Employees are CSR Stakeholders

“If It’s Not Public, You’re Not Doing It”

 This blog is about Corporate Social Responsibility (CSR) in general and especially about the disclosure of EcoVadis Premium Reports to employees as key stakeholders in the CSR management of their employer.

 EcoVadis got a hook in its name. It probably is intended to stand for “CSR checked”. Employees are key stakeholders in the CSR management of their organization. How seriously can one take the green EcoVadis check mark if the employees of audited organizations cannot scrutinize the stories which their employers tell to EcoVadis and which EcoVadis turnes into a well structured “Premium Report”? That 15 pages profiles also contains a 3 pages chapter “LABOR PRACTICES & HUMAN RIGHTS (LAB)”.


 Today, customers are not just buying products and services from their suppliers. Considering their reputation and their liabilities as purchasers and employers, especially large corporations are under immense pressure from stakeholders to be transparent about their sustainability and CSR practices, and this includes their supply chains.

 EcoVadis’ business is reputation management. EcoVadis Members can subscribe to a “Premium Plan” where EcoVadis offers “customized 360° monitoring of CSR news and events” related their company.

 Plans and prices: For being evaluated by EcoVadis in 2016, to my understanding suppliers (members) have to pay 480€ for a “Basic” one year plan. For a subscription to the “Premium” one year plan (with the 15 pages EcoVadis Premium Report) they pay 1200€. (The “Corporate” one year plan would cost them 4900€.) Subscribers to the Premium Plan get “Premium badges”, “certificates” and a “15 page profile” to proactively tell their “CSR success story” in their websites, PR, etc. Thus, EcoVadis does support the disclosure of the EcoVadis Premium Report (the profile) to the public. But only few companies to that.

 250 young and mostly low payed employees helped EcoVadis in “expanding activity by more than 50% in 2015”. EcoVadis’ business is to evaluate the CSR management of suppliers in a higly standadized way. Around 25000 suppliers from more that 100 countries are registered with the EcoVadis platform, around 6000 “members” per year are evaluated. Buying from a supplier ranked high by EcoVadis gives purchasers a good conscience. They think, that they don’t need to put effort in audits of sites of suppliers awarded with “Gold” or “Silver”.

 An EcoVadis Premium Report shows well structured and in detail what a supplier reported to EcoVadis. But there is a weak point: If the CSR of a supplier has been awarded with “Gold” by EcoVadis and if that supplier does not disclose the related EcoVadis Premium Report at least to the own employees, then there must be something wrong with the report. Employees are major stakeholders in their employer’s CSR management. The chapter “LABOR PRACTICES & HUMAN RIGHTS (LAB)” in the EcoVadis Premium Report is their’s.

 It’s the GIGO Principle: EcoVadis offers an excellent framework for standardized CSI reporting. That shows that a well structured presentation of “soft” issues is possible. But if the input is flawed (garbage in), the output of a document audit (remote audit) will be flawed as well (garbage out). The good news: Suppliers assessed by EcoVadis can turn the weak point of the EcoVadis method into a strength. There already are suppliers who disclose their EcoVadis Premium Report to their employees as stakeholders of their CSR management system. They enable their own employees to scrutinize the EcoVadis Premium Report with their insider knowledge. Some suppliers even publish the report in the Internet.

Platinum
 If you call suppliers “courageous” because they disclose their EcoVadis Premium Report to their employees or even to the public, you still don’t really understand what CSR is about. Rather than being courageous, these companies simply walk the CSR talk and display best practice leadership – which regrettably is not fostered by EcoVadis yet. Suppliers with transparent CSR reporting deserve “Platinum”. As long as EcoVadis doesn’t provide such an award, I’ll try my best to take care of that.

Trina Solar

http://www.ecovadis.com/library/trina-solar-sustainability/

[…] As a leading maker of solar panels, Trina Solar focuses its entire business purpose in sustainability. Thus, evaluating them on their CSR and sustainability performance almost seems a bit intimidating. But Trina Solar have taken a very engaging attitude toward the EcoVadis evaluation and embraced all theme aspects to maintain and improve their solid score performance. Read the full interview, conducted by EcoVadis, of Jodie Roussell, Head of Public Affairs (Europe & Africa) at Trina Solar.

“We have found, though, that EcoVadis Scorecard sharing gives our clients a greater feeling of comfort because the information has been reviewed by a third party. They feel comfortable with the information and give priority to higher risk sites and suppliers.” Jodie Roussell.

 Message to EcoVadis via Facebook:
I lived and worked in Shanghai. Auditing in China is a big challenge. It would contribute to transparency if Trinasolar would disclose not only the EcoVadis Scorecard to its own employees, but also the c. 15 pages EcoVadis Premium Report with its c. 3 pages chapter on 'Labor Practices & Human Rights'.

Sustainability reporting: focus on balanced and transparent reporting

https://johannviljoen.wordpress.com/2016/03/21/sustainability-reporting-focus-on-balanced-and-transparent-reporting/ (2016-03-21):

[…]

My research focus was to evaluate reports on transparency, management disclosure and assurance practices. Transparency was broken down into three sub-criteria:

  • how materiality is determined,
  • how stakeholder engagement practices are conducted and
  • how sustainable business goals are set.

[…]

“Did you mean eco vad is?”

http://blogspot.ecovadis.com/2014/08/schneider-electrics-transparent.html?showComment=1472951316987 (2014-10-10)

[…] It must be said that Schneider Electric’s transparency on reporting is commendable. […]

 Does Schneider Electric disclose its EcoVadis Premium Report at least to its own employees? Probably not: http://www.schneider-electric.com/en/search/EcoVadis?category=all&p=0 (2016-08-05)

[…] No results found for “EcoVadis” in All the site.
Did you mean eco vad is? […]

Checking Reporting Attitude

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.

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.