International Accounting and Reporting Issues: 2004 Review - Unctad

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9 Chapter I Business In The Community (BITC) is a non-profit organization based in the United Kingdom with about 700 members, including 75 of the FTSE 100 enterprises. BITC’s Corporate Impact Reporting project recommends 44 indicators to measure an enterprise’s impact on society. The indicators are subdivided into subsets related to the market place, environment, workplace, community and human rights. The indicators used in the Corporate Impact Reporting framework offer progression over three levels: Level 1, for companies just beginning to measure progress, requires mostly baseline data; Level 2, for companies wishing to move beyond a basic commitment, requires some performance and impact data; and Level 3, for companies aiming at further improvement of their performance, requires qualitative as well as quantitative information. A framework to measure and report on responsible business practices accompanies these indicators. BITC stresses that this reporting methodology provides a picture of enterprises’ CSR activities and performances, but does not allow for comparison. Some of its core indicators are seen as being too sector-specific. To date, 18 UK-based enterprises have participated in this initiative. 10 D. Corporate practices Surveys of report preparers carried out by major accounting companies and consultancies 11 show that although health, safety and environmental (HSE) reporting is still the most prominent type of non-financial reporting among the Global Fortune Top 250 (GFT250) companies (73%), other types of reports are emerging, including triple bottom line reports (14%), combined environmental and social reports (10%), and social and combined social and financial reports (3%). The Top 100 survey mirrors this trend, showing that companies are increasingly incorporating social and economic issues into their HSE reports. 12 The content of these reports is generally analysed in terms of economic, environmental and social issues. Environmental issues include the impact of production processes, products and services on air, land, biodiversity, and human health. Economic performance reporting spans wages and benefits, productivity, job creation, outsourcing expenditures, R&D investments, and investments in training and other forms of human capital. 13 Social issues typically include traditional reporting topics such as workplace health and safety, employee satisfaction and corporate philanthropy, as well as other topics such as labour and human rights, diversity of the workforce, and supplier relations. Table 1 shows that traditional reporting topics still rate higher than the newer topics. 10 Thames Water, Coca-Cola Great Britain, Nestle, Flag, HBOS, Sainsbury's, GUS, Severn Trent, United Utilities, Marks & Spencer, CIS, Powergen, BAA, Jaguar Cars, BUPA, Zurich Financial Services, Carillion, Orange, EDF Energy. 11 A number of assessments of social reports have been carried out by KPMG, UNEP/SustainAbility, ACCA, PricewaterhouseCoopers and others. 12 KPMG, International Survey of Corporate Sustainability Reporting, 2002. 13 PricewaterhouseCoopers, Management Barometer Survey, September 2002.
International Accounting and Reporting Issues: 2004 Review All surveys share the view that the content and quality of sustainability reports are not consistent. The number of and quality of environmental reports is generally higher than reports on economic and social issues, largely due to a number of recognized environmental metrics, for example ISAR’s eco-efficiency indicators. Social disclosure often has an internal focus, with a smaller number of reports covering local community and wider social issues. PricewaterhouseCooper’s (PwC's) survey of 140 large US companies shows that companies are struggling to define what sustainability means to their business and to translate sustainability into metrics. Overall, the ability to develop and use concrete metrics to show progress over time is significantly lower in the areas of social performance than in economic performance. Table 1. Social topics addressed in GFT250 reports Topics % Community involvement 97 Health and safety 91 Equal opportunity / workforce diversity 88 Employee satisfaction 67 Human rights 55 Supplier relations 39 Child labour 36 Freedom of association 27 Fair trade / international development 18 Corruption 15 Source: KPMG, 2002 International Survey of Corporate Sustainability Reporting. Companies have started developing social indicators in order to be able to measure their social performance. Table 2 ranks the top five such indicators used by the GFT250. For those social issues for which it is more difficult to set a metric, the reporting remains qualitative. 14 Table 2. Top five social performance indicators Topics % Accident/injury frequency 76 Community spending 48 Women in staff/management 42 Staff diversity 27 Supplier diversity 12 Source: KPMG, 2002 International Survey of Corporate Sustainability Reporting. These top five indicators, however, may not fully meet stakeholder expectations. A recent survey of a broad range of stakeholders (the Global Stakeholders Report 2003 by ECC Kothes Klewes GmbH) revealed that a significant 14 PricewaterhouseCoopers, Sustainability Survey Report, 2002. 10
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