The Basics of CSR Reporting

As I mentioned in an earlier post on The Changebase, one of the projects I’ve been working on this semester is a CSR Reporting Directed Study for a Fortune 300 company.

This company (who will remain nameless since the project is still ongoing) contacted the Boston University School of Management and asked if the school would put together a team of MBA consultants to evaluate the company’s current CSR report and make recommendations for changes or improvements. Since CSR reporting is such an important and popular topic these days, I really wanted to be a part of this project. And, since the opportunity was presented as not just a consulting gig, but also as a class, I knew there’d be some good learning too.

Over the course of the last few months, I’ve spent the majority of my time with my team (there are five of us) learning about The Global Reporting Initiative (GRI).

As the area of CSR reporting moves forward and becomes more solidified, the GRI has emerged as the leading, best-in-class standard for how companies should address their environmental and social impacts. Much like LEED has become the “gold standard” in green building, the GRI has emerged as the reporting framework that most companies use. While this doesn’t mean that the GRI framework is perfect, it does mean that the GRI is the most popular guide for companies that want to report on these issues and don’t know where to start.

While there are some folks who don’t like the GRI, in general I believe its reporting framework provides a comprehensive, detailed outline of the targets and impacts every company should be measuring. Its framework consists of 79 indicators that are measured along 6 dimensions:

• Economic
• Environmental
• Labor Practices and Decent Work
• Human Rights
• Society, and
• Product Responsibility.

Under each category, the GRI lists very specific metrics that companies should use to quantify and qualify their impacts along each dimension. For example, under Human Rights, one of the indicators is “Operations identified as having significant risks for incidents of child labor, and measures taken to contribute to the elimination of child labor”. You can imagine how hard it is for a global business with operations worldwide to wrap its arms around this kind of question.

And yet, it is understandably crucial for any business to understand something like this.

In addition to the indicator questions, the GRI lays out principles for content and quality – which are essentially a roadmap for how to determine what should be in a report and how to tell the company’s sustainability story. These are:

Principles for Content:

• Materiality
• Stakeholder Inclusiveness
• Sustainability Context
• Completeness

Principles for Quality:

• Balance
• Comparability
• Accuracy
• Timeliness
• Clarity
• Reliability.

Without getting into too much detail, you can probably guess that some of these principles are easier to follow than others. Yet, the more I learn, the more I realize that absolutely every single one of them is crucially important.

The fun part of this consulting project has been poring over the company’s CSR report and looking at it through the lens of each content and quality principle. Over the last few weeks, we’ve been asking ourselves questions like:

• How well does the company present balanced (that is, positive and negative) information?
• What kind of stakeholder analysis has the company done? Does the report speak to the right audience?
• Is the report complete? If not, what’s missing?

It’s really been a lot of fun to take a real-life case study and evaluate it according to what we’ve learned.

And what I’m learning is that CSR reporting is a lot harder than you might think!

Another highlight of the project was having the chance to meet Andy Savitz, a very well-known sustainability consultant and author of The Triple Bottom Line. Andy is incredibly experienced when it comes to CSR reporting, and he was kind enough to sit down with me and my team to talk about best practices in this area. Since this post is about The Basics, I thought I’d share a few words of wisdom from Andy:

A CSR Report is a Living Document: My sense is that some companies want to look at their CSR report much like they do an annual report – it’s published once a year and that’s it. But in a field as new as CSR reporting, many CSR Directors are still getting a handle on what they should be measuring, let alone actually being able to report on it. And since companies are still solidifying what to report on, they’re finding that the data they collect isn’t always perfect.

According to Andy, that’s more than ok. A CSR report should not just be about reporting the good stuff, nor should it just be focused on the past. A good CSR report should focus on being aspirational and strategic, and it should present both the good and the not-so-good (also known as “Opportunities” or “Room for Improvement”).

This leads to a second important point: A Balanced CSR Report is a Trust-Builder. Interestingly, while companies might shy away from sharing negative information, the more transparent a company can be about the good, the bad and the ugly, the more trust it will earn from its stakeholders. Andy gave the example of a company that reported its overseas employees had been offered 13 bribes – and that they turned down 9 of them.

Sure, a CSR department might cringe at the thought of reporting this. But in actuality disclosing this information improved the company’s image and reputation because everything was framed as a work-in-progress. Most audiences, it turns out, aren’t looking for immediate perfection – they just want to know that you’re working on it.

