Based on the articles you have read for Week 7, please discuss recommended frameworks for sustainable tourism development in fragile areas such as mountains

lable at ScienceDirect

Tourism Management 44 (2014) 149e160

Contents lists avai

Tourism Management

journal homepage: www.elsevier .com/locate/ tourman

Corporate sustainability reporting index and baseline data for the cruise industry

Ma Jesús Bonilla-Priego a, Xavier Font b,*, Ma del Rosario Pacheco-Olivares a

aDepartamento de Economía Financiera y Contabilidad I, Facultad de Ciencias Jurídicas y Sociales Universidad Rey Juan Carlos, Madrid, Spain b International Centre for Research in Events, Tourism and Hospitality, School of Events, Tourism & Hospitality, Leeds Metropolitan University, Leeds, UK

h i g h l i g h t s

� We present and test a cruising industry corporate social responsibility index. � Cruising is a late adopter of reporting e in numbers and content. � Companies disclose more management than performance data. � Companies disclosing less information focus on soft, easy to mimic indicators.

a r t i c l e i n f o

Article history: Received 7 June 2013 Accepted 7 February 2014

Keywords: Social Environmental Responsibility Legitimization Stakeholder Global reporting initiative

* Corresponding author. Tel.: þ44 1138125609. E-mail addresses: [email protected], x.font@leed

http://dx.doi.org/10.1016/j.tourman.2014.03.004 0261-5177/� 2014 Elsevier Ltd. All rights reserved.

a b s t r a c t

Sustainability policies and corporate reports demonstrate the impacts cruise companies acknowledge as their responsibility, and the actions put in place to address them. This paper develops a corporate social responsibility index based on the Global Reporting Initiative, with industry specific additions including labor and human rights, health and safety, and environmental and economic aspects. Companies disclose more management than performance data, which is typical of early stages of development. Companies disclosing less information focus on soft indicators which are easy to mimic and demonstrate posturing. Items disclosed tend to be marginal to the core of the business, have a positive economic impact or pre- empt sector regulation. Reports echo the voice of the corporations and not the demands of stakeholders. Institutional isomorphism has not influenced a homogenization in reporting, with only the largest firms reporting at this stage.

� 2014 Elsevier Ltd. All rights reserved.

1. Introduction

There is a well-established but growing demand on corpora- tions to perform not only financially but to be good citizens as “the social responsibility of business encompasses the economic, legal, ethical and discretionary expectations that society has of organi- zations at a given point in time”(Carroll, 1979:500). As society’s stakeholders become more concerned with staff welfare, the impact on the environment and local communities, they will put pressure on the most visible corporations to address the issues. Taking responsibility is therefore the process of accepting the ex- pectations placed by society (Goodwin, 2011), and accountability is the duty of providing an account for meeting those expectations (Gray, Colin, Owen, Evans, & Zadek, 1997). While accounting of financial responsibilities is well established (but not without its

smet.ac.uk (X. Font).

loop holes), the requirements for reporting “additional” but real responsibilities develop according to society’s expectations. As either issues (e.g. carbon) or sectors (e.g. extractive industries) become recognized for their potential harm, industry leaders develop mechanisms to respond.

Cruising is increasingly being called to scrutiny. The significant growth in the last two decades has been explained by the attrac- tiveness of the affordable fares, product quality and both product and destination diversification (ECC, 2012; ICCA, 2012). Yet larger vessels, corporate visibility and negative media coverage of envi- ronmental impacts, limited positive economic impact on destina- tions, poor labor conditions and the 2012 Costa Concordia accident have raised industry awareness of the need to legitimize how the sector is taking responsibility for society and the environment. This has resulted in increased corporate social reporting and industry wide promotional efforts.

Corporate Social Responsibility (CSR) practices are intended to have many positive effects such as improving social and

M.J. Bonilla-Priego et al. / Tourism Management 44 (2014) 149e160150

environmental performance and constituting an instrument to manage stakeholder relations (Kaptein & Wempe, 1998). However, they have not always satisfied this intention as CSR reports do not always represent a genuine attempt to account for negative as well as positive aspects of all material impacts (Adams, 2004). There are different practices that undermine the benefits of transparency and credibility, and a wide range of theories about why and how companies report.

