The Catch 22 of CSR Reporting and The Paradox of Trust

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Guest Post by Elaine Cohen, Joint CEO of BeyondBusiness Ltd

The purpose of a CSR report is to build trust. By operating transparently and responding openly to stakeholder concerns and aspirations, through a “fair and balanced” presentation of the material issues relating to your organization’s sustainability and corporate responsibility efforts, you build trust. Trust, so that stakeholders can hold your Company’s integrity  in high regard and make educated decisions about whether they want to invest in you, work for you, buy your products or services, supply to you, collaborate with you, complain about you to the regulators, approve your license to operate in their neighborhood or simply recommend you to their friends. But quite often, reports are met with cyncism and mistrust. Why should we believe what is written in CSR reports. And more importantly, why shouldn’t we believe what’s reported?

MANY PEOPLE SAY:

CSR Reports are just a form of marcom or PR – self-gratifying do-gooding self-promotion.

i.e. you cant trust CSR reports and you can’t trust reporting companies. People may be right. CSR reports look like  PR. They are  full of superlatives and positives and superlapositives like that ? It’s a hybrid. Using one word instead of two is sustainable best practice… or bractice. Less typing energy, less server power, less carbissions).

Which is why i find it interesting that so very few PR professionals are actually involved in managing CSR communications in their businesses, or in leading the writing of CSR reports. See some examples from reports published in September 2009:

Corporate Express Austrailia’s 2008 report :  CSR is led by a CSR manager reporting to the CEO. There is a CSR Steering Committee with representation from all functions including the New Zealand person who reports to the Head of Marketing. But there seems to be no dominant PR or comms-related presence.

WestLB AG 2009 report : The Sustainability Department, which is responsible for planning, steering and controlling all sustainability activities, is a part of the Group Development business unit and reports to the Chairman of the Managing Board. Do you detect a mention of Marketing or PR in this structure ? Nope. Me neither.

Teck 2009 Report :The Safety and Sustainability Committee  of the Board of Directors provides policy direction and monitors  environmental, social and safety performance. The Corporate Environment and Risk Management Committee is a senior management committee that sets priorities and direction for EHS programs, tracks performance and measures results. No PR stuff here.

MTR Corporation 2008 Report : The Corporate Responsibility Steering Committee is chaired by the Legal Secretary and members from different parts of the business are on the team. Sounds pretty PR-less.

Now, in an outstanding piece of research by Sherie Winston of Georgetown University, in which she charts the positioning of CSR in a business, 125 CSR jobs were studied and only half had some form of CSR communications content. When hiring CSR people, companies dont’ look for communications specialists. “Few are pure communications jobs, and most fall under administrative, managerial or business development categories.”

Logic might dictate that if companies were intending their CSR reports to be PR brochures, they would have PR people leading their CSR report publication. Does that make sense? I mean, in any business i have ever worked in, the Finance guy counted the profits and the IT person decided when to upgrade my laptop. So why would a PR-motivated CSR report not be led by the PR person, arguably the most competent person to produce PR content ?

Do you have kids ? What happens when someone asks you about your kids? You dont start off by listing all their bad points <(well, unless your kid is Dennis the Menace). You dont spend all your time saying what they don’t do well. You start off by saying how wonderful they are. Perhaps you might throw in the odd comment about the fact they total-lossed your car again last week, but on the whole, you stay with the good stuff. They are not bottom of the class, they are 28th from the top. They are not hyperactive, they have lots of energy. Most mom’s are natural PR agents for their own kids. Mom’s  tell the REAL truth about their kids (my son is two rungs short of a ladder)only  when they are with their closest family members or friends. The people who they trust the most.

And it’s a bit like that with CSR reports. Each report is someone’s kid. No CSR reporter wants to scoop up the dirt when writing about the organization in whose success he has a vested interest. So fair and balanced reporting is acually counter-intuitive, requires a degree of maturity and confidence that most corporations have not yet achieved.

Actually, it requires trust. It requires the organization to trust that the stakeholders who read the report will do so with a fair and balanced mindset, and not look for the first opportunity to beat the company about the head for everything that it admits is not perfect.

and here we have it, the CATCH 22.

