KPMG has published on October, 27 its International Survey of Corporate Responsibility Reporting. The 2008 survey was conducted in 22 countries and with more than 2200 businesses around the world. The sample has included the Global Fortune (G250) and the 100 largest companies by revenue (N100) in 22 countries.
One of the most significant findings of the 2008 Survey is that nearly 80% of the largest 250 companies in the world have issued reports. In 2005, the percentage was only 50%. Another important finding is that ethical considerations and innovation emerge as the most important drivers for reporting.
I will focus on the findings regarding the role of stakeholders in the reporting process.
Nearly two-thirds of the G250 companies engage with their stakeholders in a structured way, up to 33 percent in 2005. According to the Survey, only 42% of the N100 companies engage in a structured dialogue with the stakeholders. 65% percent of the G250 companies disclose details of who their stakeholders are and how they are engaged while less than 50% of the N100 companies provide this kind of information.
The stakeholders are involved in the definition of the corporate responsibility strategy only in 37%of the G250 companies and in 20% of the N100 companies. Only 25% of the G250 companies and 14% of the N100 companies declare that they use stakeholder feedback for reporting purposes.
The most used channels and methods for engaging with stakeholders are round tables, questionnaires, web-based feedback. Ironically, the established forums for stakeholder communications are the least utilized for corporate responsibility issues: annual general meetings, analyst presentations, direct interactions with customers.
According to KPMG, “this could be an indication that corporate responsibility is not fully integrated as a priority in a company’s main operations. It may also be a reflection, especially in the G250 population of a lack of attention paid to environmental risks and opportunities by investors and other providers of capital.”
In June, SEC’s Chairman Christopher Cox lauched the “21st Century Disclosure Initiative.” The Initiative goal is to review the existing disclosure system, its objectives and to try to propose measures in order to improve the disclosure system with modern technology and practices.
The SEC asked for public comment and the deadline for submitting them was October, 22.
Ceres has published the letter that fourteen of the nation’s largest institutional investors have sent to SEC in which they urge the Securities Exchange Commission to consider environmental, social and governance (ESG) issues as “a key element of the 21st Century Disclosure Initiative”.
The investors consider that the SEC should include “consistent and comparable” standards for disclosure of climate risk information in its disclosure system. Climate risk information is increasingly used in order to make investment decisions but most of the data is to be found in corporate voluntary reports. The information provided by corporation in these reports is not considered sufficient by investors in order to assess corporation’s financial viability.
The investors consider that environmental, social and governance (ESG) issues should find their place in the SEC disclosure system. At the moment this type of information can be found in corporate responsibility reports. The investors propose that the GRI should serve as an example for a new disclosure system.
It has to be said that this debate is not at all new in the countries of the European Union. Actually, regulations regarding disclosure of non-financial information have been adopted at both European level and national level. The U.S. investors use the examples of France, U.K. and Sweden in order to justify the need for a reform of the SEC disclosure system.
Actually, it will be interesting to see how far the SEC will go in its reform. By the end of 2008, the Initiative will produce a report that will present the modernized disclosure system.
After a 5 year process, the Financial Services Sector Supplement (FSSS) is now finalized.At this moments of financial crisis, disclosure standards in the financial services sector are more than welcomed.
The Financial Services Sector Supplement was developed in several stages, the development of social
indicators, environmental indicators, and then the merging of these indicator sets and their alignment
with the G3 Guidelines.
The financial sector was segmented into four categories for the purposes of developing this Sector Supplement: retail banking, commercial and corporate banking, asset management and insurance.
The Financial Services Sector Supplement includes:
Even though it is not an event dedicated to CSR, it touches very important regulatory issues which are relevant to the CSR debate, too.
The aim of the conference is:
1.To bring together leading experts on regulation and regulatory quality
2. To provide an international overview of current developments in the area
of regulatory reform
3. To share best practices in the area of regulatory reform in a systematic
and efficient way.
The conference will offer 20 sessions in the following five parallel work streams:
1. Going Beyond Red Tape
2. Measuring Regulatory Quality
3. Delivering Regulatory Quality
4. Risk, Regulation and International Cooperation
5. Regional Approaches to Better Regulation
The session will focus on the following topics:
What does business want from regulatory reform?
Transparency and public participation in the regulatory process?
Changing trends in better regulation – Views from Europe and the United States
The current state of European self- and co-regulation
Regulatory governance in developing countries
Regulatory reform in South Korea and Japan: Deregulation and social regulations
Risk regulation in an interconnected world.
