Early Stage of Sustainability Reporting: Case Study from the Czech Tobacco Industry

Abstract

The aim of this article is to examine the potentially controversial role of sustainability reporting in the tobacco industry and to see how the selected company reacted to the new EU Directive 2014/95/EU on non-financial reporting. The key findings are: (1) The company was actively preparing for sustainability reporting even before the new regulation came into force. (2) The parent company was concerned about the impact of its activities on stakeholders including the local community. (3) Financial donations became less popular through the years. (4) The company states that it cares about the health of its customers, the working environment, and the labour conditions of its suppliers. Even though the company operates as part of a controversial industry, it is trying to convince stakeholders, using its reporting style, that it is socially and environmentally responsible. Summary The EU Directive on disclosure of non-financial information and diversity information (2014/95/EU) was published at the end of 2014, giving the European Member States two years to transpose the EU Directive into national legislation. From reporting year 2017, the legal requirements for transparency on non-financial information in management reports of large public interest entities came into force. This paper examines the potentially controversial role played by sustainability reporting in the tobacco industry, based on the analysis of Philip Morris International. Content analysis was conducted, using a specific coding system based on CSR approaches comprising seven main categories. The analysed data included descriptive narrative sections from annual reports in years 2011-2013, prior to the approval of the regulation, and in years 2014-2016, after the approval, as well as a standalone sustainability report from 2016. Two effects can be noted: (1) companies in transitional economies copy the behaviour of their parents from Western countries; (2) the parent company has a strong influence on reporting and helps create a positive impression of itself with various CSR inspired approaches. One campaign titled itself as "The best employer of the region". Despite concerted efforts, there is still a question over genuine credibility.