The Corporate
Sustainability Report:
Growing fast
What it is, what it’s not
You’ve already heard of it, of course—the Corporate Sustainability Report (CSR). Although you may know it by a different name: Responsibility Report, Environmental and Social Report, GRI Report, Citizen Report, Good Governance Report, Report to Society. A lot of different terms are used.
As the abundance of names might suggest, the CSR is an increasingly popular communications platform for companies of all kinds. Because the information it communicates is increasingly in demand. Specifically, the CSR shares data on not only a company’s financial goals, but its social, philanthropic, and environmental goals, too.
This kind of information is so much in demand, in fact, that another term has been coined to describe what’s being reported: “the triple bottom line,” or 3BL. What 3BL is meant to convey is an expanded spectrum of criteria for measuring organizational success: economic, ecological, and social. Or, in more marketing-centric terms, “people, planet, and profit.”
And 3BL is growing fast. It has become the dominant approach to public sector full-cost accounting, since the ratification in 2007 of the 3BL standard for urban and community accounting put forward by the United Nations and the International Council for Local Environmental Initiatives. In the private sector, a commitment to some form of 3BL reporting generally goes hand in hand with a commitment to corporate social responsibility.
Clearly, the CSR is not a traditional Annual Report. Nor is it merely a supplement to the Annual Report. Instead, the CSR is the next natural step in corporate communications beyond the Annual Report, capturing information critical for today’s changing world.
Why it’s the next big thing
In a survey conducted by the Journal of Accountancy, 90% of respondent investors, portfolio managers, and securities analysts said that annual reports should go beyond financial and shareholder issues to include subjects such as environmental sustainability and corporate governance.
Covering this additional ground is precisely what the CSR is designed to do. As opposed to the Annual Report, which provides the financial information that the SEC requires be reported, the CSR is a self-initiated document that reports on social and environmental priorities and sets benchmarks for reaching sustainability goals.
Some other reasons for the CSR’s growing popularity:
- According to a survey conducted by SustainAbility and KPMG, 90% of those who read CSRs are highly influenced by them in their view of the company.
- The CSR declares the company’s commitment to environmental and social responsibility.
- Producing a CSR promotes sound environmental management and eco initiatives.
- The availability of a CSR helps recruit potential employees with similar values.
- The CSR tracks progress on sustainability initiatives, while also serving as a platform for announcing new initiatives and creating new benchmarks.
How it’s done
Many producers of CSRs use a framework of metrics created by the Global Reporting Initiative™ (GRI), a nonprofit, network-based organization whose core goals include the mainstreaming of disclosure on environmental, social, and governance performance. In 2008, more than 1,000 organizations issued CSRs based on the GRI G3 Guidelines, up 46% over 2007.
So what kind of metrics and information does the GRI recommend? A wide range—everything from reporting on efforts to minimize pollution and contain carbon emissions, protect natural resources, and improve working conditions to descriptions of how the company supports philanthropic causes and inspires people—both inside and outside the organization—to improve the world.
In particular, best practices suggest that the CSR include:
- A letter from the CEO or President, showing top-level support.
- A list of sustainability goals and plans on how those goals will be reached and measured.
- Accomplishments and areas that need work, presented with easy-to-read charts, graphs, etc.
- Testimonials, news clips, and personal stories that illustrate how real people benefit from the company’s sustainability efforts.
- A glossary of terms.
- An index of allied sustainability organizations for more information.
And in general, the CSR should demonstrate:
- Evidence of innovative thinking.
- Transparency, accuracy, and candor—no “greenwashing” (a term for the practice of merely posing as an eco-friendly organization without the proof to back it up).
- Frequent publication/updating of metrics online to reinforce accountability.
How it’s shared, and how often
How often should you generate a CSR? At least once a year, according to 70% of CSR readers who responded to a recent survey by the GRI. Many readers think that even more frequent reports are preferable, especially when a relevant issue appears. Regardless of the exact frequency, the key is to update regularly, and to have that information available online—86% of companies on the U.S. Standard & Poor’s 100 Index have corporate sustainability websites.
What about a printed version? As with Annual Reports, it depends on a number of factors—audience size, frequency of updating, budgetary constraints—but there is a good argument for going beyond online distribution. In a recent issue of Graphic Design USA, top ten design firms discuss the possibility that corporate communications might be on the verge of an evolutionary transformation making printed CSRs and Annual Reports more relevant than ever, despite the trend toward all-digital distribution. In this new age, an age of broadened messaging and accountability, an actual printed-on-paper report returns to prominence, because “online reports may be cheaper, but printed pieces imply greater credibility,” according to Lynda Decker of Decker Design. Echoing this sentiment, Darren Namaye of Ideas On Purpose recognizes that the internet is a critical tool as companies seek to report annually on topics that now range from responsibility to strategy to talent development to innovation, but he believes that the printed component will not disappear. He says that “companies who see the document as an investment in marketing/corporate communications will continue to print.”
Why it isn’t part of the Annual Report
Given that the CSR covers information that many would like to see included in Annual Reports, the question naturally arises: why not simply fold sustainability data into the Annual Report? Some companies take this approach, but others think that a separate CSR is essential in that it allows for fuller content and context. As Hamlin Metzger, Senior Manager of Corporate Responsibility at Best Buy, says: “Among some stakeholders there is support to see some sort of social and environmental component to an Annual Report, but I’m not convinced that it will be comprehensive enough to eliminate the need for a separate CSR report.“
How to get started—and when
Contacting Big Creative Studio is the perfect way to begin your CSR process, of course—as corporate communications and investor relations experts with more than forty years in the business, we’re ideally positioned to help you with this next natural step beyond the Annual Report.
As for when…well, the use of CSRs is growing by leaps and bounds. In 1999, there were eleven U.S. organizations on the GRI reports list; in 2004, there were 288; by 2009, there were 455. Investors, analysts, employees, the public at large—your company’s many audiences are increasingly demanding information beyond what typical investor relations and corporate communications provide. There is no better time than now to start telling your story.
(Information for this white paper was drawn from Wasau Paper’s “The Art of Sustainability Reporting.”)