The number of social reports is rising and calls for independent audits and standard measures are growing. But is now the time to close off innovation and discourage companies from airing risky issues?
AA1000 launch
The AA1000 assurance standard, which aims to ensure the credibility and quality of corporate public reporting on social, environmental and economic performance, was launched on March 25 by AccountAbility. The standard has already been piloted by Novo Nordisk, Camelot and the Cooperative Bank.
AccountAbility also published its first annual report on March 25, which sets out trends and highlights of emerging reporting practices. Meanwhile the European Federation of professional accountants is calling for improved assurance provision in sustainability reporting, with a new publication outlining why an organisation should commission an assurance engagement, published on February 6. Benefits of sustainability assurance claims that non-assured reports lack credibility and limit stakeholder confidence. Contact Matthew Morrell, AccountAbility, on 020 7549 0400 (http://www.accountability.org.uk); Derek McGlynn, FEE, on 00 32 2 285 4072 (http://www.fee.be)
Adequate disclosure?
Two thirds of FTSE 100 companies make a full or adequate disclosure of their management of social, environmental and ethical issues, according to research published by the Association of British Insurers on February 3. Responses to the ABI’s SRI guidelines, first launched in October 2001, suggest that smaller companies are currently less likely to engage with the issue. Information technology and distribution are singled out as sectors with slower responses, while tobacco, chemicals, water and utilities are more active. Contact Leonie Edwards, ABI, on 020 7216 7411 (http://www.abi.org.uk)
Nike gathering support
Nike is gathering support in its case before the Supreme Court from the Bush Administration, the US civil liberties union and several media organisations, including CNN and the New York Times. In May 2002 a California court ruled that a company’s public statements about its operations must be regarded as commercial activities, thereby denying Nike the protection of freedom of speech – in this case when responding to criticisms of its labour supply chain. Nike has since withheld publication of its annual corporate responsibility report. The case goes to the Supreme Court on April 23, with a verdict expected by the end of June. However the social investor, Domini, is not supporting the company, claiming that Nike’s comments about its supply chain were of a commercial nature. Domini argues that thecomments were designed to defend the company’s reputation and its bottom line. Contact Hannah Jones, Nike, on 00 32 2 646 4405 (http://www.nike.com)
Compact and GRI team up
The Global Compact and the Global Reporting Initiative will be working in closer partnership, sharing outreach, pilot programs, performance models, and technical activities, it was announced on March 18. The two have signed an agreement articulating the linkage between the Compact’s nine human rights, labour, and environmental principles and GRI’s emerging global standard for sustainability reporting. Other GRI news:
KPMG has become a patron of the Global Reporting Initiative, making a payment of more than £34,000, it was announced in March. The Australian government, BHP Billiton, Suncor Energy and Telecom Italia are new benefactors of the organisation, each contributing between £17,000 and £34,000;
GRI is encouraging companies in South Africa to improve their reporting on HIV/AIDS performance, including policies and practices, with the publication of draft key performance indicators on March 4. Sponsored by the Bill and Melinda Gates Foundation, the HIV/AIDS reporting framework document is the result of an eightmonth multi-stakeholder process. A final report is due in the summer;
the latest version of the GRI telecoms sector supplement to the 2002 Guidelines is now available on the GRI website. The telecoms working group will meet for the last time in May 2003 to review public comments received, revise the supplement, and bring its work to a conclusion.
BT is the first time winner of a new award for the best use of electronic media in communicating sustainability. BT’s Betterworld site won the plaudits of the judges at this year’s ACCA UK Awards for Sustainability for its excellent navigation facilities, its effective search function and its functional layout.
Also on the podium was The Cooperative Bank, which was singled out for the best combined sustainability report. Divided into three sections – delivering value, social responsibility, and ecological sustainability – the report was rated highly in all of the judging criteria of completeness, credibility and communication. 2003 also saw the inauguration of a US awards ceremony. Co-ordinated by ACCA US and CERES, Ben & Jerry’s and Chiquita took top-spot. Contact Rachel Jackson, ACCA, on 020 7396 5785 (http://www.accaglobal.com)
in brief
[b]Marks & Spencer, Sainsbury’s and [b]Tesco were among those ranked in the top quintile in the first Business in the Community corporate responsibility index, published on March 12. Just over half (53%) of the FTSE 100 participated in the index. Contact Elisabeth Forbes, BitC, on 020 7566 8769 (http://www.bitc.org.uk)
COMMENT:
The number of social reports is rising and calls for independent audits and standard measures are growing. But is now the time to close off innovation and discourage companies from airing risky issues?
The Nike court case is helping draw the battle lines in the on-going debate about how best to hold companies to account and encourage responsible business behaviour. The legal arguments are technical, but the positions are clear: should US companies enjoy a measure of protection in reporting their CSR activity, so allowing them freedom to speak out on social issues; or should the same standards of demonstrable truthfulness be applied here as in financial reporting, and risk having them clam up? The problem is, as Pilate said, what is truth? The newly-revised AA1000 assurance standard takes the view that trust in companies to tell the truth is now so low, nothing short of a fully-independent audit statement will inspire confidence in social reports. It recognises the practical difficulties in determining the factual accuracy of much social and economic impact, and so relies on stakeholders’ views.
At Briefing we take the unfashionable view that few companies are out and out liars. Most are guilty at worst of presenting a partial view and then putting a positive gloss on it. We fear the rush to audit and indeed to standardise measurement and reporting (pace GRI) risks putting back the cause which is still in its infancy. We feel the priority is to win hearts and minds throughout the business and find innovative ways of understanding social impacts, not to raise the bar.
And what are we to make of the row that greeted the new BITC CR Index? To be honest, our sympathy doesn’t lie with the unfairly criticized ‘laggards’ in the bottom quintile: if you enter a process built around a crude league table it was entirely predictable those at the bottom, however objectively good, would be criticised. No, sympathy is due to those who put huge effort into completing the assessment, believing the line that a BITC index would be used by rating agencies and so reduce the tidal wave of CSR surveys.
Alas, few such agencies want standardisation around someone else’s survey – they are all in a competitive position, and these new indices are as much about promoting the profile of the instigator as shedding any new light on how to measure social impact. Increasingly companies will be very choosy about who to play this game with, cooperating only with those that add real value.
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