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Lecture 10: Good and Bad CSR – A critical perspective

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Lecture 10: Good and Bad CSR – A critical perspective

  1. 1. FN0449 Lecture 10FN0449 Lecture 10 Good and Bad CSR – AGood and Bad CSR – A critical perspective…critical perspective… Dr Alex Hope
  2. 2. Objectives of the session Explain basic features of CSR reporting Understand the main reasons why companies become involved in CSR reporting Explore the role of CSR reporting in the broader accounting process Discuss key features of good CSR reporting and auditing Understand the role of stakeholder dialogue in CSR reporting Good and Bad aspects of reports…
  3. 3. Annual report (financial) targeted at shareholders  CSR report (non-financia targeted at broad range of stakeholders Introduction CSR reporting and auditing: Can help a business prove to its stakeholders that it is ‘doing the right thing’
  4. 4. Rise in non-financial reporting to inform stakeholders of the ‘triple bottom line’ 95% of the 250 largest companies in the world report on CSR All of the 100 largest UK companies have CSR reporting Introduction Source: KPMG International Survey of Corporate Responsibility Reporting 2011
  5. 5. Part of social accounting / auditing process CSR reporting is still voluntary = Heterogeneity of CSR reports •Wide variety of language / content •Difficult for stakeholders to assess the quality of a company’s CSR •Prevents the reader from comparing different companies Introduction
  6. 6. • Instrumental / economic: Social and environmental issues might pose a threat to the company’s financial performance (e.g. Nike boycotts). • Political: Increase in corporate power = greater calls for more transparency and accountability to the public. Reasons for Engaging in CSR Reporting & Auditing
  7. 7. Integrating stakeholder demands: CSR auditing and reporting helps companies to improve their interaction with stakeholders as part of a broader process of dialogue and engagement. Ethical reasons (Responding to pressure): CSR reporting is a tool to communicate ethical values and performance. (Framework from Garriga and Mele - see Chapter 3) Reasons for Engaging in CSR Reporting & Auditing
  8. 8. Current Trends in CSR Reporting •Standardization of CSR reporting to enhance credibility: Standardizing CSR reports: e.g. The ‘Global Reporting Initiative’ (GRI) framework for sustainability reports (published for the first time in 2000).
  9. 9. Assurance: e.g. The ‘AA1000S Assurance Standard,’ launched by AccountAbility in 2002, provides a framework for assessing processes underlying a CSR report. Current Trends in CSR Reporting
  10. 10. Regulation: The voluntary nature of CSR reporting is starting to be challenged in Denmark, France, Japan, Malaysia, and the UK. Integrated reporting: e.g. The International Integrated Reporting Committee (IIRC) proposes one integrated report combining the annual and CSR report. Current Trends in CSR Reporting
  11. 11. How to Do it • Diversity in practice is related to: Interests on the part of those initiating the process Types of organisations Contexts Theoretical and philosophical roots Growth in Social and Ethical Accounting, Auditing and Reporting (SEAAR)
  12. 12. How to Do it • Poor practices can be related to: Insufficient knowledge, skills, experience and/or resources A deliberate attempt to underspecify the accounts and/or verification process to report in a less than accurate, incomplete manner
  13. 13. Outlay audit: Considers financial cost, not outcome value Constituency accounting: Examine report in relation to demands of key constituencies Corporate rating against social / ethical criteria: External ratings Social indicators movement: Internal and external involvement How to Do it Methodological approaches: http://www.slideshare.net/Bull_UK/corporate-social-responsibility-a-new-business-asset
  14. 14. Understanding Quality Categorise initiatives through: Principles of good practice in SEAAR The elements into which principles can be subdivided to enable detailed analysis The level and quality of reporting
  15. 15. 1.Inclusivity: Reflect views of all principal stakeholders 2.Comparability: Compare performance as a basis for assessment 3.Completeness: All areas of company activity are included 4.Evolution: Repetition to demonstrate continual learning Understanding Quality The 8 Principles of Quality:
