Friday, September 4, 2009

8 reasons non-profits should write sustainability reports

BSR – Business for Social Responsibility – a leading light in the field of professional non-profits (they might prefer to be called an NGO) produced their second public report earlier this year, which you can download here. I won't take up your valuable time by analyzing this report, excellent though it is. I will however express my respect for an NGO who adopts a policy of public disclosure and reporting.
Far too often in the non-profit world we see a reluctance to adopt professional practices of social and environmental responsibility and transparency. NGO's, who are often so critical of business, and who campaign businesses to improve their impacts, often feel that this doesn't apply to them. "We are promoting a social cause, why should we be transparent?" is the cry.""How better than this can you get? is the implication. I fail to see the logic here, of course. All organizations, for profit, not-for-profit, for a better world or for a better environment, for better or for worse (or for chunky monkey) should behave sustainably. One could argue that non-profits should be even greater models of transparency than we might expect of business. In the case of an organization whose mission is to promote sustainable business practices, such as BSR, this an absolute necessity. Similarly, one cannot fault the Global Reporting Initiative for not behaving with integrity. Their Sustainability Report for 2007/2008 is proudly presented and follows GRI methodology to the letter. The Global Compact produces an annual report which can be found here for 2008.
Why is it important for non-profits to report? Is this not a duty (and a privilege?) reserved for corporations? Corporations report because they have a responsibility to account for their impacts on stakeholders, and in doing so hope to enhance trust, relationships, engagement and improve business processes to yield greater overall sustainable impact. Are these objectives equally valid for non-profits ? Of course. So why is reporting branded corporations only?

I looked for non-profits who produce a sustainability report (i excluded academic institutions, professional assosiations and governmental bodies from this analysis in order to focus on social and environmental cause-based non-profits only).

The UK based World Wildlife Fund published its latest an Annual Review in 2008. This is a great overview of their emvironmental impacts covering issues such as Earth Hour, climate change, sustainable investment and the way we all live as earth people. But it says nothing about internal procedures such as governance, budget allocations, people management, people diversity, community involvement, purchasing policy. Governance is covered on the website, in headline terms, and their 2008 annual financial report covers management , strategy, performance against targets and financial statements. All in all, a pretty good disclosure. There are gaps, mainly relating to their internal policies and decision making processes, support for human rights, human resources management and policies etc, and the fact that you have to read two reports to understand the totality of the organization's non-financial impacts is a minor inconvenience.
Oxfam International , another UK based non-profit which brings together 13 country Oxfam organizations, has its 2007 Annual Report available on their website ,an accountability section with some further detail and a 125 page report assessing Oxfam's social impacts. But all this falls far short of a sustainability report. Very little on governance, ethics assimilation, the way they employ people or the way they impact on the environment. I couldnt find a number of how many people are employed by this organization. And what about their purchasing budget ? Any ethical purchasing? How do they manage suppliers ?
Thumbs up for
Save the Children, also a UK registered charity, you can read their Annual Report for 2007/8 - this comes very close to sustainability reporting with a strong section relating to internal governance and processes, people management, equal opportunity employment, disclosures related to ethical investing, risk management and more. They also have a Global Children's Panel, a kind of stakeholder dialogue process made up of a panel of 14 young people between the ages of 12 and 17 from 9 countries. 46% of the leadership team are women (go girls!). A great report !!

Enough with the UK, I say to myself , let's look at the USA , I answer myself. Fast forward to Feeding America. Nothing more than financial statements on this website. Yet this is a massive organisation which oversees an enormous network of foodbanks, logistics, trucks, people and more. Environmental impacts here are significant. And also environmental benefits with the amounts of food waste they avoid or reclaim . Another neat non-profit came accoss my radar in the form of StrongWomen , Strong Girls. Surely a feminist organization would be more transparent, right ? Wrong. Nothing, not even financial reports.Come on, girls, lets show 'em how its done. Global Giving is a great organization improving our society. We are treated to detalied biographies of the 22-strong executive team, and an annual report for 2007, which covers the projects GlobalGIving supports, but no additional details. How many staff are employed at this non-profit? How do they manage their carbon footprint ? How do they select, hire and fire people ?

