I regularly review CSR reports for CorporateRegister.com. The review format is compact, ie not very long and detailed, and focuses on Content (what they disclose), Communication (how they disclose) and Credibility (can you believe it). It takes around 3 hours to read, understand, analyse and review a report. Even the lightest weight reports. So far, I have completed around 37 reviews, across all types of Company and in most sectors. After a while, you begin to get the hang of what to look for in a report. So, for the 1,212,507 people who read reports, I would like to offer some guidance as to how to make your reading experience enjoyable and worthwhile (ok, just a touch of sarcasm there). And for the very few people who do not read reports, this may help you get started J . At this point, regular readers will expect me to say: "First, equip yourself with a Chunky Monkey and a really interesting report." Ha! Ok. We'll assume you did that already. I find CSR reports fascinating – and I strongly believe in their importance and relevance in driving the transparency of businesses around the globe. So let's get dug in. Here are some introductory insights to report reading:
Start with an open mind
It is so easy to have bad vibes about report from a Company you have bad vibes about. You know they are not really into CSR and you expect to find a whole load of irrelevance in the report. You're mind is made up, and you look to prove your point as you read the report. Well, don't. Remember that CSR is evolving in every corporation and that each Company is facing different challenges and progressing at its own pace. We can learn from each Company. Whatever the motivation or the quality, any report so better than none. Go with an open mind, evaluate on the basis of what your read, by all means do a little cross-checking , but take the report on its merits. Try to understand the context in which the report was written. BAT, for example. Many would claim that a Company who makes cigarettes cannot be responsible. So when their CSR report lands in your lap, your automatic reaction is WTF?!?! i.e. a teeny weeny bit negative. @MBernhart (Michelle Bernhart of True Blue Communications) reviewed BAT's latest report which tackles the question head on of whether a tobacco company can be sustainable. They may not be your model of sustainability, but they operate a legal business and report on some measure of positive impact.
People write reports, not companies
Remember that the Company name may be on the cover, but it is people, real people who are doing their best to do a good job, who are charged with writing and producing the report. These people are doing the best they can with what they have. Sometimes, they are people who work for a totally great company with lots to report and a disposition for transparency. This makes life for the reporters much easier. Sometimes the hardest thing about writing a report is managing the internal politics. Just how much to disclose and more importantly, what NOT to disclose. Whether to tell the whole truth or just a little less than the whole truth. What to do with colleagues who do not provide data. How to present bad data in a good light and more. CSR reporters are always torn between reflecting the Company's position in a fair and balanced way, adhering to management demands and working conscientiously within reporting frameworks. By remembering that people write reports, you will be more balanced in your criticism, if you have criticism. An example is the 2008 report from Seiko. Sorry, but it's everything a CSR report should not be. But somewhere in Seiko there is a CSR person trying to do his or her best with the limited scope the Company allows. In reading this report, we should try to understand some of the limitations of a Company CSR reporter who has a desire to present good corporate citizenship but has not been able to make the sort of progress that supports good reporting. We should try to understand the complexities for a reporter, suspend negative judgement for a while, see what works, and try to encourage a better effort next time around.
Read the opening remarks by the Big Chief
The opening remarks by the Chairman, CEO or President, or all three, are quite telling. Often regarded as mumbo-jumbo empty phrases to skip over, they actually set the tone for the report, and give you a heads-up on what you may or may not find, Often there is no substance to these remarks (" this is our CSR report for the year 2008, it describes our csr activities blurb blurb we welcome your feedback blurb etc ") and this should alert you what you will find in the report. More blurb. If the opening remarks have substance, the report probably has too. Compare these two examples: Delhaize Report for 2008 – the opening remarks by the Chairman and President/CEO add nothing to the report and contain the standard blurb about how great Delhaize is and how doing CSR contributes to making them wonderful. Vodafone 2008 –here the CEO gives us a flavor of what is material to stakeholders and to Vodafone in a concise and well thought-out summary which precedes the most transparent and comprehensive reporting effort ever.
