Unsubstantiated claims, gaps in data and inaccurate figures are common in many corporate social responsibility (CSR) reports, according to researchers at the University of Leeds and Euromed Management School.
The study, due to be released early next year by the Sustainability Research Institute, analysed more than 4,000 CSR reports, rankings and surveys published worldwide over the past 10 years. Of the 443 EU-based companies featuring in the FTSE All World Index between 2005 and 2009, the research found that fewer than one in six reported greenhouse-gas emissions from all their activities, while others did not clarify which activities their data referred to.
“Some examples show that the quality of environmental data in sustainability reports remains appalling at times, even today,” commented Dr Ralf Barkemeyer, a lecturer in CSR at the University of Leeds and one of the authors of the forthcoming report. “In financial reporting, leaving out an undisclosed part of the company in the calculation of profits would be a scandal. In sustainability reporting, however, it is common practice.”
UK telecoms giant BT, a frequent winner of CSR reporting accolades, was found, in its 2007 sustainability report, to have attributed 9.8% of its international waste arisings to a handful of office workers in Belgium. BT also reported that its southeast Asian and Australian workforce did not consume any water at all. In a statement, BT described environmental reporting as a new and evolving science, and one that is especially complex when it comes to trying to standardise measurement and reporting across dozens of countries. The firm also said it is always looking to do things better.
The research also found that Italian energy company Enel reported in 2009 that its emissions amounted to 122,089 million tonnes, equivalent to four times global emissions, and Swiss firm ABB overstated its sulphur oxide and nitrogen oxide emissions by a factor of 1,000 from 2003 to 2005.
The research results come as KPMG announced that 64% of the largest 100 companies in 34 major countries are now reporting corporate responsibility activity, with every company in the FTSE 100 publishing a CSR report for the first time in 2010/11, making the UK the “leader” for non-financial disclosure.
But Barkemeyer said rankings such as the KPMG one tend to largely focus on whether or not companies report, not what they report.
“Very few criteria applied in CSR ratings relate to the actual impact of corporate activity on the environment and society. Companies get points for knowing where they want to go. But nobody seems to check whether this is where they are heading. Aspiration replaces performance,” commented Barkemeyer.
