Burgess COMMENTARY

Peter Burgess

The CSR Report – Best Practices in Corporate Social Responsibility for 2014 January 5, 2014 By Evan Kopelson If you're new here, you may want to subscribe to my RSS feed. Thanks for visiting! corporate social responsibility Corporate Social Responsibility (CSR) The year 2014 is likely to become among other things, the year that CSR best practices take root in American corporate culture. Why? Well the indicators are everywhere, from increased public awareness on climate change to consumer spending habits being linked in recent surveys to declarations by consumers that they are more likely to trust, recommend, and even switch to brands that are ethically and socially responsible and support good causes. Let’s break the ice first with some major recaps on the past two years: First, we survived 2012 with no Mayan Apocalypse. This means on the one hand there was no end of the world in December 2012, and on the other that the ancient aliens didn’t come back to Earth to solve all our problems. In 2013 we managed to avoid the Zombie Apocalypse, meaning although there were some great TV shows like The Walking Dead, there was no major biological outbreak which destroyed the human species. Newsflash: In 2014, it’s gonna be up to us to solve our own problems. Climate Change in 2014 Not even the climate science denial trifecta of the Koch Brothers, FOX News, and the Republican Party could stop people from putting two and two together and concluding that the massive upswing in environmental devastation from hurricanes, typhoons and forest fires — not to mention unseasonable weather worldwide — is part of the intimately woven tapestry known as the Earth’s climate, and the Earth’s climate is indeed changing alarmingly. Yes, there are still snowstorms in winter, but soon there will be no ice in the Arctic. Sea levels are rising, and countries like Bangladesh are in desperate straits with massive flooding displacing the population, spreading disease, and destroying crops and soil. Meanwhile here in Northern California, we saw unseasonably warm weather throughout 2013 and have been deprived of much needed rain, which not only creates water shortages but also affects crops and farming which in turn will lead to rising food prices. On the Federal beat, the Obama Administration just released its 2014 U.S. Climate Action Report that among other things summarizes how U.S. social and economic circumstances affect U.S. greenhouse gas emission levels and identifies existing and planned U.S. policies and measures to reduce greenhouse gas emissions. Now before we lose any readers by delving too deeply into overly complex and boring discussions about climate science, let’s just make the connection between climate change, sustainable development (also known as sustainability), and corporate social responsibility (CSR). Then we can move onto discussing best practices in CSR for 2014. The Link Between Climate Science, Sustainability, and CSR sustainability Sustainable Development a/k/a Sustainability First, a brief history of sustainable development: In the early 1970s, the American economy was in a depression and the international monetary system was on shaky ground. In 1972, an MIT research team brought out a report called “The Limits to Growth” that was issued by a group of economists, executives and scholars known as The Club of Rome. In basic terms, the report concluded that the Earth is a closed system of limited resources that would eventually collapse if some limits were not placed on the continual and exponential growth of the population, food production, industrialization, exploitation of natural resources, and pollution of the environment. The report was not initially well received, except by environmentalists and a small handful of economists who immediately recognized its insights as truth. Most politicians and economists of the day took issue with the concept that growth should have any limits at all. However just over a year later, the world’s first major oil crisis erupted together with the Yom Kippur War between Israel and Egypt, and it became clear that the relationship between politics and the exploitation of limited natural resources was indeed a trigger for major problems that needed serious attention. Flash forward to 1987 when another landmark report was issued, this time by the United Nations Commission on Environment and Development (sometimes referred to as the Brundtland Commission named after the committee’s chairman, Gro Harlem Brundtland). The Brundtland Commission report was titled Our Common Future, and it was in this report that the term Sustainable Development was first coined. In brief, sustainable development was defined as the ability for humanity to meet our present needs without depleting the ability of future generations to meet their own needs. So… enough with the history lesson. Let’s talk about sustainable development as it is now. Sustainable Development is more commonly known today as Sustainability. In terms of corporate governance, sustainability can be broken down into the two major arenas of operations and reporting. Let’s drill down into those separately just a little bit. Operational Aspects of