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Tourism Management 44 (2014) 149e160

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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 depe

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