The Social Balance Sheet as Part of the Annual Report in Financial Institutions. A Case Study: Banco Bilbao Vizcaya Argentaria (BBVA)
Round 1
Reviewer 1 Report
Authors have considered all my recomendations, suggestions in previous reviews. Anyway I miss to include some brief practical implications of this article in the abstract.
Author Response
Editor in Chief Prof. Miguel Martin-Valmayor
Sustainability University Francisco de Vitoria
Vincent Gan Madrid, Spain
Email: [email protected]
February 26, 2021
Manuscript ID: sustainability-1039169
THE SOCIAL BALANCE SHEET AS PART OF THE ANNUAL REPORT IN FINANCIAL INSTITUTIONS. A CASE STUDY: BANCO BILBAO VIZCAYA ARGENTARIA (BBVA)
Dear Mr. Gan,
Many thanks for considering once our paper entitled “THE SOCIAL BALANCE SHEET AS PART OF THE ANNUAL REPORT IN FINANCIAL INSTITUTIONS. A CASE STUDY: BANCO BILBAO VIZCAYA ARGENTARIA (BBVA)”, as a candidate for publication in Sustainability.
Following your final recommendations and the comments of the reviewers, we have made some minor changes in the manuscript that we present in the following pages.
Hoping this time that the paper might be acceptable for publication in Sustainability.
Sincerely,
Miguel Martin
Comments to Reviewer #1
1.) Authors have considered all my recomendations, suggestions in previous reviews. Anyway I miss to include some brief practical implications of this article in the abstract.
We really appreciate all the comments and suggestions of this reviewer, especially during the previous reviews, that had clearly and significantly improved the quality of the paper. Along this third review, it has been adapted the abstract to the applied methodologies, looking for a more practical perspective of the implications of this article, as suggested.
“…From a methodological perspective, this research has analyzed the information that should be contained in the SBS report comparing Economic Value Added (EVA) with other Social Value-Added statements (SVA), analyzing also in detail the case of Spain’s BBVA bank, as one of the pioneers in offering social reports. Along with this study, their metrics following EVA have been recalculated and a more academic SVA statement has been proposed for this specific case…
Author Response File: 
Author Response.docx
Reviewer 2 Report
The aim of the work is to provide a more thorough analysis of the documents provided by the bank, with the objective of obtaining a more realistic measure of the EVA and the social value generated by the BBVA company. The structure of the paper has a high level of quality because it's clear, the topic and the reference literature have been adequately treated and there are no elements of confusion. In my opinion, there are only few suggestions in order to improve the research:
- The Social Balance Sheet can be related to the growing interest given by the financial institution after the subprime crisis of 2007 which reduced investor confidence in stability's banks, reason for which the sustainable and responsible investments raised up? This new attention to the social impact investing features provided by the financial institutions is a growing line of research, especially in the UK and USA. If, according to the Authors, this connection exists could be useful add a brief section into the Introduction one, in order to make a wider framework on the origins and features of the social balance sheet and the related issues worldwide. If could be useful, I suggest to see some publications on the matters that can provide a detailed analysis :
- Drexler, M., Noble, A., & Bryce, J. (2013, September). From the margins to the mainstream: Assessment of the impact investment sector and opportunities to engage mainstream investors. In Geneva: World Economic Forum, Switzerland.
- Tajani, F., Morano, P., Anelli, D., & Torre, C. M. (2020, July). A Model to Support the Investment Decisions Through Social Impact Bonds as Effective Financial Instruments for the Enhancement of Social Welfare Policies. In International Conference on Computational Science and Its Applications (pp. 941-951). Springer, Cham.
- Geobey, S., Westley, F. R., & Weber, O. (2012). Enabling social innovation through developmental social finance. Journal of Social Entrepreneurship, 3(2), 151-165.
- Could be important to highlight the novelty and the effective contribution provided by the proposed methodology in order to better understand the capacity of the tool for the issue addressed (maybe by adding some graphs or flowchart that make a comparison of the possible outputs generated by the generally applied method and the one proposed by the Authors).
Author Response
Editor in Chief Prof. Miguel Martin-Valmayor
Sustainability University Francisco de Vitoria
Vincent Gan Madrid, Spain
Email: [email protected]
February 26, 2021
Manuscript ID: sustainability-1039169
THE SOCIAL BALANCE SHEET AS PART OF THE ANNUAL REPORT IN FINANCIAL INSTITUTIONS. A CASE STUDY: BANCO BILBAO VIZCAYA ARGENTARIA (BBVA)
Dear Mr. Gan,
Many thanks for considering once our paper entitled “THE SOCIAL BALANCE SHEET AS PART OF THE ANNUAL REPORT IN FINANCIAL INSTITUTIONS. A CASE STUDY: BANCO BILBAO VIZCAYA ARGENTARIA (BBVA)”, as a candidate for publication in Sustainability.
Following your final recommendations and the comments of the reviewers, we have made some minor changes in the manuscript that we present in the following pages.
Hoping this time that the paper might be acceptable for publication in Sustainability.
Sincerely,
Miguel Martin
Comments to Reviewer #1
Comments to Reviewer #2
1.) The Social Balance Sheet can be related to the growing interest given by the financial institution after the subprime crisis of 2007 which reduced investor confidence in stability's banks, reason for which the sustainable and responsible investments raised up? This new attention to the social impact investing features provided by the financial institutions is a growing line of research, especially in the UK and USA. If, according to the Authors, this connection exists could be useful add a brief section into the Introduction one, in order to make a wider framework on the origins and features of the social balance sheet and the related issues worldwide. If could be useful, I suggest to see some publications on the matters that can provide a detailed analysis :
- Drexler, M., Noble, A., & Bryce, J. (2013, September). From the margins to the mainstream: Assessment of the impact investment sector and opportunities to engage mainstream investors. In Geneva: World Economic Forum, Switzerland.
- Tajani, F., Morano, P., Anelli, D., & Torre, C. M. (2020, July). A Model to Support the Investment Decisions Through Social Impact Bonds as Effective Financial Instruments for the Enhancement of Social Welfare Policies. In International Conference on Computational Science and Its Applications(pp. 941-951). Springer, Cham.
- Geobey, S., Westley, F. R., & Weber, O. (2012). Enabling social innovation through developmental social finance. Journal of Social Entrepreneurship, 3(2), 151-165.
Thanks very much for this interesting comment. Following the advice, we have included the following comment in the introduction:
“ … In addition, the subprime financial crisis of 2007 that reduced investor confidence in stability’s banks created a growing interest by the financial institutions in sustainable and responsible investments issues and its visibility through the SBS with generation of positive returns. Thus, this new attention to the social impact investment features provided by the financial institutions has been growing up since then. Recent papers dealing with this issue include among others Geobey et al. (2012), exploring social finance as a strategy for generating social innovations and then financial returns; Drexler et al. (2013), showing the concept of impact investing to create both financial return and measurable social or environmental positive impact; and Tajani et al. (2020), implementing a model to choose an optimal combination of different social impact sectors in terms of the local community needs…
2.) Could be important to highlight the novelty and the effective contribution provided by the proposed methodology in order to better understand the capacity of the tool for the issue addressed (maybe by adding some graphs or flowchart that make a comparison of the possible outputs generated by the generally applied method and the one proposed by the Authors).
Thanks very much by this final comment. We also believe that adding a figure might clarify the comparison of the two proposed methodologies. Thus, it had been added the following figure when comparing both methodologies, and introduced with the following lines when estimating EVA at point 4 “BBVA Social Balance Sheet discussion”:
“… Figure 1 shows similarities and differences o of both SVA and EVA outputs...
