Lecture 10: Good and Bad CSR – A critical perspective
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CSR reporting allows companies to communicate their social and environmental impacts and performance to stakeholders. It is becoming more common due to pressures from stakeholders, though reporting practices vary. Good CSR reporting is transparent, uses standardized frameworks, includes stakeholder engagement, and shows outcomes and progress over time. Key aspects of quality reporting include materiality, clear data, targets, and linking CSR to business strategy. Stakeholder dialogue is important for identifying issues and verifying report content.
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Lecture 10: Good and Bad CSR – A critical perspective
- 1. FN0449 Lecture 10FN0449 Lecture 10 Good and Bad CSR – AGood and Bad CSR – A critical perspective…critical perspective… Dr Alex Hope
- 2. Objectives of the session Explain basic features of CSR reporting Understand the main reasons why companies become involved in CSR reporting Explore the role of CSR reporting in the broader accounting process Discuss key features of good CSR reporting and auditing Understand the role of stakeholder dialogue in CSR reporting Good and Bad aspects of reports…
- 3. Annual report (financial) targeted at shareholders CSR report (non-financia targeted at broad range of stakeholders Introduction CSR reporting and auditing: Can help a business prove to its stakeholders that it is ‘doing the right thing’
- 4. Rise in non-financial reporting to inform stakeholders of the ‘triple bottom line’ 95% of the 250 largest companies in the world report on CSR All of the 100 largest UK companies have CSR reporting Introduction Source: KPMG International Survey of Corporate Responsibility Reporting 2011
- 5. Part of social accounting / auditing process CSR reporting is still voluntary = Heterogeneity of CSR reports •Wide variety of language / content •Difficult for stakeholders to assess the quality of a company’s CSR •Prevents the reader from comparing different companies Introduction
- 6. • Instrumental / economic: Social and environmental issues might pose a threat to the company’s financial performance (e.g. Nike boycotts). • Political: Increase in corporate power = greater calls for more transparency and accountability to the public. Reasons for Engaging in CSR Reporting & Auditing
- 7. Integrating stakeholder demands: CSR auditing and reporting helps companies to improve their interaction with stakeholders as part of a broader process of dialogue and engagement. Ethical reasons (Responding to pressure): CSR reporting is a tool to communicate ethical values and performance. (Framework from Garriga and Mele - see Chapter 3) Reasons for Engaging in CSR Reporting & Auditing
- 8. Current Trends in CSR Reporting •Standardization of CSR reporting to enhance credibility: Standardizing CSR reports: e.g. The ‘Global Reporting Initiative’ (GRI) framework for sustainability reports (published for the first time in 2000).
- 9. Assurance: e.g. The ‘AA1000S Assurance Standard,’ launched by AccountAbility in 2002, provides a framework for assessing processes underlying a CSR report. Current Trends in CSR Reporting
- 10. Regulation: The voluntary nature of CSR reporting is starting to be challenged in Denmark, France, Japan, Malaysia, and the UK. Integrated reporting: e.g. The International Integrated Reporting Committee (IIRC) proposes one integrated report combining the annual and CSR report. Current Trends in CSR Reporting
- 11. How to Do it • Diversity in practice is related to: Interests on the part of those initiating the process Types of organisations Contexts Theoretical and philosophical roots Growth in Social and Ethical Accounting, Auditing and Reporting (SEAAR)
- 12. How to Do it • Poor practices can be related to: Insufficient knowledge, skills, experience and/or resources A deliberate attempt to underspecify the accounts and/or verification process to report in a less than accurate, incomplete manner
- 13. Outlay audit: Considers financial cost, not outcome value Constituency accounting: Examine report in relation to demands of key constituencies Corporate rating against social / ethical criteria: External ratings Social indicators movement: Internal and external involvement How to Do it Methodological approaches: http://www.slideshare.net/Bull_UK/corporate-social-responsibility-a-new-business-asset
