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Entec Bulletin
A New Era of Corporate Reporting

There was a time when organisations would put their heads in the sand when asked about their social and environmental performance. Today, it is hard to find
a FTSE 250 company that doesn’t proclaim to have responsible workplace practice, green fingers and proactive, open dialogue with its stakeholders.

So, what is driving this recent willingness to discuss an organisation’s corporate responsibility more openly? To date this has been voluntary, driven by more inquisitive stakeholders, a need to manage reputational risk or simply a competitive desire to be recognised as the best. But an explosive change in the world
of social and environmental (or corporate responsibility) reporting is about to take place. Well maybe not ‘explosive’, although we think it should be! Why do we think this? Two reasons:

1. New Regulation

Until now there has been no mandatory requirement in the UK to report social and environmental performance. The Companies Act 2006 changes this. The Companies Act 2006 requires around 1,500 out of the 36,000 large and medium sized firms operating in the UK to provide environmental and social information. Many of these businesses will not have produced anything like this before.

The Act introduces a requirement for quoted companies to produce an annual Business Review in line with the EC Accounts Modernisation Directive. A requirement of this Review is for information on environmental matters, employees, and social and community issues “to the extent necessary” for the company’s position and performance to be understood. In addition, directors will have a duty to promote the success of their companies while “having regard” to six factors, including the company’s effect on the environment and the community, and its reputation for high standards of business conduct and ethics.

We have seen all of this before in discussions around the Operating Financial Review (OFR). The difference this time is that organisations are more prepared for it, in part because of previous discussions about the OFR, but also because of a wider acceptance that the practice of corporate responsibility and issues such as climate change are here to stay. The Act is scheduled to be fully implemented by October 2008, with a first stage of requirements on narrative reporting (including environmental and social issues) and changes to directors’ duties effective from 1st October 2007 (applying to those whose financial year starts after this date). No time like the present.

2. The Limited Value of Existing Reports

We think there is a bigger reason why reporting is set to change. We think organisations are realising that they are getting little value out of existing corporate responsibility, sustainability or social and environmental reports. Are people actually reading them? Do they have any real impact?

For many organisations, this type of reporting has become an annual chore, with a flurry of activity 4 months prior to publication to find new information and stories, and to drive forward as many of the actions that were agreed in the last report. Despite all this effort, many we see lack substance, clarity and appeal - and a majority seem to operate outside of any real strategy or action plan.

There is enormous variation in the quality of reports currently published, ranging from slim glossy marketing brochures to extensive data rich performance reports backed by a website crammed with numbers, lengthy web pages and case study examples. Some companies, like BT or Vodafone, are starting to use a range of communication techniques to report performance; using this information to raise awareness amongst employees and customers.

So now that new regulation is forcing many more organisations to think about how to report on social and environmental performance, what lessons can they learn from existing practice? Here are some points we suggest you consider:

Focus on what really matters. There are a lot of guidelines and ‘good’ practice suggestions on reporting. Use them as a reference but identify what your organisation’s priorities, challenges and opportunities are – and then ask, are they really material to our business?
Talk to stakeholders. They will tell you what they think is important, but they could also help identify solutions, new opportunities and even verify your performance. More talking equals less reporting.
Think wider engagement. Most people won’t read a report, so how is this helping you to be the best or improve your reputation? Many companies forget to engage employees for example – just imagine what ambassadors 5,000 engaged employees could be for your organisation.
Deliver a strategy, rather than a report. Many organisations are reporting against what others think is right (such as Business in the Community or Global Reporting), rather than identifying the right strategy for their own organisation and reporting against it. Why not publish a 3 year strategy that includes your reasons, your stakeholders, your priorities, governance structure, targets etc.? Your report can then focus on reporting against your priorities: short, focussed reporting.
Target reporting. Do you need a separate report at all? What about the web, existing internal and external communications or a more integrated business review?
Tie reporting into your governance structure. Do you have a committee or group that oversees corporate responsibility? Why not use reports to the committee to report externally. Let’s talk about real transparency.

The fact is that social and environmental reporting is here to stay. The Companies Act 2006 is promoting higher quality narrative reporting and supports the use of electronic reporting or communication. So there is a real opportunity for more inventive, creative and engaging reporting.

A Better Way For Reporting

We are convinced there is a better way to report corporate responsibility than that experienced by many companies. Which is why Entec and Tayburn (specialists in corporate communications) are working together to come up with an approach that is part of an organisation’s routine business, has the support and input of a wider audience and actually gets used.

We aim to work with a small number of companies to challenge the current conventions of reporting, remove existing headaches that surround reporting and identify more effective ways to engage people inside and outside of the organisation.

We have already made a start by asking what you think to better understand what works and what is not working. If you would like to take part or would like to register your interest in the results please visit www.impactcr.co.uk

10 Features of a Good Report

Thinking about your next report? Here are our 10 rules of good reporting:

1	Be clear on its purpose: Reports are supposed to help monitor progress, suggest improvements and provide a reference point for a transparent ongoing dialogue with an organisation’s stakeholders.
2	Be accountable: Demonstrate transparency of process and performance, ensuring that you report on the good and the not so good. Being accountable will increase credibility - and can differentiate a company from others in a sector.
3	Target: Understand who the different audiences are and aim to meet the information needs of different audience groups. Always ask the question - who will really read this? Where possible use existing channels that work.
4	Engage: Involve the audience in the development of your report, it may take longer but you know they will read it if they have been involved.
5	Challenge your stakeholders: Regulators, suppliers, customers are part of the solution; you should not shy away from guiding and challenging them on what they could/should do as part of that solution.
6	Communicate, don’t decorate: Content should lead reporting, design should be driven by content - often it is the other way. Ensure consistency in messages across all forms of communication.
7	Reinforce your brand: Complement other avenues of communication and reporting, work towards developing a family of communications products.
8	Use clear, accessible language: Great content counts for nothing if your audience doesn’t understand it. Aim to be succinct and avoid jargon. You should also consider current standards in accessibility for communication through print and online.
9	Use standards to help: The Global Reporting Initiative (GRI) with its latest G3 guidelines provides the gold standard for reporting content, but don’t let it dictate what goes in your report: there are ways to meet good practice without producing an encyclopaedia.
10	Assure your report: We think auditing is good, but the current standard of report auditing is very poor. Consider a longer term process that involves stakeholders as part of your assurance process.

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