How to make a CSR report

What should be in your CSR report? There are no strict guidelines out there and no universal way to put such a report together but there are some best practices, which you can draw upon in order to satisfy some of your key stakeholders. One key thing to remember is that CSR is not a Marketing or Public relations tool so it is not about showing the very best of the companies products or only about all the good you have done in the past year. The report is about showing the world that your company know that we live in an imperfect world, but that you will do your part to make it better and what you are going to do about it. Here is a quick guide to what should be in your report and why.

Introduction

Your introduction should include a statement by the CEO or Board of directors on why CSR is important to the company and how management see CSR in relation to its core business area. Remember to include information about the company, its activities and the products it is producing. You should also include a organisational chart that shows who is in charge of which area and their key responsibilities if you want to communicate transparency and openness then you should also have contact details for each person. A generic mail like csr@company.com does not do the trick. When stakeholders with a request want to know something they do not want to meet a lot of red tape. Remember in CSR communication goes both ways it is not only you that is communicating to the world you are in practice inviting the world to communicate with you.

Methodology

Show what you are reporting on and what you have excluded and why. There is nothing as bad as being caught in a lie even when you did not intend to make one. You should also show how you collect data and what degree of reliability one can put into it. If you are only getting information from your supply chain through self reporting you should state this. It is important because it makes you data less reliable then if you did your own investigations. If you have a third party participating in the data collection and/or verification it is important that you have this in this section.

Governance

How do you manage your day-to-day operations and how do you ensure that the risks that are involved are reduced as much as possible. There are plenty of tools that you can choose from when it comes to risk analysis and mediation in my experience one of to build a tool that fits the company you are working for and not a shelf product. While these can be very good they seldom fit all your needs or are to general in areas were you wanted to be specific. This is not saying that they are useless and can be a good inspiration for your work but you need to have something that works not necessary looks well. Some of the tools you can draw upon are ISO 31000, COBIT, Accounting standards like IFRS, Sarbanes-Oxley and for banks BASEL 2, the OECD principles for governance can also be a good source of information.

Most stakeholders would also like to know how the process is for handling information coming from them so make sure that you have a procedure for how information from whistleblowers, NGOs, CSOs and governmental bodies are handled.

Financial information

Some might think that financial information should be let out of CSR reporting but nothing could be more wrong. It is in the interest of most stakeholders that the company is doing well and while it is also doing good. Information on financial performance should include traditional indicators like profits, share information, turnover, etc. but also data on indicators which is normally not featured in traditional annual reports like tax information, philanthropic projects, sponsorships and the likes.

Information on what markets the company is present on and what prospects that the company sees in these markets should also be available. This is important because it will give stakeholders an insight into how the company see its future role in other markets and how it is going to handle its supply chain.

Environment, Energy and materials

If your company is producing or consuming raw materials this could be you biggest point in the report. There is an increased interest from stakeholders in knowing were from the minerals and other raw materials are coming from in their products. Lately the mobile industry have been under pressure to disclose information on their purchasing practices as some of the metals they have been using is coming from conflict areas like Congo. If there are issues, which can be of concern you should mention this even though you cant, do anything about it right now. It is better to communicate that you know that there is a potential issue than to ignore it all together. Invite other stakeholders to help you out on solving the potential problem.

Information on energy consumption and emissions should follow the guidelines that have been issued by local government that in turn is linked to the UN guidelines. This ensures that your company can be compared to others in the same industry.

