In those far off, misty days of University, one of the terrible misconceptions I used to labour under was that I could play the drums.
My few remaining friends from those days are still trying to convince me of my lack of talent on the piano and guitar as well.
No one mentions singing.
One of the drums I keep on banging today is to do with transparency as a foundation of a company’s sustainability, and it’s not just me this time either. The reason for this is because as regulation has become looser accountability has to be strengthened, and the only way accountability can really be implemented is through transparency.
But how do you do it? After all, publishing every minute of every meeting ever held will just be a data overload, and while businesses need to move away from secrecy as a default no one’s suggesting the end of commercially sensitive material.
An interesting solution comes from the Netherlands, where the mandatory examination of CSR reports for transparency has been going on for several years now.
Ever since 2004 the Dutch government has required the country’s largest companies to perform a self-assessment transparency benchmark upon their own CSR reports.
Last year saw a big jump in this the number of companies, from the top 183 to the top 500 Dutch companies, and others could submit themselves to the scheme voluntarily as well if they so desired.
The benchmarking system (PDF: NOTE, in Dutch) is well thought out, straightforward and detailed where needs be. 30 items cover quantitative reporting, while a further 20 items cover qualitative reporting, and it’s worth restating that the aim is not to benchmark the CSR report per se but how transparent it is.
CSR website transparency
Taking the benchmark as a starting point, here are 10 areas a company should consider making itself more transparent on. The examples given are high scoring items within the benchmark.
- profile: e.g. detail all the company’s subsidiaries, origin of all raw materials used, impact of all operations on people and the environment
- strategy: e.g. KPIs for the next 3-5 years; description of CSR risks and how the company will tackle them
- governance: e.g. organisational chart at least to business unit level, what proportion of remuneration relies on CSR criteria
- results: e.g. setting results into a sector wide context, detailed description and timeframe for at least two quantitative measures
- policy: e.g. policy includes various aspects including limitations of measuring methodologies used
- relevance: e.g. website details are no more than 4 months out of date, descriptions of how stakeholders have been engaged to resolve problems
- clarity: e.g. financial and non-financial information are presented together; no more than 3 clicks separates financial and non-financial reports on the website
- reliability: e.g. independent verification of the report from recognised experts
- stakeholders: e.g. details of how stakeholders are engaged with material issues
- consistency: e.g. explanation of the relationship between the company’s strategic and CSR policies and developments along the supply chain within which the company sits.
Just this quick summary is pretty exhausting stuff and many of the high bar criteria bring to mind jaws dropping open in boardrooms around the world.
However, if a company is going to make a commitment to sustainability it has to be prepared to make itself accountable to stakeholders and prove that it stands by that commitment. Transparency is the only way that accountability can be delivered.
In the meantime, progressive companies can focus upon three main areas which come out of this list:
- materiality: an old chestnut which most CSR reports ignore; just how well do you stack up against your competitors?
- honesty: come on, confess all, where are your weaknesses and, most importantly of all, how will you turn those into strengths?
- examples: oh so you talked to the WWF did you? What about, and how did that discussion improve your sustainability?
Even addressing these three items would put any sustainability report head and shoulders above its rivals and allow a company to, er, beat the drum that its competitors would have to follow.
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