Corporate Social Reporting The Case of British Airways
Corporate Social Reporting: The Case of British Airways
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Introduction
Corporate social responsibility has been recognized as one of the most fundamental issues in the contemporary business environment. The term refers to a company-adopted policy that operates as an in-built self regulating mechanism where the business entity monitors, as well as ensures that it actively complies with the ethical standards, spirit of the rule of law, and international regulations and norms. It revolves around a process where the company strives to embrace its actions, as well as encourage or have a positive influence via its activities pertaining to the environment, employees, consumers, stakeholders, communities and all people in the public arena who are considered to be stakeholders. There are varied reasons as to why corporations incorporate corporate social responsibility in their operations. It comes as one of the ways of showing or exhibiting true commitment in a certain cause, not to mentions that it enhances their social media visibility. In addition, it comes as one of the most effective techniques of establishing a positive and enviable workplace environment, thereby enhancing the productivity of employees. On the same note, corporate social responsibility comes with immense public relations benefits, not to mention that it enhances the relationship between the corporations and government agencies. In the contemporary world, the manner in which corporations behave has been subjected to intense scrutiny. This is especially due to the dramatic increase in the public awareness of the economic, social, and environmental impacts of a business in the last few years and decades. In essence, corporations are now faced by intense pressure from governments, investors, customers, as well as other stakeholders even in the public arena to demonstrate the effort that they have undertaken to manage and alleviate the negative effects that their operations may have on the society and the environment in general. Scholars, however, note that accounting, which is essentially a set of socially conditioned processes and practices that have different but significant effects on the societal operations, has been called upon to help in outlining the integrity and accountability pertaining to business actions. Corporate social reporting has resulted from combination of the intense pressures that companies in the contemporary world face daily. It has been developed in an effort to address the intense need for information emanating from the key stakeholders of the company with regard to the company’s environmental and social performance. Recent times have seen an increase in the cases of Corporate Social Disclosures. While varied reasons may be used in explaining this, researchers acknowledge that corporate social disclosures are mainly used when the legitimacy of an organization or business entity is threatened, then business entities face intense media exposure or pressure from the general public, or in instances where the corporations fails to comply with the requirements pertaining to an implicit social contract. This may also be seen when corporations are facing immense threats to their image and reputation.
Extensive research has been carried out with regard to legitimacy theory as the key driver for corporations to report environmental and social information. Legitimacy theory has been defined as a supposition that a business entity undertakes constant attempts at functioning or operating within varied accepted customs and norms pertaining to the society within which they operate. The legitimacy of the operations of a corporation are conferred by the constituents who, essentially are the external and external actors making decisions pertaining to the legitimacy of a business entity. Researchers have always underlined the problems emanating from the legitimacy gap existing between the expectations of the constituent and the behaviors of the firm and underlined the fact that the deficiency of legitimacy would result in the withdrawal of the social contract that exists between the society and the business entity. Research shows that companies tend to modify policies pertaining to their disclosure especially around the time when there occurs fundamental industry or company related social events. This statement underlines the strategic nature pertaining to voluntary social disclosures, and affirms the view that the management of varied business entities considers social disclosures in annual reports as a useful and effective device in alleviating the effects of an event that is seen as unfavorable or unattractive to the image of the business entity. The contract of the organization to continue operating in the society may be revoked in instances where the social expectations pertaining to its operations’ legitimacy are unmet. It is noteworthy, however, that the event must have taken place, thereby having detrimental effects on the legitimacy and reputation of the organization. This causes the organization to have a perception on how the society sees it with regards to whether it carried out its duties in an acceptable manner. With perception and pressure from varied sources, the organization’s effort to gain legitimacy would result in strategic tactics that aim at convincing the general public as to its legitimacy. A large number of these tactics aim at controlling or concentrating the perception of the public to an organization as a response to threats to the organization’s legitimacy emanating from social pressure. This was the case for British Airways in 2000.
