4. Reporting CSR > Initial exercise on Nestlé’s report > Introduction to the Nestlé’s reporting strategy
- If we talk about the reporting that you do about CSV, could you discuss a little bit your principles for reporting and the difference between the global and the local reporting? So, what we do, we had established 38 commitments which we had communicated and now we publish regularly a global report which talks about the global commitments and the global status.
- Then we have a global full report of about 300 pages and then we have a summary report of about 50 pages.
- In this global report, we give information and results of our 38 commitments.
- In this reporting we try to give the results, first the initiatives and then the results of all these commitments per pillar.
- For Belgium for example, since two years, so 2013-2014, we have created a local Creating Shared Value report and it is called “Nestlé in Society”.
- First, the four pillars: Nutrition, water, rural development and our global youth employment initiative, and then we are as well focusing more locally on areas in which we are committing and these areas are nutrition, always nutrition because we are a nutrition company, important.
- In these area, what we are focusing on a local aspect is really our youth employment initiative because unemployment in Europe is very important and we have initiated a youth employment initiative to hire more than 20 000 people between 2013 and 2060 in Europe.
4. Reporting CSR > The process and content of reporting > The different types of report
- So that means you only have one single report per year for instance, and it is presented to all kinds of stakeholders, including the shareholders, the financiers, the bankers, and it is, it contains at the same time business information and CSR information that are really closely interlinked.
- The first is a stand-alone CSR report, or a separate report that mainly focuses on social and environmental issues.
- The second one is a combined report, so social and environmental issues are introduced and discussed within the annual report, which traditionally would have provided only financial information.
- The difference between an integrated report and a combined report is that the former links financial and non-financial information.
- Social and environmental performance and impacts get linked to financial performance and impacts, and vice versa.
4. Reporting CSR > The process and content of reporting > Some recommendations
- The content of CSR reports depends on the company.
- When a company wants to issue its first CSR report, it should ask itself two main questions: First, which CSR element can really affect my business, and second, which CSR elements do my stakeholders want to have more information about? To answer this question, the company has to engage with stakeholders.
- Then the company can report on what we in accounting call “material issues” -that is, the issues that can impact the decisions, actions, and performance of a company or its stakeholders.
- I would advise integrating these material items into your CSR strategy and operational decision making, so that you can report in what we call a comprehensive way.
- Finally, I have one more critical piece of advice for companies that want to develop an integrated report: Develop your integrated strategy first, before you start writing the report.
- You can only link social and environmental issues to financial reporting if your strategy already makes these connections very explicit.
- A CSR report offers structured insights into the key responsibilities and progress on CSR performance.
- My main recommendation is to build the internal organization in a way that avoids “the reporting trap.
- ” Reporting on oneself requires a lot of time, with questionable added value.
- It’s almost taking a camera or a video and go about asking people, first inside the company: What are some of your expectations? How do you see some possible solutions for improving daily practices in a company that takes more into consideration the human dimension and also the environmental dimension we operate in? So that is a first exercice.
- Does it end up in a nice glossy report? That’s maybe not the best solution, is it something that you share through a kind of intranet or through other social media inside the company? That is maybe a better solution- and then think to which extent this is going to be useful for you to make more public.
- I would recommend that after a couple of trials, you make it more public because it’s a very solid basis to start a stakeholder dialogue where you use some facts and figures but also some targets and objectives that the company is setting to itself and that you test with stakeholders that you invite.
- They have that material and that reading in your report that can be a starting point for discussion to be challenged, refined, changed if needed and that is, where I see the most use of a sustainability or CSR report.
- A CSR report is a communication tool, intended to provide information, internally and externally, about the company’s approach to the CSR concept and the way the company implemented it.
- Each company should develop a CSR report to communicate with all their stakeholders.
- So I have four main recommendations for what a CSR report should do.
- Report on relevant key performance indicators, then show targets, progress, and achievements.
- The 80 Global Reporting Initiatives indicators are a good way to structure a concise CSR report that focuses on the core business, explains impacts, and outlines the action plan, including costs and benefits.
- I would say the first thing that I’m looking for is, Can I easily understand what the company does? I mean, do I find this information about “This is what I do”, and most of it, “this is what I bring to society”.
- The second information I’m looking for in a report is whether the company is open to stakeholders.
- It should be short because everybody has little time so that’s for me an asset if a report is short and to the point.
