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A comparative study of the contents of Corporate Social Responsibility (CSR)
Reports of UK companies
Samuel O Idowu, Department of Accounting, Banking & Financial Systems,
London Metropolitan University
&
Brian A Towler, Department of Business & Professional Studies, Guildford College
Abstract
The last few decades have seen an increase in awareness on the part of corporate
entities in Western democracies that they are morally obliged to give something
back to society. An entity that fails to make a positive contribution to society will be
perceived as being socially irresponsible! Serious consequences may emanate from
this perception. To demonstrate that they ‘care’ about the people and environment
they operate in, organisations have taken different courses of action. The corporate
social responsibility (CSR) reports which have now become an annual report in
addition to the traditional annual financial reports is one of the vehicles used to
demonstrate how caring they have been over the financial period that has just
ended and how they intend to continue to be even more so in future periods.
CSR reports are still voluntary in the UK. This being so, it means that there is no
standard format. Companies are free to include whatever they deem fit. What do
these reports disclose to readers? Is there a good or bad CSR report? Are these
reports understandable to readers? This paper examines the roles the UK
governments have played in promoting community reports, the information
contents of different CSR reports and attempts to provide some answers to the
aforementioned questions. The study looks at CSR reports of different companies
across different industries in the UK. In particular, attention was directed at
companies in the following industries Insurance, Banking, Food Retailing, Petroleum
Retailing, Sports and Entertainment. The choice of which company we looked at in a
particular industry was based on how easily available their CSR report was. Those
companies where we experienced difficulties in obtaining their CSR reports were
excluded from the research study. We noted that there are two distinct practices
adopted when reporting on CSR matters. Some companies issue separate reports for
their CSR activities whilst others devote a section in their annual reports for
providing information on these activities. We also noted that all companies in our
survey recognise the enormous benefits that can emanate from making known their
CSR policies and activities.
It is hoped that the findings from this study will lead to further research in this area.
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A comparative study of the contents of Corporate Social Responsibility (CSR)
Reports of UK companies
Samuel O Idowu, Department of Accounting, Banking & Financial Systems, London
Metropolitan University
&
Brian A Towler, Department of Business & Professional Studies, Guildford College
The notion that the shareholders’ wealth must be maximised at all cost whilst
ignoring the consequences of those actions taken by corporate entities on society
was outdated when The Corporate Report (1975) identified that there are seven
stakeholders who are either directly or indirectly affected by corporate actions.
Looking back on what now appears to be the humble beginnings of the aspects that
form corporate social responsibility it was the rights of employees that
entrepreneurs and business managers first recognised as needing attention.
Crowther 2003 noted that Richard Arkwright an entrepreneur during the Industrial
Revolution was enlightened enough to build staff quarters at low or nominal rents
for his employees near his factories. Late in the 20th century the governments in
some West European countries (most of which are now members of the European
Union) had legislation in place forcing companies to involve employees in the
decision making process; hence the establishment of Work Councils in the work
place.
The UK governments in the 1970s passed many Acts of Parliament such as the Equal
Pay Act 1970, Health & Safety at Work Act 1974, Sex Discrimination Act 1975, Race
Relations Act 1976 just to mention a few. These Acts were intending to place some
responsibility on corporate entities towards their employees.
The effect of government legislation in the UK has understandably brought about a
change in attitude. Industrial Psychologists did not have much difficulty in
persuading senior managers that happy workers are better workers! The late 1970s
saw the birth of the Annual Employee Reports. Like its successor – the CSR report, it
was an unregulated voluntary report with no standard format or specified layout.
Some companies that issued the report used different pictograms and pie charts ‘to
inform’ their employees about the events of the previous twelve months and how
the corporate ‘cake’ had been shared. The Employees it was aimed at rarely
bothered to look at it or make any sense of what it was supposed to be informing
them of. The late 1980s saw a change in expectations when pressure was exerted by
some environmental activists on entities that were perceived as being
environmentally irresponsible. Events such as the explosion at Union Carbide in
Bhopal, India and the oil spillage in Prince William Sound, Alaska all but added
weight to why corporations must be forced to treat the environment in a more
responsible manner (Idowu 1989). The effect of the explosion in Bhopal of 1989 is
still being felt by the unfortunate residents nearly fifteen years after the event,
Union Carbide on the other hand are still paying the legal costs of the incident up till
the present moment. It did not take too much persuasion for corporate managers
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and equity investors to accept that our environment is ‘sacred’ and the cost of an
irresponsible action will be enormous.
The fact that several UK companies issue annual CSR reports removes any doubt
which one may harbour as to whether or not these companies consider that a duty
of responsibility is owed to the general public; whether local, national or even global.
Ramanathan 1976 argued that there is a social contract between organisations and
society. Jaggi & Zhao 1996 also agreed with the social contract view when they
argued that organisations do not exit in a vacuum, but are part of a society which
creates and supports them. Society will not take too kindly to corporations which fail
to recognise and support important social values. Organisations are aware that
society will not hesitate to use different sanctions to punish or bring to book any
irresponsible act or omission by an organisation as and when deemed necessary.
During the process of gathering information for the study, we noted that an
increasing number of companies of all sizes are finding that there are real business
benefits to be derived when a company is perceived by the general public as being
socially responsible. The result of this is that currently about 80% of FTSE-100
companies provide information in one form or another about their environmental
performance, social impact, or both (DTI 2003). Sixty-one percent of small and
medium sized companies in the UK were either involved a great deal or a fair
amount in local community matters (MORI survey). Accounting researchers in an
attempt to understand what has encouraged the development of CSR reports have
classified the reasons under four perspectives. These are agency theory, legitimacy
theory, political economy of accounting theory and stakeholder theory (Gray et al.,
1995, 1996; Guthrie & Parker 1990; Patten 1992; Roberts, 1992). Holland and Foo
2003 noted that the unregulated nature of the disclosure in CSR reports can only
allow the development of relationship between reporter and reportee which
provides a degree of accountability.
