Academic study finds flaws in corporate CSR reporting

Survey of 4,000 companies finds mistakes and omissions

A forthcoming academic study of 4,000 corporate social responsibility reports has shown that leading companies are publishing inaccurate statistics and omitting vital information in their CSR reports.
The research was conducted by the Sustainability Research Institute at the UK’s Leeds University and the Euromed Management School based in Marseille, France. It found “irrelevant data, unsubstantiated claims, gaps in data and inaccurate figures”.
“The quality of environmental data in sustainability reports remains appalling at times, even today,” said Leeds CSR lecturer Dr Ralf Barkemeyer. “In financial reporting to leave out an undisclosed part of the company in the calculation of profits would be a scandal. In sustainability reporting it is common practice.”

“How can stakeholders assess or compare performance without exactly knowing what the data actually covers?”

The study will show that out of 443 European Union companies featuring in the FTSE All World Index between 2005 and 2009, fewer than one in six reported greenhouse gas emissions that covered all corporate activities, while others did not say which activities their data referred to.Barkemeyer said CSR rankings, ratings and surveys tend to focus on the question of whether companies report – not what they report. He said: “Very few criteria applied in CSR ratings relate to the actual impact of corporate activity on the environment and society. Instead, aspects such as the existence of a strategy or the implementation of environmental management systems or policy formulation take centre-stage in the identification of ‘best practice’.

Companies mentioned in the report include BT, Volkswagen and E.ON, Enel, BP, Ford and ABB.
The researchers said the Global Reporting Initiative has helped to improve the quality and comparability of reporting. “However,” they said, “it is not legally binding, often misused and poorly implemented.”

Less than one out of every six firms reported greenhouse gases for all their operations and many more did not clarify which activities were covered.
Barkemeyer said improvements should come from more scrutiny of CSR reports. He said firms should follow the example of extractives group BHP Billiton, which gets KPMG to sign off its reported emissions.