Voluntary disclosure theory claims that firms are willing to disclose good news to differentiate themselves following a resource-based view of the firm (Barney, 1991; Branco & Rodrigues, 2006; Healy & Palepu, 2001), often tested by suggesting a positive relation between financial and sustainability performance (Campbell, 2007; Garay & Font, 2012). In contrast, stakeholder and legitimacy theory see disclosure as a response to social and political pressures and is therefore reactive, predicting a negative relation between environmental performance and voluntary environmental disclosure (Adams, Hill, & Roberts, 1998; Deegan, 2002; Hooghiemstra, 2000). Since legitimacy relies on meeting social systems’ expectations, this approach lends itself well to explain Carroll’s definition in the first paragraph, although there are those claiming that market-driven stakeholder accountability will pro- duce reports that are in the organization’s best interests (Gray et al., 1997).

Reputation risk management and impression management are commonly the intended purpose behind corporate social reporting (Bebbington, Larrinaga, & Moneva, 2008; Hooghiemstra, 2000). Evidence suggests that environmental managers determine the contents of their CSR reports based on their understanding of the relative importance of different stakeholders (Cormier, Gordon, & Magnan, 2004). Firms prefer to disclose major environmental events when they feel threatened by stakeholders, and disclose by defending what has been done about it retrospectively as a means of maintaining or restoring legitimacy (Elijido-Ten, Kloot, & Clarkson, 2010). Deegan (2002) summarizes some of the possible reasons for disclosure as economic rationality, acceptance of accountability responsibilities, and meeting requirements of or preventing pressure from various stakeholders including govern- ment, lenders, buyers, suppliers, industry associations, amongst others. Companies disclose more according to their size, ownership e publicly traded or government owned-, low levels of debt, age of fixed assets, environmental footprint and risk (Cormier, Magnan, & Van Velthoven, 2005; Eng & Mak, 2003; Jose & Lee, 2007).

Academics call for fine tuned metrics to capture sustainability disclosure so it better reflects performance (Jose & Lee, 2007; Morhardt, 2010), since CSR reports do not always demonstrate accountability. Companies often use CSR reporting as a public

Table 1 Company characteristics and CSR reporting practices (Group 1 e CSR reports and websit

Parent company Company Headquarters Flag country

Carnival Corporation Princess Cruises US Bermuda Holland America Line US Netherlands Costa Cruises Italy Italy P&O Australia Australia Liberia Carnival Cruise Lines US Panama AIDA Germany Italy Yachts of Seabourn US Bahamas Carnival UK Cunard UK UK Bermuda

P&O UK UK Bermuda TUI Travel UK Malta

RCI Royal Caribbean US Bahamas Celebrity Cruises US Malta Azamara US Malta Disney Cruise Line US Bahamas

Source: authors.

relations exercise to manage impressions and improve their reputation (O’Dwyer, 2003), but also to provide internal sustain- ability accounting data for management purposes. The breadth of this data will depend on the corporate priorities, often focusing on environmental aspects that lead to operational savings, or in the more advanced cases ranging the triple bottom line of environ- ment, society and economy. Stakeholders need meaningful and comparable information which comprises externally verified data and methodologies which can utilize that data. Triple bottom line reporting requires an index for measuring and reporting corporate performance. However, in cruising we are still at the stage of cataloging and categorizing impacts to form a sector specific list of indicators.

The contribution of this paper is two-fold. First, it proposes an index to measure and report corporate performance by adapting generic reporting systems to the cruise industry characteristics. Second, it conducts primary research on the level of responsibility accepted by the cruise industry by analyzing their CSR reports.

