Framework fatigue

Holly Bryant at consultancy Environ UK analyses the AA1000 framework.

Over recent years organisations have faced increasing pressure from many different stakeholders to demonstrate their corporate accountability. In response to these pressures, in 1999 the Institute of Social and Ethical Accountability (ISEA) launched the AA1000 Framework, a voluntary framework for global and corporate accounting.

Many forward-looking businesses and organisations endorse these standards and commit to conducting their business in accordance with the standard's principles. An international professional body founded in the UK in 1996, ISEA (otherwise known as AccountAbility) is committed to strengthening social responsibility and ethical behaviour within all business communities.

In establishing the AA1000 framework, ISEA is taking the lead in this field, underpinning the principles of corporate accountability. AA1000 was designed to improve the accountability and sustainability performance of businesses and non-profit organisations by promoting best practice.

The framework provides a standard against which companies can measure both their ethical behaviour and their reporting. It outlines how to design and manage an organisations social and ethical accounting, auditing and reporting processes. AA1000 is the first of its kind, since no prior established process has existed previously for ethical accounting and demonstrating best business practices.

The three foundations of accountability (as set out by AA1000) are transparency, responsiveness and compliance:

  • Transparency concerns the duty to account to those with a legitimate interest - the organisation's stakeholders.
  • Responsiveness concerns the responsibility of the organisation for its acts and omissions, including the processes of decision-making and the results of these decisions. Responsiveness entails a responsibility to develop the organisation's processes and targets to support the continuous improvement of its performance.
  • Compliance concerns the duty to comply with agreed standards regarding both organisational policies and practices, and the reporting of policies and performance.
  • Developing the framework

    In developing the framework, ISEA took the decision not to position AA1000 as a rigid, certifiable, compliance-based standard, but as a set of key principles that should stimulate innovation. As a process rather than a performance standard, AA1000 specifies the processes that an organisation should follow to account for its performance, not the ultimate levels of performance the organisation should achieve. However the appetite of an organisation to improve, not just to comply, is critical to ensuring the success of the framework.

    Within AA1000 the process of social and ethical accounting, auditing and reporting is included within the process model, which sets out the five distinct stages of:

  • Planning;
  • Accounting;
  • Auditing and reporting;
  • Embedding; and
  • Stakeholder engagement.
  • Beyond the development of the initial framework, a consultation process between stakeholders and organisations piloting AA1000, the ISEA developed the AA1000 Series (AA1000S) to assist in implementation and measurement. The AA1000 Series builds on the AA1000 Framework, adding a series of specialised modules and placing organisational learning and a trend towards change at the heart of the process. AA1000S adds detailed guidance modules upon which to build effective stakeholder engagement and social, ethical and environmental accountability systems, to the core AA1000 process. Organisations adopting any part of the AA1000 Series commit themselves to the practice of 'inclusivity' as follows:

  • The organisation will commit to identifying and understanding its social, environmental and economic performance and impacts, and stakeholder views;
  • The organisation will consider and coherently respond to stakeholder needs in its policies and practices; and
  • The organisation will commit to provide an account to its stakeholders for its decisions, actions and impacts.
  • Launching the international standard

    In March 2003 ISEA launched the first international assurance standard (AA1000 AS) to cover the full range of an organisations reporting and performance. The standard incorporates the principles that define a robust and credible assurance process, the essential elements of a public assurance statement, and the independence, impartiality and competency requirements for assurance providers.

    It addresses the need for a single approach that effectively deals with the qualitative as well as quantitative data that makes up sustainability performance as well as the systems that underpin the data and performance. The assurance standard can be used for stand alone assurance, or linked to the AA1000 series and framework.

    Under AA1000AS an assessor is expected to consider an organisation's performance against sustainable development commitments, policies, and strategies as well as stakeholder expectations and behaviour using three core principles of assurance (materiality, completeness, and responsiveness). These principals provide the framework within which an assurer can assess the report and related sustainability management processes:

  • Materiality requires indicating how one defines which stakeholder issues are material to a business - for example, compliance with law, industry codes, internal policy, or stakeholder expectations. These elements may vary across organisations' end-markets according to regulatory, cultural, or geographical contexts;
  • Competitiveness involves indicating how one understands and measures performance, impacts, and stakeholder views relating to identified material issues. This includes performance relating to organisational activities, products, services, sites, subsidiaries etc; and
  • Responsiveness requires indicating how one responds to material stakeholder concerns and interests in a timely fashion, and how sufficient resources are allocated to implement related policies, commitments etc.
  • Corporate accountability

    The AA1000 Framework is now playing a key role in corporate accountability and is influential among many leading businesses, non-profit organisations and public bodies. It can provide structure to many tangible improvements and benefits to businesses, including the development of enhanced stakeholder engagement, good practices and responsible management techniques. Further less obvious benefits resulting from improving the business accountability may include significant changes to the reputation of the business.

    By including social and ethical issues in an organisations strategic management and operations, the framework has effectively formed the basis for stakeholder discussions and reporting. This is helping organisations integrate their stakeholder engagement processes into daily activities in a systematic manner that generates value added indicators, targets and reporting systems.

    In a recent review of sustainability reports conducted by UNEP, all six of the top organisations used the AA1000AS as a basis for their external assurance. In addition, of the 18 reports shortlisted for the UK's ACCA awards 2004, 13 used the AA1000AS as a basis for their external audits, including six of the eight winners. AA1000AS is being increasingly acknowledged as key to underpinning the design of sustainability related performance management systems and is being used by a rapidly growing number of global corporations, directly through its application by risk management functions or indirectly through international auditors to inform external assurance processes.

    Standard verification

    The BT Group had its social and environmental report verified against AA1000AS. This is the first such verification of a non-financial report against AA1000AS in the telecommunications industry. Other organisations operating with the principles of AA1000 include British Airways, CIS, CEMIG, Ford Motor Co, Southern Sun Group and Van City.

    AA1000 is designed to complement other frameworks such as the Global Reporting Initiative and SA8000, each of which provide tools to help organisations manage, measure and communicate overall sustainability performance.

    AA10000 and GRI are mutually supportive, where AA1000 provides a rigorous process of stakeholder engagement in support of sustainable development, and GRI provides globally applicable guidelines for reporting on sustainable development that stresses stakeholder engagement in both its development and content. Since its release, AA1000 Framework has provided an important model, against which international organisations can structure their corporate accountability. Recent figures have indicated that the total use and reference of AA1000 during 2004 was 84 companies/organisations, the majority of which comprised major international corporations.

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