A CSR, or Corporate Social Responsibility Report, is a corporation's chance to make its case about how 'good' its being: how green, how fair, how generous. CSR's are something of a new trend: from a mere 26 such reports in 1992 to over 3000 of them in 2008, reporting on social responsibility is becoming the rule rather than the exception for large corporations.
Can we believe a report written by the corporation itself? While the process of reporting at least makes someone inside the upper levels of management pay attention to the issues, credible reporting is even better.
Steve Lydenberg of Domini Social Investments and David Wood of the Institute for Responsible Investment have written a detailed and encouraging guide for the reader in search of true corporate responsibility. Lydenberg spoke to bGreenSmart in Feb of 2010 and gave us some key points:
L: Does the company address its key performance indicators for that industry? For example, for the automobile industry, its all about fuel efficiency. For apparel, its vendor standards. For the chemical industry, its reduction of toxic chemicals.
bGS: So if an automobile company spends the majority of its report talking about how efficient its computer systems are, that's probably not a good sign about its cars.
L: Particularly, do they address the issues that have to do with their business model, because those are the hardest. Its one thing to address community relations and so on, but the hard questions often have to do with the business model.
bGS: For example, how much employees of vendors are paid is probably the toughest - but maybe most important - question for corporations that have large numbers of overseas workers. As the Guide says, 'finding these figures...in U.S. CSR reports can be difficult. They appear more frequently in those of European firms.' Britain in particular seems to be leading the way in terms of ethical reporting requirements.
L: Does it tell the bad news along with the good news? That is another way to qualify a CSR report. An honest report will disclose the areas where the corporation is not yet meeting their objectives.
L: Finally, companies that report quantitative, measurable goals and their progress towards those goals over time. Numbers can be manipulated, but reported in this way they give a certain level of comfort in terms of real progress.
Lydenberg and Wood's guide gives more detail on how to read numbers - looking for figures that are industry standard, and both normalized and total measurements. For example, how much pollution per product produced tells you something about a company's efficiency, but you also want to know the total amount they are polluting to understand their impact on the environment.
To learn more, check out the full document, available free online:
How to Read a Corporate Social Responsibility Report
and its extensive bibliography. A few of the notable sites:
Searchable collection of over 500 major CSR reports at CSRwire maintained by Michael Kane.
GoodGuide, a new guide to natural, green and healthy products
For specific industries, some interesting reporting initiatives:
The Global Network Initiative reports on how well IT/ICT firms support Principles of Freedom of Expression and Privacy.
The Toxics Release Inventory is now required reporting for US chemical firms and has 'provided a powerful incentive for corporations to manage and reduce their use of the most potentially harmful of these chemicals.' One useful thing the EPA has done!
And for those of us who just don't have the time to wade thru all the CSRs and compare notes? One option is to invest in a managed socially responsible investment fund. A number of reliable funds are available in the US, including Calvert Asset Management, Domini Social Investments, Green Century Funds, Parnassus Asset Management, Pax World Funds, Trillium Asset Management and Walden Asset Management.
Thanks to Steve Lydenberg for taking the time to share his knowledge and insights with us here at bGreenSmart!
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