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

Related articles

• Scandinavian work on CSR is reduced to how well you present your sustainability report (sriportfolio.wordpress.com)
• Integrating or delegating the CSR effort what should companies do? (sriportfolio.wordpress.com)
• Uses of Social media in CSR communication (sriportfolio.wordpress.com)
• Lessons learned from legislation on CSR (sriportfolio.wordpress.com)
• Dynamic CSR Reporting the future of stakeholder engagement – Introducing the CSR Sustainability Index (sriportfolio.wordpress.com)
• Northern Trust using CSR reporting for competitive edge (businessinsider.com)

Capitalism and CSR

I just read an interesting paper by Wayne Visser. He criticizes what he believes is the failure of CSR, or what he names as CSR 1.0 as it current is being practiced. He makes the comparison between CSR and the developments within the internet moving from Web 1.0 to Web 2.0. He believes that there should be five guiding principles for a new form of CSR namely: Creativity (Sustainable Business innovation), Scalability (The ability to transfer individual experience into a systematic approach), Responsiveness (meeting the needs of the community), Glocality (a rewrite of being global but acting local) and Circularity (A cradle to cradle approach)  

His article looks into some of the key areas of CSR and comes up with a DNA model for responsible business. His key point is that companies of the future that practices CSR, or CSR 2.0 as he put it, will have to include four basic “codes” into all aspects of their business. These building blocks are Value Creation, Good Governance, Societal Contribution and Environmental Integrity.

I must admit I like the approach that Visser present. Especially one point, which he includes and I think that many CSR professionals tend to miss in their argumentation, is that companies have to make a profit in order to be able to contribute the society. While Visser thinks that “our modern capitalist system is faulty at its core” and points out that it is basically a limitless system dedicated to endless consumption of our global resources. He argues that Adam Smith and his “invisible hand” were wrong and that the resource consumption of capitalism should somehow be controlled. His basic argument is that nothing lasts forever and if business continues to exploit the resources of the earth we will all suffer.

As a firm believer in both CSR and in Capitalism (faulty as they both seem to be) I have to say a few words on behalf of our current economic system.

First, capitalism is not the perfect system assuming that one’s goal is that we should have a perfect harmonious world. Actually it has disharmony as one of its central points as markets strive in the vortex between demand from those who want and the ability of business to produce in order to meet that want.

When business operates it will always try to produce at the lowest cost possible at the right quality in a timely manner. This is because we as consumers wants to buy quality at the cheapest price available and that the owners wants as much out of their investment as possible. In a globalised world we are able to produce our products in one end of the world and sell on the local market in another, at a fraction of the price it would take produce the same thing locally.

In theory all should be happy, we as consumers (because we can afford the product), workers in the developing world (because they have jobs), Society (because we all pay tax and contribute to local community) and the environment (as we disperse a possible impact).

However, we are not as happy as we could be. Because consumers lose their jobs when their place of work is moved, as the working conditions in the developing world is far from what we have come to expect, as corruption and tax schemes tend to eat up all the potential benefits that having big business do investments should come with and because there is no effective local government to enforce en environment standards. And of cause because there are evil people who are willing to make others suffer in-order to make a buck.

But as flawed as it might be it seems to be the only system that we as humans are able to make work.

Secondly, Because of these tensions in the capitalist system and the access to information that have become available through the web about the impact of global business we have invented CSR. Or rather business has invented CSR, as it is not a system that governments have promoted, actually quite to the contrary actually. Think of strategic philanthropy and how giving company products to schoolchildren. Think about the controversy this raised among the public. So, why should capitalist endorse CSR? Well they already do because they want what every business desire namely growth, prosperity and market share, and in order to do so they need to manage risk, reduces costs, be ethical, retain and attract employees, manage their stakeholder relationships, have a positive brand, innovate and learn, and not least understand their business even better than it does today.

In this context is CSR a tool that business can use to be ahead in the future. Visser claims that business thinks short term, but I do not think that this is necessarily true. What I do think is that shareholders (e.g. us, through pension funds, bank connections, unions etc.) think short term and “we” pressure companies to do the same.

Third, should we leave the market alone? No of cause not, we need to manage capitalism and we need to have some form of business control and transparency. There are plenty examples that evil and corrupt people can do real harm to the world. Just think of Enron, Lehman brothers, Arthur Andersen, etc. and one can easily se that no control is REALLY a bad thing. So systems of control need to be put in place so that the biggest impacts of global capitalism can be mediated. These systems are being formulated as hyper norms or institutionalized norms through organizations like the OECD, UN, EU etc. where politicians and professionals alike find out and not least learn how capitalism can be gently pushed in the right direction for all of us.

One last note for you to think about as one put more and more on the shoulders of companies around the world. We shouldn’t leave it to business to solve the problems that governments can’t seem to agree to solve themselves. COP 15 and for that matter COP16 showed that politicians are unable and to a large extend unwilling to solve the issues that we are all becoming victims of.