Other minor changes
ABSTRACT had been updated including the methodologies used in the paper
“…From a methodological perspective, this research has analyzed the information that should be contained in the SBS report comparing Economic Value Added (EVA) with other Social Value-Added statements (SVA), analyzing also in detail the case of Spain’s BBVA bank, as one of the pioneers in offering social reports. Along with this study, their metrics following EVA have been recalculated and a more academic SVA statement has been proposed for this specific case…
References
Drexler, M., A. Noble and J. Bryce (2013), From the margins to the mainstream. Assessment of the impact investment sector and opportunities to engage mainstream investors, In Geneva: World Economic Forum, Switzerland.
Geobey, S., F.R. Westley and O. Weber (2012), Enabling social innovation through developmental social finance, Jorunal of Social Entrepreneurship 3, 2, 151.165.
Tajani, F., P. Morano, D. Anelli and C.M. Torre (2020), A model to support the investment decisions through social impact bonds as effective financial instruments fro the enhancement of social welfare policies. In International Conference on Computational Science and its Applications (pp. 941-951), Springer, Cham.
Author Response File: Author Response.docx
This manuscript is a resubmission of an earlier submission. The following is a list of the peer review reports and author responses from that submission.
Round 1
Reviewer 1 Report
THE SOCIAL BALANCE SHEET AS PART OF THE ANNUAL REPORT IN FINANCIAL INSTITUTIONS. A CASE STUDY: BBVA
Referee report
This paper presents a case study discussing the social balance sheet of BBVA. The authors provide a good motivation for the case of Spain and discuss findings from the literature. The paper continues with presenting and discussing selected sections of the financial reports from BBVA (Tables 1 to 4). It evolves to conducting some performance, compensation, and other analysis including a comparative analysis with other Spanish banks. This also applies to the description of EVA on lines 145-150.
A major problem with the work is the methodology and inference based on it. My comments are provided below
With respect to the writing of the paper, there are many typos and grammatical errors that may require the authors' attention. Some acronyms need to be defined when first used. For example, EVA and BBVA in the abstract. Consistency is also important when using acronyms (SBS vs SBC) in the abstract provided on online although in this case, this was corrected in the pdf file of the paper. Note that BbVA is used in the title and BBVA is used elsewhere.
With respect to content and analysis. It is recommended that the authors would name the legislative body behind an Act or law and the corresponding year of issuing or implementing the Act. Since 2001, there have been significant developments in the EU and with frameworks proposed by accounting governing bodies that deal directly with social responsibility. While the legal and framework history is referred to early in the paper, Acts are not identified.
The analysis is concerning and has serious caveats.
There are many ways in the literature where EVA is defined. I encourage the authors to present the formula used and justify inputs in a manner that is consistent with EVA definition in the literature. In addition, it is important to justify assumptions behind inputs to EVA in the discussion on p. 7 for example. There are some ambiguities and I mention one example from Table 5a and the explanation provided for microcredit. The numbers presented in the table are inconsistent with the point made on lines 228 and 229. Inconsistency appears for other variables as well.
The regression results reported in Figure 1 seem to use a very small number of observations to be reliable estimates, this is shown in the best of fit line. The results are clearly based on misspecified models with few observations to start with which makes it hard for us to learn about the inference.
Comparing the cost of training with that of employees of the Santander Bank further justification. It could be that training at Santander bank involves higher levels of skillset deployed by trainers and is, therefore, more expensive. Without further details, it is hard to make sense of such comparisons. Another error is not comparing costs periodically as in some periods the red line corresponding to Santander bank is above the blue line corresponding to BBVA and in other periods (earlier periods) it is below. The comparison misses CAIXA although the plot in Fig. 3 is provided.
Author Response
Comments to Reviewer #1
This paper presents a case study discussing the social balance sheet of BBVA. The authors provide a good motivation for the case of Spain and discuss findings from the literature. The paper continues with presenting and discussing selected sections of the financial reports from BBVA (Tables 1 to 4). It evolves to conducting some performance, compensation, and other analysis including a comparative analysis with other Spanish banks. This also applies to the description of EVA on lines 145-150.
A major problem with the work is the methodology and inference based on it. My comments are provided below
With respect to the writing of the paper, there are many typos and grammatical errors that may require the authors' attention. Some acronyms need to be defined when first used. For example, EVA and BBVA in the abstract. Consistency is also important when using acronyms (SBS vs SBC) in the abstract provided on online although in this case, this was corrected in the pdf file of the paper. Note that BbVA is used in the title and BBVA is used elsewhere.
Thanks very much by your comments. Clearly, consistency should be reviewed. Thus, SBC has been removed from the Abstract, and we have correctly introduced the names for Social Balance Sheet (SBS), the bank BBVA (Banco Bilbao Vizcaya Argentaria), Economic Value Added (EVA) and Social Value Added (SVA).
A new description of EVA has also been included on point #4, and as the bank is not making a proper use of this topic, we have introduced Social Value Added (SVA) following the value added statemens in Rajnoha et al. (2012) and in Arangies et al. (2008)
Dealing with this, we have included the following comments:
“…EVA measures the profitability margin between the asset return and the cost of the resources used, adjusted to the specific amount of capital used […] A good example of the use of EVA to measure CSR profitability can be found in Mittal et al. (2008).
However, the EVA calculations used by BBVA follows a different approach of value-added elements, as it is estimated with the sum of shareholder dividends, interests given to clients, payments made to suppliers, taxes paid and third-party donations. This indirect focus of value-added estimations can be found in some recent references. For instance, Rajnoha et al. (2012) uses a cost accounting model that excludes those parts which are neutral for company and all interest-free current liabilities (Horvath, 2004). Arangies et al. (2008), proposes a value-added statement in the form of the sum of wages, taxes, interests, depreciations, dividends and retained earnings, including the social value-added elements that deals with the stakeholder returns…”
With respect to content and analysis. It is recommended that the authors would name the legislative body behind an Act or law and the corresponding year of issuing or implementing the Act. Since 2001, there have been significant developments in the EU and with frameworks proposed by accounting governing bodies that deal directly with social responsibility. While the legal and framework history is referred to early in the paper, Acts are not identified.
We also appreciate very much this comment. The literature review (point #2) has been fully reviewed, introducing also different recent European acts like the European Union Directive 95/2014/EU or the Italian Decree 254/2016 and the European recommendation Social Business Initiative (2011). In particular, the following lines had been added:
“…European Union in its Directive 95/2014/EU stipulates that certain large companies should prepare a non-financial statement containing information relating to at least environmental matters, social and employee-related matters, respect for human rights, anti-corruption and bribery matters.
In Italy, the Decree 254/2016 implements Directive 2014/95/EU and provides for the obligation to submit an individual non-financial declaration for public interest companies that have had, on average, more than 500 employees during the financial year and voluntary for smaller firms…”
The literature review had been restructured in a new first introductory part with the origins and current regulation of the Social Balance Sheet (SBS), and a second part (point #2.1), more focused on the monetization of this SBS.
The analysis is concerning and has serious caveats.
There are many ways in the literature where EVA is defined. I encourage the authors to present the formula used and justify inputs in a manner that is consistent with EVA definition in the literature. In addition, it is important to justify assumptions behind inputs to EVA in the discussion on p. 7 for example. There are some ambiguities and I mention one example from Table 5a and the explanation provided for microcredit. The numbers presented in the table are inconsistent with the point made on lines 228 and 229. Inconsistency appears for other variables as well.
Thanks very much for this comments. As stated before, a deeper review of EVA topic had been included (see point #3), and according to this, it looks to us that the bank is misusing this concept. Thus, we have tried to focus on other value added statements that fit more the structure of data provided by BBVA bank and have evaluated this data from a value added perspective following some authors like Rajnoha et al. (2012) that followed an indirect focus for Value Added statements, and Arangies et al. (2008) that claimed a “value added statement” with only social value-added elements that deals with the stakeholder returns.
