(i) Corporate social responsibility (CSR) strategy
A strategy is a long-term plan primarily focused on delivering a prescribed outcome. A CSR strategy specifically involves devising and then undertaking a series of deliberate steps in pursuance of a socially responsible agenda. To have a CSR strategy involves making choices in support of a specific cause, and implementing policies and procedures which will help to deliver the
objectives.
It is clear from the scenario that the senior management team at Grunwald considers that the rapid decline in the honey bee population will have a devastating effect on the natural environment. The company finds itself in a position where it is able to actively promote the cause in the following ways:
– Promoting the rationale behind the artificial Honeybuzz brand to the wider population.
– Donating some of the proceeds from the sale of Honeybuzz branded produce to finance research into the reasons why honey bees are dying out.
– Introducing a natural honey substitute in the health food manufacturing process.
The incorporation of all of these activities into Grunwald’s formal business plans effectively means that it has devised and implemented a CSR strategy.
Strategic CSR
Since CSR normally requires the commitment of significant financial resources, many companies try to reflect the core values and beliefs of the company’s shareholders in CSR matters. Therefore, when CSR activities are undertaken with the motive of maximising the long-term economic benefit of the company, it can be better described as strategic CSR. The underlying assumption underpinning strategic CSR is that all company assets belong to the shareholders and so all activities, including CSR, should be configured in such a way as to enhance shareholder value.
At Grunwald, the development and promotion of the Honeybuzz brand will not only promote the cause of the honey bees but will vicariously improve the financial fortunes of the company and its shareholders. Indeed, for sufficient funds to be set aside for the research programme, a large volume of the Honeybuzz branded products will need to be sold. In fact, this correlation means that the more of the Honeybuzz brand products sold, the more money becomes available in support of the declining honey bees, so Grunwald has aligned its social responsibility aims with its core business objectives.
It could therefore be concluded that Grunwald has adopted a CSR strategy to publicise attention of the plight of the honey bees, but in doing so has benefited its own investors, so has also adopted a strategic CSR approach.
(ii) Gray, Owen & Adams, in their book Accounting and Accountability, described seven different viewpoints or positions which a company can adopt in relation to social responsibility. They assume that all organisations accept some degree of social responsibility, and with it accountability. At one extreme is the position held by a pristine capitalist organisation where there is only a duty towards shareholders. Pristine capitalists believe that if the focus is purely on maximising shareholder value, then the resultant higher level of taxation paid will benefit society, with decisions on how to use this money to address social and environmental issues best left to elected representatives. At the other end of the social responsibility spectrum are deep ecologists who do not believe that any humans (including shareholders) have any more rights than any other species on the planet. Deep ecologists would consider the plight of the honey bees as paramount and expect organisations like Grunwald to commit as much of its resources as necessary to resolve the situation.
From the scenario, it is clear that Grunwald is neither a pristine capitalist nor a deep ecologist, but has taken a position somewhere between these extremes. The position of Grunwald can be described as that of a social ecologist, since it recognises that its environmental footprint has exacerbated the honey bee shortage problem and it has a responsibility to take action to reduce this impact and attempt to remedy the situation. The CSR strategy Grunwald has decided to pursue will help to reverse the decline in the honey bee population, and in doing so benefit human life on the planet by enabling more honey bees to pollinate those crops essential to the global food chain.

Social audits

Social auditing is the process which enables an organisation to both assess the measures it is taking to limit its negative social and economic impacts, while also demonstrating its commitment to making positive contributions and reversing any harm it may have caused through its business activities. This can be linked to its strategy by measuring the extent to which it has achieved those shared values and social responsibility objectives derived from its mission statement. The social audit provides additional information on corporate activities over and above that disclosed with the published financial statements.

At Grunwald, the social audit would identify and evaluate those health food products it manufactures and sells which have a negative impact on society. The reduction in the honey bee population will have an increasingly damaging effect on society at large if the bees are unable to pollinate sufficient crops used as foodstuffs. Grunwald has decided to take a series of positive actions, the impact of which will be eventually measured through a social audit and disclosed in the integrated report. Grunwald will be able to evaluate and report how effective its CSR strategy has been in reducing the impact of its social footprint.

Environmental audits

Environmental auditing aims to assess the impact an organisation has on its natural environment, and normally involves measurement against predetermined environmental standards, such as EMAS or ISO 14001. An environmental audit usually comprises three elements:
（i）Agreeing what should be measured and how this is to be accomplished.
（ii）Measuring actual performance against the agreed measures.
（iii）Reporting findings, including any significant deviation from the standards or objectives.

Grunwald has not yet specified any basis of measuring the success of its CSR programmes, nor has it suggested a suitable timescale upon which any measurement should be based. It is clear that the sale of Honeybuzz branded products will result in money being put into honey bee research, so this can be objectively measured and targeted in any given accounting period. However, it is less obvious how creating greater public awareness of the honey bee problem through the new brand, and the outcome of funded research into how to reverse their decline can be objectively measured in success or failure terms for Grunwald for disclosure in its integrated report.

The inclusion of independently audited social and environmental programmes in integrated reports would provide the users of this information with greater assurance and confidence that the actions claimed by Grunwald were delivering positive results. The findings of the social audits could be included under the heading of social capital as it would indicate how the actions of Grunwald are having a positive impact on wider society. The environmental audit would be covered by natural capital, since this is where the impact of the company’s activities on the ecosystem is disclosed.

The Honeybuzz brand could have a number of environmental impacts on Grunwald’s environmental footprint, including:
（i）The development and promotion of the Honeybuzz brand to the wider population will help to increase public awareness of the honey bee problem. This could then encourage others to take further action and possibly eventually influence government policy in this area.
（ii）Pledging funds to research into honey bees and their welfare may ultimately help to find a resolution to the problem. The positive commitment to this cause evidenced by Grunwald’s willingness to allocate shareholder funds to this research will have a very positive effect on its environmental footprint.
（iii）Changing a core health food manufacturing process through the introduction of a natural honey substitute demonstrates Grunwald’s serious commitment to the plight of the honey bees. This decision will have resulted in the company incurring avoidable costs, but these could be viewed as an investment into its environmental footprint.

These would impact on Grunwald’s environmental reporting in a number of ways:
（i）It would counter the unsubstantiated claims made by Paul Zondas in his article by providing independent evidence that Grunwald is actually using a natural honey substitute in its Honeybuzz branded products. This would strengthen the company’s CSR credentials with external stakeholders, and add to its strategic CSR benefits by potentially increasing sales from the positive publicity arising.
（ii）Access to this additional information would allow John Ulrich and other senior managers at Grunwald to make better resource allocation decisions. Apart from the positive CSR benefits which may arise, such decisions will enhance the risk management process and help to identify new business opportunities for the company to pursue. Therefore, environmental reporting can be seen as an aid to strategic CSR.
（iii）The information will be more aligned with shareholders and other stakeholder requirements, which may lead to enhanced trust and better engagement between Grunwald and all of its stakeholders, including its customers. Shareholders will be better informed and better able to assess the impact the CSR strategy is having on the business and their investment, in terms of risk and return.