Ethical Performance
inside intelligence for responsible business


The corporate world must be ready to accentuate the negative

December 2009

Sometimes what you leave out says more than what you put in. So it is with sustainability reports.

A new analysis commissioned by the Global Reporting Initiative, the steward of the most widely used reporting framework for corporate citizenship issues, laments that many companies continue to portray their impact on human rights mainly, if not only, in a positive light (see page eight). This is true not just in the field of human rights, but across the board. Far too many sustainability reports present minor corporate responsibility engagements in great detail while failing to mention activities long criticized by concerned NGOs and that have even provoked embarrassing headlines.

It is hard to believe in this electronic age that senior company directors really think such thorny issues as a chief executive’s £14million-a-year pay package or a multi-million dollar lawsuit brought by Colombian villagers can be swept under the carpet. Yet the problem is so common it’s difficult to conclude otherwise.

Now this ‘hear no evil, see no evil’ stance is also being seen in the narrative sections of annual reports, as the Accounting Standards Board, the body responsible for best practice narrative reporting in the UK, noted last month (see page 3). Although the revised Companies Act clearly states that reporters should mention CSR matters only when relevant to the performance of the business, many apparently prefer to talk about ‘football coaching’ and ‘chocolate gifts’ to local communities rather than the bigger issues.

There may have been some excuse for this kind of short-sighted behaviour in the formative years of sustainability reporting. But now that the cry of ‘greenwash’ can be heard throughout the land, it is totally counterproductive.

Instead of evasion, reporters need to adopt the opposite approach – acknowledge where they have reputational problems, address allegations made against them (defending themselves against unfounded ones), and lay out plans of remedial action. The world has become increasingly confessional, with politicians, pop stars and priests all prepared to face up publicly to their failings. As a corollary, it seems, people are more willing to forgive. Yet companies, almost alone among institutions, appear not to have grasped the disarming power of an admission of inadequacy, or an acceptance that things might not have worked out as planned.

Of course there are powerful forces inside the corporate machine that make it difficult to be so upfront – not the least of them the legal department. But if sustainability reporting is about transparency, then greater honesty will have to come – and sooner rather than later.

Peter Mason | Global | Reporting

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