24 August 2006, News release from Environmental Resources Management Ltd (ERM)
Corporate Social Responsibility (CSR) and reporting is still very much an emerging field and an exciting one to be involved in helping to shape.
Article by James Stacey. James is a Partner with ERM's Corporate Risk Team.
Tel: +44 207 291 0578
At the heart of ERM's approach to CSR and reporting is an understanding of how non-financial issues such as environment, social, health and safety can be drivers of business performance and value.
When CSR reporting first appeared less than 10 years ago, it was for the most part a public relations exercise, and at times criticised as 'green wash'. More recently we have started to see the leaders in CSR shift away from this tactical defence of brand, towards incorporating CSR as an integrated part of their strategy for brand differentiation and competitive positioning.
The level to which CSR is embedded in the strategic planning of an organisation varies enormously between companies. Presently there is a significant divergence of objectives, strategies, implementation programmes and quality of public disclosure. CSR reporting and the associated assurance programme can tell us a lot about how high CSR features on an organisation's strategic priorities.
For example, the first generation of non-financial assurance generally focussed on data verification - important in assisting a company to strengthen the quality of non-financial reporting systems, but contributing relatively little to actual non-financial performance improvement or more strategic CSR objectives, such as brand differentiation. More recently, companies who are seeing the most value from their assurance programme are those who use it to challenge and improve management controls and implementation; the strategic thinking about which issues to prioritise and performance indicators to use; and crucially the underlying performance which is key to delivering the business benefit.
Informed employees understand when a company is genuinely attempting to tackle issues that matter. NGOs more readily engage with organisations which are driving performance improvement and which recognise the business benefits of doing so. Customers and the media are better equipped to distinguish 'green wash' from serious commitment. As a result , reports are becoming more focussed, contain increasing evidence of underlying performance, and more clearly articulate the relevance of CSR to commercial success.
Assurance limited to the verification of KPIs has limited impact upon the confidence and trust of employees, NGOs, customers, media and other stakeholders, because it is performance rather than accuracy that they are most interested in. Value adding assurance programmes test and challenge the underlying non-financial performance, and through behavioural assessment, management process review and technical analysis can become a support which helps to maintain the momentum for ongoing performance improvement.
For further information please email Environmental Resources Management Ltd (ERM)