Taking it on
Rachel Jackson, ACCA head of social and environmental issues, gives the association's view on driving corporate social responsibility
The principles included in the government’s consultation document Taking It On, while welcome, may actually result in a loss of momentum on CSR issues because they do not incorporate targets or quantifiable measurements which will enable UK businesses and organisations to gauge their achievements or relative lack of progress.
Essentially, while we support any initiative to improve the accountability of sustainability reporting, accountability and social responsibility of the UK, ACCA is concerned that the consultation started from the false premise that the UK is already a society which has fully embraced sustainability.
Our own recent survey Toward Transparency, conducted with CorporateRegister.com, has shown that while the UK is one of the more productive countries in terms of CSR reports, reporting levels are still very low. Globally, we found that less than 2,000 standalone CSR reports are produced each year and that respective governments are doing little to encourage such reporting.
Given that complete and credible transparency and
accountability is a key driver behind sustainable development, the UK government should be leading by example to ensure that businesses report regularly and effectively against its sustainability impacts and risks.
The government has spent several years threatening that it would make it compulsory for businesses to produce social and environmental reports. This has so far failed to materialise. The prime minister’s 2001 challenge to the FTSE 350 to report also failed, mainly because there was neither follow-up nor any exposure of those companies which failed to report.
Some feel the government has again missed the chance through the company law review by ending up with a minor requirement in the new Operating and Financial Review requirements.
The consultation document says that the government wants the UK to be a leader in the field of CSR. The best way to achieve this is by leading by example. This means the government should incorporate the tenets of
sustainability into its own practices and make it an essential part of its own decision-making processes and policies.
Key constraints to purchasing
For example, sustainability considerations should be included as key constraints to purchasing decisions made by national and local government departments. This would lead to a situation where national government procurement policies require that any organisation which tenders to provide goods or services to government departments must include their sustainability report – or be omitted from the tendering process.
The consultation document discusses ten guiding principles, of which ACCA is generally in support. These have been designed to help policy and decision-making at all levels of government to move towards achieving sustainable development in practice.
organisations which breach these broad guidelines.
Ironing out inconsistencies
ACCA also welcomes the attempt to work together with the devolved administrations in Scotland, Northern Ireland and Wales and recommends the adoption of a harmonised approach. We do, however, invite the government to explain how it will achieve consensus between the administrations and how it plans to iron out any inconsistencies.
Equally as important are the issues such as the protection of the biodiversity of the environment and a measurement of global impacts and – as included in the Scottish Executive’s principles – conserving resources.
In addition we are supportive in general of the seven broad aims stipulated in the government proposal. However, it is important to stress the benefits (to the environment, the economy and to society) of acting early and ensuring the strategy is successful. The aims would also benefit from an explanation of how each could be achieved and what potential challenges may be. The long term implications if the strategy fails should also be expressed.
In the consultation, the government also addresses four priority areas which it has identified for the UK to focus on over the coming years, namely climate change; sustainable consumption, production and use of natural resources; environment and social justice and lastly assisting communities in helping themselves. While this is a good start, there are still a number of issues which need to be addressed.
The issues of waste production, biodiversity loss, energy use and reliance on fossil fuels should also be made top priorities for sustainable development policy.
More generally, the government has neglected to specify exactly when these priorities will be reviewed. Many
organisations would be greatly assisted in knowing the timescales for the review of these priorities, so that they can plan how to meet the requirements.
Another area that has been neglected in the report is the UK’s environmental impact overseas. The impact of overseas investment, the outsourcing of labour and the activities of suppliers all need to be considered – CSR issues are not limited by boundaries drawn on an atlas.
As part of the consultation, the government asks whether certain environmental issues should be tackled at a regional or local level. ACCA feels that it is more important to ensure that there is consistency across the board. To achieve that, we feel that that local performance is best monitored centrally. Consistency in approach and indicator selection is crucial across all administrations to enable an accurate measurement of national progress. Joined-up thinking and collaboration is required from all parties.
In addition, the current indicators (e.g. climate change, pollution levels) do not appear to be connected to other policy decisions and may be readily sacrificed to short term ends. The sustainable development indicators should be capable of regional and local disaggregation and international aggregation at the European and global levels. Not all growth is sustainable; new economic indicators should be developed which do not include inherently unsustainable activity just because it contributes to GDP. In addition extra indicators need to be developed to capture aspects of the structure of local economies which promote sustainability.
In addition, greater co-ordination across government and consistency of reported data is required in order to achieve this. National and local government should report on its own direct impacts, for example through reporting in accordance with Global Reporting Initiative guidelines. Report users should be able to compare the performance of government departments and be able to aggregate the data to calculate the overall impact and performance of government.
This must be a culture-wide exercise for it to be effective. The tenets of sustainable living must be made more prominent within educational curricula at all levels from primary to secondary education to appropriate parts of tertiary level studies. The government has already begun to identify which MBA courses have a sustainability aspect to the syllabus via its newly launched CSR Academy – this should be expanded to include all types of courses.
Similarly, in the interests of greater cohesion and consistency throughout the EU, government should actively support the development of coherent international strategies.
There has been much talk of the government’s ability to provide leadership in this area but so far there is little evidence of it having been provided. This has led to a failure to produce substantial change, which genuine leadership could bring. It is important to appreciate that transparency and reporting are integral to the achievement of sustainable development initiatives. Moreover, a clear distinction should be made between measuring sustainability impacts and taking action to alter them.
Learning from our failures over the last five years is important if we are to improve our contribution to sustainable development in the future.