Howlers and omissions exposed in world of corporate social responsibility

Study points to slapdash fact and figure checking in companies

guardian.co.uk, Juliette Jowit, Thursday 24 November 2011

Two companies both managed to excise, completely legally, a huge
coal plant from their pollution record. Photograph: John Giles/PA

Environment reports by some of the world's biggest companies are routinely including wrong statistics and leaving out vital information, according to the most comprehensive study yet carried out.

The examination of more than 4,000 corporate social responsibility (CSR) reports and company surveys by a team at Leeds University found "irrelevant data, unsubstantiated claims, gaps in data and inaccurate figures" – a finding that will cast serious doubt over the burgeoning sector.

Among the most colourful mistakes and omissions made by some of the world's biggest corporations were a company whose carbon footprint was four times that for the whole world, and a carmaker and power group which both, entirely legally, managed to excise a huge coal plant from their pollution record.

More regular problems included companies ignoring data from individual countries or subsidiaries in their group – including many in China and Brazil – two of the world's biggest economies

Failing to collect or ignoring data from multiple sources was so endemic that BT, which has won awards for its CSR reporting, highlighted zero energy and water use, waste and transport for many of its international operations in 2007; the following year the company did not claim they were zero but left more than half the table blank. In total, fewer than one in six of the companies surveyed reported greenhouse gases for all their operations, said the academics, and many more did not make it clear which activities were covered.

The Leeds study, carried out jointly with Euromed Management School in Marseille, France, comes just weeks after a major report by the consultancy and accountants KPMG, who found nearly two-thirds of the biggest companies in the 34 countries they studied were producing CSR reports, and that Britain was leading the world with a 100% reporting rate.

Previous studies of CSR have also praised some of the world's most reviled companies, raising doubts over the value of the practice.

"The quality of environmental data in sustainability reports remains appalling at times, even today," said Dr Ralf Barkemeyer, a lecturer in CSR at Leeds and one of the team leaders. "In financial reporting to leave out an undisclosed part of the company in the calculation of profits would be a scandal. In sustainability reporting it is common practice.

"Put provocatively, 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."

Although some of the howlers were clearly mistakes rather than attempts to distort the picture, they were wrong by such enormous factors, and sometimes for several years in a row, that it suggested they were not being read properly or taken seriously by staff inside the company, said Barkemeyer. In one example, power group ABB over-reported sulphur emissions by a factor of 1,000 by using kilotonnes instead of tonnes, for three years in a row. In another, relevant staff at a large Swedish group did not even know that it owned a paper and pulp business until the researchers pointed it out that it was the subsidiary of an acquisition.

Although the quality of reporting has improved over the 10 years or so that CSR has become commonplace, and even the period studied from 2005-2009, many problems still remain, even with the high profile issue of reporting carbon emissions, said Barkemeyer. For example, a forthcoming study of this specific issue has found "every second company has major problems".

Tom Woollard, of consultants Environmental Resources Management, said, however, that CSR reporting had also helped many companies make significant improvements, including wider issues such as staff and contractor health and safety, because publishing data forced them to address problems, and in some cases they only discovered where problems were at their worst when they collected the data. "Public EHS [environment health and safety] reporting has driven a remarkable level of transparency and performance improvement over a wide range of issues in a relatively short time," said Woollard. "Our experience of working with some of the world largest multinationals is to put more effort into achieving fewer targets – only then can you achieve a real step change in performance."

Barkemeyer said improvements should come from more public scrutiny and companies should follow the lead of mining group BHP Billiton, which asked KPMG to check and sign off its reported emissions "We pretend it's better when it's voluntary [as are the commonly used Global Reporting Initiative standards for CSR] because companies can respond more quickly, but in some cases they don't make any effort and if we don't make an effort in terms of scrutiny who can blame them," he added.

In a statement, BT said: "As the research from Leeds University highlights, this is 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. International data collection is far more complex than it is in the UK and, in some countries, the data is just not available. In those instances where reliable data isn't available a zero appears in the report. We will review the points highlighted and, where necessary, look to update our CSR reporting in coming years."

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   (Photo: RNW)