CSR and The Triple Bottom Line
Tools for issuing a successful CSR report 

 

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FRAMEWORKS

 

Frameworks are support structures for a CSR report.  Frameworks do not prescribe behaviors nor do they directly influence decisions. Instead the set out a format for reporting performance.  Some of the tools included in this section are built on stakeholder interactions.

 

  

In the table below are the prominent frameworks currently available:

 

The Global Reporting Initiative (GRI)  AccountAbility 1000 SocialAccountability 8000
The GRI provides the most comprehensive framework for triple bottom line accounting available. It lays out a structure, the data to put in the structure, and The latest edition, the g3, includes indicators for economic, environmental, social (labor practices, human rights, product responsibility) performance. There are also indicators for specific industries. The GRI was convened by  CERES and the United Nations Environment Programme. AA1000 is one of the first organizations to  emerge to help businesses implement CSR into their practices.  AA1000 facilitates stakeholder interaction in which the the design, policies and  indicators for a report are decided upon as part of an iterative process.

 

 

 SA8000 provides an auditing procedures rather than frameworks for a report.  It is a means for a  manufacturing business to  monitor whether the goals of its code of conduct  are being  met. It could also be useful for managing a supply chain’s compliance with a code of conduct. It is included in the frameworks section of this tool because, as a auditing procedure, it serves the function of disclosure. However, it is neither a set of frameworks for a CSR report nor a code of conduct. The SA 8000   incorporates many of the ILO principles as standards for auditors to verify. As such, it is more normative  than the frameworks (GRI, AA1000, CERES, ISO 14000 family).

 

Coalition of Environmentally Responsible Economies

(CERES)

 ISO 14000 Family
CERES was started in response to the Exxon Valdez oil spill. It provides a set of frameworks as well as review and feedback on CSR reports.  CERES supports the GRI. Its frameworks adopted the reporting principles of the GRI and its indicators are designed to be compatible with the GRI indicators. The CERES framework appear to be  essentially a  modified version of the GRI.

The ISO 14000 family is a protocol for implementing  environmental management programs, such as life cycle assessments and  approaches to eco-labeling.  ISO 14010 and 14011  contain information about the preparation, content and distribution of an environmental report. ISO 14020 and 14031 give guidance about issuing a declaration and the ISO 14040 focuses on reporting the results of a life cycle assessment.

The ISO 2600 standard on CSR is due out in 2009.

 

 

Below is a set of criteria for an analysis and an analysis of the frameworks:


Financial accountants follow FASB's generally accepted accounting principles (GAAP) to ensure that reports reflect the condition and performance they report. Seven factors that contribute to the usefulness of   information identified by GAAP are relevance, timeliness, reliability, verifiability, neutrality, comparability and consistency.  Financial performance of a business is one aspect of its triple bottom line , therefore CSR reports share the principles for financial accounting.  In addition, because CSR reports are issued in a voluntary regime, it behooves the reporting entity to follow the additional principles of transparency, clarity and completeness put forth by the GRI.

 

Usefulness Factors

Analysis

Consistency

 

Two characteristics contribute to consistency in a voluntary regime: prevalence of use and the probability that a framework will become prevalent in the future.  

  • A study done by KPMG revealed  GRI is the most prevalent framework in use. Of 1,600 companies surveyed. use the GRI, and less than 1% use the AA1000.  

  • The GRI states that 817 businesses have registered with it.

  • The AA1000 publishes that in 2004, 101 entities used its standards.

  • The SA8000  stated that as of 2004, 763 facilities have SA 8000 certification.

  • The European Commission’s green paper on CSR promotes the GRI for an overall framework and  SA8000 for labor issues.

Comparability

 

A framework that covers social, environmental and economic performance and allows a business to expand its reporting in a predictable way contributes to comparability over time.

  • The GRI covers the economic, social and environmental performance, provides for categories and indicators. It includes a protocol for topics not covered, thereby allowing a reader to predict where to find such information in the future.

  • CERES focuses on environmental performance. 

  • SA8000 focuses on labor.

  • AA1000 focus on ethical and social performance.

  • The ISO 14000 family focuses on environmental performance.

Relevance

 

The relevance of a report will depend on the users, or stakeholders.

  • The AA1000 is heavily built on incorporating stakeholders into an iterative process of setting goals, performance and gathering data.

