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Stakeholder Theory In Environmental Reporting

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The next common theory that used by prior researcher in finding the motivations of company in providing environmental reporting is the stakeholder theory. Ulman (1985) focuses on two categories of stakeholder theory which comprise of stakeholder accountability and stakeholder management. In general, stakeholder is said to manage the relationship of company and the stakeholders rather than being accountability. There are also some researchers that stated stakeholder theory as the market-based theory in a way that stakeholders have the power and are the resources of the factors that contribute companies to provide environmental disclosure. Stakeholder theory helps company in strengthening the relationship with stakeholder groups as company is …show more content…

Company may face tough decisions regarding the management of their stakeholders. For example, company must ask what is right for their specific situation or set of needs and how to balance competing stakeholder claims. This results in the broader question of whether stakeholder engagement is a precondition for organizational decision making. Company that provides environmental information is said to be environmentally responsible to their actions and decisions in doing their business activities. If stakeholder believes that company is responsible to the environment, the relationship between company and stakeholder is stronger. Thus, company will manage to gain stakeholder support (Gray et al., 1996). Company that provides more environmental disclosure will increase the company reputation, attract potential investor and attract potential consumers. This is because when company is being environmentally responsible, it shows that companies are actually fulfilled their stakeholder …show more content…

The more powerful the stakeholder, the more control they have to the company so more pressure will be given to the company to fulfill the stakeholder expectations and interest (Deegan, 2014). Thus, stakeholder theory is concerning on how company can strategically manage their particular powerful stakeholders and balance the often conflicting demands of different stakeholder groups (Chen and Roberts, 2010). In this theory, the ‘community’ may be perceived as a ‘powerful’ stakeholder to influence company decisions and that may then have further impact on the operations and future of company growth. Without community pressures, there might be no environmental initiatives established by companies. One of the ways for the company to meet stakeholder expectation is by providing an environmental reporting in order to gain their support. In this situation, annual report may be a medium for company to show that they are being responsible to the environment by showing that they have given full efforts to provide more environmental information (Gray et al.,

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A Stakeholder is any individual who has a vested interest in a business and is affected by the organisations decisions and strategies (Pride, Hughes & Kapoor 2015, p. 10). Therefore, the people most affected by Graeter’s decisions to take a long term view of the business rather than aim for short term profits are the family members who have a stake in the business. At the present, Richard Graeter II (CEO), Robert Graeter (vice president of operations) and Chip Graeter (vice president of retail operations) manage the business and are responsible for all the decisions regarding its operations. Graeter’s management team have chosen to forgo the opportunity for short term profits by adhering to the traditional manufacturing process used by Louis

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Legitimacy theory is a “positive theory” that asserts that businesses are bound by the implicit “social contract” that the corporation agrees to perform that are specifically relating to social and environmental issues (Rankin, et al. 2012, 142). To remain congruent with societal values in which it operates, a corporation can address attributes that relate to this theory through voluntary social and environmental disclosures made on platforms like its annual report (Coebergh 2011, 65). Virgin Australia has various groups of important stakeholders who can affect or is affected by both the actions and activities of the corporation (Laasch and Conaway 2014, 97). They are namely, guests, employees, investor groups and shareholders, unions, non-government

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Every stake holders has its own needs and demands from the organization. Every stakeholder which are directly attached to the company requires the information as it required and his role. These are the persons, groups or other company which have legitimate interest in the company and its functions. These persons or the group directly or indirectly communicate with the company. Stake holder analysis is done below to understand the needs and demands of the stakeholders.

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The Stakeholder Salience Theory, created by Mitchell, Agle and Wood, are based upon the combination of the three relationship attributes to generate general types of stakeholders. These attributes include: Power; Legitimacy; Urgency. “Stakeholder salience” is defined as the degree to which managers give priority to competing stakeholder claims. Therefore if a stakeholder consist of all three attributes, he/she/it will be of most importance and will have more rights and privileges than a stakeholder that consists of only one of the three attributes. As seen in the picture on the right, you can differentiate between the different types of stakeholders, according to where they get placed given the attributes they consist of.

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External environmental issues which impact the financial services organizations, strategic Planning have been vital to make any financial service organization survive for long term. External environment comprises of all the elements which are present outside the boundary of the organization and have the capacity to affect either part or the whole organization. IN order to understand any financial organization we need to analyse its domain which exists in the external sectors of the organization (RamaRao, 2010). The niche of the organization forms the organizational domain and also defines all the externals sectors which with the organization will interact in order to accomplish its goals.

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Here you look on the difference between benefits and harms for the society and if the benefits are greater than the decision or an action is considered as ethical, if lower – unethical. Here it is important to identify the stakeholders and an effects on them from actions or decisions of a company. “You can think of a stakeholder as a person or organization that can affect or be affected by your organization. Stakeholders can come from inside or outside of the organization. Examples of stakeholders of a business include customers, employees, stockholders, suppliers, non-profit community organizations, government, and the local community among many others.”

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