The regression results reported in Figure 1 seem to use a very small number of observations to be reliable estimates, this is shown in the best of fit line. The results are clearly based on misspecified models with few observations to start with which makes it hard for us to learn about the inference.
Comparing the cost of training with that of employees of the Santander Bank further justification. It could be that training at Santander bank involves higher levels of skillset deployed by trainers and is, therefore, more expensive. Without further details, it is hard to make sense of such comparisons. Another error is not comparing costs periodically as in some periods the red line corresponding to Santander bank is above the blue line corresponding to BBVA and in other periods (earlier periods) it is below. The comparison misses CAIXA although the plot in Fig. 3 is provided.
Thanks very much by this final comment. We fully agree on it and we are reevaluating these models, including other European players in the study. Thus, we have decided to remove this point from the current paper and work in a new one with a deeper research on this field with the largest European banks. In fact, the study is not linked with Social Balance Sheet topic.
We thank once again this reviewer for all these interesting comments.
New References included
European Union (2014) Directive 2014/95/EU of the European parliament and of the council of 22 October 2014, amending Directive 2013/34/EU as regards disclosure of non-financial and diversity information by certain large undertakings and groups.
https://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:32014L0095&from=ES
Republic of Italy (2016) Decreto Legislativo 30 dicembre 2016, n. 254 -Attuazione della direttiva 2014/95/UE. https://www.gazzettaufficiale.it/eli/id/2017/01/10/17G00002/sg
Arangies, G., Mlambo, C., Hamman, W. D., & Steyn-Bruwer, B. (2008). The value-added statement: An appeal for standardisation. Management Dynamics, 17(1), 31-43.
Bassi, A., and Vincenti, G. (2015) Toward a new metrics for the evaluation of the social added value of social enterprises. CIRIEC - Espana, (83):9-42
Bianchi, M.T., Nardecchia, A. (2016) The role of voluntary disclosure in listed company: An alternative model. Corporate Ownership and Control, 13 (2), pp. 55-65
Brealey R. A., Myers, S. C. and Allen F. (2015). Principles of Corporate Finance (11th Ed.). McGraw-Hill.
Campra M, Esposito P, Lombardi R. (2020) The engagement of stakeholders in nonfinancial reporting:New information-pressure, stimuli, inertia, under shorttermism in the banking industry. Corp Soc Responsib Environ Manag. 2020;1–9. https://doi.org/10.1002/csr.1896
Caputo F, Leopizzi R, Pizzi S, Milone V. (2020) The Non-Financial Reporting Harmonization in Europe: Evolutionary Pathways Related to the Transposition of the Directive 95/2014/EU within the Italian Context. Sustainability. 2020; 12(1):92
Cavazotte, F., Chang, N.C. (2016). Internal corporate social responsibility and performance: A study of publicly traded companies. Brazilian Administration Review, 13 (4), art. no. e160083,
Da Silveira, M.L.G., Pfitscher, E.D. (2013). Case study: Analysis of a balance sheet of an electricity holding. Revista em Agronegocio e Meio Ambiente, 6 (3), pp. 463-477.
De Souza Gonçalves, R., Rodrigues, A.P., Santana, C.M., De Oliveira Gonçalves, A. (2013). The influence of the origin of equity control in the level of social disclosure in brazilian companies. Revista de Gestao Social e Ambiental, 7 (2): 53-70.
Elvira Cruvinel, F. V. (2007). Banks and social responsibility: Incorporating social practice in organizational structures. Social Responsibility Journal, 3(1), 74-89
Fernández, P. (2005). Valoración de Empresas (3rd. Ed). Gestion 2000
García-Marzá, D. (2005). Trust and dialogue: Theoretical approaches to ethics auditing. Journal of Business Ethics, 57 (3):209-219
GECES Sub-group on Impact Measurement. 2014. Proposed Approaches to Social Impact Measurement in European Commission Legislation and in Practice Relating to: EuSEFs and the EaSI. https://ec.europa.eu/docsroom/documents/12966/attachments/5/translations/en /renditions/pdf.
Gond, J.-P., Igalens, J., Brès, L. (2013). Producing social accounting. The art of performative compromise [Rendre compte du social: L'art du compromis performative.
Revue Francaise de Gestion, 237 (8): 201-226.
Horvath, P. (2000). Balanced Scorecard v praxi. Stuttgart: Schaffer-Poeschel Verlag
Mittal, R. K., Sinha, N., & Singh, A. (2008). An analysis of linkage between economic value added and corporate social responsibility. Management Decision, 46(9), 1437-1443. doi:http://dx.doi.org.bucm.idm.oclc.org/10.1108/00251740810912037
Prieto, A. B. T., Shin, H., Lee, Y., & Lee, C. W. (2020). Relationship among CSR initiatives and financial and non-financial corporate performance in the Ecuadorian banking environment. Sustainability, 12(4), 1621.
Quarter, Jack, Laurie Mook, and Ann Armstrong (2017). Understanding the Social Economy: A Canadian Perspective. Toronto: University of Toronto Press.
Rajnoha, Rastislav, Sujová Andrea, and Dobrovič Ján. “Management and Economics of Business Processes Added Value.” Procedia - Social and Behavioral Sciences 62 (2012): 1292–96. https://doi.org/10.1016/j.sbspro.2012.09.221.
Salathé-Beaulieu, G. (2019). Sustainable Development Impact Indicators for Social and Solidarity Economy. State of the Art. Working Paper 2019-4. UNRISD
Silva, G.D., Gonçalves, M.N. (2016). Bibliometric study on the Gri Sustainability Report: An analysis of the focus of research topics up to 2014. Espacios, 37 (37)
Stewart, G. B. (1991). The quest for value : the EVA management guide. Harper Business
Social Audit Network, (2011). http://www.socialauditnetwork.org.uk/about-us/
Last viewed 1/1/2021
Social Business Initiative. Creating a favourable climate for social enterprises, key stakeholders in the social economy and innovation (2011). COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT, THE COUNCIL, THE EUROPEAN ECONOMIC AND SOCIAL COMMITTEEAND THE COMMITTEE OF THE REGIONS.
https://eur-lex.europa.eu/legal-content/EN/TXT/HTML/?uri=CELEX:52011DC0682&from=EN
https://ec.europa.eu/growth/sectors/social-economy/enterprises_en
Social Reporting Standard, (2014). The Social Reporting Initiative (SRI). https://www.social-reporting-standard.de/en/
Last viewed 1/1/2021
Author Response File: 
Author Response.pdf
Reviewer 2 Report
In the abstract I miss some information about the methodology used and practical implications of the analysis done.
In the introduction, lines 17 to 21, authors should add some more academic citations that define from an academic perspective the concept of Social Balance Sheet (SBS), not just the one coming from BBVA, which apart, is the same Institution authors analyse in the article.
At the end of the introduction, 3 main hypotheses are mentioned. However, in the whole introduction these 3 main hypotheses have not been clearly supported. There is a general presentation of some literature review in a non-organised way and few concrete information is provided of the different studies, literature review cited. I recommend authors to organise better the information, to support individually each of the 3 hypotheses they refer to and to provide more concrete information about the literature review, for example variables that have been considered in each of the studies cited, samples used, etc.
I think that more information should be offered to defend that just an only case such as BBVA is a good example to publish an academic paper in this case. Being one of the first ones doing it is not enough. Further support must be provided.
Some facts must be strongly supported. For example, in part 2, This sentence: “This indicator was calculated as the sum of 146 shareholder dividends, interests to clients, payments to suppliers, taxes and donations” must include previous citations of research where these variables have been used to measure this indicator, otherwise deeper information on how and why this indicator has been calculated this way should be provided.
