There are many examples of how companies are being affected by CSR drivers and motivators. The following three examples are just a brief sample of the myriad CSR performance motivators that are top-of-mind for executives.

1. Working with stakeholders

Driver number six in KPMG's list access to capital or increased shareholder value, acknowledges that organizations able to identify, understand, mitigate and report their business risks have a competitive advantage when raising capital. A good example of this is the Carbon Disclosure Project (CDP), which was developed, implemented and is monitored by a group of institutional investors representing in excess of $20 trillion in capital. For the past three years, the CDP has polled the FT500, which represents the world’s 500 largest companies, requesting a response to a climate change questionnaire. "Companies failing to respond or providing weak responses... will invite particular scrutiny from the investment community," said James Cameron of the CDP. According to the CDP, its institutional investors use the questionnaire results to assess company plans and performance for addressing the potential risks and opportunities of climate change.

2. Cultivating green consumers

Ethical considerations, KPMG’s second driver, is directly linked to the Lifestyles of Health and Sustainability (LOHAS) market. LOHAS describes a $226.8 billion marketplace for goods and services focused on health, the environment, social justice, personal development and sustainable living. The consumers attracted to this market have been collectively referred to as "cultural creatives" and represent a sizable group in the U.S. Approximately 30% of the adults in the U.S., or 63 million people, are currently considered LOHAS consumers. These consumers represent a substantial amount of buying power since they tend to have higher disposable income and are willing to seek out products and services that meet their CSR values and corresponding ethical concerns. Examples of products in this marketplace include organic foods, hybrid vehicles and fair trade coffee. It’s also important to note that LOHAS consumers bring their CSR values to their workplaces.

A strategic shift of organizations from a niche market (focused differentiation strategy) for green consumers to a broader appeal is occurring. LOHAS Consumers reward enterprises that demonstrate the values they seek (buy products and speak positively) and punish organizations that do not (refuse to buy products and speak critically about). In essence, these consumers/employees pay close attention to how their values align with producers of goods and services, their employers and even the charities they support.

The move to a broad market differentiation strategy can be achieved through extensive knowledge of green consumers, as well as the fulfillment of their information needs through appropriate reporting. At the same time, moving to a cost leadership strategy involves the effective and efficient use of resources, as the next example will illustrate.

3. Banking on the bottom line

The first and last of KPMG’s drivers, economic considerations and cost savings, reinforce the old adage "you can’t take the top line and put it in the bank; you can only put the bottom line in.” An added benefit of a CSR reporting focus is the ability, through it, to understand, measure and improve the use of resources.

For example, reduction in use of energy and materials will provide an enterprise with improved bottom line performance and a competitive advantage through a lower cost structure. The first two of the “three Rs” (reduce and re-use) can lead to substantial savings for organizations that implement an effective performance measurement system.
The Scottish Environmental Protection Agency recently estimated that businesses in Scotland could increase their annual profits by as much as $2,000 per employee through the introduction of aggressive waste reduction, energy efficiency and recycling programs.

CSR Reporting Requirements

The opportunity to grow the top line through green consumers in the LOHAS marketplace comes with the price of increased transparency -- this customer group demands the necessary data to make informed decisions. Interested stakeholders, such as employees, regulators, investors, and non-governmental organizations (NGOs) are pressuring organizations to disclose more and more CSR information. Companies in particular are increasingly expected to generate annual CSR reports in addition to their annual financial reports.

CSR reporting measures an organization’s economic, social and environmental performance and impacts. The measurement of CSR’s three dimensions is commonly called the triple bottom line (TBL). The Global Reporting Initiative (GRI) is the internationally accepted standard for TBL reporting. The GRI was created in 1997 to bring consistency to the TBL reporting process by “enhancing the quality, rigor and utility of sustainability reporting.”

Representatives from business, accounting societies, organized labor, investors and other stakeholders all participated in the development of what is now known as the GRI Sustainability Guidelines. The guidelines are composed of both qualitative and quantitative indicators. The guidelines and indicators were not designed, nor intended, to replace GAAP or other mandatory financial reporting requirements. Rather, the Guidelines are intended to complement GAAP by providing the basis for credibility and precision in non-financial reporting.