So far, i find my search for reporting non-profits to be rather disappointing. Then i had a brainwave. I waved back. I zoomed off to the GRI reporting website and downloaded their Reports List. Of the 454 GRI reports listed as published in 2009, 9 are non-profit (one of these is the GRI itself, mentioned above.). 2 % of the total . I had a look at one of them: The Ruah 2008 Community Services Accountability and Sustainability Report. , whose mission is to
"To redress disadvantage and enhance the human spirit. Based in Australia, Ruch provides community mental health services, housing and homelessness services, and works with issues of domestic violence, addiction, employment, and family support."
What a delightful report!!! It is a self-declared C level report and meets the requirements for the UNGC Communication on Progress. They have 160 staff, use Bokashi bins for composting waste in their office locations, they have assessed their human rights compliance and developed an improvement plan, they spent 1.4% of salary budget on training, and employees receive annual performance reviews. This is an organization which is focused on their overall impact and not just the social mission which is their core "business".

The GRI has produced a NGO sector supplement, now in final draft form for public comment. The rational for NGO sustainability reports is stated as : " The public benefit nature of the NGO sector creates an additional responsibility to demonstrate that operations are consistent with the values represented." One additional indicator for NGO's for example is the issue of ethical fundraising policies and practice.

Anyway, to sum up what has become a rather long post (NB: Now is the time for ChunkyMonkey, helps keep you focused) the 8 reasons for non-profits to engage in sustainability reporting are similar to for-profit organizations:

  1. build trust with stakeholders and manage reputation proactively
  2. create a tool for structuring the process of stakeholder dialogue and engagement, and defining materiality
  3. understand, manage and improve their economic, social and environmental impacts as an organization (in addition to the effectiveness of their social/environmental programs which is their "core" mission and which they currently addressss to some degree)
  4. drive internal employee engagement
  5. support recruitment of employees and volunteers
  6. operate transparently - they have a responsibility to do so
  7. gain competitive advantage in the fundraising war
  8. ensure their own sustainability through robust internal governance, ethics and risk management practices

All these are relevant whether the operational profits are directed to the pockets of investors, or back into the community for the benefit of all. But this sector is largely unaware and unengaged in the true meaning of sustainability and the need for transparency beyond compliance and marketing.
This is why we decided, as CSR consultants with a mission to drive awareness and transparency, to offer one non-profit in Israel a FREEBIE sustainability report which we hope will start a REVOLUTION in this sector. (you can't fault us on optimism!).

elaine cohen is the joint CEO of BeyondBusiness, a leading reporting and social-environmental consulting firm . Visit our website at: www.b-yond.biz/en

5 comments:

future mantra said...

Nice post. It is always good to see people doing new and innovative things. I would like to suggest you a similarly innovative magazine - PEOPLE MATTERS started by an Indian School of Business (ISB)Hyderabad Alumni, which was suggested to me by a friend.

It deals with various important aspects of management, especially those related to Leadership & People Management, which the mainstream business publications often ignore.

It's also relatively cheap. I guess its annual subscription is about Rs. 400 which is even less than the cost of a standard Pizza.

Their last issue had a really educative article by Robert Kaplan (the father of Balanced Scorecard method) where he talks about how organisations can create opportunities out of current economic downturn.

I got its subscription online through their website: http://www.peoplematters.in

If you like the magazine, kindly refer it to others like I am doing.

Thanks

j8 said...

For everyone interested in this specific theme I would like to suggest to look at the compilation of web resources (work in progress since 2005) located at
http://www.nfrcsr.org/international/public-social_economy-ngos_sectors/index.htm

under title: Reporting / accountability and related themes for: Social economy, co-operative / participative / social enterprises; Civil society / non-governmental / non-profit organisations


Jernej,
publisher of nfrcsr

Elaine, congratulations for a great post, again

james said...

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Lucie Evers said...

Elaine,
The list of GRI reports is incomplete. I wrote a 2008 GRI report (self declared C level) for a Flemish ngo called Trias, and it's no longer in het GRI list of reports. More and more ngo's are reporting or wanting to report but fall under the radar of both GRI and the rest of the CSR industry. Indeed, a long way to go still, but only financing mechanisms are put in place, so I can support those (smaller, local, not so international) ngo's who do report or want to report according to GRI guidelines.

elaine said...

Lucie, thanks for your comment ... there are other ways to gain awawreness for your report... first, your report can be looged for free on CorporateRegister.com .. there is a place on the site to upload the report ... second, NGOs or SME's on a low budget can make use of social media - twitter - facebook - blogs etc to generate awareness... other sites offer free publication of press releases such as CSRWire.com.. we also offer a VideoReportAlert service, for a low cost we can produce a short video about your report and distribute it to thousands of online channels. And, whilst I support the GRI, not every report needs to be in line with GRI guidelines. The important thing is the desire for transparency.
thanks for reading and commenting, elaine

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