Sustainability: There are 5 operational areas of sustainability: energy, water, recycling, waste, and materials. Materials are also called supplies and are often referred to in terms of sourcing or procurement. In each of the 5 areas there are questions one can ask that will help a company be more sustainable in its operations. When a company approaches its operations from the standpoint of wanting to be more sustainable, that company is contributing positively to global sustainable development. Here is a short video I made on the 5 Areas of Sustainable Business Development that briefly discusses each of the 5 areas and the major questions to ask in each area: Sustainability Reporting: Sustainability reporting in large part involves the measuring and reporting of carbon emissions data by companies in order to ascertain that company’s impact on the environment. Together with the reporting of carbon emissions data, a company should be setting specific emissions reduction goals and target dates to achieve those reductions. The target dates are more meaningful when set forth in a multi-year format, because sustainability reporting is an ongoing process that doesn’t take place in a one-year vacuum. For instance, each year the reporting company should clearly address both its successes and failures with respect to meeting or not meeting its target dates or emissions goals, discussing challenges, setbacks, and if necessary, steps the company plans to take to close any gaps the following year. Here is a very short video, just about 45 seconds long, discussing the importance of sustainability reporting generally: And here is another short video, under 2 minutes long where I talk in a little more detail about sustainability reporting, specifically the Global Reporting Initiative (GRI) and why it’s important: Sustainability reporting matters because carbon emissions are a worldwide issue, and the only way to accurately measure, report, and verify the levels of carbon being emitted worldwide is through reporting frameworks that provide transparency and accountability. The GRI is the recommended framework to use for sustainability reporting because the GRI framework includes all of the above: transparency, accountability, and ongoing communications. This is why in reporting sustainability data, the best practice is to use the GRI framework. Now, let’s talk about Corporate Social Responsibility (CSR): csr Corporate Social Responsibility (CSR) What is CSR and what does it mean in 2014? Corporate Social Responsibility in 2014 spans everything discussed above in terms of sustainability and climate change action, plus a company’s economic and societal impact, and its labor practices. Consumers today are demanding more transparency from the corporations they do business with as the public is becoming more aware of issues impacting the environment and the economy. This waxes both positive and negative for companies. The 2013 Global CSR Study by Cone Communications finds that consumers want to reward companies who are proactively engaged in corporate social responsibility. The same study shows that only 6% of global consumers surveyed believe that the sole purpose of business is to make money for shareholders, while 93% of consumers want to see the products and services they use support CSR. This means the tides have changed dramatically in consumer awareness and expectations, and in 2014 corporate social responsibility is going to be far more important than ever before. And corporate social responsibility doesn’t just impact consumer behavior today. In fact, a 2011 survey by Deloitte found that almost 80% of young millennials (people between the ages of 18 and 26) say that a company’s commitment to the community is a major consideration in their desire to work for a company. Thus, CSR best practices in 2014 will involve the transparent reporting of sustainability data plus meaningful communications across media platforms between companies and consumers, discussing everything from sustainability to fair labor practices. How is CSR in 2014 different from the CSR of the past? In the past, among the companies who issued CSR reports, many did not include sustainability data at all, and those that did were often not using the GRI framework, meaning the data they were reporting was not verifiable. Moreover, corporate communications took place largely in a one-way paper report. The company talked at the consumer, and there was no mechanism for a two-way conversation. In 2014, best practices for CSR reporting demand two-way communications. This means either the elimination of the traditional paper report, or the supplementation of the paper report with social media communications, which by their very nature are a two-way conversation including consumers and other stakeholders. Best practices in corporate social responsibility for 2014 also call for meaningful storytelling in addition to the mere reporting of facts and figures. This is because stories sell, and facts do not. Consumers today want to feel more connected with the brands they use. Marketing expert and trend-spotter Seth Godin calls this the connection economy and says there are two types of projects: those that exist to create