Corporate Social Responsibility is no
longer good karma – it is good business. Once perceived as a means
to display an organisation’s ethical side, CSR initiatives such as
sustainability reporting are now being employed en masse as vital
tools for companies to grow and prosper. Arvind
Hickman
reports.

The growth in sustainability reporting over the past couple of
years highlights a gradual shift in public attitude towards issues
such as the social effects of business and climate change.

This year’s Global Reporting Initiative (GRI) conference aims to
highlight, among other things, that sustainability reporting is
profitable, necessary and in high demand. Another key focus of the
conference will be to gather the views of report users and debate
whether the current reporting model is meeting the needs of the
people it is targeted at.

An extensive survey of report users that will be revealed on May 8
provides clues to the value of these reports.

GRI chairman Mervyn King predicts the Corporate Social
Responsibility (CSR) wave will continue to gather momentum and
spread. “You know the reality is that there is a new general
awareness of sustainability” he says. “I mean let’s just take one
sustainability issue – climate change. If I had said to you two
years ago that over 80 percent of companies today have on their
risk management agenda climate change, you would have laughed at
me. There has been growing public attention and there is no doubt
about it – the world is concerned.

“Of the hundred largest economies in the world by way of gross
revenue, 51 are companies and 49 are governments. Therefore the
greater agents for change to improve the quality of the world we
live in are companies and not governments. They have a greater
influence today on people then the governments. If they can change
and operate on a renewable energy source, for example, they can
make a huge contribution to improving the quality of life here on
earth.

King continues: “They are realising that strategically you have to
plan short and long term, and you cannot plan long term without
taking sustainability issues into account.”

Rabobank head of Corporate Social Responsibility Bart Jan Krouwel
is a speaker at the GRI conference and has been at the forefront of
the corporate sustainability movement for over three decades. He
was a co-founder and inaugural managing director of the Dutch
independent and green Triodos Bank before being headhunted by
Rabobank.

The three Ps

Krouwel describes sustainability as a concept of three Ps – people,
planet and profit. In the past, Krouwel explains, most people
linked sustainability to issues surrounding the planet alone, but
this mindset is slowly changing.

“CSR is not idealism anymore but is daily business,” he says. “We
implement all kinds of different aspects of CSR in our company and
in the daily business of the entities within the Rabobank Group. We
can prove from a commercial point of view CSR is profitable.”

Rabobank has introduced three green initiatives which, Krouwel
claims, have led to significant cost savings.

The first was to enforce double-sided photocopying and reduce the
amount of paper that is printed.

“The second thing was to change from grey energy to green energy
but not in the traditional way of buying it from an energy
company,” Krouwel says. “In the Netherlands, we still actually have
a market share of 85 percent of the food and agricultural sectors.
We are financing nearly every primary working farmer. Nearly all of
these farmers have one or two windmills on their land and they are
producing much more energy than they use for themselves.

“So what we did was to set up a new cooperative, as we are a
co-operative ourselves, and asked the farmers to supply and deliver
their surplus energy to that co-operative. We buy the energy
directly from that co-operative and not the energy company anymore.
This is better for the farmers because they get a better price from
their own co-operative than an energy company, and we paid less
than when we primarily bought it off energy companies.”

The third main CSR initiative was to lease cars that are
environmentally friendly, which saves Rabobank fuel costs.

GRI Reporting Country breakdowns of self-declared reporting using the GRI guidelines 2007
 
The latest figures on the number of
companies that now perform sustainability reports underline the
growing importance of CSR to the corporate world. Sustainability
reporting watchdog, Corporate Register, notes that over 2,500
corporate responsibility reports of some form were published in
2007.

The GRI’s G3 guidelines are widely regarded as an international
benchmark of sustainability reporting. Launched at the last GRI
conference in October 2006, G3 is the third generation of reporting
guidelines produced by the not-for-profit group. It provides
guidance on reporting across 79 indicators, in areas such as
environment, human rights, labour practices, product
responsibility, governance and strategy.

