Australian Corporate Social Responsibility Falls Short, According To New Research

A new Grant Thornton study has exposed a lack of corporate social responsibility (CSR) reporting amongst the ASX 300, despite a growing interest in the corporate sustainability credentials of large companies.

As the annual reporting season comes to a head, the study paints an uneven picture of current practice, with clear gaps around some of the most hotly contested areas of business activity:

Only half (52%) of Australia's largest companies have published information on their environmental performance or policies. Still fewer (28%) have provided details on action taken to reduce greenhouse gases
Around a third (36%) offer information on HR policies, including areas like maternity leave and diversity
Just 47% report on their community activities and initiatives

Peter Moloney, Director - Business Risk Services at Grant Thornton said, "Australian businesses can no longer afford to ignore the clear stakeholder demand for briefings beyond the balance sheet. Institutional investors and independent shareholders, employees, suppliers, and customers are all looking for guarantees about the overall direction of the business, and these groups will vote with their feet if they believe a firm's ethical profile isn't robust. In this climate, an ASX 300 firm which doesn't offer information on their CSR activities will soon be exposed".

Grant Thornton predicts initiatives like the 2010 carbon pollution reduction scheme will start to have a material impact on the way in which companies present and disclose their CSR activities, with firms scrambling to include relevant data in the 2008/9 wave of annual reporting.

"We know that many of these firms are doing good things behind closed doors, but there will soon be pressing requirements for companies to start officially tracking and publishing their impact on the community. Upcoming green legislation should start to create a whole new culture of disclosure, particularly around the ASX 300's exposure to emissions and carbon. The annual report is the right place to begin sharing that information, using the official shareholder publication to send a clear signal to stakeholders about a company's commitment to key social and environmental issues", said Mr Moloney.

In the UK, CSR information has already been brought into the overall corporate governance regime, with information on environmental activities now mandatory in the annual reports of quoted companies, alongside financial information.

The British Companies Act 2006 is part of a wider, global trend, where increasing numbers of firms are reporting on their ‘triple bottom-line' (People, Planet, Profit).

Mr Moloney said, "Australia now needs to catch up with the rest of the world, and recognise that CSR is no longer the domain of interest groups and companies with a social conscience - it will become a necessity rather than a choice. Those businesses adopting ethical business practices quickly and efficiently and communicating their commitment to them through comprehensive disclosure will thrive. These are the businesses that will secure the skilled workers and the contracts with the large multinationals. Those failing to act now face an uncertain future."

The 2008 Grant Thornton Corporate Governance Reporting review analysed 290 of the ASX 300's annual reports from last year, and also examined company websites and other publically available records.

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First published: 8 September 2008.
Last updated: 8 September 2008.