Corporate social responsibility information belongs in the main company report, says Gerry Hagelberg
With all the standards, codes, rules, guidelines, benchmarks, league
tables, criteria and indicators on offer, CSR increasingly resembles
big city rush-hour traffic, in which a push-bike is more efficient than
a Ferrari.
Like financial accounting, where the treatment
of goodwill and share options is still debated, CSR presents problems
to which there is no uniform approach. Definitions, harmonization, and
a judicious mix of legislation and self-regulation are required. But
after Enron et al, the Bob Dylan principle applies: You don’t need a
weather man to know which way the wind blows. Few would now argue that
CSR – basically an expression of ethical behaviour – distracts from
business’s job of making profits. So let’s move on.
Having
smoked for 60 years, I’m not ill-disposed towards British American
Tobacco. Still, its 156-page social report strikes me as over the top.
Smoking may shorten my life; it hasn’t addled my brain or made me less
sensitive to being patronized. Efforts to develop less harmful
cigarettes, to see that child farm workers get schooling, to combat
smuggling, to cease undesirable marketing practices are evidence of
good faith. Stuff about talking to your stakeholders – not an end in
itself – and being decent to your employees is largely window-dressing;
no big business survives long without doing both. Simplicity is the
mother of transparency. That goes for verifiers as well as reporters.
Separate social and environmental reports remind me of nappies –
essential in infancy, redundant once out of the pram and potty-trained.
CSR has reached a stage where greater discipline can be demanded. It’s
time to start incorporating the non-financial information necessary to
judge performance and sustainability in the regular reports. That’s
where it belongs, if needed to assess value and risk, and if CSR is
seen of a piece with corporate governance. And in similar form to the
financial data – quantitative, previous year’s figure alongside,
chairman’s comments in front, notes at the back. For example:
Ratio of pay package of highest to lowest-grade full-time employee Proportion of women and ethnic minority employees in the workforce and top remuneration quartile Number of work-related accidents and illnesses, and hours lost Hours lost in industrial disputes Electricity and water consumption per £1000 turnover Paper sent for recycling Donations to registered charities Paid employee time seconded to community work.
You get the idea. In most cases, a couple of pages should do it.
Chances are you’d reach more people and avoid having to answer pesky
questionnaires.
Gerry Hagelberg is a commodity analyst.
