Prince Charles’ think-tank, A4S or “The Prince’s Accounting For Sustainability Project”, recently published an insightful new report called “Future Proofed Decision Making” critiquing the state of CSR. A4S found that firms were not “Future Proofing” rapidly enough – that is to say they were not turning CSR into a principal business activity such as finance, accounting, administration and strategic decision-making processes. A4S is interested in encouraging CSR advocates to better communicate with industry about how to understand the environment’s financial value and role in their business operations.
The report surveyed “board members and senior management” and discovered that senior staff could not articulate specific ways in which sustainability was integrated into managerial decision making. This means investment choices, fiscal analysis, expansion decisions, hiring & firing, etc; the mundane but critical decisions that actually run a business were not considered in the context of CSR. The report goes on to express concern that environmental issues continue to be relegated to a marketing or foundation-related CSR division, which is superfluous and tangential to the firm’s core business.
As a CSR advocate, this was troubling to read but also felt completely correct. CSR seems to have plateaued. More firms than ever have sustainability programs and publish assessments of their impact, but still continue to be operationally destructive with no intention of changing the way they do business. Greenwashing and similar discord is an example of a symptom that CSR not being considered as anything more than PR.
How can firms tie corporate responsibility to value throughout divisions? An example the report gives is Puma’s environmental ‘profit and loss’ statement, which analyzed the financial impact of raw materials used in Puma’s supply chain. Annual sustainability reports are a good step towards Puma-style ‘environmental accounting’, but A4S wants firms to translate the contents of CSR reports into a format that is accessible to managers, not just stakeholders. Explaining CSR in “business-friendly” language means using numbers; profit and loss statements are universally understood in business. In this way, financial statements that integrate CSR information may serve as a Rosetta Stone for CSR advocates communicating more successfully with C-level staff and board-members.
I admit that I was skeptical about A4S when I read about its founding a few years ago. However, the Future-Proof report is quite worthwhile, and the rest of its work is also notable. In Future Proof, A4S has succeeded in challenging CSR advocates to present CSR in the form of financial data that is accessible to analysts, CFOs and board members alike—a level of quantitative demand that the NGO based CSR community may have to adapt to.
Photo by By Dan Marsh