Corporate stakeholders have the right to know what contributions corporate entities
are making to society. The provision of information which satisfies this need is
known as accountability; hence Gray et al 1996 defined accountability as ‘the duty to
provide an account of action or reckoning of those actions for which one is held
responsible. Hackston and Milne 1996 also supported the view that corporate
entities should be held responsible for their actions which affect society. In the light
of this, a recent survey (DTI 2001) of CSR Europe of 45 global and large companies
operating in the EU showed that over 90% reported on their mission, vision and
values, workplace climate, community involvement, local economic development,
market place and environmental impact.
EXTERNAL INFLUENCES
The importance of CSR reports was noted by the British government when a minister
for CSR was appointed in March 2000. The minister’s duties amongst others include
working with the private sector and co-ordinating CSR policy across Government.
The Government takes corporate social responsibility very seriously; Whitehall and
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the devolved administrations have major programmes that engage businesses in a
wide range of relevant issues such as partnership with business on regeneration and
skills development and establishing codes of practice. The UK government sees itself
focussing attention in four key areas namely promoting good practice, supporting
work to demonstrate the business case, promoting international action on CSR and
joining up action across government (DTI 2001).
The recommendations in the European Union’s Fifth Action Programme on the
Environment embedded in the report ‘Towards Sustainability’ 1992 has contributed
to the current interests in this area. The report calls on organisations to provide
information on a number of areas namely: details of their environmental policy and
activities and the effects thereof in their annual reports, their expenses on
environmental programmes and make provisions in their accounts for environmental
risks and future environmental expenses.
The EC’s 1993 Environmental Management and Audit Scheme (EMAS) encourages
companies to provide information on matters such as their objectives and
management of issues relating to environmental performance, initiate a pattern of
eco-auditing, make available to the public an environmental statement and show
commitment to externally validated progress in meeting their environmental
objectives.
The ICAEW’s guidelines of 1993 which encourages companies to provide information
on their environmental objectives in a form that allows their performance in the area
to be easily measurable; provides the required evidence that professional
accountancy bodies in the UK are not left out of the debate.
The Association of British Insurers (ABI) has issued guidelines setting out the
disclosures on social, environmental and ethical matters that institutional investors
now expect to be included in the annual reports of listed companies. Listed
companies that fail to comply with these guidelines will experience difficulties in
obtaining institutional investors’ votes adopting their reports and accounts and
funds because institutional investors now tend to have ethical concerns when
making investment decisions.
The Welfare and Pension Act 1999 has made it obligatory for pension funds to
disclose whether they took social, ethical and environmental matters into
consideration in the selection and management of funds.
In 2001 FTSE4Good index was launched. Companies that were considered to have
made progress in three main areas namely working towards environmental
sustainability, developing positive relationships with stakeholders and upgrading and
supporting universal human rights were selected for inclusion in the index.
Benefits
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Advocates of CSR reports have put forward some perceived benefits which an
organisation may derive from its provision. Examples are: increased customer
loyalty, more supportive communities, the recruitment and retention of more
talented employees, improved quality and productivity and the avoidance of
potential reputational risks which may arise from environmental incidents. However,
Cooper 2003 noted that the practical experience of early adopters of CSR reports
was mixed. Some companies noticed that instead of the provision of the reports
enhancing companies’ reputation, it actually attracted adverse comments by
drawing attention to divergences between the values espoused by the company and
its actual behaviour. One can only view this as an inevitable teething problem which
would over time disappear from the corporate scene. Cooper’s survey of FTSE 250
companies found that less than 33% of companies considered that their CSR
activities resulted in improved customer loyalty while only 20% believed that it
enhanced staff recruitment and retention. Cooper concluded that the benefits may
be more subtle and realised over a longer timescale than is sometimes suggested but
there is no doubt that the resulting benefit will be enormous in the long run. Despite
these perceived benefits, Schaltegger et al 1996 have argued that one of the driving
forces in the popularity of CSR reports was the need to appease some user groups
e.g. environmental activists.
The Research Study
Having accepted that an empirical study of the contents of unregulated UK CSR
reports will add to knowledge, it was decided to contact by telephone as many
companies as possible in the following industries in order to obtain specifically their
latest Corporate Social Responsibility Reports: Insurance, Banking, Food Retailing
and Processing, Petroleum Processing and Retailing, Sports and Entertainment and
Construction. Thirty companies with registered office in different parts of the United
Kingdom were contacted. As the medium of contact was by telephone, some of the
individuals we spoke to at the other end of the telephone did not know what a
Corporate Social Responsibility report was. Interestingly, some of them offered to
send us their organisations’ annual reports or suggested to put us through to a more
senior individual in the organisation who might be able to help us.
We received information from 60% of the organisations contacted; the rest did not
bother to respond to our request. From the information received, we saw that
organisations in the UK have adopted two practices in reporting CSR activities. Some
organisations issue a separate CSR report from their annual financial report whilst
others devote a section for this activity in their main financial report. Companies in
the first category are The Royal Bank of Scotland (they call their CSR report
Community and Environment Report), Balfour Beatty (they call theirs Safety,
Environment and Social Report) Barclays Bank (CSR), Tesco (CSR), The Royal Dutch/
Shell Group (Meeting the Energy challenge), Northern Rock (Community and
Environmental Report) and Friends Provident (CSR). Those in the second category
are Northern Foods, mmO2, National Grid Transco, Safeway, Manchester United, BG
Group, Centrica, Bradford & Bingley, Kingston Communications and Tullow Oil. It
appears that all these companies are aware of the recommendations in the
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European Union’s Fifth Action Programme on the Environment ‘Towards
Sustainability’ Report 1992.
