The rise and fall of corporate social responsibility reporting in a multinational subsidiary in Bangladesh: a longitudinal case study

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The rise and fall of c
orporate

social

responsibility

reporting

in

a

multinational

subsidiary

in

Bangladesh
:
a

longitudinal

case

study



Ataur Rahman Belal, Aston Business School, Aston Unive
rsity, UK
*


and

David L. Owen,
International Centre for
Corporate Social Responsibility,
Nottingham University Business School
, University of Nottingham, UK



*
Contact details


Ataur Rahman
Belal Ph.D
.

Finance & Accounting Group

Aston Business School, Aston University

Birmingham B4 7 ET, UK

E
-
mail:
a.r.belal@aston.ac.uk

Telephone: 0121 204 3031

Fax: 0121 204 4915





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2

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Corporate social responsibility reporting in a multinational
subsidiary in Bangladesh: a longitudinal case study


Abstract

The main aim of this paper is to examine
the underlying
drivers

for
the
development
and
the
subsequent discontinuation of

stand
-
alone
corporate social responsibility
(CSR)

reporting in a multinational subsidiary in Bangladesh
. The research
approach

employe
d for this purpose is a longitudinal case study using evidence
from

documentary analysis and
a
series of
in depth interviews

conducted over a nine year
period (2002
-
2010)
.

Although
early

social
disclosures (
via annual reports
)

in the
company
can be traced back to the
197
0s t
he stand
-
alone
CSR

r
eporting process
started in 2002
. It appears that
while

the process was
initiated with the encouragement
of

its head office based in
Europe

the social reporting process gave the reported
subsidiary a
for
mal
space to legitimise its activities in Bangladesh where both tobacco
control
regulation and strong anti
-
tobacco movement
were

gaining momentum.

At the
start of the process in 200
2

corporate interviewees were very receptive
and upbeat
of
this initiative and reiterated that it would not be a one off exercise.
However,
at

the
backdrop of increasing criticism of the
CSR

activities of the organisation at home and
abroad the process was brought to an abrupt end

in 2009
as part of a global
ra
tionalisation initiative.

The paper unpacks the underlying factors responsible for the
cessation

of
CSR

reporting in the organisation.


Key words:
Social Reporting,
CSR
,

Bangladesh, Legitimacy, Case Study,


1.

Introduction

This paper reports a longitudinal
case study of the development and the subsequent
discontinuation of

stand
-
alone
corporate social responsibility (CSR) reporting in a
multinational subsidiary in Bangladesh

(ABC thereafter)
.

A major area of increased
research interest in the area of
CSR

reporting is that of examining and seeking to
explain the rise of corporate disclosures on social, ethical and environmental issues

(Owen, 2008)
.

However, as opposed to the earlier content a
nalysis based studies of
CSR reporting, current research has moved on to using more direct methods for
exploring managerial motivations, such as in
-
depth interviews with corporate
managers
(Belal, 2008; Belal & Owen, 2007)
. Responding to Gray’s
(2002)

and
Parker’s
(2005)

recent call for more engagement
-
based research, and in an attempt to
seek a richer and more in
-
depth understa
nding of social accounting processes within
organisations, social accounting researchers have begun to undertake intensive case
studies.


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3

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41


Prominent examples here include studies of the UK’s fair trade organisation
Traidcraft
(Dey, 2007)
, Landcare Research, New Zealand
(Bebbington & Gray,
2001)
, Irish Agency for Personal Service Overseas (APSO)
(O'Dwyer, 2005)
, Total
SA, France
(Cho, 2009)

and Ghana’s Volta River Authority
(Rahaman, Lawrence, &
Rop
er, 2004)
. While these much needed case studies provide an invaluable insight
into social
and environmental
accounting practices within the above mentioned
organisations, it is significant that none of these
case studies were undertaken in the
context o
f

traditional commercial
organizations (except Cho’s study on Total SA)
. It
is the social, ethical and environmental accounting practices of the large commercial
multinational enterprises (MNEs) which are of more major concern because of the
enormous
impact of these organisations


operations on different stakeholders and their
lives

particularly in
developing

countries
. Currently, MNEs are not disclosing enough
on their social and environmental performance
(Newson & Deegan, 2002)
. O'Dwyer
(2005
, p.292
) notes that ‘there is an urgent need’ for the examination of social
accounting practices from the perspective of the ‘corporate world’.
From the
Banglad
eshi context Belal
(2008)

made a specific call for such case studies.
In
addition,
Hopwood
(2009)

called for detailed case studies of corporate environmental
and sustainability reporting practices to expose the ‘variety of motives’ (p.438)
implicated in the production of such reports.
While
acknowledging

that such case
studies might be difficult to un
dertake due to lack of necessary access to the
companies to examine a sensitive area of interest, Hopwood
(2009)

urged

a
ctive
researchers in this area to make
serious
attempts for such challenging case studies.
This

study
responds to that challenge
.



Our main aim
in this study
is to
scrutinise
the motivations underpinning the current
stand
-
alone
CSR reporting initiatives
in

ABC

operating in a developing country
. The
precise research question of the study is as follows:



W
hy
has
stand
-
alone
CSR reporting developed
and subsequently discontinued
in

ABC
?


The research aim is im
portant given the enormous power enjoyed by the
mul
tinationals
(Korten, 2001)

and the need to hold them to an account which is
matched by
the
power possessed by them. Such necessity is even more significant in
the context of the multinationals operating in the developing

countries where
regulation

and policy development is weak, civil society is underdeveloped and public
awareness is low. As we will see in the next section given that
the
largest number of
tobacco users are now located in the developing countries

we can ex
pect to see a
larger expansion of the tobacco companies in those countries either directly or
indirectly. It cannot be emphasised any more how important it is to expose the CSR

and its

reporting activities of these tobacco multinationals operating in devel
oping
countries w
hich allegedly claim

promotion of ‘transparency and accountability’
via
these initiatives
as our case study company ABS did. Such scrutiny might have
notable implications for the development and improvement of tobacco control policies
and
regulation
s in developing countries in general and Bangladesh in particular
.


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41


This

study
contributes to the social and environmental accounting literature in

a
number of

ways
. Firstly,

while most of the previous studies focused on examining the
motivations

for extant social disclosures this study also examines the factors driving
the cessation of social reporting in the case study organisation. As far as we know this
is the first study which did so.
ABC began, implemented and discontinued the
production

of stand
-
alone CSR report during the period under study. Thus we are able
to capture the internal and external dynamics that contribute to each of these
important developments in it. The unique setting and situation under study are part of
the appeal of t
his study.
Secondly,

while most of the evidence
s

in the social

and
environmental

accounting literature
are

secondary data based
(including the two
studies
(Moerman & Van der Laan, 2005; Tilling & Tilt, 2010)

reported on the
tobacco companies)
this study provides
primary
evidence from a field work based
longitud
inal case study over a
long
er

period

of time
.
Finally
,
this study provides much
needed empirical evidence of the motivations of CSR reporting of multinational
commercial organisations operating in a developing country

where there is a relative
lack of research as noted by Islam and Deegan
(2010)
.

Islam and
Deegan

argued that
‘there is a general absence of such research within the context of [multinational]
operations undertaken within a developing country’ (P.134).


The paper proceeds with
a

discussion of the context of tobacco regulation and the
activities

of the
media and the
anti
-
tobacco groups in Bangladesh.
There follows a
brief discussion of
the relevant literature in this area and an elaboration of the
theoretical perspective adopted in this paper
.
Section
four

explains the research
approach

employed in the study. The penultimate section of the paper provides the
key findings and its analysis which is then followed by a discussion of the results in
the final section.


2.

The c
ontext of
t
obacco
c
ontrol and
r
egulation in Bangladesh

WHO estimates t
hat more than 80% of the total smokers worldwide come from
developing countries where tobacco use is still increasing as compared to the
developed countries
where it is reported to be decreasing
(
http://www.who.int/mediacentre/factsheets/fs339/en/index.html
, accessed, 31
st

August, 2010).
Bangladesh is one of the poorest countries of the world where tobacco
use is very high and is considered
to be one of the largest

market
s

by the tobacco
industry

with an estimated 20 million tobacco users
(
http://www.tobaccoeconomicsbd.org
, accessed, 10
th

October, 2010)
. According to
the 2009 Global Adult Tobacco Survey (GATS) approximately
43% of all adults (age
15
+) use some of form of tobacco

in Bangladesh

(WHO, 2009)
.


The oldest tobacco control regulation in Bangladesh was enacted in
1890 via
Railways Act which stipulated penalties for smoking in train compartments without
permission of
the
fellow passengers. Another older piece of law is the Juvenile
Smoking Act of 1919 which prohibited selling cigarettes to under 16s. The Smoking
and

Tobacco Products Usage (Control) Act, 2005 and the Smoking and Tobacco
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41


Products Usage (Control) Rules, 2006 were enacted in 2005 and 2006 respectively.
The
se

tobacco control legislations slapped a
comprehensive
ban on all forms of
tobacco advertisements,
made most public places smoke
-
free and required clear
warnings to occupy 30% of the front and back of cigarette packs.

Even before this
legislatio
n Bangladesh had

a Presidential
d
ecree passed in 1990 banning tobacco
advertisements in the country. However,
it was not enacted in law in
the
wake of
active lobbying by the tobacco industry

in Bangladesh
.


The current
legislative

framework also discourages tobacco cultivation in the country

and provides incentives for cultivating alternative crops to the farmers
. In 2010,
in
line

with the current spirit of
tobacco
control
legislation
, Bangladesh Bank
(Central
Bank of Bangladesh)
has banned loan for tobacco farming.
The National Strategic
Plan of Action for Tobacco Control (NSPATC) specifically aims to reduce the
prevalence of tobacco use in the country. Inter alia, it also aims to increase tobacco
tax in each year’s budget.

Accordingly, with a view to discourage tobacco cultivation
in the country in the budget of 2010
-
11 a 10% levy has been proposed on tobacco leaf
exports. In recent times the current Law
Minister

also hinted for stricter amendment to
the current
legislative

framework for tobacco control (The Daily Star, 10
th

August,
2010).


These
legislative measures

were part of Bangladesh’s commitment to implement the
provisions of
FCTC
. Bangladesh signed the FCTC on 16
th

June, 2003 and ratified it
on 10
th

May, 2004. Here
it is to be noted that Bangladesh was one of the first
signatory to the FCTC from South Asia. Bangladesh was actively involved in the
development of the FCTC. The then Health
Minister

of Bangladesh presided over the
WHO’s
56
th

session which ap
proved the FC
TC in May 2003.

Here it is interesting to
note that while WHO excluded tobacco industry in the framing of FCTC
ABC

had
been consulted in the development of tobacco legislation in Bangladesh.
The
company represented the tobacco industry on behalf of Bangladesh Cigarette
Manufacturers’ Association and provided inputs to the
consultation

process of
tobacco legislation.