So there you have it – The Basics of CSR Reporting. In truth, there is still so much more that I’m learning – in a month I’ll probably be able to come back and update this post! But I hope this helps lay the groundwork for you as you learn about this topic.

As for my consulting project, my team and I head to their corporate headquarters in late January to present our findings and recommendations. The goal is for their CSR department to take our feedback and incorporate it into their upcoming 2010 report. It’ll be interesting and exciting to see how their new report differs from their old one. I’ll keep you posted!

(By the way, if this post was helpful be sure to check out other posts I've written on "The Basics" - and let me know if there's anything you want to learn next!)

End of Semester Recap

Perhaps one of the best parts of being a second year MBA student is getting to pick my schedule. Unlike first year, where all of the core business classes were chosen for me, as a second year student I get to decide which electives I want to take. Not only has this been a relief (since most of the core classes were quantitative, and I am by no means a math whiz), it’s also been fun and rewarding to study topics that interest me through an MBA lens.

Unfortunately, by the end of the semester, there’s little time for anything else – including blogging. I haven’t been able to write on The Changebase for a couple of weeks precisely because I’ve been too busy wrapping up all of the projects, presentations, and papers that these electives have assigned!

But it’s been a great semester of learning, and since I’m often asked to talk about how what I study relates to my interest in CSR and sustainability, I thought I’d share a little recap.

I started out my semester with a one-week intensive course called Global Sustainability, which basically looked at issues like food and water scarcity, energy constraints, and global migration and the impacts they have on our planet. If you haven’t checked out my previous summary on this class, I recommend reading it.

The rest of my four month semester consisted of five other classes:

Government, Society and the New Entrepreneur focused on the topics of “economic globalization, environmental sustainability, international entrepreneurship, and the interplay between growth and prosperity”. Through in-depth studies of various countries (Japan, China, India, South Africa, Saudi Arabia, Singapore, Russia and Brazil), my classmates and I gained a broad overview of how globalization impacts trade, economic growth, education, environmental conservation, and entrepreneurship around the world.

Big Takeaway: While our world is more connected than ever, each country’s national interests are more divergent than ever. To solve an issue as big as climate change, for instance, world leaders must balance their responsibility to their own people with a shared responsibility to care for our global resources. Tough job for sure.

On the other end of the spectrum, Consumer Behavior focused on the attitudes, behaviors, social norms, and decision-making processes that consumers use and reference when they make purchases. For this course I worked with a team to develop a hypothetical new product (along with target consumer and marketing recommendations) for green cleaning producer Seventh Generation. Lots of primary data collection, and lots of consumer behavior theory.

Big Takeaway: The more I spoke with potential target consumers, the clearer it became that people really are wary of the “green” label. They’ve heard it so many times – and yet they still don’t really understand what it means nor do they trust its value. A clear warning sign for marketers…

My Corporate Governance seminar centered on the interplay between governance, accountability and ethics in the corporate and nonprofit sectors. Through in-depth, “governance gone wrong” case studies, we developed a framework for understanding how factors like board oversight, compensation structures, and organizational culture affect the level and type of governance at a company. This class was especially timely one year after the global financial crisis.

Big Takeaway: Much like CSR, there are varied opinions relating to the value that good governance brings to an organization. Is governance just about compliance and risk management, or does it actually add value? Are investors willing to pay more for good governance? I think (and hope) they are.

Entrepreneurial Management focused on the challenges and hurdles faced by early-stage entrepreneurs, including the identification of and access to capital, scaling growth to reach beyond the early adapter market, and building a successful team. Perhaps the most fun part of the class was serving as a consultant to a social entrepreneur who’s facing these kinds of issues right now as he builds a line of ethically-sourced footwear. Like consumer behavior, this involved lots of primary data collection and marketing recommendations.

Big Takeaway: As a social enterprise footwear company, the client I worked with wanted to “do good and do well.” Yet, the potential consumers we spoke with reminded us that it’s not just intention that matters – cause marketing campaigns need to be genuine, transparent, easy to understand, and perhaps most importantly, have an immediate and tangible impact on a meaningful cause. Not always an easy task!

