Ten lessons from our reporting conference this week

Today I attended the second day of our annual reporting conference in London.

It was one of the best yet, and we've been holding them for five years or more.

I'm trying to consider the really important bits that I remember, and make sense of them.

Here's ten:

1) Investors such as Aviva (£300 billion under management) are not that interested in what level of GRI you have. Although using it is a useful indicator for them.

2) The push by Bloomberg to put ESG-related information on their terminals will be very significant over time, although it doesn't work so well right now.

3) The UK election may be quite significant, given the more hands-off approach the Conservatives may seek to take to business generally. But their Responsibility Deals mechanism may play an important role (I should note here that I was partly responsible for the creation of these, although not responsible for how they are being used right now).

4) GRI still has little traction in the US. But the SEC is planning some moves to encourage better reporting. Watch this space, slowly, is the messsage I heard.

5) Reports are only really useful as a management tool. As a communications device they don't work. But CR teams lack the budget and wherewithal to take them to the next level of segmented communication.

6) The traditional formats for consumer communication make it very hard to do this for that particular audience, i.e. customers. But focused communications utilising new communications methods present an excellent low cost way to engage some groups.

7) Reporting to 'opinion formers' is best done in the form of issue briefs, with credible stakeholder comments on specific issues. But hardly anyone does it consistently, or at all. Working with the comms department is seen as very tough.

8) The GRI needs to reform, and help make reports shorter, and more readable. But their long term future is by no means assured, given potential integration of some information into annual reports and other, segmented communication formats.

9) The role of assurance is constantly up for debate. Companies are unhappy with what assurance achieves for them, and the costs of it, but are not sure what else to do. Stakeholder panels are seen as one solution. Both may be required in future. But for many companies resources for both are just not available.

10) Companies are becoming more comfortable with giving critics a voice in their reporting, but given no-one reads reports, are confused about the value of this, and have to fight internal battles as a result.

Overall, I'd say despite the challenges above, I've seen reporting improve drastically in the last few years. It's what you do AFTER you publish your report that will soon count for a lot more than the fact you produced a report itself.

That's the real challenge, and opportunity, for business to win trust from stakeholders.

Will we ever have a big CSR brand?

I spent a bit of time this week talking with a fascinating branding consultant, who was presenting at a conference on how some big brands, like Coke, are using sustainability to try and re-define how they will produce and market products in the future.

One conversation I had with a colleague of his was around big brands and CSR.

Over dinner at the second annual Hungarian CSR awards in Budapest, we debated whether it's possible for a big brand to be as closely associated with responsible business as it is for smaller ones.

Smaller firm examples, like Innocent Drinks, jump to mind fairly easily. Coke bought a non-controlling stake in them recently.

But what about larger companies? Given all their growing and inherent sustainability liabilities, is it possible that in the future, one or more of them will be associated obviously with sustainability in the minds of consumers?

My picks are Unilever (for their lead on certification and others areas) and Marks and Spencer (for Plan A). I'd also throw Timberland in there, for various reasons.

But I'm not yet convinced it is possible.

Big companies, with diverse products appealing to so many different groups, and so many ever-broadening issues to deal with, will largely find it very hard to become eminently associated with ethics first in the mind of their customers.

We all know that companies can be great at many issues, whilst falling down on others.

We live in an imperfect world, after all, and mistakes will always be made, and limits will always be in place. And emerging issues can always jump up and bite you.

If I had to put money on it. I'd go with M&S though.

My question to you, readers, is twofold:

Do you agree?

And do you think I missed any likely candidates?

CSR in Hungary: On the rise

After my recent Bulgaria trip to talk about embedding CSR, this week I ventured to Budapest to meet some Hungarian companies and talk about excellence in CSR.

The conference was organised by the impressive consultancy Braun and Partners. I found Robert Braun and his colleagues to be a very interesting bunch of well informed CSR experts.

The conference was a step change from my Sofia visit. I spent some time hearing about companies aiming at advanced GRI reporting, which surprised me.

I spent some time arguing the case for not spending too much time on 'standards' and box ticking over taking meaningful action.