Same comment for the information provided in lines from 165 to 168: “This model was completed in the year 2012 and presented as the SBS for the period 2012 to 165 2014 under the title “Social Impact”. This document, provided in Table 3, sets out the indicators in 166 four broad sections, contribution to social development and welfare, generation of wealth for 167 stakeholders (mainly dividends, taxes and salaries), job creation (direct and indirect), and final 168 contributions to society thru direct investments.”
Authors must provide citations that prove that the different dimensions that the BBVA is including in the new social report are aligned with what is written in literature review, or at least are based on expert’s opinion.
Again, for information provided in lines 175-178: “…..articulated in a new policy of social responsibility focusing on guaranteeing 176 transparency, clarity and responsibility in relation to our clients, the generation of long-term value 177 for all stakeholders and the integration of social and environmental..” it is necessary to cite the sources of inspiration (again new regulations? Social changes?, etc..) that justify the change in the reports from 2012 to 2015.
More citations are required in many parts of the text. For example, to support this idea in part 3. “To measure the social impact of an entity is having on society, it is necessary to evaluate and 196 quantify the monetary effect of each item defined in the SBS”. Some academic citations are required to support this. This is just an example..but in the text I have indicated different locations in text where citations are mandatory.
English proofreading is necessary. I have also corrected some sentences. For example, lines 199-200: “To validate this metric, it will be analysed these indicators 199 under the supposition that the company does not exist.”
In line 217, when authors refer to the “Yo soy empleo” program, a link to the program or to a web explaining the program is needed.
The material and methods or methodology part is missed in the article. A part describing the methodology used to analyse data and compare figures from three banks should be included, before part 4, or at the beginning of part 4.
Discussion is missed and it is necessary., Some of the findings coming from the analysis of the figures should be supported and discussed considering previous analysis in other firms and/or context, but there is no discussion in this article. It goes from the description of data to conclusions….
Comments for author File: Comments.pdf
Author Response
Comments to Reviewer #2
In the introduction, lines 17 to 21, authors should add some more academic citations that define from an academic perspective the concept of Social Balance Sheet (SBS), not just the one coming from BBVA, which apart, is the same Institution authors analyse in the article.
Thanks for this comment. We have added a couple of academic definitions: García-Marzá (2005) and Nardecchia (2016) explaining this point in detail. Additionally, a paper by Elvira Cruvinel (2007) for financial institutions has also been referenced. In particular, the following lines were added:
“…The Social Balance Sheet (SBS) is any type of presentation of social accounts, looking at the existent relationship between the company and society, and explaining what actually exists and what should exist (García-Marzá, 2005). The SBS aims to describe the analytical cost that can generate benefits for stakeholders over the long term, in the best strategic planning and in the development of brand, reputation and corporate’s image (Bianchi-Nardecchia, 2016)…”
At the end of the introduction, 3 main hypotheses are mentioned. However, in the whole introduction these 3 main hypotheses have not been clearly supported. There is a general presentation of some literature review in a non-organised way and few concrete information is provided of the different studies, literature review cited. I recommend authors to organise better the information, to support individually each of the 3 hypotheses they refer to and to provide more concrete information about the literature review, for example variables that have been considered in each of the studies cited, samples used, etc.
We really appreciate your help with this comment. The objective of the paper has been reformulated by adding the following in the paper:
“…Thus, the aim of this work is to provide a deeper analysis of this document (SBS), with the objective of measuring the social economic value generated by the company and its relationship with other economic indicators…”
Regarding the literature review, it has been updated including a new first general part regarding the Social Balance Sheet review with several references and separated from a second (2.1 subtitle) which focuses now on the quantification of the SBS based on the previous work. 26 additional references have been added in total that can be found at the bottom of this letter
I think that more information should be offered to defend that just an only case such as BBVA is a good example to publish an academic paper in this case. Being one of the first ones doing it is not enough. Further support must be provided. As it can be seen in the text,
“…BBVA was founded in 1857 and is today one of the three largest financial institutions in Spain, having direct operations in more than 30 countries, especially in Latin-America…”
2) Some facts must be strongly supported. For example, in part 2, This sentence: “This indicator was calculated as the sum of 146 shareholder dividends, interests to clients, payments to suppliers, taxes and donations” must include previous citations of research where these variables have been used to measure this indicator, otherwise deeper information on how and why this indicator has been calculated this way should be provided.
Same comment for the information provided in lines from 165 to 168: “This model was completed in the year 2012 and presented as the SBS for the period 2012 to 165 2014 under the title “Social Impact”. This document, provided in Table 3, sets out the indicators in 166 four broad sections, contribution to social development and welfare, generation of wealth for 167 stakeholders (mainly dividends, taxes and salaries), job creation (direct and indirect), and final 168 contributions to society thru direct investments.”
Authors must provide citations that prove that the different dimensions that the BBVA is including in the new social report are aligned with what is written in literature review, or at least are based on expert’s opinion.
Thanks very much for these comments. We fully agree that new citations and ideas should be included to clarify these assessments.
Firstly, a deeper EVA explanation has been included based on the work by Stewart (1991). Then, a second financial interpretation from Fernandez (2005) that links de difference between ROA and WACC as value added generated from the company has also been incorporated in the new version of the manuscript. According to this, what we have observed is that BBVA bank is not using properly this concept as WACC is not included in it, as it can be seen in the paper by Mittal et al. (2008) linking CSR and EVA performance. Dealing with this, we have included the following comment:
“…Originally, EVA is a trademark of Stern, Stuart & Co. since 1993 and firstly defined by Stewart (1991) as
[…]
Fernandez (2005) linked this in terms of the corporate returns, indicating that as ROA (return over invested capital) is the NOPAT or non-leveraged profit over the invested resources, then EVA can be redefined as …”
As a second idea, the work by authors such as Rajnoha et al. (2012) that followed an indirect focus, or Arangies et al. (2008) that claimed a “value added statement” with only social value-added elements that deals with the stakeholder returns, have suggested us that the statement used should be called “Social Value Added”, as the bank report is mainly including social value added elements for stakeholders as it has been noted by this reviewer. Thus, the references to EVA had been removed and changed by Social Value added by the company. In particular it had been added the following comments:
“…EVA measures the profitability margin between the asset return and the cost of the resources used, adjusted to the specific amount of capital used […] A good example of the use of EVA to measure CSR profitability can be found in Mittal et al. (2008),
However, the EVA calculations used by BBVA follows a different approach of value-added elements, as it is estimated with the sum of shareholder dividends, interests given to clients, payments made to suppliers, taxes paid and third-party donations. This indirect focus of value-added estimations can be found in some recent references…”
Again, for information provided in lines 175-178: “…..articulated in a new policy of social responsibility focusing on guaranteeing 176 transparency, clarity and responsibility in relation to our clients, the generation of long-term value 177 for all stakeholders and the integration of social and environmental..” it is necessary to cite the sources of inspiration (again new regulations? Social changes?, etc..) that justify the change in the reports from 2012 to 2015.
Once more, thanks very much for these comments. We really apologize if our ideas were a bit unclear. Over this new version, it had been added a specific point #4, regarding the BBVA case discussion. Thus, we had separated the description of the different reports that the bank is handling (over point #3) and the specific discussion and recommendations that we do for these figures.
More citations are required in many parts of the text. For example, to support this idea in part 3. “To measure the social impact of an entity is having on society, it is necessary to evaluate and quantify the monetary effect of each item defined in the SBS”. Some academic citations are required to support this. This is just an example but in the text I have indicated different locations in text where citations are mandatory.
Thanks very much for this comment. Regarding the support of this idea, an specific subpoint #2.1 regarding the monetization of the SBS has been included. We fully agree that it is not required a figure of the social impact (for instance, Bassi & Vicenti, 2015 present SBS impact from an index perspective).
