Integrating a CR Report to Your Company’s Overall Strategy? Start, Don’t End, with the Board

Communicating a company’s corporate responsibility performance to all stakeholders is certainly a pesky task. There are all the various factors that merit reporting, including human rights, energy efficiency, employee satisfaction, volunteer hours, funds spent on lobbying and diversity, just to start. Then you’ve got the reporting standards. True, GRI has become the standard, but let’s not forget reporting to CDP, the UN Global Compact, SASB, IIRC, MCSI and DJSI, among others.

Furthermore, reporting on a company’s sustainability performance is becoming increasingly important to the people who are considering investing (or divesting from) in your company. “Investors need standardized, high quality information on material factors that can affect price or value,” Tim Mohin and Jean Rogers wrote in GreenBiz last year.

It sounds simple, but the corporate reporting journey often becomes complicated. Or, maybe companies are just making this process too complicated. The conventional wisdom is conducting that material assessment, (after ensuring that you have scored buy-in from the C-suite that a report should be done) . . . then have the board of directors sign off on the report.

But during a recent interview I had with Helle Bank Jorgensen, CEO of B. Accountability and President of the Global Compact Network Canada, it became clear that many companies may need to rethink their plan of attack when it comes to sustainability reporting.

Jorgensen certainly has the credentials when it comes to advising companies on taking a step back and giving a fresh look at their sustainability reporting processes. In addition to working on what were the first integrated report and first responsible supply chain programs, she has worked with hundreds of companies, including Ikea, Nike, Unilever, Shell, Novo Nordisk, Maersk, Pfizer, Monsanto and Lego during her tenure as a partner with PwC in Europe and the U.S.

As Jorgensen, and additional thought leaders such as GRI’s Tim Mohin have explained, there is no absolute rule that a company’s sustainability report be released on an annual basis. But because many countries, including the U.S., have long mandated that financial reports be issued on a regular basis, it was intuitive to assume the same should be done for that annual sustainability report.

The problem, however, is that sustainability reporting teams must deal with copious amounts of data through which they must parse. Therefore, you have scenarios of companies that find themselves generating financial reports, social reports, environmental reports and even intellectual capital reports. Naturally, the conclusion that comes about is all of this must be all integrated. But so much “what” goes into a sustainability report, it is easy for a company to forget the “why” they are doing such an exercise in the first place.

The task at hand is to ensure all this information resonates. “I still think some companies are missing the point of these reports: they need to show the value; yes, the numbers may be there, but what about the value?” asked Jorgensen.

One could just say that these reports are full of so much "what" . . . what is missing, is a clear understanding of the "why."

Unfortunately, the value of the company’s work too often becomes lost in translation. “That comes to the fact that they are spending much time putting all of these reporting data points in their report . . . rather than gaining value out of what they are doing.”

One challenge companies face is that despite all this talk about integration and collaboration, many companies still find they are working in silos. Jorgensen recounted a story of two different reports a company had issued. One report stated that the company’s employees were its most important asset; but another report disclosed that the same company had struggled with retaining employees. Naturally, stakeholders, including investors, were left scratching their heads.

As Jorgensen put it, “There must be a way for some companies to step back, and ask: what are we producing; and what does success actually look like? Are we focusing on the right stakeholders? Are we focusing on not only making the report, but getting value out of it?”

In the case of the aforementioned company that valued its employees (while those same workers were apparently quick to make an exit), it was clear that two different departments were writing their own report. “That comes from the tone at the top,” explained Jorgensen.

And therein lies for making the case that instead of signing off on sustainability reports, board of directors should sign on and be proactive when it comes to the process. This is especially important at a time when more corporate governance experts are calling for improved communication between investors, the C-suite and boards.

“The board needs an understanding of the goals of sustainability reporting,” said Jorgensen. “There are a lot of board of directors that only get the sustainability report to review and sign off on it. Meanwhile, they are responsible for the financials--but why not the sustainability report?”

What any board needs to understand, according to Jorgensen, is the reason why the so-called non-financials are important. Board members unfamiliar with the factors driving sustainability reporting may at first be averse to disclosing information about sensitive topics such as human rights or employee retention.

But boards need to understand that there are more customers insisting that if they can’t trust where a company stands on issues such as human rights or the environment, they will shop elsewhere. And at a time when supply chain is on everyone’s mind, it is also important to remind boards that if it is not clear where a company procures its parts or raw materials, those same customers move on to another competitor.

At a time when more brands are taking stands and companies are stepping out of their comfort zone to not just take on environmental and social responsibility, but also volatile political issues, it may just be time to give another look at the annual corporate responsibility report, with the emphasis on the “annual.” And the fact that so much of this data is difficult to obtain should send a message to companies that the mad rush to push out that annual report means less time spent on doing good – instead the emphasis is reporting the “good.”

“[Sustainability report] should not be a yearly project--it’s a process,” said Jorgensen as we wrapped up our talk.

And that process should showcase how the company is providing value to employees, and communities worldwide – even if it means reevaluating whether the annual report is the best way to communicate this progress in the first place.

Image credit: Jeffrey Zeldman/Flickr