The anti tobacco movement in Bangladesh dates back to
1980s when the first
anti

tobacco
organisation

was established in 1987 with the name of ADHUNIK’
1
. It was
established by one of the famous
campaigner

of anti tobacco
activities

who
has
also
been

a medical practitioner. In 1998 Bhorer Kagoj

(Morning News)



a local daily
newspa
per


declared a policy of not accepting any tobacco advertisement. In 1999
Bangladesh Anti Tobacco Alliance (BATA) came into existence specifically in
response to a promotional campaign by
ABC

and managed to mobilise
a
massive
public opinions against the campaign. BATA filed a successful writ
petition

in
Bangladesh High Court against the campaign whereby the Court
issued an
order



1

‘We Prevent Smoking’
.

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prohibiting all further promotions around the campaign. BATA also led a successful
court cas
e against another multinational tobacco company which ultimately ceased
operations in Bangladesh.

BATA’s current work includes a campaign for tobacco tax
increase.

Its

declared objectives include raising awareness
against

tobacco use and
contribute to the
national tobacco policies and legislations. It works closely with
WHO, Bangladesh office which plays a significant role in the tobacco control
activities of the country and provided technical assistance to the formulation of
national tobacco control strate
gy (NSPATC). WHO, Bangladesh conducted a
significant survey on tobacco related illnesses in Bangladesh. It also provided
technical assistance to the 2009
GATS
in Bangladesh
. Bangladesh was one of the
three countries from the South East Asia selected for th
is influential survey on
tobacco use.


In addition to the above actors in the tobacco control field in Bangladesh a number of
NGOs


work include tobacco control activities and research on the social and
economic effects of tobacco cultivation and use. Pro
minent NGOs in this regard
include
Consumers’ Association of Bangladesh (CAB),
Policy Research for
Development Alternative

(
UBINIG
)
and
Development Coordination

(
UNNAYAN
SAMANNOY
)
.

CAB is an active member of BATA and has been campaigning
against tobacco since 1981. It
has
lobbied the
G
overnment of Bangladesh for anti
-
tobacco legislation

and currently engaged in raising awareness of the harmful effects
of tobacco use and effective imp
lementation of tobacco
control
legislation in
Bangladesh. One of its current campaigns includes lobbying the government for
inclusion of pictorial warning
on the cigarette packs
in the tobacco legislation.
UBINIG
conducts various researches documenting the

ill effects of tobacco farming
and the
exploitation

of tobacco farmers in the
hands of
tobacco
companies
(
http://www.ubinig.org/index.php/home/showAerticle/15/english
, accessed 8
th

October, 2010)
.
UNNAYAN SAMANNOY
runs an advocacy programme titled
‘Policy Advoc
acy for Tobacco Taxation’ funded by the Tobacco Free Kids Initiative
,
USA
. As part of the comprehensive tobacco control initiatives the main aim of this
advocacy programme i
s to lobby the policy makers

for ‘
more effective tax and price
policy measures through necessary policy analysis and advocacy

http://www.tobaccoeconomicsbd.org/index.php
, accessed, 8
th

Oc
tober, 2
010).

We
have already mentioned the influence of
these advocacies

and lobbying measures by
various NGOs on the policy makers
(e.g.

recent 10% levy on tobacco
leaf
exports and
a ban by
the
Bangladesh Bank on loans to the
tobacco
farmers
)
.


3.

CSR Reporting,
Legitimacy and Tobacco Industry

In a critical examination of the tobacco giant Philip Morris’s “People” advertising
campaign Metzler
(2001)

noted that tobacco industry in gene
ral ‘is under siege from
various publics’ (p.372).
The legitimacy threat the industry faces from global
regulation, attacks from media and intense pressures from anti
-
tobacco groups have
le
d

to develop and utilise various legitimacy strategies in order to
protect

its survival.

It can be argued that CSR and its reporting are used by the tobacco companies as
legitimising tools
(Moerman & Van der Laan, 2005)

to renew its ‘social contract’ in
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41


the communities it is operating.
We argue t
hat l
egitimacy theory provides an
appropriate lens for this study to examine the development and subsequent cessation
of stand
-
alone CSR reporting in ABC



a
company which operates within a
controversial sector and under intense scrutiny by media, anti
-
tob
acco groups and
civil society in Bangladesh
.


Citing Lindblom
(1994)

Deegan &
Unerman

(2011)

notes that
legitimacy

is a status or
condition,
ligitimation

is a process and an organisation being considered as
legitimate

by its ‘relevant publics’ is the outcome o
f that process.

‘L
egitimacy’

is a critical
resource required by the organisations for its continuity and survival
(D
owling &
Pfeffer, 1975)
. Suchman
(1995)

defines it as
“a generalized perception or assumption
that the actions of an entity are desirable, pro
per, or appropriate within some socially
constructed system of norms, values, beliefs, and definitions” (p. 574)
.
Legitimacy
gap will emerge when there is incongruence between organisational activities and
stakeholder

expectations.
Symptoms of this gap bec
omes pronounced

when pressure
groups and media engages in lobbying government for increased taxes, tighter
regulation and prohibition of certain activities (for example, CSR activities by the
tobacco companies).
In a recent refinement of legitimacy theory

O’Dwyer, Owen, &
Unerman

(2011)

cites
Suchman
(1995)

to talk about
three types of legitimacy,

viz.
pragmatic (aimed at
satisfying the needs of
immediate audiences and generally
involves exchanges between the organisation and its immediate audience), moral (it is
conferred based on a normative evaluation of organisational activities
)
and cognitive
legitimacy

(based on comprehensibility and taken for grantedness)
.

It appears that
social and environmental accounting researchers are
primarily

concerned with
pragmatic legitimacy and moral legitima
cy

which is also the primary concern of this
study
.


Organisational l
egitimacy theory

(Dowling & Pfeffer, 1975)
, in addition to other
socio
-
political theories of socia
l and environmental accounting, viz., political
economy, stakeholder and institutional theories, has been widely used in the social
and environmental accounting literature
to explain corporate motivations behind the
social and environmental disclosures
(See for example, Campbell, Craven, & Shrives,
2003; de Villiers & van Staden, 2006; Deegan, 2002; Deegan & Blomquist, 2006;
Deegan, Rankin, & Tobin, 2002; Moerman & Van der Laan, 2005; Tilling & Tilt,
2010)
2
.
It suggests that organisations will use di
sclosure as a tool to appear legitimate
in accordance with the changing social norms and expectations

(Cho, 2009; Cho &
Patten, 2007)
. Most of the previous research noted above argued that in the context of
percei
ved legitimacy threat organisations would maintain or increase their disclosures.




2

Chen & Roberts (2010)
explores the relationship between legitimacy theory,

institutional theory,
resource dependence theory and stakeholder theory.

They do so by using

the notion of ‘legitimacy’ as
an overarching concept

and categorises legitimacy theory into institutional legi
timacy and strategic
legitimacy. While institutional legitimacy operates at the macro level and talks about the legitimacy of
the system strategic legitimacy operates at a micro level


organisational level. The strategic or
organisational legitimacy is th
e focus of this paper.

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However,
in an extension of the legitimacy theory
de Villiers and van Staden
(2006)

revealed that under certain situations organisations can change the type of disclosures
or reduce it in order to ap
pear legitimate.
They argue that this is consistent with the
legitimacy theory.
In the South African context they
showed

that after an initial period
of increase environmental disclosures decreased (also there was change in disclosure
types from specific t
o general) to reflect the changing attitudes of South African
society with regard to environment.
In their attempt to theorise the conditions under
which reductions in
CSR
disclosures
may take place
they provide
the following

list:

1.

when societal suspicions

or concerns reduce or disappear,

2.

when an organisation moves from a strategy of (re)gaining legitimacy to one of maintaining it
(once legitimacy has been achieved, it may be maintained by less disclosures and/or more
general disclosures),

3.

when managers rea
ssess the importance/influence of stakeholder groups they previously
thought important/influential,

4.

when managers stop disclosure in the hope that this will assist in reducing the importance of
the issue,

5.

when managers perceive disclosure to be useless in
the legitimation effort,

6.

when managers move on to a more in ‘vogue’ social disclosure theme or one where they
happen to have good news, in order to maintain their overall image as a socially
-
responsible
company, or

7.

when managers perceive an issue to have t
urned ‘sensitive’.

(p.767)


From the Irish context O’Dwyer
(2002)

found that Irish managers were reluctant to
make some environmental disclosures as they thought it might not be useful as a
legitimation strategy. They argued that
reactive
corp
orate disclosures may provide
credence to the existing
legitimacy
concerns raising further societal scrutiny on the
issue.
Belal and Cooper
(2011)

provided similar explanations i
n their examination of
the reasons for Bangladeshi managers’ reluctance to disclose on certain social justice
issues such as child labour, equal opportunity and poverty alleviation.
They cite
Adams, Coutts & Harte
(1995)

to observe that corporations may deliberately resort to
non
-
disclosure or reduced disclosure
strategy
with a view to achi
eve control over
disclosure agenda an
d inf
o
r
mation flows to the stakeholders.
Exploring this point
further
de Villiers and van Staden
(
2006
) cites Oliver
(1991)

to argue that in certain
publicly sensitive industries (e.g. tobacco and arms manufacturers) companies may
decrease disclosures or may replace specific

detailed disclosures with vague general
disclosures or with more in ‘vogue’ disclosures where they have a better and positive
story to tell.
They further suggest that companies in this type of industries could adopt
less
(non)
disclosure strategy ‘to avoi
d further scrutiny’.
This is what Oliver
(1991)

termed a
s ‘.......avoidance tactics, such as ceremonial conformity, symboic gestures of
compliance, and restricted access to information on the company’s practices........’
(p.164).



Here the concepts of

symbolic
legitimation’
and

substantive legitimation

introduced
by

Richardson
(1985)

and later further clarified by Ashforth & Gibbs
(1990)

are
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41


relevant. It can be argued that when organisations are faced with legitimacy threats
they could e
mploy a combination of these legitimation techniques.

Symbolic
legitimation


involves attempt to conform to the social norms and values without any
change in actual practice on the ground.
As part of this legitimation activities
organisations
, for example
,

may establish
environmental

policies without any
effective implementation procedures

for it
. Moreover, managers may suppress
(Ashforth & Gibbs, 1990)

or control
(Richardson, 1985)

information if it is likely to
threate
n legitimacy.

‘Substantive legitimation’, on the other hand, would require
significant adjustments to the organisational routines and procedures to be in line with
the social expectations.

Examples could include full implementation and compliance
with well

known standards like GRI Guidelines or ISO standard 26000.

However, in
order to achieve the desired legitimacy organisations would need to communicate this
significant change in practices to the stakeholders.


