Wednesday, June 15, 2005

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What to make of this corporate trend?

Tobias Buck reports in the Financial Times on the growth of an interesting corporate trend:

More than half of the world's biggest companies reveal details of their environmental and social performance, according to a KPMG survey that provides fresh evidence of business leaders' support for corporate social responsibility.

The survey, published every three years, found that CSR reports for 2005 now cover a much wider range of issues, and that many companies also provide CSR information in their annual financial reports. Fifty-two per cent of the top 250 companies in the Fortune 500 list published separate reports on corporate social responsibility, up from 45 per cent three years ago.

George Molenkamp, chairman of KPMG's sustainability services, said the growth of CSR reporting had proved the sceptics wrong. “When we started observing these issues, many people argued this was just a fashion that would disappear as soon as the economic situation got worse. But the economic situation has deteriorated, and still more and more companies are doing this.”

Click here for the actual KPMG report. Among the interesting facts:

What are the business drivers behind corporate responsibility? In their corporate responsibility reports almost 75 percent of companies state that these are economic reasons, while over 50 percent give ethical reasons and talk about integrity and values....

The typical industrial sectors with relatively high environmental impact continue to lead in reporting. At the global level (G250), more than 80 percent companies are reporting in electronics & computers, utilities, automotive and oil & gas sectors, whereas at the national level (N100), over 50 percent of companies are reporting in the utilities, mining, chemicals & synthetics, oil & gas, oil & gas and forestry, paper & pulp sectors. Most remarkable is the financial sector which shows more than a two-fold increase in reporting since 2002....

The survey analyzed how companies select the issues discussed in the reports and whether the users of the report are systematically consulted during the process. The survey revealed that report content is most commonly decided based on GRI [Global Reporting Initiative) guidelines (40 percent) with only a fifth (21 percent) mentioning stakeholder consultation. About a third of the companies (32 percent) invite stakeholder feedback on the report.

If I'm working for an NGO devoted to corporate social responsibility, I'd be very, very happy with these results.

[Why? These corporations are primarily reporting to advance their own self-interest--ed. Yes, and that's a self-perpetuating mechanism, which is much better that corporations acting against their own self-interest. This might be a case where NGOs have managed to reconstitute how corporations define their interests]

posted by Dan on 06.15.05 at 12:43 AM


You're right--it is the company's advancing their self-interest. One of the more powerful factors in that self-interest is that these reports often allow the companies to avoid including shareholder proposals from environmental and social groups seeking such reports in their proxy statements. While the groups get the reports they are seeking, management avoids having statements about what poor corporate citizens they are in their proxy statements.

posted by: Steven on 06.15.05 at 12:43 AM [permalink]

I think you're missing what the report is really saying. It's trying to make the case that "coporate social responsibility" is the next management fad and you [managers] better not be the last one to get in on it.

But what kind of a fad only grows 15% or so in three years? That's a very poorly performing fad indeed, and if you manage the KPMG group set to capitalize on it you would be casting about for ways to bump up business in a hurry.

"This might be a case where NGOs have managed to reconstitute how corporations define their interests" - I think not. I think this is case where someone dicovered a treasure trove of 'studies' and PR they were using to push the TQM fad a dozen years ago and have repurposed it to support the "corporate social responsibility" consulting unit.

posted by: Jos Bleau on 06.15.05 at 12:43 AM [permalink]

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