Tuesday, November 19, 2013

CSR: Time for some perspective

We all have perspectives. Sustainability Reporting is something that tends to give rise to many different perspectives - my last post being a case in point.  Some perspectives are more important than others. And some perspectives lack perspective. A new report from CorporateRegister.com now reveals many perspectives. My perspective on that is positive. 

CorporateRegister.com, who hosts and manages the global online directory of corporate responsibility (CR) reports, today launched the CR Perspectives report, combining data, insight and opinion to reveal how global CSR reporting has developed to date and where it might be headed. Available as a free download from www.corporateregister.com (login required),  the report CR Perspectives 2013 - Global CR Reporting Trends and Stakeholder Views looks at global CR reporting based on statistics deriving from the world’s largest CR reporting database (52,000 reports) and stakeholder views based on the  CR Perspectives online survey.

The report is structured into four sections looking at the Context, Content, Communications and Credibility of CR reporting. The online survey conducted in early 2013 received 300 responses from corporate CSR professionals (40%), CSR consultants (18%), academics and students (16%), and even investors (3%), as well as other stakeholder groups. 71% of respondents were from Europe and the U.S., with the remainder from pretty much everywhere else.

The Context of CR reporting 
While sustainability reporting continues to expand, it is doing so at a slower rate, according to CorporateRegister.com. Part of the reason for the slowing of this growth is the fact that, for the past 2 years, 2011 and 2012, there have been fewer first time reports than previously, breaking a pattern of year-on-year increase of first time reports every year since the year 2000. This is a big disappointment. I LOVE first time reports. Still, in 2012, 800 first-timers made their first foray into the transparency jungle, so that's about as many reports as I can reasonably read in a couple of months, so I guess things are not too bad.

Source: CR Perspectives Global CR Reporting Trends and Stakeholder Views 2013 p5
Survey respondents largely feel that CSR reports are an effective tool for building trust, and that reporting quality has improved over the past ten years. Surprisingly, perhaps, very few think that CSR reports are just PR. I could point them in the direction of a few choice reports to help prove otherwise, but gladly, I concur that today, while PR is always an element of almost every report, we are seeing more substance and more serious attention to important issues in sustainability reporting today.

Another perspective is that almost all survey respondents think that all publicly traded companies ought to be required to report on sustainability matters. A few think that even SMEs should be required to report. If you work from the premise that sustainability reporting is a highly useful internal management tool, then this makes sense. Perhaps CSR reporting finally moving out from under the shroud of illegitimacy?

The Content of CR reporting 
According to CorporateRegister.com statistics, integrated reports are increasing, but are not yet as widespread as generally assumed. They are still less than 10% of the total reports published, around 600 integrateds in 2012. However, integrated reports are not all born equal. Many of them are just an expanded financial report with a section on issues related to sustainability and no linkage between the sustainability-type information and the business-type information. The IIRC is piloting use of the new IIRC framework, with a wide range of respected and experienced reporting companies. In fact, the IIRC includes several examples of integrated reports in the Emerging Integrated Reporting Database which hosts integrated pioneer flagship reports. I took a look at one of them - the Gold Fields 2012 Integrated Report, which came top in Ernst and Young's Excellence in Integrated Reporting Awards for 2013. At 212 pages, it's an easy read :). There is a very extensive section on assurance which is as comprehensive as I have seen in any sustainability report. The report is not GRI based. There is no materiality matrix of list of material issues presented, although assurance statements indicate that the report complies with the principle of materiality - probably because of the inclusion of a risk matrix which includes both business and sustainability-type issues.

What I wondered, though, is how this report expresses the linkage between business sustainability (and risk) and sustainability performance. For example, the report contains a very detailed disclosure on human resources - as part of the "employer of choice" strategy. This covers everything from the "war for talent" and approaches to win the war, skills and leadership development, investment in operational training, increasing HDSAs (Historically disadvantaged South Africans) in the workforce, health and wellbeing, labor relations and illegal strikes, and safety and security. A very detailed disclosure by all accounts.

But as this is an integrated report, I would have expected to see some correlation of the degree of investment in employee development to the business outcomes - both in terms of the incremental costs of extensive human resources activity and the expected benefits. Employee turnover has reduced significantly over a five year period; is this the result of these efforts? How does this benefit the bottom line? What about absenteeism which I can't find mention of? Recruitment costs and effectiveness? And many other aspects of business performance affected by the company's approach to human resources.

In other words, in an integrated report, I would expect to find sustainability issues addressed from a more holistic standpoint - both in terms of impacts on people and society and/or the environment, and in terms of business growth, profitability and/or achievement of critical business objectives. If I understand this correctly, this is the principle of connectivity which the IIRC framework describes as follows: "An integrated report should show, as a comprehensive value creation story, the combination, inter-relatedness and dependencies between the components that are material to the organization’s ability to create value over time." Perhaps there is room for Gold Fields and other integrated reporters to make these connections more explicitly, as a demonstration of their "integrated thinking". It seems to me that, at present, integrated reporting is still very relative: relatively integrated, relatively more integrated, relatively not integrated, relatively kind of integrated. What appears to be generally the case, is that relatively integrated almost always means relatively very-long.

Another interesting result from this survey relates to use of reporting frameworks. GRI and CDP come out on top with sector frameworks remaining in high focus. Thumbs down for UN Global Compact, however, despite its attempt in recent years to make reporting more prescriptive and comprehensive. Relatively.

The Communication of CR Reporting
The CR Perspectives survey results suggest that stakeholders who are not as close to the direct operations of the organization are less important to the reporting organization. Employees are seen as the single most important report audience, and the general public comes bottom of a long list. A majority of respondents believe that large global companies should report at different levels which could be country level or even site level.

The Credibility of CR Reporting
Aha, the best bit comes at the end. After all has been said and done, can you really believe what's in sustainability reports? And it may not surprise any of you to know that almost all respondents listed BAD NEWS as the main thing that adds to the credibility of a sustainability report. A few failure stories, missed targets, operational spills or discussion of a major screw-up is going to make your report stand out from the crowd in terms of credibility. Everyone wants bad news. If you don't have any, you may find yourself in a real sustainability reporting hole. But what company has no bad news? ) Be careful, though, you don't want to add too much bad news..... don't give your stakeholders too much of a good thing :)

Other things that support credibility are provision of data and specific targets and using a known reporting framework. An external assurance statement is the fourth element which contributes to delivering credibility. Interesting that this is in fourth place, as improving credibility is the prime purpose of assurance. Perhaps, in general, the poor quality of assurance statements we have been seeing to date, not a small number of which, in my experience, have a de-assurance effect, is the reason they are not seen to be delivering their purpose.

There are many more perspectives in the CR Perspectives survey, and perspectively-speaking, it's useful to understand the perspectives at play in our sustainability landscape. My perspective on all of this is that you should take a look at CR Perspectives. Maybe you also have a perspective you would like to offer a perspective on?

elaine cohen, CSR consultant, winning (CRRA'12) Sustainability Reporter, HR Professional, Ice Cream Addict. Author of Understanding G4: the Concise guide to Next Generation Sustainability Reporting  AND  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

1 comment:

Jordi Morrós Ribera said...

Thank you for the highlighting approach to the report.

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