All of the

previous

three studies
on social reporting in tobacco companies
employed
content analysis method and legitimacy theory to analyse and explain their findings.
Based on their analysis of BAT’s (British American Tobacco) first social report
published in 2002
Moerman and Van der Laa
n
(
2005
) found support for legitimacy
theory and argued that in the face of increasing legitimacy threat arising from WHO’s
global regulation via
Framework Convention of Tobacco Control (FCTC)

social
reporting provided the company an opportunity to influen
ce the public policy arena.
However, the other two studies found decreasing
CSR
disclosures within the annual
reports
of

BAT [1975
-
1997]
(Campbell et al., 2003)

and Rothman [1956
-
1999]
(
T
illing and Tilt
,

2010)
. Based on their findings while Campbell et al (2003)
concluded that they could not find support for legitimacy in the tobacco industry
(which was expected to provide more disclosures to deal with the legitimacy threat) in
the light of recent conceptualisa
tion of legitimacy theory by
de Villiers and van
Staden
(
2006
), noted earlier,
Tilling and Tilt
(
2010)

argued that legitimacy theory
could be used to explain this decreasing trend. They suggested that Rothman might
have entered a phase of legitimacy loss
when the company did not find disclosure as a
useful device in their attempts for legitimation.
Drawing on the influential works of
Ashforth & Gibbs
(1990)

Suchman (1995)
Tilling and Tilt

(
2010)

provided

an
organisational legitimacy model consisting of
various

phases


establishment,
maintenance,
extension
,

defense, los
s
and

disestablishment
.
These phases are now
explained below:



Establishment:
This is what Suchman (1995) referred to as gaining/building
legitimacy. The challenge here is to gain acceptance from the ‘relevant
publics’ in the early years of oganisational li
fe by making sure that its
products/services are in congruence with the

expectations of the ‘relevant
publics’.
Incongruence

might lead to a loss of legitimacy.



Maintenance:
Gaining legitimacy is harder than maintaining it. Upon gaining
legitimacy it
becomes much easier for the organisation to maintain it with
symbolic legitimation practices.

In this phase once
conferred by
the ‘relevant
publics’
‘legtimacy tends to be taken largely for granted’
(Ashforth & Gibbs,
1990, p.183)
. Less CSR disclosure is usually needed to maintain than ga
in
legitimacy.

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10

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41




Extension:

It would normally be found when firms enters into new activities
or practices due to changing social expectations. For example, a firm which
previously maintained legitimacy by CSR disclosures within annual reports
may move into a

comprehensive stand
-
alone reporting regime in an attempt to
extend its legitimacy.



Defenc
e

(or Repair)
:

This occurs when organisational legitimacy is
threatened
leading to

legitimacy gap or crisis. This aspect of legitimacy
attracted most of the attention of social and environmental accounting
researchers.

Prev
ious scholars have shown that in

the event of crisis (e.g.

Exxon Veldez) organisation
s

would increase CSR disclosur
es to minimise or
repair the damage caused to its reputation or image.

Cho (2009) reports the
results of a case study of environmental reporting practices of French oil
multinational Total SA. Examining its environmental disclosures around two
major enviro
nmental disasters the study argued that Total employed
environmental reporting as a legitimising tool as opposed to an exercise of
organisational accountability. He argued that in response to the environmental
disasters Total defended its activities by usi
ng a combination of image
enhancement (self laudatory disclosures linking positively with social norms
and values), avoidance/deflection (distracting/diverting stakeholders’ attention
from the controversial issue to other non related issues) and disclaimer

strategies (denying responsibility/disassociating from controversial issue
concerned). According to
Dowling and Pfeffer
(1975)

firms under
defence

phase may adopt
three legitimation methods: adapt outputs, communicate to
change social expectations and communicate to identify with symbols or
institutions of legitimacy (e.g. GRI

Guidelines
). Similarly
L
indblom

(1994)

talks of four
types

of legitimation

strategies
: educate pu
blics

of organisational
change
, change social expectations without changing firm behaviour,
manipulate perceptions by distracting
to unrelated issues
and change external
expectations of its performance.



Loss:

It is
normally preceded

by intense media scruti
ny, new regulatory
control and hostile presssure groups

(Tilling, 2006)
. These are the symptoms
of organisations having problematic or low legitimacy. Tobacco companies in
Bangladesh could be an example here which are facing
unfavourable tobacco
policy shift,
hostile anti
-
tobacco pressures, incre
ased tax and tighter regulator
y
control as discussed in the preceding section.

Tilling and Tilt
(
2010)

observed
that Rothman’s decreasing disclosures might be indicative ‘of an organisation
losing legitimacy over a period of time’ (p.74).
Firms in this phase are more
likely to resort t
o less disclosure strategy or
may make
deliberate attempt to
withhold information by
replac
ing

comprehensive
CSR
reporting

with
‘symbolic’ disclosures within websites or annual report
s
.



Disestablishment
:

Once the firm is in the loss phase it might attempt

to travel
towards the
disestablishment

phase and then start all over again to regain
or
re
establis
h
its legitimacy
(Tilling & Tilt, 2010)
.


Page
11

of
41


Tilling and Tilt
(
2010)

argued that firm’s legitimation strategies might involve
moving from one phase to another

over a period of time
.
They might not
necessarily
move in the order

outlined above
. Some firms might not
go

through all the phases at
all.

It should be noted that while gaining or extending legitimacy could be a proactive
response defense or repair of legitimacy represents a reactive approach
(Ashforth &
Gibbs, 1990; S
uchman, 1995)
.


From the above review of relevant literaure we observe that all three previous studies

(Campbell et al., 2003; Moerman & Van der Laan, 2005; Tilling & Tilt, 2010)

were
based on secondary data only and called for further investigations of the assertions
made in these studies by the use of other methods such as interviews
“with those
responsible for producing annual reports, and other reports where social disclosure
a
ppears
.......” (
Tilling and Tilt 2010
,
p.77)
.

Similarly,
Moerman and Van der Laan
(
2005
) also invited future research using interviews with key players and adopting a
longitudinal approach.
This
longitudinal
study contributes to this body of

literature by
providing this called for empirical data collected via interviews with corporate
managers and stakeholders of ABC.

The following section explains the empirical data
collection and analysis method used in this study.


4.

Research
a
pproach

This
paper

presents a longitudinal case study of a tobacco multinational in Bangladesh
(hypothetical name
ABC
).
It
is a Bangladesh based subsidiary of
a
European

multinational company

listed on the Dhaka Stock Exchange
. It has a
hundred year
long history of operatio
ns in Bangladesh and in the nearby region. Currently it
employs more than
118
6

people in Bangladesh. It also provides indirect employment
to a further
5
0,000 farmers, distributors and suppliers in Bangladesh

(
ABC
’s Annual
Report
2010
, p.3)
. It has a long
history of CSR reporting since 197
5

through its
annual reports (197
5
-
2010
). However, it has started publishing separate social reports
since 2003 following a two year reporting cycle. So far
three

social reports
(2003,
2005 and 2007)
have been published. I
t
was

the first and the only company in
Bangladesh publishing social reports following international standards

such as GRI’s
Sustainability Reporting Guidelines and AA 1000.

The final reason for choosing the
company is accessibility.


The field work
for th
is study
started in
February

200
2

before
ABC
’s publication of
first social report and finished in
July

2010
after
the
cessation

of
social
report
ing in
ABC
. Thus, the data in this study was collected over a long period of time
[9

years]
for us to be able to build a rich story of the case organisation under study.
An
explanatory case method
is
used in th
is

study ‘to explain the reasons for observed
practice [in this case
stand
-
alone
CSR reporting in
ABC
]’
(Ryan, Scapens, &
Theobald, 2002, P.144)
. A case approach helps to focus the study on a single setting
(in this case
ABC
) and thus it enables the undertaking of a rig
orous and intensive
analysis of the phenomenon examined
.

Page
12

of
41



Access to the organization was
negotiated
via the Company Secretary of the company.
The Company Secretary and the first author belong to the same professional
accounting institute in Bangladesh.
This professional belonging was used to develop
the contact and get in touch with him.
The first interview in the company was
conducted in 2002 as part of a larger study. This is when it w
as
found

that the
company wa
s about to embark
on stand
-
alone

social
reporting process.
It is at this
stage it was decided to undertake a detailed longitudinal case study of the
phenomenon (CSR reporting) in
ABC
. In 2004 the Company Secretary was contacted
(via email) again for necessary access to the
senior
individuals wit
hin the company.
This generated a cold response from the company. However, after several telephone
calls and follow up emails over a prolonged period of time preliminary acc
ess was
given to the researcher

in 2006
. In
accordance with the prior arrangements
the first
author visited the company

in 2006.

At

the entrance
of the company
an airport style
security process was carried out on the researcher and his vehicle before reaching the
Company Secretary’s office where

a warm welcome was given

and the researche
r was
introduced over a lunch to the senior managers of the Corporate and Regulatory
Affairs department within which the CSR unit
is

located.

This was rather unexpected
given the cold response given in 2004.
In th
is

meeting the background of the project
was explained, researcher’s identity and motivation for the project were discussed.
Since then necessary access was given to the researcher to interview various senior
managers of the company at
various

points in time

until 2010 when the researcher
withdrew from the company. The researcher left the company in 2010 as the company
took a decision to discontinue stand
-
alone social reporting in 2009 and it was also felt
that the access was getting saturated after seeing th
e research
er

for such a prolonged
period of time in the company.

However, significant access to the company
maintained over a long period of time gave the researcher the opportunity to develop a
detailed and credible story on the development and subsequent

discontinuation of
stand
-
alone
CSR reporting in the company.


The case is constructed by a combination of qualitative research methods


face to
face interviews and documentary analysis.
A
total

of
22
interviews
had been

conducted in Bangladesh both with
corporate managers and the relevant stakeholder
groups.
Details of the interviews are provided in Table 1 below:

INSERT TABLE 1 HERE


C
orporate interviews
ha
d

been carried out

in Bangladesh with senior managers of
ABC

particularly with those involved in the CSR reporting process

in their place of
business (except
the
one conducted in the interviewee’s residence)
. Another
round of

interviews
was

undertaken

with various stakeholder groups of
ABC

in Bangladesh
(e.g.
g
over
nment/r
egulatory agencies,
community and a
nti tobacco g
roups).
Most of
the

interviews
w
ere

recorded
(when permitted) using a digital recorder
and
then
subsequently
transcribed.
Where recording was not permitted extensive notes were
taken immediately after
the interviews.

T
he
average
length of the interviews
was

6
0
minutes.

All of the interviews were conducted individually in a face to face mode
Page
13

of
41


(except
two

interview
s

which w
ere

conducted via telephone).
These were then
followed up by further telephone calls

and

emails.


In addition to
the
interviews, an extensive documentary analysis
was
undertaken in
order to cross check and corroborate the information which have been found during
the interviews

and vice versa
. Documents analysed include
ABC
’s
three
social
reports
(
2003, 2005

and

2007
) and

all
available
annual reports (197
5
-
20
10
)
.
Two approaches
have been used to
a
nalyse these documents. Firstly, using disclosure
indexing

approach
(Buzby & Falk, 1978; Maali, Casson, & Napier, 2006)

we have determined
the level of disclosures in each year via a
social disclosure index for each annual
report and social report.
We did not measure the volume of disclosures as our
objective was to observe the trends in social reporting over the study period. This
approach was also used by
de Villiers & van Staden

(2006)

for the study of the trends
in South African environmental reporting.
The analytical framewo
rk used for this
purpose

is GRI’s Sustainability Reporting Guidelines (G2)

which contained 13
economic, 35 environmental and 4
9 social indicators
.
For each item disclosed was
given a score of 1 and
0

if not disclosed.
T
he total of each year

was
then
divide
d by
the total of all possible items (97) to develop the index for each year.
3

Secondly, the
same data was also interrogated more qualitatively via
an
‘interpretive textual
analysis’
(Laine, 2009, 2010)

approach.
Under this more loosely used approach
attempts were made to examine the development and changes of various disclosure
t
hemes in different time periods
.



