This is a guest blog post by Maja Recnik, Education Director at SPEM Communication Group, Slovenia
One can never find the appropriate time to start reporting on sustainable development and corporate social responsibility. Global companies are currently at the head of the game in the area of reporting about sustainability while global organizations, such as United Nations and ISO, define reporting methods and structure. In the next year European Union plans to prescribe reporting as obligatory for all European companies. The least European companies can do to adapt to this rising trend is to start now.
Let us look at how some global companies handle this.
According to data received from the audit firm KPMG 95 % of 250 largest companies in the world annualy report on sustainability. The ratio would be approximately 20 % if 5000 largest companies in the world were taken into consideration. Of all companies included in database CorporateRegister.com exactly 6400 make the report. If smaller countries and more languages were included, this number would probably raise to 10000 companies. This is still a small number but the trends predict it would definitely increase. For the next year, for all companies with at least 500 employees the European Commission announced the revoluton in reporting. Thus it won’t only make a huge change in company’s attitude towards sustainable business but will also follow north European countries where reporting is already an obligation.
The need for reporting on sustainable operation and social responsibility emerged in 1990s when the photography of 12-year old boy, who was sewing Nike shoes with his bare hands, was published in media. The photo soon surrounded the world and despite Nike’s effort in the last twenty years to rebuild reputation the image could not disappear. The definition of sustainable development as three aspects of the operation, economical, social and ecological, emerged after the year 2000. Companies should plan their development in a beneficial manner for the next generations. The United Nations first introduced reporting for environment in order to establish common standards so the efforts of companies could be compared. After the year 2010, knowing that companies by doing their work don’t pollute the environment wasn’t enough anymore; besides sustainable growth they must also attain positive effects on environment and society. The future will introduce more specialized reporting areas and integrated reports. The Organization GRI (Global Initiative Report) intends to introduce the next generation of G4 standards which are supposed to focus more on materiality. The event is presumably going to happen next week in Amsterdam. The novelty is the transition from wide scale reporting to reports considering important issues that affect the operation of business and the relationship of participants towards the company.
Preparation of report is a process lasting approximately six till eight months when doing it for the first time. According to specialists’ experiences the report is useful in 90 % because it creates a dialog between the company and participants, on the basis of which it is possible to predict risks and determine opportunities. At first, it isn’t necessary for the companies to choose one of the international standards but can start with minimal observation of their operation on business, society and environment. Elaine Cohem, the counsellor for sustainable reporting at Reporter Beyond Business, who at the invitation ofZavod Ekvilib gave lectures to companies in Network for Corporate Social Responsibility Slovenia, pointed out 25 common indexes for measuring sustainability. Some of them are for example total electricity consumption, joint gasoline and other fuel consumption, the number of kilometres by plane, water consumption, kilograms of trash. In the field of relationship with employees, the indexes are for example employee contentment, the number of absences due to illness or injury, gender diversity, number of training hours. In the field of relationship with customers: customers contentment, product safety, the number of complaints, suppliers satisfaction, payments in due time. Another important area is the field of charity as for example the amount of donations to local communities, number and hours of work of volunteers and other. It is essential that the company collects the required data first. It must accomplish discussions with various participants because thus it already gets the basic data for defining the reporting. Beside the process going on in the company it must be noted that these reports are of most importance to employees and academics who analyse them and then also to customers and suppliers.
The majority of global companies already has a 10-years reporting tradition. Reasons for this are not only various sustainability and companies reputation scales but also greater consumer awareness. Between the same price and the same quality the consumer will probably decide for the company which has a story of sustainability. Likewise we will rather accept a job in a trustworthy company. Magazine Corporate Responsibility (CR Magazine) is one of many which regularly publish data considering company reporting. Its scale of 100 best corporate citizens in USA is a top-level list for measuring practices of corporate citizenship. Global company PPG which shares a joint company in Slovenia in assocciation with Helios Company was selected among finalists. The magazine gathered 318 points from public available data such as annual report, management statements etc. in seven categories: environment, climate changes, human rights, philanthropy, employee relations, financial communities and government. PPG company has issued a sustainability report in April for 2012 where it published sustainability goals and defined new vision till the year 2020. Their sustainability framework follows more than a year long internal and external analysis to determine the most important effects to the company and participants. The company made a plan to decrease environmental impact, improve health, safety and welfare of employees as well as enhance and report about donations and charity of its employees, all these to be accomplished until 2020. In their opinion this was a great step forward which will help all employees in the world to get a method and measurable goals for promotion and development of sustainability practices. Some of the goals are reducing energy consumption and greenhouse gas emissions for 1.5 % per year, reducing overflows and releases for 10 % per year, initiating programs for employee welfare and attaining 30 % sale of sustainable products until the year 2020. The report is made by GRI standard G3.
Other successful global companies with high quotes in the sustainable development field develop concepts where they put themselves and key participants in the forefront. In Unilever the key participants are employees and consumers. Their vision is creating consumer awareness to the point at which they will use cleaning agents more economically and qualitatively. By doing that the company will indirectly affect environment protection and economic independence of consumers. In a similar innovative way Marks and Spencer began their sustainable concept named Plan A since plan B no longer exists. His sustainable model brought not only the reduction of costs but also the increase of profit. Technology company SAP is the first that made a report on sustainability on network and interactively connected itself with its participants in order to get feedback. 100 individuals from different target groups replied and they were valuable source of information on how to improve operation.
Experiences of big global companies are of invaluable importance for companies who are only at the beginning of understanding sustainable operation. The European Union tries to put itself in the forefront. What will these changes bring will be possible to see only when all companies are obliged to operate and report sustainably.