CORPORATE RESPONSIBILITY CONTINUED This section analyses what is reported in terms of social, environmental, ethical and employee obligations. It also monitors how well corporate responsibility is integrated into the overall business strategy. Approach to corporate responsibility reporting Corporate responsibility reporting remains a much discussed topic with the conversation now moving towards producing an ‘integrated report’, as opposed to providing the reader with non-financial information in a siloed section. We have seen a large number of companies (44%) providing corporate responsibility information in a dedicated section only within the Annual Report. This indicates the challenges which companies face in building an integrated picture of their business, from strategy, remuneration and governance, to risk, opportunities and performance. Ultimately, an integrated Annual Report should add value for stakeholders, as well as benefiting the companies themselves, by sharpening insights into the company culture, behaviours, activities and ethos. In addition, more companies are recognising that financial reporting is a useful indication of past performance whilst non-financial reporting enables a more forward-looking approach to be taken. Figure 7.1 The continuous discussion of what terminology to use within the Annual Report continues with little change from last year, as the majority of companies are still favouring ‘corporate responsibility’. We would often argue that the way in which a company refers to their non-financial activities or commitment, is usually reflective of how far that company has travelled on its journey towards embedding corporate responsibility into every facet of their business. Companies seem to be moving from ‘environmental and social’ terminology, through ‘corporate responsibility’, to ‘sustainability’, but of course this question of terminology is sometimes influenced by the industry of operation. Interestingly, this year, we found that 100% of the companies operating in the utilities and telecoms industries use the terminology of ‘CR’ whilst ‘sustainable development’ is used primarily by the basic materials companies. Figure 7.2 What is the link between CR and group strategy? • • • • No CR strategy CR strategy is completely autonomous to group strategy CR strategy is standalone but does complement the group strategy CR strategy is integral to the group strategy 35% 12% 33% 20% Integral to strategy We have seen a step change in the number of companies demonstrating CR as an integral element of the business strategy and delivering value for all stakeholders, not simply shareholders. Strategic alignment will help to evidence the related and independent nature of finance, governance, social and environmental issues. This year, 33% of the FTSE 100 presented a CR strategy which complemented the group strategy and we hope that these companies are moving towards joining the 20% already reporting their CR strategy as integral to the group strategy. Demonstrating this integration gives stakeholders confidence in the long-term sustainable value of a company. Corporate responsibility governance and assurance Although companies are becoming adept at referencing corporate responsibility issues within their report, detail surrounding the governance of these issues is still trailing with only 38% of the FTSE 100 giving specific detail. Sometimes, this detail is provided within the ‘CR section’, whilst at other times, it can be found in the governance report. If it is reported on within the governance report, it tends to be because there is a Board level CR committee and this is where the committee report is located. Again, the terminology of these committee names varies, but somewhat encouragingly, the majority have either the Chairman or the CEO sitting on the committee, demonstrating the commitment of senior management to the issue. What terminology is used for CR? • • • • • • 26 No CR reported CSR CR Sustainability Sustainable development Other 3% 9% 53% 14% 8% 13% © Black Sun Plc 2011 www.blacksunplc.com
