Today Trinity College Dublin hosted the “CSR Exchange”, a half-day seminar on CSR reporting, organised by Dr Deirdre Ahern of the TCD School of Law. The event was based around the new EU Non-Financial Reporting Directive and incorporated academic and industry viewpoints.
At the seminar Dr Ahern spoke first, explaining the EU Directive, which will come into force in early 2017. The Directive will require mandatory “sustainability” reporting by large companies (>500 employees plus a balance sheet > €20m or turnover >€40m). The content of the reporting, however, is not yet clear, and the EU is expected to issue guidelines shortly.
Broadly, companies will be expected to report on four areas: Environmental Matters, Social and Employee Matters, Respect for Human Rights and Anti-Corruption and Bribery. The Directive does not provide a reporting framework, and companies can choose from an existing framework e.g. the GRI Guidelines, or the UN Global Compact, or simply create their own framework. The Directive also asks companies to “comply or explain”, meaning that they do not have to comply with all requirements, as long as they explain why. As Dr Ahern pointed out, the Directive leaves plenty of “wiggle room” for “vacuous” or “token” explanations. Her conclusion was that it is a “stepping stone” towards regulated CSR reporting.
Dr Ahern was followed by Maura Molloy of Business in the Community Ireland (BITC), who explained the organisation’s “Business Working Responsibly Mark”, which evaluates organisations based on their “performance” in four categories: Workplace, Marketplace, CSR Governance, Environment and Community. Companies receive the Mark after successful completion of a questionnaire and a follow-up audit. She stressed that BITC aims to work with companies, and does not publish the “performance” of each organisation.
Ms Molloy spoke often of the business case for CSR, and highlighted the business benefits for organisations of receiving the mark e.g. employee engagement, cost management, investor relations. She noted that nobody invests in CSR without thinking “there must be some business benefit to doing this”
The business case was also high on the agenda for the post-coffee speakers, Jack Golden and Naomi Cooper of CRH, building materials manufacturer and Ireland’s largest company. They described how sustainability “adds value” to the company through “cost savings”, “green marketing”, “ESG investments” and more. They also described some interesting cradle to cradle manufacturing processes, e.g. Reclaimed Asphalt Pavement (RAP – http://www.apa-mi.org/reclaimed_asphalt_pavement_%28ra.php).
Perhaps one of the most interesting parts of the morning, however, was when the representatives of CRH were asked, at the closing Q&A, if they could link CSR reporting to a direct financial benefit i.e. “does reporting increase your share price?” The question and ensuing responses illustrate how quickly the business case can fall apart when challenged. The CRH representatives admitted that, as far as they saw, their Sustainability Report did not affect share price, and further noted that large contracts were won primarily on a low-cost basis. They cited one case in which sustainability had affected the outcome of a tender, but referred specifically to their safety record rather than their overall sustainability “performance”. It was clear from the questioner’s reaction that he was not sufficiently convinced to institute sustainability reporting in his organisation.
In closing, Dr Ahern suggested that the contribution of the EU Non-financial Reporting Directive might be to “help influence CSR norms”, rather than any seismic change in CSR reporting practices. However, as panellist Dr Ciara Hackett of Queens University Belfast pointed out, the EU has mooted further reporting legislation in the future, so we can hope that “norms” will continue to evolve.