereby convey the im-pression of a broad and very comprehensive offer of information to the recipi-ents.


The stakeholders in turn report upon inquiry that “their” issues are generally included in the SR, but they each want more specific information or more com-prehensive data based on their personal focus.

In the case of Telekom, even though the stakeholders admitted that they found the issues in relation to the environmental, social and economic dimensions of sustainability, which they had expected beforehand, there were still many envi-ronmental, social and economic issues which were not covered in the report, according to their opinion. They also mentioned that some issues were not well presented in the report (see Chapter 4.2.4.2). Meanwhile, in the case of Weleda, the stakeholders also admitted that they found the issues in the envi-ronmental, social and economic dimension which they had expected before-hand, but there were still some critics from the stakeholders mentioning that some of these issues were not well presented in the report (see Chapter 5.2.4.2).

The contents of SR from both companies, regarding the presented environ-mental, social and economic issues, could not completely meet the information needs of the stakeholders. However, the information presented in Weleda’s SR could better satisfy the stakeholders than that of Telekom’s SR. In the case of Telekom, 26 respondents showed their interest in environmental themes by dealing with and giving their comments on the presented environmental issues. Meanwhile, it turns out that 27 respondents dealt with the social themes and gave their comments on the presented social issues; whereas only 17 respon-dents stated their enthusiasm for economic issues. Meanwhile, in the case of Weleda, the amount of the stakeholders who showed their interest by giving their comments for the presented environmental, social and economic issues are 26, 22, and 17 respondents, respectively. These results show that the social dimension of company’s activities received the most attention from Telekom stakeholders, more than the environmental and economic dimension. The first three social issues, which are mostly expected by the stakeholders, are staff development (education, training, etc.), social standard/policy, and matters re-lating to staff lay-off (retirement, old-age provision, etc.).

The dimension of the company’s activities, which was receiving the most atten-tion of the Weleda stakeholders, is the environmental dimension. The first three environmental issues, which are mostly expected by the stakeholders, are energy management/consumption, transport management (i.e. commuter traf-fic), and raw material management/consumption.

Interestingly, the choice of topic plays a central role for the question of “reading enjoyment” – therefore, topic complexes exist that are considered to be particu-larly interesting from the view of the recipients and that make the SR attractive: In the case of Telekom, the comparison of the value of contingency coefficient between the variables of SR in the communicative phase, such as “language


style”, “structure of the report”, “font type and size”, “design and colour”, “found economic issues”, “found environmental issues”, and “found social issues” with the variable “reading enjoyment” shows that the social issues, which are ex-pected and found by the stakeholders in the Telekom’s SR, play the most im-portant role together with the variable “structure of the report” in affecting the “reading enjoyment” of the stakeholders. In the case of Weleda, the environ-mental issues, which are expected and found by the stakeholders in Weleda’s SR, play the most important role in influencing the variable “reading enjoyment” of the stakeholders.


On average, the information demand of the stakeholders is well satisfied by the SR in the case at hand – next to a general interest about the facets of sustain-ability that is encountered across the board, every reader approaches the mate-rial with a specific interest though.

General conclusion:

The deepened, individually specific interest of each stakeholder in the SR can generally not be met by it, if it does not want to go beyond any reasonable scope (the text should not exceed a certain length, see below). Therefore, the demand for information of each stakeholder cannot be met by a standardised SR.

6.1.3 Layout / Understandability

The conclusions in relation to layout and understandability are mainly based on the theory of the ‘Hamburger Verständlichkeitskonzept’ (Hamburg Concept of Understandability). Considerable empirical evidence supports the theory and identified four criteria of a text’s understandability. The criteria are ‘readability’, ‘structure’, ‘briefness-conciseness’ and ‘additional stimulants’. The criteria are organised according to their importance (see Chapter 2.4.3).

Readability:

In general, it can be concluded that the Telekom’s and Weleda’s sustainability reports matched the criteria to be ‘easy to read’. It can be assumed that the


editors succeeded in adapting the language of the report to the communication abilities of their target groups.

In the case of Telekom, 64.5% of 31 stakeholders stated that the report was easy to read. Meanwhile, 32.3% said that the report was moderately easy to read and the other 3.2% thought that it was difficult to read. In the case of Weleda, 85.2% of 27 stakeholders were of the opinion that the report was easy to read and the other 14.8% said that the report was moderately easy to read. There was not any stakeholder who mentioned that the report was difficult to read.

