In order to know whether or not the corporate social responsibility (“CSR”) initiative and its related commitments are actually improving the company’s performance it is necessary to have in place procedures for reporting and verification, each of which are important tools for measuring change and communicating those changes to the company’s stakeholders. In Corporate Social Responsibility: An Implementation Guide for Business, Hohnen and Potts described reporting as “communicating with stakeholders about a firm’s economic, environmental and social management and performance” and verification, which is often referred to as “assurance”, as a form of measurement that involves on-site inspections and review of management systems to determine levels of conformity to particular criteria set out in codes and standards to which the company may have agreed to adhere. Verification procedures should be tailored to the company’s organizational culture and the specific elements of the company’s CSR strategy and commitments; however, it is common for companies to rely on internal audits, industry (i.e., peer) and stakeholder reviews and professional third-party audits. Verification procedures should be established before a specific CSR initiative is undertaken and should be included in the business case for the initiative.
The scope of the company’s reporting and verification efforts will depend on various factors including the size of the company, the focus of its CSR commitments and the financial and human resources available for investment in those activities. When establishing plans for reporting and verification it is useful to obtain and review copies of reports that have been done and published by comparable companies. Reports of larger companies are generally available on their corporate websites and extensive archives of past CSR-focused reports can be accessed through various online platforms such as CorporateRegister.com, a widely recognized global online directory of corporate responsibility reports. It is also important to have a good working understanding of well-known reporting and verification initiatives such as the GRI Standards; the AccountAbility AA1000 series; the United Nations Global Compact; and the International Auditing and Assurance Standards Board ISAE 3000 standard. Country-specific information is also available through professional organizations such as the Canadian Chartered Professional Accountants, which has published an extensive report on sustainability reporting in Canada.
Reporting standards are also emerging for specific topics within the broader universe of CSR and stakeholder engagement. For example, while companies can use several of the disclosure categories in the GRI to describe their activities relating to community involvement, investment and impact, they can also turn to a framework for reporting on corporate community investment promoted by the London Benchmarking Group (“LBG”) (http://www.lbg-online.net/), which is managed by Corporate Citizenship, a global corporate responsibility consultancy based in London with offices in Singapore and New York. The LBG framework has been touted as an effective tool for quantifying and organizing information about corporate community investment and, most importantly, assessing and reporting on the impact of their relationships with communities and how to manage it. Other tools for reporting on community impact have included return on investment (ROI) frameworks; the social, ecological and environmental footprints; Ethos Indicators and work done by partnerships between NGOs and multilaterals that have attempted to conceptualize impact related to broader sustainability dimensions.
One basic reason for sustainability reporting and verification is to make sure that the CSR initiative is properly managed and that persons involved understand they will be accountable for their actions. Other good reasons for reporting and verification include giving interested parties the information they need in order to make decisions about purchasing the company’s products and/or investing in the company (the level of funding from investors focusing their interest on ethical businesses is continuously increasing) or otherwise supporting the company’s community activities; collecting information that can be used to make changes and improvements to the company’s CSR strategy and commitments; improving internal operations; managing and reducing risks; and strengthening relationships with stakeholders.
Libit and Freier argued that CSR reporting provides companies with an opportunity to communicate their CSR efforts to the company’s stakeholders, discuss certain successes and challenges with respect to the company on a wide array of CSR issues, demonstrate transparency which can ultimately help to improve the company’s reputation with certain stakeholders, provide existing and potential investors with CSR information to assist in analyzing investment decisions and improve the effectiveness of ongoing shareholder relations campaigns such that activist shareholders are deterred from submitting CSR-related shareholder proposals or pursuing or threatening litigation. However, in order to achieve the greatest benefits from reporting and verification companies need to carry out those activities in a rigorous and professional manner using tools and standards that are widely recognized and accepted among those interested in the results.
Government and Other Public Domain Publications