I recently published an editorial on CSRwire.com called "Sustainability Reports: don't ask "if", ask "how". In a nutshell, using the PwC CSR Reporting Trends 2010 study published last month, and the Radley Yeldar "How Does It Stack Up" reviews of European and UK CSR Reports, and the Lundquist second "Global Leaders" report, which assesses online sustainability communications (and not just sustainability reports), the inevitable concusion to be drawn was that sustainability reporting is now a minimum expectation of companies and the key to differentiation is the way a company reports, rather than, as was the case not so many years ago, whether the company reports. There are still thousands of companies who do not communicate on sustainability, but sooner or later, there will be no avoiding full accountability and transparency. The ones who do it well will gain a range of internal as well as external benefits. You can read my full editorial here.
Anyway, as it is now mid-November, thoughts are turning to the end-of-year lists (The Best of 2010... The Worst of 2010... The Trends.. The Rising Stars .... The Leaders and the Laggards ... etc) and all those kinds of articles which appear in December, and I have already been asked for my view of how CSR Reporting did in 2010 and what the trends I see for 2011, for an article to be published on this subject. My response ended up being blop material. So here it is. After I tidied it up a little!
CSR Reporting 2010 and 2011 trends
2010 has been a good year for reporting. It started well with news of a sharp increase in reports produced by the S&P 100 in 2009, 93 of the 100 now reporting and by mid October, the GRI was reporting a 60% increase in reporting in 2010 versus 2009. . The PwC trends summary for 2010 shows strong advancement of a reporting culture. The success of the GRI 2010 Conference in Amsterdam and the establishment of a new GRI foothold in the USA, the continued expansion of the Carbon Disclosure Project and their new Water Disclosure Report as well as many other other frameworks all point to increasing focus on business transparency and reporting. Companies are becoming more creative with reporting techniques, and using the power of the internet to reach more readers. The strong push towards Integrated Reporting and the establishment of the Integrated Committee (IIRC) has provoked new debate, activity and even listing requirements on some stock exchanges. The focus on reporting as a feed into investment analysis tools has heightened with Sustainable Indexes continuing to have an important role, including the publication of the Global 1000 Index by CRD analytics, which powers the NASDAQ Global Sustainability Top 50.
The debate on reporting moved in 2010 from whether to report to how to report – and this includes fundamental questions about presentation of CR reports (online or print/download) , separate versus integrated and frequency of update (annual or more frequently). Whilst the talk is towards integrated, companies are not moving wholeheartedly in this direction and much work still needs to be done to define what integrated really means and how it can be applied in a way which is better than now. Perhaps many will wait to see what guidelines and frameworks will emerge to assist them in addressing the highly complex issues that true integrated reporting poses.
Trends to watch in 2011
Non-profit reporting : We are starting to see more scrutiny of large NGO's and the understanding that as large organizations, they should be committed to transparency in spite of, or perhaps because of, their inherent social or environmental nature. The release of the GRI NGO sector supplement will probably have an influence here.
Integrated reporting : It is likely that more companies will want to get ahead of the game on integrated reporting, and will start by joining a financial report and a sustainability report in one cover. Whilst this is not true integration, some companies will go this route for many reasons, if only to be counted as leading a new phase of sustainability reporting. What we might see, however, is a greater attempt by companies to quantify the financial impact of their non-financial performance in one way or another. This is long overdue and would be a welcome development in Sustainability Reporting , even if full integration is not yet a practical option for most.
Online engagement around reporting : The drive to use reporting as a platform for interaction will gain speed in 2011. Today, only a handful of reporters (Guardian, SAP, Timberland to name a few) have really designed their reporting efforts around a more holistic view of sustainability communications and are using their report as a catalyst to engage stakeholders. As time goes by, more companies will realize that this is not only far less risky than they think, but also an inevitable feature of being a sustainability leader.