The attendees were well informed and knowledgeable, and we had some great discussion about the future of anti-corruption enforcement in Europe (slow but picking up), stakeholder engagement techniques, and how companies manage key CR issues.

Overall I was impressed with the level of debate. Hungarian companies seem up there with the best in Poland, at least. And I met a couple of interesting Romanian companies too, who are also getting more traction with their CEOs on CSR.

So whilst being a wonderful city to stroll around, I can also recommend Hungary for its emerging debate on responsible business. Braun and Partners likely deserve much of the credit for this.

I left hopeful about the future of corporate responsibility in Hungary. If 100 business people can pay for a conference in these tough times, that bodes well for the future.

My friend and colleague Mallen Baker told me today he is off to Kiev shortly to do some CSR workshops.

If CSR can survive and appear to thrive in these tough times in countries hit much harder by the downturn than Western Europe, we should really celebrate the fact.

The tidal wave has been building for many years. We're not close to the crest of it yet, but its rise and momentum is now clearly inexorable.

CSR in Bulgaria: Likely to accelerate

Last week I spoke about embedding CSR at the first annual CSR forum in Sofia, Bulgaria.

Aside from seeing the inside of the atmospheric cathedral in Sofia, I attempted to work out how CSR is progressing in the country.

The presentation I gave is here.

What did I learn?

Well, despite the recession, the organisers, Capital Weekly, a Bulgarian business paper, were able to bring in 150 odd business people and NGOs. So that's a good sign for CR in tough times. It is still spreading strongly.

What else? That partnerships with NGOs are becoming important in Bulgaria.

Again, a good sign.

Consultants trying to establish a business in the country told me that most of the focus in the country is about philanthropy and sponsorship, quite common in Central and Eastern Europe.

I sensed they were right. Many of the questions I had from the audience were about my assertion that CSR is NOT philanthropy.

But that's how it starts in every country. What's really interesting about CR in places such as Bulgaria is how fast the paradigm is changing.

It took the UK a long time to make the shift. My bet is that it will be an awful lot quicker in Bulgaria.

Multi-national companies, UNDP and the Global Compact can take a lot of credit for this.

But there are also some interesting emerging examples of local firms engaging in environmental and social issues. As these develop, they will have as least as much, if not more influence, on others.

China vs. US on Climate Change

By Paul French, China editor for Ethical Corporation, in Shanghai.

In my upcoming China Column for Ethical Corporation I talk to two long time commentators on China's environment about whether 2009 was the year China 'got' green both at a Party-state and individual Zhou Public level.

Both Jonathan Watts, the Guardian's East Asia Environment Correspondent and Isabel Hilton of the English-Chinese bilingual environment website China Dialogue, were positive but cautious over the progress made in 2009 and the possibilities for further advances in 2010.

It seems the Economist also had the same idea...sort of.

Economist Debates has raised the question 'This House believes that China is showing more leadership than America in the fight against climate change.'

As you might expect both the speakers for an against have their own agendas - JUCCE is wedded to China so has a stake in arguing for the motion while the Manhattan Institute's Center for Energy Policy and the Environment has a clearly defined 'free markets' agenda on climate change.

Still, it's all part of the debate and interesting reading all the same. It's certainly true that the Economist at least manages to attract a better and more literate responder in their comments section that most web sites! - you can read all the arguments and comments here.

The Responsible Business Summit and Ethical Corporation Awards 2010

My colleague Nick Johnson has spent some considerable time putting together what could be our biggest and best ever conference.

It's the Responsible Business Summit 2010. Take a look at it here.

The brochure is uploaded to slideshare so check it out.

There's a stellar speaker line up for May 4-5 2010.

Last year Ikea's CEO spoke. Here's a link to his slides and here's a podcast with him.

Ethical Corporation is also hosting our first-ever awards ceremony at the conference on May 4th in London. The website is open for entries right now. Details are here.

Excellence in CR presentation

I've put together a short presentation, based largely on a previous post and some reader comments, on excellence in CSR.

You can view it by going here on slideshare.

The slides are in advance of a talk I am giving to 100 or so corporate managers in Budapest on Tuesday.