Structure:

From the literature we know that a clear structure is one of the necessary key elements to attain a high degree of ‘readability’. Regarding the SR’s structure and the readability of the report, 54.8% of the 31 Telekom stakeholders stated that the structure of the SR helped them to understand the contents of the re-port. Meanwhile, 29% said that the structure was only somewhat helpful and the remaining 16.2% thought that it was not helpful or even confusing. In the case of Weleda, 92.6% of 27 stakeholders stated that the structure of the SR was help-ful to understand the contents of the report and the other 7.4% were of the opinion that the structure was only somewhat helpful.

Weleda seems to have performed much better in clearly structuring its SR. Weleda’s report is divided into three sections: ecological, economic and social sustainability. These were the three key words almost always mentioned by the interviewees when asked about their understanding of sustainability. The divi-sion of the concept of sustainability into those three dimensions seems to be common knowledge. Therefore, readers are more likely to perceive the report as well structured due to its division according to those three dimensions of sustainability.

Briefness-Conciseness:

The results with respect to conciseness are somewhat contradictory. In order to determine the conciseness of the sustainability reports two of the interview questions dealt with the ‘length of the report’ and the ‘preferred amount of pages’. On the one hand, the majority of Telekom stakeholders stated that the length of the report is not appropriate. On the other hand, when asked about the optimal length of such a report, most of the stakeholders preferred exactly the amount of pages, which the report actually had (90-130 pages). This contradic-tion in data just reflects the contradicting demands on such a report. Concise-


ness is requested but at the same time there is a huge interest in the issues of sustainability and, therefore, detailed information about particular aspects is also demanded. This dilemma cannot be solved easily by the producers of the sustainability reports.

Additional Stimulants:

The answers in respect to this criterion indicate that there is a general satisfac-tion of the recipients with the additional stimulants in the report. There are hardly any suggestions of how to improve the report with the help of inspiring or non-conventional stimulants. However, this finding has to be qualified, as other studies show that this point is usually overstated by the recipients (Schulz von Thun 2003).

General conclusion:

Particular in the case of Telekom various interviewees criticise the structure. However, as the example of Weleda shows, using a stringent structure following the well known, almost ‘conventional’ structure of the three aspects of sustain-ability, leads to a high degree of satisfaction. In relation to conciseness, the editor must deal with the aforementioned dilemma, for which no overall solution is available. Various stakeholder profiles may require different solutions to tackle this dilemma. One could think of using more elements to structure the text (see above), clearly indicating concise and detailed sections. Many recipi-ents did not know the aim of the report and had no specific expectations. Con-sequently, it may be beneficial to inform about the aim of the report at the be-ginning.

There could be a precise and short executive summary on the first pages of the report. Another alternative would be to publish a concise print version of the report, which includes links to an extended online version, which is well struc-tured and presents all the necessary detailed information, which stakeholders like financial advisers may need at a later stage, for example394. The main aim of the short print version would be to convince the stakeholder groups, which are in need of more detailed information, that the company is transparent and trustworthy and all information needs are fulfilled in a far more accessible format by means of the extended internet version.

394 Cf. Cahyandito and Ebinger 2004.


6.1.4 Style and Communication Method

Main results:

It is rather difficult to interpret the data concerning the various communication methods and styles. Very few precise comments were made and little critique was voiced. However, some elements, particularly in the report of Weleda, were judged positively. The following three elements were mentioned particu-larly often:

• Presentation of concrete and real examples of the company’s sustainability management and production, which illustrate the com-pany’s approach to sustainability in a vivid way. Sustainability as a con-cept is rather abstract and therefore practical examples make it more tangible.

• Humanising is another important factor for getting attention. Those parts of the text, which relate to people, usually attract a higher attention than abstract figures and data. Obviously, people can better identify themselves with other humans. This may possibly explain the high in-terest in the social dimension of sustainability.

• Interviews make the report appear more personal. It provides the reader with first hand information, which can be directly attributed to a particu-lar person. The reader feels directly addressed by the information and messages in the text and, therefore, approach the text more openly.

In general it can be concluded that vividness and liveliness are of particular importance to the SR. This also includes allowing a certain degree of contro-versy. Various interviewees mentioned that different voices and views particu-larly attract their attention. Arguing in favour of vividness and liveliness should not be misunderstood as a statement in favour of high gloss, colours and pic-tures. The huge differences in style of the two reports, and the relatively positive responses to both of them, clearly show that there is no single recipe for pro-ducing the ideal SR.


