CSR Reporting and Communications

CSR implementation includes develop meaningful reports for internal management and stakeholders that outline the company’s sustainable development objectives and compare performance against them.  CSR reporting actually has several dimensions, each of which will require a different form of report, albeit based on essentially the same pool of information.  Directors and senior executives use internal reports to measure performance, make decisions and monitor the implementation of their policies and strategies.  Portions of these reports will also be distributed throughout the organization so that managers responsible for specific activities have good information about how their teams are performing and contributing and can make appropriate adjustments at their levels in the organizational hierarchy.

Shareholders, creditors, employees and customers, as well as the public at large, use external corporate reports to evaluate the performance of a company and to hold the directors and senior executives accountable for achieving financial, social and environmental objectives. External reports have been required for shareholders of companies that have become subject to the reporting requirements imposed by federal regulators (i.e., the Securities and Exchange Commission) and securities exchanges; however, those reports have typically been limited to information on financial performance (including financial statements that traditionally have not included disclosures regarding CSR-related activities, such as investments in pollution control and conservation of natural resources) and governance structures.  External reporting may also be required as a matter of contract, as when creditors of the company require financial statements that can be used for assessment of the company’s ongoing creditworthiness and financial performance.

Regulatory reports, beyond those that may be required by federal securities regulators and securities exchanges, may be required by various governmental agencies at all levels.  In general, these reports are required in order to track the company’s compliance with specific regulations pertaining to environmental and social issues.  In addition, if the company is formed and organized as a social benefit corporation, it will need to comply with applicable state law reporting requirements calling for information regarding the success of the company’s efforts to pursue and achieve the specific public benefits set out in its charter documents.

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.  For example, the latest version of the GRI’s sustainability reporting framework that formally went into effect for reports and other materials published on or after July 1, 2018 requires reporting in three categories: economic (e.g., economic performance, indirect economic impacts, procurement practices etc.); environmental (e.g., materials, energy, water, transport, environmental grievance mechanisms etc.); and social, which includes labor practices and decent work (e.g., employment, occupational health and safety, training and education etc.), human rights (e.g., non-discrimination, forced or compulsory labor, indigenous rights etc.), society (e.g., local communities etc.) and product responsibility (e.g., customer health and safety, product and service labeling, customer privacy etc.).[1]  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.

In addition to formal reporting on corporate responsibility, companies should consider how their CSR activities can be integrated into their overall corporate communications strategies and activities.  Finnish Textile & Fashion (“FTF”), the central organization for textile, clothing and fashion companies in Finland, cautioned that communications should be appropriate in light of the company’s nature, size, operating methods and potential risks related to CSR, and recommended that companies focus their communications efforts on matters that are essential from the business perspective, are of interest to stakeholders and include potential operational and reputational risks.  For example, since consumers are interested in the origin of the products that are marketing and sold by the company, communications should include transparent information on all stages of the value chain including a description of how the company monitors the environmental and social responsibility of supply chain partners and data on compliance by those partners with company requirements.[2]  Companies will naturally want to include their corporate responsibility successes in efforts to promote its brand; however, presentation of environmental and social responsibility in advertising and marketing materials are subject to the same fundamental principles as any other information and companies need to ensure the information is not misleading or unjustified.[3]  Signaling social responsibility in marketing is more difficult.  For example, companies that have been certified as to social responsibility in accordance with the SA8000 standard are listed in a public database; however, there is currently no branding for SA8000.  Some companies do attempt to incorporate social responsibility into their marketing activities by identifying the country of origin in their product labeling and/or describing the social responsibility audit and certification procedures used in each of the production phases for the company’s products.[4]

For more information on the topic of this article, see the author’s book Responsible Business: A Guide to Corporate Social Responsibility for Sustainable Entrepreneurs, which is available here, and materials distributed through the Sustainable Entrepreneurship Project. 

[1] The GRI Standards replaced the G4 guidelines; however, the GRI explained that the transition for organizations that had previously used the G4 guidelines should be smooth since the main content, concepts and requirements did not change and the most significant changes occurred with respect to structure and format.  For more information, see the “Transition to Standards” page on the GRI website and “From Guidelines to Standards: Implication of the GRI Transition” (BSR Sustainability Matters Webinar, December 2016).

[2] Finnish Textile & Fashion Corporate Responsibility Manual (Helsinki: Finnish Textile & Fashion, 2016), 58.

[3] Id. at 59.

[4] Companies certified as to social responsibility in accordance with the SA8000 standard are listed in a public database; however, there is currently no branding for SA8000.  Some companies do attempt to incorporate social responsibility into their marketing activities by identifying the country of origin in their product labeling.  Id.