CLAUSULA NOVENA: RESPONSABILIDADES DE SECURITY DATA SEGURIDAD EN DATOS Y FIRMA DIGITAL S.

Employee relations disclosure covers issues such as health and safety in working places, improving employee skills throughout levels of training and development programmes. Examples of employee benefits include competitive remuneration and career development. Some companies also provide wellness at work amidst comfortable and safe working conditions, employee engagement into physical and social activities and other healthy lifestyle encouragements, various employee relation activities such as organized religious activities to balance the pursuit of work with spiritual aspects, as well as supporting family day activities. Employee profiles cover employee statistics provided, total manpower strength disclosed by group and division, executive group(s) by division and management levels. Share options for employees are an important programme because it can not only enhance spirit and motivation to be involved in company ownership; the scheme serves as a method to instil a stronger ownership sense amongst staff members.

Results of the CSRD for each dimension reveal that the employee benefit category is most popular for the employee relations dimension, ranging from 128 (64 percent) and 185 (92.5 percent) of the sample for the seven years analysis. For example, the company provides help or guidance to their employees such as preparing them for their retirement process, employee accommodation and housing schemes, as well as recreation and family day activities. The second highest disclosed category in the employee relations dimension is the Executive Share Option Scheme (ESOS), where the number of companies that disclosed varied between 60 (30 percent) to 107 (54 percent). The aim of the ESOS programme for employees is to make them more responsible in operating their own companies.

178 Training and educational programmes are important for the employees with disclosures that varied from 30 (15 percent) to 48 (24 percent). Most companies disclose their training programmes in terms of employee training via in-house programmes, and providing financial support to the employees in continuing their education such as courses and training. The employee profile is also essential for CSRD where several companies disclosed this dimension, which displayed a range between 7 (3.5 percent) to 62 (31 percent) within the sample size. Some types of employee profiles are disclosed as follows: statistics on the number of staff, length of service in the company and age groups; the number of workers and the managerial levels involved; the number of employees in the company and/or in the respective branches and/or subsidiaries; and information provided on qualifications of recruited employees.

This result is consistent with prior studies (Haniffa and Cooke, 2005; Thompson and Zakaria, 2004; and Che Zuriana et al., 2003; and Williams and Pei, 1999) who found employee relations to be the highest disclosed dimension by the Malaysian PLCs. This indicates employee relations to be the most valuable asset for the Malaysian PLCs and that declaration of information on this dimension is vital. This is due to the assumption that good human resources management will enhance company image (Che Zuriana et al., 2003). However, this finding is contrary with other studies conducted by Nik Ahmad et al. (2003) and Kin (1990) who found product to be the highest disclosed dimension. The result of this study is also consistent with findings from other emerging markets which report employee relations to be the most popular dimension, followed by community involvement (Kuasirikun and Sherer, 2004; Abu-Baker and Nasser, 2000; Imam, 2000, and Savage, 1994).

179

5.2.1.2.Community Involvement Dimension

Community involvement comprises disclosures relating to cash donations and contributions to the needy. Supporting and involving charitable institutions such as schools, non-profit associations and non-governmental organizations include providing scholarship programmes for worthy students. Companies actively sponsor sports events and development; for example by being the main sponsor of national and international sporting events. Companies actively support national pride related charity programmes, sports sponsorships and community projects that are praised by government bodies, the business sector or the involved community itself.

Various community programmes are conducted by PLCs in Malaysia. For the community involvement dimension, charity programmes are the most popular ranging from 29 (14.5 percent) to 56 (28 percent); followed by cash donations varying between 23 (11.0 percent) to 52 (26 percent) of the 200 companies. Government programmes supporting national pride ranged between 14 (7 percent) to 24 (12 percent). Finally, scholarship programmes which prove concern for society ranged between 10 (5 percent) and 29 (14 percent).