Further

to the
various corporate

documents
, various local newspaper articles related to
ABC

and its activities
ha
ve

been

used

as supplementary evidence.

As noted earlier,
ABC

published its first social report in 2003 and the third and final social report was
published in 2007. The decision to discontinue social reporting was taken in 2009.
Keeping this timeline
in mind
we structure the findings of this paper in the following
w
ays:



Early
social
disclosure initiatives in the annual report

(1975
-
2002)



The rise of stand
-
alone reporting
(200
3
-
2007)



The discontinuation of stand
-
alone reporting
(200
8
-
2010).







3

One can argue whether early disclosures of ABC can be expected to meet the comprehensive
demands of GRI Guidelines, however, we used it to ensure consistency of our comparison between
different reporting periods against a common ba
se. GRI Guidelines has become a de facto standard for
companies around world for sustainability reporting

(Brown, de Jong, & Lessidrenska, 2009; Etzion &
Ferraro, 2010)
.

.

Page
14

of
41


5.

CSR
r
eporting
in

ABC

5.1
Early
CSR

disclosures in the annual report
s

(1975
-
2002)


The genesis of
CSR

reporting
in

ABC

can be traced back to the 19
7
0s. The word

CSR


was

first used in its annual report of 1984 (p.6):

During the year, your c
ompany discharged its
corporate social responsibilities
, as a good
corporate
citizen. (Emphasis added)


The
overall level

of
economic,
social and environmental disclosures in the company’s
annual report
s

appearing over the
28

year
s

period

(1975
-
200
2
) is shown in Figure 1
below

(average disclosure level of only 8.2%)
:

INSERT FIGURE
1 HERE


Figure
1
above
shows that although the company had early examples of
CSR

disclosures in the annual reports it increased significantly in
recent

years

(
since 1999
)

and more disclosure
s

were made in the social categories
.
Since 1999

anti
-
tobacco
movement in Bangladesh gained momentum and government
was playing a proactive
role in the development of

FCTC.

As we noted earlier, in 1999
ABC

had a major
setback involving
a
promotional campaign of one its major product which was
strongly r
esisted by the media and anti
-
tobacco groups

resulting in a court ruling
banning all further promotions around the campaign
.

While the company did not
mention this event in its annual reports

(or in any other report)

1999 report contained
two pages
defendi
ng

its views on tobacco marketing and smoking. In the annual
report of 2000
ABC

published its
first
marketing code of conduct

devoting whole one
page
. During the years since 1999
ABC

also increased its disclosures on various
social and community contributi
ons.


The company’s
early
social disclosures
focused on

topics
including

labour relations,
afforestation and tree plantation activities,
tobacco cultivation and tobacco taxation.
It
appears that the company had reasonable labour relation
s

throughout its
operations in
Bangladesh
.

Afforestation and tree plantation
s

are key flagship CSR activities

of the
company which started in 1980
at the instigation of Government of Bangladesh in its
desire to increase the forest cover of the country. This
has
also served

the need of the
company for more

wood fuel require
d in tobacco processing.


A
lthough the company’s afforestation initiative

was publicised as meeting country’s
energy requirement and drive for forest cover one of the company’s interviewees
acknowledged that:

At the same time our purpose, which is you know, ensuring wood fuel supply
for
tobacco
processing........

(
Interview 5
)

Page
15

of
41


The company’s afforestation drive

and the motivation behind it
, however, came under
attack from the environmental and anti
-
tobacco groups of the country as noted by the
above interviewee

of the company
:

Environmentalists were practically on our throat beca
use they were saying that we are
promoting

exotic foreign variety (‘Ipil Ipil’) which are damaging for the environment of the
country.



One of the interviewees of anti
-
tobacco groups commented on the tree plantation
activities of the company:

I am very wa
ry of their tree plantation activities. I think it is designed to cover up

their
requirements for more wood
fuel
supply. If you cut a tree and plant a new one, would it not
take

longer to replace the original one?

(
Interview 18
)


Tobacco cultivation
is another theme which
featured quite strongly in the early annual
reports. To decrease its reliance on tobacco leaf imports the company expanded its
tobacco cultivation quite aggressively to become

self
-
reliant and to export to other
subsidiaries of the c
ompany in different parts of the world

where cigarettes are being
manufactured
. This is evidenced by
the increase in
areas cultivated from 700 acres in
1972 to 22,500 acres by 1976. This was also facilitated by the
then
government
setting up Tobacco Development Board and giving the company President’s Gold
Medal for agricultural development via tobacco cultivation.
However, tobacco
cultivation in the country came under attack in recent times from the media and
the
anti
-
to
bacco groups.

Also government policy on tobacco cultivation has changed with
the enactment of
Smoking and
Tobacco
Products Usage (
Control
) Act, 2005 whereby
government is now discouraging tobacco cultivation.
This is also evidenced by the
replacement of pr
evious Tobacco Development Board with the Department of
Agricultural Extension (DAE) whose aim is to reduce tobacco cultivation over the
years

by promoting the cultivation of alternative crops
. In addition,
Bangladesh Bank
has
recently

issued a circular ba
nning bank loans for tobacco farming.
The
interviewee from
the
DAE

commented:

Given the adverse environmental impact of tobacco farming we discourage farmers to grow
tobacco. Our policy is to decrease tobacco growing areas over the years. We encourage
farm
ers to produce alternative crops.

(
Interview 22
)


Tobacco taxation is another area of concern to the company.

On the one hand, the
company boasts

about its economic contribution to Bangladesh as one of the largest
private sector tax payers and on the other hand, it remains significantly concerned
about adverse impact of tobacco taxation on its profitability. This is evident from the
following extra
cts of company’s annual report of 1981 (p.5):

In my last review I stated that the two most important constraints to our profit growth were
price control and an anomalous excise structure.


Page
16

of
41


In 1983 the Chairman of the company made an appeal to the governme
nt to
rationalise its excise duty structure
.
Several interviewees from the company were
quick to point out the company’s
great
contribution to Bangladesh in the form of
tobacco tax

and employment generation
.
For example,

However, we felt that we could help by virtue of having an opportunity here.... To give you an
example, we have
hundreds of

employees in
[
ABC
]
. I think then you have
hundreds of

employees


families who have good income so that they can have upward social m
obility.

At
the same time we have
thousands of

farmers and their families from whom we buy tobacco.
We pay
over

3
0,
000
million

taka
4

as tax. It helps government in spending money for [social
development].
(
Interview 2
)


However, several stakeholder interviewees brushed aside this contribution by the
tobacco industry by
drawing attention to the significant

social and health costs

arising
from tobacco use.

In spite of the claims made by

the tobacco companies of their contr
ibution I am very
concerned about the human and health costs of tobacco to the country.
(
Interview 21
)

It is a very serious issue. It is killing people like war. Thousands of peoples are dying in
Bangladesh every year due to tobacco related diseases. So th
ere is no way we can support the
tobacco companies. It does not matter how they repay us in the form
of
tax. The net costs to
the country are always higher.
(
Interview 17
)


According to

one

study
(WHO, 2007)
,

over 57,000 people (9% of all deaths) died in
2004
5

in tobacco related diseases in Bangladesh. In a cos
t
-
benefit analysis of the
tobacco sector the study estimated that while the sector contributed taka 24.8 billion
per year in the form of taxes and wages the health bill to the country was in the region
of taka 50.9 billion. Thus
net costs of tobacco usage
to the country were

in the region
of taka 26.1 billion

arising from tobacco related illnesses
. This statistical data from
WHO appears to support the concern shared by the stakeholder interviewees.


In sum, while the themes
observed

in the early years’ repo
rt continued until the recent
years
,

in the later years the company started to draw
more
attention to its social and
community
development initiatives
.

After examining the
early

social disclosures in
the annual reports of
ABC

we now turn our attention to the review of their stand
-
alone
social reporting.







4

$1=Taka 70 approximately.

5

This is the latest statistics on this subject at the time of writing this paper.

Page
17

of
41


5.2
The rise of stand
-
alone reporting (200
3
-
2007)

Social reporting
process in
ABC

started in 2002 followed by
the

publication of first
social report in 2003 and ended in 2009

following a two yearly cycle of reporting
.

The
company
claimed

the objective of newly started social reporting process
w
as to make:

….the organisation transparent and accountable for its ethical

performance …. (Annual
Report, 2002, p. vi)


The
average
percentage of GRI disclosures
made in the social reports
against all
possible disclosures is around 40
.5
%
(
Figure
2
)
.

In the same figure we also showed
the comparatively limited disclosures made in
the annual reports in the same period
(2003
-
2007)

(average disclosure level of 19.4%)
.

INSERT FIGURE
2

HERE


It is notable that during this time period disclosures within the annual reports
stabilised as more disclosures were made in the social reports.
Social disclosures
remain
ed

the dominant category in this period as well.
The nature of disclosures in
these two documents was
to some extent
different. While disclosures in the social
reports were more specific and detailed

as evidenced by the provision o
f ‘hard’
indicators required by GRI
,

disclosures in the annual reports were more general and
vague. For example, under the environmental category the company reported its
carbon emissions in tonnes in all three social reports which
were

never
disclosed

in
the annual reports. In the annual reports company’s environmental management
activities were more generally
couched in terms of

its afforestation and tree
plantations activities.


In
its

first
social
report
ABC

covered eight themed topics on consumer information,
public smoking, youth smoking prevention, responsible marketing, tobacco
regulation, tobacco taxation & pricing, environmental management and corporate
citizenship.
It is noteworthy that some of these t
hemes have been reported by the
company in their annual reports before as illustrated in the
previous subsection of this
paper.

It appears that social reporting gave the company a formal space to reiterate
those issues of course this time with
the
vetting
of

stakeholder dialogue.

For this
purpose the company identified the stakeholders through stakeholder mapping and
internal scoping study. The stakeholders were then invited via
a

moderator

appointed
by ABC
. All issues raised
during s
takeholder dialogue ses
sions
were recorded and
reported via social report. The report was then verified by an external verifier. The
contents of the report were mainly structured around the various issues raised at the
stakeholder dialogue which were held in different parts of t
he country where the
company has operations.
In addition to that the company reported on various
other
social, environmental and economic issues against certain selected GRI indicators.


Page
18

of
41


While continued with most of these themes in the second report
ABC

dropped the
theme of responsible marketing and replaced it with the theme of harm reduction.
This was done at a time when local awareness a
bout the
health hazards of tobacco

use
was increasing. The Ministry of Health established a National Tobacco Control

Cell
which works closely with

WHO, Bangladesh
.
The company

also dropped the themes
related to regulation and taxation. Are these changes a
mere
coincidence? In 2005
Bangladesh passed Smoking and Tobacco Products Usage (Control
) Act which
imposed a compreh
ensive ban on tobacco advertising.

Increased tax
had been

enacted
to the national policy and strategy documents on tobacco.
In its latest budget of 2010
-
11 the government has proposed
a
10%
levy

on tobacco
leaf

export (The Daily Star,
23
rd

June, 2010). This move practically reversed the previous decision in 2003 to give
10% cash incentive to tobacco
leaf

exporters (The Daily Star, 3
rd

December, 2003).