An unexpected, unconventional and lively style and presentation format, which differs from the traditional report/data collection style, usually leads to positive responses of the stakeholders and increasing willingness on their part to read the report. The unconventional elements of the reports were remembered and were mentioned when asked about the qualities of the report.


General conclusion:

The more vivid the report is, the further it distinguishes itself from mere adver-tising. The more unexpected unconventional styles used, the greater the willing-ness is to read the report and to remember the contents, and the higher is the probability that even stakeholders with negative perception will appreciate the report. In short, the effectiveness of the communication process is greater. The interviewees showed a clear preference for a colourful mixture of styles: ab-stract reporting, magazine style presentation of cases, portraits or interviews instead of pure data. Therefore, there are no strict limits on what is allowed and what not within an SR. Weleda applied such a vivid mixture of styles, which may possibly explain the slightly better rating of the report by the stakeholders.

Considering the significant amount of resources, which the companies spend on producing their sustainability reports, the results listed above are not satisfying for the company. Many stakeholders were indifferent to the SR and only browsed through it, because of the announced interview. Companies had con-siderable expenses incurred in producing the SR, without achieving effective communication. The efficiency of this means of communication is rather low. The reason for this lack of interest cannot be a lack of interest in sustainability itself, as the interviewed stakeholders made known that they are interested in issues of sustainability. Therefore, an SR should be a particularly suitable tool of normative management, to transport credibility and trustworthiness to the com-pany’s stakeholders with respect to the company’s sustainable management practices. Communication style and structure should be more diverse and ad-dress the needs of the heterogeneous groups of stakeholders.

However, these recommendations, concerning the design of an SR do not deal with the major problem. The major problem with the SR’s effectiveness as a communication tool is not connected to the actual SR itself. Those who finally read or browsed through the reports did not express major criticism. Most re-cipients judged the quality of the reports positively. The key problem refers to the phase before reading the report: if stakeholders are not even willing to take a minute to browse through the report, it does not matter how good the report is, it simply cannot have any effect.


6.2 Recommendations

What general recommendations resulting from this study can one make to the producers of sustainability reports? The two following aspects need to be dis-tinguished:

1. Recommendations relating to the design and content of an SR itself, which lead to making it more interesting, understandable, and therefore more effective

2. Ways of improving the reception of the SR, thereby tackling the main problem of getting the stakeholders to engage with the SR at all.

6.2.1 Recommendations to Design and Contents of the SR

One aspect that cannot be neglected to pursue the effectiveness of communi-cation with a sustainability report is the report’s design and contents. Below are some considerations the company should have in creating the design and contents of an SR:

• It is crucial for the producer of an SR to make the pursued goal clear and transparent for the stakeholder. If the stakeholder cannot get clarity and has to assume that the particular SR is either a pure advertising sheet or just “another boring collection of data”, then there is the poten-tial risk that even persons interested in sustainability issues will not ap-proach the report with the necessary openness and interest.

• Different stakeholder groups do prefer different styles of SRs. If, for example, a stakeholder approaches a report with a rather professional and analytical attitude, he or she accepts or even prefers reports, which are loaded with information and analytical data similar to an annual or financial report. Key stakeholder groups of Telekom are certainly of this type. Nevertheless, it can indeed be concluded that the majority of re-cipients generally preferred those parts of the text, which clearly differed from the classical report, which aims to provide as much data and ab-stract information as possible. Lively reports, which entail different styles and genres, switching between abstract and rather concrete ex-amples, reports, interviews or portraits are more likely to be received with higher attention. Therefore, this type of report generally has higher communication effectiveness. The more positively ranked report of Weleda might be an example of this. Lively reports and mixed genres are also often seen as more relevant for current situations. They invite


more critical responses and do not hesitate to address controversial is-sues.

