What Gets the Worst Marketing ROI? Your Corporate Social Responsibility Report
Three Ways to Improve the Value of Your CSR Report
By Paul Klein. Published on September 26, 2014.
Finally, CSR reporting has become a case of the tail wagging the dog. There is a growing industry of suppliers that specialize in defining, collecting and packaging environmental, social and governance (ESG) data. This industry advocates for annual reporting but, given the results, the current model seems to be driven by self-interest rather than real value.
The real value (and objective) could be reduced scrunity.
Corporations are keen to avoid interference in their business through taxation and/or regulations. A CSR program can persuade governments and the public that a company takes health and safety, diversity and the environment seriously, reducing the likelihood that company practices will be closely monitored.
I think that this often is the main reason for advertising CSR. By awarding suppliers with “Gold” who do not allow their own employees to check the EcoVadis Premiom Report, EcoVadis helps their clients to avoid thorough audits. That is irresponsible.
Employees are key stakeholders in the CSR management of their employers. Without credible stakeholder involvement, even being ISAE 3000 audited won’t help (as much as all the buzz words in EcoVadis’ announcement won’t help). EcoVadis talks to unions, but they don’t pay enough respect to employees where EcoVadis could help them directly without too much effort. That is an ethical problem in the ethics business.
I think that the concept of EcoVadis is good, but their reluctance to encourage suppliers to disclose their EcoVadis Premium Reports at least to the own employees is irritating. On the other hand that also provides suppliers with an opportunity to get an “Platinum” award just by publishing their reports without having been asked by EcoVadis.
That said, I want to draw your attention to AntiCSR.com with the understanding, that I am not against CSR reporting in general. I am against insufficiently verified CSR reporting. I am against hype. “Anti CSR” takes “a Critical look at Corporate Social Responsibility”. That is what we need.
Each year, PWC, Deloitte, EY and KPMG check annual reports of their clients. As a part of this business, the “Big Four” also audit the increasingly important “sustainability” chapters of their clients’ reports. Here organizations assessed by the Big Four often present their “Corporate Social Responsibility” (CSR).
When checking an organizations’ annual report, the EcoVadis Premium Report is an interesting source of information to auditors. The assessed client probably is proud to mention an EcoVadis “Gold” award in the annual report.
To auditors: Use the EcoVadis Premium Report to assess your client’s reporting attitude.
Auditors can use the EcoVadis Report in at least two ways:
- The content of the report gives auditors a good and well structured overview on how their audited client has presented the CRS mamagement to EcoVadis. That is the usual way to use the EcoVadis Premium Report.
- The application of the report shows to auditors, which attitude their assessed client has to transparency. If the organization discloses the EcoVadis Premium Report to clients only, but refuses to disclose that report to the own employees, you as an auditor know, that there probably something is wrong with the report. As an employer, the assessed organization may want to avoid that employees scrutinize the report with their insider knowledge. That attitude of the assessed organization towards reporting also may affect what your client reports to you on other matters.
Thus, not only the EcoVadis Premium Report itself but also the way how your client uses it, helps you as an auditor to assess the transparency and credibility of your client’s reporting.
However, there may be legitimate reasons not to disclose an EcoVadis report. If your client claims to have a legitimate reason not to disclose at least the chapter “LABOR PRACTICES & HUMAN RIGHTS (LAB)” to the employees, let the client explain to you, which parts exactly of that chapter should not be disclosed and why these parts of the EcoVadis Premium Report should not be disclosed to the own employees, even though they obviously hold a stake in their employer’s CSR. There is a legitimate “need to know” on the side of the employees.
EvoVadis reported that the following suppliers had turned to EcoVadis’ supplier sustainability ratings service:
- Coca Cola Enterprises,
- Eastman Chemical,
- ING Bank,
- Johnson & Johnson,
Question to these suppliers: Do you disclose your EcoVadis Premium Reports to the public – or at least your own employees?
Transparent and honest reporting is possible.
According to EcoVadis (see http://www.endress.com/_storage/asset/1576641/storage/master/file/6849002/download/eh_EcoVadis_Premium_Report_2016.pdf, chapter 10, p. 24/31) “legitimate stakeholders” are:
- Governmental organizations (i.e. government environmental protection administrations, anti-trust agencies, customers protection agencies)
- CSR networks and initiatives
- Trade unions and employers’ organizations
- International organizations (i.e. UN, ILO, UNEP, …)
- NGO’s (i.e. Greenpeace, Clean Clothes Campaign, Transparency international, UFC, …)
- Research institutes and reputable press (CSR Asia, Blacksmith Institute, …)
A corporate stakeholder is a party that can affect or be affected by the actions of the company and the achievement of its objectives (i.e. employees, clients, suppliers).
I think that, presently, EcoVadis treats employees as 2nd class stakeholders.
EcoVadis should publish which companies disclose their Premium Reports to their employees and which companies refuse to do so.
Honest companies tell the truth to EcoVadis. There will be no significant conflict between what an organization reports to EcoVadis and what the employees know about their organization.
If, however, an organization has a policy to hide CSR reports from the employees, they can spruce up their self assessment quite a bit. EcoVadis doesn’t have the background knowledge and the resources to check reports as thoroughly as the employees. Therefore it is easier for dishonest companies to get an EcoVadis “Gold” award than for honest companies.
Thus, by not encouraging organizations with a “Silver” or “Gold” rated CSR management to disclose the detailed Ecovadis Premium Report, EcoVadis gives organizations with intransparent CSR reporting an unfair advantage.
But then again, things perhaps are not that bad: Honest companies can disclose their detailed EcoVadis CSR report without any encouragement by EcoVadis. That is how smart companies turn a disadvantage into an advantage.