What is CSR Reporting?
Corporate Social Responsibility (CSR) reporting is the process of publicly disclosing a company’s social, environmental, and economic performance and impact. CSR reporting provides stakeholders with transparency and accountability regarding the company’s CSR initiatives, as well as its progress and achievements in meeting its CSR goals and objectives.
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In the context of the pressurising demands for transparency and corporate action on global social issues like climate change, environmental conservation, anti corruption, human rights and so on, it becomes important for companies to provide information about how they have integrated CSR as an integral part of their functioning.
CSR reporting is one of the anchors that enable a company to succeed as a high performance organisation. The process provides the hindsight, insight and foresight to understand stakeholder expectations, make decisions that position the company to meet their needs, and marshal their resources effectively to help meet evolving global challenges.
Companies produce a Corporate Sustainability Report (CSR) for multiple reasons.
A good CSR report provides valuable and impartial information to allow stakeholders, including investors, to assess a company’s CSR strategy and their current and future performance. It can also be an important tool to engage employees and external stakeholders in the company’s CSR activities.
Strong reports are tools for improvement of social and environmental performance. Producing a CSR report ingrains sustainability into a company’s corporate culture through its operating and governance structures.
Good CSR reports explain how the tenets of CSR and sustainability manifest themselves through the company’s codes and policies to create sustainability.
What to Report
A good CSR report should provide valuable and impartial information to allow stakeholders, including investors, to assess a company’s CSR strategy and their current and future performance.
Whom to Report
CSR should be reported to both internal (employees, Board) and external stakeholders comprising of local and global investors, suppliers, current and potential customers, government, public and private organisations, NGOs, media and so on of the company.
How to Report
It is critical to “sell” CSR readership to both internal as well as external stakeholders and hence a strong cover theme and design can set the tone for the report and/or convey a key message and encourage potential readers to open the report and learn more about the company.
To be truly meaningful, reporting on corporate responsibility/sustainability performance must be done with clarity, candour and effective design.
Increasing global companies are using Triple Bottom Line Reporting (TBLR). For formulating such reports, companies use Global Reporting Initiative (GRI) indexes/formats. TBLR integrates information throughout all business processes and encourages the measurement, management and communication of environmental, social and economic results on an equal basis.
Ultimately whatever pattern of reporting is adopted, readers want to see an honest and forthright discussion of how strongly CSR is embedded. What are the benefits of CSR to the company; where does CSR fit with the overall corporate strategy; and what challenges has the company been facing?
Benefits of CSR Reporting
With modern communications technologies democratizing the availability of information, stakeholders from all walks of life are making more informed decisions. More and more companies are requiring their suppliers and partners to provide proof of their CSR performance. Efforts to communicate CSR efforts are now an essential part of businesses. In other words, they are only as good as how well they are communicated.
For a business to succeed amidst heightening environmental consciousness, not only does a company have to engage in CSR, but they must also find ways to report their CSR endeavors to stakeholders in forms that resonate with them.
Example: Apple has a code that suppliers must commit to before they can do business with the tech giant. (They even publish an annual audit of their suppliers’ CSR performance, called the Apple Supplier Responsibility Progress Report).
- These companies may be trying to establish CSR compliance throughout their supply chain or as a way to manage risk and make sure they’re dealing with organizations that won’t negatively affect their reputation, or both.
Either way, you need to respond to this growing trend or you may find yourself losing customers and revenue. - CSR strategy and reporting mechanism helps the company to engage with stakeholders and market the company on this level.
- CSR reporting adds to the credibility, as an organization at a time in today’s market when everyone from potential employees, clients and suppliers, to the general public want to see more transparency in the companies they deal with.
After the fall of so many corporate giants in the last decade, from the Enron scandal in 2001 to the fall from grace of so many financial institutions as a result of the sub-prime mortgage crisis that led to the recent recession, people have had it with corporate corruption.
They want to see companies behaving honestly and with responsibility. And they want to see the proof. - CSR reporting will enhances the shareholders sense of engagement with the company as employees, customers and other stakeholders like to hear about the great things your company does.