• Currently, there is an intensive discussion about standardising the SRs more and creating an institutionalised structure. The findings of this re-search clearly indicate that this would be the wrong direction to follow, but would undoubtedly be a plea for more individual forms, which are adjusted to the specific needs of the particular stakeholder groups ad-dressed. In an environment, which is more and more characterised by severe competition on the market for information brochures and reports, it is a competitive advantage to design a report as concise and concrete as possible. Therefore, one should take the often mentioned preference of the stakeholders for concise reports seriously, which nevertheless cover the whole range of the rather broad issue of sustainability. This might lead to the fact that an SR can only sensitise stakeholders for a complex topic, instead of delivering detailed information, while still in-creasing a company's credibility and trusting its ability to handle the is-sue appropriately. If an SR exists, and a company can credibly transmit its aim of transparency and that it does not want to cover up critical is-sues in its report, then this should usually lead to the stakeholders' will-ingness to engage with the sustainability policy of the company. De-tailed information, which is perceived as rather too heavy, might be better placed in an appendix, or might even be placed on a separate website and then just be referred to. The particular preferred solution is obviously dependant on case-specific factors.

6.2.2 Reception of the Sustainability Report

The already mentioned core problem remains: even an SR, which includes highly relevant and interesting information for the stakeholder concerned with the sustainability issue, will have no impact at all, if one cannot assure that the report is received at all, or at least received sporadically. Therefore, some re-commendations below are important:

• The key issue, therefore, must be to provoke the engagement of the stakeholders with the SR by any means. The stakeholder engagement in the production of the SR will allow the company to have an opportunity to learn much better to whom the company should communicate its SR and what themes it should conclude in its SR as expected by the stakeholders. At the same time, it is hoped that the stakeholders’ trust in the company can also be raised as the stakeholders might feel that their involvement in the report making


process is a sign of company’s responsibility and transparency. Furthermore, the stakeholders might also feel more addressed by the report. By engaging stakeholders in the report making process, it is also hoped that the stakeholders might know much better what SR is and what goals it is striving for. This condition might eventually raise the interest of the stakeholders in SR. In this relation, the role of the government in popularising SR is also essential.

• The interest of the stakeholder must be caught, for example, with the help of an interesting cover, or with accompanying campaigns during distribution.

• The reader must be able to relate the SR to him- or herself. Expecta-tions need to be created that the report might contain something new - central information for the stakeholder - otherwise the report will be lost in a flood of other information sources, with which the stakeholder is inundated day by day. There is no chance of getting attention, if the perception prevails that no new and crucial information will be obtained.

The above mentioned problem certainly shows the area in which there is the most urgent need for further research and investigation into sustainability re-porting (i.e. stakeholder analysis, information interest of each stakeholder group, popularisation of SR) - if the aim is to use an SR as an effective communication tool.

The company must keep in mind that communication especially via an SR is not an easy task as it depends on many factors from both the company’s and stakeholders’ point of view (two-sided and not one-sided communication model). Consequently, the company must take this matter seriously. Communication through an SR is an ongoing task between a company and its stakeholders so that the stakeholder engagement process neither begins nor ends just with the publication of an SR.

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List of Appendices

Appendix A: Invitation letter for the interview to stakeholders

Appendix B: Interview guideline for managers (in German)

Appendix C: Interview guideline for stakeholders

Appendices 249

Appendix A: Invitation letter for the interview to stakeholders

Institute of Forestry Economics University of Freiburg Tennenbacher Str. 4

79106 Freiburg Ph.: +49-(0)761-203 3784

Fax : +49-(0)761-203 3690 E-Mail: [email protected]

URL: http://www.ife.uni-freiburg.de

Martha Fani Cahyandito, M.Sc. • Tennenbacherstr. 4 79106 Freiburg

[Name and Address of interviewee]

Freiburg, …………

REQUEST FOR PHONE INTERVIEW

Dear Ms. / Mr. ..............,

I am a Ph.D. candidate at the University of Freiburg Germany working on the topic „Sustainability reporting and stakeholder communication” with a case study at the (Name of the corporation). In the framework of my research, I would very much like to request your consent for a 20-minute telephone interview. If you agree to this, I will contact you beforehand to arrange the date and time of interview. Your cooperation is, of course, voluntary, which means you may review the enclosed sustainability report from the (Name of the corporation) partially or completely, at will. I am interested to hear your view to questions such as:

Which information contained in the sustainability report were you interested in?

How do you value the credibility of this sustainability report?

In the interview, it is not about giving the right or wrong answers, but it is important to know your point of view. The assessment of the interviews will serve to help further sci-entific researches on other published sustainability reports as a communication instru-ment. That is why the success of my research depends very much on your openness in the interview. The valuation of the interview will be conducted anonymously. The re-search results will be presented to the (Name of the corporation).