King says the current G3 guidelines are by no means the definitive
article. “The guidelines will never be a finished product – this is
something that is not the law. If you take every sector, [such as] the mining sector, car manufacturing sector, whatever it is, they
themselves keep developing and changing, so reporting and
guidelines are going to keep on changing and improving.”

Official GRI figures show nearly 1,500 companies use the G3
guidelines – an increase of more than 50 percent since G3 was first
introduced. This includes several of the world’s largest companies
such as Coca-Cola, Microsoft, IBM, General Electric and
Nokia.

User focus

One of the key aspects of this year’s GRI conference is a focus on
the viewpoint of report users. King says it is the users who
sustainability reports should be targeted towards, which is a
departure from traditional financial reports that are typically
aimed at analysts, banks and regulators.

“The reality in the world today is that the majority of the
stakeholders are the pension funds and pension funds are conduits
for you and me, the people in the street,” King comments.
“Consequently, what is happening is that the reports should be
prepared more and more with an eye on what is needed by the user
rather then the preparer.

“So what preparers are now daring to do is to prepare their
financial statements on how the companies did business during the
year and review how it has positively and negatively affected the
economic life of the community in which they have operated and how
it intends to advance or improve those positive aspects and
eradicate those negative aspects in the year ahead.”

One of the ways sustainability report preparers can achieve this
goal, according to King, is through meaningful narrative reporting
on the performance indicators contained within the G3 guidelines.
“So you will see a whole new approach; getting information on the
economic value of a company. That is forward-looking information,
exactly what the G3 standards are about,” he says.

As commissioned by the Global Reporting Initiative, KPMG and
SustainAbility (UK) conducted a survey of sustainability report
users that will be presented at this year’s GRI conference. The
global professional services network recently announced an
initiative to reduce its combined carbon emissions by 25 percent by
2010.

KPMG Sustainability chairman Wim Bartels tells The
Accountant
he has noticed a rise in popularity and acceptance
among clients for G3 guidelines. “The general response to G3
guidelines is positive,” he says. “After the launch of G3, our
experience is that almost all clients use G3 at a minimum as a
reference. With the previous model, G2, you had companies who said
they used them and companies who said they had their own
guidelines.”

Bartels reveals that nearly 2,300 respondents took part in the
users’ survey, which also gathered the thoughts of 500 people who
do not currently use sustainability reports. “I think that will be
rather interesting, specifically for the reporters to understand
there is a way to go to get these non-readers on board and to
change their attitude,” he says.

King says the over-riding trend to emerge from the users’ survey is
that users feel much better informed about an organisation that
presents forward-looking information.  

Sustainability Reporting CSR
Corporate social responsibility services on the
rise

As more and more companies adopt corporate social responsibility
(CSR) schemes, the financial sector is expanding related services
to the public and private sectors.

All of the Big Four and several mid-tier professional services
firms now have dedicated resources to sustainability services, and
demand is rising fast. Financial services organisations such as
banks are offering new and innovative green products.

When KPMG Global Sustainability Services was formed 15 years ago,
it initially dealt with services related to environmental issues.
KPMG Sustainability chairman Wim Bartels tells The
Accountant
the network grew at a steady rate until 2005 when
it had 250 professionals across 33 countries. In the past year, he
notes, there has been rapid growth of about 20-30 percent and
demand is filtering into more developing markets.

“Countries like China, Mexico, Indonesia or South Korea are now
suddenly getting into this market and this is based on the demand
they get from their clients,” Bartels says, adding the network now
has 350 sustainability professionals.

KPMG helps organisations develop sustainability strategies,
implement sustainability processes and provides assurance on
sustainability reporting. One area that is rapidly growing across
the profession is carbon advisory services, which is approached in
a multidisciplinary way by KPMG.

Dutch co-operative Rabobank Group has also developed a solid
portfolio of sustainability financial products and services,
including green bonds, green loans, climate mortgage, climate
credit card and various CSR asset funds.

Rabobank head of Corporate Social Responsibility Bart Jan Krouwel
says there is over €10 billion ($15.6 billion) invested into
Rabobank’s ethical and sustainable investment funds.