- CSR reporting helps the company in gaining loyal customers by including facts what the company is actually doing for the society If they don’t know that your company makes significant contributions they’re missing out on some key elements about their relationship with you.
- Then there’s the overall impact on the company’s reputation. With social media taking over the way people research and make purchasing decisions, truly transparent and committed CSR efforts can enhance your company’s online presence and add value to it’s reputation – turning critics into into supporters and supporters into advocates.
- CSR Reporting will help the companies to gain access to capital with which they can expand their business along with their CSR endeavors
Contents of CSR Report
Corporate Context
Effective CSR practices and reporting must be placed within the context of a company’s business activities, geographic footprint, operating performance, financial strength and corporate goals.
This allows stakeholders to understand the context in which the CSR policies and strategies have been developed as well as how CSR impacts operating and financial strategies. Information about the company would include an overview of its history, past performance, current operations, major products or services, geographic locations and other matters.
A brief review and explanation of main trends and factors contributing to the development and performance of the business during the financial year, as well as those factors, which are likely to affect future performance, will set the tone for the context.
Stakeholder Engagement
CSR reporting is a dialogue between a company and its stakeholders. An effective message to stakeholders should convince all those affected by the company’s operations that their concerns are understood and being addressed.
Therefore, the report should identify the company’s stakeholders and explain how it approaches and manages stakeholder engagement.
This should include how often, with whom and through what activities, such as workshops, surveys, focus groups, review panels and feedback formats, stakeholders have been engaged and how the same is incorporated into CSR decisions and activities.
Performance
Committing to sustainability and corporate social responsibility means adherence to a set of external and self-imposed standards of performance as well as the policies, procedures, systems and structures that ensure those standards are met.
This framework should report information on:
- Codes of conduct for employees, management, directors and suppliers
- External economic, environmental and social charters, principles or guidelines to which the company subscribes
- Governance structure and responsibilities
- Corporate and community committees
- Processes for identifying and mitigating risks
- Environmental and social management systems
- Integration of triple bottom line into decision-making
Performance is demonstrated by key performance indicators (KPIs) and information on performance should include both achievement and under-achievements. Testimonials, expert commentary and case studies can improve credibility and foster an honest, beneficial dialogue with stakeholders. It can also provide balance in the testimonials by including comments on weaknesses or setbacks as well as accomplishments. Good graphic elements such as photographs, illustrations, diagrams, graphs or maps can improve a report’s ability to effectively communicate key messages.
KPIs should cover critical performance information on both management processes adopted and its impact. It should be linked to business goals & objectives; and against targets worked out by the company as a basis for reviewing overall performance.
The report should include a discussion of risks as well as opportunities, historical performance along with expectations for the future. It is essential to back up the discussions with hard numbers that should have been collected using a consistent methodology over time.
Factors that influence credibility in CSR reporting are:
- Stakeholder participation,
- Honesty in reporting,
- Admitting limitations, and
- Maintaining consistency in providing information.
Assurance and Validation
Assurance adds another level of credibility by providing an opinion of the company’s CSR report. Companies should tailor their approach to establish the credibility of its reports through external verifications.
External or independent auditors examine a variety of performance measures, management processes and strategy against available guidelines such as Accountability’s AA1000 Assurance Standard, SA 8000 or GRI guidelines.
Stakeholder review panels can be used to provide a more informal review of the report, either alone or in conjunction with a formal auditor. The assurance statement of the report should explain the scope of the review as well as the assurance methodology.
Global Reporting Initiative G4 Guidelines
The Global Reporting Initiative (GRI) promotes the use of sustainability reporting as a way for companies and organizations to become more sustainable and contribute to a sustainable global economy.
GRI’s mission is to make sustainability reporting standard practice. To enable all companies and organizations to report their economic, environmental, social and governance performance and impacts, GRI produces free Sustainability Reporting Guidelines.