Of all European Union member countries, Germany has probably produced the
largest collection of elaborate, theoretically well grounded models of corporate
social reporting (Schreuder 1979). We found that Eichhorn 1974 advocated in
Germany for the construction of a societal profit and loss account
(gesellschaftsbezogene Erfolgsrechnung) and the societal balance sheet. He argued
that the societal Profit & Loss account would show the net social result by
subtracting the social costs of the enterprise from the social benefits; equally he
argued, the societal balance sheet would show the net social assets or liabilities
when the difference between the sum of the total human and public assets and the
total human and public liabilities is found. The societal profit and loss account and
societal balance sheet are in effect what we now refer to as the CSR report albeit set
out in both quantitative and qualitative terms.
REPORTING FRAMEWORKS ON CSR
We have noted that over the years, several voluntary standards on social, ethical and
environmental reporting have emerged. Some of these standards have both national
and international backings. A few examples which we found useful during the study
are:
1. The AA1000 developed by the Institute of Social and Ethical
Accountability. This framework provides a standard for social and
ethical accounting, auditing and reporting. It includes mandatory
external verification and stakeholder engagement.
2. The Good Corporation developed by the Institute of Business
Ethics. This covers fairness to employees, suppliers, customers,
Equity and loan creditors, contribution to community and
protection of the environment. The framework provides that the
company performance should be assessed annually by an
independent verifier.
3. The Social Accountability (SA) 8000 developed by an international
coalition of businesses, trade unions and non-governmental
organisations (NGOs) on the basis of International Labour
Organisation (ILO) conventions – the Universal Declaration of
Human Rights and the UN convention on the Rights of the Child.
This standard focuses on child labour, forced labour, health and
safety, working hours, discrimination, discipline, free association
and collective bargaining.
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All the UK companies we studied have recognised either directly or indirectly the
existence of these voluntary codes in the statements contained in their CSR reports.
As noted above some of the companies we studied have not issued a separate CSR
report from their annual company report but have embedded information about CSR
in the annual report. In most of them, we noted information about CSR matters were
either provided before or after the Financial Review, this is a common practice in the
UK. A general statement often written in bold and in a different colour similar to the
following commences the disclosures in the CSR reports.
“XYZ Company recognises that it has a duty to act as a responsible corporate
citizen, by meeting its obligations to all its stakeholders – shareholders,
customers, employees and the local, national and global communities in
which it operates.”
This would appear to be an affirmation that they recognise what society expects
from them as corporations and here is what has been done over the last year to
meet those expectations and what will be done in the following year(s). The research
noted that CSR covers a very wide range of issues; some may appear remote to the
man in the street!
It is often said that ‘beauty is in the eye of the beholder’, we knew from the outset of
the study that what constitutes a ‘good’ or ‘bad’ CSR report may not be
straightforward. In order to form a valid opinion of what is a ‘good’ or ‘bad’ report
we have used the ‘Business Impact Task Force’s’ three criteria which are.
The cost or benefit of a company’s goods and services, how it treats
its own employees and the environment, its record in respecting
human rights, its investment in local communities – and even its
record in prompt payment of bills, can all be significant factors
affecting its reputation
A company’s approach to managing supplier and customer
relationships, workforce diversity and work/life balance as well as its
efficient management of environmental issues are central to
competitiveness
The wide range of risks to which a business is exposed – whether
financial, regulatory, environmental or consumer attitudes – demand
a complex process of managing relationships and establishing values.
We were guided by the above criteria in order to establish whether a CSR report will
meet the requirements of the intended stakeholders. A CSR report that fails to cover
fully these three areas may not necessarily be a bad one but may be perceived as
requiring improvements. We were also interested in the language used in the report;
will this be understood by ‘the man in the street’? From the CSR reports we studied
we noted that companies in the insurance industry are regular readers of other
companies CSR for equity investment purposes in compliance with ABI’s guidelines.
An area that requires additional work on our part is to establish whether some of the
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audiences (other than those in insurance and pensions industries) to whom the
report is aimed at do actually read the CSR report. This may involve contacting
pressure groups such as Friends of the Earth (FOE), Green Peace, Commission for
Racial Equality and other similar organisations.
The lack of standards and the fact that the report has no defined audience but is
aimed at the world at large has led to a wide variation in what is reported. This will
continue to hinder the usefulness of the report unless this situation is rectified.
CSR Reports
The remaining part of this paper will focus attention on the CSR reports of the
companies we have studied. In this section we have answered the question – What
do these CSR reports disclose to readers? We have divided the CSR reports into two
categories namely companies with stand alone CSR reports and those who have
devoted a section for the activity in their traditional annual reports. The order below
is of no significance but merely a matter of convenience.
The Royal Dutch/Shell Group
The CSR report disclosed that by 2050 the world will double its use of energy. The
growth in demand would mostly concentrate in the developing countries as people
escape from poverty but developed nations’ demand despite greater efficiency will
continue unabated. The company sees itself facing a daunting challenge of how to
satisfy these rising energy needs without damaging health, blighting local
environments and threatening vital natural systems. The report shows how Shell is
responding to the ‘daunting challenge’ by working with governments, non-
governmental organisations, local communities and industry partners. The report
addresses how Shell is assuring and dealing with what it calls ‘hot spot’ sites and
issues and how it is contributing to sustainable development. Three pages were
devoted to Shell’s contributions to social performance in Nigeria and two pages for
the same activity in China. The report has 49 pages of information with pictures and
bar charts of Shell’s Economic, Environment and Social performance.
