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Corporate Responsibility Reporting: Doubts, Myths & Questions

A client of mine recently shared his method for making important decisions. For everything from key business projects to personal choices of where to holiday or what car to buy, he swears by collecting the data and applying the cause-and-effect matrix beloved of Six Sigma practitioners.

For business decisions it was hard to fault. But for his personal life his revelation was greeted by mild hilarity. So why did we think it (or indeed he) was so odd? Perhaps because in our personal lives we recognise that decisions don’t always happen formally in meetings, nor are they the work of a single moment of decision, and we hardly pretend they are scientific, rational, and free of emotions.

In short, personal decisions are not transactions; they are complex and hard-to-explain processes by which we move towards our goals. (This is supported by several rich veins of research — see references below.) So, knowing this, why would we expect business decisions to be any different? Sure, a certain theater of formality surrounds the endorsement of decisions in business, but more often than not the same heady mixture of politics, intuition, routines, and, hopefully, learning surrounds their birth and implementation.

Recently I have read several interesting pieces about the future of corporate sustainability reporting (CSR). Some proclaim that CSR reporting is dead because sceptical stakeholders have grown weary of the glossy brochures, and selective information makes informed decision making impossible. Others say that integrated reporting will be our salvation because, by delivering sustainability information alongside financial data, it will lead to better and more sustainable business decisions.

In my view, both accounts miss the point: In the first case, the painstaking and detailed work carried out by sustainability practitioners to support their corporate reports is not a waste of time, but much of the value created is in the learning process of engaging internal and external stakeholders to create the output and in influencing key business processes such as product design.

In the case of integrated reports, and speaking as a lifelong standards geek, I can only support the standardization and integration agendas, but I am under no illusions that they will automatically lead to better or more sustainable business decisions. This can only be achieved when those who champion sustainability understand their own internal landscapes of decision making and can deliver the right information to the right people at the right time to influence and innovate through those key business processes.

I could have this all wrong, in which case we may all be choosing our Christmas presents this year using Six Sigma (no socks please!). But in case I’m not, and before we throw our new inheritance of detailed sustainability data out the window altogether, maybe we should look again at the way in which we bring this wealth of data to life to influence more sustainable decision making in the corporate sphere.

References:

Naturalistic Decision Making
Edited by Caroline E. Zsambok, Gary Klein
Psychology Press

The Upside of Irrationality
The Unexpected Benefits of Defying Logic at Work and at Home

By Dan Ariely
HarperCollins

6 comments on “Corporate Responsibility Reporting: Doubts, Myths & Questions

  1. Barbara Jorgensen
    November 16, 2010

    Hi Paul,

    I think the application of a standard–or at least a baseline–is always the better way to go in business decision-making. Isn't that what GAAP is for?

    I understand sustainability is more difficult to measure, but I think something is going to force the issue. In a blog post today, I talk about the misuse of the word “green” and a complete lack of parameters when it comes to using the term. I think the same is true of sustainability. If you are a public company and shareholders are trusting you with their decision-making, it's your responsibility to understand what it is you are talking about when you say “sustainability.”

     The existing data you talk about must have the makings of some kind of measurement or index. The question is, who is going to oversee the data gathering and decision making? I don't know the answer, but sustainability is such a hot topic there must be enough interested parties out there to make it work.

  2. saranyatil
    November 22, 2010

    Paul there is always a difference in decision making between personal life and professional one. sustainability is definitely a key to ensure all the reportings and decisions in corporate, six sigma will be incorporated in all decision making procedure in most of the companies to make important decisions that smart matrix will do it all.

  3. Ms. Daisy
    November 27, 2010

    Paul:

    I agree with you on the need for corporations to have a good assessment of their internal environments (strengths and weaknesses), as well as the opportunities and threats in the external environment to their survival and sustainanablity.

    No doubt that engaging the internal and external stakeholders to create outputs is very important too. I was pleased to see your inclusion of the importance of communication and delivery of right information as adjuncts to companies CSRs.

  4. eemom
    November 28, 2010

    Any standards applied to Corporate reporting at this point is a step in the right direction.  Corporations have gotten to used to telling the positive side of the story while sugar coating the negartive. I agree, however, that just the sheer existence of standardization and integration does not guarantee better sustainable decision making.  The work here is critical though and hopefully companies will continue to go through the effort in order to provide shareholders with accurate and timely information.

  5. TTT
    December 22, 2011

    face it folks the only game in town is money, csr gets dumped if the capitalists don't think its worth it.

  6. mario8a
    December 31, 2011

    I agree with this statement: In short, personal decisions are not transactions; they are complex and hard-to-explain processes by which we move towards our goals. (This is supported by several rich veins of research — see references below.) So, knowing this, why would we expect business decisions to be any different?

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