  16. 16. Understanding Quality The 8 Principles of Quality: 4.Management policies and systems: Clear internal processes 4.Disclosure: Formality or active means of communication? 5.Externally verified: Validate material professionally & independently 6.Continuous improvement: Assess progress over time
  17. 17. Scoring Quality Stage 1: Commentary – Report of social mission / aims and ad hoc descriptive elements Stage 2: Review – Occasional descriptive report covering different stakeholders, including specific policies Stage 3: Report – Regular report with stakeholder consultation, indicators and financial data, explicit policies, internal systems Social and ethical disclosure: Assessing progress: http://www.thevirtuouscircle.co.uk
  18. 18. Stage 4: Statement – Regular externally verified report with two-way stakeholder dialogue, indicators, targets and benchmarks and commitment to comprehensive coverage over time Stage 5: Sustainability statement – Regular externally verified sustainability statement with linkages to environmental, animal, economic and financial data Scoring Quality
  19. 19. Stakeholder Engagement and Dialogue
  20. 20. The Core Role of Stakeholder Engagement and Dialogue Stage 1: Understanding organizational motives for stakeholder engagement and dialogue Holistic perspective: Social and environmental reporting and CSR as processes which transform business practices to become socially and environmentally sustainable. Strategic perspective: Social and environmental reporting as a tool to win or retain the support of stakeholders who have the power to influence the achievement of an organization’s goals.
  21. 21. Identifying to whom the organization needs to report if it is to achieve its philosophical objectives The identification of stakeholders takes place after the philosophical motives for engaging in CSR and social and environmental reporting have been determined Moving from stakeholder identification to stakeholder engagement and dialogue The Core Role of Stakeholder Engagement and Dialogue Stage 2: Linking stakeholder identification to motives for reporting
  22. 22. Key Issues & Difficulties in Stakeholder Engagement & Dialogue Identifying the range of stakeholders to be considered Impossibility of direct dialogue and engagement with some stakeholders Addressing heterogeneous stakeholder views and expectations
  23. 23. Key Issues & Difficulties in Stakeholder Engagement & Dialogue Prioritizing stakeholder needs on the basis of maximum negative consequences Negotiating a consensus among mutually exclusive stakeholder views through discourse ethics
  24. 24. What makes a good or bad report? Context: The Company's Role in Society “Our role in society is an extension of our core purpose: we make what matters better, together.” http://www.tescoplc.com/files/pdf/responsibility/2014/tesco_and_society_review_2014.pdf “Banks play an important role in society. By assisting customers with financing, investments, secure payments and asset management, we support economic development and international trade and contribute to financial security” http://sebgroup.com/about-seb/who-we-are/our-role-in-society
  25. 25. Material Issues What makes a good or bad report? http://report.basf.com/2012/en/pics/img/028a_nochart_en.png
  26. 26. Outcomes What makes a good or bad report? Look for the outcomes or impacts of the company's Sustainability activities, not just performance. Look to see if environmental impacts have improved. Look to see what community outcomes have been achieved
  27. 27. Framework What makes a good or bad report?
  28. 28. Authentic Style and Tone What makes a good or bad report?
  29. 29. Clear Data What makes a good or bad report?
  30. 30. Targets, Progress and Future Plans What makes a good or bad report?
  31. 31. Stakeholder Voices What makes a good or bad report?
  32. 32. How Sustainability is Managed What makes a good or bad report?
  33. 33. Accessibility What makes a good or bad report?
  34. 34. Linkage What makes a good or bad report?
  35. 35. Linkage What makes a good or bad report?
  36. 36. Summary Explain basic features of CSR reporting Understand the main reasons why companies become involved in CSR reporting Explore the role of CSR reporting in the broader accounting process Discuss key features of good CSR reporting and auditing Understand the role of stakeholder dialogue in CSR reporting Good and Bad aspects of reports…

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