Dealing with this, the following lines had been added:
“…Rajnoha et al. (2012) uses a cost accounting model that excludes those parts which are neutral for company and all interest-free current liabilities (Horvath, 2004). Arangies et al. (2008), proposes a value-added statement in the form of the sum of wages, taxes, interests, depreciations, dividends and retained earnings, including the social value-added elements that deals with the stakeholder returns. Finally, this focus can found some similarities in the IBASE Brazilian reports, where social balance structure is defined with the sum of internal and social elements to evaluate the social impact. Thus, we believe that for this case study, this statement should be called “Social Value Added” and not EVA. Some authors such as Bassi and Vicenti (2015) already proposed this term regarding the ability to generate different outcomes in different corporate social dimensions following, however, with an index structure…”
English proofreading is necessary. I have also corrected some sentences. For example, lines 199-200: “To validate this metric, it will be analysed these indicators 199 under the supposition that the company does not exist.”
Thanks very much by your support. All your corrections from the pdf file had been included in the revised version.
In line 217, when authors refer to the “Yo soy empleo” program, a link to the program or to a web explaining the program is needed.
Thanks very much by your comments. The link has been included as a footnote.
The material and methods or methodology part is missed in the article. A part describing the methodology used to analyse data and compare figures from three banks should be included, before part 4, or at the beginning of part 4.
Discussion is missed and it is necessary., Some of the findings coming from the analysis of the figures should be supported and discussed considering previous analysis in other firms and/or context, but there is no discussion in this article. It goes from the description of data to conclusions….
Thanks very much for this final comment. After reading again the whole manuscript we fully agree on your comments, and we have decided that as the Spanish market is too small for supporting this study, we should include more European institutions. However, we think that this would be a new study with a different scope than this SBS analysis. and thus, we will dedicate a new paper to fulfill this research. Thus, the following lines had been added
“…Possible future lines of research, would be to extend this analysis to other leading players in the European financial sector given that the European regulation is becoming increasingly harmonised following the Directive 2014/95/EU, but countries still have their own particular laws. In addition, as training investment is a gear for future productivity, especially when compared to management and executive remuneration, another potential line of research could be to examine the relationship between investment in training and productivity…”
We thank once again this reviewer for all these interesting comments.
New References included
European Union (2014) Directive 2014/95/EU of the European parliament and of the council of 22 October 2014, amending Directive 2013/34/EU as regards disclosure of non-financial and diversity information by certain large undertakings and groups.
https://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:32014L0095&from=ES
Republic of Italy (2016) Decreto Legislativo 30 dicembre 2016, n. 254 -Attuazione della direttiva 2014/95/UE. https://www.gazzettaufficiale.it/eli/id/2017/01/10/17G00002/sg
Arangies, G., Mlambo, C., Hamman, W. D., & Steyn-Bruwer, B. (2008). The value-added statement: An appeal for standardisation. Management Dynamics, 17(1), 31-43.
Bassi, A., and Vincenti, G. (2015) Toward a new metrics for the evaluation of the social added value of social enterprises. CIRIEC - Espana, (83):9-42
Bianchi, M.T., Nardecchia, A. (2016) The role of voluntary disclosure in listed company: An alternative model. Corporate Ownership and Control, 13 (2), pp. 55-65
Brealey R. A., Myers, S. C. and Allen F. (2015). Principles of Corporate Finance (11th Ed.). McGraw-Hill.
Campra M, Esposito P, Lombardi R. (2020) The engagement of stakeholders in nonfinancial reporting:New information-pressure, stimuli, inertia, under shorttermism in the banking industry. Corp Soc Responsib Environ Manag. 2020;1–9. https://doi.org/10.1002/csr.1896
Caputo F, Leopizzi R, Pizzi S, Milone V. (2020) The Non-Financial Reporting Harmonization in Europe: Evolutionary Pathways Related to the Transposition of the Directive 95/2014/EU within the Italian Context. Sustainability. 2020; 12(1):92
Cavazotte, F., Chang, N.C. (2016). Internal corporate social responsibility and performance: A study of publicly traded companies. Brazilian Administration Review, 13 (4), art. no. e160083,
Da Silveira, M.L.G., Pfitscher, E.D. (2013). Case study: Analysis of a balance sheet of an electricity holding. Revista em Agronegocio e Meio Ambiente, 6 (3), pp. 463-477.
De Souza Gonçalves, R., Rodrigues, A.P., Santana, C.M., De Oliveira Gonçalves, A. (2013). The influence of the origin of equity control in the level of social disclosure in brazilian companies. Revista de Gestao Social e Ambiental, 7 (2): 53-70.
Elvira Cruvinel, F. V. (2007). Banks and social responsibility: Incorporating social practice in organizational structures. Social Responsibility Journal, 3(1), 74-89
Fernández, P. (2005). Valoración de Empresas (3rd. Ed). Gestion 2000
García-Marzá, D. (2005). Trust and dialogue: Theoretical approaches to ethics auditing. Journal of Business Ethics, 57 (3):209-219
GECES Sub-group on Impact Measurement. 2014. Proposed Approaches to Social Impact Measurement in European Commission Legislation and in Practice Relating to: EuSEFs and the EaSI. https://ec.europa.eu/docsroom/documents/12966/attachments/5/translations/en /renditions/pdf.
Gond, J.-P., Igalens, J., Brès, L. (2013). Producing social accounting. The art of performative compromise [Rendre compte du social: L'art du compromis performative.
Revue Francaise de Gestion, 237 (8): 201-226.
Horvath, P. (2000). Balanced Scorecard v praxi. Stuttgart: Schaffer-Poeschel Verlag
Mittal, R. K., Sinha, N., & Singh, A. (2008). An analysis of linkage between economic value added and corporate social responsibility. Management Decision, 46(9), 1437-1443. doi:http://dx.doi.org.bucm.idm.oclc.org/10.1108/00251740810912037
Prieto, A. B. T., Shin, H., Lee, Y., & Lee, C. W. (2020). Relationship among CSR initiatives and financial and non-financial corporate performance in the Ecuadorian banking environment. Sustainability, 12(4), 1621.
Quarter, Jack, Laurie Mook, and Ann Armstrong (2017). Understanding the Social Economy: A Canadian Perspective. Toronto: University of Toronto Press.
Rajnoha, Rastislav, Sujová Andrea, and Dobrovič Ján. “Management and Economics of Business Processes Added Value.” Procedia - Social and Behavioral Sciences 62 (2012): 1292–96. https://doi.org/10.1016/j.sbspro.2012.09.221.
Salathé-Beaulieu, G. (2019). Sustainable Development Impact Indicators for Social and Solidarity Economy. State of the Art. Working Paper 2019-4. UNRISD
Silva, G.D., Gonçalves, M.N. (2016). Bibliometric study on the Gri Sustainability Report: An analysis of the focus of research topics up to 2014. Espacios, 37 (37)
Stewart, G. B. (1991). The quest for value : the EVA management guide. Harper Business
Social Audit Network, (2011). http://www.socialauditnetwork.org.uk/about-us/
Last viewed 1/1/2021
Social Business Initiative. Creating a favourable climate for social enterprises, key stakeholders in the social economy and innovation (2011). COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT, THE COUNCIL, THE EUROPEAN ECONOMIC AND SOCIAL COMMITTEEAND THE COMMITTEE OF THE REGIONS.
https://eur-lex.europa.eu/legal-content/EN/TXT/HTML/?uri=CELEX:52011DC0682&from=EN
https://ec.europa.eu/growth/sectors/social-economy/enterprises_en
Social Reporting Standard, (2014). The Social Reporting Initiative (SRI). https://www.social-reporting-standard.de/en/
Last viewed 1/1/2021
Author Response File: Author Response.docx
Reviewer 3 Report
General comments:
Social balance sheet and more focus on social reporting is certainly a useful and perspective trend it current reporting.
