Workshop on CSR, Hyderabad 28-29 May 2010 (Part 2)

By Suresh Kr Pramar

Second Day

The second day session started with a presentation by Dr Sangeeta Mansur, Director Training & Consulting, Sustainability Reporting, Insight Associates and Associate Publisher, ManagementNext.

Speaking on Communicating CSR to Stakeholders the GRI way, Sangeeta highlighted the need for reporting Sustainability. Sustainability reporting, she pointed out, was about communicating the economic, social and environment impacts of the business to the stakeholders. It is about communicating what non economic value the company was creating and how it was creating it. All this, she said, relates to accountability, transparency and inclusiveness.

She went on to point out that sustainability reporting was increasing world wide. In some countries it was mandatory for public sector units to publish GRI based sustainability reports every year. In India there were already guidelines for CSR reporting and non financials disclosures.

The significance of non financial reporting was increasing. This was because companies that want to attract financial investments recognise that reporting on issues like carbon emissions and corporate governance is as important as the traditional financial reports.

Building a business case for sustainability reporting Sangeeta said the benefits of sustainability reporting from a company point of view include improved financial performance, enhanced stakeholder relationships, improved risk management…, as well as improved investor relations. A number of business leaders, she said feel that reporting acts as a building block in developing a vision and strategy. It provides a reference point to improve performance, leadership and trust.

According to Sangeeta sustainability reporting helps the company get a clear picture of its main economic, environmental and social impacts which helps to identification risks, opportunities, including opportunities of cost reduction. These reports also help the company, to priorities actions, identification general management improvements, savings on employee recruitment and retention and increase in reputation and in customer/client loyalty.

Sustainability reporting is all about demonstrating the company’s sustainability values, communicating the sustainability position, leveraging your position, closing gaps in the journey and integrating it in the company’s sustainability performance. She said there were several critics who often question the need for such reports because according them who reads it? They also claim that all the effort was only a window dressing gimmick.

Explaining the concept of GRI Sangeeta said GRI is an international, multi-stakeholder based agency, promoting Sustainability Reporting across the globe in collaboration with UNEP, CERES and the UN Global Compact. GRI Reporting Framework comprises of Reporting Process and principles, G3 Guidelines and sector supplements.

The G3 guidelines, she said, consisted of standard disclosures made up of strategy, profile, governance disclosures, management disclosures / approach. These were divided into categories like economic, environmental and social. The G3 guidelines also contained performance indicators, reporting levels and assurance.

Every corporate which wishes to be recognized as a responsible company has initiated steps to give back to society. Every company practicing CSR is now involved in community investments. Speaking on Why Corporates Undertake Community Investments: How to Get it Right, Suresh Pamar said Companies practicing Corporate Social Responsibility invest in Community Projects. They build schools, health centres. They support local charities and provide funds for various programmes of benefit for the community. All this is done because of strong external pressure from customers, investors, the media, the local community leaders and other stakeholders.

He said the one important reason for this is their desire to build and support positive company-community relationships The community’s expectation from business has increased over the years. Peoples’ expectation of what business should do for the society is growing Community involvement in the community is no longer considered to be discretionary. It has become a business necessity. Business, Pramar said, now realise that community responsibility and economic goals can, and should, be merged.

He said business and community need each other. The community creates the environment for the trouble free functioning of the business. The performance of the business and the development of the community depends heavily on how business interacts with the community. Businesses, which are aware of this, pay increased attention to issues of concern to the community.

He quoted the World Council for Sustainable Development as saying that “ Community issues cover a broad range of activities, including community assistance programmes; supporting educational needs; fostering a shared vision of the role of business in the community; ensuring community health and safety; sponsorship; enabling employees to do voluntary work in the community and philanthropic giving.”

According to Pramar, leading business houses in India and abroad are increasingly realising that social problems are actually economic problems. That community investment programmes create a win win situation for both business and the community. They realize that helping to solve chronic social problems of the community stimulates their business development. He said business realize that today’s better educated children in the community are tomorrow’s skilled workers. Lower unemployment in the community helps to increase consumption of goods and services which in turn help to improve the company’s bottom line.

However, the best drafted programmes for community investments can become unstuck if the company does not plan out its interventions in a proper manner ensuring that the project benefits the largest number of people. He said business should understand that the loudest voices not always enjoy the most support in the community. They also need to stay clear of political pressures since in every community there would rival political groups.

Problems also increase when company officials are seen to favour one group over the other. This happens when there are rival groups within the community each with their own interest and agenda. I most cases company manager tend to favour the nuisance creators only to save themselves from problems. Such a move while it gives the nuisance creator an upper hand also sends out the message that the company will do more if it feels threatened.

The underlying premise of Sustainable Development is that economic well–being is inextricably linked to the health of the environment and the success of the communities both local and global. Speaking Integrating CSR & Carbon Responsibility, Thilotham R Kolanu, Director GreenStratos Consulting (P) Ltd and Consultant Asian Bank of Development, said business face two contradictory forces; Need to achieve lowest price in order to survive and thrive in the global competitive market; and to meet social demand of internalising the expenses of acting in a more environmentally and socially responsible manner.

A health society is based on three interdependent sectors: public sector for good governance; private sector of successful companies and economics and the social sector of a caring community and of social organizations. According to Peter Tucker all the three sectors, he said, are responsible for a civil society –they have to be managed effectively, and they need to learn from each other

He said corporates today are considered to be the most powerful institutions on the planet. With power comes responsibility He said certain corporate leaders had shown Exemplary leadership which has inspired change

Highlighting the fact that both business and sustainability had aligned interests the business case for sustainability He said improved environmental, social or corporate governance can have payoffs for the company’s bottom line. There is urgent need for the rich countries, corporations and industries across the world to reduce, with a greater degree of urgency, emissions and to assist poorer nations and people to develop sustainably. Kolanu pointed out that the growth of wealth with the use of cheap fossil fuel energy was causing immense damage. This damage was being felt disproportionately by the poorer nations and people.

Climate charge was resulting in a 5-20 percent reduction in the average consumption per head. He said there was still time to bring in corrective measures. The cost of these measures was still within reach, less than one percent of the GDP.

According to Kolanu, there were several ways in which rapid climate change can be arrested. Countries around the world need to take policy decisions to reduce deforestation and increase forestation. There was also need to introduce more efficient methods of energy generation and use. Likewise there was urgent need to change to the use of non fossil fuels and undertake carbon capture and storage.

Corporate decision makers, he said, should realize that efficient energy and carbon management can help to build corporate value and earn the company benefits. The value propositions include tangible returns and measurable financial gains. Tangible returns are available through cost savings from improved energy management and operational efficiencies, as well as greater market share and revenues from providing low-carbon products. Intangible benefits could be competitive positioning, improved shareholder relations, and human resource management advantages such as better recruitment and retention of employees.

Concluding his presentation, Kolanu quoted Albert Einstein: “The world we have created today as a result of our thinking thus far has problems which cannot be solved by thinking the way we thought when we created them.”

For Part 1, click here.