Responding to this in a media interview one of the senior manager
s

of the company
expresse
d disappointment saying,

The duty will hurt the competitiveness of the Bangladeshi produce in the international market,
as no country in the world imposes duty on the product
.....

When Bangladesh is looking for export diversification, the proposed export d
uty will
definitely be considered as regressive. It will also negatively impact the livelihood of
thousands of farmers.



This is the first time when government imposed duty on an export item.
However, this

is line with the aim of
national tobacco strategy

(
NSPATC
)

and the tax authority
explained the rationale behind it as follows,

..... it has been done to discourage cultivation of tobacco on farmland
…..

tobacco cultivation
has affected farmlands adversely and it is also threatening food security.

(The Dai
ly Star, 11
th

June, 2010)


In the first two reports
ABC

focused on several themes. However, under the theme of
environmental management stakeholders’ concerns over the harmful effects of
tobacco farming was coming through. At that time media and

anti
-
toba
cco groups
were also highly critical of tobacco farming in the country.
There
were

also evidence
of community level protests and rally against tobacco cultivation as
reported in the
media
(The Daily Star, 10
th

April, 2008)
.


Unsurprisingly, the company
decided to focus on tobacco farming in its last and final
report. One of the senior managers of the company commented:

Nongovernmental organisations (NGOs) and
the
media made a big fuss about it
[
tobacco
farming
]

and we decided to respond via our third soc
ial report.
(
Interview 2
)


Another interviewee

of the company articulated t
he rationale behind the focus on

tobacco cultivation as follows:


Page
19

of
41


We also observed that towards the end of 2005 and in early 2006 there were many negative
media reports on the environmental effects of tobacco cultivation, e.g. tree cutting, reduction
in soil fertility etc. So the public expectations changed from tobacco
marketing to tobacco
cultivation. This trend was particularly observable in the negative media reporting. Many
issues were raised, e.g. deforestation, soil fertility damage, economic deprivation/health
effects of farmers, food crop replacement, etc. There
were many allegations which might not
be necessarily true.
(
Interview 8
)


Th
e above
discussion

shows that

ABC’s

CSR and its reporting in Bangladesh appears
to be driven a by a combination of global and local forces that are many and complex.
Main global in
fluence arises from the nature of the organisation with global presence
and with a head office in
Europe

which adopted stand
-
alone social reporting in 2001.
Another important influence to be noted here is the global regulation o
f

tobacco
industry
via WHO
’s

FCTC. Bangladesh is the first signatory to the FCTC from the
South Asian region and WHO’s local office in Bangladesh has extensive tobacco
control activities. Significant local driving forces include government of Bangladesh
and its various agencies, loca
l anti tobacco groups and the media.


Several interviewees attempted to explain the drivers of the social reporting process in
the company. When the social reporting process started in 2002 the then Head of
CORA

emphasised that it will be a continuous exer
cise:

Believe me, believe me this is a commitment we are taking very seriously. I mean first of all
as we go through the social reporting process itself, which will be beginning this year. We’re
making it clear that we are going to make specific concentrat
ion
in

the next 3 years. It’s not
going to happen in one year. It’s going to take the first year to understand
it;

second year will
be a little better and hopefully
in

the third year things will be in line. Then

we are not thinking
of
abandoning

it, we are

not thinking of box ticking exercise because we are raising our own
standards.
(
Interview 1
, emphasis added
)


On the question of how social reporting emerged within the group in general and the
Bangladesh subsidiary in particular one interviewee at the he
ad office in
Europe

responded,

When we first started social reporting, we encouraged our larger markets to take part but it
was really at the discretion of a market whether they wanted to or not, which is why we had
quite a mix of some of our largest marke
ts, but also some of our smaller ones, like Fiji, for
instance. ........But we encouraged as many markets as possible to take it up. So there would
have been encouragement from the centre to do so. But it would have been Bangladesh
subsidiary’s decision

to take it up or not.
(
Interview 16
)


The current Chairman of the company who was the leading champion behind the
introduction of social reporting in
ABC

gave the background of this initiative in the
following words,

Yes. I think it came about with the active encouragement of the head office. There was a huge
debate in the management at that time, of which I was a part, whether we should do it or
it

will
open
the
Pandora’s

b
ox. Since other subsidiaries of the group had

started it we felt that we
Page
20

of
41


should not lag behind. Why not start something new in the country which could be an example
in the future for other
companies
....... Initially, hesitation was there but at the end of the day
like many other initiatives we’ve dec
ided to introduce it.

(
Interview 9
)


Another interviewee highlighted the circumstances which led to the development of
social reporting in the company:

Around the world I think the work on
FCTC

was gaining momentum. If you recall the earlier
provisions of WHO's proposal

stipulated

that no consultation will be made with the tobacco
companies in the compilation of the tobacco related policy. I think that was a trend around the
world where we were

no longer able to put forward our views.
We've been excluded from
policy discussions.
....

That gave us an external push to do something.

We realised that we're
becoming irrelevant in the policy discussion.
.....
. I think at that time there was a growing anti
-
tobacco movement around the world. Because
[
ABC
]

used to do things unilaterally we
became irrelevant to society. I think social reporting helped us to get back as a relevant force
within society. I think in t
he context of Bangladesh if we do not participate in any social
programmes whatsoever then we're nothing more than a trading company sucking all the
economic benefits and profits out of Bangladesh to our head office and that’s it. Then why
would any govern
ment or civil society here want to engage with us?.... I think we need to
become more relevant to society rather than alienate them. That has also influenced us to think
what social reporting is about.
(
Interview 2
, emphasis added
)


In response to the ques
tion of why Bangladesh subsidiary started the social reporting
process the
above
interviewee said,

Bangladesh participated, I think, in the 2nd cycle. Bangladesh is one of the big operating
entities [subsidiary] within the ... group. I think in terms of vo
lume of cigarette it’s huge.
Bangladesh was chosen for two reasons. First, because of the need to do social reporting in
Bangladesh. Second, the ability of the company [
ABC
] to do social reporting. It has a proper
CORA function and it has peoples and skill
s to do it.


The above data and analysis shows that one of the big push for social reporting came
via the head office which
,

in turn
,

was influenced by WHO’s FCTC.WHO not only
influenced the parent company but also influenced the Bangladesh subsidiary’s C
SR
and its reporting via Bangladesh office which has a large tobacco control programme.
WHO
,

Bangladesh has provided technical assistance to the Ministry of Health for the
preparation of national tobacco control strategy paper.


In addition to WHO other i
nternational influences to be noted here include
Centre for
Disease Control (CDC), USA,
Bloomberg Initiatives and Path, Canada which
supported various anti tobacco organisations in Bangladesh. The local anti tobacco
movement in Bangladesh can be traced back to the 1980s with the
establishment of

‘ADHUNIK’

followed by

BATA

specifically in resp
onse to a huge promotional
campaign of one of the
ABC
’s products. As part of this campaign in 1999 a yacht
sailed from
Europe

with the final destination being Bangladesh via 17 countries in
170 days.
ABC

heavily promoted the campaign via advertisement in l
ocal
newspapers. In response BATA mobilised protests and rallies against the campaign of
Page
21

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41


the company. Since then anti tobacco movement accelerated and gained further
strength. The pressure from the anti tobacco group was identified by one of the
interviewe
es as follows:

I think, from what I understand, prior to social reporting there wasn't much engagement with
the anti
-
tobacco groups or even society at large. .......Social reporting allows you to have that
kind of engagement and to get ideas from them. At

least you're talking to them. Rather than
suspicion, you know, and thinking that they're plotting conspiracy. That is what we should be
doing. The whole point of social reporting is to develop a bridge. To
some

extent there is a
better understanding of ea
ch other's position. There are areas we can agree on and let’s do that
for a start. There are things which you can't agree. Let’s say anti
-
tobacco group said that we
want you to shut down your factory. Then obviously we can't do that. It’s impossible. That
’s
all we do. But if they ask us to be responsible in the m
arketing of cigarettes; y
es
,

we can do
something about it. Tell us what you want us to do. Social reporting does not mean you do
whatever they ask you to do. But you can at least try to meet them a
nd see where you can co
-
operate. That’s the value of social reporting.
(
Interview 2
)


Articulating its relationship with the anti tobacco groups in Bangladesh the
above
interviewee further add
ed
,

Some people from the anti
-
tobacco lobby sits on the other s
ide of the spectrum. It’s a position
of opposition and fear. Between us and them there is this silent
member

of the public and
the
policy makers
. The
point

is that their level of commitment and opposition affects us. It’s well
known. Our position is also well known. The question is which position is the reasonable one
to the society? The only judge for that are the peoples sitting in between us and them. The

more people realise that we're responsi
ble, we're reasonable and

we're trying our best

the
better
. They are trying the same thing as well. The amount of pressure, the players on the stage
are well known. It’s a question of demonstrating who is trying thei
r best to resolve issues as
opposed to merely pointing fingers. We're serious about it and not paying merely lip service.
We're serious about resolving some of the issues that we're accused of, issues that are
important to the society. More and more people

are realising that we're a
responsible company

within a
controversial industry
. Anti
-
tobacco groups play on this controversy to criticise us.
But if you're responsible
,

despite being controversial
,

at least some part of the society accepts
you as a releva
nt party

(emphasis added)
.

Similar to the anti tobacco groups another important local influence on the company’s
CSR and its reporting is Bangladeshi media. Bhorer Kagoj, a local news paper which
voluntarily refused to carry tobacco advertisement, conven
ed a roundtable meeting in
1999 to discuss strategies against the promotional campaign of the company discussed
above. On some occasions media and anti tobacco groups worked together to promote
anti tobacco activities in Bangladesh. One interviewee
emphasi
sed

the importance of
the media

saying
,

.... Now you have 8/9 TV channels

or even more

in Bangladesh
. Newspapers are becoming
very vocal and more organised. These peoples are playing a very big influential role in terms
of putting pressure on us.
(
Intervie
w 5
)


Another interviewee notes the importance of media,

You know that the media plays a very important role in the modern world. Global shift
towards having a responsible business practice has had influence in our country. The
businesses in our country are also realising the importance of CSR ..... I think what

is
happening globally that has influence in our country too.
(
Interview 8
)


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22

of
41


The mounting media

pressures on the company

have been articulated by another
senior manager
:

There is a very active tobacco control group in the country. That’s one. Second, there
are

a
group of media which also work in tandem with the tobacco control groups. So there are
direct links between some
of the activities that we see.
Basically a lot
of tobacco control
groups try to do advocacy through media.
(
Interview 2
)


Government of Bangladesh and its various agencies bear an important influence on
the activities of the company. This was emphasised by several corporate interviewees.
For example,
the above

interviewee said,

....in our business one of the important stakeholder is government

b
ecause the government can
create regulations and rules which have an impact on us.


Another interviewee identified t
he government agencies’ importance

for the company.

I’d say that stakeholder groups like Ministry of Environment. They have a
big
stake in our
company because our farmers need some wood fuel for tobacco curing. Ministry of Finance
have a big stake because we contribute a large amount [of t
ax] to the national exchequer.
.....They are important to us and we would like to take their views into consideration.
(
Interview 8
)


In its Annual Report of 2005 the company commented,

The biggest external influence on the industry was the Smoking and Tob
acco Product
Consumption (Control) Act 2005. It was promulgated by the Government of Bangladesh in
March 2005 to
fulfil

its obligations as a party to the FCTC.