A sustainability report conveys disclosures on an organization’s most critical impacts – be they positive or negative – on the environment, society and the economy. By using the Guidelines, reporting organizations can generate reliable, relevant and standardized information with which to assess opportunities and risks, and enable more informed decision-making – both within the business and among its stakeholders.
By developing and communicating their understanding about the connections between sustainability and business, companies can enhance their value, measure and manage change, and drive improvement and innovation.
G4, the fourth generation of the Guidelines, was launched in May 2013. The launch marked the culmination of two years of extensive stakeholder consultation and dialogue with hundreds of experts from across the world from a wide variety of sectors, including companies, civil society, labor organizations, academia, and finance. The aim of G4 is to help reporters prepare sustainability reports that matter – and to make robust and purposeful sustainability reporting standard practice.
The G4 Guidelines have increased user-friendliness and accessibility. They emphasize on the organizations to provide only information that is critical to their business and stakeholders. This means organizations and report users can concentrate on the sustainability impacts that matter, resulting in reports that are more strategic, more focused, more credible, and easier for stakeholders to navigate.
G4 Guidelines
Flexible and Globally Relevant
G4 is designed to be universally applicable to all organizations of all types and sectors, large and small, across the world. G4 includes references to other widely recognized frameworks, and is designed as a consolidated framework for reporting performance against different codes and norms for sustainability.
This includes harmonization with other important global frameworks, including the OECD Guidelines for Multinational Enterprises, the UN Global Compact Principles, and the UN Guiding Principles on Business and Human Rights.
The guidance in G4 is designed to be compatible with a range of different reporting formats. In addition to enhancing the relevance and quality of standalone sustainability reports, G4 also offers a widely recognized global standard for sustainability information to be included in integrated reports.
Spotlight on Materiality
A robust sustainability report is far more than a mere data gathering or compliance exercise.To support organizations on this strategic journey, G4 places the concept of materiality at the heart of sustainability reporting.
This means encouraging reporting organizations to only provide information on the issues that are really critical in order to achieve the organization’s goals for sustainability and manage its impact on the environment and society. This will result in reports that are strategic and focused.
Materiality is the threshold at which the sustainability subjects covered by the Guidelines – known as ‘Aspects’ – become sufficiently important that they should be reported. G4-based reports should cover Aspects that reflect the organization’s significant economic, environmental and social impacts; or substantively influence the assessments and decisions of stakeholders.
Key stakeholders such as investors, market regulators, civil society, suppliers, employees or customers – have a vital role to play in informing an organization’s materiality assessment. Taking stakeholders’ views into account is central to developing a robust understanding of a company’s economic, environmental, and social impacts, and of how these relate to business value and resilience.
In this way G4 invites companies to analyze the fundamental links between their sustainability impacts and their business strategy and operations. By taking a strategic and materiality based approach, organizations will get greater value out of reporting, and a greater return for the resources they invest.
Structure and Format of G4
G4 is presented in two separate documents such as (a) Reporting Principles and Standard Disclosures: GRI’s Reporting Principles are the criteria that should be used to guide your choices, in order to achieve effective GRI reporting.
Standard Disclosures are the GRI ‘questions’ you answer in your report. (b) Implementation Manual: This is the ‘how to’ section, and provides detailed advice and recommendations for reporting with G4.
Disclosures in G4
There are two kinds of disclosures in G4 which are (a) General Standard Disclosures: These disclosures set the overall context for the report, providing a description of the organization and its reporting process. They apply to all organizations, regardless of their materiality assessment.
There are seven types of General Standard Disclosures, ranging from the organization’s strategic perspective on addressing sustainability issues, and how it involves stakeholders in this process, to how it approaches key issues such as governance and ethics and integrity and (b) Specific Standard Disclosures:
These are divided into two areas: (i) Management Approach (DMA):The Disclosures on Management Approach (DMA) provide the organization with an opportunity to explain how it is managing its material economic, environmental or social impacts (Aspects), thus providing an overview of its approach to sustainability issues.
