Good reporting depends on keeping your focusJanuary 2009
Try to think of who you are addressing and what they might want to know, advises Tom Rotherham
During 2008 I had the opportunity to discuss corporate responsibility with a number of mainstream investors. This included working with the United Nations Principles for Responsible Investment; participating in the Tomorrow’s Owners inquiry; and chairing a seminar on climate change for the Investor Relations Society. I learnt four things about corporate responsibility reporting during this time:
1. Focus on one audience
Warren Buffett writes acclaimed annual reports by focusing on a single audience: his cousin Bertie. You can write a much better report by focusing on one person too: the head of responsible investment at a pension fund. Long-term responsible investors are as close as you’ll find to an audience that balances stakeholder interests with your company’s interests.
2. Not just what; tell them why
Research and development contributes to society’s knowledge base. But we expect companies to focus R&D investments where they will benefit them most. It’s the same with corporate responsibility. There are a thousand things a company could do around the topic, but the competitive advantage comes from investing in the right things. More than ever, investors are interested in quality of management and decision-making. The information an investor wants – that everyone wants – relates to the question: ‘how do I know you are paying attention to the material issues?’
3. Maybe not everything ‘depends’
Corporate responsibility managers and consultants often note that materiality depends on sector, market, business model, and size. But research recently published at www.investorvalue.org suggests otherwise. It identifies six non-financial performance factors that influence financial performance across all sectors and markets. The European Union commissioner for enterprise, Gunter Verheugen, said he hoped this idea ‘can contribute to a quiet revolution’. If governments are paying attention, companies should too.
4. Reports can communicate – communication can report
My consultancy will shortly publish a report with the Global Reporting Initiative on how new digital technologies are influencing corporate responsibility reports. The preliminary findings reflect two things we’re seeing in the marketplace. First, companies are beginning to use technology to make reports more powerful communication tools. Second, they are recognising that you don’t actually need a report to provide an archive of credible, engaging and insightful information. That’s something we should all bear in mind.
Tom Rotherham is head of corporate responsibility at Radley Yeldar.
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