I thank you in advance for your willingness to cooperate and look forward to our inter-view.

Best regards,


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Appendix B: Interview guideline for managers (in German)

BEGRÜßUNG UND EINLEITUNG

(Namentliche Vorstellung)

Zuerst einmal vielen Dank dafür, dass Sie der Einladung zu diesem Interview gefolgt sind. Wie bereits in unserem Anschreiben vorgestellt, beschäftigt sich meine Untersu-chung mit dem Themen Nachhaltigkeitsbericht und Stakeholderkommunikation. Ich will im Rahmen der Untersuchung herausfinden, was die Beweggründe zur Veröffentlichung des Nachhaltigkeitsberichtes sind, für wen der Nachhaltigkeitsbericht geschrieben wer-den sollte, welche Informationen die Unternehmensleitung an ihre Stakeholder vermitteln möchte.

Ihre Teilnahme ist selbstverständlich freiwillig. Sie können dieses Interview jederzeit abbrechen, ohne dass dies irgendwelche Folgen für Sie hätte. Die von mir gestellten Fragen können Sie in jeder Weise und Ausführlichkeit beantworten. Es sind keine Wis-sensfragen, daher gibt es auch keine richtigen und keine falschen Antworten. Was mich interessiert ist Ihre Sichtweise. Deswegen ist es wichtig, dass Sie mir offen das sagen, was Sie denken.

Falls Sie damit einverstanden sind, würde ich das Gespräch, mit diesem Tonbandauf-nahmegerät aufnehmen, damit ich dieses Interview besser protokollieren kann. Die Pro-tokolle werden von mir vertraulich behandelt. Alle von Ihnen gemachten Angaben wer-den ausschließlich zu wissenschaftlichen Zwecken und ohne Angabe Ihres Namens weiterverwendet.

Es ist möglich, nachdem Interview bestimmte Teile aus dem Protokoll zu streichen. Ich kann dies auf Ihren Wunsch tun, falls Sie Probleme darin sehen, dass aus den von Ihnen gemachten Angaben Rückschlüsse auf Ihre Person gezogen werden können. Wenn Sie wollen, kann ich Ihnen das Protokoll schicken, damit Sie dazu die Möglichkeit haben, das Protokoll noch einmal gegenzulesen.

Sind Sie mit dieser Vorgehensweise einverstanden? Haben Sie noch Fragen bevor wir mit dem Interview beginnen?

BESCHREIBUNG DER EIGENEN SITUATION

Frage 1. Sie sind ja [Funktion] in der [Abteilung]. Seit wann arbeiten Sie in diesem Betrieb? Haben Sie durchgehend in dieser Abteilung gearbeitet oder haben Sie die Abteilungen gewech-selt?

Frage 2. Sie waren an dem Erstellungsprozess des Nachhaltigkeitsberichtes beteiligt. Können Sie mir bitte genauer erläutern, auf welcher Art und Weise Sie dabei beteiligt waren?

Frage 3. Können Sie mir bitte erläutern, was IHR UNTERNEHMEN unter dem Begriff „Nachhal-tigkeitsbericht“ Ihrer Meinung nach versteht? (Im Vergleich zu anderen Berichte: Ge-schäftsbericht, Finanzbericht, Umweltbericht, usw.)

Appendices 251

Meinen Sie, dass der Nachhaltigkeitsbericht mehr Wert hat als die anderen Berichte (Umwelt-, Sozial-, Geschäftsbericht)

MOTIV UND ERSTELLUNGSPROZESS DER VERÖFFENTLICHUNG DES BERICHTES

Frage 4. Was waren Ihrer Meinung nach die Beweggründe, die IHR UNTERNEHMEN zur Veröf-fentlichung des Nachhaltigkeitsberichtes veranlasst haben?

Frage 5. Wie sah der Ablauf des Erstellungsprozesses aus?

BENUTZTE RICHTLINIEN

Frage 6. a. Zurzeit gibt es einige Richtlinien, die als Rahmenwerk für die Erstellung des

Nachhaltigkeitsberichtes benutzt werden können, wie Richtlinien von GRI, CSR und IÖW/imug. Bezieht sich Ihrer Meinung nach IHR UNTERNEHMEN auf eine der ge-nannten Richtlinien?

b. [Wenn ja]: Welche sind dies? Was sind Ihrer Meinung nach die Gründe, warum IHR UNTERNEHMEN gerade

diese Richtlinien benutzt hat?

