What point the story with no plot?

Date: 24 Nov 2008

I read another review of a company's corporate social responsibility report today. The review is typical of the genre. It talks about whether the company sets targets. It talked about whether the report follows the GRI guidelines. It talks about whether the report is assured by an independent third party. The only thing is doesn't talk about is how that company is actually performing on a social, environmental or economic scale.

Nothing screams louder that here is a state of the art that remains completely immature – when the focus is on the how of reporting, not the what of reporting. After all, you don't see reviews of companies' annual report and accounts on such a basis.

By any scale of usefulness, CSR reporting is broken. If it wasn't broken, then commentators would be writing news stories based on what was in, not in, or hidden between the lines of, CSR reports. They would be doing this because it would provide extra insights to those wanting to understand the company and its prospects. Almost nobody is, so rather than arguing about whether or not good reports should have twenty or fifty items in the appendices, it would be worth asking why not.

After all, these are serious, newsworthy issues. The fact that banks engaged in irresponsible lending might just be the straw that breaks the back of a very mighty camel indeed. Nobody scanned the CSR reports of the banks for evidence that they were doing the right thing. The growth in computer games is one of the significant factors that is leading to greater childhood obesity – nobody is talking about how well the different companies are anticipating the moment the spotlight will fall upon them. Some of the retailers have rewritten their supplier terms and conditions to a very one–sided balance, but nobody is now evaluating which, in the face of the downturn, may have pushed their suppliers to failure point, representing a key risk to the business.

The people who have a stake in businesses are supposed to understand that the value of owning shares in a company is not down to the value of those shares today, but the potential value of the shares tomorrow based on the company's ability to generate future cashflows. By and large, CSR reports – whether GRI, independently assured, or printed on hemp with biodegradable ink, are not being accepted as providing useful evidence in making that equation.

In the last couple of weeks, there was a story suggesting that longer reports win prizes – shorter ones don't. And although the authors of this research didn't suggest that padding a report out for the sake of it would do the job, it did make one wonder as to what criteria rewards a piece of communication for flying in the face of accepted good communication practice.

It all depends what you think reports are for. The most common answer is that it is a statement, made in the spirit of accountability, to all the interested stakeholders of the business. This is its downfall, because it defies the laws of gravity to speak to so many different audiences at once and expect all their needs to be met.

The financial analysts who care at all will say that they are not interested in stories, they are interested in data. In principle, they are interested in understanding those factors that will influence future performance – particularly around quality of leadership.

The campaign groups are not much interested in the majority of reports – but they will look at those of any 'lightning rod' companies, in sensitive industries or big brands with some historical baggage. They are interested in issues at an expert, albeit often highly partisan, level.

Customers are interested in issues that affect them, often at an entry point level. They respond well to authentic stories, although they respond badly to poor quality corporate PR speak.

Employees are interested in issues that affect them, and may affect how they feel about working for the company. They are interested in issues and processes, and come to the dialogue with a beginner level for some of the issues, but with an expert – and occasionally cynical – eye to the company's claims relating to consistent behaviours around values.

Never mind suppliers, shareholders, local communities. Craft me one communication that meets just the audiences outlined above, and you deserve an award. If not a medal.

You can see companies exploring the space – trying to find modes of communication that will be accepted as authentic, but which will have better penetration into key audiences. Take Cadbury, for instance, the UK headquartered chocolate company. Its latest web–based report, dearcadbury.com, uses a lively, straightforward approach to encourage people that are not CSR geeks to explore the issues, and to hear a story. There is still a section for the boffins who know their stuff. But they dropped independent assurance this year, because it costs a lot of money and it is by no means clear what value the different audiences actually place on it.

The Cadbury site is indicative of the fact that companies are trying out new things because they know the state of reporting has not yet arrived to a point where it meets the communication needs of the companies and their various audiences. So they are innovating, and trying new things out.

Where are the frameworks, the all–important standards in all of this? The Global Reporting Initiative, although it has done good work to date, almost by definition cannot be part of this process. It has a top–heavy structure of multi–stakeholder committees that guarantees slow, ponderous progress – suitable perhaps for a legislative process, but not for something fast moving and dynamic. And the fact that it is multi–stakeholder by design means that it cannot arrive at anything other than a negotiated compromise for a framework that is designed to be all things to all people.

The reporting of the future is likely to be very different. We will see datastreams going from companies directly into the spreadsheets of analysts, with expert third party commentators then providing the context as to what those figures mean. Completely separately to that, companies will have established effective communication mechanisms with their direct stakeholders – customers, employees, local communities, which establishes a dialogue about issues.

The thing that this future suggests is no single report. Information defined by the needs of the audience, rather than the armchair theorising of professional stakeholders. And, hopefully, a process of communication that encourages businesses to drive change through their business – not simply to expend large amounts of energy into turning the handle on producing an annual report that nobody much wants or reads.

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