Finally, one project that I started this semester and will finish in early January is a CSR Reporting Directed Study. Back in October a Fortune 300 company contacted my school to inquire about putting a team of MBAs together to evaluate their current CSR reporting – and I jumped at the chance. In order to make recommendations, my team and I have spent the semester doing a deep-dive into the Global Reporting Initiative and the Carbon Disclosure Project. We’re now just starting the recommendation phase and I’ll be sure to keep you posted.

Big Takeaway: Sustainability reporting is more than just wrapping your arms around numbers (although it’s fair to say that getting a handle on a company’s data is hard enough!). In fact, two key themes that keep coming up are transparency in information sharing and stakeholder engagement – two crucial topics that are very hard to get right and very easy to get wrong.

So all in all it’s been an incredible four months, especially compared to my first year of business school when it was so hard to “see the forest” through all that data analysis!

In the end this really was a semester of putting all of the pieces together, which is a great feeling. And now on to winter break!

The End of the Barking Dog

So Ferocious!

What’s your opinion on the purpose of corporate philanthropy?

Is it an example of the powerful partnership that can be created between business and nonprofits?

Or is it simply about writing a check – and checking a box?

I mentioned in an earlier post on The Changebase that I recently attended the 2009 Net Impact Conference at Cornell University, and one of the panels I attended tackled this question.

The panel was called “The Evolution of Corporate Philanthropy: Achieving Greater Impact through Strategic Giving” – and moderator Mark Kramer, managing director at FSG Social Impact Advisors, immediately set the record straight regarding the changing role of corporate philanthropy over time.

His hypothesis is that in the last twenty years, the purpose of corporate philanthropy has evolved from mere existence (he actually used the word "irrelevance") to creating shared value for a company, its nonprofit partners, and its community.

To prove this point, Mark enlisted the help of an impressive corporate philanthropy panel:

• Anne Bronson, director of US Corporate Citizenship at Accenture
• Jason McBriarty, senior manager of Worldwide Community Affairs at Levi Strauss (and a Boston University MBA!)
• Hasting Stewart, vice president at Shell Oil Company Foundation.

Here’s what I learned:

Question: Do you still run into the issue of people doubting whether philanthropy is an important part of business?

Jason from Levi’s started out by noting that his company is privately-owned with a history of philanthropic community support (a factor that I believe is crucially important when it comes to the successful adoption/implementation of sustainability and CSR programs). He noted that the company’s new CEO understands that even in bad times philanthropy is a core component of Levi Strauss’ business.

Anne from Accenture said that, in this tough economy, shareholders don’t always want to see large checks going out the door. To respond to this, she and her team have focused more on donations of employee time through skills-based volunteering – which, given the experience of the Accenture workforce – is certainly a valuable gift.

Question: How can philanthropy be used to drive business goals?

I thought this was an especially important question – as I learned this summer as a corporate philanthropy intern, “doing the right thing” will only get you so far.

In the end, it’s about proving that the corporate philanthropy program is aligned with the business objectives.

Hasting said that philanthropy often reinforces the work that his company does by enabling Shell to have a presence in local communities. For example, every city or town that hosts a Shell refinery also has a community advisory panel (managed by the Shell Foundation and made up of local leaders and city advocates) that meets quarterly to engage in dialogue and share feedback or concerns. Thus philanthropy serves as an entry point for Shell to connect with its local communities.

Jason acknowledged that Levi Strauss engages in philanthropy because it’s the right thing to do, but it also looks critically at how philanthropy can have an impact on the business. One area of focus for Levi’s is its network of over 600 suppliers. Through its Foundation, Levi Strauss is training suppliers and their employees on issues relating to human rights and labor conditions in factories. In this way, corporate philanthropy is another lever that Levi’s can pull to ensure that its business is successful and sustainable.

Question: What kinds of attitude changes have you seen taking place in regards to public/private partnerships?

Anne noted that in the past relationships between the for-profit and nonprofit sectors had been strained, and even antagonistic. But, she believed that partnerships among business, nonprofits and governments were growing in popularity – and that when you focus on opportunities to partner with, rather than fight against, other organizations you ultimately create even more value and impact.

Jason highlighted the recent launch of a new partnership with Goodwill as an example of the power that can come through partnerships.

After evaluating their supply chain, Levi’s found that the greatest use of energy in the lifecycle of their 501 jean is consumer washing of the product at home. This made the company realize that it needed to do a better job of educating its consumers regarding how to care for their jeans as well as what to do with them once they were no longer wanted. And thus the Goodwill partnership – and a new Levi’s care tag on the inside of all 501 jeans – was borne.

