Sense & Sustainability 17 January 2013

We hear a lot about CSR activity being the “right thing to do”. And what’s wrong with that we ask when the world is full of people doing bad things?

Relevance

Well, it matters when the right thing is somehow being passed off as the relevant thing in the absence of any clear link to business strategy. It matters when the CSR sections of many plc annual reports are full of seemingly random and disconnected charitable donations, community events, staff bonding sessions and ‘green’ activities with no discernible business benefit beyond a nice warm feeling. But as we all know there are easier, and cheaper, ways to get a nice warm feeling.

To improve CSR communication we need to question and clarify why;

• Companies invest so much time, energy and shareholders’ funds on environmental issues when their business has little environmental impact?

• These companies devote significant funds to community activities in far flung corners of the world when the core focus of their business is in Northern Europe?

• They invest significant funds in ‘outward bound’ and team bonding sessions when many employees find these activities appalling?

          To improve CSR communication CSR professionals need to be clear about the difference between the right things to do and the relevant things to do. Get the balance right, communicate which of your CSR activities support business strategy and how, and your stakeholders will understand and support you.

          And if you can’t be relevant, be honest; say why you believe it’s simply the right thing to do. Regardless of whether or not it helps the business.

          Alignment

          Talking of environmental impacts, much hot air is expelled talking about whether companies should produce separate CSR reports, summarise them or integrate them fully in the annual report. This debate is fine but misses a key point. And that is if all this reporting fails to communicate with stakeholders how CSR activity supports business strategy, drives shareholder value or is aligned with the size, scale and nature of the business then it is a waste of time.

          What matters is the quality of communication; that the information in these CSR reports is transparent, engaging, relevant and aligned with the business strategy. Call it connected reporting.

          Environmental Sustainability vs Business Sustainability

          Many FTSE350 companies refer to sustainability in an environmental context as though a company’s success relies solely on its carbon footprint or recycling programme.  Sure, if the planet burns out there will be no business to do and no mater how good your business strategy you will fail. We all will. But to infer (unless you are a BP or a Shell) that managing ones carbon footprint can somehow alone drive better business is missing the point.

          For sustainability reporting to be of real value it needs to be focused on and communicate a business’s ability to survive and thrive. How good is its business model? Its client service; its understanding of its marketplace; its business strategy? And, yes, its CSR strategy. Of which employee engagement, community support and environmental reporting are a key part, because how a company manages all of these things will have an effect on its reputation.

          But all these things are simply components of business sustainability. And business sustainability is what shareholders are interested in.

          If you’d like to discuss any of the issues raised in this piece please contact Abigail Vyner (+44 20 7739 8899) in London or Melanie Osborne (+852 3711 3100) in Hong Kong.

          Sensibility image