The DMA focus on three things: describing why an Aspect is material, how its impacts are being managed, and how the approach to managing this Aspect is being evaluated. (ii) Indicators:Indicators allow companies to provide comparable information on their economic, environmental and social impacts and performance.
Much of this is in the form of quantitative data. Organizations are only required to provide Indicators on Aspects that they and their stakeholders have identified as material to the business. G4 contains Indicators for a wide range of sustainability issues.For example, these could include water usage, health and safety, human rights or an organization’s impact on local communities.
Omissions
The Guidelines recognize that, in exceptional cases, it may not be possible for an organization to disclose certain information. In those cases, the report should clearly identify the required information that has been omitted and indicate which explanation applies, from a list provided in the Guidelines.
Partial Application of the GRI Guidelines
This alternative may be useful for organizations that are required to report certain Indicators under a regulatory framework, or for firsttime reporting organizations that need a longer transition period before they can claim to be ‘in accordance’ with the Guidelines.
While an organization that partially applies the Guidelines cannot self-declare that they are ‘in accordance’, they can choose to disclose that their report contains GRI Standard Disclosures. However, the organization must list these disclosures and their location in its sustainability report.
Reporting on Sector-specific Issues
Many sectors face unique sustainability issues that should be captured in sustainability reports. These issues may not be covered in the Guidelines. GRI’s Sector Disclosures provide additional sector-specific guidance and disclosures to be used in conjunction with the Guidelines.
In order for a reporting organization to declare that its report has been prepared ‘in accordance’ with the Guidelines, sectorspecific disclosures must be provided wherever GRI Sector Disclosures are available and they apply to the organization’s sector.
Examples of the issues covered in the Sector Disclosures include noise measurement for airports, the resettlement of people for mining and metals companies, animal welfare for the food processing industry, and program effectiveness for nongovernmental organizations.
Transparency on Assurance
External assurance can greatly enhance the credibility of sustainability disclosures. The G4 Guidelines ask companies to state their policy and practice on external assurance as part of their report.
While GRI recommends the use of external assurance, this is not a requirement in order for a company to prepare a report ‘in accordance’ with the G4 Guidelines. However, should a company wish to present its report as externally assured, it must provide an external assurance statement.
Formats of CSR Communication and Reporting
CSR/sustainability reports serve as a tool to change external perceptions and to instigate dialogue with stakeholders both inside and outside the company.
Open and honest, relevant and well-targeted CSR/ sustainability communications can contribute to increasing employee motivation, improving company or brand reputation, strengthening credibility, and building trust and long-term competitive advantage.
Being strategic and targeted will improve CSR communication as well as the readership of CSR reports. The CSR communication and report can be made interesting by using a variety of communication devices and tactics to keep the stakeholder informed and engaged. There is value in looking at different ways of communicating CSR information.
Web-based, short format and stand alone CSR reports can be designed to communicate with various audiences.
- Web based approach offers more flexible opportunities for information sharing and interaction with stakeholders. Corporate websites are important source of information as they provide a channel for reporting on activities and progress and can become part of the CSR activity itself, for example by proving a platform for engaging with stakeholders. For example it offers:
- Unlimited accessibility from any place at any time
- Easy facilitation of dialogue between the company and a globally dispersed group of stakeholders
- An enhanced user experience through immediate accessibility, multi-media options that enrich content, and customisation to meet personal needs
- Ability for companies to update information and news feeds in real-time
- Unlimited accessibility from any place at any time
Report Formats
Companies issuing CSR/sustainability reports generally combine and complement traditional hard copy reporting with information available on their website in PDF,HTML or interactive/dynamic formats.
Standalone CSR Report
A report that is not some piece of any solicitation set or any record set is a standalone report, i.e. the report ought not to be produced from any viable methodology. Such a report is viewed as a stand-alone report.
CSR standalone reports may be utilized as an indicator of a decent corporate citizenship or may be utilized as a type of greenwashing. Greenwashing is a disinformation methodology made conceivable by data asymmetry because of absence of obligatory reporting models for CSR.