Case study approach is suitable, because it allows diversity, however it is sometimes difficult to capture the complexity. I understand that the authors attempted to analyse whole banking sector in Spain which I find interesting.
I think that this paper deals with interesting and timely topic, but it needs to be more focussed and more recent findings should be included in the picture.
Introduction:
Authors analyse evaluate the compliance with the corporate social responsibility requirements regarding the social reporting during a specific period in Spanish bank sector namely the bank group BBVA. The authors concentrate on employees training and donations and link them to productivity measures represented by financial ratios ROA and ROE.
The first impulse to measure contribution to society comes from the fact that some European countries require companies to provide, in addition to their yearly statements, a specific reporting on the corporate value contribution to the society for comprise with more than 300 employees (line 35 – 39).
The authors mention, that similar regulations are in other countries, but the information on SBS are still not unified.
Motivation of the paper is good. It would perhaps help if the authors were able to bring in more examples of regulations like the French example.
Traditionally however the CSR performance is expressed as having correlation with financial measures like ROE, ROI or ROA which have financial character even though we speak preliminary of nonfinancial measures. How can the contribution to society be measured?
Past literature:
Could be more developed. Possible studies to learn from could include:
Caputo, F., Leopizzi, R., Pizzi, S., & Milone, V. (2020). The Non-Financial Reporting Harmonization in Europe: Evolutionary Pathways Related to the Transposition of the Directive 95/2014/EU within the Italian Context. Sustainability, 12(1), 92.;
Campra, M., Esposito, P., & Lombardi, R. (2020). The engagement of stakeholders in nonfinancial reporting: New information‐pressure, stimuli, inertia, under short‐termism in the banking industry. Corporate Social Responsibility and Environmental Management, 27(3), 1436-1444.
Prieto, A. B. T., Shin, H., Lee, Y., & Lee, C. W. (2020). Relationship among CSR initiatives and financial and non-financial corporate performance in the Ecuadorian banking environment. Sustainability, 12(4), 1621.
Methodology and analysis:
The paper provides the comparison of treatment of social balance sheet of the bank from different years. The chief indicator is Economic Value Added (EVA) which is used to measure its contribution to society line 145 p 3.
We learn that Social responsibility report structure did not change between years 2005-2007 and some changes were instituted in 2011. When the bank started measuring the social impact the Impact of BBVA on society (Line 163)
Further major change emerged in the year 2015 with “with social responsibility now incorporated into the business strategy of the company, articulated in a new policy of social responsibility focusing on guaranteeing transparency, clarity and responsibility in relation to our clients, the generation of long-term value for all stakeholders and the integration of social and environmental opportunities and risks in the business model.” Lines 175-178
As it is specified in table 4 lines 174, the bank was included in prestigious index Dow Jones Sustainability Index. But it was removed in 2016 despite previous high scores, the bank was displaced by other, smaller Spanish entities such as Bankia). (Line 186-187). What do authors think about this move and what are the implications?
Is there any link to the EU Directive on nonfinancial reporting? (Directive 2014/95/EU) which was fully adopted in 2016? Are there any special requirements for banking sector?
Part 3 provides BBVA Social Balance Sheet analysis
This analysis is rather detailed and the authors bring in further sub-classification of EVA indicator attempting to explain the contribution to community. I can see this perspective rather problematic because of mixing macroeconomic and microeconomic perspective. Could the authors please address this issue?
Figure 1 is difficult to read (line 255). Could the authors use labels in English and explain better what the graph is supposed to say?
Part 4 analyses the executive remuneration employees training and donations per employee. Some indicators are interesting and would deserve deeper comments. However, many indicators are not available for CAIXABANK, which makes the comparison difficult. Also the interpretation is missing.
Results in the graph no 3 deserve more explanation. I cannot see any pattern between the variables - is this an intention?
Conclusion
Conclusion needs to highlight the contribution of the paper. Here the academic contribution as well as practical contribution of the paper should be discussed.
Could the authors explain more clearly how they suggest measuring “the contribution that a company is giving to society in monetary terms” line 298?
On line 305 the authors state that „ it has been found evidence that as social value is linked to corporate productivity” I think that this it could be a coincidence. We are just used to say that more responsible companies bring more value. It is just a popular opinion of socially responsible investors, which represents recent investment movement.
There may be different oppinions – e.g. Sparkes, R., & Cowton, C. J. (2004). The maturing of socially responsible investment: A review of the developing link with corporate social responsibility. Journal of Business Ethics, 52(1), 45-57.
Vo, N. N., He, X., Liu, S., & Xu, G. (2019). Deep learning for decision making and the optimization of socially responsible investments and portfolio. Decision Support Systems, 124, 113097.
So far it seems that financial gains will always play decisive role in any corporate assessment even if we take in consideration the famous concept of shared value coined by prof Michel Porter .
I appreciate that the authors want to extend this analysis and provide scrutiny of other players in the European financial sector given that the regulation of these entities is becoming increasingly harmonised (Line 318).
Could the authors please explain what the nature of harmonization is as we have so far seen great diversity of approaches to social reporting?
Author Response
Comments to Reviewer #3
General comments:
Social balance sheet and more focus on social reporting is certainly a useful and perspective trend it current reporting.
Case study approach is suitable, because it allows diversity, however it is sometimes difficult to capture the complexity. I understand that the authors attempted to analyse whole banking sector in Spain which I find interesting.
I think that this paper deals with interesting and timely topic, but it needs to be more focused and more recent findings should be included in the picture.
Introduction:
Authors analyse evaluate the compliance with the corporate social responsibility requirements regarding the social reporting during a specific period in Spanish bank sector namely the bank group BBVA. The authors concentrate on employees training and donations and link them to productivity measures represented by financial ratios ROA and ROE.
The first impulse to measure contribution to society comes from the fact that some European countries require companies to provide, in addition to their yearly statements, a specific reporting on the corporate value contribution to the society for comprise with more than 300 employees (line 35 – 39).
The authors mention, that similar regulations are in other countries, but the information on SBS are still not unified.
Motivation of the paper is good. It would perhaps help if the authors were able to bring in more examples of regulations like the French example.
Traditionally however the CSR performance is expressed as having correlation with financial measures like ROE, ROI or ROA which have financial character even though we speak preliminary of nonfinancial measures. How can the contribution to society be measured?
Thanks very much for these comments. This last point is exactly the main motivation to our study, as there are several ratio measures or direct contributions of the social behavior of the different companies, but not a monetary figure trying to evaluate the real contribution that the company does. In fact, the bank is trying to do this but without doing a proper use of the Economic Value Added (EVA), by building a value added statement. (See, e.g., Rajnoha et al., 2012, and Arangies et al. 2008). Based on that, we have decided to rename this contribution as “Social Value Added” (SVA).
In particular, the following lines were added to deal with this point:
“… EVA measures the profitability margin between the asset return and the cost of the resources used, adjusted to the specific amount of capital used […] A good example of the use of EVA to measure CSR profitability can be found in Mittal et al. (2008)…”
Past literature:
Could be more developed. Possible studies to learn from could include:
Caputo, F., Leopizzi, R., Pizzi, S., & Milone, V. (2020). The Non-Financial Reporting Harmonization in Europe: Evolutionary Pathways Related to the Transposition of the Directive 95/2014/EU within the Italian Context. Sustainability, 12(1), 92.;
Campra, M., Esposito, P., & Lombardi, R. (2020). The engagement of stakeholders in nonfinancial reporting: New information‐pressure, stimuli, inertia, under short‐termism in the banking industry. Corporate Social Responsibility and Environmental Management, 27(3), 1436-1444.
