Category Archives: accounting

Corporate Social Responsibility Reporting

Corporate social responsibility (CSR) has become a significant theme in business operations domestically and globally. The essence of CSR is integrating stakeholder’s economic, social, environmental and other concerns into an organization’s operations to ensure that it can conduct and grow operations on a sustainable basis. Stakeholders include customers, employees, vendors, and the community a business operates in. CSR has become a topic of importance in the wake of fraudulent practices and negative impacts on the environment attributed to some businesses that have damaged the public’s trust. As a result, many companies have responded by taking actions to become better corporate citizens. These actions have ranged from philanthropy to embedding environmentally –conscious practices in their businesses.

Consumers of products and investors have choices about the companies they conduct business with and invest in. Therefore, a vital part of the CSR effort is reporting results to interested stakeholders of the organization. While there is no universally accepted means of reporting CSR activities, one organization is making inroads with developing standards for reporting. The Global Reporting Initiative (GRI) is a non-profit organization provides companies and organizations with a comprehensive sustainability reporting framework. The terms CSR and sustainable business practices have many similarities and have been used interchangeably. The GRI defines sustainability as a combination of long-term profitability, social justice and environmental care. It has been documented that more than 3,000 organizations from 60 countries employ GRI guidelines to prepare their sustainability reports. There are some prominent publicly traded companies who released sustainability reports on 2010 activities following GRI guidelines, including Amgen, Kimberly Clark, and UPS.

In 2011, the GRI issued G3.1, the latest sustainability reporting guidelines. The sustainability reporting guidelines provide a framework for reporting related to the content, quality, and boundaries of reporting along with standard disclosures to be made. Those standard disclosures encompass the following dimensions of a company’s operations:

  • Strategy and company profile
  • Economic
  • Environmental
  • Social:
    • Labor practices
    • Human rights
    • Society
    • Product responsibility

The type of business and the scope of operations, among other variables, will determine the specifics of items reported. To get a better idea of what is disclosed in a sustainability report, selected information from the 2010 UPS Sustainability Report covers:

  • A summary of key performance indicators (KPI) and comparative results for 2007 – 2010 plus goals for 2011 and 2020
  • KPIs include:
    • Penalties as a percent of total environment inspections
    • Water and energy consumption
    • Gallons of fuel per ground package
    • CO2 emissions, normalized
    • Total charitable contributions
    • Full-time employee turnover rate
    • Auto accident frequency
  • Detail sections supporting efforts in: minimizing negative environmental impacts, creating a safe, employee-friendly environment, and being a good corporate citizen to the community
  • GRI grade earned (B+ level), based on GRI guidelines
  • An assurance report independently prepared by Deloitte and Touche LLP

CSR reporting appears to have been adopted by some large and well known companies. Those using the GRI framework employ standards that may aid in comparability of results from one company to the next. With the passage of time, it will be interesting to observe whether CSR reporting becomes more prevalent.

Jeffrey Wong, Ph.D. CPA

Jeffrey Wong, Ph.D. CPAJeffrey Wong is associate professor in the College of Business and received his Ph.D. from the University of Oregon. Wong’s work has been published in a number of journals including Behavioral Research in Accounting, Database, International Journal of e-Collaboration, and Internal Auditor.

His research interests focus on understanding how a firm’s strategic decisions and actions ultimately map to financial results. This research focus has most recently examined how a company’s information systems and investments in technology enhance the value of a firm.