MLI51C100 – SESSION #4 MAY 12, 2016 DR. MARGARET C. MCKEE Measurement and Reporting of Corporate Social Performance

Today’s Agenda Measurement and Reporting of Corporate Social Performance  Social Auditing Benchmarks  Global Reporting Initiative (GRI)  Channels for Reporting of Corporate Social Performance (CSP)  Challenges with CSP Ratings and Rankings Check-in on Group Projects Neste CSR talk

Social Auditing Benchmarks Principles and guidelines e.g., CAUX Principles, CBSR Good Company Standard setting, accreditation, and certification organizations e.g., ISO, Fair Trade Labeling Reporting organizations e.g., Global Reporting Initiative 3

Global Reporting Initiative (GRI) Economic  Capital flows among stakeholders and economic impact of organization at local, national and global level. Environmental  Materials; Energy; Water; Biodiversity; Emissions, Effluents & Waste; Products & Services; Compliance; Transport Social  Labor Practices and Decent Work; Product Responsibility; Customer Privacy and Compliance; Human Rights; Society Source: 4

HOW DO COMPANIES REPORT ON THEIR CORPORATE SOCIAL PERFORMANCE?

Company Reporting of CSP Internal Stakeholders: Articles in newsletters Information on employee intranet Agenda item at meetings Corporate reputation committees CR officer activities External Stakeholders: Customer invoices or billings Point of purchase and packaging Advertising and publicity campaigns Sponsorship programs Corporate reports and web sites Social media 6

External Reporting of CSP Magazines e.g., Fortune, Corporate Knights, the CRO, EthicsWorld, etc. NGO Web Sites Multinational Monitor, Greenpeace, etc. Academic Journals e.g., Journal of Business Ethics, Organization & Environment, Business & Society, etc. Blogs e.g., Businessethicsblog.com,craneandmatten.blogspot.com 7

CSR Ratings and Rankings Sustainable Asset Management 8

The Case of KLD Investment research firm generating its own CSR Ratings for clients’ use — What are the evaluation criteria?  Community  Diversity  Employee Relations  Environment  Product/Customer — Who are the evaluators?  Professional research analysts 9

The Case of Fortune Magazine Business magazine producing annual listing of Top 10 Most Admired Companies  What are the evaluation criteria?  “Customer satisfaction”  “Corporate citizenship”  “Shareholder return”  Who are the evaluators?  Industry leaders (CEOs)  Stock analysts 10

CSR ASSESSMENT AND REPORTING WHAT CHALLENGES DO YOU SEE WITH THESE PRACTICES? Discussion 11

The Integration Gap BSR/GlobeScan State of Sustainable Business Poll. Based on responses from 556 representatives from business, NGOs, government, and academia, representing Africa, Asia/Pacific, Europe, Latin America, and North America. 62% of global business leaders think that integrating sustainability into business operations is their company’s most important leadership challenge. However, just 21% report that their companies are close to fully integrating sustainability into the core of their company.

Buying Social Enterprises to Buy CSR?! Multinationals’ acquisitions:  Loreal – Body Shop  Colgate Palmolive – Tom’s of Maine  Danone – Stonyfield Farm  Unilever – Ben & Jerry’s  Kellogg’s – Kashi  Pepsi Co. – Naked Juice Other concerning trends  Increasing corporate presence on regulating/certifying organizations  National Organic Standards Board  Co-option/dilution of organic labels

Closing Comments Many corporations actively engaged in CSR activities and making considerable investments Concern over the authenticity of some firm commitments Corporations have many options for assessment and reporting of CSR activity and this generates concern about authenticity of engagement Multiple benchmarks of varying quality/validity  Measures, weightings, self-report data  “Halo effect” of financial performance 14