As 2014 comes to an end, companies are beginning to reflect on their achievements from the past year and are already planning for their 2015 corporate social responsibility (CSR) reports. CSR reports have become the norm among Fortune Global 500 corporations to communicate about successes and challenges associated with reaching sustainable and inclusive growth goals. To better understand companies’ efforts to achieve greater environmental and social impact, researchers at The Fletcher School, Tufts University, reviewed dozens of CSR reports released in 2014. We found that the most compelling reports shared some key criteria that demonstrate not only the comprehensiveness of a report as a communication tool, but also the comprehensiveness of a company’s strategy for sustainable and inclusive business.
At the outset, it is important to acknowledge that the Global Reporting Initiative (GRI) has helped companies streamline their sustainability reporting. Specifically, GRI guidelines help companies report on the most ‘material aspects’ of their business operations — ‘those that reflect the organization’s significant economic, environmental and social impacts; or substantively influence the assessments and decisions of stakeholders.’ Materiality plays a key role in the latest iteration of GRI’s reporting framework, G4, and we found this concept integral to the most substantive reports we came across.
Novartis, after undertaking a materiality assessment, organized its corporate responsibility initiatives under the following issue areas: access to healthcare; governance and ethical business practices; and research and development.
With 2 billion underserved patients across the world, Novartis identified these three areas as key to achieving its core business strategy: improving health. First, access to healthcare is a key driver in future growth markets and will help build business in the long term. Second, governance and ethical business practices are seen as material from a financial perspective, because poor ethical practices can lead to fines, public scrutiny and distrust, ultimately affecting sales and profits. Lastly, R&D and a pipeline of potential medicines are critical for future business and long-term growth in emerging markets.
To understand a company’s commitment to such activities, it is also important to see buy-in from company leadership. While GRI guidelines require a letter from the CEO in a CSR report, the role of a Chief Sustainability Officer (CSO) and the Board of Directors in sustainability decision-making can also be indicative of this commitment. Furthermore, a report that provides details of organizational structure as it relates to sustainable and inclusive business signifies that the company has the internal support in place to implement social and environmental initiatives.
UPS has a CSO and three governance bodies dedicated to sustainability, all of which support the company’s Management Committee and Board of Directors. The company’s cross-functional Sustainability Working Committee raises sustainability issues for discussion within UPS. Critical issues and decisions are taken up by UPS’ Sustainability Steering Committee, which reports to the company’s Management Committee. Decisions and strategies set by the Management Committee and CSO are disseminated to the company’s Sustainability Directors’ Committee, which represents major corporate functions at a mid-management level.
A compelling CSR or sustainability report also includes a company’s goals for social and environmental impact and clear measures of its progress.
By 2020, Unilever aims to help more than a billion people take action to improve their health and well-being, to halve the environmental footprint of making and using its products, and to enhance the livelihoods of millions of people as the company grows. To measure progress toward these goals, Unilever employs the following metrics, among others:
- Percentage of products which meet the highest nutritional standards, based on globally recognized dietary guidelines for salt, saturated and trans-fat and sugar
- Raw or packaging material sourced from verifiable sustainable renewable sources or made from recycled materials (% by weight)
- Greenhouse gases per consumer use: CO2 equivalents across the product lifecycle
As companies begin working on next year’s reports, they will be reflecting on how best to communicate about sustainable and inclusive business. We have found that reporting on materiality, organizational structure and performance management are just a few ways to enhance the depth of a company’s report and improve its overall CSR strategy. With many companies still struggling to integrate social and environmental activities into core business operations, focusing on these issue areas would make worthy New Year’s resolutions.
Tara Dhawan Khalid is part of the research team at The Institute for Business in the Global Context at The Fletcher School, Tufts University, focused on sustainable and inclusive business activities. The team’s research builds on the recently released white paper, Growth for Good or Good for Growth? How Sustainable and Inclusive Activities are Changing Business and Why Companies Aren’t Changing Enough, in collaboration with the Citi Foundation.
G4 Sustainability Reporting Guidelines: Reporting Principles and Standard Disclosures. Global Reporting Initiative (2013). Page 7
Corporate Responsibility Performance Report. Novartis (2013)
UPS Corporate Sustainability Report 2013. UPS (2014). Pages 78-79
http://www.unilever.com/sustainable-living-2014/our-approach-to-sus…. Accessed on December 9, 2014