Prieto, A. B. T., Shin, H., Lee, Y., & Lee, C. W. (2020). Relationship among CSR initiatives and financial and non-financial corporate performance in the Ecuadorian banking environment. Sustainability, 12(4), 1621.
Thanks very much for these inputs, specially the references that have given us a shadow of light in the literature review. These references had been included in the new version of the manuscript. The literature review has been fully modified by adding 26 new references. More in detail, it has been split in a first part, more related with the general review of the Social Balance Sheet topic, and a second one (part 2.1) more focused on the monetization of this topic.
Methodology and analysis:
The paper provides the comparison of treatment of social balance sheet of the bank from different years. The chief indicator is Economic Value Added (EVA) which is used to measure its contribution to society line 145 p 3.
We learn that Social responsibility report structure did not change between years 2005-2007 and some changes were instituted in 2011. When the bank started measuring the social impact the Impact of BBVA on society (Line 163)
Further major change emerged in the year 2015 with “with social responsibility now incorporated into the business strategy of the company, articulated in a new policy of social responsibility focusing on guaranteeing transparency, clarity and responsibility in relation to our clients, the generation of long-term value for all stakeholders and the integration of social and environmental opportunities and risks in the business model.” Lines 175-178
As it is specified in table 4 lines 174, the bank was included in prestigious index Dow Jones Sustainability Index. But it was removed in 2016 despite previous high scores, the bank was displaced by other, smaller Spanish entities such as Bankia). (Line 186-187). What do authors think about this move and what are the implications?
We appreciate very much these ideas. Regarding this, a separate point #4 regarding the BBVA bank reporting discussion was added, while point #3 is focused on describing the reporting evolution of the bank.
In particular, as EVA was the main indicator followed by the bank during the period, a brief explanation was included at the beginning on the discussion part. Regarding the question raised, we ask a colleague that was working in the bank in the consolidation reporting and said that there were very few people working on the report. We guess that due to this lack of resources, the bank was not able to maintain its position in the DJ Sustainability Index, and, as sustainability was becoming a mandatory topic, the management decided to integrate all in the main corporate memory. However, the amount of information provided after 2017 is of less quality and has less economic indicators (for instance, EVA figure is not given today). It looks to us that the bank was looking “sustainability” as part of their strategy to be differential and being included in sustainability indexes to improve their position, but some reputational scandals that arose in 2016 forced changes in the management team (new CEO was appointed in 2018) and the restructuration of the reporting resources.
Is there any link to the EU Directive on nonfinancial reporting? (Directive 2014/95/EU) which was fully adopted in 2016? Are there any special requirements for banking sector?
Regarding this point, the following paragraph was added on page 4:
“ … European Union in its Directive 95/2014/EU stipulates that certain large companies should prepare a non-financial statement containing information relating to at least environmental matters, social and employee-related matters, respect for human rights, anti-corruption and bribery matters”. This directive is not specific to the financial sector but it applies to it as part of large companies. …”
Part 3 provides BBVA Social Balance Sheet analysis
This analysis is rather detailed and the authors bring in further sub-classification of EVA indicator attempting to explain the contribution to community. I can see this perspective rather problematic because of mixing macroeconomic and microeconomic perspective. Could the authors please address this issue?
Thanks very much for this comment. As introduced above, a new point #4 regarding the case discussion was introduced. In fact, according to the EVA definition, it looks some sort of misuse of this topic. As pointed out by the other reviewers, some authors as Rajnoha et al. (2012) that followed an indirect focus, and Arangies et al. (2008) that claimed a “value added statement” with only social value-added elements that deals with the stakeholder returns, it looks to us that the report used by the bank is more a “Social Value Added” statement. Thus, the references to EVA have been removed and changed by Social Value Added by the company, hoping to clarify this misunderstanding.
Dealing with this, it had been added the following lines:
“ … The EVA calculations used by BBVA follows a different approach of value-added elements, as it is estimated with the sum of shareholder dividends, interests given to clients, payments made to suppliers, taxes paid and third-party donations. This indirect focus of value-added estimations can be found in some recent references. Rajnoha et al. (2012) uses a cost accounting model that excludes those parts which are neutral for company and all interest-free current liabilities (Horvath, 2004). Arangies et al. (2008), proposes a value-added statement in the form of the sum of wages, taxes, interests, depreciations, dividends and retained earnings, including the social value-added elements that deals with the stakeholder returns. Finally, this focus can found some similarities in the IBASE Brazilian reports, where social balance structure is defined with the sum of internal and social elements to evaluate the social impact. Thus, we believe that for this case study, this statement should be called “Social Value Added” and not EVA. Some authors such as Bassi and Vicenti (2015) already proposed this term regarding the ability to generate different outcomes in different corporate social dimensions following, however, with an index structure … ”
Figure 1 is difficult to read (line 255). Could the authors use labels in English and explain better what the graph is supposed to say?
Thanks very much for this remark. We apologize for not translate it to English. This graph had been updated and all axes were re-labeled in English.
Part 4 analyses the executive remuneration employees training and donations per employee. Some indicators are interesting and would deserve deeper comments. However, many indicators are not available for CAIXABANK, which makes the comparison difficult. Also the interpretation is missing.
Results in the graph no 3 deserve more explanation. I cannot see any pattern between the variables - is this an intention?
Thanks very much for this final point. We fully agree on it, and more references should be added, focusing on the European sector rather than the Spanish one that looks a bit small for this sort of research.
Thus, we guess that this study should be followed on a separate paper and we have removed from this one by now.
Conclusion
Conclusion needs to highlight the contribution of the paper. Here the academic contribution as well as practical contribution of the paper should be discussed.
Could the authors explain more clearly how they suggest measuring “the contribution that a company is giving to society in monetary terms” line 298?
On line 305 the authors state that „ it has been found evidence that as social value is linked to corporate productivity” I think that this it could be a coincidence. We are just used to say that more responsible companies bring more value. It is just a popular opinion of socially responsible investors, which represents recent investment movement.
There may be different oppinions – e.g. Sparkes, R., & Cowton, C. J. (2004). The maturing of socially responsible investment: A review of the developing link with corporate social responsibility. Journal of Business Ethics, 52(1), 45-57.
Vo, N. N., He, X., Liu, S., & Xu, G. (2019). Deep learning for decision making and the optimization of socially responsible investments and portfolio. Decision Support Systems, 124, 113097.
So far it seems that financial gains will always play decisive role in any corporate assessment even if we take in consideration the famous concept of shared value coined by prof Michel Porter .
I appreciate that the authors want to extend this analysis and provide scrutiny of other players in the European financial sector given that the regulation of these entities is becoming increasingly harmonised (Line 318).
Could the authors please explain what the nature of harmonization is as we have so far seen great diversity of approaches to social reporting?
Regarding this final conclusion, we have rewritten in the revised version the first and last paragraphs, trying to enhance the evidence found in the BBVA case analysis, basically, the misusage of the EVA topic and the construction of a Social Value Added statement that tries to quantify the bank contribution.
In particular, the following lines were added:
“ … as the bank is just giving the list of the social elements generated and delivered to stakeholders, there are clear evidence of not a proper use of this metric, since the specific WACC cost and return of the used resources were not included in the analysis …”
“ … In addition, we also believe that some further adjustments need to be done to evaluate the total contribution that this company gives to society in monetary terms as added value statement (Arangies et al., 2008) … ”
“ … Regarding the financial sector analysis, we fully agree that an extension to the European sector should be done and in terms of the possible harmonization, we have reformulated this idea according to the general directive 2014/95/EU, that is not focused in the banking sector only. …”.