Tesco
Tesco’s 32 page stand alone CSR report stated that each year the Corporate Social
Responsibility group sets some Key Performance Indicators (KPIs) which the
company should attempt to meet during a forthcoming financial period. The latest
CSR report identified the KPIs Tesco intended to meet during 2001/2002 as Energy
and Fuel Efficiency, Water conservation, Waste and Recycling programme,
Biodiversity programme, Develop new stores on brown field sites, Organic aim,
Business in the Environment Index, Training and development, Employment
opportunities, Staff Retention, Regeneration, Business in the Community PerCent
Club, Education Support, Communication in the Supply Chain, Local Sourcing and
Supply Chain Labour Standards. For each of the KPI it stated four performance
criteria against which its performance will be measured. These are Under
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Development, On Track, Completed and Exceeded Expectations. Tesco was on track
with 8 out of the 17 indicators, 8 were complete and it exceeded expectation in one
of them whilst none were under developed. A section was devoted to how CSR fits
into the corporate business plan. The last five pages of the report were comparing
how the company has performed in ten of the KPIs noted above with bar charts over
different time periods. Four of the indicators were compared over five years 1997 to
2002, two of them over a three year period 1999 to 2002, one over two year period
2000 to 2002, another one over a four year period 1998 to 2002, one from 1993 to
2002 and the last one from 1994 to 2001. We noted that the company improved
over the years in all of them.
In Tesco’s Chief Executive’s words ‘CSR reflects our Values – treating people how we
would like to be treated’. As such we recognise our responsibility to communities and
to the environment wherever we operate. Our philosophy of ‘Every Little Helps’
underpins these wide ranging responsibilities – we recognise that we cannot change
the world, but we can do our bit and so play our part. We strive to attract and retain
the best people to work for us by offering support and development, reflecting
another one of our Values, ‘look after our people so they can look after our
customer’. This lies at the heart of our business strategy’. The company appears to
have disclosed useful information on its CSR activities.
The Royal Bank of Scotland (RBS)
Another stand alone CSR report of 36 pages with a theme that focuses on “Make it
happen”. The bank sees itself as adding value for their customers and staff,
conducting all its operations responsibly, bringing benefits to the wider community,
seeking to set and maintain ever higher standards. The report sets out how the bank
has worked and intends to continue to work towards achieving these objectives. A
deficiency we noted in this their first report was the failure to disclose the bank’s
policy and practices on ethical lending. One may construe that the bank has an
awareness of its responsibilities in the area as the Group Chief Executive in his
foreword to the report indicated the bank’s intention to comply fully with the
legislative and regulatory framework in their areas of operation. He noted that the
bank has implemented a range of initiatives which will ensure that their business is
conducted in a sustainable way.
Barclays Bank
A stand alone CSR which started by listing 10 key corporate social responsibility
achievements the bank made during 2002. Notable amongst these key achievements
are: Barclays became the first UK bank to receive ISO 14001 environmental
certification, supported more that 16,000 UK employees in their volunteering and
fund raising activity, set up a Global Diversity Council to ensure the reflection of
equality and diversity in its operations worldwide, invested a further £7.7 million in
projects to make their branches more accessible to customers with disabilities,
offered employees in Botswana and Zambia free, voluntary and confidential
HIV/AIDS testing, and rolled out an HIV/AIDS employee education awareness
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programme in their other sub-Saharan operations and reduced their UK CO2
emissions by 10.2%.
Barclays’ CSR report was verified by SGS (an independent provider of management
systems certification, environmental report verification and ethical auditing). Barclay
has a director whose key responsibility is CSR. The company is included in a number
of external indices of responsible companies, the Dow Jones Sustainability Group
Index, the Dow Jones STOXX Sustainability Index and the FTSE4Good Indices. The
company subscribes to the principles enshrined in the UN Universal Declaration of
Human Rights and the ILO conventions on minimum working age, health and safety,
working hours and discrimination. Barclays maintains its focus on managing the
environmental impact of its commercial lending and through the Environmental Risk
Management Unit (ERMU) increases awareness of the environmental considerations
to be factored into lending decisions. It has a well established policy on ethical
lending.
Information about its corporate social responsibility performance has been offered
to readers by number of methods. Readers using the net can obtain information
from www.barclays.co.uk/cosialresponsibility, readers requiring audio cassettes,
Braille and large-print version are invited to phone a free phone number 0800 400
100 or send an e-mail to disability.issues@barclays.co.uk . In our opinion Barclays
appears to have made some commendable progress in disclosing useful information
about their CSR matters. In addition, their CSR report appears to be user friendly.
Manchester United
This famous football club has embedded the CSR report in their annual report and
devoted four pages to its CSR disclosures. The club disclosed that in 2001 they were
selected for inclusion in the FTSE4Good index because they met the three criteria to
qualify for inclusion. The company also disclosed that they were the only football
club to date to take part in the annual Index of Corporate Environmental
Engagement compiled by Business in the Environment. The club proudly reported
that their inclusion in these indices was as a result of initiatives undertaken to
establish criteria and policies relating to a broad range of social and environmental
issues. Formal policies covering environmental management, health and safety,
spectator safety, equal opportunities and disability discrimination have been
developed and published. The company has a director with specific responsibility for
environmental matters.
The Group disclosed that it aims to conserve natural resources by minimising the use
of non-renewable materials, by recycling materials, by minimising energy use and by
using recycled products and packaging. The assessment of the environmental
standards of major suppliers and contractors and developing plans to improve their
environmental performance where appropriate are objectives of the company.
