Figuring out how to be both creative and meet the demand for standardisation is likely to be the focus of the next CSR ‘reporting season’.
Many readers will be pausing for breath right now, before gearing up to produce next year’s CSR / sustainable development report. Looking back at this season’s crop of reports, it’s clear that what was once a trickle among the avant-garde has become a flood.
The GRI ‘industry’ is heading for Amsterdam in the first week of October to launch the new guidelines. Briefing hears word of changes to the set of reporting indicators so that they become more focused on results and performance and include indirect economic impacts, as well as climate change and pension coverage. “In accordance” will move to four reporting levels, but these levels are not intended to be a substitute for independent assurance.
There’s a niggling question of just who reads these reports in any depth or with the attention that the huge effort put into their production should warrant. So is it worth all the effort, or a bubble that’s overdue to burst?
Well, some important audiences, like ethical investors, now pretty well require one (even if there is some doubt they read it; the mere presence is a sign of serious intent, they think). Indeed, in many ways, the CSR reporting process is more important than the end product. For example, a public report grabs the attention of senior executives and functional managers in a way that no amount of internal exhortation can.
For CSR managers, these reports are an important record of ‘place on their journey at a point in time’, in effect a milestone. Of course, there is also an element of ‘me too’: if everyone else has one, we better had. But if that’s all it is, some will start not doing it, and the bubble will soon burst.
Still, given the huge effort, it’s important companies do get the most out of the process. Yet a paradox is at work here. The more people report, the greater the need to stand out from the crowd and be noticed, to focus on your own important issues, otherwise it fails in communication terms. Yet the demands for comparability and standardisation represented by GRI are working the other way. We predict that figuring out how to square that particular circle will be the focus of much effort in this forthcoming reporting
RELATED NEWS
G3 Global Reporting
The Global Reporting Initiative’s board of directors has unanimously approved the G3 Guidelines – GRI’s third generation since the inaugural version in 2000, the GRI said in July. Development of the guidelines involved multi-stakeholder engagement over two years, involving engagement with upwards of 4000 people across the world. Full details of the G3 Guidelines are being released at the GRI’s annual conference on October 4 and 5.
GRI chief executive Ernst Ligteringen said that “the G3 reflects two things: the closest the world community could come to consensus on what a sustainability reporting framework should look like; and our best knowledge and experience with reporting on sustainability issues thus far.” Contact Alyson Slater, GRI 00 31 20 531 0000 www.globalreporting.org
Long live the OFR
Black Sun, a corporate reporting agency, revealed in August that the cancellation of the mandatory OFR in 2005 has not stopped the move in narrative reporting towards greater transparency and best practice behaviour.
David Christopherson, managing director of Black Sun, said: “The Chancellor’s decision to abolish the mandatory OFR resulted in significant uncertainty, but this has created opportunities for companies to use strong reporting as a source of competitive advantage – particularly in a global economy where high standards of disclosure establish trust with the capital markets, investors and other stakeholders.”
The agency’s report, The First 23, explores the performance of the first companies to disclose under the reporting requirements set out in the Business Review, obligations which arise out of the EU’s Account Modernisation Directive. The report examined whether companies are merely complying with the new Business Review requirements or going one step further to report more openly on their business performance.
Nearly a half (48%) of companies prepared a report equivalent to an OFR, while the bulk of the remainder used a Business Review format. Risk-reporting is improving in terms of quantity and quality, although over half of companies (57%) are identifying key performance indicators. Meanwhile, only 17% of the companies surveyed introduced a discrete section to communicate their views of the future prospects of the company.
National Grid and Land Securities were cited as examples of best practice narrative reporting. Companies reviewed were 3i Group, BAA, Boots Group, British Airways, British Land Co, BT Group, Cable & Wireless, GUS, Johnson Matthey, Kelda Group, Land Securities Group, Marks & Spencer Group, Man Group, National Grid, SABMiller, Sainsbury (J), Scottish and Southern Energy, Scottish Power, Severn Trent, Tate & Lyle, United Utilities, Vodafone Group and Yell Group. Contact Sallie Cooke Pilot Black Sun 020 7736 0011 www.blacksunplc.com
Stateside reporting
Over two-fifths of the US’s largest 100 companies by capitalisation publish corporate social responsibility reports, according to a new study published by the Social Investment Research Analysts Network (SIRAN), conducted by the US-based independent investment research firm KLD Research & Analytics.
KLD conducted an independent review of the public websites of all S&P 100 companies to assess their disclosure of environmental, social and governance policies and performance. Each public report was also assessed to examine the goals, benchmarking and indexing of key sustainability indicators. Findings include: more than three-quarters have special sections of their websites dedicated to information about their social and environmental policies and performance, an increase of a third (34%) since last year.
In the last year, a dozen new companies issued corporate social responsibility reports for the first time, including Cisco Systems, General Electric, Time Warner and Wells Fargo. Other members of the S&P 100, such as American International Group and Black & Decker, have pledged to issue their first reports later this year.
Over a third of the S&P 100 Index (34 companies) say they base their CSR reports on the Global Reporting Initiative’s Sustainability Reporting Guidelines, up sharply from 2005, when 25 companies based their reports on the guidelines.
Shareholders are becoming more demanding, SIRAN said, finding that institutional investors filed 19 proposals over the last year calling on companies to issue sustainability reports. The proposals received record levels of support, including 48% in favour for a proposal filed at construction equipment manufacturer Terex. Contact Kate Rosow, Siran 00 1 202 872 5347 www.siran.org
Regional trends revealed
Most of the world’s top 300 public companies now report on a range of issues rather than focusing solely on environment or philanthropy, a survey by consultancy Context revealed. Global Corporate Responsibility Reporting Trends 2006, published on July 31, highlights some regional difference in reporting styles. For example, the majority of European reporters use external assurance to validate their reports, but this is less common elsewhere and rare in the US. Contact Peter Knight, Context 020 7251 0050 www.econtext.co.uk
In brief
AccountAbility published on July 28 A Guidance Note on the Principles of Materiality, Completeness and Responsiveness as they relate to the AA1000 Assurance Standard (AA1000AS). The note aims to clarify understanding of the principles for assurance providers and reporting organisations. Contact Alan Knight, AccountAbility 020 7549 0400 www.acountability.org.uk
The ISO has published an executive summary of its future ISO26000 standard which provides voluntary guidance on social responsibility. The standard is applicable to both private and public sector organisations. Contact Roger Frost, ISO 00 1 41 22 749 0111 www.iso.org/sr
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