Integrating Sustainability Indicators for CSR

Corporate social responsibility has been defined by the World Business Council for Sustainable Development as ‘the continuing commitment by businesses to behave ethically and contribute to economic development while improving the quality of life of the workforce and their families as well as of the local community and society at large.’ There are five possible themes for corporate social responsibility which include: (1) human rights; (2) worker rights; (3) environmental impact; (4) community involvement; and (5) stakeholder relations and monitoring. For an individual company, this means the integration of social (including human rights), environmental and economic concerns into that company’s values and culture. These values are reflected in the company’s policies, strategies, decision making and its operations.

Components of CSR
Corporate Governance: Good corporate governance policy enables the company to realise its corporate objectives, protect its shareholder rights, meet the legal requirements and create transparency for all its stakeholders.

Business Ethics: This means transferring the core value of the company such as honesty, trust, respect and fairness into its policies, practices, and decision making. This also involves a company’s compliance with legal standards and adherence to internal rules and regulations.

Workplace and Labour Relations: Good CSR practices relating to workplace and labour relations can help improve the workplace in terms of health and safety, and employee relations. It includes a better human resource policy of the company to retain its staff for longer periods of time.

Good Practices: An equal opportunity employer and diversity of workforce includes people with disability, people from the local community, etc. A well - thought out gender policy, code of conduct/guidelines on prevention of sexual harassment at workplace, prevention of HIV/AIDS at workplace, employee volunteering, etc., are some of the practices that reflect a company’s CSR practices.

Supply Chain: The supply chain includes social, environment and human rights. A company should use its strategic position to influence the entire supply chain to positively impact the stakeholders.

Environment: CSR also ensures that the company delivers environmental benefits. This includes finding sustainable solutions for natural resources, reducing adverse impacts on the environment, reducing environment-risky pollutants/emissions as well as producing environment-friendly goods.

Community: The community is a major stakeholder of the company. There may be direct interaction with the community or it may be the communities living in the neighboring areas. This helps in delivering a community focused CSR strategy - making positive changes to the lives of the people and improving the brand image of the company. Involvement with the community could be both direct and indirect, through funding and other support for community projects implemented by local agencies.

Need for Integrating Sustainability indicators for CSR
Nowadays, CSR is evolving beyond philanthropy and it has more to do with the social obligation of the company. With its extending role in the future, more and more companies as well as governments and civil societies will assess the social return on investment that companies make, both locally and globally. This may involve, for example, local enterprise initiatives linked to the supply chain; pre-employment training; local human and institutional capacity building; or designing infrastructure – like roads or water supplies – to ensure benefits are reaching to the local people.

Earlier, the role of CSR was restricted to ‘service functions’, viz., delivery of services such as education, health and housing. Now, CSR includes other community processes such as providing assistance for local level livelihoods to the community based groups, ensuring effective local level governance system for better delivery of services and assisting communities to access their rights and entitlements.
 
With the change of time, more and more companies are encouraging and involving their employees in the numerous social activities as a result of a revolutionary change in the attitude of the corporate sector towards the communities they are operating in and an increasing awareness of the companies about the need of ecological sustainability. There is also a growing desire to establish a strategic relationship with the state by showing their commitment towards the communities by creating a positive image amongst the people. Thus, the company may earn special respect amongst its stakeholders and, in many cases, also attract social investments.

These days, CSR is not limited to ‘feel-good’, voluntary and charitable efforts. In many companies, CSR functions are based within the human resources or public relations departments. Companies that commit themselves to developing a comprehensive CSR strategy can expect benefits from a number of possible positive outcomes, like enhanced brand value, improved customer loyalty, facilitating business in sensitive environments by getting informal social license, and developing more employee satisfaction.

Benefits of Sustainability Reporting
There are several benefits accruing from sustainability reporting. This strategy:

• Provides continued tracking and improved performance. It is easier to assess sustainability performance with respect to laws, norms, codes, performance standards, and voluntary initiatives
• Provides the ability to compare an organisation’s activities and process over a period of time by establishing a quantified baseline of performance in terms of economic, social and environmental sustainability
• Generates a sustainability discussion, which helps to create a greater awareness of the organisation’s impacts
• Identifies and evaluates the consistencies between an organisation’s objectives’ policies, programme activities and internal procedures
• Improves accountability of the staff members or investors on the performance of the company
• Enhances the reputation and relationship with investors through increased transparency and operational funds
• Helps in risk management practices and integrates them transparently in the day-to-day management
• Provides a focal point for the organisation’s staff, thus motivating and uniting them on the issues of reducing environmental footprint and sustainability in general