Firms use standalone CSR reports to convey that they give voluntarily transparent data and backing of their great conduct to stakeholders.
Example: Monsanto’s report is presented exclusively as an electronic document.
Table below lists various formats of CSR communication and reporting patterns adopted by various companies with their internal and external stakeholders.
Stakeholders | Format |
---|---|
Internal | 1. Team briefings 2. Procedural notes 3. Training sessions 4. Internal magazines 5. Internal compliance or audit reports 6. Intranet 7. Notice boards 8. Site locations 9. Specific reports |
External | 1. Annual reports 2. Websites 3. Stand alone reports 4. External magazines 5. AGMs 6. Media outlets 7. Corporate videos 8 Speaking platforms for senior managers |
CSR Reporting Team
In order to build a good corporate sustainability report (CSR), it is important to have a solid team in place. There are five ways to get and keep people engaged for sustainable report team.
Set Expectations
Everyone hates a last minute request that requires a mad dash to meet a deadline.This is particularly disappointing when the work could undoubtedly have been finished with advanced notice. Help your group by building a venture plan with a reasonable timetable.
The arrangement ought to obviously relegate deliverables, rundown key gathering dates, and secure due dates so everybody recognizes what’s in store and when and offer the task arranges early and make sure to convey changes in an opportune way.
This will permit your group to incorporate the reporting workload with their timetable for the year and prevent the frustrations of last minute requests.
Explain the WIFM (What’s In it For Me?)
Tell individuals that they are going to get recognized – in a decent manner – for assisting with information, substance audits, and stakeholder connections. Your allies will be more willing to put their time and vitality in the venture in the event that it is perceived as prominent and determined by top executives.
It is also good to generate excitement around the opportunity that comes with being on the ground floor of a company initiative that will have a long-term positive impact on the organization.
Be Nice
Tragically, being pleasant frequently becomes mixed up in the quick paced and upsetting universe of corporate due dates, client requests, and official desires. So as to be fruitful, your group needs to work well together, bringing their individual ability and readiness to team up, to make a first rate report.
To get the best comes about; it is paramount to make partaking on your group an average experience. Indeed the seemingly insignificant issues can go far. Approach pleasantly for help and schedule gatherings in an agreeable area at once advantageous for everybody.
Watch the Clock
Begin and complete gatherings on time (or early!). Stick to the venture arrange as nearly as could be expected under the circumstances and make giving information and assessing substance as simple and productive as could be expected under the circumstances for your colleagues (and the system of associates they’ll be reaching for the benefit of the report).
Great devices incorporate institutionalized spreadsheets, Sharepoint locales, and online administrations to catch sentiment in a solitary area.
Inexorably, not all prescribed progressions/ alters are fused into the last form, so make a point to finish the sentiment circle with the goal that supporters comprehend why they may not see their information in the last form. It is important for team morale that no one feels that their input was a waste of time.
Once the amazingly successful report is discharged, make a point to impart the credit and perceive the diligent work of the whole group. Send cards to say thanks to your colleagues. Go the additional step and send a note of thankfulness to their supervisors.
On the off chance that there is certain media scope or stakeholder sentiment, impart that to everybody, as well. Presently that the group has made it effectively through the trenches together, assemble everybody to commend your aggregate achievement. Even more terrific, meet over mixed drinks! Before long enough it will be time to begin the following report
CSR reports must be documented by the CSR team headed by a senior executive (Senior VP, CEO, and Company Director). The CSR team must include representatives from both the corporate policy and operational divisions. Geographical representation as well as representation from different divisions greatly increases the probability of the report having internal and external value.
Additional References for CSR Reporting
The following websites can be referred by the CSR team to learn more about CSR standards and sustainability reporting.
- ACCA
- Accountability AA1000
- Accounting for Sustainability
- Black Sun
- BITC CR Index
- European Sustainability Reporting Association
- Ethical Corporation
- Global Reporting Initiative
- Sustainability
ACCA
ACCA has been heartily included in the unfolding verbal confrontation on corporate social obligation since 1990. They advertise transparency and best practice, and expect to help organizations and associations understand the developing vitality of manageable quality to them.
