Monday, April 12, 2010

Writing and Reading CSR Reports: Baxter and Risk Metrics Group

The Beyond Reporting break-out session of the BCCC Conference focused, as the title suggests, on the corporate social report which has become a routine task of the CSR departments. Companies recognize these reports as an essential management tool to communicate and track key performance indicators. Analysts use these reports to evaluate how the environmental, social and governance dimensions are affecting the financial health of the company.

So what? asked David Wood, director, Initiative for Responsible Investment, Harvard University, the two panelists, Elaine Salewske, Senior Manager, Corporate Communications, Baxter International Inc and Eric Fernald of Risk Metrics Group.

In order to ensure a comprehensive approach, it’s important to consider two perspectives of reporting: that of the writer as well as that of the reader. Baxter is a long-term reporter and believes in the need to prioritize content rather than the production of the report. In deciding what to include into a report, Baxter uses GRI standards as well as requests for information from the numerous stakeholders. On the other hand, Risk Metrics Group looks at many sustainability reports – as many as 500 annually – and rates companies based on a multitude of metrics relevant to socially-responsible investors and other stakeholders. RMG provided a perspective on how that content is weighed and analyzed externally. The conversation focused on the following main ideas:

Materiality is a key consideration for a corporate sustainability report. Given that it will never be possible to satisfy all demands for information, the company focuses on the areas that matter most for its business.

By creating a repository of all types of sustainability-related information, the reporting processes help a company establish performance goals and mobilize necessary resources to achieve them in due time. Reporting has a ‘plant the flag in the ground’ effect on the entire company.

Socially responsible investors are primarily interested in a company’s key performance indicators (KPI) – or the areas where the company has the greatest impact. CSR reports need to incorporate these metrics to achieve materiality and relevance.

Meaningful reporting that drives sustainability performance and achievement in a company is resources intensive because it considers a wide spectrum of values and issues and spans across regions and countries.