Friday, November 27, 2009

Does size really matter ?

Should small Companies report ? Do you agree with the statement that "CR reporting is for companies with large footprints" ? Does the size of the Company, and its footprint dictate whether a Company should be transparent and accountable to its stakeholders? Is it true that "that large companies have many more resources than small firms" and therefore, large Companies can afford to report and small Companies cannot ? Should a small Company content itself with "more written policies and statements about our impacts"?

The quotes (in red) above are from Toby Webb, the founder and manager of Ethical Corporation.(The questions are mine!)  I have met Toby briefly a couple of times, when I have attended Ethical Corp's conferences, which are very good. I regularly follow his blog Reflections on Ethical Business which I genuinely find to be one of the best blogs around on CSR, full of sharp insight and commentary. Recently Toby posted "Twelve reasons why I won't read your corporate responsibility report", and my response, which was basically that the twelve reasons Toby mentions for not reading CSR reports, are precisely the reasons he should read reports (call me argumentative if you like, but check it out), led to a ping-pong of why reporting is for all organizations, irrespective of size (me) versus why a small business doesnt need, or have the resources, to report (Toby). This prompted me to bring  the ping-pong on to my territory, a blog about reporting, for all organizations (ALL organizations) and elaborate on why I believe this to be so.

What is reporting ? It's a process by which a business, after reasonable dialogue with stakeholders, considers the most material issues for them, the stakeholders, and for its business sustainability, and is transparent about how it performs on matters of stakeholder interest. Reporting is part of the loop of dialogue - we listen, we act, we respond, we listen again. The report is the periodical output of this cyclical process. The process itself builds relationships, trust, management discipline, identifies risk and oportunity, contributes to positive reputation and enhances investor interest, to name but a few benefits. The resources required to produce a report are do not need to be overwhelming - more often than not, the design, printing and dispatch of reports can cost more than the investment in wirting them, or the consultant fee. Most of these cost elements can be avoided by a producing a PDF download or an online report, with modest graphics. The content is what counts. In a small business, personnel resources may be more limited, but the issues are far less complex than in a big global business, and require less personnel.  So i think this  we-ain't-got-the-resources line is a cop-out for not applying rigorous thinking to sustainability, or accepting accountability. Oh, and let's face it, no-one reads reports, anyway, right ?

Let's take a look at some stuff relating to SME reporting:

In Spain, 822 SME's  now produce CSR reports. Why ? It enables them "to increase their competitiveness in a setting where transparency and distinguishing features play an important role. ...... the preparation of the reports initiates the enterprise in the main aspects of CSR while encouraging it to develop its skills of self-diagnosis." This is reported on the Instituto de Crédito Oficial website, an organziation which assists SMEs to report.

The Global Reporting Initiative website has a  section dedicated to support for SME's , and  lists a whole string of SME's who report. In an interview with  Scott McAusland on the GRI website, he says that SME's " account for about 90% of businesses worldwide and 50 - 60% of employment."  Often SME's are part of MNE (multinational enterprise) supply chains, and therefore may have a need to demonstrate ethical, accountable and transparent behaviour in order to stay competitive.

CorporateRegister.com's 2010 CR Reporting Awards has a special category for SME's , as in previous years. You can find many SME reports in the CorporateRegister.com database. The European Commission produced an excellent guide for SME's for communicating CSR.  Whilst the focus of this guide is communications, of which reporting is only one element, it lists many compelling reasons for SME's to communicate abobut their CSR activities, with a CSR report included in the different channels reletvant to different stakeholder groups.

In a post back in July 2009, called You don't have to be BIG to do CSR, I gave an example of an SME from Moldova who reported many positive impacts which almost certainly no-one would ever know about had they not reported themselves. Local competitiveness and reputation are just as crucial here as for bigger businesses.

Many of the reporting SME's confirm that both the process and the report deliver significant benefits as mentioned above. It is important to note that the process cannot succeed without the product of that process - the report itself - a periodical health-check of strategy and metrics, and renewed commitment. A report is the most appropriate vehicle for this - as part of a total csr and communications strategy. I dont see this as a privilege reserved  for only the big blockbuster corps.

What might a Company like Ethical Corporation have to gain by a reporting process and publication of a report? 
  • Stakeholder engagement and materiality analysis could throw up new insights about ways to serve stakeholders and do more, better, business. At worst, it will provide an external reality check of how the Company is percieved by those who can influence its sucess.
  • An environmental risk and impact assessment, followed by an Environmental Policy and Action Plan could deliver several benefits - cost savings through improved internal environmental practices, travel habits, printing and sustainability in events management.
  • A statement of mission, values and perhaps even a Code of Ethics could serve to align employees and all contributing writers to the Company's "what we stand for" and support the building of alignment, trust and reputation. Marketing practices for example are an important element of this too.
  • A review of Human Resources practices - even with a small team - could assist the business in improving employee engagement and beoming more attractive to potential employees.
  • A review of how the Company contributes to the public good through its business activities, and involves its employees in community activities or supporting social causes could contribute to positive reputation, improved egagement and skill development.
  • And more than anything else,  scoping of Ethical Corporation's indirect influence on its many readers and conference attendees could provide the business with a platform to measure and increase its influence and potential readership. Through a "Green Conference Facilities", for example, the Company could provide attendees with an opportunity to make their own contribution to environmental sustainability.
  • And finally, the compiling of all of this into a periodical, coherent report would provide a basis to maintain this cycle of planning and improvement, track performance and maintain a leading edge.  
Would this sell more mags or bring more people to summits ? Maybe not in the short term. But we all know that sustainability is a long haul and not a quick-buck thing. And it really doesn't matter how many people the Company employs or how many $ it earns. It's all about impacts. As Dolly Parton said, as far as i recall, "If you think you are too small to influence, you have never been in bed with a mosquito".

Note that i haven't even touched on the sense of duty we might assume of a Company whose core business is communicating about business ethics and "encouraging debate on responsible business" . The GRI produces a report, BSR produces a report, The Guardian produces a report.

Enough said.  I don't hope to convince Toby or Ethical Corporation, and i understand that every business must choose its own ways of doing things. My comments could apply to any small business, not just Ethical Corp. I just felt the need to share my perspective in good spirit on something i have, as you may have noticed, strong views about. And by way of disclosure, I am a CSR report-writing consultant so i am not totally objective.  Thanks to Toby for allowing this debate on his blog  - I expect i am getting on his nerves a bit. Oops!  Next time i see him at a conference I will buy him a Chunky Monkey!

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

2 comments:

Jernej said...

You may want to look at some further readings on sustainability reporting by SMEs and on general responsible entrepreneurship at: http://www.nfrcsr.org/international/small_and_medium-size_enterprises/index.htm

Caution: This page is lephantic in size, but has low impact (don't worry) - be happy, it's friday

gianlu said...

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