April 2004

Corporate Reporting

Although Corporate Reporting is not a new issue it has received greater emphasis in recent years as globalisation continues and investors become wary following recent corporate collapses.

The recent increase in interest has led to many people asking "what is Corporate Reporting all about?"

Although the UK is leading the way in Corporate Reporting (environmental; health & safety; social; ethical; supply chain etc.) less than half of the FTSE 250 issue complete corporate reports. Organisations with significant environmental impacts are the most forthcoming with their reports, primarily due to the regulatory regime they face, but other companies still seem to be unclear on the potential benefits of corporate reporting and what should be covered.

What is Extended Corporate Reporting?

Corporate Reporting comes in many forms and has many guises including social and ethical reporting and as we have already said, extended corporate reporting is not new. It was defined in 1997 by Zadek et al, as "The practice of social and ethical accounting is emerging as a key tool for companies in the 1990s in response to calls for greater transparency and accountability to different stakeholders, and as a means for managing companies in increasingly complex situations where social and environmental issues are significant in securing business success".

As social reporting advances rapidly into the mainstream many organisations, large and small, are exploring what social reporting can bring to corporate social responsibility and sustainable development. Sustainable companies are recognised as having three kinds of responsibility: economic, environmental and social. Corporate social responsibility is an integral part of this mix and needs to be reported in the same way as environmental issues. It is about integrating the issues of the workplace, human rights, the community and the marketplace into core business strategies.

Why Do it?

Extended Corporate Reporting is a business strategy that works. In a world where the brand and a company’s reputation is increasingly seen as their most valuable asset, Extended Corporate Reporting can help build the loyalty and trust that ensures a bright sustainable future. In our complex, global society, organisations are becoming increasingly visible. They are not judged only on their results but on their behaviour too, and this must be seen as an opportunity to develop the business.

By integrating Extended Corporate Reporting into your business as a mainstream activity, you are not only making a significant contribution to a better society, but just as importantly you are recognised for doing so. This has obvious benefits for the company including:

Better risk and crisis management
Good relations with stakeholders and interested communities
Increased worker commitment
Increased productivity
Reduced operating costs
Enhanced brand value and reputation
Long-term sustainability for your company and society

Compiling and issuing an Extended Corporate Report will help the organisation identify key stakeholders, especially investors and customers and any specific social and ethical issues.

Creating an effective benchmark will allow the organisation to measure itself against peer groups, competitors and best practice and will help identify areas of potential business improvement.

Corporate policies can be validated and progress towards their achievement can be shown, this is especially true of non-financial measures which are sometimes difficult to quantify.

The report can be used to evaluate the overall effectiveness of the organisation’s strategic objectives and the business plans it is deploying to achieve these objectives.

Where do you go next in developing your corporate reporting? How can organisations use corporate reporting to restore confidence and protect themselves against tomorrow’s headlines? How much further than legal minimum requirements for corporate reporting should corporations go to ensure sustainable success? These are all the questions organisations need to be asking themselves now!

For a confidential review of your current social, ethical and environmental reporting or to discuss how you can create an effective Corporate Report, please contact Nersi Salehi on 024 7627 9000.