Increasing Business Transparency by Corporate Social Reporting: Development and Problems in Lithuania

Abstract

The paper analyzes a transparency of business activities in relation to social reporting issues. Investors, customers, employees and other stakeholders are less trustful in recent decades. While rethinking what is needed to build trust in business environment, one of the most important subjects to discuss is increasing of business transparency because companies that are in conflict with their stakeholders cannot survive for a long run. Thus, corporate social reporting serves as a true opportunity to improve trust and competitiveness.

Companies report on social issues under many different communication forms such as corporate social responsibility report, sustainability report, report to society, social report, communication on progress, social information disclosure on their websites or even annual reports. European countries, including Lithuania, haven’t formed a single system of corporate social reporting as social disclosure is voluntary. Thus, not only a relatively small number of companies make these statements, but at the same time they are different in content and structure, and therefore not always comparable. Stakeholders, assessing companies in the context of social responsibility and making socio-economic decisions, have no opportunity to use understandable and comparable information on human resources, products, environment control and public services. Thus the research question is directed to the identification of problems of corporate social reporting development both at the institutional and organizational levels.

The objective of this paper is to analyze problems of social reporting and disclosure in Lithuania in order to increase the transparency of business activities. The research methods applied in this article are analysis of legal acts, logical and comparative analysis OFM scientific literature, dynamic and social reporting content analysis, problem analysis. As the article refers to corporate social reporting development in Lithuania, there is the theoretical background of researches mainly made in Lithuania carried out. This paper also presents the problems of social reporting in Lithuania from institutional and organizational views, the results from empirical researches of companies‘ disclosed social information. The findings of the article show that still more declaratory socially responsible business ideas dominate in Lithuania, while the actual manifestation of social reporting is in the initial level. At the same time the most important thing should be the process of implementation of socially responsible business, as social reporting is rather a process for better business transparency than just a document. The process of corporate social reporting may be improved by strengthening legal framework and improving legal conditions for voluntary reporting. But at the same time the regulatory mechanism is not enough because trust is always related to main values driving the companies and their managers.

DOI: http://dx.doi.org/10.5755/j01.ee.25.1.2356