Natural Light

Fusing CSR information into financial reporting might be illuminating for some stakeholders, but it's often a challenge for companies to do.

Corporate social responsibility reports have become so bloated that even the World Wildlife Fund doesn’t want to read many of them anymore, says Oliver Greenfield, head of sustainable business and markets at the nonprofit organisation. To recapture the interest of stakeholders such as the WWF in CSR, Greenfield has a draconian proposal: get rid of them. Rather than slogging through these standalone tomes of CSR-friendly data every year, he reckons stakeholders would benefit would benefit more if CSR data were incorporated into audited financial reports.

Greenfield’s proposal is being met with more and more corporate proponents. In recent years, there has been a spike in companies around the world integrating CSR and annual financial reports, according to research by, an online CSR reporting repository. It found that 93 such reports were prepared in 2007, up from 48 in 2006 and eight in 2005. Accounting for 14% of the total in 2007, European companies such as Roche, BC Hydro and Umicore have been taking the lead, according to the survey’s co-author, Iain McGhee.

That still leaves plenty of companies that haven’t abandoned their standalone CSR reports. Mindful of the dangers to their reputations if there were a public backlash, environmentally sensitive industries for their part now rely greatly on their annual CSR reports to disclose the environmental and social factors affecting the performance of their companies. Others find CSR reports an important channel for attracting socially responsible investors, not to mention meeting regulatory requirements for particular sectors.

But there’s room for improvement, and now that CSR reports are reaching a level of sophistication unimaginable even a few years ago, reporting experts are encouraging companies to take a fresh look at their reports to improve the information they’re sending out to stakeholders.

Much of the direction this work takes is dictated by a company’s line of business. “Companies need to decide what data is material to their sector,” says Nick Coad, head of environmental strategy at National Express Group, a £2.6 billion (€3.6 billion) UK public transport company that’s been publishing paper-based annual CSR reports since 2002. “As a public transport company, we need to say to investors, ‘Yes, our strategy is going to be a carbon-increasing one, but our fuel efficiency numbers are what you should be looking at.’”

Careful What You Wish For

Coad confesses that when he joined the company six years ago, he was as guilty as others in believing CSR reports needed bulking up to be credible. “The more, the better,” he recalls thinking, and the company’s CSR reports increased year after year, to more than 40 pages, roughly the same size as a selection of similar reports published by listed UK companies studied by Black Sun, a corporate-reporting consultancy.

But last year, National Express overhauled its report, stripping out pages and pages of graphs and data. The simplified report was less than half the length of previous reports. The latest report focused on the company’s long-term goals, while directing readers to its website to find traditional CSR data. “Broad CSR reports drown out useful numbers,” asserts Coad. “They don’t encourage people to think about what is really material to the company’s strategy.”


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