(
P
.5)


However,
over time government tobacco policy has significantly shifted from
being
supportive to more unfavourable in recent times which are evident in
some recent
measures taken in tobacco legislation and national tobacco strategy

(e.g. increased
tax, advertising ban and discouragement to tobacco cultivation)
.

While the company
survived

in this rather unfavourable climate
these changes
have
clearly put
the
company under
intense
pressure
. The pressure was further augmented by the hostile
anti tobacco movement and the critical media.
These factors might have a bearing on
ABC’s subsequent d
ecision to cease stand alone social reporting.


5.3
The
discontinuation of stand
-
alone reporting (200
8
-
2010)

After examining the various drivers
for undertaking

social reporting in
ABC
, it is
worthwhile to explore the reasons for cessation of social reporting
during this period
.
By
2007

ABC

has
published

three social reports and was preparing to publish the
fourth one in 2009.
In response to the question of why social reporting ended in

ABC

several interviewees
directed us to the head office
sa
ying

that it was a decision taken
at the centre (head office).
In an email response
ABC
’s

South East Asia regional

head
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23

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41


of
corporate

and regulatory affairs wrote that it was in line with the intent
ion to
produce a consolidated global report instead of individual country level reports.
He
also confirmed that
ABC

would

continue its CSR
and stakeholder engagement

activities
.



One of the interviewees

articulated the reasons for cessation of social reporting at
the
end markets including Bangladesh as
a
change of
strategy

on the part of the company


a decision taken by the central board of directors in 2009.
The interviewee

explained,

A number of factor
s were at play.
……


we were getting feedback from our stakeholders
that the plc report should be more globally representative. It had previously been a much
more strategic document. So we were under pressure to include more information in there on
end market activities.

..
We’re going through a large programme of global integration at the
moment which means that we’re reducing the complexity and the duplication within the
organisation.
……

we did a review of our social reporting globally, and one of the things that
came bac
k very strongly from our markets, and this research was carried out by an
independent

consultancy firm rather than us just ringing up people ourselves. And the
feedback that came back very strongly was whilst the dialogue was incredibly valuable and
the ma
rket saw a lot of benefit from completing the dialogue, the reporting side was less
valuable to them. We had a very, very robust reporting process in place. Whilst we did leave
it to
the

market whether or not they wanted to report. The way that they repo
rted was
much

regimented. It was very intensive, involving indepen
dent moderator facilitating the
dialogue.
The reports
..

had to be assured, had to meet all the various requirements that we put in place.
And reporting requirements were quite onerous. B
ut the dialogue was felt to be very
beneficial. So with those things coming into play, we made the decision that
we would have
only one sustainability report for the group
. But that we would still encourage our markets
to continue dialogue and to report o
n the dialogue that had taken place.
(
Interview 16,
Emphasis added)


On enquiry regarding how the proposed new stakeholder dialogue would be different
from the previous dialogue carried out as part of social reporting process the
interviewee clarified,

Th
e only difference is that we’ve relaxed the
requirements

around assurance. So in the past we
insisted that the assurance was carried out by the same assurance provider who assured the
whole report….
They were proving to
be
incredibly expensive in
the
end
markets and also
because one of our objectives is to relax the burden on the end markets.

So now they do
need to be assured
b
ut

the way that they can assure them is different. So it can be assured by
the facilitator
……
or they

can get the participants to ve
rify that it’s true and accurate
recording of events…..

(
Interview 16,
Emphasis added)


Thus the decision came in as part of a global rationalisation initiative designed to
address the issue of resource constraints.

I think it’s about rationalising global resources of a global organisation.
(
Interview 11
)


The economic imperative also surfaced in the following comment published in the
parent company’s recent sustainability report:

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24

of
41


Not producing local reports will free

up time and resources to concentrate on the
implementation of the sustainability initiatives. Performance will continue to be monitored
and reported through our audit and CSR committees. Similarly, dialogue, transparency and
accountability remain central
to our approach. Our local companies will continue to engage
with stakeholders to help shape their local sustainability plans and initiatives. (p.6)


At the same time anti tobacco groups were attacking the CSR
communications

of the
tobacco companies.
The a
bove

interviewee remarked,

I think what is happening globally is that there is more and more pressure from anti tobacco
groups to stop communication channels by tobacco companies. So there is increased pressure
on stopping CSR communication by
the
tobacco

companies. And also to stop corporate brand
communication by tobacco companies. That’s one area of increasing pressure that is being
mounted on tobacco companies.………
CSR by the tobacco companies is also being
challenged at its basic premises.

That’s
also local. I mean local tobacco control groups are
actively talking about restricting CSR activit
ies

by
the
tobacco companies.
(
Interview 11
,
emphasis added
)



The interviewee further added
on
how the local anti tobacco movement is getting
stronger
, vocal

and critical

in recent times,

The last 3 years there has been
a
very special focus on Bangladesh as a market.
Bangladesh is
one of the markets under tobacco radar.

Much more
is
featured now. Bloomberg initiatives,
which now funds some of the biggest
tobacco control activities, funds quite a few Bangladesh
tobacco control projects. And so this is already in their third year now.………..Global Adult
Tobacco Survey, GATS, where Bangladesh is among the first 3 markets in the region which
features in the sur
vey. ……..So there is much more intense activation by the tobacco control

groups.

I
f you are comparing the previous movement and the current
phase

and the current
drive, there is a dramatic shift into that.
(
Interview 11
,

emphasis added
)


In a recent semi
nar on tobacco control the incumbent Law Minister of Bangladesh
hinted that ‘amendments will be brought to check advertisements by tobacco
companies in the name of CSR’ (The Daily Star, 8
th

August, 2010).
The
public
relations

nature of
ABC
’s CSR activities was also criticised by one
of
the anti
-
tobacco
campaigner
s interviewed for this study
:

I am working in this field [anti
-
tobacco] for
a
long time.

Although they are publicising that
they are trying to address these issues [social and envir
onmental] in a transparent and
accountable way I remain far from convinced
. They do it to protect their interests… Their
CSR activities come down to planting trees after cutting down trees for tobacco processing.
This is becoming a farcical exercise.

(
Inte
rview 18
)


In a similar way a notable medical practitioner and one of the earliest anti
-
tobacco
campaigners of Bangladesh
questioned
the credibility and sustainability of the
company’s activities and the stakeholder dialogue based social reporting exercise
:

I went there but that does not mean I support them or their activities. The discussion
[stakeholder dialogue] like this is good as you can hear the view
s from the tobacco companies

and also express your own views ........ If you
involve

everyone in a dis
cussion you can
influence

it in a better way and that is how the dialogue is a good one. Actually in the dialogue
they described the social activities they are doing such as tree planting, health care activities
Page
25

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41


etc. But if you critically analyse this they

do it to make the people understand
that
the tobacco
companies are doing social activities but that does not take away their social responsibility of
killing people by serving tobacco. I said it many times in many words, if the tobacco use can
show one si
ngle benefit I will stop all my anti tobacco activities.
........
They have invited us to
have

our opinions which we
expressed
. How much they publish it and give it to their
consumer is a big question which I believe they will not.
(
Interview 19
)


There is
already evidence of stricter enforcement of tobacco control laws in
Bangladesh

and government has announced harsher amendment to the anti
-
tobacco
laws (Financial Express, 10
th

April, 2011)
.
As noted earlier, t
here also appears to be a
policy shift in favou
r of reduction of tobacco
leaf
export,
cultivation and increased
tax.
Several NGOs and anti
-
tobacco pressure groups lobbied government for these
policy shifts.
All these factors had an impact on the company’s decision to end
stakeholder dialogue based
stan
d
-
alone social reporting in Bangladesh.


S
ince the company ceased stand
-
alone social reporting a separate section on CSR has
been introduced in the annual reports of 2008
-
20
10

mainly
highlighting the
topics of
company’s afforestation and other community
development initiatives
.

During this
period
average

CSR disclosure level
within annual reports
increased

(25.1%)
as
compared to the previous period (2003
-
2007)

(19.4%)
.
Disclosure levels of these two
periods

are

shown in Figure
3.

INSERT FIGURE
3

HERE


Figure
3

shows that after stabilisation of annual report disclosure levels
over

the
stand
-
alone
social reporting period (2003
-
2007) disclosure levels have increased since
2008 to compensate for the discontinuation of stand
-
alon
e

social reporting.
While
stand
-
alone social reporting provided more detailed specific disclosures based on
formal stakeholder dialogue and
the
GRI guidelines that level of details and
specificity could not have been sustained within the limited space of annual reports.
Inste
ad some general narratives have been provided
with
in the pages of annual reports
for the years 2008
-
2010

with a separate CSR section introduced.

During the previous
years w
hile CSR disclosures
barely

exceeded more than a
few

of page, in 2008 the
company de
voted nearly 13 pages describing its various
CSR
activities. By 2009 the
length of CSR disclosures within the annual report nearly doubled with a new 8 pages
long environmental, health and safety
(EHS)
section introduced.
However, this
significant increase

in volume of disclosures in annual reports is not matched by
the
use of ‘hard’ indicators previously found in the stand alone social reports.
During the
years
2008
-
2010
the company mainly highlighted its flagship CSR activities on
afforestation (this time

with an added claim of helping to prevent climate change),
community developme
nt (e.g. education, health care and

provision of drinking water
and flood relief) and EHS activities.

It is also noteworthy that since 2007 as part of a
structured directors’ re
port the company included a section titled, ‘responsibility’ to
comment on its various CSR activities.



Page
26

of
41


The attempts of further compensation for dropping stand
-
alone reporting w
ere

explained by

a

manager of the company

as follows:

There are
various

avenue
s and media we are exploring.
..
currently we are in the process of
preparing a CSR brochure…Because our stakeholders…want to know about our CSR
projects… we felt that we need some kind of hard copy reference….Previously what used to
happen is that if someone was asking
about

our CSR proj
ects we used to hand them o
ver

social reports

...

But the social reports are no longer there………
there is also one recruitment
website [where]… we have mentioned some CSR activities

… we don’t have plans to have a
separate website for CSR activities…..
(
Inter
view 12
)


However, later in 2010 ABC introduced a website
which
contain
s, inter alia,

a brief
CSR section. However, nothing new appeared here other than claiming it as a
‘responsible company’ and framing its CSR agenda in terms of afforestation and
communi
ty development initiatives such as
drinking water project and promotion of
sustainable agriculture in its tobacco farming areas. The website also talks about its
support for ‘sensible’ regulation and the belief that
the tobacco industry

should be part
of i
ts development. Another theme covered by the newly introduced website centres
around the issue of health. However, instead of defending
the
issue of health hazards
of tobacco here it focused on

projecting an image of a company which is striving to
minimise

the harms arising from tobacco use.