Customers would be encouraged to take positive actions in areas such as transport,
recycling and purchasing.
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As part of its positive contributions to the community, the Club disclosed that
Football in the Community Scheme which it runs provided coaching for over 100,000
participants during 2001/2002 including adults, children and people with disabilities.
The Club visited 454 schools to provide coaching. It runs after school sessions,
holiday courses, junior clubs and numerous competitions for grass-roots players. The
Manchester United Study Centre which was opened in 2000 aims to raise pupil
achievement and motivation in the areas of literacy, numeracy, information
computing technology (ICT), and self-esteem, by providing a caring and simulating
out of hours/after school learning environment for pupils from local schools.
The Club disclosed that it has an initial three year partnership commitment to raise
£1 million for its global charity UNICEF and to increase awareness of the problems
faced by children around the world. Other charities that the Club disclosed it
supports include Marie Curie, NSPCC, Christies Cancer Research Hospital, Mencap,
Guide Dogs for the Blind and Childline.
Friends Provident
Friends Provident provided us with two documents aimed at all stakeholder groups.
The first document was the latest annual report and accounts which contained three
pages on CSR. The theme of their CSR report was “Making a Difference”. The second
was a 12 page simplified version of the annual review (8 pages) and CSR report (4
pages).
The company has a director responsible for CSR. In 2001 it entered the FTSE4Good
Index and is an active member of Business in the Community (BitC), a national non-
profit making organisation that supports social and economic regeneration. Annually
the company sets and reviews its objectives and targets for its CSR issues. At the
beginning of 2002, the company set 13 CSR related targets and achieved 77% of the
targets. Sixteen CSR related targets had been set for 2003. It has a full CSR report
and business principles and policies on CSR on their website
www.friendsprovident.com. The company has a programme to train, educate and
advise staff on ways they can help the environment while at work or at home.
Friends are a supporter of the United Nations Environment Programme by
subscribing to the London Principles. The company has a policy of investing
premiums from policyholders ethically. In order to help bring about positive change
in companies which Friends invests in, reo which stands for responsible engagement
overlay was devised. Through reo the company has a team of 12 experts which
engage with companies on issues such as CSR and governance, environmental
management and reporting, climate change, sustainable forestry, labour standards,
bribery and corruption and human rights. The company applies reo to nearly all the
equity investments made on behalf of Life and Pensions business customers. As a
major shareholder in many companies, Friends uses its votes to encourage
companies to adopt effective corporate governance practice. In 2002 the company
launched the Stewardship International Fund, a medium/high risk ethical fund which
provides the opportunity to invest in global markets whose operations make a
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positive contribution to society. Companies that appear to be harming the world, its
people and its wildlife are screened out.
In the market for buying its goods and services Friends checks the CSR credentials of
their suppliers.
The company partners Barnado’s in an initiative called Future Citizens, promoting
citizenship to 11-14 year olds across the UK. Staff are given time to visit schools to
help 5-11 year olds develop their reading skills. Through its sponsorship of
Southampton Football Club, in 2002 it supported a new initiative “Racism Just Ain’t
Saintly’ in collaboration with Southampton FC and Southampton City Council to
challenge and ‘kick’ racism out of football.
In terms of looking after its staff, Friends was proud to report that two years in a row
2001 and 2002 it won the Sunday Times ‘Best Companies to work for’. In 2003 it was
amongst one of the 50 Best Workplaces in the UK. The company is an ‘equal
opportunities employer’. As a result of the company’s commitment to health and
safety, it won the Bronze Award in 2000 and Silver Award in 2002 for Occupational
Safety of the Royal Society for the Prevention of Accidents.
Friends disclosed that as part of its contributions to reduce the effect of energy
related emissions, it has negotiated contracts to supply the majority of its electricity
from renewable sources for the next two years and has introduced a campaign to
reduce inter-office travel and LPG converted vehicles are now used to replace
company cars. Video and teleconferencing facilities are now used by staff to cut
down on business travel.
Friends believes that its long running commitment to CSR will continue to positively
differentiate its business from others.
BG
BG did not have a stand alone CSR report but included a report under the heading
“Corporate Responsibility” with its annual accounts.
The corporate social responsibility is divided into four sections covering Business
Principles, Health Safety Security and Environment, Human Resources Management
and Community Involvement.
BG’s statement of Business Principles sets out the fundamental values and principles
within which they operate as they strive to create shareholder value. Their
commitment is to the welfare of their employees and to the stakeholders and
communities they serve. BG believes that the protection of the health and safety of
their employees and all those affected by their business and the protection of the
environment and security of their assets are critical to their overall success.
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During 2002, BG received certification to ISO 14001 in its operations in Bolivia, Brazil,
Phoenix (USA), Northern Ireland, Egypt, and Trinidad & Tobago.
With regard to Human Resources Management, BG believes that people are a key
source of competitive advantage and building and continuously developing a high
calibre workforce is essential to the continued growth and success of the company.
BG recognises that as an international company, it has responsibilities to contribute
to the communities where it operates. They make voluntary and contractual
contributions to communities, sponsor local groups and run employee involvement
programmes. BG Energy Challenge has raised over £1m for charities since its
inception in1996. BG is a member of CARE International UK. The company operates a
CareShare scheme which allows employees to increase the money they raise to a
maximum of £250 per person per year and operates a payroll-giving scheme. They
also undertake social impact assessments, develop community relationships and
contribute to sustainable development.
Centrica
Centrica did not have a stand alone CSR report but included a report under the
heading of ‘Corporate Responsibility’ within its annual report and accounts.
