Though the actual CSR report is now more concise, the company says it’s able to draw attention to more detailed information online. such as explaining cost savings from environmental policies or how fuel efficiency measurement alerted management to cost discrepancies between different regions.
Disseminating different types of CSR information via financial accounts and the internet has worked well at National Grid, a £11.4 billion electricity and gas company. “We know that good reporting will drive value,” says Steve Noonan, National Grid’s group financial controller. He adds that accurate, comprehensive CSR reporting can bring a level of transparency that’s appreciated by regulators and customers alike.
Since 2001, it has included CSR in its annual review, but such elements contained in its most recent review are only those directly related to the company’s financial performance, including fines related to environmental damage and reduction of greenhouse gases against government targets. The rest — including investment in local communities and human rights — is published online.
“Things that are not material to the business shouldn’t be included in annual reviews and accounts,” says Ian Gearing, corporate responsibility manager. “But regulators and customers are still going to be interested in the other CSR data that is not included.”
Beyond making better use of annual reports and the web, National Grid has also recently begun publishing “dilemma reports” or “one-offs.” These are sector-specific reports published in response to a recent event, such as the impact of rapidly increasing fuel prices or supply chain issues. One-offs are good for targeting specific stakeholders, says Gearing. “We recently published a new strategy document, which revealed that because of a merger we did, we needed to change from business-as-usual if we were to meet the government’s climate change targets.”
One-offs are also used at National Express. “Creating one-off special reports demonstrates to stakeholders that you are responding quickly to topical issues, and allows [stakeholders] to review and challenge your ideas,” says Coad.
Looking after the Future
Companies say that even if they were in favour of publishing CSR information in their financial reporting, the real difficulty may be deciding which CSR-related information will be materially important to the business in the future. What will be the CSR information that will need to become part of “a long-term value-creation strategy?” asks Thomas Scheiwiller, global sustainability team leader of PricewaterhouseCoopers in Zurich.
Whether or not a company chooses to keep standalone CSR reports, Greenfield of the WWF warns that mandatory emissions-related reporting and sector-specific CSR regulations will continue to grow and inevitably find their way into financial reports. But on behalf of inundated stakeholders, his plea remains the same: Less is more.
John Zhu is senior staff writer at CFO Europe.