All reader comments will of course help with refinements...

(And if you haven't been to Budapest, you should visit, a wonderful city)

Do you worry too much about ethical and ‘sustainable’ rankings?

I would argue that, if you work in corporate responsibility for a large company, you probably do.

Before I explain why I think this, there is a legitimate question to ask here.

What should be the role of the sector or overall business benchmark in corporate responsibility strategy?

Not easy to answer.

The Dow Jones Sustainability Indexes have done much to encourage progress in the field. Of that there’s no doubt.

The BITC CR Index and FTSE4Good one can look at with a similar view.

But there surely will come a time, and I hope soon, when we will look at companies by issue, not by industry or worse, by turnover/net profit/employee numbers.

An example of misleading, yet also slightly useful benchmarking, comes in the form of the recent green rankings by Newsweek, the struggling US weekly.

Let’s start with the positive points.

The Newsweek ranking, published a couple of months ago, does provide a useful list, in its upper echelons, of companies doing good work on the environment.

Anyone sensible would struggle to argue with, say, the top ten or even thirty companies being highlighted as environment leaders.

By that I mean these companies mentioned by Newsweek deserve to be praised. Just not in specific order.

Many, including particularly HP, the winner, have done great work over many years.

But that’s really where the usefulness of the list ends.

It’s a list of companies, the top ten to thirty of which deserve considerable praise.

But that doesn’t mean you can compare them, which the list implicitly tries to do.

Comparing HP with a company outside its sector (or even within it) on overall CR is pointless.

Why? Because the issues companies in different sector tackle are so varied and company specific.

How can one compare an HP supplier in Mexico with a Dell one in Malaysia? You can’t. The operating environment and issues are different.

You also can’t compare companies OVERALL, accurately, because CR is such a young disciple, covering so many complex issues.

We just don’t know how to do this yet, if ever we will.

Attempts to do so may satisfy some innate human desire to make simple sense of complexity.

But that doesn’t make doing so in any way accurate, useful or desirable.

Other rankings suffer the same problem.

Even comparing companies by sector is only useful in listing some companies doing good, or better, work, as the DJSI list does.

What WOULD be useful, and where rankings need to move towards, is comparison by progress on specific issue, highly relevant to all firms included.

What do I mean by this? Well, how about on palm oil, or fish, or carbon, for example? Progress on a specific, complex issue on its own is much more interesting, and likely to drive progress.

WWF recently compared companies with palm oil liability, and ranked them on their responses to the issue.

Not perfect by any means (I am still trying to find out their methodology, whether it was by policy or survey response, both, or what) but better.

Or how about by carbon emissions and how much they have reduced them by compared with output?

The Carbon Reduction Committment, coming into force in the UK right now, plans to do that in about a year’s time. Not perfect I agree, but better.

The best way to do such a comparison right now, I think, is by health and safety data.

Why? Because it’s where we do have more historic data, and because some UK investors have worked out a mechanism (again not perfect, but useful) by which companies can submit data, and be ranked on it for comparable and historic performance.

If better utilised, this particular mechanism can be expanded upon, particularly as access to data internally on other, specific issues, increases in big companies.

The issue-specific example I refer to is called the UK Corporate Health & Safety Performance Index.

It was created by investors such as Morley Fund Management and Insight Investment, and designed to create useful, comparable data for investors on corporate liability risk.

The idea of course, was to both educate the investment community on non-financial risk, (or risk that may only be financial later, when cases are tried or fines issues, and reputations besmirched) and companies on relatively comparable performance.

The Corporate Health & Safety Performance Index (detailed here in this downloadable policy report I co-authored in 2008) was never pushed properly by the UK government. The take-up remains disappointing. But the model is potentially sound. And it’s been, and is being copied, on issues such as palm oil or carbon.

These are the future of comparison related rankings. While they are being tested and developed, as a manager you should support them, and get your company involved early.

As the leading companies in CR will tell you, early adoption is eminently useful later on.

And in the meantime, perhaps spend a little less time on the dying breed of all-encompassing rankings, and your place in them.

Their days are surely numbered.