1.Do CPA firms like KPMG and PwC have special expertise in social and environmental auditing?Are there differences between social auditing and financial auditing?
2.What kind of attestation or verification would you like to see in the back of a social or environmental report?
3.What market factors do you think will drive corporations to adopt the practice of audited social reports?
4.What types of steps have BP, Ford and the other companies listed in Echo’s report taken in order to incorporate CSR into its branding efforts?
Social Reports as Reputation Builders
Better CSR Reports Tend to Be from Younger Firms or "Bitten Brands" The UK consultancy SustainAbilitypopularized the term "triple bottom line", i.e., adding to the financial bottom line an environmental and social bottom line.SustainAbility each year selects the top 50 social and environmental reports of that year based on clarity of measuring and reporting, transparency, and management approach.The SustainAbility ranking is a global version of the Tellus ranking of the top U.S. environmental reports.
The companies most frequently cited for having good reports tend to fall into two categories:
- relatively younger(to be consistent with next point) companies (post-1970), often with an organic orientation, that have made social issues part of its brand;
- larger, older companies that were "bitten" by an NGO campaign and are seeking to avoid a repetition.
Some larger companies producing social reports have had to deal with a history or crisis that has at times threatened their existence as a company.For example, Chiquita is given credit for producing the “gold standard” of CSR supply-chain reporting. It is a "bitten brand" because as successor to the United Fruit Company it has the long history of “banana republics” that is used against it by activists and in the 1990s was the subject of a major exposé by the Cincinnati Enquirer on treatment of its workers in Central America (despite its excellent CSR reporting, it has remained in the headlines in the 21st century).
What will it take for other companies to get ahead of issues without a crisis in hand, or is it too much to expect?
The CSR aspects of brand creation and maintenance are part of a broader trend.Brands can be introduced faster and more cost-effectively. With money and professional management of the process, it is easier to launch a brand today because of media penetration and the related power of advertising, public relations and marketing.Two reasons, among others:
-Young people are far more aware and concerned about brands; -They are easily reached through television and the Internet.
The other side of this coin is that brands can also decline more rapidly.Media penetration works both ways.Bad news on the CSR side can destroy a brand even faster than use of CSR in advertising can help it.The people who are expert at creating a brand are not always so clever at controlling the devastation from negative publicity.Johnson & Johnson managed to do it with Tylenol.But Bridgestone/Firestone lost the faith of its customers in the quality of its brand.More broadly speaking, corporate mortality rates have risen.The average life expectancy of a Fortune 500 company in 1938 was 100 years.It is now 20 years.More threats to brands exist and therefore corporations have less time to realize value.
One way of summarizing all this is to say that the corporate “Brand Beta” has been tilting upward (the coefficient of β has been rising).The ladders to brand success are steeper, but so are the downward spirals.Just one exaggerated claim that is attacked in the press can be devastating for the company.
CSR issues are important not only to the maintenance of a brand built over several years but also to the building of a new brand.This is both easier and harder than it used to be, because public perception of many brands today is greatly affected by the social message conveyed by the brand.Some convey it as a conscious strategy called cause-related marketing, i.e., linking a commercial product to a cause.Various organizations have begun efforts to quantify the value of a company’s reputation (see the excerpt below on one organization’s findings) to help companies measure the effects of their social responsibility marketing efforts.
Alternatively, a company can suffer negative repercussions for not addressing socially responsible issues. When a company’s value depends on its employees and its reputation, the lines between social reporting and financial reporting become blurred.Failures in social reporting could adversely affect the company.
For instance, Nike suffered greatly from the negative publicity concerning the pay and abusive work conditions of workers in Asia who make its athletic shoes. As a result, Nike decided to invest in improving its reputation.Shell suffered from publicity linking the company to human rights abuses in Nigeria, and Exxon was vilified following the Valdez oil spill in Alaska.While it is difficult to pinpoint the economic effect, certainly Shell turned itself around and is now perceived as a world leader in social reporting.
…International reputation analysts at Echo Research tracked 426 businesses, national and on-line articles during 2000 and interviewed 30 leading opinion formers in the UK, USA, France, Germany, Japan and Australia to produce 'Echo's International CSR 2000 Report'.
Globally From 122 companies named as 'best practice' leaders
%share of all mentions
UK From 40 companies named as 'best practice' leaders
%share of all mentions
The Body Shop
The Body Shop
Robert Bosch Foundation
B & Q
Echo's research shows that:
-Global organizations attract the most recognition for best practice in the CSR arena, and see it as a license to operate in a competitive society. However, the UK, and Europe in general, appear to be driven by avoiding regulation, while the USA has a long tradition of philanthropy in the US. -Social welfare is much more developed in Europe than in the US. In the UK, the emphasis was not just on philanthropy, but rather on engaging in a two-way dialogue. In France, there were concerns about CSR being a substitute for social services. In Germany, the environmental aspects of sustainability were emphasized as much as social ones.
"CSR's time has come, and it is not just a management fad. Our research shows that the key benefits of CSR for companies are in employee retention and helping organizations through dialogue and engagement with their key stakeholders. This enables companies to win better alignment with their markets and customers in the long run, and help stem the growing tide of confrontation." - Sandra Macleod, Chief Executive of Echo Research… Certain companies were described as having a notable record for and commitment to corporate social responsibility and were also covered positively in the media. The resulting integrated analysis shows, globally and in the UK, from left to right in the tables below 1. the leading companies 2. quality ratings in the media (from 0-100, with the neutral rating being 50) 3. frequency with which companies appeared in the media analysed 4. qualitative comments from the interviewees…
Assessment (where available)
Extremely positive stance; pursues sustainable energy
Socially integrative, especially of young people
Pioneers - shamed others into following suit
Have CSR managers
Good reputation overall
Because Riboud (CEO) is highly committed
Robert Bosch Foundation
Via its excellent foundation
…The report concludes that careful research and analysis of the benefits on both sides of the equation are essential to ensure that companies and society derive the most out of CSR programs.
 John Elkington, Cannibals with Forks (London: Capstone, 1997).
 Examples: Ben & Jerry’s, Stonyfield Farm, Tom’s of Maine, Body Shop.
 PricewaterhouseCoopers, “Uncertain Times, Abundant Opportunities: 5th Annual Global CEO Survey,” in conjunction with the World Economic Forum, 2002, p. 17.
 In 1954, United Fruit was involved in the CIA-assisted overthrow of the Guatemalan government.
 As The Body Shop can attest from the public backlash it received.The company claimed that they had sourced its supply of babassu oil from the rainforest, when in fact it was produced commercially.This was in direct conflict with their “Trade Not Aid” program.
 This fact is demonstrated regularly by surveys by Environics.
“The Echo Group brings together market research, media analysis and communication planning to enable clients to monitor their reputation, brands, messages and image more perceptively, accurately and actively than ever before.”