FOCUS PAPER

Publication in memory of Ron Speed inSocial focus Reporting

Traditionally, stakeholders evaluated companies primarily on their products or services. Now, they

want to know how a company treats its employees, if it is environmentally responsible and if its

business practices are ethical. They are demanding greater levels of and

on every aspect of company operations.

In response, companies around the globe have begun to issue “social reports.” Social reporting

measures and assesses the impact of a company’s environmental, social and economic performance.

While its form varies widely, one thing is clear: social reporting is rapidly becoming a competitive

necessity and a key component of any company’s corporate citizenship initiatives.

The Center for The Center for Corporate Citizenship at Boston most common reporting standards, and highlights College is committed to helping companies improve the benefits and challenges you’ll want to consider. Corporate Citizenship and sustain their corporate citizenship initiatives. Most importantly, The Center hopes to both at Boston College This guide, Social Reporting in focus, will help you inspire and support your organization as you to develop a social report for your organization. consolidate your company’s environmental, social focuses on the business It outlines the steps required to create a social report, and economic performance into your first social of corporate citizenship provides an overview of best-practice companies report or take your current social reporting process currently issuing social reports, reviews the four to the next level.

Of the 22,000 consumers surveyed, a majority based their impression of a company on its labor practices, , societal responsibility, and/or environmental impacts. – Millennium Poll on Corporate , PricewaterhouseCoopers Six Key Steps to Creating Social Reports

Social reporting is about being intentional, setting clear goals that can be measured and investing the human and financial capital required to make the report meaningful and accountable. Here are the six steps to get your process started and create a social 6report that communicates and reflects your organization’s effort and commitments. 1) Determine Goals and Objectives sure you don’t overlook an important audience: shareholders, Investor-related Will your social report be verified by a third party? employees, community organizations, consumers, media, access to markets and opportunities Independent verification of a company’s social report ensures What do you want to achieve or address by publishing a government, regulators, investors, financial and industry analysts, social investment ratings companies are truly being as transparent and accountable as social report? Is the report a tool to be more accountable to auditors, non-profit advocacy groups, labor unions, suppliers, cost, cost avoidance or tax savings possible. For example, the Worldwide Responsible Apparel stakeholders? Is it a tool to more effectively communicate your business partners, consumer activists, human rights activists, Customer-related Production (WRAP) has accredited PricewaterhouseCoopers, company’s responsible social, economic and environmental environmental agencies, and health and safety inspectors. customer awareness and support Testing Services, and Cal Safety Compliance practices? Is it to meet government or regulatory requirements? increased sales Corporation (CSCC) to monitor compliance with the Establishing your goals and objectives is the first step. Start with 3) Determine Who Needs to Contribute Community/Government-related around the world. the ending – the big picture goals you want to achieve. Then break What key players in the organization need to contribute awareness those goals into smaller bite-sized objectives you can measure in a to this report? While the ultimate responsibility may fall positive local decisions 6) Determine Resources Available changes in regulatory process or environment given timeframe. Put these to paper and communicate them on your shoulders, social reporting is not a one-person show – What resources are available to create a social report? trust in crisis