Why firms should adopt corporate sustainability reporting

In Summary

•Sustainable corporate social responsibility, which has now morphed into Corporate Social investment (CSI) demands a critical appreciation and understanding of the key issues that affect communities within which they operate and offer solutions that give them hope.

•Corporates must meaningfully engage as they direct their social investments to such issues sustainably and in line with their strategic configurations. 

Bernard Kimani.
Bernard Kimani.
Image: COURTESY

Today, in line with the best international practices organizations are required to plainly define their role and the economic, social and environmental impact caused by their operations. This is because, stakeholders who include customers, shareholders, regulators and society in general are now focused on sustainability than just profitability. This is because in this era no organization can thrive without taking into cognizance the concept of sustainable development. How you respond to the plight of the vulnerable and needy and the kind of support you offer and especially if you choose to support organizations committed to societal transformation and environmental protection and conservation, will determine the kind of image you cultivate of yourself in the eyes of the public.

Sustainable corporate social responsibility, which has now morphed into Corporate Social investment (CSI) demands a critical appreciation and understanding of the key issues that affect communities within which they operate and offer solutions that give them hope. Corporates must meaningfully engage as they direct their social investments to such issues sustainably and in line with their strategic configurations. What is your impact on education, health, infrastructure among others should be key considerations in an organization’s strategic vision. Creating a lasting positive impact on society matters more than the profits that a firm may make.

Sustainability also demands that firms should prioritize increased and high-level accountability and transparency not only with the key shareholders but the community at large. Such candidness makes it easier for an organization to appropriately, in partnership with the community and stakeholders, respond sustainably to potential environmental and health hazards associated with the business since it is much easier to communicate the impact of the business to the society, without having to justify your existence in times of a crisis.

 

As enshrined in the United Nation’s Environment Resources and Markets Unit, corporate sustainability reporting is the willingness by companies to openly report on their socio-economic and environmental impacts occasioned by their daily operations within the society they operate. The parameter helps organizations or companies measure their overall performance besides enhancing efficient resource utilization and movement towards a greener economy.

In fact, under the UN’s Sustainable Development Goals target 12.6 countries are required to facilitate and encourage companies adopt sustainable practices by integrating them in their reporting cycles. Accordingly, organizations can achieve sustainable development in Kenya is through corporate social responsibility (CSR).  CSR is a business concept that continue to inform corporate strategies today, in terms of sustainable development. Unfortunately, most organizations in Kenya are yet to appreciate the role CSR can play in fostering sustainable development objective.  Sustainable development encompasses the use of environmentally responsible and efficient operational practices that preserve environmental resources crucial for long-term business growth. In this case therefore, Corporate social responsibility, or CSR, means balancing responsible corporate citizenship and environmental responsibility to give back to the communities in which an organization operate.

Organizations thus need to operate in a way that benefits society now and in the future and this can earn favor with its publics. Conversely, ignoring expectations for responsible activities can lead to negative publicity, boycotts and general backlash from communities in which your organization operates. Organizations must operate with fairness and honesty with publics, give back to and actively participate in improving the lives of local communities. In Kenya for example, certain projects have failed to take-off or have closed out due to issues of environmental impact and lack of appreciating the inputs of the local communities in terms of development. Such challenges can be cured through a robust CSR strategy with such communities.

Furthermore, apart from achieving sustainable development, in a well-executed CSR strategy, the government becomes a secondary beneficiary to CSR as this lessens the government’s burden for responding to a wide range of issues for communities. Thus, for companies to achieve sustainable development through CSR they must plan their CSR strategies. Each organization should have a consistent strategy and specific annual budget amounts for CSR projects. CSR should be the product of a planned strategy, rather than consisting of occasional charitable activities.

To achieve sustainable development, CRS strategies should be drawn to meet publics requirements. Formulating and implementing CSR strategies should be a more proactive, rather than reactive process. Each organization must follow the cardinal rule of winning strategies. Choosing the right social responsibility strategy influences business by reducing costs and risk while maximizing profits and competitive advantage and overall increasing reputation and legitimacy and creating synergistic value.  However, it is important for corporate leadership to note that, for CSR to be employed as  a  strategic  tool,  it  must  be institutionalized  within  the  corporate  activities and processes and it must get equal  attention as to other  strategies within the organization such as,  marketing  strategy,  operation  strategy,  human  resources  strategy,  financial strategy and a host of other corporate strategies.

 

Kimani is a Communication Specialist and Certified Public Relations Analyst