More information at: IRR-conference@bertelsmann.de
He is a CSR supporter but he emphasizes that Corporate Social Responsibility (CSR) has failed to reduce social “bads” like poverty, human rights abuses or environmental degradation and argues that CSR needs to evolve exactly like the Internet from 1.0 to 2.0. CSR 2.0 has to achieve three objectives: connectivity, scaleability, responsiveness.
David Henderson, admits that corporations should behave responsibly but does not agree with the concept of CSR that is used now. Basically, he thinks that the justification provided for CSR actions is not correct and that CSR is not going to make the world a better place but it will bring it more harm.
So, ironically, CSR supporters and critics agree. Of course, there are plenty of nuances in the CSR debate, but I think that it is obvious that CSR has not helped much in reducing “social bads” like environmental degradation or human rights abuses. Actually, some commentators think that it was an utopy to expect that.
The question is how to achieve objectives like connectivity, scaleability or responsiveness. Through which mechanisms. How to enhace the complementarity between CSR instruments and legal mechanisms. Moreover, it is about designing coherent policy frameworks.
In the last weeks, many have asked themselves if the recent financial crisis has a negative impact on CSR activities. In a recent report, the GRI considers that the financial crisis should be seen as a driver for policy-making based on sustainable development principles. In this process, sustainability reporting, says the GRI,
“is a tool that can help to achieve this goal as it facilitates transparency and accountability, enables like-for-like comparison between organizations’ sustainability performance, and through the process of gathering data and information, it creates optimal conditions for new sustainability systems to be established within organizations. “
Covalence has published today its quaterly ethical reputation ranking.
Twenty multinational companies are analyzed in ten sectors: automobiles, banks, chemicals, entertainment, food&beverage, mining&metals, oil&gas, pharmaceuticals, retailers, technology hardware.
The indicators used are: the best ethical quote score, the best ethical progress and the best reported performance. The first two indicators are given by confronting the positive and negative news while the best reported performance shows “how companies report on their ethical performance without considering criticism and demands.”
In its press release, Covalence states that the criteria gaining weight within positive news were: product environmental risk, waste management, labour standards, eco innovative product. The criteria gaining weight within negative news: downsizing, waste management, labour standards and external working conditions.
The leaders across all sectors are: Toyota (best ethical quote score, best ethical progress), Wal Mart (best reported performance). Sony leads in the entertainment section while Alcoa leads in the mining&metals section.
CSR will not make the world a better place but it will actually do more harm to it, says David Henderson, in a speech at the Instituto Bruno Leoni. Henderson, former chief economist of the OECD, thinks that CSR will not help answering to the challenges associated with globalization and it will not bring benefits to individual enterprises, too.
I will develop today the “Green Jobs” topic by presenting the main findings of the report “Green Jobs: Towards Decent Work in a Sustainable Low-Carbon World” and some reflections of the partners of the Green Jobs initiative which were not included in the report. I will focus mainly on the policy recommendations made by the partners of the “Green Jobs” initiative.
The report defines green jobs as work in agriculture, industry, services and administration that contributes to preserving or restoring the quality of environment. One of the main findings of the report is that green jobs do not automatically represent “decent work”, meaning “opportunities for women and men to obtain decent and productive work in conditions of freedom, equity, security and human dignity”. Low income, precarious employment, inappropriate working practices are many times associated with green jobs.
The report finds that green jobs have a significant potential to contribute to the goal of sustainable development but there is a need for government leadership and for a coherent policy framework in order to speed up the process of creation of ” decent” green jobs. Another issue to be dealt with is the transition for enterprises and workers affected adversely by the transition to the green economy. Of course, “the business case” for green jobs has to be object of further research. Supporters of green technologies and business practices have to compete with enterprises which offer low prices but externalize their social and environmental costs.
The partners of the “Green Job” initiative proposed several immediate and effective measures in order to deal with the challenges associated with green jobs. Still they admit that these measures are necessary but not sufficient to ensure the transition to the green economy. First of all, there is a need to gather more information about issues like the changes that green jobs induce to labour market, the skills needed to perform these jobs. There is a need for investment in green technologies and jobs, for research and for policy frameworks.
But above all, there is a need for a coherent approach and not a piece-meal one. There is a need to put together at the table the main actors: stakeholders, businesses and Governments in order to decide together upon a strategic approach to achieve the goal of a green economy.
Work under the Green Jobs Initiative so far has focused on collecting evidence and different examples of green jobs creation, resulting in a major comprehensive study, Green Jobs: Towards Decent work in a Sustainable, Low-Carbon World, on the impact of an emerging green economy on the world of work.
UNEP, ILO, IOE and ITUC are planning a second phase of the Green Jobs Initiative. The project will move from information gathering and analysis in the green jobs report to assistance in policy formulation and implementation through active macro-economic and sectoral assessment of potential green jobs creation.