This index results from adapting reporting systems such as the Global Reporting Initiative (GRI), the Carbon Disclosure Program and other international initiatives together with literature specific to the cruise industry to develop a sector specific instrument. These metrics encompass both the setting up of management systems and the development of specific performance indicators. This in- cludes assessing management indicators such as having de- partments, management positions, committees and stakeholder involvement (Adams, 2008). It also requires independent verifica- tion of the credibility of company reports (Laufer, 2003). GRI in- cludes both items and validates the level of disclosure achieved, but fails to require external audits. While these are important elements of the literature review, they apply to all industries and for brevity reasons cannot be described in detail here.

The index will require industry adaptation. For example, as a result of the registration policy, a ship is considered the territory of the country in which it is registered and this is why many vessels are registered in countries without stringent laws or the capacity to monitor safety and working conditions and investigate incidents. When the ship is in international waters, it comes under the jurisdiction of the flag registry plus international laws (covering only some environmental standards, and not socio-economic). Ship Safety Certificates are given out by private classification societies and the worse the conditions of the ship, the more likely they are to choose a less demanding society (Doherty, 2012, see also Tables 1 and 2). Having clarified this industry specific issue, the remainder of the literature review outlines cruise industry impacts and efforts to respond to them, subsequently used in the methodology.

e content).

n� Ships Max capacity Average capacity

Sustainability report

Experience (report number)

17 45,506 2677 2009 1st 15 30,292 2019 2009 1st 14 37,118 2651 2010 6th 4 7500 1875 2010 2nd

23 74,007 3218 2009 1st 8 14,210 1776 2011 3rd 4 1074 268 2009 1st 3 6960 2320 2010 2nd 7 16,678 2383 5 7020 1404 2010 3rd

22 72,074 3276 2010 3rd 11 27,166 2470 2 1388 694 4 12,800 3200 2010 3rd

Table 2 Company characteristics and CSR reporting practices (Group 2 e website content only).

Company Headquarters Flag country n�

ships Max capacity

Average capacity

Crystal Cruises US Bahamas 2 1992 996 Norwegian CL US Bahamas/USA 12 29,632 2469 Hapa Lloyd Germany Bahamas 5 1970 394 Genting HK China Bahamas/Panama 5 7238 1448 MSC Cruises US Panama 12 31,840 2653 Orion Australia Bahamas 1 106 106 SilverSea Monaco Bahamas 6 2028 338 Windstar US Bahamas 3 606 202 Uniworld US Netherlands 17 2069 122 Fred Olsen Norway Bahamas 4 3963 991 Tauck US Switzerland 4 472 118 Avalon Switzerland Germany 19 2822 148 Scenic tour Australia Malta 6 957 159 Compagnie

du Ponant France France 4 856 214

Iberocruceros Spain Portugal 3 5104 1701 Lüftner Austria Germany 11 1656 151 Paul Gauguin Bahamas 1 332 332 Hurtigruten Norway Norway 12 7721 643

M.J. Bonilla-Priego et al. / Tourism Management 44 (2014) 149e160 151

The literature suggests that corporate social reports are valid instruments to understand how companies acknowledge certain responsibilities in relation to given stakeholder pressures (Kaptein, 2007; Krippendorff, 1980). Many of these studies focus on analyzing the selection of issues and the type of information pro- vided. This selection would help to uncover the issue of the inclu- sivity of stakeholders in the reporting process and the use of the social report as a legitimization tool (Adams, 2004). It is worth noting that in keeping with similar exploratory studies, this study measures CSR reporting (what impacts companies accept and how they deal with them), and not CSR performance (to which extent their actions actually deal appropriately with the impacts). We analyze CSR reporting using a typology format, developing an index and then attributing scores to whether companies report on taking action on each indicator, which allows for numerical comparison and categorization (Kolk & Mauser, 2002; Morhardt, 2010). Focusing on a single industry allows us to provide some insights on the corporate characteristics conditioning social reporting worthy of further research.