The Event
The accident occurred on 25th July 2000, when the Concorde had its first fatal accident 10 miles north-east of Paris after departing from Charles de Gaulle Airport in Paris on a non-scheduled service heading to New York. The accident took place after close to 25 years of offering the only sustained supersonic passenger service. All the 109 passengers aboard the Concorde including the 9 crew members and an additional four on the ground died in the accident, while another six people suffered serious injuries. The Concorde was chartered by a tour company from Germany and was ferrying individuals who were to take a transatlantic trip using a Caribbean cruise. On the fateful day, Air France Concorde started its take-off on Runway 26-Right. On attaining a speed of about 320 Kmh, one of its tyres ran over a strip of metal that was lying on the pavement. This resulted in a fire on the Concorde’s left side. The aircraft, nonetheless, lifted off and was airborne for almost a minute but was incapable of maintaining altitude or speed, in which case it struck a hotel and exploded about 5.5 km from the runway’s end.
One day prior to the accident, British Airways had been forced to admit to having safety issues after stating that all the planes in the Concorde fleet incorporated some hairline cracks in the wings. This resulted in serious concerns pertaining to safety among the aviation industry and the general public.
Consequently, Concorde’s certificate for airworthiness was revoked by the British and French Civil Aviation Authority. While varied changes were made with the Concorde returning to regular service as at November 2001, British Airways and Air France, the only two operators of Concorde announced the termination of the Concorde’s service by the end of the year thereby eliminating the other aircrafts from use. They cited low passenger loads, general slowdown of the airline industry and high cost of maintenance.
Investigation and Outcomes
France’s accident Investigation bureau undertook the official investigation, which was published on January 16th 2002. It was concluded that the Concorde had been overloaded by about 810 kg above the maximum weight safe for takeoff. This excess weight, however, was said to have a negligible effect on the takeoff performance.
The key blame was laid on the tyre of wheel number 2, which, after attaining takeoff speed, was cut by a metal strip that was lying on the runway. The metal strip had come from the thrust reverser cowl door for engine number for Continental Airline DC-10, which had left the runway a few minutes prior to the Concorde. It was concluded that the strip, which had been installed in Houston, Texas, was neither manufactured nor put into place in line with the procedures laid out by the manufacturer. On the same note, the investigating team noted that the accident may have emanated from the ripping out of an enormous piece of the aircraft’s tank in a complicated transmission process for the energy emanating from the piece of tyre at a different point on the tank. The transmission associated the tank skin’ deformation and the oil movement, with the contributory effects pertaining to other minor shorts or a hydrodynamic pressure surge.
The investigators exonerated the crew and aircraft stating that they were qualified and airworthy respectively. They stated that there were no prior serious problems pertaining to the landing gear that failed to retract. In fact, terminating the takeoff would have resulted in a high-speed runway excursion, as well as collapse of the landing gear, which would eventually have resulted in a crash. On the same note, as much as two of the plane’s engines had problems with one of the being shut down, the structure of the plane was so severely damaged that the crash could not be prevented if with the normal functioning of the engines. However, as much as the crew was properly trained and certified, the airline did not have any plan for the failure of the two engines on the runway at the same time, considering such an occurrence as highly unlikely.
Recommendations
The investigators published four recommendations that were specific to Concorde. It recommended that the operators and manufacturers of Concorde, as well as the airworthiness of authorities undertake a reinforcement of the means that were available for analysis of the operation of in-service events and aircraft systems and a speedy definition of the corrective actions.
In addition, it recommended that Air France makes certain that the emergency procedures pertaining to the utilization of Concorde in the Operations Manual are coherent with the flight manual. On the same note, it recommended that Air France installs recorders that have the capacity to sample at least once every second the parameters allowing for the determination of engine speed on all engines in Concorde aircraft. Lastly, the report recommended that the Directorate General for Civil Aviation audits the maintenance and operational conditions within Air France.
Other recommendations revolved around the primary certification authorities asking aircraft manufacturers to undertake an immediate identification of any potentially dangerous substances (in case of an accident) that are used in manufacturing aircrafts under their responsibility. They were supposed to outline them explicitly in documentation. The Federal Aviation Administration was supposed to audit the maintenance of Continental Airlines in the United States, as well as the foreign subcontractors.