Question: Given our economy, how has your company’s outlook on philanthropy changed?

In general, all of the panelists agreed that they’ve seen cuts to their budgets and staff. But, they also all agreed that they’re not seeing an abandonment of philanthropy just because times are tough.

As one panelist put it, “philanthropy is about being in it for the long haul” – and companies can’t just leave their communities because the economy is struggling.

All panelists did agree that, beyond measurement, monetizing the impact of philanthropy is a huge challenge. Levi’s, for instance, looks at measuring impact through the “buzz” that their cause marketing campaigns create, while Accenture uses storytelling to demonstrate the impact of their community investments.

Perhaps the most powerful moment of the session came when one panelist asked why corporate philanthropy was being forced to prove financial returns to the business when other functions (like marketing) have always had dubious connections to ROI?

In the end, he said, we need to stop being “the barking dog” - that is, forcing a conversation about why philanthropy matters - and instead showcase the assets that philanthropy has to offer to the business.

I couldn’t agree more!

So You Want to Be a CSR Director?

This past weekend over 2,400 MBA students, CSR professionals and social entrepreneurs congregated on the campus of Cornell University for the 2009 Net Impact Conference.

For those of you not “in the know,” Net Impact is an international network of people looking to use their business skills to create global social change.

I’ve been a member of Net Impact for a few years now, and I have to say that attending their annual conference is a must (if you’re not a member, I highly encourage you to join).

When I attended last year as a first year MBA, I remember feeling overwhelmed by all of the new ideas, terminology and opinions swirling around in the air. This time though, as a second year student, I felt much more grounded and less inundated, which made it possible to simply enjoy the opportunity to learn, connect with colleagues and friends, and share ideas around CSR and sustainability.

Perhaps because it’s the topic most on my brain these days, but a lot of the panels I attended were somehow related to careers in CSR. I went to a couple of especially terrific sessions that I just know the readers of The Changebase will enjoy, so I thought I’d share what I learned over the course of a couple of blog posts.

This post centers around one panel I attended called “Developing CSR Competencies”. Moderated by Chris Pinney, director of research and policy at Boston College Center for Corporate Citizenship, this session highlighted recent research that BCCCC had just completed with the Hay Group, a global management consulting firm.

The research they did focused on the specific individual competencies that CSR directors need to have in order to be successful in their jobs. To add value to the report’s findings, the panel included three current CSR directors who were interviewed for the study:

• Dan Bross, Senior Director of Global Corporate Citizenship, Microsoft Corporation
• Valerie Smith, VP of Corporate Responsibility, Citigroup
• Dave Stangis, VP of Corporate Social Responsibility, Campbell Soup Company (follow Dave on Twitter here).

Chris opened up the panel by introducing a few important points which are worth repeating here:

• Each company does CSR differently – so the job functions of a CSR director will vary.
• Most CSR teams are incredibly small – for instance, the group at Campbell Soup is only 1 ½ people!
• Not surprisingly, therefore, these jobs are incredibly hard to come by – especially for folks who aren’t already internal employees at the company.

After this, he went on to outline the research findings. In general, 8 key competencies emerged as the "keys to success" for any CSR director.

Personal Maturity (aka: Humility): this basically comes down to your ability to achieve success through empowering others to be part of the process – and then letting them take the credit. All three panelists agreed letting other people shine (and thus staying out of the spotlight yourself) is an acceptable trade-off for seeing your program reach its milestones.

Optimistic Passion: this competency relates to your ability to get out of bed everyday feeling motivated about your work. It’s about being patient, resilient, and dedicated to making change. Perhaps the best part of the panel was when Dave from Campbell Soup strongly opposed this phrase ‘optimistic passion’ (two words that he did not believe described himself or his work). Yet the more he explained why he opposed the phrase, the more passionate he seemed!

Next up was Peripheral Vision and Systems Perspective: two traits that refer to your ability to understand how your work in CSR relates to various business units within your company as well as to society as a whole. Once you understand this, the next step is being able to translate these ideas to other stakeholders. Essentially, it’s how well you can see the forest through the trees – and then tell others about what that forest looks like.

After that was Visionary Thinking: a skill that forces you to look beyond that pile of “to-do’s” on your desk and think instead about how you can bring innovation and fresh ideas to your work.