We provide a justification for the index in the remainder of the literature review, before testing it through a content analysis of the publicly available data from the 29 out of a population of 80 cruise companies that report CSR practices. Some 11 of these publish corporate social responsibility reports, and 18 make some state- ments on their website. The content of the reports are classified according to the type and format of data disclosed, according to environmental and socio-economic, hard and soft, management and performance variables. These are then compared against company characteristics e size, reporting experience and whether they produce CSR reports or disclose on their website. The patterns are then analyzed in the Discussion section against the literature outlined above on the motivations for CSR disclosure e this shows the industry has not reached a mimetic behavior, but disclosure depends on company size, practices disclosed follow beyond compliance theory reputation risk management, with little commitment to change the core of the business. The consequences for the maturity of CSR reporting in the cruise industry are then summarized in the conclusions.

2. Environmental impacts

Environmental impacts are most commonly described by in- ternational organizations such as the IMO (International Maritime

Organization) through MARPOL (International Convention for the prevention of Pollution from Ships), first adopted in 1973 and continuously updated through the years. They are also recognized by the European Union (COM, 2007). Impacts will be reviewed following the GRI format: materials, water, biodiversity, emissions/ effluents/waste, and products and services.

The first two environmental aspects listed under the GRI are the consumption of materials and water. Large cruise ships are luxury floating cities with more comfort than a population of that size requires: resources consumed approach 1.5 times normal con- sumption patterns (Véronneau & Roy, 2009), and overconsumption creates pressure in areas where there is a shortage of fresh water. In either aspect there is no literature specific to the cruise industry. Sustainable supply chain management approaches would be needed to both reduce the consumption and wastage, as well as to consider the origin of the materials used and the impact of over- using water (Font, Tapper, Schwartz, & Kornilaki, 2008).

The third aspect is biodiversity, from at least two operational areas in addition to the impacts resulting from constructing the ships. The impact on biodiversity from consumption onboard the ship would be similar to that of hotels (IUCN, 2008), for example the type of food and other produce used. The impact from dis- charges is specifically of concern, as cruises usually operate in highly valued coastal water and marine ecosystems. Two examples are covered here. First, many ships use hull coatings, also called anti-fouling systems, as a surface treatment to control or prevent attachment of unwanted organisms that would result in increased fuel requirements and spread invasive species around the world. However, some anti-fouling coatings contain hazardous chemicals which can be harmful to marine organisms. There are biocides with a low risk biological accumulation, and some other possible solu- tions (EMEC, 2010).

A more widespread biodiversity impact occurs from carrying ballast water to keep cruises stable in the water. The IMO noted the negative impact of non-indigenous organisms transported in the ballast water back in 1970. In 2004 the IMO adopted the Interna- tional Convention for the Control and Management on Ship’s Ballast Water and Sediments to protect waters from non- indigenous aquatic organisms and pathogens that can be harmful to ecosystems. Although this convention did not enter into force as it was only signed by 33 states by January 2012 (IMO, 2011), the harm from ballast water is well recognized (Gollasch, Lenz, Dammer, & Andres, 2000; Williams, Griffiths, Van der Wal, & Kelly, 1988). For example U.S. regulation sets standards for dis- charges within three miles of the shoreline and California requires ships to treat ballast water before dumping it in ports or coastal waters (Klein, 2011) through various technologies (EMEC, 2010).

The fourth, and most detailed GRI aspect is emissions, effluents and waste. A cruise vessel generates and disposes of millions of gallons of liquid waste in the form of gray and black water which not only threatens shellfish beds, coral reefs and other marine ecosystems, but also human health (EPA, 2004). Gray water is the wastewater from sinks, showers or laundry and is not covered by international regulations; while black water is the waste from cruise ships toilets and medical facilities e and is regulated. Cruise ships that comply with legislation and are under international regulation (Annex IV MARPOL), may still discharge comminuted and disinfected sewage using a system approved by its flag administration at a distance of more than three nautical miles from shore. A ship may discharge untreated sewage at a distance of more than twelve nautical miles and when the vessel is traveling at a speed of no less than four knots. Untreated black water is dis- charged under the assumption that oceans can dilute any pollution. Two treatment systems are used, the traditional type II marine sanitation device and the most advanced water treatment systems,

M.J. Bonilla-Priego et al. / Tourism Management 44 (2014) 149e160152

which still generate important impacts (Klein, 2011). Therefore, to be able to claim environmental responsibility, companies should use an advanced system consistently, not just depending on the jurisdiction.

