December 10, 2021 By IBM Envizi 5 min read

Organizations are increasingly required and expected to report on performance metrics that extend beyond their financial performance. Corporate Social Responsibility reporting, or CSR reporting, is one approach which provides corporate transparency to key stakeholders on an organization’s social and environmental performance.

In this article, we will examine CSR reporting in more detail, as well as the importance of using specialist software to capture CSR data and measure performance.

What is CSR reporting?

CSR reporting is the practice of reporting an organization’s performance of non-financial metrics, providing transparency on the organization’s impact on society and the environment. Typically released on an annual basis, CSR performance reporting is voluntary. However, some jurisdictions mandate large organizations to disclose their social and environmental performance, assisting investors and consumers to assess the organization’s non-financial impacts.

Historically the focus of the CSR report was squarely on social metrics, but these reports have grown to encompass other, non-financial, measures of success. In recent times, the term CSR reporting has been used interchangeably with the term ESG (Environmental Social and Governance) reporting.

The history of CSR reporting

Evidence showing organizations’ concern for society and their employees’ wellbeing and working conditions can be found as far back as the 1800s, during the Industrial Revolution. Philanthropy was also on the rise during this time, and it was not uncommon for industrialists and entrepreneurs to make donations to educational or scientific causes.

Modern CSR reporting can be traced back to 1953 when the term was officially coined by the American economist, Howard Bowen. In the 1970s, the popularity of CSR reporting began to take hold, and by the 1980s, many companies were using CSR reports to showcase their social responsibility, bolster their brand reputation, and respond to stakeholders.

Once a seldom-used approach within some organizations, CSR is now a widely practiced form of self-regulation across organizations of all sizes and is often led by an appointed CSR Manager.

Reporting frameworks that support CSR reporting

Several reporting frameworks exist to support CSR reporting, depending on whether the organization wants to focus on their greenhouse gas (GHG) emissions, economic performance or social impact. Three CSR reporting frameworks that are consistently rated highly by investors are the Carbon Disclosure Project (CDP), the Dow Jones Sustainability Index (DJSI) and the Global Reporting Initiative (GRI).

There are similarities and differences between these frameworks. The CDP focuses on GHG data, water and supply chain performance, to help organizations protect natural resources and mitigate climate change. Meanwhile, the GRI is more focused on the social, environmental and economic impact of organizations on their stakeholders.

These frameworks are publicly available and allow comparisons to be drawn between organizations—whereas the DJSI is by invitation only, and the results are not made public. The DJSI is used primarily by stakeholders looking to jointly assess an organization’s ESG data and financial performance.

CSR reporting software

Whichever CSR framework you choose, software such as IBM Envizi will help optimize the process of creating your report. By automating reliable data capture and consolidating it into a single system, sustainability software makes it easier for you to draft, create and publish CSR reports, in collaboration with your team.

The software will assist you in capturing CSR metrics, calculating your organization’s GHG emissions and creating auditable reports that comply with industry regulations and best practices. We strongly recommend this to save you time, money and effort during the complex process of CSR reporting. And indeed, CSR performance improvements such as this software can also go beyond reporting to support the setting of CSR targets and the tracking of performance initiative outcomes.

Reporting standards

Requirements for CSR differ between geographical regions, and there are few, if any, widely agreed-upon standards, meaning that the content, length and style of CSR reports can vary widely between organizations. This can be viewed as a positive by some organizations, as it affords them the flexibility to design and brand their reports as they see fit.

The downside to the lack of common CSR reporting standards is that organizations can be selective over exactly what information they divulge and highlight in their reports. This can not only make it difficult to draw accurate comparisons between organizations, but can also lead to accusations of greenwashing and reputational damage.

To avoid this, organizations should aim to be as open as possible in their reporting. This includes disclosing their CSR shortcomings and areas where they need to improve, as well as their successes. The more transparent the organization, the more likely consumers are to trust that these issues really matter to the organization.

Things to consider

Good CSR performance is good business performance. Research consistently shows that CSR performance delivers real value for organizations.

CSR reports can also function as an important PR tool for organizations, giving them an opportunity to communicate their environmental initiatives, showcase their achievements and present themselves as socially responsible. In a world where investors and consumers are increasingly scrutinizing social and environmental performance, corporate social responsibility reporting and performance is an integral strategy for organizations.