- Meaning does the report contain information about what matters for the company? Here, the 80 GRI indicators can be informative.
- A high quality CSR report offers three things: Authenticity: Does the company report its CSR honestly, with various stakeholder voices to supplement performance data? Materiality: Has the company clearly defined the most important issues for itself and its stakeholders? And impacts: Is the company discussing the outcomes of what it has achieved? The outcomes are the achievement, not the activities.
- When I have to judge the quality of a CSR report, I go through three steps: First, I ask myself, What information do I expect to find in this report? For a bank for example, I expect information about how it assesses the social and environmental impacts of the loans it provides.
- If I cannot find this information in the report, I immediately consider the report incomplete -and not very useful for some stakeholders.
- This is what I referred to previously as comprehensive reporting.
- Companies need to disclose information about their objectives, values, and actions, and then they must provide quantitative indicators to indicate the outcomes of those actions.
- If a company mainly reports qualitative information, I probably would assume that it is talking a lot about CSR but might not have implemented many CSR practices.
- Third, an assurance statement from a third party increases my perceptions of the quality of the report.
- In a lot of cases, the assurance exercise might be limited to just a few indicators, which means that only those indicators have been verified, not any of the others contained in the report.
- Well, the first one is make sure that this report is not being led within your company by the public affairs or only the communication unit or I would say also the legal affairs.
- They have a very important contribution to make, but they should not be the starter and end of the process of a report.
- I would also very much judge the quality of these reports not only because there will be some figures and numbers, but also more quality information explained about the challenges including even the dilemmas that the company is facing, and I would be honest enough to say, What is that you can and What is it that you can’t do, maybe because you are lacking some of the information or expertise, and that is something that might generate some further development.
- I would also very much look at a report if I can understand how the company defines itself at a certain point A, now, versus where it is coming from and where is it heading to.
- I would also expect very much in a sustainability report a good pedagogy of explaining the who is who in the company, who is responsible of the overall strategy and then who-further cascading in the company- is responsible for the different sub topics that are part of that overall strategy.
- Last but no least, I would also like to know how the report is one element of a broader communication strategy where social media and blogs and other channels of communication are being used to explain how the company is contributing to a more sustainable living in society towards more respect, towards environment.
- The report is part of a wider bouquet of communication.
- The key criteria are: Materiality-or, does the report contain information about what matters for the company? Here, the 80 GRI indicators can be informative.
- A high quality CSR report offers three things: Authenticity: Does the company report its CSR honestly, with various stakeholder voices to supplement performance data? Materiality: Has the company clearly defined the most important issues for itself and its stakeholders? Impacts: Is the company discussing the outcomes of what it has achieved? The outcomes are the achievement, not the activities.
- The first one is make sure that this report is not being led within your company by the public affairs or only the communication unit or I would say also the legal affairs.
4. Reporting CSR > Some reporting frameworks > Reporting frameworks
- Especially their latest version, the G4 has made a very significant progress towards materiality and if you follow them well, then you’re really guided in the way to define the content of your next report.
- It is surprising because it breaks from the tradition of saying everything you have, and giving all the data you have, to just pushing in a big report and try to impress.
- From now on, it allows you to have a more targeted, more concise reporting and assume the fact that due to the priorities that you should have done, this is the essence that you should be communicating.
- These guidelines are currently accepted as best practices and are used by many organisations as bases for their social and environmental reporting.
- The GRI’s list of indicators that companies might report on consists of the following categories: environment, human rights, labour practices & decent work, product responsibility, society and economic.
4. Reporting CSR > Some reporting frameworks > The Global Reporting Initiative
- The company should provide descriptions of its key impacts and effects on stakeholders and societal issues.
- The report needs to provide an overview of the organization’s stakeholder dialogue, key topics and concerns that have been raised through these stakeholder dialogues, and how the organization has responded.
- Third, the report should cover what have been called material aspects -meaning the aspects that reflect the organization’s significant economic, environmental, and social impacts or that substantively influence stakeholders’ assessments and decisions.
- Fourth, the report has to describe its highest governance body: how it was established and structured in support of the organization’s purpose, and how this purpose relates to economic, environmental, and social dimensions.
- Finally, to enhance the credibility of any reported data and make the information as relevant as possible for stakeholders, the GRI proposes six principles to establish report quality: Balance: the report should reflect positive and negative aspects of the organization’s performance to enable reasoned assessments of overall performance.
