To whom do we report our CSR and sustainability progress?

Stephen Evanoff

Stephen Evanoff

The last NAEM Board of Regents meeting featured a thought-provoking and entertaining session on communicating corporate environmental performance that reinforced the importance of understanding one’s audience and stating information in a way that connects with them.

I think there was a tacit understanding among the participants that the primary audience for sustainability and corporate social responsibility (CSR) reports is the general public and others outside the organization, such as customers and investors.  I’ve certainly been operating with the presumption that they are designed primarily for people outside the organization.  But a business leader surprised me recently with his response to a proposal to report certain aspects of his company’s EHS performance.

He felt that these reports are for people on the inside, not the outside.  He explained that today’s graduates want to work for organizations that are environmentally and socially responsible; this makes these reports valuable in recruiting, retaining and motivating young talent.  The more I think about it, the more I believe he is on to something.  Here are a few thoughts in support of this premise:

  • Environment, health and safety (EHS)/CSR reports may seem commonplace to outsiders:  The proliferation of EHS and CSR reports available today may not distinguish a company among external audiences.  But, to people on the inside, the company EHS report stands out and can make a positive impact on employee perception.
  • The public is increasingly wary of greenwashing:  Those on the outside are more likely to discount information in an EHS or CSR report from an organization with which they aren’t familiar.  Among insiders, however, a well-crafted report will contain information they can recognize and can validate, making it more effective.
  • Modern enterprises are complex.  Business management systems, products and services are increasingly complex.  A well-designed EHS or CSR report can help employees better understand the company’s goals, principles, achievements, and the value it delivers to society.
  • Businesses are increasingly global:  EHS programs can build a sense of common purpose and commitment within an organization that transcends language and cultural differences.   
  • Idealism is back:  The Millennial generation tends to be more idealistic.  As employees they likely will become a receptive internal audience.
  • Capable, well-educated graduates are in short supply:  A company that can demonstrate a commitment to high EHS standards and a high level of EHS performance has a subtle, but significant advantage in attracting and keeping top graduates.  We all want to be on a winning team.  EHS performance is one way of defining success and instilling pride among the most malleable insiders.

What do you think?  Among which audiences do you think CSR and sustainability reporting has the greatest impact?

About Stephen Evanoff

Stephen Evanoff is Vice President of Environment, Health and Safety for Danaher Corp. and President of NAEM’s Board of Directors. Follow him on Twitter at @SteveEvanoff.

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8 Comments
  1. Sandy

    July 15, 2011

    You’re right on all counts. But I would make the case for external audiences being key stakeholders, too. The challenge is knowing who they are and that they each receive and want different information. I think it depends a lot on the industry you’re in, too. In the electric utility industry, environmental groups and regulators are big consumers of CSR info. Increasingly, so are investors. While we have a long way to go before “mainstream” investors pay attention to nonfinancial performance, it’s going in that direction. Remember what CRD Analytics said at that conference — there’s a retail investor revolution coming and it will be driven by the “second” internet that brings people together and make investment decisions based on their trusted networks. It’s also incumbent upon us to start speaking the language of those we’re talking to — whether it’s investors, customers or employees.

  2. Lisa Barnes

    July 15, 2011

    Virtually all of the companies that I have worked with on sustainability reporting consider employees (current and prospective) as one of their key stakeholder groups. Hiring managers often consider having a credible sustainability or CSR report essential for recruiting new talent, especially new graduates. For current employees, the company’s annual sustainability report is a source of pride. Case studies and specific programs presented in the report can also inspire employees to get more involved in the sustainability efforts of their company. Enhanced employee involvement can then drive further improvements that can then be reported in the next report!

  3. Walker Young

    July 17, 2011

    I agree with the assessment that internal stakeholders are a major audience of Sustainability, EHS and CSR reports. In fact, previous corporates which I have worked for made it a practice to also include employee interviews and photos alongside the sustainability report, which further emphasizes team building and pride in one’s colleagues and workplace.

    The challenge and opportunity in multi-stakeholder engagement is crafting the message directly to the audience; this can be an internal audience, or external in the form of NGOs, government, consumers, etc. Crafting your message in a language and in content which is easily and readily grasped by your target audience can be a game changer in terms of the success of the report.

  4. Stephen Evanoff

    July 18, 2011

    Sandy, Lissa and Walker:

    Thank you for your astute comments. You all make the good point of understanding what your audience wants and customizing the message to that audience. This suggests that the concept of producing more than one version of the CSR/sustainability report may have merit.

  5. William D'Alessandro

    July 18, 2011

    The clamor for legally mandated report of environmental, social, and governance performance information comes mainly from financial institutions, asset managers and other organizations predominantly from the socially responsible investment community.

    So reporting that does not satisfy them will fall short of stakeholder expectations.

    The movement is also towards integrated ESG reporting in the annual financial report. So for better or worse, if that trend continues, this will cement the idea that ESG reporting is for shareholders and investors.

    All of which does not mean that employees are not a high priority audience. It just means that the formal corporate sustainability report will have to meet the demands of interested parties apart from them.

  6. W Acha

    July 21, 2011

    @William – I agree. This also means that the information presented needs to be credible and verifiable. Similar to attestations from financial auditors, there will likely be interest from stakeholders that the CSR information be audited, either by internal groups or third parties.

  7. William D'Alessandro

    July 21, 2011

    @W Acha — You are 125% correct. This is as vital a subject as any when it comes to accountability for corporate sustainability.

    I reported back in 2005 in Crosslands Bulletin about efforts on the part of the Institute of German Auditors and the Dutch Institute of Accountants to develop a standard for auditing and reviewing sustainability reports. In 2004 the European Federation of Accountants wanted the European Commission to give corporate sustainability reporting the same level of recognition as financial reporting.

    Wouldn’t it be good if BEAC and others (like NAEM) had a leading role to play in this area, and didn’t leave the field wide open for financial accounting firms? The EHS profession has ceded so much of its expertise and authority over the past 15 years.

    P.S. The essential read in this area is still the report “Assure View”, which is a review of assurance statements for sustainability reports. It was done by Corporateregister.com in July 2008. http://www.corporateregister.com/downloads/

    (Full disclosure: Although I am not compensated in any way whatsoever, from time to time I write independent reviews of corporate sustainability reports that are posted on CorporateRegister.com.)

  8. Stephen Evanoff

    October 11, 2011

    William:

    Thanks for the reference to Crosslands Bulletin and CorporateRegister.com.

    Hope to see you all at the NAEM Forum next week. It’d be great to continue our discussion in person.

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