Is Your CSR Report a Window or a Mirror?

At the Ceres conference last week, I was struck by an observation about sustainability or corporate social responsibility (CSR) reports. Formed after the Exxon Valdez spill more than 20 years ago, Ceres bills itself as "investors and environmentalists for sustainable prosperity."

The conference proved this slogan to be accurate. Case in point: One of the most popular booths was from Bloomberg (the investment data company) which was demonstrating how investors can access corporate responsibility (CR) information along with their standard economic indicators. (Note: AMD prefers to use the term Corporate Responsibility to encompass both CSR and sustainability. This should probably be the subject of another blog ...)

So, let's get to the observation ... more of a question actually: If so many companies are producing data on environmental, social and governance issues, who is reading all these reports? And, what are the data being used for?

The standard response to these questions is that the data are used to screen companies for socially responsible investment. While true, this did not explain all the effort many companies pour into these reports. Most are high production value reports that include photos, graphics and accounts of employees volunteering in the community -- way more than the raw data needed by analysts.

So why go to all the effort? The answer became clear in the Ceres award ceremony. At their annual meeting Ceres recognizes the best of the best CR reports. In accepting the award in the small and medium business category, the representative from Seventh Generation asked the audience how many people had read their report. Very few hands went up. Then he asked, how many people had read their own company reports. Almost all the hands went up.

The point was made. Few people will invest the time to read a CSR report unless it has direct impact on them. In the age of instant information, if we want data on a particular issue, we don't sit down to read a report ... we just "Google" or "Bing" it. This means that perhaps only a handful of people have read your CSR report cover to cover ... and most of them are probably company employees.

The next award winner was Ford Motors. During his acceptance speech, the Ford representative said that the process of pulling together their sustainability report was instrumental in driving programs within Ford. He said the reporting deadlines impelled departments within Ford to launch programs and/or collect data that would not have likely happened without this forcing function.

Hmmm -- two of the top CSR companies essentially admitting that the main value in producing their reports was not transparency (i.e., a window on company operations) but a driver for company awareness and action (i.e., a mirror for employees to evaluate and enhance their actions). This had all the makings of a "man bites dog" story. Typically we think of reporting as "after-the-fact" -- telling the story, not creating the story.

This little epiphany resonated with me. I thought back to the last few reports I had worked on -- from the new report from my current employer - AMD to the reports issued by my former employer -- Apple (which can be found on Apple's website), each had a transformative impact on the strategy and direction of the program.

Our latest report at AMD has been tantamount to an internal audit of the systems and processes for our CR programs. Although this is our 15th consecutive year of reporting, there have been major changes at AMD that have changed the material issues for our CR programs. In other words, this year's report became the ideal foundation for developing a new CR strategy.

The axiom about transparency, "sunshine is the best disinfectant" is as true as ever but perhaps needs a slight update. The new sentiment should be that "transparency is the best form of reflection."

Tim Mohin is the Director of Corporate Responsibility for AMD.