Boards learning to love CSR

Dec 18 2007 by Nic Paton Print This Article

Corporate social responsibility once used to be little more than encouraging employees to rattle tins on high streets or do some volunteering.

But the past five years has witnessed a profound change, with corporate reporting becoming an integral part of the financial landscape, so much so that eight out of 10 of Britain's top companies now formally report on how they are maintaining their community, social and ethical record.

What's more, the study by accountancy firm Deloitte has predicted that it won't be long before all large companies will feel obliged to publish some reports if they want to maintain their reputation as an employer of choice.

The study by Deloitte has found a record 80 of UK FTSE-100 companies now issue corporate responsibility (CR) reports, up from 56 five years ago.

In the same timeframe, the number of companies producing a stand-alone report had more than tripled, from 21 in 2002 to 69 in 2006.

And the number of companies receiving independent third party advice on CR reporting had risen by 83 per cent in the past five years, from 29 in 2002 to 53 in 2006.

Mike Barber, corporate responsibility partner at Deloitte, said: "The increase in CR reporting is a consequence of investors, pressure groups and other stakeholders demanding more information on social and environmental issues.

"Companies committed to best practice reporting focus on issues material to the business and its stakeholders and seek to validate chosen indicators through third party assurance," he added.

Another significant shift was a move away from companies simply issuing environment or community reports to a much greater emphasis on more business-orientated stand-alone corporate responsibility reports.

What this showed was that companies were increasingly identifying CR practices as core to their business, said Deloitte.

Firms were also much more likely now to report against global reporting initiative guidelines, which are aimed at making reporting on economic, environmental and social indicators more comparable.

The number doing this had significantly increased, from 5 per cent in 2002 to close to 30 per cent last year, said Deloitte.

Companies were by and large reporting on 49 different indicators, with guidance on how to determine the relevance of each indicator for their company and industry.

More than nine out of 10 companies in the energy, mining and utility sectors reported on CR.

In both the real estate and financial services sectors 85 per cent of companies produced stand-alone CR reports in 2006, up from a fifth and 30 per cent respectively five years before, Deloitte added.

"Comparability with peers is another key driver for improved narrative reporting. Senior executives increasingly recognise that to deliver shareholder value, companies need to manage and report on non-financial factors that drive financial performance and corporate reputation," said Barber.

"The trend across the FTSE-100 and 250 is that ever more companies are producing standalone CR reports.

"As stakeholder pressure for more information continues, it can only be expected that this trend will continue. It is likely that before too long, virtually all of the largest companies in the UK will produce CR reports," he predicted.