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The future of online CSR reporting
Susan Werkner, Managing Director of Interactive Investor, reviews key CSR trends and highlights some great local companies' well-executed CSR reporting.
While around 20-25% of Australian companies produce a formal CSR document, this is set to increase as evidenced by the increasing numbers of companies participating in the Australian Corporate Responsibility Index (CRI) Awards1. In 2005, 29 CEOs submitted to public examination of their corporate responsibility practice. Westpac tops the CRI in Australia, with Toyota Australia, ANZ and BHP Billiton closing the gap.
CSR reports are having a positive effect on companies’ branding and reputations, particularly with opinion leaders in the community. According to a survey of investor behaviour conducted by global communications consultancy APCO Worldwide, positive CSR information has led 72% of the respondents to purchase a company's product or services and 61% to recommend the company to others. Conversely, negative CSR news has led 60% to boycott a company's products and services2.
While the importance of CSR and how it affects investor’s ratings of listed companies is evident, corporations’ CSR communications strategies are less clear.
To meet emerging stakeholder preferences the primary means by which CSR will need to be communicated is via interactive and accessible online reporting formats. Ideally these should provide companies with an opportunity for an online dialogue with their stakeholders and reinforce companies’ commitment to the environment by minimising the use of paper. There are already many companies that have implemented this strategy for CSR reporting and they are reaping the rewards of high investor regard and strong support in the wider community as a result.
Much like in Europe and the US, CSR is growing in popularity in Australia as more companies are increasingly reporting CSR related initiatives online. With Australia’s internet usage more than doubling since 2000 from 6.6 million online users to 13.9 million in 20053, it is little wonder even the government is advocating the increased use of online reporting to reduce costs of corporate reporting, as the recent AFR article highlighted “...government pushes for internet only reports for listed companies4”
No doubt, the single most effective and efficient CSR communications platform for companies is their corporate website. Typically, Australian listed companies have chosen one of two classic approaches: a “spirit of CSR” approach (e.g. Suncorp) or a “compliance” approach. In each case the means of integration of the CSR message into the website is critical to ensure it complements the site and reinforces positive investor perceptions. Many mining companies have implemented this since they are at the forefront of sensitive issues regarding the environmental impact of their processes. For example, Woodside has taken a high profile prescriptive approach by producing an online Health Safety Environment and Community Report for 2005 5. ANZ has similarly produced a highly effective report that seeks to measures its progress along defined CSR areas.6
The participants in the Australian Corporate Responsibility Index Awards are highlighting the value in “triple bottom line” reporting. In the words of John McFarlane, CEO of ANZ:
“Today, a successful and sustainable company has to be focussed on more than its financial performance. We need to understand and engage with our customers, our staff and the community… Our shareholders and other stakeholders now want much more detailed and transparent information on how we work as well as the financial outcomes we achieve… (the ANZ CSR report) provides a concise overview of our approach to managing non-financial indicators, such as employee engagement and customer satisfaction, and for the first time consolidates our outcomes, achievements and future challenges7”
Being committed to CSR can bring significant benefits to companies dealing with the challenge of recruiting and keeping talented employees, and doesn’t mean any less focus on the bottom line at award-winners Westpac, according to Graham Paterson, Westpac’s Head of Corporate Responsibility and Sustainability:
"Our corporate responsibility record is a key decision driver for a lot of new employees. It means we can attract very good quality employees and keep them... You can never lose sight of the bottom line and the need to always drive shareholder value… after all, if the business fails, what does all the corporate responsibility stand for 8?"
In the future, CEOs, CFOs, Company Secretaries and Investor Relations Officers (IROs) will need to ensure they are addressing the growing interest in ethical business practices and communicating a credible message that embraces accountability, responsibility and trust to their broader stakeholders.
About the author
Susan Werkner is Managing Director of Interactive Investor, online IR service providers of a suite of web-based interactive solutions that combine specialist knowledge of corporate communications with internet technology expertise and IR experience to increase the impact of a company's online IR strategy.
1 See www.corporate-responsibility.com.au. The Corporate Responsibility Index is developed by Business in the Community, an initiative of St James Ethics Centre, The Sydney Morning Herald and The Age, proudly supported by Ernst & Young.
2 See Apco Worldwide
3 Neilson/Net Ratings 2006 Monitor taken from Tick Yes Newsletter 2006 http://www.tickyes.com/default.asp
4 AFR April 7th 2006 http://ice2.interactiveinvestor.com.au/AFR/April%208%202006/EN/body.aspx?z=3&p=1&v=1
5 Woodside Health Safety and Environment Report for 2005 http://ice2.interactiveinvestor.com.au/WoodsideLtd/Health%20Safety%20Environment%20and%20Community%20Report/EN/body.aspx?z=1&p=-1&v=1
6 ANZ Corporate Social Responsibility Interim report 2006. http://ice2.interactiveinvestor.com.au/ANZ/Corporate%20Responsibility%20Report%202005/EN/body.aspx?z=1&p=-1&v=1
8 “It Pays to be a Good Citizen”, Management Today, April 2006, Australian Institute of Management.
- ASX Corporate Governance Council Principles of Good Corporate Governance and Best Practice Recommendations
- United Nations “Principles for Responsible Investment”
- Juno Consulting
- The Partners for Financial Stability
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