Social

When it comes to the social impact of corporate activities there are several groups, which need to be paid attention to. First of all there are the employees or internal stakeholders. This group is of cause by the majority of companies regarded as the most important mainly due to the fact that they have a legitimate claim to the corporate activities and in most cases also have the relative power to back these claims up through actions such as strikes or other means of persuading management. When employees have such a prominent place in your organisation you should of cause show what you do to ensure that you live up to your commitments to them. Remember that being able to show that the company is a good place to work will attract more qualified candidates for you job opening so there is a good reason why you should do something about communicating your efforts. There are several things you can do:

  • If the company is already issuing health and safety reporting it could be a benefit to incorporate this data into a combined CSR report.
  • If you have a good working relationship with the unions you can ask them to write a page in your report. This will give the opportunity to show that the CSR report is not only a marketing/PR tool but that you actually do what you preach in terms of transparency and engagement with key stakeholders, also the ones that are critical.
  • Write about what you do to keep your employees qualified and up to date with the newest developments within your field. This communicate that you are willing to invest in your employees.
  • If you give employees voice in your CSR report make sure to say that they can say anything that they would like and that you have their title and position within the organisation in a place where it can be seen. If you only use management testimonial then you credibility will not be that big compared to when you use employees from all the organisational layers. Also keep in mind to have a even distribution of gender, age and ethnicity as well.

Human Rights

While environmental and Social issues have been on the agenda for a long time is the area of Human Rights and business a relative new area. However, with increased media and stakeholder attention coming to the area as corporate activities are stepped up in countries like China and the Middle East there are real issues of Human Rights abuse, which the company must address. For example are there no free unions in China that makes it hard to live up to the Global Compacts third principle, which dictates that companies should “uphold the freedom of association and the effective recognition of the right to collective bargaining.”

Even though that your company might not be directly in charge of or have power to change companies within the supply chain key stakeholders will hold you accountable for whatever happened in among your suppliers. There for you have to implement systems and show how you make them work that target abuses and violation of basic Human Rights with the companies that you are dealing with. The governance systems can have many names but in general they are called ‘Code of Ethics’ or ‘Code of Conduct’ and are build around the principles that you deem important in order to manage the risks that you potentially could be exposed to.

Remember that the principles around Human Rights are not just about ensuring basic rights for the people in you supply chain. But it is also about promoting the rule of law, building relationships with the local community, understanding your sphere of influence and maybe most important of all is to ‘do no harm’ in the communities you are affecting.

Perspectives

So what is the most important thing you are going to achieve in the next year? What are your goals and aspirations? These are some of the answers you have to give when you round up your report. How is it that the vision that the CEO set out to in the introduction is going to be put into practice and how is it you are going to make sure that it has been done. Like all the other activities that your business is engaged in, your CSR also have to be managed effectively in order to work and this means that you Plan – Do – Check – Act on all your indicators. You measure and hold people/managers accountable for their success.

Effective communication of your report

Ones you have finished you need to tell the world what you have done and what you plan to do in the future. I have seen hundreds of press releases that says “XXX company have now issued the sustainable report for Year XXX” this is of cause a way to tell the world but if you think about it will properly not attract that many readers. So you tell the world what you are trying to achieve instead “Company XXX is educating seamstress in its supply chain” or “Company XXX is aiming for zero emissions by 2020”. Be proud of what you are out to do and tell the world about it. If you are not you are properly doing something wrong.

Remember that there is no standard CSR report so try to be inventive and creative with your reporting but make sure that you also do your footwork and get the information in there that your stakeholders are looking for.

Good Luck

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Scandinavian work on CSR is reduced to how well you present your sustainability report

Ones the Scandinavian countries were among the very best performers with field of creating initiatives for how business and society could work together for a greater good. But now it is more about how you present your activities than it is about what the company is actually doing that matters.

I would love if I could say I live in a region were we have some of the best socially conscious companies in the world, but if I did so I would properly be lying to myself. What I see is that it’s all about presentation and squeezing all the advertising and PR blood out of every bit of activity that even have the smallest scent of social impact.

A few examples can be found in the partnership between IBIS (A NGO) and Toms (A chocolate producer). They have found each other over the child-labour issue and have partnered up to create programs that will educate farmers and their children in Africa. This is all well and I it is very well that a company tries to do something about the very problems it self is causing. But the issue I have is that it has become a marketing machine, which tries to inflate a relative small project (about 15000 people is effected by the program) into a commutative platform, which almost seems to proclaim that they are eradicating child-labour in Ghana all together.

