Posts Tagged ‘ESG’

The Evolution of CSR Reporting

Sustainability reporting is increasing at a fast pace here in the United States. Since the Global Reporting Initiative was launched in 1997, the number of reporting organizations in our country has increased tenfold. It’s true that multi-nationals reporting on environmental, social and governance (ESG) issues in the U.S. lag behind our global counterparts. However, it’s encouraging to see an increase in reporting uptake – not just because this allows stakeholders to better understand corporate impacts, but also because reporting in its best form should be a tool that aids strategy development, target setting, and business management.

Since the early days when standards were first created to guide corporations’ communication of ESG impacts and issues, the details, mediums, and audiences for sustainability reports have changed. What started out as backward-looking accountability statements primarily covering environmental impacts and corporate philanthropy has evolved into robust corporate evaluations of material impacts – which are now vetted through stakeholder bodies and include a balanced account of progress, challenges, and forward-looking and aspirational targets (in their best form).

Timberland has been experimenting with different mediums for some time. We issued our first CSR report back in 2000 – a short, printed document focused on community service, employee engagement, and overview information about our social and environmental programs. Fast forward to 2007 when we released our 2006 CSR report – our last annual, printed “accountability statement.” In today’s era of increasing information and stakeholder requests, I’m often asked “who’s reading these reports, and what are they accomplishing?”  One could argue that our 19-page report in 2000 was accessible, easy to understand, and inclusive of many stakeholder interests (although light on data by today’s standards). By comparison, our 2006 report (which was 180 pages long and won several awards for best-in-class disclosure) was full of possibly too much information for different audiences to easily access what they had specific interest in.

There’s continued debate about whether or not a single sustainability report can satisfy the needs of multiple stakeholders – that is, employees, NGOs, issue experts, critics, partners, peer companies, investors, analysts, consumers, communities, workers, media, governments … the list goes on!  Different stakeholders have different interests in EGS data, programs, and strategies.  Being accountable to all of these stakeholders requires engagement, partnership, and dialogue – much more than simply producing a report. Yet the reporting process can inform these audiences, and I encourage companies to start by determining which groups are core to their business success. Target your reporting approach for these key groups, and ensure others can easily find information so they aren’t left out.

So how does a company balance the need for more information, while also maintaining credibility and relevance? At Timberland, we’ve continued our experimentation with different reporting formats. Our evolving reporting and communication approach reflects an evolving and improved sustainability strategy for managing risk, creating value and increasing consumer relevance – components that are necessary for our entire business model to succeed.

Whether you are a first time reporter or have been at it for years, here are my top 5 tips for effectively leveraging reporting as a management and communication tool:

  1. Ensure your report reflects material impacts – GRI advises that “the information in a report should cover topics and indicators that reflect the organization’s significant economic, environmental, and social impacts, or that would substantively influence the assessments and decisions of stakeholders.”  A credible report should cover such impacts, and by engaging stakeholders in a materiality assessment process, you can prioritize resources and reporting topics. Ford Motor Company has been producing an excellent Materiality Matrix for years.
  2. Consider different stakeholders’ entry points and interests – different stakeholder groups read reports for different reasons. A detailed data set may appeal to a socially responsible investor, whereas a story about your program in action could be more relevant to an issue expert looking to understand supply chain management practices. Timberland issued our 2007-8 CSR report as a “suite” of communication tools – including a summary report (only 30 pages!), detailed “Dig Deeper” papers for those looking for more details, an online forum to engage stakeholders in dialogue on key issues, and a consumer-facing brochure.
  3. Tell the good and the bad – In today’s globalized society, if you’re not telling your own story in a truthful, credible, and engaging manner, others will simply tell it for you – and sometimes inaccurately! And yes, even if you are the most transparent company in the world, this still happens. But being open, honest and engaging can put you ahead of the curve when it comes to stakeholder engagement, campaigns, and trust-building. Dell has an open report, including discussion of tough issues like eliminating hazardous chemicals.
  4. Make it engaging – which will help attract different types of stakeholders, too. Timberland’s new Responsibility website aims to do just that. The site is much more than a report; it’s a comprehensive and interactive hub for all information about Timberland’s social and environmental activities. Viewers can read Featured Stories about topics such as our sustainable store design, work with tanneries to reduce their environmental impacts, efforts to empower factory workers, and community greening. It’s important to consider the best ways to reach targeted stakeholder audiences – as a footwear company, consumers are key and that’s why these stories are written in a news-editorial style and linked to CSR Stakeholder Calls, Voices of Challenge dialogue, blog and social media.
  5. A report is not the means to an end – Use the reporting process to build increased accountability for sustainability issues within your organization. Reporting efforts should be aimed at both internal and external audiences. And don’t forget to engage and share results with your own business units and internal leaders. It’s critical to build buy-in and ownership of ESG issues in order to successfully integrate sustainability into your business model.

This post also currently appears on the Boston College Center for Corporate Citizenship blog.  Thank you, BCCCC, for sharing content with us!