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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Can you ever have too much information – Lessons learned from the world of Business Intelligence

Business intelI was inspired by the headline Is GRI Too much transparency for NGOs? Which was posted on prizmablog.com and it made me think about how information is managed and how far we are from learning from each other’s mistakes in both the business and NGO/CSO world.

When I started in the field of business intelligence in the late 90’ties information of God, or at least we had a religious belief around information. All we wanted was to get as much information as possible little did we know that information would eventually make us inefficient and create weak decision-making systems.

In the transport industry was one of the main problems to know were stuff were? We transported ‘stuff’ all around the world with multiple stops along the way. When we wanted to know were ‘stuff’ were we needed to one see if it arrived at the destination or two pick up the phone and start asking around.

In one instance I had a package going from Vietnam to Copenhagen and it was lost and had not arrived on time. So I used a day calling the different stations along the supply chain all the way from Copenhagen to the different logistics hubs along the way all the way to south East Asia. In the end I got a hold of somebody in the Hanoi office and she might be able to help me out, but not until the day after because they only had power two hours a day so that she could use the computer. The next day I finally found my package in Belgium, but that is a different story.

The point is that we needed easy access to information and we needed it now. We had screaming clients in one end, and massive waste of man-hours in another and the solution was apparent to as all, we desperately wanted to know what was going on. The company was loosing both money and clients and at an alarming rate. To our benefit could be said that all our competitors was just as bad us so it was a level playing field.

So we started an information gathering project. All our packages had a barcode on them and that would form the backbone of our tracking service. All employees that handled packages were issued with a system for scanning and creating digital reference points. All in all, we figured that one package that were either shipped or received from outside Europe would receive somewhere between 30 and 50 checkpoints, as we called these reference points, along the way.  In 1998 we hit the implement bottom and in a matter of days we were overloaded with information, which we knew we needed but we had no system for handling.

Basically we became hugely inefficient and the system was extremely expensive to implement and we were unable to determine if we were taking right or wrong decisions. Just imaging the cost of scanners and computers that was needed to get all the equipment installed around the world, not to mention the man-hours. On top of that we had of cause a need to upgrade the electricity supply in Vietnam, so that they could transmit and retrieve data.

Later one we found out what to do and had training and systems in place for handling the incoming data but the starting point was nothing less than a disaster.

What NGO should learn from Business Intelligence  

So when one asks if the NGOs are able to handle the information they themselves have been asking for, my hypostasis would be that it’s a big NO. At least we had the benefit if knowing the business and its inner clockwork of the organization. The NGOs have no such perspective and the chance of miss interpreting data and making huge mistake are ever present.

What is needed it in my mind effective communication/information management. The transport business of 2011 is much more advanced than it was when I started and in the end left. The track and trace systems of today are much more intuitive and ‘Google’ inspired which really creates value for customers and transportation companies alike. The NGO or other organizations interested in transparency have no such system for handling data and have no experience. When I left the company some six years ago it was producing well over 10’000´000 checkpoints every day around the world at tens of thousands of locations.

How in the world would a NGO be able to handle just 1% or even less of that information? The GRI provides some individual 129 headlines, which in some way tell something about the company from economic data to its status on environmental impact and Human Rights. In a normal GRI report one would properly have somewhere between 500 and 3000 checkpoints. There is no way in my mind that NGO will be able to effectively use this data for anything than individual company analysis and spot checks without an effective information management system and training in how to use it.

So my small piece of advice is to think before you hit the implement bottom and get overwhelmed with information that you have no chance in the world to manage anyhow. Instead one should sit down and find out what information is needed, how we are going to handle it and what are we going to use it for. From there the NGO or other interested organization can systematically create databases of corporate GRI report data that is actually useful.