While the parent company in its
recent
sustainability

report attempted to justify its
decisions in
favour

of one global report the Bangladesh subsidiar
y

re
frained from
making any comments on

its decision to discontinue stand
-
alone reporting
.
The only
comment they made in their 2008 annual report
is that
they complied with all
commitments made in their 2007 social report without even mentioning the
discontinuation of social reporting.
Thus, st
and
-
alone social reporting disappeared
quietly.
However, the company did not fail to highlight its introduction of stand
-
alone
social reporting in
its
2002

annual report
:

Social reporting provides us with a formal framework in which to listen to the views
and
expectations of all our stakeholders. This has given us an excellent insight as to how we are
perceived

and how the stakeholders believe we can improve as a corporate citizen. We have
found the dialogue sessions to be extremely rewarding and look forward to them
each year as
we
move forward.
In August/September
2003

we shall issue our first ever Social Repo
rt.
(Annual Report, 2002, p.8, emphasis added)


Further
,

several interviewees from
ABC

commented that in spite of the
discontinuation of stand
-
alone social reporting stakeholder engagement activities will
continue. However, there
is

virtually

no
reporting
of such engagements in the annual
reports of
2008
-
20
10

or in the newly introduced website
.

I
f we look at some of the
sensitive issues raised during the stakeholder dialogue sessions of the social reporting
process

we see
that the very fundamentals of
ABC
’s activities were questioned. From
our interviews and close scrutiny of the social reports it appears that there
were

obvious tensions and uncertainty surrounding the dialogues and the reporting process.
Such tensions were apparent from some of the demand
s made by the stakeholders
Page
27

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41


which
must

have been uncomfortable
and painful
to the company. Examples include,
demand for cessation of tobacco farming, “it should not exist as a cigarette
manufacturer” and disclosure of company’s marketing expenditures. Obvio
usly, such
demands have not been met.


Other two important demands placed by the stakeholders were rewriting the
c
ompany’s vision statement emphasising on social responsibility and the need to shift
the company’s factory to a non
-
residential area. The comp
any’s response regarding
the vision was as follows:

Our vision statement "Extend our leadership through world
-
class performance" was first
introduced in 1998 and still holds good today in driving our business decisions. Since then in
2002 we have introduc
ed a new corporate slogan "Success and Responsibility Go Together"
that supports our vision and emphasises
o
ur commitment to be a responsible company. With
the vision and corporate slogan together we believe there is no need to revisit the vision
statement
. (Social Report 2002
-
2003, p.46)


ABC’s

factory and head office are located within a residential area. So the demand for
shifting their operations appears to be a legitimate demand by the neighbourhood
community. We have interviewed the general secretary
of the neighbourhood council
who participated in the stakeholder dialogue
and
reiterated the above concern:

This is a residential area. Tobacco consumption creates health hazard. No tobacco factory
should be here... so that it becomes a pure residential area. They are not welcome by the
people of this area. People have been telling that the factory should be shi
fted to other places.
The bad odour and the smell of tobacco coming from the factory are very disturbing to the
people of this area. We raised the issue with the company. They have established a bio filter.
But that was not sufficient. We are still having
this bad smell of tobacco. In recent times it has
increased rather aggressively.
(
Interview 20
)


In response to the stakeholder demand for shifting company’s operations from the
existing residential area the company expressed their views as follows:

While
we do not have plans of shifting our factory from [this area], we will continue to engage
with local neighbours in [this area] to understand and address their concerns on .... factory
emission issues. (Social Report 2003
-
5, p.57)


Thus

it becomes clear that the company
only
met stakeholder demands where it was
convenient for them to do so without ‘hurting’
(Gray, 2001)

to
o

much of their
commercial interests. Regarding the five issues noted above the stakeholders had no
redress when the company declined to meet these rather uncomfortable demands. This
illuminates the tension
s

surrounding co
mpany’s stakeholder dialogue process and
realistically what it can achieve

in the absence of any stakeholder empowerment
mechanism

in the social reporting process

(Cooper & Owen, 2007)
.
Under these
circumstances one can also question the possibility of continuing such a process in the
longer term
. Thus, the whole

process became untenable
. Ultimately,
ABC

had to
bring it to an end to avoid further scrutiny and
criticism
.

It is also significant that the
Page
28

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41


above issues could not have been followed up in the third social reporting cycle
(2006
-
07)

as the company decided, a bit unilaterally, to conduct the stakeh
older
dialogue sessions on a single focused theme of tobacco cultivation as a response to the
controversy created around that topic
by

the media and the anti
-
tobacco campaigns.


6.

Discussion and conclusion

The main aim of this paper is to examine
the underly
ing
drivers

for the development
and the subsequent discontinuation of

stand
-
alone
CSR reporting
at

ABC
.

Using a
longitudinal case study approach evidences were collected via documentary analysis
and in depth interviews. Documentary analysis shows that
the trend of CSR
disclosures within the annual reports increased initially
during

the pre social reporting
(stand
-
alone)
period (1975
-
2002) particularly in the later part of this period. Then
the
disclosures within annual report

stabilised, to some extent,

during the social reporting
period
(2003
-
2007)
before picking up again

in the post social reporting period (2008
-
2010). While some compensation was sought via annual report
/website

disclosures we
observed that there were significant differences in the nat
ure of disclosures provided.
The disclosures within the stand
-
alone social reports were more detailed and specific
as opposed to the annual report disclosures which appear to be more general and
vague.
In addition to this documentary analysis substantial i
nterview evidence
s had

been collected over a nine year

period (2002
-
2010) involving senior managers of
ABC and its various stakeholders.
The interview analysis suggests that the rise and
the subsequent cessation of CSR reporting at ABC were driven by a com
bination of
complex global and local forces. Global forces include ABC’s head office based in
Europe
, WHO and FCTC,
CDC,
Bloomberg Initiatives and Path, Canada. Local
forces include various government agencies, local media, NGOs and anti
-
tobacco
pressure groups. We now interpret these findings with reference to the
prior
literature

and the contextual insights provided earlie
r in this paper.

We have argued that during
the study period ABS moved through different legitimacy phases
(Tilling and Tilt,
2010)
with different CSR disclosure strategies.

This is shown in Table 2.


Early social disclosures (1980s) suggest that ABC was t
rying to
establish

its
legitimacy quite early in it
s

operations in Bangladesh constructing it’s socially
responsible image by drawing attention to
its

economic contribution
s (highest private
sector tax provider and employment generation).
The trend of incr
easing CSR
disclosures during
ABC’s

early period (1975
-
2002), particularly in the later part of
this period (since 1999), can be interpreted with reference to the legitimacy threat
ABC was facing around this time. It appears that ABC responded with increas
ed
disclosures which are predicted by the legitimacy theory

for the companies in the
defence

phase of legitimacy

(Deegan, 2002)
.
For the first time in its annual reports of
1999 and 2000 ABC published its views on tobacco marketing and smoking and a
marketing code of conduct.
In accordance with the interpretations of legitimacy
theory
apparently
ABC was
defending

(Tilling and Tilt,
2010) its legitimacy.
In 1999
ABC faced significant criticism from media and the anti
-
tobacco groups involving
promotional campaign of one its major products. It is also
significant

that WHO
decided to start work on the FCTC

in 1999
. We noted earlier that
Bangladesh
Page
29

of
41


government played a significant part in the development of FCTC. Around this time
anti
-
tobacco movement gained its momentum with the formation of BATA
specifically as a response to ABC’s promotional campaign noted above. Since then
BATA
gained f
urther strength to accelerate its anti
-
tobacco programmes
and played a
significant role in the subsequent development
and implementation
of tobacco
policies and legislations

as evidenced by its membership in all relevant taskforce
established for enforcing

tobacco
control
legislations in Bangladesh
.



Following an attempt to
defend

the legitimacy threat
s

outlined above ABC appears to
maintain

its legitimacy by stabilising its disclosures within the annual reports during
the period of social reporting (2003
-
2007).
However, d
uring this period
ABC

started
stand
-
alone
CSR
reporting with encouragement from its head office.
It
was the first
and the
only company in Bangladesh in this regard.
We interpret this as an attempt of
extending

legitimacy into a new area where ABC has never been before.

Several
interviewees suggested that stand
-
alone social reporting gave them a formal space to
legitimise its
activities

which was hitherto not available to them
.
This is also
confirmed by the analysis of
social reporting in
tobacco industry by
Moerman and van
der Lann (2005).
They argued that this
was

a strategy to pre
-
empt forthcoming
global
tobacco
regulations
.
In the context of Bangladesh of stand
-
alone social reporting was
initiated

before the passing
of
tobacco control legislation
s

in 2005 and national
tobacco control strategy in 2007.
Corporate interviewees noted that the purpose was to
influence the tobacc
o policies in Bangladesh.
Ashforth & Gibbs

(1990)

suggests that
o
rganisations at this phase of legitimacy might engage in both
substantive

and
symbolic

legitimation
methods
.
The stand
-
alone reporting process, characterised by
stakeholder dialogue, use of international external verifiers and compliance with
international

standards and norms (e.g. AA 1000 and GRI Guidelines), seems to
provide evidence

of

substantive

legitimation
by conforming to
the
established
international rules and norms which would not be
normally
expected in Bangladesh.
During this period ABC created
a CSR committee headed by Chief Executive and
consisting of all functional departmental heads, appointed social reporting manager
and established
a social reporting system together with
a CSR unit within its
department of CORA. At the same time it was also

engaged in various
symbolic

disclosures within its annual reports
primarily drawing attention to its economic
contributions to national exchequer and social activities like afforestation
.


D
uring this period (2003
-
2007) Bangladesh
signed
up to the

FCTC an
d as part of its
commitment to
the
FCTC
passed tobacco control legislations

in 2005
banning tobacco
advertisements

and containing a health warning requirement of
at least
30% of
the
total area of cigarette packets as opposed to the 10% ABC voluntarily signed up to via
its marketing code of conduct
published

in its annual report of 2000
.
The national
tobacco control strategy was produced in 2007 with the explicit aim of increasing
tobacco taxation, reducing tobacco production and use

and producing measures for
the implementation of tobacco control legislations.
We have also observed a
significant shift in the government’s tobacco policy

from one of encouraging tobacco
production to
one of gradually phasing it out
.

Page
30

of
41



Various
local
NGOs
started lobbying the government for higher tobacco tax, stricter
enforcement of legislations and amend
ment of

tobacco
laws incorporating the
provisions of pictorial health warnings. They also undert
ook

research showing ill
effects of tobacco cultivation. Media was ever more critical of the tobacco
cultivation

in Bangladesh. Anti tobacco groups successfully

organised various awareness
campaigns and lobbied the government for the enactment of
stricter
toba
cco
legislations. In addition to their 1999 campaign against
one of the
ABC’s
major
promotional

activit
ies
,
on 30
th

May, 2004
some anti tobacco groups rallied against
another big promotional event by ABC at a city hotel. They arrived on bikes to the
hotel
and handed over letters to the hotel and the media pointing out that ABC’s event
was targeted at the youths

to promote company’s business. Various international
organisations (e.g. Bloomberg Initiatives, Path Canada,
CDC

and WHO) supported
these anti tobac
co measures.

Various interviewees also illuminated the significant
pressures created by the media, NGOs and anti tobacco groups.