situations throughout the organization to gather support and buy-in. nor should it be. You’ll need a cross-functional team that Is there a designated budget? a team responsible for Reputation-related Here are some examples of common goals to start your thinking includes people from each major operational area of your the project? One thing is clear: a social report can’t happen media/news coverage about what you want to achieve through your company’s social report: company. Select people who are able to highlight their off the corner of someone’s desk. It needs clearly defined awards and accolades Goals department’s performance and how this performance roles and responsibilities and dedicated financial and human Contact The Center for more information on measurement. • enhance reputation with stakeholders relates to the economic, environmental and social goals resources to get the job done. • become more accountable and responsive to stakeholders of the organization. You’ll have greater success if your 5) Determine Reporting Standards and Verification For example: • effectively communicate social, economic and team includes one or more social reporting “champions” employee time to plan, coordinate, measure, environmental practices Will your organization align its report with a specific reporting at the senior management level. Regardless, be sure to seek track and compile • meet government or regulatory requirements guideline or standard? While some organizations choose to input from every line function within your organization. employee or consultant time to write, design, produce • preserve your license to operate develop their own guidelines, there are a number of social and distribute • communicate core values 4) Determine Scope of Analysis reporting standards. You don’t have to “recreate the wheel.” auditors, if verified by third-party • support sales targets You can simply follow the standard that most closely fits with What level of analysis does the organization plan to undertake reporting or tracking systems or software • augment business marketing your organization or is used most widely within your industry print costs or programming if web published in producing this report? What types of measures or evaluation • help attract, motivate and retain employees so you will have a tool for comparison against competitors. tools are in place already? If your company is not already You can measure your progress toward these goals a number Pages 6 and 7 outline the most widely used reporting standards. tracking financial, environmental and social performance, of ways. Many of these are outlined later in this paper. then what measures can it establish? How can the cross- 2) Identify Key Audiences functional team assist in this process? What level of analysis will satisfy the expectations of the report’s audiences? Consider Who do you want to reach with your social report? these possible tools and measures to gather the data you need: Which audiences are most important to reaching your goals? Employee-related With which audiences will you have the greatest wins? To make awareness/opinion surveys an impact, you’ll need to understand the needs and expectations motivation/morale British Petroleum of your audiences and align them with the goals and objectives recruitment of your social report. Consider the following list of stakeholders British Petroleum uses a social report to explain its process to manage environmental, social retention to start your thinking. The list is not exhaustive and not all the and ethical risks, and to ensure that their actions are meeting BP standards. Their social report employee training and skills groups will apply to your organization. Use it as a tool to make plays a crucial role, says The Lord Browne of Madingley, group chief executive. “Behind everything reported in these pages lies our determination to make progress, to deliver on our promises in this area – which we take as seriously as our commitments on financial performance – and to seek continuous improvement, because, as in everything we do, there is no room for complacency.” —British Petroleum, Performance for All Our Futures, 2002 2 3 Who’s doing what