Organizations must fully commit to their initiatives, and employees should be involved in the process and encouraged to make a positive impact in their day-to-day work. Any CSR commitments made by the organization should be communicated clearly, and their implementation and effectiveness must be backed up with evidence in all subsequent reports.

The future of CSR reporting

These days, reporting is increasingly being replaced by the next generation Environmental, Social and Governance (ESG) reporting. ESG reporting is more encompassing and tangible, and it is more supported by recognized ESG reporting frameworks than CSR.

ESG reporting places greater emphasis on quantifying environmental and sustainability efforts, rather than just communicating social responsibility. It measures sustainability performance against comparable metrics and sets exact targets for the future—making ESG reporting more relevant to our current situation with the climate crisis and the demand for organizations to be ethical at their core.

FAQs

What is CSR reporting?

CSR reporting stands for Corporate Social Responsibility reporting. A CSR report is an internal and external-facing document that enables organizations to evaluate their ethical, environmental, philanthropic and economic impact. It is used to communicate with stakeholders about an organization’s social and sustainability performance.

What is good CSR reporting?

A good CSR report should be detailed, transparent and flexible. It should provide a good data foundation to meet current and future reporting requirements. There should be data for all the key sustainability metrics that apply to your organization, and you should not omit data that may reflect negatively on the organization.

Good CSR reporting should encourage trust and meaningful dialogue between organizations and stakeholders. If you have multiple stakeholders who favor specific methods of reporting, it may make sense to use more than one CSR reporting framework.

What is the best framework for CSR reporting?

The best framework for CSR reporting depends on the target audience, value and purpose of the report. For example, investors looking to determine the carbon emissions or climate change mitigation of an organization might select the CDP or DJSI framework as the best choice. These public frameworks will also be ideal if your goal is to compare your data to your peers.

However, if the CSR report is aimed at stakeholders such as NGOs, suppliers, employees or customers, and it seeks to determine the social, economic or environmental impact of an organization on these stakeholders, the GRI framework might be more appropriate.

Is CSR reporting mandatory?

CSR reporting is largely voluntary, however, some jurisdictions such as Australia, Canada and the UK require large organizations and others operating within specific industries to report on their social and environmental performance. It is not currently mandatory in the US, although this may soon change. Even in countries where sustainability reporting is not mandatory, many organizations undertake voluntary CSR reporting. This can assist them with stakeholder engagement, bolster their reputation with investors and customers, and help them meet their disclosure targets.
Build your sustainability data foundation, streamline reporting and accelerate decarbonization with the IBM Envizi ESG Suite

Was this article helpful?
YesNo

More from Sustainability

AI-infused sustainability planning and forecasting with Envizi 

2 min read - As climate disclosure requirements continue to grow as part of environmental, social and governance reporting, many businesses are seeking to steer their path effectively toward meeting their emissions reduction targets. However, existing planning and forecasting tools are not well equipped to manage ESG data models.  To help address this challenge, IBM is pleased to announce the addition of enhanced planning and forecasting capability to the IBM® Envizi™ ESG Suite from 21 May 2024.   IBM Envizi’s planning and forecasting solution…

How generative AI will revolutionize supply chain 

2 min read - Unlocking the full potential of supply chain management has long been a goal for businesses that seek efficiency, resilience and sustainability. In the age of digital transformation, the integration of advanced technologies like generative artificial intelligence brings a new era of innovation and optimization. AI tools help users address queries and resolve alerts by using supply chain data, and natural language processing helps analysts access inventory, order and shipment data for decision-making.  A recent IBM Institute of Business Value study,…

Streamline CSRD disclosures with new features from IBM Envizi 

2 min read - IBM® is pleased to announce the release of more functionality for IBM Envizi™ as we continue to expand our environmental, social and governance (ESG) reporting product. The new functionality now helps organizations meet the reporting requirements of the EU Corporate Sustainability Reporting Directive (CSRD).   The CSRD mandates that companies must report disclosures and metrics set out in the European Sustainability Reporting Standards (ESRS), which involves gathering and analyzing thousands to tens of thousands of data points. ESRS questions are now embedded…

IBM Newsletters

Get our newsletters and topic updates that deliver the latest thought leadership and insights on emerging trends.
Subscribe now More newsletters