The report states that corporate responsibility is integral to all their activities, which
their framework is set and co-ordinated by the Centrica corporate responsibility
committee that was formed in 2002. Centrica was included in the 2002 FTSE4Good
Index and in the Dow Jones Sustainability Indices for 2003. The report states that
corporate responsibility concerns have been fully integrated into the group’s risk
management structures. These address the financial impact on the business of social
and environmental threats as well as the potential impact on the reputation of their
brands. Their corporate activities fall into four main categories namely: Environment,
Community, Marketplace and Workplace.
Northern Foods
Northern Foods has no stand alone CSR report but devoted three pages for their CSR
activities in the annual report and accounts. The company disclosed that it manages
its impact on the environment by reducing emissions and increasing efficiency in the
use of resources. A clear policy framework was drawn up at group level and the
company has made considerable efforts to improve its measurement and recording
systems. Its participation in the 7th Business in Community Corporate Environment
Engagement Index showed a 17% improvement in the previous year. It also disclosed
it met its target for energy efficiency improvement by more than 2% reduction per
tonne of product required by Climate Change Levy Agreement in all its qualifying
sites. This means that the company will continue to qualify for a climate change levy
discount until at least 2005. The report disclosed that it continues to meet all its
obligations under the Packaging Waste Regulations and efforts are being made
install alternatives to landfill for the disposal of biodegradable food waste. In
addition, it has undertaken pilot composting and anaerobic digestion projects.
14
Following an external audit and certification by the British Standards Institute, one of
their bakeries reached Acorn level 5.
The report disclosed that it was working towards monitoring the ethical standards of
their suppliers and collaborating with other parts of the supply chain to ensure that
monitoring is carried out efficiently and to appropriate standards.
In order to continue to support its local communities, it disclosed that through the
Northern Foods Social Responsibility Committee cash donations of £266,000 were
made to charities including agencies working in developing countries during the year
to 31 March 2003. The company made donations to 29 named charities amongst
which are Barnardos, Farm Africa, Hope for the Homeless, Oxfam, Samaritans. The
company gives time off to graduate trainee managers to carry out a two week
assignment a local community organisation. Many other employees are active in
their local communities in a wide variety of roles such as mentors, trustees and
fundraisers.
In recognition of its commitment to provide a safe environment for its staff, the
company disclosed that many of its operating companies won different health and
safety awards during year. Pennine Foods, Walter Hollands and Palethorpes each
received a gold award from The Royal Society for the Prevention of Accidents. Elkes
Biscuits received an award from the Health and Safety Executive for a successful and
original programme of on-site activities in support of European Week of Safety and
Health of October 2002.
The company disclosed that it has the principles of fair employment. It therefore
monitors the employment patterns of gender, race and disability and runs equal
opportunities training courses.
Bradford & Bingley
Bradford & Bingley has devoted three pages in its annual report and accounts. It
disclosed that during 2002, it adopted the FORGE Group framework for CSR
management and reporting for the Financial Services Sector as recommended by the
British Bankers Association. As it recognises the importance of sharing success and
best practice, it is a member of the London Benchmarking Group (LBG) which
measures members investment programmes in their communities using a consistent
model (there are 72 member companies from the UK, USA and Europe) and Business
in Community (BitC). The company has a director responsible for its CSR activities.
On its community investment programme, the company disclosed that in 2002 it
invested over £1m directly in the community and its programme has been ranked as
45th in the FTSE 100 by the Guardian Giving List. Its community investment covers
four main areas linked to the business which are; prevention and alleviating the
causes of homelessness (the company is the title sponsor of Shelterline), personal
finance and numeracy education in schools (it works with Education Extra an out of
school hours learning charity), disability access to financial services (they worked
15
with the Royal National Institute for the Blind in producing a Braille version of Money
Matter and Royal National Institute for the Deaf to provide sign language and
manual interpreting services) and social regeneration through its work with Housing
Associations. The company is also a member of Employers Forum on Disability.
On its environmental activities, it disclosed that in 2002 it entered the Business in
the Environment Index for the first time but ranked 169th out of 192 companies in
the index which has helped to identify the structure needed to improve its
environmental management procedures. The company disclosed that its
environmental activities include investing in sustainable housebuilding techniques,
energy, water solid waste and recycling and transport.
Bradford & Bingley disclosed that it is committed to equality across all aspects of
working life. As it recognises the importance of best practice and success the
company is a member of Opportunity Now and Race for Opportunity. Both
organisations look at ways to promote gender and race equality within the
workplace. The company supports the 30 Articles of the United Nations Universal
Declaration of Human Rights in the workplace. There are two female Directors out of
nine Directors on the Board and women occupy 35% of management roles in the
company. It disclosed that during 2002, the company developed a formal
Occupational Safety & Health Management System to be used as a basis for
evaluating its future occupational health and safety profile.
The company disclosed that during 2002 it had introduced an increasing range of
ethical investment products and it met all its obligations under the anti-money
laundering and anti-terrorist legislation.
Kingston Communications
The company’s CSR report was only one page in its 2003 annual report. There was no
CSR theme only a heading of Environmental, Community, Social and Ethical Policies.
The company disclosed that its operations do not involve high inherent
environmental risks. Kingston Communication disclosed that it has been included in
the FTSE4Good Index since 2001. The company has recently developed a formal
environmental management process in line with ISO14001 standard with which it
aims to achieve full compliance. In line with its policy of improving waste
management, specific targets on environmentally friendly disposal of printer
cartridges, fluorescent tubes, markets for re-use of waste electronic equipment and
recycling of equipment that cannot be economically re-used have been set.
On health and safety, the company disclosed that a considerable emphasis has been
placed on improving health and safety awareness and embedding a health and
safety culture through its intensified training programmes. Improved accident and
‘near miss’ reporting procedures with an accident database have been adopted.