WHY LEADING COMPANIES ARE PRODUCING SOCIAL REPORTS A social report can take several different forms and be used for a variety of purposes. Most companies create social reports to assess performance, to communicate and build trust with stakeholders, to help attract and retain talented employees, or to enhance the company’s reputation, transparency and accountability.

Here’s what some of the world’s leading companies are saying about why they create social reports and the challenges they face.

Petro-Canada Chiquita Brands Bristol-Myers Squibb Premier Oil Baxter International ING International purpose of social report purpose of social report purpose of social report purpose of social report purpose of social report purpose of social report To build its reputation as an ethical company To establish and communicate Chiquita’s To communicate sustainability To be open and transparent with To emphasize Baxter’s responsiveness To communicate with stakeholders on standard leadership standard for corporate performance to stakeholders. stakeholders about Premier Oil’s to diverse interests. the social, environmental and economic standard ISO 14000 citizenship to build trust. performance as a socially responsible standard aspects of ING’s activities. Global Reporting Initiative (GRI) corporate citizen. continuing challenges standard Global Reporting Initiative (GRI) standard continuing challenges standard • Maintaining reduction in greenhouse SA8000 continuing challenges Global Reporting Initiative (GRI) gas emissions as they develop oil sands continuing challenges • Protecting biodiversity AA1000 • Continuing to focus on how today’s continuing challenges opportunities • Implementing the • Assuring the safety of biotechnology continuing challenges actions affect tomorrow’s needs – • Delivering good performance while • Developing and enhancing relationships globally • Understanding the impacts of products • Improving and monitoring social maximize value while using resources acting socially responsible with Aboriginal communities in their own words in the environment performance efficiently and strategically to minimize in their own words • Operating in countries with different “The fact that we operate in countries • Providing affordable access to • Consulting with additional stakeholder environmental impact “ING has many groups of stakeholders, cultures and social issues with diverse cultures and widely different innovative medicines worldwide groups not addressed in this report in their own words each with their own interests and in their own words stages of development often makes it in their own words in their own words “We believe it is important to take a more priorities. As a worldwide financial “Building our reputation as a company difficult to identify what would be the “We are facing a critical period in our “In the future, we will continue to improve comprehensive look at our performance services provider, we seek to balance that conducts business in an ethical right thing to do in a given situation. company’s history. Rapid advances in and monitor our social performance and according to the of the interests of our four main stakeholder and open manner and protects the Many leaders within the company science have created growing expectations it will help us to ensure that corporate economic, environmental and social groups: our clients, our shareholders, environment, builds community and recognized…the need to develop and by the public for better and more widely social responsibility and human rights responsibility. Instead of evaluating our our employees and the society we live respects people is just as essential to communicate a shared set of values as accessible medicines delivered as quickly considerations are an integral part of performance independently in each of and work in. To underline our commitment our success as growth and profitability.” well as clear guidelines for conduct that as possible. This is by far the greatest our decision-making processes.” these areas, we bring them together in to an equitable treatment of each of these — Petro-Canada, A Commitment to Caring, 2001 would help us resolve these dilemmas challenge for sustainable development – Premier Oil, Social Performance Report, 2001 this report to demonstrate the synergies groups, we have broadened our mission consistently and appropriately throughout within our industry.” and inter-relationships that define our statement: ING seeks to deliver added our organization.” — Bristol-Myers Squibb Company, On the Path Toward long-term success in responding to value, not only to our shareholders, but Sustainability, 2001 — Chiquita Brands International, Code of Conduct, 2000 diverse stakeholder interests and the to all stakeholder groups. With this policy needs of future generations.” we have achieved a stable annual average — Baxter International Inc., Seeing Tomorrow Today, 2002 profit increase of 13-14 percent over the past 11 years.” – ING, ING in Society, 2001

Fifty percent of Fortune 100 companies are producing environmental and social Large companies are most likely to issue a sustainability report, more than half of these companies reports, up from 44 percent the previous year are following the GRI guidelines, and almost one-third are pursuing external verification – 2001 Benchmark Survey of The State of Global Environmental and Social Reporting by CSR network – 2002 Sustainability Survey report, PricewaterhouseCoopers

– Baxter International Sustainability Report 2001, Seeing Tomorrow Today 4 5 Four Common Standards of Social Reporting 4While the Global Reporting Initiative (GRI) is the most commonly used reporting standard, there is no single standard used by all reporting companies. In fact, a number of different standards have been created to guide the development and evaluation of social reports. You’ll want to determine the standard that works best for your organization.

GRI SA8000 AA1000 ISO 14000

The Coalition for Environmentally Responsible Social Accountability International launched the The Institute of Social and Ethical Accountability The International Organization for Standardization Economies and the United Nations Environment SA8000 reporting guidelines in 1997 to address developed the AA1000 reporting guidelines in 1999. developed ISO 14000 in 1996 to address Program developed the GRI in 1997 through a multi- labor and workplace conditions. Independent These reporting guidelines are a ‘process standard’ environmental issues. ISO 14000 establishes stakeholder consultative process. These guidelines auditing organizations are certified to evaluate that focus on the method of reporting, not the content standards for assessing product life cycle, were the first to combine reporting on the economic, facilities conformance to the SA8000. of the reports. AA1000 guidelines provide a improving the environmental performance environmental and social components of an The requirements of the SA8000 include: child framework for how organizations can establish a of products, creating environmental labeling, organization’s operations. labor, forced labor, health and safety, right to process that generates the communicating on environmental performance