connections, and those that don’t. With respect to cause marketing — a company’s efforts to communicate to consumers how their products and services benefit good causes — it’s important that the company is able to clearly communicate how the cause they’re supporting is relevant to their consumers. Climate Counts Carbon Score Study Climate Counts Carbon Score Study Observations: How are companies doing in terms of sustainability reporting and climate change action? Here’s the bad and the good news, in that order: The bad news: In a recent carbon score report by Climate Counts, of 100 companies surveyed, most are still not using science-based targets to set their emissions reduction goals. This means more than half of the companies surveyed are emitting unsustainable levels of carbon, and even those companies who are pledging to reduce carbon emissions are not setting their targets to meet scientific consensus on sustainability. Again, sustainability means the ability to meet our own needs today without compromising the ability of future generations to meet their own needs. We’re keeping the facts and figures out of this discussion for a reason: 350 parts per million is an important number but in plain English, unsustainable is unsustainable. The good news: According to the Climate Counts carbon score report, all but one of the companies who are scoring sustainably also increased revenues since 2005. This means that the all-important ROI (return on investment) for sustainability initiatives is being proved by history. Sustainability is indeed good for the bottom line. According to an October 2013 post by Forbes, the 10 companies with the best CSR reputations understand the connection between CSR and sustainability initiatives, ROI, and brand loyalty. csr best practices for 2014 CSR Best Practices for 2014 Conclusions: So to conclude this CSR report, let’s summarize: What are the best practices for corporate social responsibility in 2014? Here are 5 best practices you can incorporate into your CSR strategy: 1. Report sustainability data using the GRI Framework. The transparency and accountability of the Global Reporting Initiative (GRI) standard is built into the framework and allows for the proper measuring, reporting and verification of sustainability data across companies and countries. This is essential to meet scientific benchmarks and effectively combat climate change globally. 2. Connect with consumers through storytelling, and use a multi-year format. Don’t just report facts and figures, but tell stories. Share your company’s goals, benchmarks, achievements and failures. Share openly, and put a face to the company. This can be a CSO (Chief Sustainability Officer) or corporate communications officer, or anyone empowered to issue official communications for the company on environmental issues and sustainability initiatives. Multi-year charts and stories are essential when discussing benchmarks, especially when your company experiences setbacks and challenges. If you miss a target date or emissions goal, and you can show what happened so your stakeholders understand, this will help you maintain brand loyalty even when you miss your targets. Just be sure you include in your storytelling what steps you plan to take to close the gap in the coming year, and then hold yourself accountable to those new goals. 3. Talk about your internal business practices as well as your community efforts. It’s not enough to tell consumers about the causes you give to. First, the causes need to be relevant to your audience, and beyond that, consumers want to know how you keep house. This means how you treat your employees (do you support work-life balance?), where you source your materials (are you using styrofoam drinking cups? How about your paper supply, is it forestry certified as sustainable?), and even how you deal with drinking water (do you use plastic drinking bottles or do you have water coolers with reusable cups?) All these things combine to give consumers a better picture of who you are and what you stand for as a company. 4. Be more transparent and encourage an open dialog. Consumers crave transparency and they want to be heard. Use social media channels the way they were intended to be used, not as a one-way “push messaging” platform but to enable a two-way conversation. Seek input from stakeholders, respond to their input, and incorporate their questions and feedback into followup reports. When stakeholders know they are being listened to and respected, their brand loyalty increases. 5. Eliminate or supplement the paper report. Use engaging platforms like social media pages, YouTube videos, mobile apps, and games to meet your stakeholders where they are. Offer downloadable PDF reports with live links to source information. Take advantage of creative ways to communicate important information, like using infographics. The Climate Counts carbon score report uses infographics and encourages interested stakeholders to share the infographics on social media to help them get their message out. Call to Action: Did you find the information in this report helpful? Please share the report and leave a comment below if you have any questions or want to add to the discussion.