Processes are being developed to ensure full compliance by the company of OHSAS
18001 standard. No fatalities occurred during the year and the number of major
16
injuries and dangerous occurrences was 0.17% per 1000 employees. The total loss of
employees days due to all causes of sickness, injury or disability was 13,204 days or
2.35% of the total working days in the year.
On the issue of contributing to its local communities, the company disclosed that it
has actively supported volunteers amongst its workforce to become school
governors, released staff during working hours to participate in Children’s university
and opened Kingston Communications Stadium during the year.
The company disclosed that all its employees are required to act with integrity and
the high ethical standards necessary to maintain the company’s reputation.
Balfour Beatty
Balfour Beatty has a stand alone CSR report of 40 pages divided into six sections
namely introduction pp1-7, sustainability development pp8-11, safety and health
pp12-19, environment pp20-29, social pp30-37 and appendix and validation
statement pp38-40.
The company identified 17 milestones it reached in 2002 and a number of key
objectives to attain in 2003. In 2002, six of its operating companies achieved the
target level 4 in the Royal Society for the Prevention of Accidents (RoSPA) audit
scheme (level 5 is the highest). The company disclosed that there were 6 fatalities
across the Group during 2002; the figure was 5 in 2001. The Group has continued to
provide an increasingly high level of safety training to enhance the competence of
each jobholder. The Group participates in Business in the Environment Index. Several
operating companies in the Group in the UK and across the world are now IOS 14001
certified.
Balfour Beatty disclosed that it is increasingly engaged in ensuring that it identifies
and engages with all its stakeholders and fulfils its responsibilities to them all
Safeway
Safeway has no stand alone CSR report but has a director for CSR matters. The
company disclosed that it recognises that the demands and expectations of all its
stakeholders are sometimes conflicting but these must be met and it has a duty to
demonstrate how the company is meeting or planning to meet them. In February
2002 the company published on its website a comprehensive report on how its
corporate social responsibilities are being met.
Safeway was accepted into the Dow Jones Sustainability Index World in 2002, the
index tracks the share prices of sustainability-driven companies worldwide and a
constituent of FTSE4Good Index in March 2002.
17
Safety and Environmental Risk Management Agency Ltd (SERM) (an independent
company which provide companies and investors with a strategic benchmarking
assessment of their safety, environmental and social risk exposure in hard financial
terms) during 2002 gave Safeway AA+ rating, the highest in its industry.
The report disclosed that as part of the company’s commitment to greater
transparency, it will continue to improve the quality of information it produces to
support its CSR strategy.
National Grid Transco
National Grid Transco has not issued a stand alone CSR report. The company has a
director responsible for its CSR matters. The report disclosed that National Grid
Transco recognises that as one of the world’s largest utilities it must conduct its
business under a responsible framework. It has therefore built the framework under
three goals namely sustainable growth, profits with responsibility and investing in
the future.
The company disclosed that it believes that safety is paramount and that all work-
related injuries and illnesses are preventable. The company was proud to disclose
that during 2002/03 its operations have not resulted in any fatalities to either its
employees or contractors and the rate of injuries resulting in lost time has decreased
by up to 46% across its major operations compared with 2001/02. During the year
269 employees took time off work due to accidents.
There was no prosecution by any environmental regulatory body for an
environmental offence during the financial year. Several of its operating companies
in the US and UK received certification to ISO 14001 during the year. The company
was one of the 18 companies out of 200 placed in the premier league of Business in
the Community’s 7th BE index of corporate environmental Engagement.
The company is committed to being an equal opportunity employer, encouraging
diversity and avoiding any discrimination on the ground of race, colour, religion,
political opinion, nationality, gender, disability, sexual orientation, age, social status
and origin, indigenous status or other status unrelated to the individual’s ability to
perform his or her work.
National Grid Transco recognises that it has a diverse range of stakeholders to
interact with, in its dealings with external audiences it strives to be open and
constructive. Its dealings with customers, suppliers, local communities and grantors
during the financial year received coverage in the last section of the report.
Tullow Oil
18
Tullow Oil has included its report on CSR under the heading of Environmental, Health
and Safety Review in the annual report.
Tullow disclosed that it recognises that constant vigilance and awareness of
environmental, health and safety (EHS) issues are paramount in the oil and gas
industry. As a result, the company is committed to developing and maintaining
systems and procedures that allow it to effectively manage and limit risk in the day
to day running of the business. During the year, the company was involved with a
local seismic contractor in its operations in Bangladesh to help develop an EHS
management system and project EHS plan consistent with international standards.
Tullow Oil sees its social performance involving a combination of three areas which
are Behaviour – following EHS and welfare policies, Impact – how well the impact of
operations on people is managed and Overall contribution to society – including
support for community programmes and charities. The company is in the process of
formalising its existing activities and initiatives into a structured CSR strategy.
Finally, it disclosed that it continues to support local communities in UK, Ireland and
Pakistan through contributions to health care programmes, provision of water
supplies to local communities, charitable and educational projects.
mmO2
The information of the company’s CSR activities was obtained from its 2003 annual
review. The company has a director for CSR and a website on its CSR activities
www.mmo2.com/society and believes that it has the best chance of delivering long
term value to its shareholders as well as to society by offering excellent mobile
communications. It intends to support this ambition through active involvement and
dialogue with all its stakeholders.
During 2003, the company disclosed that it made three remarkable achievements in
its CSR matters. It established a Corporate Responsibility Advisory Council, launched
‘Can Do in the Community’ programme and carried out a review of its approach to
diversity and human rights and published its review ethics policy, environmental and
ethical procurement policies. It has also published in print and online its
independently verified CSR report for 2003.
