1. Copyright © 2008 McGraw-Hill Ryerson Ltd.1 Chapter Nine CSR Auditing, Reporting, and Communication

2. Chapter Outline Social Auditing: Definition and Approaches CSR Reporting Corporate Reputation and CSR Stakeholders Demanding CSR CSR and Profitability Social Auditing and Reporting Criteria Communicating CSR and Sustainability Results Business Schools and Corporate Reporting The Future of CSR and Social Reporting Chapter 9 Copyright © 2008 McGraw-Hill Ryerson Ltd.2

3. Social Auditing: Definition Systematic assessment that identifies, measures, evaluates, reports, and monitors the effects an enterprise has on society that are not covered in traditional financial reports. Chapter 9 Copyright © 2008 McGraw-Hill Ryerson Ltd.3

4. Social Auditing: Approaches Inventory – list of activities Program management – description of programs Process – objectives, rational, and assessment of programs Cost or outlay – positive and negative effects on society Social responsibility accounting – return on investment Social indicators – audit of social need Chapter 9 Copyright © 2008 McGraw-Hill Ryerson Ltd.4

5. Social Auditing: Approaches Social objective setting Triple-E reporting – economic, ethical & environmental Social reports – include objectives and triple-E criteria Sustainable guidelines – criteria and indicators Externally verified social reports – accountability, not widely used Chapter 9 Copyright © 2008 McGraw-Hill Ryerson Ltd.5

6. CSR Reporting: Definition A management function that documents the corporation’s economic, ethical/social, and environmental responsibilities and initiatives and communicates this information to relevant stakeholders. Also known as sustainability reporting. Chapter 9 Copyright © 2008 McGraw-Hill Ryerson Ltd.6

7. Corporate Reputation and CSR Corporate Reputation: “a perceptual representation of a company’s past actions and future prospects that describes the firm’s overall appeal to all of its key constituents [stakeholders] when compared with other leading rivals.” (Fombrun, 1996) Often associated with corporate image, but today related more to “character” of corporation An intangible asset for the corporation. Chapter 9 Copyright © 2008 McGraw-Hill Ryerson Ltd.7

8. Stakeholders Demanding CSR reporting Shareholders ◦ Not too much or too little, and in the right places Employees ◦ Effects: recruitment, retention, motivation and loyalty Consumers ◦ “ethical shopping” ◦ “conflicted customer” p.181 ◦ Health issues: genetic modifications, chemicals in process, etc… Society at large ◦ Awareness and education Chapter 9 Copyright © 2008 McGraw-Hill Ryerson Ltd.8

9. Stakeholders Demanding CSR reporting Service professionals ◦ Accounting Professionals: more reporting is required (Canadian Institute of Chartered Accountants) Non-governmental agencies Charities ◦ Self-interest – social legitimacy, application procedure Media ◦ Hot topic for a story, good or bad Government ◦ Prefer to avoid implementing now legislation Chapter 9 Copyright © 2008 McGraw-Hill Ryerson Ltd.9

10. CSR and Profitability Relationship between profitability and CSR has been extensively studied, but with mixed results: ◦ Expenditures on CSR do not contribute to profits; ◦ Expenditures on CSR do contribute to profits; ◦ Expenditures on CSR might contribute to profits. Chapter 9 Copyright © 2008 McGraw-Hill Ryerson Ltd.10

11. Social Auditing and Reporting Criteria Canadian Business for Corporate Social Responsibility Criteria: ◦ Community (9 criteria) ◦ Employee (19 criteria) ◦ Customer (7 criteria) ◦ Supplier (9 criteria) ◦ Environment (6 criteria) ◦ Shareholder (6 criteria) ◦ International operations (4 criteria) Chapter 9 Copyright © 2008 McGraw-Hill Ryerson Ltd.11

12. Global Reporting Initiative (GRI) A long-term, multi-stakeholder, international process whose mission is to develop and disseminate globally applicable Sustainability Reporting Guidelines. Principles grouped into four clusters: ◦ Framework for the report ◦ Inform decisions about what to report ◦ Quality and reliability ◦ Access to the report Chapter 9 Copyright © 2008 McGraw-Hill Ryerson Ltd.12

13. Global Corporate Reporting Guidelines OECD Guidelines for Multinational Enterprises UN Global Compact Caux Round Table Principles for Business International Code of Ethics for Canadian Business ISO CSR Reporting Standards Chapter 9 Copyright © 2008 McGraw-Hill Ryerson Ltd.13

14. Communicating CSR and Sustainability Results How to inform employees: ◦ Articles in newsletters ◦ Information on employee intranet ◦ Agenda item at meetings ◦ Corporate reputation committees How to inform other stakeholders: ◦ Customer invoices or billings ◦ Corporate web sites ◦ Newspaper and magazine articles and television news programs ◦ Word of mouth ◦ Create a position to communicate: Corporate Responsibility Officer (CRO)Corporate Responsibility Officer (CRO) Chapter 9 Copyright © 2008 McGraw-Hill Ryerson Ltd.14

15. The Future of CSR and Social Reporting Role of stakeholders will become more powerful ◦ More stakeholders have a voice through technology Top CSR issues will be: ◦ Environment ◦ Reduction of poverty ◦ Governance ◦ Accountability Focus on CSR measuring and reporting – standards Government – mandatory reporting Social contract – business has a greater role Chapter 9 Copyright © 2008 McGraw-Hill Ryerson Ltd.15 Source: Strandberg, 2002

16. The Future of CSR and Social Reporting Fad-and-fade scenario ◦ Awareness and practice of CSR will decline significantly Embed-and-integrate scenario ◦ CSR is accepted, continuous enhancement continues Transition-and-transformation scenario ◦ incremental changes to CSR are insufficient, redesign of corporation necessary Chapter 9 Copyright © 2008 McGraw-Hill Ryerson Ltd.16 Source: White, 2005