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Corporate Social Reporting and Sustainability in the Modern Business Environment

RemonAs society and businesses become more aware of their impact on people and the environment, organisations have been striving to boost their Corporate Social Reporting (CSR) credentials.

Over the past two decades, we have seen greater emphasis on measurement and reporting, to give tangibility to good intentions. The term ‘Sustainability’ and CSR has become a familiar phrase and an indispensable element of any publicly listed company’s annual report. More organisations, especially in the business services and consumer industry are investing and implementing CSR reporting as part of their reporting framework. Although CSR Reporting can incorporate a wide range of topics, the goal is to demonstrate an organisation’s intention to demonstrate its contribution to human kind and the planet.

But what does sustainability really entail and what does it mean in the context of the modern business environment? If you ask most employees of an organisation to answer that question, you’re most likely to get a vague or ambiguous answer.

In 1987, The Brundtland Commission of the United Nation defined sustainability as, ‘meeting the needs of the present without compromising the ability of future generations to meet their own needs’.

More recently, sustainability’s meaning has evolved to encompass environmental, social and economic demands – known as the “three pillars” or the “triple bottom line” of sustainability. An ideal plan for sustainability would benefit the environment; improve the lives of humans, and make money simultaneously for the organisation, illustrated by the diagram below.

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CSR reporting aims to capture and highlight these three pillars, different from traditional forms of reporting, which are centred on financial and economic results and outcomes. As such, you can define sustainability in the context of the modern business environment as:

“The ability to produce a service or product which can be maintained at a certain rate, whilst avoiding the depletion of natural resources, treating society in an ethical manner and reporting financial statements which reflect a true and accurate view of the organisation”.

As mentioned earlier, the purpose of the CSR report is to demonstrate an organisation’s contribution to society. But more specifically:

• To outline its extended Responsibility to wider society encompassing the environment and its citizens

• To be Accountable for the impact it has on its employees, supply chain, customers and the environment

• To demonstrate Transparency, with a clear Sustainability Policy

• To Communicate to stakeholders; Employees, Suppliers, Customers and Shareholders said Policies

And as with any respectable report, the attributes remain the same. The CSR report should be:

• Timely and Regular, at least once a year in line with the company’s Annual report

• Relevant, underpinning the company’s existing CSR policies keeping with the sector

• Accurate, using actual quantifiable metrics, which can be evidenced as oppose to generic statements

Unfortunately, not all organisations are geared up to develop a strong sustainability policy and CSR reporting framework.
Organisations should seek to bolster their CSR capabilities by up-skilling existing resources and recruiting subject matter exports to enable correct adoption. Alternatively, organisations could partner with the right sustainability Partner to enhance the organisation’s sustainability offering, such as an NGO or sustainability consultancy such as The Sector Inc.

The dilemma faced by organisations is how to strike a balance between generating profit for shareholders and investors, whilst contributing to the well-being of society in the form of job creation, fair treatment of employees’ and avoidance of aggressive tax avoidance schemes. However, the benefits of adopting good CSR standards and policy include; greater regulatory compliance, competitive differentiation and management of shareholder and consumer expectation. Overtime, this leads to enhanced trust, increased loyalty and therefore stronger bottom line.

 

Remon Fahim, Principal, The Sector UK