As part of the stakeholder dialogue organised by ABC during the social reporting
process it was becoming clear that some of t
he stakeholder demands were not going to
be met as ABC
intends

to carry on

without any fundamental change
. This is consistent
with
symbolic

legitimation strategies noted in section 3 of this paper
. These demands,
as
noted earlier, posed fundamental challen
ge to ABC at its very premises, according
to one interviewee. These demands, raised in the first and second reporting cycle,
could not be followed up in the third cycle as the theme of this cycle was mainly
focused on tobacco cultivation

(example of ABC co
ntrolling disclosure agenda)
.
The
theme on tobacco cultivation was selected specifically to respond to the criticism
the
tobacco industry

was receiving in the media against tobacco cultivation.
In addition to
this ABC
scrapped

the entire stand alone reporting system
in 2009
and
attempted to
seek some compensation via increased annual report disclosures in 2008
-
2010
.
They
have
also introduced a website in 2010 by addressing various CSR issues

and
containing some standard narrati
ves on health issues and regulations
.
This change of
strategy can be
considered as

avoidance tactics


(Oliver, 1991) by

conforming
ceremonially


or providing ‘symbolic gesture of compliance’
.



Having considered the pre social reporting (1975
-
2002) and
t
he
social reporting
period (2003
-

2007) let us now consider the post social reporting period (2008
-
2010).
What marks the cessation of standalone social reporting in ABC?

In the context of
stricter global (FCTC) and local regulations (promulgation

of

tobacco control
legislations in Bangladesh), increased tax

(including recent levy on tobacco exports)
,
critical media
, community level protests against tobacco cultivation

and immense anti
tobacco pressures instead of further
defending

the legitimacy with

enhanced

disclosures ABC

changed both the nature of disclosures (detailed specifics to general
narratives) and
the
medium

of
disclosures

(from stand
-
alone reports to annual reports
and website)
.


Page
31

of
41


This appears to be perplexing.
Apparently, this runs again
st the predictions of
legitimacy theory which suggests
that under

these circumstances ABC would
continue

defence

and
maintenance

strategies with enhanced disclosures.

Instead

what we see is
the complete abandonment of stand
-
alone social reporting system together with
discontinuation of formal stakeholder dialogue.
ABC also abolished the position of
social reporting manager as a result of its decision to cease stand
-
alone social

reporting.
However, in the light of recent conceptualisations of legitimacy theory by
de Villiers and van Staden
(
2006
) and Tilling and Tilt (2010) it can be argued that
such change in
reporting
strategies can also be interpreted with reference to
the
leg
itimacy theory.


In the social reporting process ABC app
a
rently realised that some of the stakeholder
demands are irreconciliable with ABC’s corporate interests making the whole process
untenable.
Our stakeholder interviewees suggest that they remain far
from convinced
about ABC’s intention (or ability) to change fundamentally responding to the
substantial demands placed at the stakeholder dialogue
s carried out as part of the
social reporting process

(Interview 19)
.
We argue that
such detailed disclosures via
standalone social reports exposed ABC to further scrutiny
(O'Dwyer, 2002)

which is
evidenced by
subsequent
intense media scrutiny, enactment
of
stringent tobacco
legislations, increased tax, comprehensive ban on advertising, shif
ts in government
policy

and ever mounting pressures from NGOs and anti tobacco groups. These
are
evidences of an organisation losing legitimacy over time and entering a ‘loss’ phase of
legitimacy

(Tilling and Tilt, 2010) whereby ABC

no longer thought
of
st
and
-
alone
reporting as an effective tool to legitimise

(
de Villiers and van Staden
,
2006
,
condition
no. 5, p.767).

They replaced it with much shorter general
symbolic

narratives within
annual reports and website

whereby they can tell a better story without giving up its
claim of a responsible company (condition no. 6, p.767).

This confirms the assertion
made

by
de Villiers and van Staden
(
2006
) that managers would reduce (or cease)
reporting
(altogether or part o
f it as deemed necessary)
with ‘the hope that this will
assist in reducing the importance of the issue’ (
condition no. 4,
p.767).


According to one of the corporate interviewees, stand
-
alone CSR reporting was to
some extent motivated by the ABC’s desire to

influence the local tobacco regulations
and policies. The desire to
extend

legitimacy in this way clearly did not succeed as
evidenced by the subsequent enactment of stricter tobacco control laws (30% warning
clause than its anticipated 10%
6
) and national

tobacco strategy.

We could argue that
failure of this
extension

attempt is further evidenced by not only

by the enactment of
tobacco laws and policies but also by the unanticipated legitimacy threatening
demands by the stakeholders noted earlier and furth
er scrutiny of ABC’s activities by
the skeptical anti
-
tobacco groups.
This is what
Ashforth & Gibbs

(1990)

termed as

the

‘double edge’ of legitimation: ‘attempts to increase

[
or extend
]

legitimacy may trigger
a series of vicious circles which ultimately decrease legitimacy’ (p.177).
From this we
surmise that instead of
extending

legitimacy ABC
lost

its legitimacy triggering the



6

Suchman (1995) termed it as ‘pre
-
emptive conformity’.

Page
32

of
41


final phase of
disestablishment



starting all over again to rebuild or re
-
establish its
legitimacy
.

Under these circumstances it is possible that organisations
would

opt for
more

subtle
techniques


(
symbolic

disclosures
annual reports and website)
abandoning

highly visible legitimation efforts


(
substantive

stand
-
alone reporting)
(Suchman, 1995
, p.595
).
This is what ABS appears to be doing now by enhanced
annual report and website disclo
sures

as compared to the previous period
. Thus we
observe that ABC moved through all of the phases of legitimacy during the study
period.


We
also
argue that in the context of an organisation losing legitimacy ABC’s change
of gear (from high (
substantive

c
omprehensive stand
-
alone reporting) to low
(
symbolic

annual reports and website

reporting
)) was a deliberate attempt to
control

(Richardson,
1985)

the disclosure agenda and information flows to the stakeholders
(Adams et al., 1995)
.

Ashfort
h & Gibbs

(1990)

suggests that under these
circumstances organisa
tions may
suppress

the desired information flows to the
stakeholders.


The paper contributes to the social and environmental accounting literature by
providing a field work based longitudinal case study evidence collected from a
multinational subsidiary operating in Bangladesh where
currently
there is a distinct
lack of resea
rch.
By doing so it responds to the
recent
call for case study type of
research by Hopwood (2009)

to examine the various motives implicated in the (non)
production of corporate sustainability reports
.
As far as we know this is the first study
which theoris
es and provides significant empirical evidence regarding the
discontinuation of stand
-
alone social reporting at a tobacco multination operating in a
developing country.
Thus, it extends the previous attempts of using legitimacy theory
to explain decrease
(or discontinuity)
in CSR disclosures by
de Villiers and van
Staden
(
2006
) and Tilling and Tilt (2010).
Previous literature predominantly
focused
on

extant social reporting practices of organisations.
Future case studies may be
encouraged, using field work

based longitudinal approach,
on multinational
companies in other sectors in
other
developing countries (e.g. oil and gas) to scrutinise
the
drivers

for undertaking
(
or
not undertaking)
social and environmental reporting.



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7

During the nine year

long interview period

(2002
-
2010)
we have come across several major changes in the CSR unit loc
ated within the CORA function of ABC. Head of
CORA 1
-

3, CSR Managers 1 and 2 represent different interviewees holding the same position over the interview period.

Table 1: Details of
i
nterviews

Code of
Interviews

Designation of Interviewees

Department/Organisation

Date of Interviews

1.


Head 1
7

Corporate and Regulatory Affairs (CORA)

February, 2002

2.


Head 2

Corporate and Regulatory Affairs (CORA)

April, 2006

3.


Head

(also company s
ecretary

and
member, board of directors)

Legal

April, 2006

4.


CSR Manager 1

Corporate and Regulatory Affairs (CORA)

April, 2006

5.


Development Affairs Manager

Corporate and Regulatory Affairs (CORA)

April, 2006

6.


Head 2

Corporate and
Regulatory Affairs (CORA)

July, 2007

7.


CSR Manager 2

Corporate and Regulatory Affairs (CORA)

July, 2007

8.


Social Reporting Manager

Corporate and Regulatory Affairs (CORA)

July, 2007

9.


Chairman

N/A

January, 2009

10.


Finance Director

Finance

February, 2010

11.


Head 3

Corporate and Regulatory Affairs (CORA)

February, 2010

Page
37

of
41




12.


Communication Manager

Corporate and Regulatory Affairs (CORA)

February, 2010

13.


External Communication and CSR
Manager

Corporate and Regulatory Affairs (CORA)

February, 2010

14.


Head 3

Corporate
and Regulatory Affairs (CORA)

May, 2010

15.


Environment, Health and Safety
Officer

Operations

May, 2010

16.


International Sustainability Manager

ABC’s Head Office,
䕵r潰o

g畬yⰠ㈰㄰

ㄷN


Medical Practitioner and anti
-
tobacco
campaigner

Bangladesh Anti Tobacco
Alliance (BATA)

January, 2009

18.


Secretary General

Consumers’ Association of Bangladesh

ga湵nryⰠ㈰〹

ㄹN


Medical Practitioner and anti
-
tobacco
campaigner

Adhunic (We Prevent Smoking)

July, 2009

20.


Secretary

Residential Community Council in the neighbourhood
of ABC

July, 2009

21.


Joint Secretary

Ministry of Health, Bangladesh

March, 2010

22.


Deputy Director (Tobacco)

Cash Crop Wing, Department of Agricultural Extension, Ministry
of Agriculture, Bangladesh

March, 2010

Page
38

of
41





Table 2: Changes is ABC’s CSR disclosure
strategies (1975
-
2010)

CSR disclosure periods

1975
-
2002

2003
-
2007

2008
-
2010

CSR disclosure strategies



Disclosures within annual
reports



Stand
-
alone social reporting



Disclosures within annual reports
continued



No stand
-
alone social
reporting



Disclosures

within annual
reports continued



Website disclosures
started

Legitimation phases



Establishment and Defense



Maintenance and Extension



Loss

and disestablishment

Legitimation method
s



Symbolic



Symbolic and Substantive



Symbolic

Regulatory control and
pressures
from media and civil society
including anti
-
tobacco groups



BATA was established in
1999



Tobacco control legislation
passed



National Tobacco Control
Strategy framed



Demand for pictorial
warning in cigarette packs



Hint of further tightening
of toba
cco control
legislations, increased tax
etc.

Intensity of the above pressures
and perceived legitimacy threats



Low



High



Very High

Page
39

of
41


0
2
4
6
8
10
12
14
16
18
20
1975
1976
1977
1978
1979
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
Economic Disclosure Scores
Environmental Disclosure Scores
Social Disclosure Scores
Total Disclosure Scores


Figure 1: CSR d
isclosure

level

in
annual r
eports (1975


2002)


Page
40

of
41


0
5
10
15
20
25
30
35
40
45
50
AR 2003
SR 2002
-
03
AR 2004
SR 2003
-
5
AR 2005
AR 2006
AR 2007
SR 2005
-
07
Economic Disclosure
Environmental Disclosure
Social Disclosure


Figure 2:
CSR
d
isclosure levels in annual
(AR)
and social reports
(SR)
(2003
-
2007)

Figure
3
: CSR
d
isclosure
l
evels in
a
nnual
r
eports 2003
-
20
10