ACCA champions the enlargement of corporate reporting to incorporate the social and ecological parts of a business.
They seek to utilize thier solid business sector position to highlight the criticalness of following up on maintainability challenges. They provides information on annual sustainability reporting awards and criteria on completeness, credibility and communication.
Accountability AA1000
AA1000 has been developed to improve the accountability and overall performance of organisations by increasing quality in social and ethical accounting, auditing and reporting. The Institute has facilitated the development of AA1000 through work with hundreds of individuals and organisations worldwide from business, government, and civil society.
AA1000 is likewise intended to function as a stand-alone quality framework and procedure. The suite of requisitions that make up the AA1000 Framework gives the premise to expert preparing and for the particular provision of the core standard.
Accounting for Sustainability
They discuss campaign and guidance for better integration of sustainability and financial performance reporting. From January 2012, the International Integrated Reporting Council (IIRC) has been supported by an independent Secretariat, although A4S still works closely with the IIRC.
The mission of the IIRC is to create a globally accepted Integrated Reporting framework which brings together financial, environmental, social and governance information in a clear, concise, consistent and comparable format.
A4s attempts to advertise the Integrated Thinking that is obliged if associations are to accomplish fruitful Integrated Reporting.
(www.accountingforsustainability.org/home/)
Black Sun
They help their clients to recount their corporate stories through integrated communications, by bringing together corporate reporting, sustainability communications, and digital communications and they presents best practice case studies, news and research on latest trends from reporting consultancy.
Their work has received awards for best practice, and innovative and creative communications. In 2012, BAE Systems won the Strategic Governance Award at the Strategic Value in Corporate Reporting Awards and Tullow Oil was awarded the gold award in the Best Report category at Communicate Magazine’s Corporate & Financial Awards.
BITC CR Index
They offer a variety of benchmarking tools which help companies to measure and report on responsible business in an integrated and systematic way and highlights voluntary benchmark of corporate responsibility governance and management.
European Sustainability Reporting Association
Their aim is to improve Sustainability Reporting by sharing trends and best practice across European countries.
Companies, students, investors, governments, assurance providers and any other groups with an interest in Sustainability Reporting will use the information for the following purposes:
- Get a overview of national best practice examples and why the countries have awarded the local winners.
- Benchmark sustainability reporting practices against other countries
- Benchmark assurance practice against other countries
- Allow companies to explore the practice and trends in the countries where they wish to find suppliers or businesspartners
- Help analysts and students to get an overall picture on which countries are ahead in the field of sustainability reporting.
Ethical Corporation
Toby Webb is our founder of Ethical Corporation. They are providing business intelligence for sustainability since 2001. Ethical Corporation is 100% focused on global ethical business and observes how large companies are responding to the sustainable business agenda. They also provide information about conferences exploring best practices in CSR and business ethics.
Global Reporting Initiative
The Global Reporting Initiative (GRI) is a not-for-profit organization, generously funded by a diverse range of contributors, partners and supporter and is a leading organization in the sustainability field.
GRI promotes the use of sustainability reporting and presents information about global sustainability reporting guidelines as a way for organizations to become more sustainable and contribute to sustainable development.
GRI’s Sustainability Reporting Framework is a reporting system that enables all companies and organizations to measure, understand and communicate this information. GRI’s mission is to make sustainability reporting standard practice; one which helps to promote and manage change towards a sustainable global economy.
Sustainability
The institute is founded in 1987, they’ve evolved alongside the broader sustainability agenda and helped to define and shape the unique role of business within it.
On issues from consumption, transparency, stakeholder engagement and strategy to innovation and transformation, they have helped many clients and partners better understand and create business and societal value in response to global challenges and explains global reporters programme from strategy consultancy and think-tank
Business Ethics
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Corporate social responsibility (CSR)
Lean Six Sigma
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Supply Chain