CSR reports are missing key targets

Source: Pleon, 7 September 2005

The quality of corporate reports on social responsibilities may have risen, but they consistently fail to meet the expectations of a major target group: the financial services sector, with its associated analysts, investors and shareholders. This is one of the key findings of the Global Stakeholder Report 2005, a survey of 500 global readers of CSR reports from 58 countries.
The study found that, although the importance of Corporate Social Responsibility (CSR) within the financial services sector has increased considerably in the past few years, it is this group which gets the least from sustainability reports. According to the survey, the prime reason for this disparity is that the economic arguments for corporate sustainability and social commitments are not convincingly explained. The survey was conducted by Pleon, Europe’s largest corporate communications network. The launch took place in a public roundtable event at Amsterdam yesterday.

Referring to the findings, Mark Makepeace, Chief Executive of FTSE Group, London said: "What analysts need is information and data that is material to a company’s business and is in context of the whole group’s activities." Makepeace notes that corporate responsibility reporting to investors is still in its infancy.

There are a minority of reporting companies that are already aware of this shortcoming. Dr David Bickerton, Head of External Communications at BP said: "BP’s research suggests that investors are becoming increasingly engaged with sustainability reports but want to see clearer linkages between the business strategy and sustainability issues. I believe many companies have struggled to make this linkage in the past."

In addition, there is evidence that a number of other critical stakeholder groups don’t always find CSR reports credible. As a direct consequence of this, many companies fail to achieve the desired objective of CSR reporting in the first place: to positively increase reputation and trust.

Generally however, readers of CSR reports are more satisfied with the quality of reports than they were two years ago. For instance, reporting on social issues was described by 55.2 percent of respondents as being "fully" or "to some extent" in line with their expectations (an increase of 6.5 percent from 2003). The survey also revealed that the most important issues of a CSR report, from a stakeholder perspective, are the management of human rights, eco- and energy efficiency in business operations, and health and safety of employees. Perhaps surprisingly, "Corporate Citizenship" – defined here as corporate giving, community involvement etc. – was ranked 27th out of 30 issues stakeholders consider important.

In order to raise corporate reputation with CSR measures, companies have to take into account the issues that are important to their key stakeholders. One of these is a convincing explanation of the business case for corporate responsibility and a clear concentration on material business issues. This means, an outline of operational responsibility towards people and the environment is a compulsory exercise. Further voluntary social engagements and reporting about them is "freestyle".

The full report "Accounting for Good: the Global Stakeholder Report 2005" as well as a background paper to media is available for download from www.pleon.com.

Download the full report (pdf)