“ … Possible future lines of study, would be to extend this analysis done for BBVA bank to other leading players in the European financial sector given that the European regulation is becoming increasingly harmonised following the Directive 2014/95/EU, but countries still have their own particular laws. …”
We thank once again this reviewer for all these interesting comments.
New References included
European Union (2014) Directive 2014/95/EU of the European parliament and of the council of 22 October 2014, amending Directive 2013/34/EU as regards disclosure of non-financial and diversity information by certain large undertakings and groups.
https://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:32014L0095&from=ES
Republic of Italy (2016) Decreto Legislativo 30 dicembre 2016, n. 254 -Attuazione della direttiva 2014/95/UE. https://www.gazzettaufficiale.it/eli/id/2017/01/10/17G00002/sg
Arangies, G., Mlambo, C., Hamman, W. D., & Steyn-Bruwer, B. (2008). The value-added statement: An appeal for standardisation. Management Dynamics, 17(1), 31-43.
Bassi, A., and Vincenti, G. (2015) Toward a new metrics for the evaluation of the social added value of social enterprises. CIRIEC - Espana, (83):9-42
Bianchi, M.T., Nardecchia, A. (2016) The role of voluntary disclosure in listed company: An alternative model. Corporate Ownership and Control, 13 (2), pp. 55-65
Brealey R. A., Myers, S. C. and Allen F. (2015). Principles of Corporate Finance (11th Ed.). McGraw-Hill.
Campra M, Esposito P, Lombardi R. (2020) The engagement of stakeholders in nonfinancial reporting:New information-pressure, stimuli, inertia, under shorttermism in the banking industry. Corp Soc Responsib Environ Manag. 2020;1–9. https://doi.org/10.1002/csr.1896
Caputo F, Leopizzi R, Pizzi S, Milone V. (2020) The Non-Financial Reporting Harmonization in Europe: Evolutionary Pathways Related to the Transposition of the Directive 95/2014/EU within the Italian Context. Sustainability. 2020; 12(1):92
Cavazotte, F., Chang, N.C. (2016). Internal corporate social responsibility and performance: A study of publicly traded companies. Brazilian Administration Review, 13 (4), art. no. e160083,
Da Silveira, M.L.G., Pfitscher, E.D. (2013). Case study: Analysis of a balance sheet of an electricity holding. Revista em Agronegocio e Meio Ambiente, 6 (3), pp. 463-477.
De Souza Gonçalves, R., Rodrigues, A.P., Santana, C.M., De Oliveira Gonçalves, A. (2013). The influence of the origin of equity control in the level of social disclosure in brazilian companies. Revista de Gestao Social e Ambiental, 7 (2): 53-70.
Elvira Cruvinel, F. V. (2007). Banks and social responsibility: Incorporating social practice in organizational structures. Social Responsibility Journal, 3(1), 74-89
Fernández, P. (2005). Valoración de Empresas (3rd. Ed). Gestion 2000
García-Marzá, D. (2005). Trust and dialogue: Theoretical approaches to ethics auditing. Journal of Business Ethics, 57 (3):209-219
GECES Sub-group on Impact Measurement. 2014. Proposed Approaches to Social Impact Measurement in European Commission Legislation and in Practice Relating to: EuSEFs and the EaSI. https://ec.europa.eu/docsroom/documents/12966/attachments/5/translations/en /renditions/pdf.
Gond, J.-P., Igalens, J., Brès, L. (2013). Producing social accounting. The art of performative compromise [Rendre compte du social: L'art du compromis performative.
Revue Francaise de Gestion, 237 (8): 201-226.
Horvath, P. (2000). Balanced Scorecard v praxi. Stuttgart: Schaffer-Poeschel Verlag
Mittal, R. K., Sinha, N., & Singh, A. (2008). An analysis of linkage between economic value added and corporate social responsibility. Management Decision, 46(9), 1437-1443. doi:http://dx.doi.org.bucm.idm.oclc.org/10.1108/00251740810912037
Prieto, A. B. T., Shin, H., Lee, Y., & Lee, C. W. (2020). Relationship among CSR initiatives and financial and non-financial corporate performance in the Ecuadorian banking environment. Sustainability, 12(4), 1621.
Quarter, Jack, Laurie Mook, and Ann Armstrong (2017). Understanding the Social Economy: A Canadian Perspective. Toronto: University of Toronto Press.
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Author Response File: Author Response.pdf
Round 2
Reviewer 1 Report
Review report 2
The paper has improved significantly in sections like the literature review, explanations of the social balance sheet, and some of the other written sections including EVA formulae discussion. There remain several ambiguities in the analysis of contributions to social welfare and in some instances points raised are based on the authors' opinion. For example, the links to market efficiency or even its relevance to the discussion and the isolation of BBVA in the manner discussed. On taxes, deferred taxes need to be considered in any analysis and require further information on the asset and liabilities sides. Estimates of various measures are not aligned with years, volume is based on 2011/12, contributions, and tech investments 2015/2016.
The discussion of numbers reported by BBVA in Tables lacks scientific analysis. It is best if you rely on research that providing an opinion in some cases. The concern is mainly related to the interpretation of tables and calculations of SVA. While you have provided a couple of expressions for EVA, you did not for SVA. I provide a paper by Wnuczak (2018) as an example. I am also concerned about the invalidity of the results in Figure 1 as stated in the previous report and the conclusions made based on regressions and calculations in Tables 5a and 5b. Note that some years in some tables have decimal points.
It is also recommended that you use the full dataset for all years used in the analysis up to the most recent year in a uniform manner for all variables. Ideally, calculating SVA does not say much but analyzing a trend or providing peer comparison is better. Levels and relative changes are important to consider.
As stated earlier, there have been visible improvements in writing some parts, which could improve further. For example, compare EVA and SVA using models first (See reference paper provided). Provide justified explanations in particular for p. 12 to 14 and improve the demonstration part used in the analysis. There are many references other than the paper I provided, but I hope this would be a good example and may help you improve the paper. In particular, it presents a model for SVA after discussing EVA and implements clear calculations.
References:
Wnuczak, P. (2018). Social value added (SVA) as an adaptation of economic value added (EVA) to the specificity of cultural institutions, Journal of Management and Business Administration. Central Europe, 26(1), 100-120. doi: https://doi.org/10.7206/jmba.ce.2450-7814.221
Reviewer 2 Report
Authors have paid attention to my previous suggestions and have made an effort to improve the paper by considering my recommendatios. I think the paper has improved substantially but the English written style should be revised.
Reviewer 3 Report
TEXT OF THE SECOND REVIEW:
Introduction:
In the new version of this paper introduction and motivation are structured more clearly. I appreciate the thorough explanation of the social balance sheet.
In this part, the authors explained how social reports on financial institutions were organized, highlighting differences in their own approach. This deeper insight brings more value to the paper.
Past literature:
In the new version, the authors added the explanation that “Social Balance Sheet (SBS) is the specific part of the Corporate Social Responsibility (CSR)“.
Moreover, a new overview of SBS reporting in Europe and other continents was added. This included additional resources and further links with the original concept of the traditional Balanced Scorecard by Kaplan and Norton, 1992.
Methodology and analysis:
In the new version of part 3, the authors explained the report evolution in BBVA. This is adding more detail to the Latin American context, which I appreciate.
Furthermore
In the new version, Part 4 concentrates deeply on the discussion on Social Balance sheet and elaborates further on the calculation of relevant HR measures, which explains the results more thoroughly.
Please, consider merging parts 3 and 4 as they seem to be parts of one chapter.
Conclusion
In the new version of Conclusion, the authors have elaborated on reviewers’ comments in their conclusions. The conclusions have been tightened which is increasing the value of this paper.
Everything considered,
Please, check the English as well, minor corrections and good proofreading will improve the flow of the text.