Sustainable Reporting Tools for CSR

The different possible tools for CSR include:
• The Baldrige performance excellence criteria is a framework that any organisation can use to improve its overall performance. The different categories include leadership, strategic planning, customer and market focus, information and analysis, human resource, process management and business results.
• ISO 14000 series which mainly focuses on effective environment management.
• Total Quality Environmental Management – The Primer. This short manual shows how to use the classic TQM tools such as process maps, run charts and cause and effect diagrams to improve EHS performance. Most of the GEMI companies claim to use this approach in EHS.
• Sustainable Balanced Scorecard is a concept popularised by a group of European researchers and industrialists. This is a simpler version of the Baldrige performance system.
• Accountability’s AA1000 standard, based on John Elkington’s triple bottom line (TBL standard) reporting, is aimed at supporting organizational learnings, performance and progress towards sustainable development by improving the quality of social and ethical accounting, auditing and reporting.
• Social Accountability International’s SA8000 standard is used by some corporate to focus on specific issues such as human rights.
• The Environmental Sustainability Index (ESI) also provides a useful source of data. ESI is a measure of overall progress towards environmental sustainability.
• Global Reporting Initiatives (G3 Guidelines) is a sustainable reporting guideline which reports on the economic, social and environmental performance (both negative and positive) and contains general and sector specific content which has been agreed upon by a wide range of stakeholders.

Economic Indicators Measuring Sustainability in CSR 1(Footnotes)

General issues:
• Develop financial planning processes that include budgeting and forecasting
• Budget for a surplus to ensure sustainability of the organization's services, which is essential for good governance
• Business/revenue generation

Possible Indicators:
• Flow of capital among different stakeholders
• Main economic impacts of the organisation throughout society
• Investment for humanitarian causes
• Reporting on the funds generated from donations other community investments
• Development and impact of infrastructure investments and services provided for public benefit through commercial, in kind or pro bono engagement

Environmental Indicators Measuring Sustainability in CSR

General issues:
• Monitor energy use associated with running the organisation’s sites
• Implement strategies to reduce energy consumption. This would include energy efficient features
• Waste minimisation
• Compliance with local legislative requirements
• Encourage the use of email and teleconferencing, provide access to such tools and training for staff
• Encourage the use of train travel and minimise air travel in a way that still allows the organisation to achieve its goals
• Engage proactively with the organisation’s suppliers to increase the purchase of goods and services that have been produced using sustainable practices
• Procurement, use, recycling and/or disposal of products such as paper, office supplies and equipment
• Brief and encourage the staff on how to reduce energy use

Indicators used:
• Total greenhouse gas emissions (CO2 metric tonnes), (CO2 metric tonnes)
• Direct and indirect energy consumption by primary energy sources
• Total water withdrawal sources
• Total water discharge by quality and destination
• Location and size of land owned, leased, managed in, or adjacent to, protected areas and areas of high biodiversity value outside protected areas
• Habitat protected and restored
• Systems for renewal energy, reduction of the use of non-renewable resources, conserving the ecosystem and biodiversity, water management and controlling atmospheric emissions
• Initiatives to mitigate environmental impacts of products and services and extent of impact mitigation - forest areas, landscape, freshwater and wetland ecosystems
• Reporting on impacts and mitigation

Social Indicators Measuring Sustainability in CSR

General issues:
• Ensuring that those closely engaged in the organisation’s activities come from a diverse array of geographic and cultural backgrounds
• Providing a safe and healthy working environment that supports individual development, team working, positive work – life balance, and job satisfaction
• Ethical policies and systems determine how the organisation works with the corporate sector
• Retaining staff
• Donation of staff time to community projects (on a voluntary basis)
• Human rights - investment and procurement processes, non discrimination, freedom of association and collective bargaining, child labour, forced labour and indigenous rights

Indicators used:
• Ratio of highest to lowest wage
• Gender diversity of staff
   1. Overall administrative, accounting and technical services
   2. Research and reporting services
   3. Corporate management and programme directors
   4. Boards of Directors
• International diversity of staff
• Ethnic diversity of staff
• Turnover of staff
• Days lost to injuries
• Policies to protect human rights and action reporting
• At the community level:
– Investment on the number and types of community welfare programmes (health, education, counseling centers, etc.), innovation
– Community participation – contingency planning measurement, disaster management, community as a shareholder of the company
– Rehabilitation and resettlement policy
– Impact assessment on the number and type of community asset built, increased livelihoods option, approach to manage the impact of involuntary displacement
– Human rights, child labour and worker’s exploitation.  q   

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