Asserting its Responsibility and Legitimacy Using Accounting Reports
While the accident did not involve British Airways directly, BA’s Corporate Social Reporting was affected by the subsequent grounding of the Concorde fleet, as well as the intense public concern pertaining to the safety of the aircrafts. Researchers note that following the accident, British Airways increased the total Corporate Social Disclosure in its financial reports by 8% in 2001. Prior to the accident in 2000, the company’s Corporate Social Disclosure was primarily revolving around Social and Environment Report. This, however, reduced after the accident with the company paying more attention and giving more space to Healthy and Safety information as the popular disclosing theme. It is worth noting that Health and Safety information doubled in proportion in 2001 from 2000. Researchers note that these attempts are attributable or interpreted as an attempt by the organization to address and salvage their legitimacy, which was threatened by the accident. This was also necessitated by the dire effects that the September 11th 2001 attacks in Washington DC had on the entire industry, as well as the occurrence of SARS (Severe Acute Respiratory Syndrome) after the accident, which further threatened the entire industry’ s legitimacy and, therefore, contributed to the proportional increase in the Health and Safety information. Considering that the Health and Safety and total substantive Corporate Social Disclosure reduced in the subsequent years, it would only follow that the symbolic vs. substantive evidence signifies an image-oriented, as well as pragmatic organizational stance to corporate social reporting, where the organization gives priority to the protection of their legitimacy rather than ethically or opportunistically extending it. A qualitative analysis pertaining to British Airways annual and sustainability reports indicate an organizational position towards Corporate Social Reporting that changes from stakeholder expediency to ethics opportunism while being predominantly pragmatic. While the airline, for instance underlines its support for the UK government’s interpretation of the sustainable development as espousing better life quality for all today and in the future, thereby seeming to adopt an ethical position, it seems to be opportunistically driven when it states that it would consider ethical, environmental and social implications pertaining to decisions that enhance shareholder value. It, however, seems that British Airways has a pragmatic perception of the CSR as a condition for enhancing its economic success where it states that although it was fundamentally concerned with the financial performance of the company, it acknowledged that its capacity to sustain a well-performing business was subject to considerations on the environment on global and local scale, as well as its relationship with the business’ legitimate stakeholders. On the same note, its pragmatic perception pertaining to Corporate Social Reporting explains the regular attempts to question contribution of the entire industry to climate change, while also laying emphasis on its contribution to economic good over the likely undesirable environmental impacts. It underlines the fact that an all-inclusive audit on the performance of the company as a sustainable business should consider the environmental, social, as well economic dimensions.
It is clear that British Airways sees corporate social reporting as a necessary or imperative “pragmatic” activity that would satisfy the heightened consumer expectations, as well as maintain legitimacy, which would consequently sustain profitability. It is also a technique through which the company undertakes an opportunistic attraction of patient shareholders, as well as enhances the reputation of the firm and its brand value so as to establish new markets, increase customer loyalty, increase the market size and gain extra market share. Comparing the pre-accident period and post-accident period Corporation Social Reporting, quantitative evidence suggests that the company paid an increased emphasis on its health and safety responsibilities in a likely attempt to protect, as well as restore its legitimacy. It is worth noting that, for instance, while British Airways noted the absolute importance of safety prior to the accident and stated that it will never compromise on the safety offered in its services for commercial reasons, the sustainability reports in the two years following the accident (2001 and 2002), were the only ones that incorporated an insinuation on air safety as embroidered within a culture of openness that the company had taken up. The emphasis on Health and Safety comes alongside more frequent references to aviation’s contribution that could be seen as a symbolic strategy for repairing its threatened image, as well as a substantive strategy that would change social legitimacy’s definition through attempting to modify their constituents’ perceptions. It stated that what the aviation industry can offer and facilitate as a crucial part of the world communication network is creating wealth needed for health, education and welfare that ensures a sustainable society. It continued that the aviation industry produced socio-political external benefits that may cannot be empirically measured.
However, the increased emphasis on aviation’s contribution is not supported by further attempts to question its contribution to climate change as was the case during pre-accident years. British Airways, on the contrary, seems to acknowledge that their environmental impact. The change may potentially be part of substantive efforts by the organization for role performance via engaging with its stakeholders, not to mention symbolic admission of its guilt in an effort gain ceremonial conformity. However, having in mind that these efforts were made after the accident occurred comes as an indication as to the pragmatic attempt to protect, as well as restore its legitimacy in the eyes of the society.
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