Social reporting isn’t yet doing it’s job and holding big companies to account. That’s the view of a radical critique by NEF (The New Economics Foundation), which calls for a new audit radicalisation.
The report "Corporate Spin: The Troubled Teenager Years of Social Reporting" tracks how social and ethical auditing has grown from a NEF technique in the early 1990s to the domain of large accountancy firms, with its own professional standard, accreditation system for practitioners and even its own annual award.
"The trouble is that although coporate social reporting has taken off, it hasn’t actually grown up" says Deborah Doane, NEF’s corporate accountability chief.
The number of reports issued in the past year represents less than one per cent of all listed companies on either the New York or London stock exchanges. And although some social reports are innovative and exciting, others are not:
– Nearly half of business and finance journalists in the UK feel that social reports are "just PR gloss with little real substance"
– The top 50 companies producing social reports have been judged as "failing to address…..the biggest sustainability issues associated with a company’s activities"
– They are often ignoring the most important stakeholders and ignoring the most important facts
– There are huge discrepancies between what some of the leading reporting companies say compared to what they actually do.
Barclay’s social report carries a commitment "to make a positive and lasting contribution to the communities in which we operate" – despite closing 172 branches in rural areas.
The report urges a five-point plan that includes in-depth research about the links between social auditing and performance, simpler social audits – they can cost up to $1m – more stakeholder governance of corporations, for scrutiny by NGOs, government and journalists, and legal requirements for social reporting.
"Social auditing has come a long way, but if it just becomes a tool of the marketing departments it will lose its usefulness as a technique," says Deborah Doane. "The report is intended as a way of it keeping its radical edge."