Social and Environmental Reporting Essay Example | Topics and Well Written Essays - 1500 words

Social and Environmental Reporting - Essay Example This support from the various stakeholders is essential for the company in order to ensure that business continues to exist. Stakeholders of the company are varied – they are investors, lenders, creditors, employees, managers, the environment in which the company operates, government, general public and local community. The co-operation between the multiple stakeholders is essential condition for any company to reach excellence. Stakeholders have a direct effect on the decision of the management. Even if all stakeholders are on board but the local community is against a particular project of the company; productivity is likely to be effected as local community will influence government and the employees. Companies can no longer function in isolation. Their activities are likely to have an impact on various stakeholders and it becomes their duty to keep them informed. (Idowu, 2010) Legitimacy Theory Any organisation operates in a social environment which has certain values whic h are acceptable and certain others which are not. Every company seeks to establish congruence between the accepted social norms and the social values associated with the company or implied by their activities. (Rizk, 2010) When there is a disparity between the two; protests are likely to take place and this will be a threat to the organisational legitimacy. Every company likes to gain legitimacy among its stakeholders by performing one of the following activities – Educate public about its activities and the change in them Change the perception of public about the company Manipulate the perception by deflecting attention on to something else Change expectations of performance among the stakeholders. Benefit to the Business of SER – Strengthens the relation of the company with stakeholders Self regulation by the company reduces litigations and government interventions Identifies the risk associated with a business move and reduces the risks Improves profitability of th e company in long run Attracts positive PR for the company (Higgins, 2010) A company which is seen in positive light also attracts a lot of investment. Gives the company competitive advantage. Analysis of Rolls Royce according to Stakeholder Theory Rolls Royce operates in three basic areas – aviation, marine and energy. The main problem that various stakeholders can have in these areas is the pollution caused by the company. The company’s report recognises this problem and also states the various measures that they have taken or are proposing to take in order to mitigate the environmental concerns associated with the company’s operations. The company has mentioned three basic challenges in the sectors and has also come out with solution to the challenges – The Trent XWB engine which is being developed by the company will increase fuel efficiency in the aviation sector by about 16% and thus reduce the carbon foot print of the company. (Rolls-royce.com, 201 0) The Bergen mean burn gas engine emits almost no sulphur and reduces the nitrogen and carbon content in the atmosphere by 90 % and 20% respectively. This step is aimed at telling the stakeholders about the environmental friendly operations of the company in the marine sector (Rolls-royce.com, 2010). In the energy sector ; the company has developed gas turbines which will operate on either dry or