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July 24, 2015

Rankings of 2014 Corporate Social Responsibility Reports Are Published
    by Robert Kropp

Baruch College's Weissman Center for International Business analyzes corporate social responsibility reporting from the largest US and international companies, and publishes an online ranking that allows investors and other stakeholders to review the quality of CSR reports. -- Despite repeated calls from sustainable investors for corporate reporting on environmental, social and governance (ESG) factors, a 2011 analysis by the Governance & Accountability Institute found that only 19% of the S&P 500 provided such reports. Only one year later, however, 53% were doing so. And by 2014, 72% of companies listed on the S&P 500 index were publishing sustainability reports.

Now that major corporations have come around to recognizing the value of sustainability reporting, a new question arises: what is the quality of these reports we are receiving? Far too often in the recent past, corporate claims of sustainable practices have been undercut by analyses that reveal them to be nothing more than public relations greenwashing. Now that CSR reporting has become mainstream, it is time to devise metrics with which to analyze the quality of those reports.

One such effort has been launched by Baruch College's Weissman Center for International Business, whose
CSR-Sustainability Monitor, whose analysis of corporate sustainability reporting in 2014 seeks to provide a measure of the information provided in the reports. �The effectiveness of a company's corporate social responsibility reporting depends, to a large extent, on the level of credibility that the company's important stakeholders attach to it,� the report states. �That is why the CSR-Sustainability Monitor, in its screening process, also measures the degree to which the reporting company provides integrity assurance as to the accuracy and completeness of the information it is disclosing.�

The analysis in the CSR-Sustainability Monitor hits all the right notes, as a perusal of its methodology makes clear; the eleven contextual elements deployed in the analysis address all the facets of the ESG spectrum. Furthermore, nothing that a corporation proclaims in its sustainability report is worth the web page devoted to it unless those claims are subjected to independent third-party assurance. So it is most welcome that the Monitor focuses on third-party assurance as an essential part of effective corporate sustainability reporting.

Citing an ongoing discrepancy between reporting and the quality of information provided, the report observes, �stakeholders often distrust the information provided in CSR reports...only 36 percent of companies from our sample provided a formal independent integrity assurance statement for their report.�

The results for US-headquartered corporations, whose numbers far exceed those of any other nation? Five of the top 25 companies are from the US; on the other hand, 13 of the worst performing companies are from the US as well. �These two results point to significant variation in reporting practices among the US companies,� the report states. �Despite the growing number of companies reporting on their CSR practices in the major US indices, our results underline a lack of a broad consensus on disclosure content as the main driver of this disparity in reporting.�

Stakeholders now expect the same quality of reporting on ESG issues as on traditional financial metrics, the report concludes. �Companies that are issuing CSR reports can serve their own purposes better if they are more ambitious in meeting the information needs of their audiences,� it states. �The goal should be to provide comprehensive, relevant, specific, and detailed information about the company�s environmental, social, and governance issues, and have that information assured by an independent provider.�

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