- 14. Understanding Quality Categorise initiatives through: Principles of good practice in SEAAR The elements into which principles can be subdivided to enable detailed analysis The level and quality of reporting
- 15. 1.Inclusivity: Reflect views of all principal stakeholders 2.Comparability: Compare performance as a basis for assessment 3.Completeness: All areas of company activity are included 4.Evolution: Repetition to demonstrate continual learning Understanding Quality The 8 Principles of Quality:
- 16. Understanding Quality The 8 Principles of Quality: 4.Management policies and systems: Clear internal processes 4.Disclosure: Formality or active means of communication? 5.Externally verified: Validate material professionally & independently 6.Continuous improvement: Assess progress over time
- 17. Scoring Quality Stage 1: Commentary – Report of social mission / aims and ad hoc descriptive elements Stage 2: Review – Occasional descriptive report covering different stakeholders, including specific policies Stage 3: Report – Regular report with stakeholder consultation, indicators and financial data, explicit policies, internal systems Social and ethical disclosure: Assessing progress: http://www.thevirtuouscircle.co.uk
- 18. Stage 4: Statement – Regular externally verified report with two-way stakeholder dialogue, indicators, targets and benchmarks and commitment to comprehensive coverage over time Stage 5: Sustainability statement – Regular externally verified sustainability statement with linkages to environmental, animal, economic and financial data Scoring Quality
- 20. The Core Role of Stakeholder Engagement and Dialogue Stage 1: Understanding organizational motives for stakeholder engagement and dialogue Holistic perspective: Social and environmental reporting and CSR as processes which transform business practices to become socially and environmentally sustainable. Strategic perspective: Social and environmental reporting as a tool to win or retain the support of stakeholders who have the power to influence the achievement of an organization’s goals.
- 21. Identifying to whom the organization needs to report if it is to achieve its philosophical objectives The identification of stakeholders takes place after the philosophical motives for engaging in CSR and social and environmental reporting have been determined Moving from stakeholder identification to stakeholder engagement and dialogue The Core Role of Stakeholder Engagement and Dialogue Stage 2: Linking stakeholder identification to motives for reporting
- 22. Key Issues & Difficulties in Stakeholder Engagement & Dialogue Identifying the range of stakeholders to be considered Impossibility of direct dialogue and engagement with some stakeholders Addressing heterogeneous stakeholder views and expectations
- 23. Key Issues & Difficulties in Stakeholder Engagement & Dialogue Prioritizing stakeholder needs on the basis of maximum negative consequences Negotiating a consensus among mutually exclusive stakeholder views through discourse ethics
- 24. What makes a good or bad report? Context: The Company's Role in Society “Our role in society is an extension of our core purpose: we make what matters better, together.” http://www.tescoplc.com/files/pdf/responsibility/2014/tesco_and_society_review_2014.pdf “Banks play an important role in society. By assisting customers with financing, investments, secure payments and asset management, we support economic development and international trade and contribute to financial security” http://sebgroup.com/about-seb/who-we-are/our-role-in-society
- 25. Material Issues What makes a good or bad report? http://report.basf.com/2012/en/pics/img/028a_nochart_en.png
- 26. Outcomes What makes a good or bad report? Look for the outcomes or impacts of the company's Sustainability activities, not just performance. Look to see if environmental impacts have improved. Look to see what community outcomes have been achieved
- 27. Framework What makes a good or bad report?
- 28. Authentic Style and Tone What makes a good or bad report?
- 29. Clear Data What makes a good or bad report?
- 30. Targets, Progress and Future Plans What makes a good or bad report?
- 31. Stakeholder Voices What makes a good or bad report?
- 32. How Sustainability is Managed What makes a good or bad report?
- 33. Accessibility What makes a good or bad report?
- 34. Linkage What makes a good or bad report?
- 35. Linkage What makes a good or bad report?