The results in Table 5.1 found community involvement to be the second highest dimension disclosed by the Malaysian PLCs. This result is consistent with prior studies by Che Zurina et al. (2003) and William and Pei (1999) who also found community involvement to be the second highest disclosure by PLCs in Malaysia.

180

5.2.1.3.Product Dimension

There are three main items under the product dimension namely development, quality and safety. Product research and development is the pursuit of higher standards in the quality of products and services, and improvement of various quality and safety aspects in products and services as well.

Most companies reported product development (ranging of 24 (12 percent) to 54 (27 percent). Product development includes development information related to a company‘s products, the amount and percentage figures of research and development expenditure as well as its benefits, and information on any product improvement research projects set up by the company. Percentages of disclosed product quality ranged from 16 (8 percent) to 51 (25.5 percent). The category of quality involves information on the quality of a company‘s product as reflected by the certification, prizes or awards received (for example, ISO 9000 and Super Brand). Lastly, disclosure of product safety ranged between 3 (1.5 percent) to 5.5 percent of the sample. Product dimension is found to be the third highest CSR disclosure by PLCs in Malaysia; consistent with the prior study by William and Pei (1999) that revealed product dimension to be the third highest dimension disclosed after employee relations and community involvement.

5.2.1.4.Environment Dimension

This section explores nature and environment related activities disclosed in companies‘ annual reports. Environmental disclosures relating to pollution control include recognition of eco-friendly activities such as waste management practices, air and water pollution control and zero burning practices. Companies should support conservation and protection by actively promoting environmental awareness. For instance,

181 plantation companies that utilize palm oil mill effluent and empty fruit bunches to produce compost, as well as employing fibres and fruit shells as fuel to run the palm oil mills without the use of outside supplied electricity. More important than just the effect of companies‘ activities on the environment, is the continued effort to enlighten younger generations of the importance concerning environmental protection. In appreciation of environmental concerns, companies disclose their environmental awards and certification of ISO 14001 As proof that can be appreciated by other parties.

Various types of environment dimensions are disclosed by companies. Pollution control is most popularly reported in companies‘ annual reports, ranging between 7 (3.5 percent) to 27 (15 percent) of the 200 companies. Pollution control in the conduct of business operation is as follows; research and development expenditure for pollution abatement; statements indicating company operations are non-polluting or are in compliance with pollution laws and regulations; and statements indicating pollution from operation has been or will be reduced. Conservation of natural resources such as using recycled materials are second highest with the average percentage from the sample ranging between 6 (3 percent) to 18 (9 percent). Finally, the percentage of environment damage repairs or prevention which result in the processing of natural resources ranged between 6 (3 percent) to 21 (10.5 percent).

The study found the environment dimension to be at the lowest level of disclosure by the Malaysian PLCs over the seven year period. This result is consistent with the majority of previous studies (Haniffa and Cook, 2005; Thompson and Zakaria, 2004; Nik Ahmad et al., 2003; Williams and Pei, 1999; and Kin, 1990). The awareness level of PLCs in Malaysia toward environmental issues was revealed to still be at a low.

182 Recently the pressure from some activists and environmental NGOs‘ towards PLCs in Malaysia has resulted in companies to conduct more socially responsible practices. Hence, annual reports can be utilised to promote a company‘s involvement in CSR practices (Nik Ahmad et al., 2003). There are some efforts to pursue companies to be concerned and involved in CSR practices, especially in the environment dimension. Besides the ISO 1400125 certificate, the Malaysian Environmental and Social Reporting Awards (MESRA) was launched in July 2002. The main aim of the award scheme is to appreciate the voluntary disclosure of environmental practices among the Malaysian PLCs. MESRA was released by the Malaysian Environment Department. The association of Chartered Certified Accountants (ACCA) in cooperation with the Department of Environment have also launched environmental reporting guidelines for companies. Through this activity, the government expects that the Malaysian PLCs will take on environmental reporting more actively (Thompson and Zakaria, 2004).