In tonnage terms, the most important pollutant resulting from shipping operations is oil (Gard, 2011). MARPOL allows discharges (within twelve miles from shore) of bilge water through an oily water separator which generates an effluent with an oil content that does not exceed 15 parts per million. It also requires all vessels to maintain a sludge tank to store oil wastes, which can be incinerated or pumped ashore since it is considered a hazardous waste.

The emissions caused by a cruise ship depend on many vari- ables, for example the size and age of the vessels, which determine the power needed and the type of fuel used. Most cruise ships use residual oil, also known as heavy fuel oil, a thick, highly sulfurous fuel (EC, 2009). Additionally, carbon dioxide is the most important greenhouse gas emitted by ships, both in terms of quantity and of global warming potential. However, emissions are also created by the burning of waste onboard. There are different ship-based fa- cilities that can be installed to reduce NOx, SOx and particulate matter. However, the best way to reduce impacts from emissions is to use less combustible or replace them with less harmful power sources such as natural gas, solar panels or wind-powered systems (ECC, 2011). In fact, MARPOL Annex VI regulations include caps on the sulfur content of fuel oil to control SOx and PM emissions. This Annex was reviewed in the last few years and a progressive reduction in emissions of SOx, NOx and particulate matter was introduced. Emissions Control Areas where the emissions limits are further restricted were established in the Baltic and North Seas and North America.

Most waste treated on board is pulped, ground or incinerated and the ash is discharged overboard. Although legal under certain circumstances, the disposal of waste overboard increases biological and chemical oxygen demand, total organic carbon, and turbidity and nutrient levels, and also diminishes water and sediment quality amongmany others impacts (EPA, 2008). Incinerators on board also increase air emissions and other impacts when ash is dumped into the sea, except ashes from plastic products whichmay contain toxic or heavy metal residues which cannot be dumped. Solid waste management practices should reduce, recycle and process before discharging onshore. Because of the pressure on changeover day, recycling often occurs at intermediate ports (Véronneau & Roy, 2009).

3. Socio-economic impacts

While there are environmental impacts specific to the cruise industry, socio-economic impacts are not dissimilar to those caused by large scale resorts. They differ however in their concentration in time and space, their location in high pressure areas, and the compliance with regulations of the country where the ship is registered.

Following the GRI structure, the index includes labor conditions such as employment, labor management relations, occupational health and safety, training and education, diversity and equal op- portunity. Additional indicators on the accommodation and work- ing conditions of staff and working hours were added based on the literature. Work conditions differ considerably from land based staff, due to the temporary nature of contracts, working in isolation during long periods of time, and unclear application of legislation unfavorable to the workers due in part to the use of flags of con- venience (Bauer, 2007; Dimitrova & Blanpain, 2010; Terry, 2009). Intermediary and recruitment agencies in developing countries add charges for medical examinations, visas, transport and

administration and often put workers into a level of debt that cannot be repaid and comparable to forced labor (Klein, 2003).

The second social issue is human rights, including investment and procurement practices, non-discrimination, freedom of asso- ciation and collective bargaining, child labor, forced and compul- sory labor, security practices, and indigenous rights. Indicators generally revolve around incident reporting. There is evidence of frequent violation of rights for disadvantaged groups with tasks allocated and salaries paid according to nationality and cultural background, not capability or performance (Brida & Zapata, 2010; Terry, 2009). Labor rights in general and unionization in partic- ular are complex since the laws of the vessel’s registration apply on board e many workers begin work in debt to secure on board placements, and working hours and living conditions are below those expected on shore (Lillie, 2005). Both of these labor issues face increased legislation since 2013 with the introduction of the Maritime Labor Convention (Piniella, Silos, & Bernal, 2013).

