May 31, 2004

Survey finds CSR reporting concentrated in companies with heavy environmental or social footprints

Canadian companies in heavily regulated or intensely political industries are most likely to have strong corporate social responsibility (CSR) management and disclosure practices, says the Conference Board of Canada. Mining, forestry, chemical and energy companies have responded more to pressure from external stakeholders for responsible conduct because they are industries with a heavy environmental or social footprint. Companies operating in heavily regulated sectors, such as banks, have also adopted comprehensive practices.

These and other findings are presented in the Conference Board's first National Corporate Social Responsibility Report: Managing Risks, Leveraging Opportunities, released at its 2004 Corporate Social Responsibility Conference: From Dilemmas to Solutions, held last week in Toronto.

Conference Board president and CEO Anne Golden said the data show that "Canadian companies are making progress in CSR, but the progress is slow and it is not universal.

"Two issues of concern arise from the research," she continued. "First, just one-third of Canada's 300 largest companies publicly disclose their CSR activities. Second, companies focus on their processes instead of measuring the outcomes of CSR conduct in their reporting."

The report, said to be the first of its kind in Canada, includes an in-depth analysis of the CSR management practices of 53 of Canada's 300 largest companies. Of the 53 companies surveyed, 62% issue formal CSR reports.

The survey measured the companies' CSR management practices against 60 indicators relating to five CSR dimensions. In addition to environment, health and safety, these included governance and management; human resources management; community investment and involvement; and human rights.

The Board found that none of the 300 corporations examined report publicly on more than 60% of selected indicators. The average corporation reports on only 12% of the possible 60 indicators, and half of the 300 companies report on less than 7% of all the indicators.

CSR, says the report, will continue to be a key business issue. Companies will not be able to operate without taking into account the impacts of their operations, and the risks of failing to keep pace with market and stakeholder expectations are significant. Equally significant, however, are the opportunities for companies that take CSR seriously.

"Corporate citizenship is an essential component of the global economy and CSR performance is linked to bottom-line results," said Prem Benimadhu, the Board's vice-president, organizational performance. "Canada's largest companies can do more to reap the benefits of CSR. Benefits include building stakeholder trust, enhanced reputation, better risk management, ability to attract and retain employees, and access to capital markets."

The Board's survey found that corporate CSR reports tend to describe policies and processes without connecting them to results; public reporting does not fully reflect what is going on inside a company. Linking policies with performance will help address stakeholder concerns that CSR is little more than public relations, says the report.

Another problem is that where CSR information is available, there is no standardized form of reporting. Defining commonly accepted standards and benchmarks for socially responsible behaviour that also take industry differences into account would facilitate comparative analyses, says the report.

The surveyed companies showed a high level of formal environment, health and safety (EHS) management practice, with all reporting that they provide workforce safety education and training. Other statistics indicated that 70% have an environmental management system (EMS) and 24% have their EMS certified to the ISO 14001 standard, while 41% have an industry standard-aligned EMS. The majority (89%) have eco-efficiency practices in place, with 68% making use of environmental technologies and 69% indicating that they consider enviromental impacts when making investment or procurement decisions. Only 49%, however, indicated that they are actively managing their greenhouse gas (GHG) emissions.

Carbon risk is cited by the study as one of the three main EHG-related business risks. Global investors, it notes, are particularly concerned about the business risk posed by GHG emissions and are taking steps to ensure that they have the right information to make better investment decisions. The low level of public reporting on GHG management practices among the top 300 companies suggests that there is room for improvement, the report adds. It names disclosure of environmental liabilities (i.e. those associated with contaminated sites), along with criminal liability for workplace accidents as the other leading EHS-related business risks.

On the opportunity side, the report points to cost savings and innovation associated with the implementation of eco-efficiency practices and use of environmental technology, e.g. to conserve energy and reduce waste and material use. Public expectations surrounding product stewardship and environmental responsibility in the value chain are viewed as both a business risk and opportunity. Such expectations, notes the report, are driving corporations to extend environmental considerations beyond their own operations to suppliers, business partners and distributors.

The report lists and discusses nine key future directions for CSR in Canada. At the top of the list is the continuing debate over regulating corporate accountability, which raises challenging questions about the scope and depth of such accountability. Among the other directions are: increasing pressure and scrutiny of the environmental and social performance of Canadian corporations; the positioning of corporations as community leaders as they pursue a social return on investment; progress toward new international standards and accountability frameworks; increased interest in CSR by the financial community; and management of environmental and social performance in the value chain. Examples of supply chain management models include the Marine Stewardship Council (sustainable fisheries) and the Forest Stewardship Council/Sustainable Forestry International (sustainable forestry). For Canadian companies, with their heavy emphasis on natural resource extraction, this issue will pose both challenges and opportunities, notes the report.

The National Corporate Social Responsibility Report was sponsored by a number of leading public and private sector organizations, among them Alcan, Sears, Talisman Energy, the Ontario government, Telus and the TD Bank Financial Group. The report may be viewed on the Conference Board of Canada Web site,

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