Corporate
Social Responsibility (2)
Social Reporting
Contents:
•
Introduction
•
Important
Concepts
•
Questions
•
Other Papers in this Series
Introduction
Companies
across Europe are obliged to produce annual reports and annual accounts,
which have been verified by third party auditors, to ensure that
accurate information concerning the financial running of a business
is available to all those it may concern. However there is no widespread
legal obligation across Europe for companies to report on their
non-financial impacts. Where companies do produce a report on the
non-financial impacts of their business, this is called social reporting.
Given the increasing influence that business has over our daily
lives, a reassessment of what information citizens, consumers, employees
and NGOs have the right to access is necessary.
Example:
Nike v Kasky
In a case that will be heard by the American Supreme Court
in 2003, limits to freedom of speech on business’ communications
will be examined. In the case, Kasky alleges that Nike published
a report inaccurately claiming there were no abuses of labour
rights in its subcontractors in south-east Asia. Kasky claims
Nike is therefore guilty of false advertising and should repay
the profits earned as a result. Kasky argues the statements
were intended to encourage people to buy Nike shoes who otherwise
would not have done so. Nike claims that the statements it
issued should be protected by the US Constitution’s
first amendment, which protects the freedom of speech, as
the statements were in a report and press releases and not
adverts.
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Some
companies undertake social reporting voluntarily. The methods they
choose vary widely as do the methods, if any, they employ for social
auditing: the system employed to verify the report. Some reports
are superficial and do not reflect the real impacts of their business,
whilst other reports accurately sum up the extent to which the business
has integrated corporate social responsibility’s concerns
into their main business activities. By integrating the reporting
of environmental and social concerns into the everyday business
of organisations, alongside financial reporting, regard for the
environmental and social impacts can be fully considered during
all decisions.
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Important
Concepts
Independent
Auditing: Some businesses subject their reports to a form
of independent audit, sometimes by NGOs both northern and southern
and through the use of independent auditors such as large accountancy/business
services organisations. Intangible
Assets: During the 1990s many companies increasingly became
aware and adopted business models that stressed the importance of
their intangible assets, especially their brand, reputation and
the values that are associated with a brand. This leaves companies
open to risk associated with their CSR policies.
Risk:
Many companies have viewed and justified the need for CSR on the
basis of the risk that revelations of unsound or damaging CSR practices
could have on the intangible assets of a business. However some
argue that the environmental and social aspects of CSR should not
be subsumed to an ulterior financial motive in this way. They also
argue that viewing CSR as risk management will only lead to superficial
CSR policies and glossy publicity and not to real change in the
way business operates as it is only the perception of the business
that is the intangible asset.
Triple
Bottom Line Reporting
•
TBLR is where a company reports on its performance on financial,
environmental and social fields [impact on people]
• Can be integrated throughout all business processes
• Can be adopted to allow all business decisions to
be informed by the triple bottom line.
• Encourages the measurement, management and communication
of environmental, social and economic results on an equal
basis.
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Global
Reporting Initiative
The
GRI is an initiative that develops and disseminates voluntary
Sustainability Reporting Guidelines. These Guidelines are
for voluntary use by organisations for reporting on the economic,
environmental, and social dimensions of their activities,
products, and services. Although originally started by an
NGO, GRI has become accepted as a leading model for how social
environmental and economic reporting should take place. It
aims to provide a framework that allows comparability between
different companies’ reports whilst being sufficiently
flexible to reflect the different impacts of different business
sectors. |
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Questions
•
What role does information about a company’s activities play
in improving a business’s social and environmental impacts?
•
Does voluntary reporting ensure that society has sufficient information
about business activities?
•
How much information should society be entitled to from business?
•
Should the idea of freedom of information, as is currently applied
to government be extended to business? To what extent? How does
the relationship between government and business affect this?
•
What should be the balance between corporate confidentiality and
society’s right to information?
•
How important for society is accuracy in the information that companies
produce? For ethical investors, consumers, NGOs, government, trade
unions?
•
Is all business communication a form of advertising?
•
Should false advertising legislation be used to enforce accuracy
in Social Reporting?
•
Can business communications be protected by the freedom of speech?
If so, to what extent?
•
What role should independent auditing have in ensuring the accuracy
of social reporting?
•
Who is best suited to carry out social auditing: large accountancy
firms, trade unions, NGOs, consumer groups? Who can oversee social
reporting and auditing?
•
What role should government play in social reporting?
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Other
Papers in this Series
(1)
What is CSR? HTML
PDF (277kb)
(3)
Ethical Investment HTML
PDF (253kb)
(4)
Rules, Regulations and Codes HTML
PDF (259kb)
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speed may take some time to download
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