The third social issue to be reviewed is the impact on society, including community, corruption and compliance. Besides the generic GRI indicators, it is worth mentioning cruises change the character of harbor areas in destinations, often making them un- attractive to local citizens (Seidl, Guiliano, & Pratt, 2007) and land- based tourists alike (Klein, 2011). This is especially acute in small destinationswhere the ratio to cruise passenger per resident is high (Brida & Zapata, 2010) and is causing a “crowding-out trap” of the stay-over tourism (Bresson & Logossah, 2011).

The final issue is product responsibility including health and safety, while product and service labeling, marketing communica- tions, customer privacy and compliance will be reviewed following generic GRI indicators. Health and safety of customers and staff is an aspect of corporate responsibility. The ShipSan Project Study results revealed a diversity of approaches and practices in the conduct of ship inspections, differences in the competencies of inspectors and the legislation applied during inspections, and a lack of communication and training among many European Union member states (Hadjichristodoulou et al., 2011). Recognizing that there is a need for standards, a manual was published with guidelines and best practices (EC, 2011). The 2012 Costa Concordia disaster has reminded us that ships may not be able to help all passengers abandon the ship within 30 min. The International Convention for the Safety of Life at Sea (SOLAS) must be updated to suit the modern cruise line industry since SOLAS was first pub- lished when ships accommodated no more than 2000 passengers (Klein, 2012).

The American Medical Association called for awareness on the limited medical services available aboard ships (Klein, 2012). “Keeping on top of health” appears as an industry association target (CLIA, 2012). Medical services depend on ship size, duration, destination of the voyage and the number of passengers and crew. Directive 92/29/EEC on the minimum safety and health re- quirements for improved medical treatment on board vessels establish some requirements on sanitary personnel, medical sup- plies and equipment. Although cruise lines remind us that this is not just a cruise issue, the incidence of illness caused by norovirus has increased significantly and ships traveling inwarmerwaters are especially at risk since outbreaks often occur in closed or semi closed communities. The cruise industry works with the Center for Disease Control and Prevention Vessel Sanitation Program designed for developing and implementing sanitation programs to minimize the risk for gastroenteritis, also addressed under the ShipSan Project. In the United Sates, the Cruise Vessel Security and Safety Act of 2010 requires a doctor or nurse to be onboard for the treatment of a victim sexual assault. While well intended, there are shortfalls in enforcement, financing and prosecution (Doherty, 2012). The Standard for Training Certification and Watch Keeping

M.J. Bonilla-Priego et al. / Tourism Management 44 (2014) 149e160 153

for Seafarers is the only international maritime law establishing some requirements (Klein, 2012).

In relation to safety and security, there are many regulatory and legal standards that apply to onboard safety and security which include flag state and port state laws. SOLAS is considered the most important of all international treaties concerning the safety of ships, which was amended in 2002 by the International Ship and Port Facility Security (IMO, 2002). It also includes the Standards of Training Certification and Watch Keeping and the International Safety Management rules. Security is not only related to the pre- vention of accidents and response systems, but also to criminality. Most common are sexual assaults and thefts which are in many cases related to alcohol use (Klein, 2012). The Manila Amendments (ISF/ICS, 2011) address alcohol consumption and cruise lines should implement an alcohol program that manages how alcohol is served to passengers.

In addition, there are specifically economic impacts of cruising included in the index. The cruise industry boasts of its positive economic impacts by creating jobs and contributing to the econ- omy of destinations visited (ECC, 2011; Klein, 2011) but there is limited public data to substantiate this claim. In fact, low spend cruisers are considered unproductive given the costs incurred by the destination (Jayawardena, 2002; Larsen, Wolff, Marnburg, & Øgaard, 2013). The duration of the visit and the number of spending opportunities correlates with the popularity and attrac- tiveness of the destination (PRC, 2009), but these are too short and only allow passengers to take shore tours and do some shopping with very little time to interact with destinations, many of which are directly controll

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