Measuring your responsibilities

More companies today are reporting on social, ethical and environmental issues around the world. According to the University of Amsterdam and the professionals of KPMGs Global Sustainability Services, corporate responsibility (CR) reporting has been steadily rising since 1993, and has increased substantially in the past three years. In 2005, 52% of the top 250 companies of the Fortune 500 and 33% of its top 100 companies issued separate CR reports, compared with 45% and 23%, respectively, in 2002.

In its survey on sustainability reporting, KPMG found that some sectors are more likely to report than others. Extractive industries and utility industries scored highly in terms of measuring and reporting, which I suspect is because of the high level of scrutiny they receive from nongovernmental organizations and the intrinsic impact they have on the communities in which they operate.

In February 2005, the Global Report Initiative (GRI) and the International Council for Mining and Metals (ICMM) released the pilot version of the Mining and Metals Sector Supplement. There was an ongoing debate about CR issues during 2005, but also a lot of complaints among companies and their stakeholders about the number of guidelines.

“One of the problems we have with guidelines is not always with the content of those guidelines, or with the ideas behind them, but with the implementation and the loopholes it provides,” said Bas Zwiers at the Netherlands Institute for Southern Africa (NIZA). “For instance the usage of the OECD guidelines for multinational enterprises. These guidelines only deal with full ownership relations, yet in practice you will often find other structures between head office and business units on the ground. Others deal only with policies and reporting, yet a perfect policy within a company doesn’t always result in perfect practice. The same goes for reporting. Some of the companies with the best social reports are the ones that still haven’t a good impact on the ground.”

In addition, some managers claim they are faced with information overload of social, environmental and economic issues, yet only a number of items are actually put to use. Addressing a balance of issues tends to please all sides rather than focus on what should be the most important purpose of all.

Why should companies bother to measure and report? In the first instance, because the marketplace makes reporting mandatory due to public legislation or specific legal requirements or stock exchange policies. On a closer look, companies will increasingly face a number of requirements from different stakeholders such as journalists, specialists or agencies.

What should be measured and reported is different for every single company depending on its sector, activity, geographical situation, legal legislation and the requirements in each country where it works. In order to improve social balance, it is important to consider the following questions.

1. What is the objective of the report? Is the purpose to provide internal data for the company’s development? What is the target audience? How can feedback be provided and then generate useful information to the company?

2. What kind of indicators should be used? Should a formal framework be included, such as the Global Reporting Initiative, or should the company follow the process outlined in the social accountability 8000 standard or in the accountability 1000 (AA1000) standard? Is it alright to create a mixed model? Will a separate report be published or should a social balance be an integral part of the report?

3. What assurance and verification procedures need to be presented? Is it necessary to provide external input for full or partial external verification? What are the pros and cons of external verification?

Finally, be honest in your reports. Mistakes of non-compliance and poor practice will be less compromising in most countries if the company is seen to be honest and genuinely concerned about its failings, rather than trying to hide them and carry on “business as usual”.

Jaquelina Jimena is a business journalist and advisor on corporate social responsibility (CSR) issues, based in Mendosa, Argentina. She can be reached at [email protected]