Another example can be found around the leading company in Denmark Novo Nordisk (A medico company producing insulin) that have been leading within transparency and stakeholder engagement. But now seems to be preoccupied with their own reporting and creating so-called ‘shared value’ rather than engaging in activities that really integrate social and environmental concerns in the business operations. There is no doubt that Novo Nordisk have fantastic reporting and does a lot to promote a sustainable agenda, but in my mind they have taken the ‘eye of the ball’ and forgot what really matters is what you do not what you say about it.

Actually was the former chair of Novo Nordisk quite critical of the current CSR climate when he said that “Danish companies are not global leader in corporate responsibility. If we look at the various indices, which rates companies according to their efforts on CSR issues – such as the Dow Jones Sustainability or Sustainable Asset Management (SAM) – so there is no index, where Denmark was leading. There are four, five Danish companies, which occasionally are high, but it does not justify to-call ourselves leaders. Denmark is an average performer, despite the fact that our self-understanding in this area is very high.”

While the indexes should not be seen as a measurement in it self I think he is quite right when he points to the Danish self-understanding as being ethical and socially conscious.

So when Ingrid Schullström CSR manger for H&M in Sweden claims that “I think we are traditionally very Scandinavian in being fairly modest that we’d rather do things first and talk about it later”.

She says that while H&M has been active in this area for as long as 12 years, she feels customers do not “know enough about what we actually are and have been doing”, and identifies the communication of its CSR activities as “an area where we should maybe improve” she is actually kicking in a open door. CSR activities in Scandinavia have become a Communicative exercise rather than an activity that companies and organisations engage in for reasons of ethics and morals.

When I from time to time meet business leaders and professionals, and talk about there company they often refer to themselves as the ‘good girl in the class’. Implying that there specific company is better than the average and that they have a clean record on social, governance and environmental issues. But when I ask how they know this it is often because they have not bothered to ask some very straight forward questions about their own performance and not least the impact of their operations. When I for example ask about corruption they often refer to the Scandinavian way of thinking as being free from the idea of corruption. The just by being from this part of the world make the company somehow free from dishonesty, fraud and bribery like some kind of force field. Even when confronted with overwhelming evidence to the contrary we seem unable to change this worldview. In relation with the food-for-oil program scandal in Iraq they’re where several Scandinavian companies involved including Novo Nordisk who was heavily fined we do not change our self-perception.

They will rather boost their communication with half-truths and semi-investigated activities than really actively engage in social responsible activities. And when we invite for seminars, talking about The Scandinavian CSR model, we pat each other on the shoulder about how good we are and how stupid everyone else is acting when they do see us as the center of the universe.

So lets challenge our-self and the image we have created and start dealing with the real issues that we have in front of us and not dwell in what we ones were really good at, creating real sustained social change.

Effective communication in a world of imperfect systems

So what is the difference between systems and communication? Well, the problem with systems is that they are unable to predict or function in situations where the organization is faced with a situation it does not know about. For most people it is hard to understand why BP could let a simple pressure valve determine the future image of the corporation. When one look at the situation that BP was faced with it was not the failure of the system that was the problem but it was the inability to understand the communicative risk that was involved.

BP or Transocean as the drilling company is called, knew from the systems that when they decided to cut costs and not maintain this simple safety feature that there was a certain chance that if a accident would happened they would be unable to shut down the flow of oil. Because Transocean did not understand the communicative aspect of such an incident happening there cost-benefit analysis did not take into account that the risk was not only to the rig and surrounding environment, but also to the reputation and image of themselves and their biggest client BP. This failure of comprehension was the biggest mistake that the company made when they decided to rely on only there systems to give information about the processes.

To me it is the combination systems and effective organizational communication that will enable companies to identify and counter future events. The systems will tell you what you already know while organizational communication collects new knowledge and ensures that it is effectively spread to the people who needs to know and can act. Of cause this requires the right type of managers and leaders but I’m convinced that leaders who are unable to work and comprehend these two aspects will cease to exist thorough a Darwinian process that have been in progress for the past ten years and that will continue for the next ten to come.