Tuesday, May 7, 2013

Is reporting bad news?

As mentioned in my previous post, the annual  CR Reporting Awards CRRA '13 Winners were announced during a special, one-day, by-invitation-only CR Perspectives conference hosted by CorporateRegister.com in late April. The conference shared the results of the CR Perspectives survey, which was completed by hundreds of people around the world and yielded some very interesting results. A full analysis of the results will be published and made freely available by the end of May on CorporateRegister.com.

I chaired the CR  Perspectives conference, which gave me the opportunity to hear and share CR Perspectives with a full-house of fascinating people from all over the world, including China. 

Paul Scott, MD of CorporateRegister.com, a fully-fledged Sustainability Reporting authority and celebrity, told me: “As CR reporting continues to evolve, CorporateRegister was very pleased to offer a forum where recent developments and the direction of reporting could be debated by an informed audience of practitioners. CR reporting developed organically, and as it matures we find various organisations attempting to steer it one way or the other. What our CR Perspectives survey has shown is that people involved in reporting make up their own minds, and we could be in for some surprises.”

CR Perspectives opened up with  Richard Howitt, MEP and European Parliament's spokesperson on Corporate Social Responsibility who spoke about the recent non-financial reporting directive which has been proposed by the European Commission, which, if adopted, will require companies of 500 employees and more to disclose information on "policies, risks and results as regards environmental matters, social and employee-related aspects, respect for human rights, anti-corruption and bribery issues, and diversity on the Boards of Directors." Richard is optimistic that this will go through all the necessary approvals to become law within the next six months or so - resulting in another 18,000 companies delivering sustainability reports - integrated or standalone- a big increase from the 2,500 that Richard says make some form of disclosure today. Richard talked about ethics and trust  in business as being part of the economic crisis we find ourselves in today, and that these are not only part of the crisis, but the route out of the crisis. He believes the European Directive will help Europe to catch up with progress made in other countries such as South Africa, Denmark, Brazil and more, where non-financial reporting has already been advanced in some form. Interestingly, Richard said that non-financial reporting should not be a big financial burden on companies. He quoted a figure of GBP 4,200 additional cost for each company to produce this information, less for smaller businesses. I am not quite sure how this was calculated but I wouldn't bet my last ice-cream on that one. However, Richard Howitt's perspectives were a great starter for what turned out to be a fascinating, packed day of discussion and ... well.. perspectives.
Paul Scott shared the results of the CR Perspectives survey and I can't resist providing a glimpse of a few of the initial results, pending the full and final version later this month. For example:
  • Over 95% of respondents agreed that CR Reporting builds trust. Great news!
  • Mandatory reporting or disclosure was the thing that the highest number of people agreed would lead to better uptake of reporting (I proposed that reporters receive free ice-cream, but I don't think that gained too much ground). 
  • Over half of the survey respondents agreed that improved standardization would lead to better quality reporting.
  • 92% of respondents believe that an annual form of reporting is the way to go, with much less support for continuous updates throughout the year
  • A whopping 63% of reporters supported country-specific reporting, as opposed to regional or global. This is validation for multinationals who commendably invest so much effort in producing local reports.
  • Almost all respondents believe that all stakeholders are important audiences for CR reporting, which continues to make the reporting task a complex one, trying to meet the demands of multiple stakeholder groups.
  • When asked what would make reporting more credible, the highest number of respondents said: bad news! Quantified data, assurance and use of a known reporting standard also came in with quite some support.

During the day, we heard from a range of CR practitioners and experts, including Jo Franses of Coca Cola Enterprises, Rupert Thomas of Royal Dutch Shell, Verity Lawson of BAT, Shannon Shoul of Nike, Core Olsen from Novo Nordisk, Sophie Guillou of La Poste, Joss Tantram of Terrafiniti  and Lois Guthrie, of the Climate Standards Disclosure Board, who is always an interesting contributor.
We debated with passion some of the big issues of the day, from the level of understanding that companies have of the value of reporting in a "survival"" context, to the use of reporting to drive corporate value. Of course, the concept of box-ticking came up, as it always does when people talk about reporting, and while a certain amount of that is always required, especially if we move to more standardized formats, the focus on materiality may well drive companies to think more deeply about what really matters rather than what boxes are available to tick.  
On credibility, given that the most significant credibility builder is apparently bad news, the one thing that companies don't want to report, I asked the panel what bad news they include in their reports and what they consider bad news to actually mean. The consensus seemed to be that bad news includes: failure to meet targets, failure to address material issues due to significant challenges, and worsening of performance such as in the area of safety or GHG emissions. For bad news to be noticed, it also should not be hidden way and minimized to the point that it's unrecognizable as bad news. This also gave me the opportunity to tell the story of the work I did with GSK Romania in helping to prepare their first, local, CR Report, called Valuing your Trust. In my first meeting with the General Manager, Pascal Prigent, I asked: "What can we not report? What do you not want to include in this CR Report?" Pascal looked me, puzzled, as if this was a rather odd question. His response: "Nothing. You can include in the report anything that is relevant to telling our full, honest and authentic CR performance in all the necessary areas." I didn't actually find too much bad news to disclose at GSK Romania, after interviewing all the management team and tens of others, and reviewing mounds of data and information, but the open approach of leadership and willingness to be fully transparent in the interests of building trust and credibility is something that more reporters would do well to emulate.
Now that we have established that bad news works, perhaps we can expect to be reading lots more bad news in future reports. This may be totally depressing but at least we will trust everybody:).
Watch this space for more bad news!

elaine cohen, CSR consultant, winning (CRRA'12) Sustainability Reporter, HR Professional, Ice Cream Addict. Author of Sustainability Reporting for SMEs: Competitive Advantage Through Transparency AND CSR for HR: A necessary partnership for advancing responsible business practices Contact me via www.twitter.com/elainecohen   or via my business website www.b-yond.biz   (Beyond Business Ltd, an inspired CSR consulting and Sustainability Reporting firm)

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