Best Practices in CSR Reporting
Posted on May 10, 2011
In the early days of Corporate Social Responsibility (CSR) reporting, most non-financial reports were either exclusively environmental in focus or dealt only with philanthropy. Today, however, CSR reports are seen increasingly as strategic documents that, when done well, offer a balanced, objective, reasonable and comprehensive assessment of a firm’s non-financial performance. In our work with clients, we see stakeholders watching with a new level of interest in this data – particularly the investment community. The challenge for CSR and sustainability executives is how to keep up with constantly evolving reporting expectations.
What should CSR reports include?
A company should report on the issues most material or important to its business success. For example, if the company’s operations are energy-intensive, what measures are they taking to operate more efficiently and ensure long-term access to affordable, clean energy sources?
The report should also include a description of the governance structure that is responsible for integrating CSR issues into the company’s operating model. It should concentrate on communicating specific social and environmental goals and initiatives; include measurements of success…and failure; and, a timeframe by which to achieve these commitments. The report should also include a frank discussion on the challenges a company faces to achieve their commitments.
Aligning a CSR report with Independent Frameworks
Aligning the information with independent reporting frameworks or standards increases the credibility of the report with important stakeholders. These frameworks can also be a powerful tool in helping to identify which data to report. Deciding which framework to adopt depends on your business type, stakeholder profile and objectives for reporting.
One of the most popular frameworks that we recommend to our clients is the Global Reporting Initiatives (GRI) Guidelines. Its mission is to make sustainability reporting standard practice by providing guidance and support to organizations. The reporting framework sets out the principles and performance indicators that organizations can use to measure and report their economic, environmental, and social performance.
Companies who have been reporting for a few years, or who wish to take their reporting to the next level, look to third parties to review and verify the data and collection processes in their report. This verification process not only indicates to stakeholders that the data is sound, but it also helps a company identify where they might need to strengthen their data collection and reporting. As investors begin to make decisions informed by this data, this step is increasingly important.
The Future of CSR Reporting
There is an emerging trend, now more in Europe and the UK than the U.S., towards integrating non-financial reporting with a company’s annual report. The upside of this is that it demonstrates top-level commitment to the subject of CSR and provides stakeholders with a complete picture of how the business is operating.
That said, there’s not a “one size fits all” approach to writing and publishing a CSR report. Each company has to weigh the amount of data to publish, the level of transparency it is comfortable sharing with stakeholders; and, the intended audience.