Although there is a considerable increase in the number of organisations producing social or sustainable development reports, the truth is that most stakeholders are simply not interested. In response, the Ashridge Centre for Business and Society has undertaken research to find out how companies can ensure successful social or sustainable development reporting. This briefing paper outlines the findings and offers insights into how leading companies ensure successful reporting
1. INTRODUCTION
More and more organisations produce social or sustainable development reports; however, many find that most stakeholders are simply not interested. In response, the Ashridge Centre for Business and Society recently undertook some research to find out how companies can ensure successful social or sustainable development reporting.1 The research provides two important insights into how leading companies ensure successful reporting.
Focus on materiality. Reports should be concerned with the issues that stakeholders or the organisation find important instead of a complete range of social or sustainable development issues.
Look beyond reporting. The processes of social and sustainable development reporting are integrated into the way in which the organisation is run and provide an anchor for building trust in the organisation’s sustainability efforts, not the answer for reporting.
The exploratory research project sought to identify some of the emerging trends and challenges for organisations wishing to report on their social, economic and environmental performance. Interviews with six leading reporters such as The Cooperative Bank, Novo Nordisk and BT and two experts, combined with desktop research, explored three areas
why organisations are reporting and how successful they have been
how reporting principles are informing their approach
future challenges for reporting.
2. PURPOSE OF REPORTING
Reporting organisations had a host of specific motives for reporting, but two key objectives appeared consistently
to improve the performance of the organisation in these areas (internal objective)
enable stakeholders to judge an organisation’s social, environmental and economic performance so they can make informed decisions on how and to what extent they wish to interact with that organisation (external objective).
Interviewees believed that reporting continued to provide an effective lever for improving performance; however, enabling stakeholder decision making is still a challenge. In part this is because of a growing divergence between stakeholders’ information needs and interests. They seem to be forming into two broad groupings, namely broad-focus and narrow-focus stakeholders.
Broad-focus stakeholders include the socially responsible investment community and non-governmental organisations (NGOs). They have been very influential in shaping the reporting approach of many organisations—particularly in encouraging them to provide as complete a picture of the organisation’s performance and impacts as possible. This emphasis on completeness as a reporting principle has resulted in reports that are now very large and complex.
Narrow-focus stakeholders, such as employees and suppliers, are simply not interested in all the issues reports address. The amount and complexity of information with which they are often presented undermines their confidence to make judgements. Nor are they interested in the finer points of the reporting process. Thus reporting is still having only limited success at providing a basis for decision making for narrow-focus stakeholders.
3. FOCUS ON MATERIALITY (AND ACCESSIBILITY)
Attention among the leading reporters is turning towards two other reporting principles, namely those of materiality and accessibility, in order to more fully achieve both reporting objectives. Materiality concerns the information stakeholders want in order to make decisions on how and to what extent they wish to interact with an organisation. Accessibility concerns the ability of stakeholders to acquire and understand the information provided by the organisation.
While there were differences between the organisations as to how materiality was being defined, three broad considerations appeared frequently
issues of sufficient importance to one or more stakeholder group (which is primary)
relevance to the organisation’s strategy and day-to-day management
significance in respect of industry norms and external standards.
Interviewees are adopting a range of approaches to increase accessibility. To reach narrow-focus stakeholders a key trend is the development of targeted reports and communication. Organisations are producing a range of stakeholder specific reports which are short, have little jargon and focus on the issues relevant to the specific stakeholder group.
4. AN ANCHOR, NOT THE ANSWER
An organisation’s formal reporting may provide an anchor for accountability but it does not provide the answer. The challenge is broader than technical reporting issues. Interviewees stressed the need to address issues of trust, intention and humility (Fig. 1).
4.1. Engage and build trust
Stakeholders need to trust reports if they are to inform their decision making. This research found many organisations, particularly companies, find it difficult to build and maintain trust among stakeholders. Many stakeholders are unsure about the real motives of organisations and doubt their honesty. A key message from this project is that organisations need to be clearer at demonstrating their intentions and show humility.
4.2. Demonstrate intention
Intention is simply not about mission statements and policies. It is about stakeholders believing that the organisation really is trying to do the right thing. The organisation should explore with stakeholders what the intention of the organisation should be, including how it deals with competing demands from stakeholders. The organisation should also seek to explain how its intention is being put into practice, for example through clearly showing this in its report. Equally important is the consistency of communication and demonstrating organisational competence.
4.3. Show humility
Related to intention is the notion of humility. Managing social, economic and environmental impacts is difficult and understanding is far from perfect. Too many organisations have attempted to portray themselves as having fully addressed these issues. For many stakeholders this comes across as arrogant and creates an atmosphere of mistrust. Organisations need to be more open about the difficulties they face when dealing with these issues. In part it means being open about areas of failure. It also means admitting uncertainty, particularly in how to address competing demands from stakeholders. Without acknowledging these tensions, organisations run the risk of not appearing to be responsive to stakeholder demands.
5. THE WIDER IMPLICATIONS
From the interviews it was clear that reporting on these issues is not a passing fad and that reporting continues to evolve. Historically, the approaches of the leading organisations have provided useful insight into the reporting trends. Ashridge believes that this trend will continue, which means that in the coming years there will be a growing emphasis on materiality and accessibility, as well as on trust, intention and humility in reporting.
6. ACKNOWLEDGEMENTS
The author would like to acknowledge the contribution made by Camelot, who sponsored the research.