The company was proud to disclose that it is now represented in some of the main
sustainability indices and funds. These include the FTSE4Good Index, Dow Jones
Sustainability Index, Ethical investment and sustainability registers and Business in
Community CR index. The company won corporate registration under the ISO 14001
since 2000. The company disclosed that it endorses the Disclosure Guidelines on
Social Responsibility set out by the Association of British Insurers.
The company finally disclosed that it is committed to Ethical procurement, Health
and safety at work and in the community, the United Nations Declaration on Human
19
Rights and the International Labour Organisation declarations. It donated a total of
£444,000 to charitable causes during the year.
Northern Rock
Northern Rock has issued a stand alone CSR report and devoted 3 pages to its CSR
activities in its annual report. The company disclosed that its biggest contribution to
the community in which it operates is the donation of 5% of its pre-tax profit to The
Northern Rock Foundation which makes grants to charities and disadvantaged
people primarily in the North East of England. Five per cent of its pre-tax profit in
2002 amounted to £16.3 million which will bring the total donation to the
Foundation since incorporation in 1997 to £86.5 million.
On its environmental policy, the company disclosed that it is committed to ensuring
that environmental awareness and best practice form an integral part of its
corporate thinking which made them adopt the following policy. The incorporation
of environmental considerations in it planning and decision making, re-using,
recycling or wherever possible reducing waste, consideration of environmental
issues in purchasing and lending policies, investing in community environmental
issues that are of benefit to the community and to monitor, control and record its
energy use and to seek to reduce its consumption levels.
It disclosed that its good environmental policies have been recognised by a number
of external bodies such as the FTSE4Good, Business in the Community, National
Energy Foundation, this has led to its inclusion in their indices/registers.
Final the company disclosed that it has an environmentally friendly policy on its
range of products, training programmes, energy consumption, waste and material
recycling, building design, use of transport and health and safety. Its CSR activities
also extend to its employment, recruitment work life balance and education and
training issues.
Below is a table of some areas where there are differences in reporting practices of
the companies we studied.
Company
Stand
Alon
e CSR
Direc
tor
Resp
onsib
le for
CSR
FTSE
4Goo
d
Index
Busin
ess in
the
Com
muni
ty
Index
Dow
Jones
Susta
inabil
ity
Index
ISO
1400
1
Index
Supp
orts
Nam
ed
Chari
ties?
CSR
Repo
rt
Has a
Them
e
Sets
Annu
al
Targe
ts for
CSR
Has
Web
site
for
CSR
Shell Group
√
√
x
√
x
x
√
√
√
x
Tesco
√
x
√
x
x
x
√
x
Royal Bank of
Scotland
√
√
x
√
√
√
√
√
√
√
Barclays Bank
√
√
√
√
√
√
√
x
√
√
Manchester
x
√
√
√
x
√
√
x
√
x
20
United
Friends
Provident
√
√
√
√
x
x
√
√
√
√
BG Group
x
x
x
x
x
√
√
x
√
x
Centrica
x
√
√
√
√
√
√
x
√
x
Northern Foods
x
√
x
√
x
x
√
x
√
x
Bradford &
Bingley
x
√
x
√
x
x
√
x
√
x
Kingston
Communications
x
x
√
√
x
√
√
x
√
x
Balfour Beatty
√
√
x
√
√
√
x
√
√
x
Safeway
x
√
√
x
√
√
x
x
√
√
National Grid
Transco
x
√
x
√
x
√
√
√
√
√
Tullow Oil
x
x
x
x
x
x
√
√
√
x
mmO2
x
√
√
√
√
√
√
√
√
√
Northern Rock
√
√
√
√
x
√
√
√
√
√
Conclusions
In general terms one can conclude that CSR reporting in the UK is still in its infancy.
We noted that the reporting practices range from the very sophisticated and well
established system to ‘a brief mention of CSR’ in the annual report. Some of the
companies we studied appear to use the report as a public relations exercise; some
appear to do what ‘the Joneses’ are doing just to be seen to ‘comply’! CSR reporting
will continue to improve in the UK and globally, but the information it contains
would need to be standardised. A feature we noticed in the development of CSR
reporting is the influences of several international and local organisations with
different frameworks, indices, directives and initiatives etc many of which are
voluntary but are likely to hinder rather than assist the development in the reporting
systems. We noted that a large number of organisations are rightly concerned about
our environment, resources, quality of life and how people are treated wherever
they are in the globe especially those in the less developed world. Unless efforts are
co-ordinated by a few organisations around the world, confusion will be created
which might make it impossible for readers to identify what to look for in a ‘normal’
CSR report. An un-audited CSR report leaves room for companies to make
exaggerated claims that may be unverifiable. This will only limit the usefulness of
such a report.
We can confirm from our empirical study of this area that UK companies are making
reasonable efforts possible to disclose information about their CSR activities. Over
the next few years many of the companies that are still embedding the CSR reports
in their annual reports are going to appreciate that every socially responsible
company should produce a stand alone CSR report at its year end, some of these
reports may have to be externally verified by experts in the different areas before
reaching the public domain.
21
The UK government has played a pivotal role in encouraging corporate entities to
recognise that nothing short of socially responsible behaviour will be accepted by
the stakeholders. The appointment of a Minister for Social Responsibility in March
2000 by the current UK government has played a part in encouraging some UK
companies to appoint a member of the Board to take charge of CSR; many more
companies are likely to follow this example. The UK government will have to lead the
way in reducing the number of all these ‘concerned’ organisations around the world,
who undoubtedly are doing a good job in this area but are too many in our opinion,
in order to make companies better informed of their obligations when reporting
their CSR activities.
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