GRI provides guidance on the applicability of the collective bargaining, discrimination, disciplinary report systems needed to ensure effectiveness on and auditing environmental management systems. guidelines, the practices that promote reliable action, working hours, and remuneration. decisions and overall performance Examples of companies that endorse the ISO 14000: reporting, and the framework for structuring The SA8000 models the International (www.accountability.com). The AA1000 describes Petro-Canada, ExxonMobil, 3M, Xerox Corporation a report. It helps companies evaluate consistency Organization of Standardization’s Quality Audit how to identify key issues, report on these issues in a between their performance and their policies, (ISO 9000) and Environmental Audit (ISO 14000). way that outsiders can rely on, and suggest how these implement sustainability and monitor their progress, The main difference between the ISO standards reports should be audited. and provides a consistent framework for sharing and and the SA8000 standards is that the SA8000 Examples of companies that endorse the AA1000: comparing their accomplishments and challenges. includes a standard for performance requirements Premier Oil, Camelot, The British Airports as well as system requirements. The GRI guidelines do not suggest methods for Authority (BAA) implementing data collection, reporting systems Examples of companies that endorse the SA8000: or organizational procedures to prepare a report. Chiquita Brands International, Dole, Avon Nor do they provide guidance on monitoring performance, verifying information or setting a minimum level of expected performance. These are left to the discretion of the reporting organizations. Because GRI is a voluntary process, it does not require enforcement or verification. The guidelines suggest verification of social reports needs to be more flexible than that of financial auditing yet still provide assurance and credibility to the report. Shell

Examples of companies that endorse the GRI: Nike, Sir Philip Watts, Chairman of the Committee of Managing Directors of Shell, says the Bristol-Myers Squibb Company, ING Group, and company’s sustainable development report reflects the company’s principles of using Baxter International Inc. sustainable development in all its operations – taking account of their social and environmental consequences, as well as the economic dimension. For both internal and external audiences, this report demonstrates Shell’s commitment to transparency. “We believe long-term competitive success depends on being trusted to meet society’s expectations,” says Watts. – Shell, People, planet & profits, 2001

– People, planet and profits 6 The Shell Report 2001 7 The benefits and challenges of social reporting

The social reporting trend has provoked debate. While social reports are becoming a regulatory requirement in parts of Europe, opponents argue that voluntary pressure is enough to force change among businesses. Some also believe the cost of creating a social report may outweigh the potential benefits since there is no certainty that the report will be read. Others raise concerns about liability as companies become more transparent and accountable. Some question how effective disclosure will be in making companies more ethical and honest.

Nonetheless, marketplace needs are driving the Getting started

adoption of social reporting and the majority of large The Center for Corporate Citizenship at Boston companies in Western Europe and North America are College has a number of tools and resources producing social reports and realizing the benefits. to help you take your company’s corporate Social reports help companies to: citizenship efforts to the next level. The Center

• communicate with stakeholders offers consulting support, training, access to cutting edge research in the field, opportunities • communicate core values to share and learn with leaders in the field, and • identify areas of weakness a community of more than 300 members dedicated • promote stability and manage risk to defining, measuring and communicating the • manage reputation and trust business benefits of corporate citizenship.

• address stakeholder concerns and interests To access our resources, visit our web site • attract, motivate and retain employees at www.bc.edu/corporatecitizenship or • introduce innovative management practices call 1.617.552.4545 for more information.

Understanding Corporate Citizenship

Corporations with vision have a clear What are the benefits of corporate citizenship? Contact The Center for understanding of the rights and responsibilities • Employees are looking to work for companies that reflect Corporate Citizenship they have in our society. They understand that and embody their values, who are as concerned about principles as they are with profits. citizenship is an important driver for building at Boston College • Investors are increasingly looking for companies they can trust. trust with customers, attracting and retaining • Customers are looking to purchase products and services at www.bc.edu/ employees, and establishing support with from companies they respect, and from companies that communities where they operate. They also reflect their own values. corporatecitizenship know that corporate citizenship is much more • Communities are more willing to support an organization’s or call 1.617.552.4545 than charitable donations or volunteer leave license to operate when there is a history of trust, support and mutual benefit. time for employees – it’s the way the company • In a crowded marketplace, corporate citizenship is a integrates basic social values with everyday key differentiator. business practices, operations and policies. • Organizations that do well by doing the right thing earn And most importantly, they know that becoming a reputations as leading corporate citizens with media, government, investors and customers. leading corporate citizen provides real, measurable bottom line benefits to their companies.

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