ZIELGRUPPEN FÜR DIE VERÖFFENTLICHUNG DES BERICHTES UND INFORMATIONSVERMITTLUNG

Frage 7. a. Können Sie mir sagen, an welche Zielgruppe sich der Bericht Ihrer Meinung nach

richtet? b. Wurde der Bericht auf die spezifischen Informationsinteressen einer Zielgruppe

ausgerichtet?

[Wenn ja]: Wie wurde diese spezifische Information ermittelt? Wie wurde diese Informationsinteresse im Bericht Rechnung getragen?

c. Können Sie mir 3 Themenbereiche (Aussagen) im Bericht nennen, die Ihrer Mei-nung nach (an Stakeholdern) unbedingt vermittelt werden sollen?

Frage 8. Welches Image besitzt Ihrer Meinung nach IHR UNTERNEHMEN aus Sicht seiner Sta-keholder?

Skala: 1 2 3 4 5

Sehr positiv Positiv Mittelmäßig Schlecht Sehr schlecht

Frage 9. Wie wurde der Bericht verteilt? (Wie viele wurden produziert / Wie viele werden verteilt werden?)

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Frage 10. Wie ist Ihre Einschätzung nach der Veröffentlichung des Berichtes: Sind Sie der Mei-nung, dass die im Nachhaltigkeitsbericht veröffentlichten Informationen die Zielgruppen erreichen?

Skala: 1 2 3 4 5

Sehr optimal Gut Mittelmäßig Eher schlecht Überhaupt nicht

a. [Wenn ja]: Wie haben Sie dies festgestellt? (Worauf gründet sich Ihre Einschätzung?)

b. [Wenn nein / teilweise]: Was sind Ihrer Meinung nach die Gründe dafür, dass die Zielgruppen [teilweise] nicht erreicht werden?

NACHHALTIGKEITSBERICHT ALS KOMMUNIKATIONSINSTRUMENT

Frage 11. a. Welche Aufgabe erfüllt ein Nachhaltigkeitsbericht Ihrer Meinung nach für IHR

UNTERNEHMEN?

• Nur Informationen mitteilen?

• Wollen Sie mit dem Nachhaltigkeitsbericht die Einstellung des Stakeholders ge-genüber dem Unternehmen verbessern?

• Oder wollen Sie noch ein weiteres Ziel erreichen, nämlich die Verhaltensabsicht des Stakeholders auch zu beeinflussen?

b. Welche Bedeutung besitzt ein Nachhaltigkeitsbericht Ihrer Meinung nach für IHR UNTERNEHMEN? (Große Bedeutung? Wenig bedeutend?)

Skala: 1 2 3 4 5

Sehr große Bedeutung

Bedeutend Bisweilen be-deutend

Begrenzte Be-deutung

Überhaupt keine Bedeutung

Frage 12. a. Sehen Sie Möglichkeiten, wie der Nachhaltigkeitsbericht optimiert werden kann? b. Gibt es aus Ihrer Sicht andere oder bessere Alternativen zum Kommunikations-

instrument „Nachhaltigkeitsbericht“?

AUSKLANG

Frage 13. a. Gibt es aus Ihrer Sicht Gesichtspunkte, die wir im Rahmen dieses Interviews noch

nicht angesprochen haben? b. Wollen Sie das Protokoll noch einmal gegenlesen?

Appendices 253

Appendix C: Interview guideline for stakeholders

THIS INTERVIEW GUIDELINE IS USED FOR THE INTERVIEW WITH THE STAKEHOLDERS

GREETING AND FOREWORD

(Introduction)

First of all, I would like to thank you for accepting this interview invitation. As I have men-tioned in my letter, my research deals with themes about „Sustainability reporting and Stakeholder communication“. In my research, I will investigate several issues which are expressed in the following questions:

What did you expect from the sustainability report of the (CORPORATION), in other words, did you find the information you were looking for, and did you believe in the infor-mation contained in the report? (If you read the report, partially or completely).

If you did not read the report or did not want to read it at all, I would very much like to know, why you did not read the report or did not want to read it.

