Self-Interest of CSR Rating Providers

http://adage.com/article/guest-columnists/ways-improve-csr/295139/

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.

Reduced Scrutiny

https://en.wikipedia.org/w/index.php?title=Corporate_social_responsibility&oldid=736600984#Reduced_scrutiny

[…]

Reduced scrutiny

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.

CSR Evaluation and Corporate Hypocrisy

http://surface.syr.edu/cgi/viewcontent.cgi?article=1025&context=etd

Syracuse University
12-2013

The Role of Ethical Evaluation of Corporate Social
Responsibility in the Perception of Corporate
Hypocrisy, the Intention of Opinioned
Communication and Behavior toward a Firm

KyuJin Shim

ABSTRACT
Corporate hypocrisy refers to publics’ negative perception of CSR (Corporate Social Responsibility) as a result of ethical attribution of CSR to normative ethics, and thus can be a useful indicator of the disappointing and ineffective role of CSR programs geared toward raising publics’ goodwill toward a firm. However, scant scholarly effort has been made to explore the concept of corporate hypocrisy in relation to corporate issues and crises, publics’ ethical orientation, cultural and national influence, and polarized sentiments toward global business in the media landscape. These aspects collectively constitute the unpredictable, uncontrollable public opinion, in particular the opinion of the socially minded general public, and these aspects thus generate a turbulent business arena across the globe.
        To fill this void, this dissertation concurrently conducted two sets of research: one used a survey methodology on a real company’s CSR case and the other used an experimental method. […]

Unfair Advantage

 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.

Giving Credibility to EcoVadis Awards

Reputation management can be honest.

 There is a credibility issue with EcoVadis awards. However, the good news is that organizations assessed by ecovadis can make their award credible just by disclosing their EcoVadis Premium Report to the public. Then everybody knows for sure that also the employees of that company can scrutinize that CSR report.

 If they hide their EcoVadis Premium Report from their own employees, you can’t really count on “Gold” ratings and “Silver” ratings given to organizations assessed by EcoVadis for their CSR management. But companies that disclose such an CSR report at least to the own employees, deserve credit. They, and of course those who publish the report in the internet, deserve a Platinum CSR Award.

 The employees of these platinum winners then can compare the reported CSR performance of their employer with the real CSR performance experienced by the employees. Seemingly, only very few companies ranked by EcoVadis can afford such an openess.

 Companies that prove their credibility by openly publishing their report in the internet(!) of course have a top-notch attitude towards CSR – even if they have no “Gold” award. A company with a “Silver” award and disclosed Premium Reports is much more credible that a “Gold” awarded company that hides the Premium Report.

 In the listing below, entries are rendered in boldface typesetting for those companies who publish their EcoVadis premium report in the internet.

 


Platinum for transparent reporting:

Above I listed good practice examples only. The listing is not complete.

 
 Should I add EcoVadis to the list? (They didn’t answer yet.)

 “Analysing CSR orientation through employees’ perceptions can help distinguish between company’s genuine CSR orientation and simple window dressing.” Bad companies don’t care about employees’ perceptions. Such examples you can find yourself, I won’t list them here. If a company has been awarded by EcoVadis with “Gold” and if such a company has received an EcoVadis Premium Report, there should be no reason to hide a that report from the employees. Actually, according to EcoVadis, “trade unions” are legitimate stakeholders. Therefore at least these employee representatives should receive the Premium Report.

 The companies mentioned above are credible. They don’t hide their EcoVadis Premium report. But some companies seem to be afraid that providing their own employees with the Premium Report would reveal to the employees what their employer reported to EcoVadis. If a company assessed by EcoVadis hides the Report from the employees, there may be something wrong with what that company had reported to EcoVadis. Then a “Gold” award has no value.

Imbalanced Inclusion

RobecoSAM (Dow Jones Sustainability Yearbook) explained by CINCS (Creating Intelligent Natural Capital Solutions) in: Sustainability Indices and Environmental Reporting, 2013-04-23
(http://cincs.com/dev/wp-content/uploads/2014/07/InFocus23.pdf):

“[…] Environmental-business analysts and investors have challenged the credibility of DJSI’s information source for some time. DJSI [Dow Jones Sustainability Index] has four steps to follow in the evaluation process:

[1] First, each participating company has to fill in an industry-specific company questionnaire distributed by RobecoSAM, which evaluates the overall social and environmental strategies of each company.
[2] After that, DJSI will analyze industry-relevant media reports, press releases, news articles, investor commentaries and employee feedback to get a comprehensive understanding of how the company is perceived by opinion leaders and stakeholders.
[3] Following this is the company documentation section, in which RobecoSAM will request sustainability reports, environmental reports, health and safety reports, social reports and annual financial reports from each company.
[4] The last part is the company contact, in which SAM will have discussions and phone conversations with corporation leaders.

Of these, three of them are based on companies’ self-provided reports, data, resources and articles. In that circumstance, data could be optimized or even manipulated to generate better evaluation scores. For example, in the company documentation section, there is no standard sustainability reporting regulation regarding how companies should file sustainability and environmental reports. Therefore, companies are able to polish and further dress these data to make them appear glorious and “trustworthy.”
[…]
Conclusions – With the growing awareness of and demand for sustainability assessment, DJSI is a great tool for companies who are dedicated to gaining ongoing financial growth while meeting high environmental and social standards. The major benefit of being listed in DJSI is that it will help companies to be more transparent for investors through a thoroughly planned and designed corporate sustainability ranking system. The two major deficiencies of DJSI and other similar indices are that they lack authenticity in their auditing process and use imbalanced inclusion. […]”

Imbalanced inclusion: Inclusion of pros only while neglecting cons. In advertising that is legitimate. However, a performance evaluation or an audit which allows imbalanced inclusion is not credible.

External Assurance

https://johannviljoen.wordpress.com/sustainability-reporting-focus-on-assurance/

[…] External assurance seems to increase year-on-year. In the annual World Business Council for Sustainable Development´s (WBCSD) 2015 report, Reporting matters, 78 per cent of their 169 members have their report externally assured. Of course one can reason that the sample population is skewed, and indeed I would agree with that, as membership tends to consist of progressive sustainable companies, but even within this group, the trend is increasing by five percentage points in 2014 and 14 percentage points when compared to 2013. […]

Be assured: External assurance isn’t necessarily external verification.

Leftist Trade Unions not interested in CSR

http://www.etui.org/News/Trade-unions-and-corporate-social-responsibility-pragmatism-wins-out-against-mistrust (2015-02-26)

[…] The more left-wing the trade union, the less it will be interested in CSR’ was how Lutz Preuss summed up the situation. According to this researcher, it is in Finland that the trade union movement is most open to CSR, a finding that can be explained by the fact that this country is able to boast a highly developed social legislation that endows it, to some extent, with a safety net that can protect it from any undesirable side-effects of negotiations undertaken in the framework of CSR. […]

If “left-wing” stands for left-wing conservativism, I agree to that. As for CSR, old fashioned unions too often leave the agenda setting to the employers and lack the competency and professionality required to challenge corporate story telling and corporate “reputation management”.