Choose how you read
After the opening remarks, there are a number of ways you can go. You can keep on reading. You can look for something specific. You can go to a section of interest. You can go for a pizza. If the Big Chief has said something meaningful, you might want to pick a thread and follow it in the report. If you have a particular issue or prejudgement about the Company, you can dive in to see what they report about that. If something is currently topical, such as climate change, you might want to go there first. This is where an index comes in very useful. A GRI index is the best. Tells you exactly where to find exactly what you are looking for. (Though beware, not all that is indexed is present). But the point is, don't try to read the report as if it were a best seller. They are not written by Alexander McCall Smith (as far as I know) and do not make for great bedtime stories. Read the report as a report in a discerning way – its purpose is to provide a lot of information to a broad range of stakeholders. By definition, not everybody will be interested in everything to the same degree. Decide what you want to read about and go there.
Whilst good corporate citizenship is made up of different actions in many parts of the business, the true impacts of a corporation are the ones that address material issues, which are often related to indirect impacts. A corporation who reports on direct impacts alone has not matured to the most significant level of CSR. Gap Inc 2005-2006 report always sticks in my memory as an outstanding report that addresses indirect impacts well. The report is called "What is a company's role in society?" How more indirect than that can you get? The report contains a good materiality assessment summary.
Be copy-paste and delete aware
For all but first reports, I always check back to the prior report, sometimes several prior reports. It is hard to believe just how much copy-pasting goes on in reporting. Sometimes you can read the same paragraph year after year. Surely the point of a report is to report new stuff. Not to regurgitate. If nothing new has happened in the reporting period, leave it out. Or say why not. Often a glance at prior reports can give you a better sense of context and evolution of the company's approach, and also what they are not reporting. The Aviva CR report for 2009 neatly omitted to report on social-benefit insurance products offerings that were proudly announced in the previous report. Clearly Aviva had not been able to meet the challenges of changing consumer perceptions and behaviours. Look at promises made in previous reports and how they are addressed in the current report. You sometimes need to assess the report credibility based on what was copy-pasted or deleted from prior reports.
Look for consistency (and inconsistency) in data
If Companies have been reporting for years, they should present data in charts showing at least 3 prior years. This provides context and understanding of the measure of performance over time. Where contextual data is lacking, there is always a reason. A closer look often leads you to the answers. Marks and Spencer, in their last Plan A report, which I reviewed here, made no mention of high numbers redundancies despite this being plastered all over the UK press. 1,000 people- that's a lot of livelihoods and was glossed over in the CR report. Compare data, look for inconsistencies in carbon footprint calculations, see how companies spend pages talking about energy consumption reduction and carbon reduction per product, per person or per location when overall they have increased, not reduced their footprint. Look for big declarations (we support equal opportunity) and results ( 5% women in management). Look for the data that isn't reported. And think about why.
Give feedback, ask questions, make comments, get engaged
There is nothing worst for a CSR reporter than no reaction. All reporters want feedback on their report, even if it's negative. I regularly make contact with the reporting companies whose reports I review, if something is not clear to me, and I regularly provide feedback directly to Companies. In almost all cases, I get a positive and comprehensive response from someone who is committed to the process. The best recent example is W.M. Morrison, the UK Supermarket chain. After writing about issues related to product packaging, I received a long response with explanations from the Company. Similarly Aviva, mentioned above, responded to me frankly and constructively about issues I raised in their report. I could cite numerous more examples. So all of you who sit there beefing about how CSR reports are bad, worthless and even misleading – I urge you to do something about it and WRITE to the reporting companies. Ask, tell, demand .. and listen to the response.
Give some leeway to first-timers
The first CSR report is a real challenge. It is often written at a stage where the Company has started on the journey of CSR, but is still developing its approach. Not all data may be available. The mammoth exercise of aligning the Company in a way which fits into a reporting process is not to be underestimated. The first report requires the Company to address issues that have probably never before been discussed. Cut these companies some slack. Understand that the only way to gain reporting experience is to report. The best two examples for first timers I came across in the last year are Jumeirah Hotel Group in Dubai and Central Textiles of Hong Kong.
If you have read to the end of this post, congratulations! You are now qualified as an Advanced CSR Report Reader. Go read some reports! And don't forget that Chunky Monkey makes even the awfullest of reports more palatable.