Your cooperation is, of course, voluntary. You can stop this interview at any time, without having to worry about the consequences. You may answer the questions in any way and to any extent you see fit. These are not questions that require your scientific answer, so there are no right and wrong answers. I am only interested in your point of view. That is why, it is very important for me that you speak freely about what you think.

If you agree, I will record our conversation with this tape recorder, so I can better write a resumé of the interview later on. The interview resumé will be kept in confidence. All your statements will be used only for scientific research and anonymously.

It is possible to erase parts of the interview if you see this necessary or in case you do not feel at ease with the statements you have made. If you want, I will send the resumé to you, so you have the chance to check it.

Do you agree with the procedure? Do you have any other questions before we begin with the interview?

QUESTION 1 (FAMILIARITY WITH THE SUSTAINABILITY REPORT) Have you ever heard about the term „sustainability report“?

[If yes]: What do you think is the meaning of this term? Have you ever read the report?

[If no]: You have received the new sustainability report from the (CORPORATION). Have you read this report?

[If yes]: Could you define the term with your own words? (Further questions re-fer to Questions for stakeholders, who have read the report). [If no]: (Further questions refer to Questions for stakeholders, who have not read the report).

254 Literatures

THIS INTERVIEW GUIDELINE IS USED FOR THE INTERVIEW WITH THE STAKEHOLDERS, WHO HAVE

READ THE COMPANY’S SUSTAINABILITY REPORT

FAMILIARITY WITH THE SUSTAINABILITY REPORT / INTEREST

QUESTION 2. a. Have you heard about this report, before we sent it to you?

[If yes]: How did you hear about it? b. Are you interested in the sustainability report at all?

Scale: 1 2 3 4 5

very interested Interested somewhat inte-

rested not so interested

not interested at all

(If the respondent is not interested in the report, but read the report, then we should ask his/her reason, why he/she is not interested). c. With which expectations did you start reading the report?

COMPREHENSION

QUESTION 3. a. Did you enjoy reading the report?

Scale: 1 2 3 4 5

very much Enjoyed moderately

enjoyed did not quite

enjoyed did not enjoyed at

all

b. Did you read the whole report or did you just briefly flip through the pages? Or were you only especially interested in several parts of the report?

Scale: 1 2 3 4 5

read 100% read 75% or more read 50% or more read 25% or more read less than

25%

How long did you read the report?

Scale: 1 2 3 4 5

1 hour or more 45 min or more 30 min or more 15 min or more less than 15 min

Was it easy to read?

Scale: 1 2 3 4 5

Very easy Easy moderately easy difficult very difficult

• What did you think about the size (length) of the report?

Scale: 1 2 3 4 5

very appropriate Appropriate quite appropriate not appropriate not appropriate at all

Appendices 255

• It is now 114 pages long. How many pages should it be?

• What did you think about the design and colour of the report?

Scale: 1 2 3 4 5

Very good good moderate not good Ugly

• What did you think about the font type and size used in the report?

Scale: 1 2 3 4 5

very appropriate appropriate quite appropriate not appropriate not appropriate at all

• Did the theme classification help you to understand the report more?

Scale: 1 2 3 4 5

very helpful helpful somewhat helpful not helpful more confusing

• Did you think that the language style of the report understandable is for everybody?

Scale: 1 2 3 4 5

very understand-able

understandable most of it under-standable

difficult to under-stand

most of it difficult to understand

[If only parts of the report were read or if little time was invested in the reading, say 5 minutes or just flipped through the pages]:

Why? Was it because of the content? Or was because of the form?

QUESTION 4.

Did you feel yourself addressed by the report?

Scale: 1 2 3 4 5

very much addressed neutral not addressed more put off

[If yes]: By what?

[If no]: For whom do you think this report was written?

INFORMATION WISH/DESIRE

QUESTION 5. a. When we compare the sustainability report with other reports, such as business,

finance, environmental or social report, does the construction/content of the sustain-ability report have more value according to your opinion? (Even though it has fewer pages).

b. Did you find the environmental themes that you are interested in the report?

Scale: 1 2 3 4 5

Yes, 100% Yes, 75% of them Yes, at least 50% Seldom, 25-50% Less than 25%

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What are these? (If not 100%): What did you miss in the report? Or what else should be in the re-port? Or were there themes that you missed or should have been more empha-sized?)

Did you find the social themes that you are interested in the report?

Scale: 1 2 3 4 5



Did you find the economic themes that you are interested in the report?

