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Seeking The Most Useful, Most Comparable, Corporate Social Responsibility Reporting Format

Merrill Disclosure Solutions | April 28, 2015

Corporate Social Responsibility

Abstracted from: The Harmonization And Convergence Of Corporate Social Responsibility Reporting Standards
By: Prof. Daniel Tschopp and Prof. Michael Nastanski, Saint Leo University
Journal of Business Ethics, Vol. 125, No. 1, Pgs. 147-162

Harmonization remains a distant goal. Although investors in the United States and elsewhere are concerned about corporate social responsibility, that interest is far from globally or domestically universal. Environmental and social activists have been talking about corporate social responsibility (“CSR”) since the 1960s and 1970s, business professors Daniel Tschopp and Michael Nastanski observe. Nevertheless, the reports from companies then resembled public relations more than actual reporting of corporate behavior. Sometime in 1990, a few companies began to issue more detailed and verifiable reports, because they either had potential liabilities or wanted to position themselves better with CSR-concerned consumers and investors. There is currently much discussion about the desirability of CSR reporting being both substantial and verifiable, but only a few European nations require such reports. Even so, most of the largest multinational corporations have adopted CSR reporting in some form. By 2011, 95% of the G250 and 69% of the N100 companies had issued CSR reports. The formats they use vary considerably, and those of smaller companies or in smaller countries diverge even more.

Neither possible nor desirable. Worldwide, hundreds of CSR formats are in use, and a number of international institutions, such as the Organization for Economic Co-operation and Development have also issued guidelines. Among the many competing choices, four models seem most promising for adoption and stakeholder utility: the G3 report from the Global Reporting Initiative; the AA1000 Series from AccountAbility; the UN Global Compact's Communication on Progress; and ISO 26000 from the International Organization for Standardization. The authors interviewed representatives from these four organizations about their CSR guidelines and their attitudes toward harmonization. Because of the extreme differences in countries and industries, it is unlikely that complete harmonization is either possible or desirable. What instead seems preferable is the ability to understand CSR reports in different formats and to be able to verify their contents. Because of global diversity, groups disagree about what balance of rules-based and principles-based reporting is appropriate.

Comparing models. The four reporting models considered by the authors are either rules-based or principles-based. The UN Global Compact sees its function as spreading modern attitudes toward human rights, corruption, labor conditions, and environmental protection throughout the world. Introduced in 2000, the Compact's Communication on Progress (“COP”) is principles-based reporting, which is subject to differing interpretation, but it does raise awareness in companies and regulators that those are areas of concern. The COP recommends the GRI as a format for meeting its guidelines but does not require it or any other format for CSR reporting. Started in 1999, the AA1000 from AccountAbility is also principles-based. It covers fewer languages than COP but does offer local support in some countries. AccountAbility is happy to work with COP, GRI, and ISO, since it does not consider a single standard necessary as long as people can decipher the content. The International Organization for Standardization (ISO) has significant clout because it influences legislation in various jurisdictions. It takes a particularly wide view of CSR concerns, and, the authors explain, it would like to move toward global harmonization and collaboration among CSR standard-setters. Nonetheless, the ISO 26000 - even in its most recent format - is not a reporting tool or set of specific standards; rather, it is a principles-based guide to the needs of all stakeholders.

Based on rules or principles? Among the available CSR reporting guidelines and formats, the authors consider the G3 model from Global Reporting Initiative to be the most useful and comparable for stakeholders. The G3 Reporting Framework is more rules-based, and the same rules apply to all its users, although there are supplemental guidelines that apply to particular industries and countries. The GRI reports offer a comparability that is not present in the other three major global CSR reporting initiatives. The model is also widespread, being present in upwards of 60 countries and used by some 2,000 companies. In the authors' opinion, the G3 is the most comparable and reliable model from a stakeholder perspective for CSR reporting.

Abstracted from Journal of Business Ethics, published by Springer Netherlands, Van Godewijckstraat 30, Dordrecht 3311 GX, The Netherlands. To subscribe in North America, call (800) 777-4643; or visit For more on sustainability reporting and the Global Reporting Initiative, see page 10 in the October 2014 issue of Dimensions.

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