  • AA8000 and the SA8000 aim at social performance. Report readers looking for environmental performance information may not find a report relevant. 

  • CERES and the ISO 14000 family includes procedures for stakeholder interactions. It focuses on environmental performance.

  • The GRI includes stakeholder interactions in it reporting, but not to the extent of the AA1000. The GRI has a broad set of categories for a report, so that many types of users may find it relevant. 

Reliability

 

A report is reliable when it is accurate.  The use of indicators, particularly quantitative indicators, can increase the accuracy of a report.  

  • The GRI’s g3 provides indicators, both qualitative and quantitative. Auditing is one of the indicators, but not part of the process for accreditation. 

  • The ISO 14000 family provides a method for identifying indicators but does not provide indicators.

  • The SA8000 and AA1000 use qualitative indicators.

Verifiability

 

A report is verified when it is audited.

  • The SA8000 and AA1000 include auditing procedures for accreditation.

  • CERES reviews reports, which lend to their reliability.

  • The GRI includes auditing as one of its indicators but leaves it to the business to decide whether to internally audit, hire neutral third parties or rely on stakeholder interaction in lieu of an auditing process.

  • The ISO 14000 also includes auditing as part of its process, but does not provide the manner in which performance or a report should be audited.

Timeliness

 

A framework that specifies the frequency of reporting and sets the terms for the information reported.

  • The GRI is the only framework that specifies reporting on goal performance should be included with data from past performance.

Neutrality

 

A report is neutral when it is issued to inform and not to influence decisions of report readers.

  • The AA1000, SA8000, CERES and the ISO 14000 focus on certain aspects of CSR. The scope of a report formed under these tools may be limited. In such a case, a report may include inadvertent bias.

  • The GRI covers the widest range of activities and respond to the widest range of interests of all the frameworks.

Transparent

 

When there is complete disclosure, a report is transparent.

  • The AA1000 incorporates a depth of stakeholder interaction in which stakeholders are active in goal decisions, measuring performance and report formation. This acts to  ensures transparency.

  • The SA1000 and AA1000 can includesa third party auditing process that ensures transparency.

  • The GRI provides for greater detail in all areas of the triple bottom line in its reports, which also increases transparency. 

Clear

 

A report is clear when it is understood by the user.

  • The GRI is the most robust of frameworks. A GRI report can be very technical, ther by narrowing the users to whom the material is understandable.

  • The ISO 14000 series provides standards for auditing and performance evaluation, but not for issuing a CSR report in a way that is understandable by a stakeholder outside of an organization.

  • Under the  AA1000, stakeholders contribute to decision about the content of a report. This ensures clarity.

Complete

 

A report is complete when it is inclusive and the reported matter is within a sustainable context. A report that covers financial, social and environmental performance is more complete than one that covers only one or two areas. In addition, if a report includes the ways that performances interact, it becomes more complete. 

  • The GRI is the only framework that specifically covers all areas.

 

Conclusion of analysis:


A business manager should choose the GRI and, when possible, implement third party audits.  By choosing the GRI, the business manager will benefit from being able to compare  its own report with that of other businesses. This is because the GRI is the most commonly used framework. Thus, it is the most consistent and the most comparable. It is also the most complete and provides relevant material for the widest range of stakeholders because it is the most robust.  The weakest point in the GRI is its lack of an auditing procedure. The SA 8000 and AA 1000 incorporate auditing procedures into a CSR report, which lends them greater verifiability on the subjects reported. If a reporting entity using the GRI employs stakeholder interaction when setting goals, taking measurements and issuing a report, its report will be transparent and clear. This stakeholder interaction can also act as an auditing process.

 

The AA1000 and ISO 14000 are two tools  that guide stakeholder interaction. Another is CC(BE)2.

 

 

Sources (this list excludes linked sources):

  1. Revsine, Lawrence, et. al., Financial Reporting and Analysis, Prentice Hall 2005, p. 17.
  2. Stoughton, Mark & Elizabeth Levy, Voluntary Facility-Level Sustainability Performance Rep Orting: Current Status, Relationship To  Organizational Level Reporting, And Principles For Progress, 21 Pace Envtl. L. Rev. 265, 268 (2004).

copyright Laura Musikanski laura.musikanski@gmail.com