Scale: 1 2 3 4 5



c. Can you name three things that are for you most important in the sustainability re-port?

QUESTION 6 (KNOWLEDGE ABOUT THE COMPANY, SUSTAINABILITY REPORT AND COMMUNICA-TION) a. What do you know about the company? b. Do you think the company is trustworthy?

Scale: 1 2 3 4 5

very trustworthy trustworthy more or less / no

comment not always not trustworthy

c. What do you think is the intention of the making of the sustainability report?

• informing the message?

• as a PR strategy or tool for manipulation?

• to make the company image better?

• to affect the stakeholders’ behaviour?

QUESTION 7 (RELIABILITY OF THE INFORMATION)

a. Do you think that the information contained in the report is reliable? Or do you have a feeling that the report just tries to present a good image for the corporation?

Appendices 257

Scale: 1 2 3 4 5

very trustworthy Trustworthy more or less / no


[If no]: Which parts of the report were for you untrustworthy?

b. How do you think can the reliability of the report be improved?

• Through the stakeholders’ comments?

• Verification from environmental auditors?

• etc.

IMAGE OF THE SUSTAINABILITY REPORT AND THE CORPORATION

QUESTION 8. a. Is this sustainability report, the first sustainability report from the German Telecom

that you have ever read? Or have you also already read the previous report? [If the previous report was read]: Do you think that the new report better or worse

is compared to the old one? b. Do you have any idea, what could make the report more interesting?

• by the content

• layout (inside/outside)

• etc. c. In your opinion, through which media should the next report be best published?

QUESTION 9. Do you now have the feeling that after having read the sustainability report, you now have a different or better understanding (image) of the company and its activities?

Scale: 1 2 3 4 5

definitely better somewhat better neutral somewhat worse definitely worse

QUESTION 10 (ATTITUDE INTENTION) What are your intentions after having read company’s sustainability report?

- Customer: keep buying/using the products/services of the company? - Employee: want to keep working there or even work harder? - Shareholders: keep you shares in the company? - Local government/Public authorities: keep giving ‘licence to operate’? - etc.

QUESTION 11 (FINAL NOTES) a. Is there anything in our interview that has not been mentioned, according to your

opinion? b. Do you want to read the resumé of the interview?

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THIS INTERVIEW GUIDELINE IS USED FOR THE INTERVIEW WITH THE STAKEHOLDERS, WHO HAVE

NOT READ THE COMPANY’S SUSTAINABILITY REPORT

QUESTION 2 (FAMILIARITY WITH THE SUSTAINABILITY REPORT) Would you please tell me, why you did not read or did not want to read the report?

Was it because of the form? What is wrong with it?

Or was the reliability of the information the reason for your not reading the report? a. Do you think that the information in the report is true as it is? Or do you have a feel-

ing that the report just wants to deliver a good image for the German Telecom?

Scale: 1 2 3 4 5

very reliable reliable moderate not reliable not reliable at all

b. How do you think a company can achieve making a reliable report? - Through the stakeholders’ comments? - Verification of environmental auditors?

Or was because of your disinterest in the report or because you did not feel being addressed by the report (being a stakeholder of the company)?

a. Did you think that you didn’t have any reason to read the report because you were not interested in it?

b. Or you did not want to read it because you feel that you are not a stakeholder of the company? Or did you feel that the report was not made for you?

Scale: 1 2 3 4 5

very much addressed neutral not addressed more put off

[If yes]: For whom do you think the sustainability report is written?

Or was the company that produced the report the reason? a. What do you know about the company? b. Do you trust the company?

Scale: 1 2 3 4 5

very trustworthy trustworthy more or less / no


QUESTION 3 (INFORMATION WISH) Would you please tell me, what is it in the sustainability report that you want to read?

QUESTION 4 (KNOWLEDGE ABOUT COMMUNICATION WITH SUSTAINABILITY REPORT) What do you think was the purpose of producing the sustainability report? - just informing the message - as a PR-Strategy/tool for manipulation?

QUESTION 5 (IMAGE OF SUSTAINABILITY REPORT) a. Have you read the previous report?

Appendices 259

[If yes]: Do you think that the previous report better is as the new one? b. Through which media do you think should the next sustainability report be pub-

lished?

QUESTION 6 (FINAL NOTES) a. Are there any other issues that you think we have not mentioned in our interview? b. Do you want to read the interview resumé?

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