Use of social media tools to engage stakeholders in the reporting process : As online engagement becomes more widespread, companies will have no choice but to explore the possibilities of Social Media and use tools that are available on the Internet. We will see a proliferation of corporate CSR blogs, more Facebook pages and more tweets from Company accounts. Some may even take the lead from the Guardian who used their blog platform to ask stakeholders what the Guardian should be reporting on . In this way, Companies will try to engage stakeholders in the content and development of the report, rather than just gaining their reactions.
Dominant online formats: More companies will develop their online architecture to include sustainability data and use the annual reporting cycle to create order, priorities and create a structured report which is printed only in a summary form. Websites will be the domininant information carriers.
Issue based reports: We have seen an increase in sustainability reports which are region or issue based: L'Oreal issued a report on Diversity, SAB Miller issued a report on their economic impact in South Africa, Unilever has issued a series of reports on different aspects of their sustainability initiatives, Nestle has issued a report on water management, and another on Nutrition and Diet. More companies will be looking to differentiate themselves through focused and targeted reporting on their impacts in specific regions or on specific issues.
Materiality and Engagement: These two areas are those which most companies fail to report well, and yet are key to good sustainability communication. We have seen companies start to mature into reporting on these issues. I believe better reporting on materiality and stakeholder engagement will characterize 2011 reports.
Some trends I would like to see but I doubt will materialize in 2011:
Brand based reporting for consumers: I would like to see more companies influencing consumers with their sustainability reporting, via the brands that they distribute and the customers they serve. I would like to see some Sustainability Reports for Brands rather than global reports which mean little to local consumers or customers. I would like to see consumers being engaged at the point of sale with sustainability information contained on product packaging so that they can make the right choices as they purchase.
Employee involvement: I would like to see evidence of greater employee engagement and involvement in the reporting process. Many companies do not report on the process of their report development or use the great insights of employees in the body of the report itself. I would like to see more evidence of a CSR enabled culture in the business and its evidence in the reporting process and the report.
Outcomes: The most important change I would like to see is the move from reporting on what has been done to what a difference has been made i.e. the move from inputs, decisions, plans and actions to a real assessment of what impacts the company is making as a result of all these inputs, decisions, plans and actions. Outcomes has to be the key focus for 2011. However, I suspect that so many companies will continue to take the easy route of just listing all the good things that they have been doing and not really bothering to put in the extra effort so that we can all know whether it was worth it. This would mean considering the indirect impacts as well as the direct impacts a company has.
Localized reporting: I would like to see more global companies producing local reports describing their local impacts. When a global business reports, it is at a high level and meaningless for local stakeholders. Intel, GE, Vodafone, Telefonica, Motorola and others have developed a leading habit of parallel reporting at local level. I hope that more global companies will do the same in 2011.
SME reporting: There are some glimmers of hope in the SME community but by and large, reporting has not been assimilated in this sector. However, as SMEs drive economies, we cannot ignore their collective impact on our societies. My firm view is that SME reporting will be largely driven by MNE requirements for reporting in their supply chain, much like the excellent initiative of Puma in the context of a GRI project or the requirements of Walmart from its first tier suppliers. I would like to see more MNE's driving this and supporting their supply chains in becoming more transparent and more sustainable.
Finally, a word about context. There is a body of thought that says sustainability reporting should be contextual, i.e. impacts which are defined in terms of their contribution to overall global sustainability rather than individual unconnected impacts of a single company. See this interview with Mark McElroy of the Centre for Sustainable Innovation. I am going to remain quiet on this for the time being till I distill my thoughts more comprehensively, but suffice it to say that beyond the additional more general contextual information shared as background to material issues reported on, I don't see many companies going this route, whatever its merits or otherwise.
So there you have it. Be prepared for an onslaught of posts, opinions and predictions of reporting trends for 2011, many of which will differ and only some of which will prove to be relevant. See you in December 2011 to check out how everyone did.
elaine cohen, CSR consultant, Sustainabilty Reporter, HR Professional, Ice Cream Addict. Author of CSR for HR: A necessary partnership for advancing responsible business practices Contact me via www.twitter.com/elainecohen on Twitter or via my business website www.b-yond.biz/en (Beyond Business Ltd, CSR consulting and Sustainability Reporting firm)