- Reliability: the company should gather, analyze, and disclose information and processes in a way that allows them to be subject to examination and that establishes the quality and materiality of the information.
- In addition to these general guidelines, the GRI has proposed a long list of detailed performance indicators in many reporting areas and recommends that companies obtain external assurance for their reports.
4. Reporting CSR > Some reporting frameworks > The case of integrated reports
- The IIRC identifies five Guiding Principles for preparing an integrated report, some of which are very similar to the GRI guidelines: First, Strategic focus: An integrated report provides insight into the company’s strategic objectives and how those objectives relate to its ability to create and sustain value over time, as well as the resources and relationships on which the company depends.
- Second, Connectivity of information: An integrated report describes the connections between the different components of the company’s business model, external factors that affect the company, and the various resources and relationships on which the company and its performance depend.
- Future orientation: An integrated report includes management’s expectations about the future and other information that can help readers understand and assess the company’s prospects and the uncertainties it faces.
- Responsiveness and stakeholder inclusiveness: An integrated report provides insights into the organization’s relationships with its key stakeholders and how and to what extent the organization understands, takes into account, and responds to their needs.
- An integrated report helps contribute to the development of clear metrics and can translate social and environmental issues into more business-relevant terms, figures, and graphs.
- Other than investors and shareholders that actively seek to assess a company’s future performance and business risks or opportunities, is anyone -like consumers, employees, and other stakeholders- really interested in reading integrated reports.
- One possibility would separate the more standardized data reports, available in integrated reports that readers with an analytical bent could access, from related reports that focus more on materiality and disclosures, for those who are more interested in context and transparency.
4. Reporting CSR > Some trends > Current trends
- The idea underlying this integration is that financial and non-financial information are linked and are equally important elements of the same strategy.
- Umicore highlights the link between financial and non-financial information clearly with a fully integrated report, available online.
- The Delhaize sustainability report is short and structured around material issues, with performance comparisons against targets.
- Finally, in another widespread trend, many reports today include testimonials from external and internal stakeholders, to increase their credibility and provide some external assurance.
4. Reporting CSR > Some trends > Regulations on non-financial reporting
- In France, listed companies are obligated to report on various social and environmental issues.
- In 2014, at the EU level, a new directive on social and environmental reporting passed.
- It requires large companies to disclose information about their policies, risks, and outcomes related to environmental matters, social and employee aspects, respect for human rights, anticorruption and bribery issues, and diversity in their boards of directors, all in their management reports.
- This has been the result of a 15 years European stakeholders dialogue that has engaged and the governments and enterprises, NGOs, investors and many others.
- By the end of 2016, the 28 member states will need to transpose this European directive and their legislations, and it will require large companies but also indirectly, the medium and smaller companies to be transparent about, Do they have a policy and a practice with regard employment-related issues, a policy and practice around environmental related issues, about bribery and corruption, on human rights, and on diversity at the board level.
- This is a norm whereby boards and the members of the board will be taken accountable, collectively, for the efficiency and accuracy of the information that will be in this annual non-financial report of companies.
- What I want to say about the directive is that if this is one side of the coin, the other side of the coin is a European directive that is also in preparation now, with regard the shareholders’ rights whereby the EU will ask investors to also report on the criteria and the non-financial information that they will have used to justify their capital allocations, their investment decisions.
4. Reporting CSR > Conclusion > Conclusion and forthcoming
- By covering CSR reporting, this module offers three key lessons: First, different types of reporting coexist today: Stand-alone CSR reports that focus on social and environmental issues; Combined reports that introduce social and environmental issues into the existing annual report; And integrated reports that highlight linkages across financial and non-financial information.
- A CSR report should provide insight into the organization’s relationships with its key stakeholders and how and to what extent the organization understands, takes into account, and responds to their needs.
- In discussing these varied tools in our next module, we learn more about whether, how, and in which conditions each tool can be used to communicate about CSR. To address this topic, we welcome the participation of reputed professors, active in the CSR communication field, including François Lambotte and Andrea Catellani, who both are professors of communication at UCL, and Catherine Janssen, Professor of marketing and CSR at IESEG School of Management.
- Mathieu Jahnich, the founder and manager of Sircome, a strategic consulting firm specializing in marketing, communications, and CSR, and Jacques François, a twenty-three year advertising industry veteran, have agreed to share their best advice and recommendations with us.