To engender trust, you have to show trust though balanced reporting.

But balanced reporting is risky, as stakeholders might react negatively to anything that is less than perfect. If you dont trust them, they wont trust you.  If you don’t trust your stakeholders, your CSR report will always lack authenticity. Because you will always be too scared to present your Company in a balanced way.
Like mommy (above), a corporation will have greater trust in those stakeholders that itis closest to. Those the company has invested time in getting to know, in engaging and dialoging with. The corporation will feel safe in providing with a balanced picture to this greater critical mass of stakeholders.

and here is the PARADOX

Paradoxically, despite the fact that stakeholder engagement is crucial to building trust and therefore balanced, trustworthy reporting, most Companies do not pay much attention to this. We can see this evidenced in the brief one-pagers in most reports which do no more than pay lip-service to stakeholder engagement. Not many corporations realize how core this is to their entire CSR program, and to building trust through CSR reporting.

At this point, you are wondering how Chunky Monkey fits with reporting, catch 22′s and paradoxes (gotcha!) . Here’s the thing: I did a Free Astrology Destiny Reading on Astrology.com for Chunky Monkey , and this is part of what what is says:…… chunky monkey, if you are a business person, you may feel that your employees and customers (especially the loyal, long time ones) are your family and try to take care of them as such. You care about their personal lives and feel for their troubles, and can like a good mother you see them through tough times. Get that ? Chunky Monkey is all about values and stakeholder engagement. Phew. That’s a relief!

© 2009, Elaine_Cohen. All rights reserved. Do not republish.

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Author: Elaine_Cohen (19 Articles)

Elaine Cohen is the Joint CEO of BeyondBusiness Ltd, a leading CSR consulting and reporting firm, offering a wide range of consulting services for the strategic development of social and environmental responsibility of businesses, reporting and assurance using the GRI and Accountability frameworks, and reporting on application of Global Compact principles. Elaine writes a blog on CSR reporting, expert CSR report reviews for CorporateRegister.com ,tweets on CSR topics at @elainecohen and has specialist knowledge of governance, ethics, diversity, advancement of women, responsible workplace and use of social media for csr communications.

  • navid

    Elaine,

    Your analyse is absolutely correct. CSR is more issued for the moment for marketing / communication purpose…

    However, what do you propose to settle this TRUST in the company ? How can we instill this change in order to use CSR in its original purpose ?

    thanks,

    navid

  • http://www.b-yond.biz/en elaine cohen

    hello navid, thank you for reading and thanks for commenting. I think my point was really that it takes a lot of maturity to generate a CSR report which is truly authentic and does not shy away from disclosing difficult issues at the expense of authenticity. It is a diffult balance for any organization, and we must have some understanding that no organization wants to shoot itself in the foot by reporting.

    I believe that as CSR as a professional discipline in the business matures, so will reporting. And so will those using reports. And this will engender greater trust. The keys to this are enlightened and bold CEO’s who are committed to change, business strategy which includes CSR as core and not add-on, effective and open stakeholder dialogue, and balanced and professional reporting teams.

    CSR, and CSR reporting, is evolving, and i remain optimistic that a better balance will be found.

    warm regards, elaine

  • Sushant Dahiya

    HI ELAINE, NICE ARTICLE. VERY TRUE ABOUT CSR reporting. But don’t you think, an independent organisation or committee, may government or any regulatory authority should prepare these reports of companies. These reports prepared by independent organisation will be more authentic and people believe it more, even stakeholders. But what about companies, is it useful for companies to report on CSR?

  • http://www.csr-reporting.blogspot.com elaine cohen

    Hello Sushant, apologies for the late reply, your comment went under my radar for a while… thank you for commenting. Whilst there is room for external reporting (audit?) , much of the value of CSR reporting is in the way the PROCESS of reporting drives performance change. If the reporting process becomes an external check, i suspect the process will lose much of its value. Compaines need to learn how to report in a more authentic and credible way. Ultimately it is this stakeholder interaction which will drive performance and paragidm change, i believe, not an auditor or regulator. Companies derive many benefits from reporting – even though many do not do it well. You might like to take a look at this earlier post http://bit.ly/jJT5k which discusses some of the benefits of reporting for companies.