- 36. Summary Explain basic features of CSR reporting Understand the main reasons why companies become involved in CSR reporting Explore the role of CSR reporting in the broader accounting process Discuss key features of good CSR reporting and auditing Understand the role of stakeholder dialogue in CSR reporting Good and Bad aspects of reports…
Hinweis der Redaktion
- Building Corporate AccountAbility (Simon Zadek, Peter Pruzan & Richard Evans, 1997) Stakeholder Engagement and Dialogue (Jeffrey Unerman, 2007)
- Building Corporate AccountAbility (Simon Zadek, Peter Pruzan & Richard Evans, 1997)
- Building Corporate AccountAbility (Simon Zadek, Peter Pruzan & Richard Evans, 1997)
- One of the first things I look to a Sustainability Report to do is enlighten me as to how the company sees its role in society. Sustainability is not just about improving impacts and behaving ethically. It's about doing business in a different way which makes a social contribution. I like to see companies define that contribution before they get into the detail of how many tons of paper they have recycled. This provides context for the report. Skandinaviska Enskilda Banken AB is a Swedish financial group for corporate customers, institutions and private individuals with headquarters in Stockholm, Sweden
- A materiality matrix which identifies the specific most important issues that the company faces in sustainability performance which has been developed using input from external and internal stakeholders, is important. Specific companies are at specific risk and face specific opportunities, as well as having very specific impacts on people and planet. Materiality helps us understand what these are and react accordingly.
- I look for the outcomes or impacts of the company's Sustainability activities, not just performance. So if a company has been investing in environmental technology, I look to see if environmental impacts have improved. If the company has been investing in the community, I look to see what community outcomes have been achieved. A simple "train timetable" of what we have done and how much we have spent is rarely satisfying.
- Most companies today have adopted a framework such as the GRI Framework to compile their report and include a GRI Index. I find this very helpful for navigating the report and finding specific information that I require. With such a framework, it is easy to see what has been reported and what not, against a template of universally relevant key issues. Even if the GRI Framework is not used, another type of framework or structure may be fine, but the inclusion of a content index is most helpful. Visteon Corporation is an American global automotive parts supply company spun off from the Ford Motor Company in 2000
- I look for a style and tone which is authentic and not obviously copy-written – one which explains technical terms and helps tell a story rather than just state the dry facts.
- I look for data which is presented coherently and where the basis for calculations are clear, so that you know what's included and what's not. I was recently reading a report that provides a figure for Motor Collisions per 100 employees. There is no basis for the calculation. Does this mean all employees or only employees that have a company vehicle? Is it all collisions or only collisions caused rather than experienced? Data must be presented in a way we can understand, and it is interesting to see prior year data for more than one or two years, so that you can get a sense of continuity.
- I look for SMART targets , and understanding of not only what progress has been made to achieve the targets so far, but also what plans are in place to continue to do so (see Starbcks Report for a good example of this). Simply stating that the company will reduce carbon emissions by 20% by 2020 is not terribly convincing. What is convincing is the plan to achieve this.
- I love to see people in the report – all businesses are about people – employees telling their stories, external perspectives and well-written real-life case studies all add to the credibility and easy-reading factor of the report. Impahla Clothing (Impahla) is a South African-based company that manufactures sports and lifestyle apparel, socks, collars and trims, as well as fabrics, and offers a range of branding services including embroidery, sublimation, heat transfers and screen printing – supplier to PUMA
- I believe there is importance in how sustainability is managed in an organization – whether there is a Board Committee, a dedicated Sustainability Leader and a corporate Steering Team of some sort. I always look in the report to see who is responsible for leading sustainability strategy and who is on the frontline of execution. A robust structure gives credibility and confidence that progress can be made and objectives can be achieved. (see page 48 of the Toyota Report for an example)
- Easy navigation of all the report content – a hyperlinked downloadable PDF is my preference, as I can read it without an internet connection. Report-builder features for web-based reports are important (see Timberland's example). I hate flipbooks and other pyrotechnical web presentations, though opportunity to add comments, such as the SAP report , is a nice touch. A good report website is attractive and accessible to many. Either way, it must enable you to get to what you want fast. Not many people read a report from end to end in the order of the contents list.
- The link between the company's sustainability performance and its business success. Most companies don't really know how to express this, and there is some expectation that Integrated Reporting might provide a route to expressing this meaningfully. Today, when I see it, it's a bonus, but my starting point premise is that I won't find it in Sustainability Reports, which is quite ironic really, when you think that many companies engage in sustainability in order to support sustainable positive business performance. (I like the way BT does this)
- finally, I look for Assurance. Today, most companies do not use external assurance or verification and those Assurance statements I read are often partial or completely inadequate, so I tend to assume that I won't find a good Assurance statement which is the result of rigorous process and adds credibility to the report. Here again, when I find a great Assurance Statement, it's a bonus. (here is an example from Baxter)