Two other competencies that I particularly enjoyed were Collaborative Networking and Strategic Influencing: these attributes relate to how well you engage others in your work, ask for help when you need it, and get buy-in from key decision-makers. Dan from Microsoft brought up a particularly interesting point about the role of trust in strategic influence – without instilling in your colleagues the feeling that they can trust you, you’ll never be able to persuade them to help you.

Finally, and perhaps most important, you need to be a Change Driver: with such small teams and such big jobs, you must be the one leading the charge and taking initiative to get results.

I found all of these traits to be incredibly interesting – and truthfully a little daunting.

To be a really good CSR director, it turns out you have to be a bit of a superhero!

But the more I heard the panelists speak about their experiences, the more excited I felt about the opportunity to one day join their ranks.

At the end of the session there was still one final question that I felt needed to be answered:

With all of this emphasis on individual competencies, I wondered what it was about the panelists' specific organizations that perhaps nurtured their ability to be successful in their jobs?

Was it simply a case of just having these competencies and jumping in with both feet? Or did their company's culture, values or even governance structure have something to do with their success?

Interestingly, the panelists seemed to agree that in fact it’s the individual’s ability to bring these skills to the table that sets them apart. While some organizations may have value systems or missions that make it easier to succeed, the panelists believed that true success in these positions is based on your ability to think big yet stay grounded, to include various stakeholders in a collaborative process, and to strategically enlist the help of champions to promote and evangelize your cause.

Overall it was an incredibly valuable afternoon and I learned a lot. Thank you Chris, Dan, Valerie and Dave for sharing your insights with us!

Stay tuned to future posts on The Changebase to hear more about what I learned at Net Impact 2009…

In the meantime, ask yourself: what are you doing right now to develop each of these competencies yourself?

Creating Change from Within

I've often spoken on The Changebase about social entrepreneurs who've chosen to radically reinvent how business creates social change in our communities and around the world. Organizations like Kiva (microfinance), Carrotmob (conscious consumerism), and Frontline SMS (information access through technology) have literally re-drawn the lines when it comes to creating sustainable, empowered and effective change through grass-roots social entrepreneurship.

While the importance of these examples can't be overstated, if we only focus on social entrepreneurs we actually miss an entire population of changemakers who want to have an impact but can’t quit their day jobs.

What can these people do to create change in their communities and their environment, without reinventing the wheel?

Enter social intrapreneurship – a new movement centered around creating progress internally at existing organizations.

Ok, so this is an interesting concept, you might say. But what does this look like in practice?

From what I hear, it’s all about baby steps - that is, starting small and growing big. Maybe it’s just me but it seems everywhere I turn I hear stories of employees who mobilized themselves and insisted on small initial changes like improved recycling at their corporate office, company incentives for using public transportation, or time off to volunteer in the community. And from there the social intrapreneurship momentum just grew. 

Another example: I recently had the chance to speak with someone in global citizenship at eBay, and I asked her what she thought made the company’s green efforts so successful. While she agreed with me that senior leadership buy-in is important, she pointed first to eBay’s employees as the single biggest driving force in creating change in the company.

It just so happens that much of their CSR efforts actually got started by a group of forty employees who came together to talk about little ways they could “green” the company – and from there it just snowballed. Now, more than 2000 employees in 23 countries are part of eBay’s Green Team – talk about a perfect example of real-life social intrapreneurship!

As a growing wave of MBA students (myself included) begins to dip their toes into the job hunt water, I find eBay’s story of creating change from within particularly inspiring. I know I want to work in CSR and sustainability, but I also know that these jobs are often really hard to find. If eBay's social intrapreneurship story tells us anything, it's that making change isn’t just about your job title or even your job function. No matter where any of us lands after graduation, we can each be changemakers in our organizations. And all it takes are some baby steps.

And that goes for all of you non-MBA students too!

It turns out that this isn't the first time I've extolled the virtues of social intrapreneurship. In fact, I was recently interviewed by my school, Boston University School of Management, as part of a promotional video meant to show prospective applicants how MBAs use their degrees to create change. Since I talk about social intrapreneurship in the clip, I thought I'd include it.

First up is BU Finance professor Yrjo Koskinan, then my classmate Susie Keane, and then me (I’m roughly two minutes and thirty seconds into the video).

Enjoy my 15 minutes of fame! 

And going forward, ask yourself: how can I be a social intrapreneur and create change from within my own organization, school, or community?