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CSR Reporting faces its next challenge
There is some discussion that a number of the people in the leading
companies - the pioneers, the CSR enthusiasts, the committed - are
getting pretty fed up of being on the hamster wheel of churning out
annual CSR reports. They spend most of their time collecting data, and
not coming up with new ways to improve business practice. Revolt is in
the air.
Not that there is due to be an out and out assault on the
principle of performance measurement and disclosure. But the current
form of CSR reporting is simply not proving its value. It needs to
evolve and fast to show that it can meet real needs.
As it stands, vast amounts of money and time go into reports and it is known only too well by the people carrying out this investment that the stakeholders at whom the reports are aimed largely don't read them. Sooner or later, businesses begin to question a process where the standard rules of communication are routinely ignored, and the business value is slight. It is easy to say that no-one will be spending half a million dollars on reports that no-one reads in ten or twenty years time. It is harder to work out what will happen in the next three years.
On the one hand, there is a growing interest amongst report writers to reach those elusive audiences. So the recent Centrica report, for instance, as well as being produced in conventional form, is having a separate edition produced for employees. It is based on the same information, but in much more of a 'magazine' format to make it more attractive to that audience. Different reporting channels for different key stakeholders is a very real possibility. Some of these may look nothing like reports at all - and it will be interesting to see how fast the CSR industry, which has certain expectations of its reports, will recognised and reward such approaches.
On the other hand, there are moves to try to standardise the information that reports carry to make them easier to interpret. The Global Reporting Initiative, for instance, is now heavily into its '3rd Generation' development for its guidelines, aiming to produce something that shows real value.
I have been one of the people critical of the GRI framework in the past. As it currently stands, it has been a struggle to explain why a report produced against the existing framework provides information that could communicate to the board why their company is committed to sustainability or social responsibility. A performance framework must be just that - the current draft with its one third of questions focusing on the existence of policies - falls well short in terms of quality of impact measurement.
But its mere existence encourages legislators to lean on it. The South African Stock Exchange (JSE) requires companies to report against it. When campaign groups lobbied for compulsory reporting in the UK, the answer to the question "report against what?" was the GRI - more because it was there and a convenient answer than because it was the right answer.
This will mostly be good, healthy stuff if there is a common framework that genuinely captures the core of what companies should be disclosing on social responsibility - telling a real story to the financial community, to employees and to customers. If, however, the framework is misconceived, then it will potentially do a lot of damage. I applaud, and have high hopes for, the revision of the GRI framework currently going on. This really is the last chance in some ways. If it can't be gotten right now, with the accumulated experience of reporting that has grown up in recent years, then it should probably be dropped as being an impossible task. Obviously, it would be better if it succeeds.
Of course, part of the problem is that we have unrealistic expectations of what these reports can tell us. After all, the financial reports of the company give us something which is much more concrete. Figures are figures and, properly gathered and represented, they don't lie. And yet we are quite used to the fact that we expect a number of financial analyst experts who know the industry context, have an assessment of the quality and track record of the leadership, and bring these into an interpretation of what the figures are actually telling us. Why do we imagine that CSR reports, which deal with much more intangible matters, should be self-evident and not at all requiring interpretation or context setting? Who currently provides such interpretation? Nobody. It is a rare event when the content of a CSR report makes it into the news sections as an indication of how a company is doing.
As a result, we get reports with lots of photos of smiling children which try simultaneously to present data and to tell stories. The company becomes its own interpreter - and that is why so much of the focus on reporting remains on the quality of the report, rather than on what the report is actually telling us.
There needs to be a revolution in reporting. Reports needs to be clear about their target audiences, and to select information that is relevant to that audience. They need to be used to drive performance improvement, and therefore to streamline the actual process of gathering data.
And we desperately need an informed, critical group of interpreters to give us the real story behind the reports. Only then will the money spent of them really begin to provide the value that it should.
An Article from Business Respect, Issue
Number 85, dated 29 Jul 2005
By Mallen Baker