Early academic contributions on CRS theoretical frameworks focused on ensuring that boundaries are assigned to prevent social and financial components of business entity from overpowering or overshadowing each other’s. This was the major problems of modern era business (Crowther and Rayman-Bacchus, 2004). Key among corporate responsibility frameworks that brought to the limelight the need for the demarcation of non-financial from financial performance was the Carroll’s Pyramid and Elkington triple bottom line (TBL) reporting. A review was carried out to determine how their deficiencies have affected CRS performance reporting.
Carroll put forward pyramidal framework that boundary four categories of corporate responsibility in decreasing order of importance: economi, legal, ethical, philanthropic responsibilities (Carroll, 1991 and 1998). Furthermore, Carroll (1991) expressed that, although the components of Pyramid are not mutually exclusive, it helps the manager to see that the different types of obligations are in constant tension with one another. But scholastic revisit of Carroll pyramid in recent years has revealed some deficiencies that accounted for its insignificant contributions in terms of providing guidance for CRS performance management (Visser, 2006).
Further , it was argued that the interconnections between Carroll’s four levels responsibilities components are so blurred making theoretical demarcation seem artificial or even irrelevant in practical sense (Crane and Matten,2004; Visser, 2006). Hence, suggested that rather than tinkering with Carroll’s pyramid, effort should be concentrated in developing alternatives frameworks that better describe the reality of corporate responsibility (De Jongh and Prinsloo, 2005). While Visser (2006) expressed that managers are increasingly using the banner of sustainability or the triple-bottom-line (TBL) non-financial reporting approach to describe their CRS activities due to limited instrumental value of Carroll’s pyramid. So, the question now is triple-bottom-line reporting the alternative CRS model we are looking for?
Elkiington put forward the idea of reporting on business – society relationship. The concern that business does not know how to harmonise the traditional financial bottom line with environmental quality and social justice led to Elkington (1994) triple bottom line (TBL) reporting framework. TBL reporting provides guidance on measurement of business and investors performances against a new set of metrics—capturing economic, social and environmental value added—or destroyed—during the processes of wealth creation.
TBL accounting expands the traditional performance reporting framework to take into account social and environmental performances in addition to financial performance through which opportunity for societal and ecological agreement between the community and businesses were created (Elkington, 1994 and 1997). TBL established the demands that businesses publicly present non -financial information about company’s CRS impact showing both positive and negative items; thereby making company’s CRS performance measurement lies with stakeholders rather than shareholders (Jacson, Bosewell & Davis, 2011).
An analysis of first global wide-stakeholders survey on non-financial reporting conducted by ECC Kohtes Klewes GmbH and Fishburn Hedges (2003) revealed that stakeholders were not satisfied with state of CRS performance reporting and the very low rate of compliance and commitment to TBL reporting. Furthermore, (Jacson et al, 2011) survey finding showed that 8 countries of the world are actively promoting TBL reporting 17 years from inception of idea by Elkington, (1994).
This beg the question why are TBL adopter so few? And, indeed challenged Visser (2006) argument above that managers are increasingly likely to use the banner of sustainability or the triple-bottom-line approach to describe their corporate responsibility activities because Carroll’s pyramid has limited instrumental value. These suggest that there are problems with business adoption and operation of TBL reporting framework.
The reasons for the unsatisfactory TBL reporting by companies are suggested to be risk, and human and financial resources costs in relation to reporting system infrastructure. Nevertheless, the risk and costs of implementation of TBL reporting by businesses, one of the main purposes of sustainability for any business remains reduction or elimination of its cost of poor quality. Yet the above arguments pointed out that implementation of TBL reporting require extensive readjustment of a company’s operations. An indication of inherent difficulty related to maintaining the application of TBL reporting in business operations (Jacson et al, 2011). Even though, measuring the cost of poor quality is a vital part of TBL reporting, however for companies to benefits from this important management information, avoidance of self-serving bias in the reporting process is a key requirement (Isaksson, 2005; Jacson et al, 2011).
To resolve the problem associated with TBL reporting adoption and application scholars suggested that sustainability function need to be tasked to company’s strategic decision making level with a section of the Board of Directors to preside as a “Sustainability Committee of the Board’ (Painter-Morland, 2006). Nonetheless, this can only increase adoption rate but does not resolved the TBL application problems of bias free information gathering process, data accuracy and organisation crucial for strategic CRS performance management decision making function of the board; as well as for the production of CRS report that is straightforward and understandable by the stakeholders inclusive of society at large, employees and stockholders (Jacson, et al., 2011). Against the understanding of issues surrounding TBL reporting, a review of CORE coalition report on non- financial information in annual reports of London FTSE 100 by Henriques (2010) carried out to see the level of compliance with TBL in the below section.