Are opinion statements really the way forward?April 2009
The use of independent experts to provide commentaries in sustainability reports is becoming increasingly popular. EP looks at the arguments for and against
Deutsche Telekom can do a lot more than its ‘previous, scattered activities’ if it is to become a new industry leader in corporate responsibility. So thinks Andreas Manhart, a consultant with the ecological research institute Oko-Institut. Meanwhile, Cornelia Heydenreich of the campaign group Germanwatch thinks it’s time the company joined forces with its suppliers to establish ‘better social and ecological conditions’.
Both comments are found in the company’s latest corporate responsibility report. Such pull-out statements are becoming the vogue as companies seek to make their reports more responsive to stakeholders. But, welcome as it is to know the views of Manhart and Heydenreich, are they a distraction from good, honest data-driven reporting? Do the opinions of civil society representatives and other ‘experts’ undermine the role of the professional assurance provider?
Opinions are divided, but the trend appears to be growing. According to the recent Assure View report produced by the online report database firm CorporateRegister.com, of the 4733 assurance statements published during the past 15 years, 536 include statements by selected stakeholders rather than assurance experts. In 2007 alone, 165 reports fell into this bracket.
Some important qualifications need to be made. Not all companies that include opinion statements do so at the exclusion of formal assurance. Deutsche Telekom is one such example. The telecoms company contracted audit firm PricewaterhouseCoopers to assure its report.
That said, in 2007, opinion statements appeared in one in five of those reports with external commentaries. That figure is up from less than one in six the year before.
There are also important cultural differences to note. Three out of four companies using opinion statements in 2007 are in Japan. Mitsubishi Motors, for example, turns to a prominent journalist and environmental leader to provide its external statement. Hitachi Construction Machinery has a visiting economics professor fulfil the function of third-party expert.
Paul Scott, director of CorporateRegister.com, puts the phenomenon down to the innate trust that the Japanese still tend to place in their authority figures. That would certainly explain why numbers are lower in the West, where the trend veers more towards public scepticism. Only 17 reports with standalone opinion statements were registered in Europe last year. The number falls to three in North America.
However, opinion statements have their advocates. Their arguments typically centre on three points: the insights that genuine experts can bring in their specialist areas; the sense they can offer of how a company is progressing; and the credibility independent stakeholders carry with the public. All are plus marks that, the argument goes, professional auditors aren’t able to offer.
Professional assurance is useful for mistrusted companies, points out Simon Propper, managing director at corporate responsibility consultancy Context. ‘In general, though, people trust the data in these reports,’ he says. ‘They really want to know if the company is making a serious effort in the important areas.’ That’s where the judgement of an independent expert comes in, he maintains.
Propper cites the example of supermarket chain (and Context client), Tesco. The UK’s largest retailer invited environmentalist Jonathan Porritt to offer his summary of the company’s performance in its recent report, and he was given a blank page on which to write. The result is a relatively bland, but well-balanced verdict. Porritt claims to be ‘heartened’ by the integration of sustainability into Tesco’s strategy, but urges the company to scale up efforts to promote green products.
There’s another issue too. Regardless of what experts say, finding one is not easy. Non-profits earn much of their credibility by distancing themselves from firms. Nor are genuinely independent individual experts in high supply. Then there’s the suspicion that independent experts aren’t so independent after all.
‘The danger is that these experts are sometimes taking the company coin. As such, their comments may be seen as paid-for advertorials,’ argues Mike Tuffrey, director of assurance company Corporate Citizenship.
Stefan Seidel, European social and environmental affairs manager at sports retailer Puma, maintains such accusations can be avoided if the company is transparent about its selection process. ‘Our selection of NGOs is not random’, Seidel states. ‘We include relevant and critical stakeholders who we have an existing relationship with. Their comments are authentic because they know the efforts and challenges of our company.’
But Seidel concedes that independents, however engaged, are no replacement for professional assurance. That conclusion led the German retailer to contract a technical specialist firm to assure its most recent report, released in 2007.
So a merger of the two – expert opinion and professional assurance – is becoming the recommended route.