More Company Boards Talk Corporate Responsibility
Wednesday, 23rd April 2014 at 11:43 am
Corporate Responsibility is of far greater interest in Australian company boardrooms than it was 10 years ago, the latest annual Corporate Responsibility Index has revealed.
Releasing the 2014 Corporate Responsibility (CR) Index, its creator Business in the Community (BITC) said that during the past decade Boards had been paying much more attention to non-financial issues that were material to their business.
In 2004, only 65 per cent of the companies studied regularly discussed CR issues at board meetings. This has now risen to 98 per cent. While 83 per cent have a CR committee, which gives recommendations to the board, only a third of companies reported that their board has formally reviewed and approved specific actions and discussed progress of key CR issues.
The CR Index is one of world’s leading voluntary benchmarks of corporate responsibility, allowing businesses to benchmark against competitors and transparently communicate progress to all stakeholders.
BITC says it raised the bar in this year’s CR rating by changing the previous bronze, silver, gold and platinum rankings to a tougher five-star rating system. It says the new system is aimed at stretching companies to drive change within their business and to reflect the complexity of integrating sustainability into core business strategy.
BITC’s Chief Executive Stephen Howard said that even though none of the 98 companies that participated this year earned a five-star rating, they were still making real progress to integrate CR throughout their operations.
“We know that companies are increasingly discussing CR at board level, transforming company culture through embedding CR into training, and unlocking innovative products and services by looking ahead to the long-term challenges and opportunities of responsible business,” Howard said.
“Crucially, this shift is being driven by a tranche of responsible leaders that understand the new contract now required between business and society to drive change,” he said.
The 2014 CR Index revealed six key trends among those companies that are leading the way in corporate responsibility. The research found that:
top performers had a board and senior managers with a sustainability mindset;
were linking sustainability progress with remuneration;
had strong stakeholder engagement on sustainability;
evaluated the economic benefit of corporate responsibility;
were analysing sustainability mega trends and their associated risks and opportunities; and
were looking at sustainably products and services as a long term investment.
Of the companies that took part in the CR Index, 27 were global companies with operations in Australia and New Zealand (A&NZ), but only 10 of these included their A&NZ operations in the scope of their submission.
Alan Dayeh from the Net Balance Foundation, which manages the CR Index in Australia, said the lack of A&NZ participation was of concern.
“The BITC CR Index offers companies the opportunity to identify gaps for improvement while reinforcing good practice, track their progress, benchmark against their peers and engage with stakeholders,” Dayeh said.
He said it was one of the few benchmarks that takes a holistic approach to assessing CR performance by looking at how companies were driving shared value opportunities to contribute to addressing the world’s societal and environmental challenges.
“While there are many investor-led indexes, a public, transparent and non-commercial benchmark is invaluable for the broadest set of stakeholders and we believe Australian companies would benefit greatly from participation,” Dayeh said.
The CR Index is based on an online survey with companies following a self-assessment process intended to help them identify the strengths in their management and performance, as well as the gaps where future progress can be made.
The CR Index is evidence based where participants are asked to provide relevant evidence as part of their submission which is validated by BITC’s expert reviewers.
The 2014 CR Index scores participating companies against the following areas of responsible business: Corporate Strategy, Integration, Management, Performance and Impact. This year 98 companies participated publicly and more companies participated privately.
The full CR Index is available here.