The Rise of CSR Reporting
Only a few years ago, Corporate Social Responsibility (CSR) reporting was regarded as a niche activity that was only practiced by a few companies in select sectors. Now it is a mainstream business focus across all sectors of industries, spanning companies of all sizes.
According to research presented at the 7th Annual CR Reporting and Communications Summit in London, the overall number of CSR reports continues to increase rapidly year by year. In 2012 more than 6,600 reports were published with 42 percent of them following the Global Reporting Initiative (GRI) framework, making it the most widely used global CSR reporting framework.1
When companies first started to publish non-financial reports over 20 years ago, the reports focused on environmental (emissions, discharges, waste management) and health & safety (injuries and fatalities). During the mid-to-late nineties, the concept of CSR gained ground and became part of the reporting palette.
Today, more companies include CSR information in annual reports, integrated reports, and dedicated websites, rather than exclusively in stand-alone CSR reports. CSR reporting has developed organically, adding layers of issues to reflect the expectations of a company’s stakeholders and, more widely, of society. Reports engage with topics such as supply chains, gender issues, ethics, and human rights, in addition to the original environmental issues that continue to form the core of reporting.
The "more is better" approach has led many companies to focus on checking the boxes for each reported indicator to raise the application level of their report by maximizing the number of GRI indicators reported rather than focusing on what's important to the company. This has led to voluminous reports, but with less focus on what is material. The emphasis in the new G4 iteration of the GRI framework is now on materiality—the key, relevant issues. The first substantial numbers of G4 reports are expected in 2014.
What’s driving the rise in CSR reporting? The participation of socially responsible and mainstream institutional investors in the CR Reporting and Communications Summit shows that CSR is seen as a new approach to assess the vitality of companies. CSR is becoming increasingly relevant for the in-depth evaluation of investment and development opportunities.
This is of paramount importance because investors faced with the uncertain evolution of the global financial crisis are now looking to evaluate not only the short-term financial performance of companies, but also their real viability. Investors are looking for their ability to grow in the context of new challenges and manage new risks generated by a fast-changing world.2
Around the globe, companies are beginning to sense the new reporting paradigm. Companies, especially those publicly listed, are increasingly reporting their CSR performance to investors, customers, rating agencies, regulatory bodies, employees, suppliers, and NGOs in order to illustrate their viability. This is often done by showing how they are lowering costs, managing risk, and developing new business opportunities.
CSR reporting has presented some companies with substantial business opportunities. For example, General Electric’s Ecomagination line of products brought the company $21 billion USD in sales in 2011.3 Proctor & Gamble reports that from 2007–2012 the Sustainable Innovation products earned $50 billion USD in revenue.4
It is clear that the expectations of both customers and investors are evolving. Regardless of whether the company operates in developed or emerging markets, CSR reporting is becoming a business imperative.
1Scott, P. "CRPerspectives 2013: Global Corporate Responsibility Trends and Stakeholder Views." Corporate Register. (2013.) Retrieved from http://www.corporateregister.com/search/report.cgi?num=58958-QdDeF/JivVo
2"Pilot Programme Year Book: Business and Investors explore the sustainability perspective of Integrated Reporting." (2013.) The International Integrated Reporting Counsel. Retrieved from http://integratedreporting.org/wp-content/uploads/2013/11/IIRC-PP-Yearbo...
3"Progress: Ecomagination Report 2011" (2011.) General Electric. Retrieved from http://www.ecomagination.com/2011-progress-report-preview
4"P&G 2012 Sustainability Overview" (2012.) Proctor & Gamble. Retrieved from www.pg.com/en_US/downloads/sustainability/reports/PG_2012_Sustainability...