Corporate Social Responsibility is becoming a market standard, but how do you tell the difference between a truly committed company and one that only pays lip service to CSR? One particular tool to help assess a company’s commitment is the CSR report. Read on to find out how and why…
What is a CSR Report ?
“A CSR, corporate social responsibility or sustainability report is a periodical (usually annual) report published by companies with the goal of sharing their corporate social responsibility actions and results. The report synthesizes and makes public the information organizations decide to communicate regarding their commitments and actions in social and environmental areas.”
Several terms, such as CSR report, non-financial report or non-financial statement (EU) are used to talk about the same type of document. Their purpose is similar, but each has its own specific features.
Similarity-wise, each illustrates the company’s CSR approach and the way in which the principles of sustainable development are integrated into its daily operations.
A CSR report is voluntary. It presents the company’s CSR strategy, its commitments and the sustainable actions undertaken. The report can be drawn up in different formats and does not have to follow a particular reporting methodology. Tools are available to standardise and legitimise the CSR report; we will review these later in this article.
A non-financial report is more demanding than the usual CSR report because the information it contains is subject to specific requirements. It is presented as a balance sheet that outlines the major challenges facing the company and the sustainable objectives implemented, plus their results. You will often see performance indicators in this report, but you may also see them in other types of reports. A non-financial report also pays particular attention to corporate governance. This reporting format is often preferred by financial and legislative bodies.
Non-financial reporting is currently voluntary, but on 28 November 2022, the EU Council gave its final approval to the corporate sustainability reporting directive (CSRD). For more information, visit this link.
Why prepare a CSR report?
A CSR report has several uses in the context of a sustainable business approach, both inside and outside the company.
The main objective is to be transparent about the company’s activities and their overall impact. As the life of a company involves a set of stakeholders, it is important to engage them in the sustainable approach and to provide access to information.
Inside the company, the report helps to measure overall performance. Measuring sustainability indicators and targets provides a clear picture of the company’s impact on the environment, the community and the economic ecosystem. This understanding makes it easier for the company to improve its strategy to create a positive impact.
By better understanding, managing and disclosing impacts, organisations can tap into benefits that inform decision-making, reduce risks, improve business opportunities and strengthen stakeholder relationships.
Outside the company, the report helps stakeholders assess the company’s overall impact and understand its sustainability commitments. Stakeholders thus have the tools to assess the consequences of partnering with the company because they can make an informed choice based on the report’s content.
As explained above, public and financial institutions are creating CSR reporting laws and requirements. The EU Council has given the green light for the corporate sustainability reporting directive which will require large companies (to start with) to publish an annual non-financial report. Several financial organisations, such as banks or investment funds, require a non-financial report to supplement a company assessment.
Benefits for a company
Internal:
- Create a corporate vision and strategy
- Measure overall performance
- Manage potential risks
- Motivate employees
External:
- Build stakeholders trust
- Comply with legislation (EU)
- Attract new investors
- Engage all stakeholders
How to create a CSR Report ?
What should a CSR report include?
We have already mentioned above that CSR covers different areas. A company seeks to demonstrate its environmental, social and community impact through the report. Governance, another essential topic, should also be covered to create a fully comprehensive report. Governance is considered particularly important by financial institutions and other stakeholders who need to assess the company’s performance.
While there are tools available to guide you in writing a report, here is quick overview of the key topics to cover:
Presentation of company governance
- Presentation of the company’s activity and its potential entities
- Tools implemented for control, transparency and ethics
- Due diligence policies
- Commitments and targets (and their performance indicators)
Presentation of the company’s social impact
- Well-being in the workplace
- Human rights
- Trade union practices
- Non-discrimination policy
- etc.
Presentation of impact on the community
- Supplier relations
- Donations
- Pro-bono work
- Volunteering
- Respecting consumers
Presentation of the environmental impact
- Carbon footprint
- Facilities management
- Recording and monitoring of energy and other consumption
- Environmental policy
- Impact of products or services
These are just a few general examples to give you an idea of what is needed for the report. The following section provides more details and a set of tools for a more precise and standardised approach.
Reference frameworks
Several public and private bodies have been created to provide a standardised and comprehensive version of the CSR report. They have built frameworks that allow companies to draw up accessible, compliant and transparent reports.
GRI
GRI (Global Reporting Initiative) is an independent international organisation that helps companies and other organisations take responsibility for their impacts by providing a global language for communicating these impacts.
Global Compact with UNGPs
The UN Guiding Principles for Business and Human Rights are a set of guidelines for nations and companies to prevent, address and remedy human rights’ abuses committed in the course of business operations.
SASB Standards
The Value Reporting Foundation, now consolidated into the IFRS Foundation, provides an industry-focused perspective by identifying the sustainability-related risks and opportunities most likely to affect a company’s financial position, operational performance or risk profile.
All these frameworks work together to develop common standards and provide formalised reporting techniques. This unification helps companies to be fully transparent about their impacts.
Do be aware that economic and financial institutions now request and expect a non-financial report as an essential element of their assessment process. It enables stakeholders to understand the operations, impact and potential risks associated with a business. The CSR report supplements the financial report when assessing a company. It is therefore important to coordinate the publication of financial and CSR reports for greater accessibility and consistency.
Conclusion
To speed up the sustainable transition and engage stakeholders, it is vital to standardise CSR reports, regulate them and provide access. Transparency is an important element of any sustainable approach. A CSR report is a solution and springboard to conducting sustainable and successful business.
If you would like to discuss CSR strategy and/or CSR reporting, please get in touch. We’d love to hear from you!