CSR Reporting: The Expanding Field of Corporate Citizenship

Eight years ago, the Center for Corporate Citizenship at Boston College’s Carroll School of Management published “How to Read a Corporate Social Responsibility Report: A User’s Guide.” The publication was timely: More and more companies were beginning to file CSR reports to inform investors, employees, consumers and the general public of their social and environmental initiatives and achievements. Today, even more companies annually report on their CSR initiatives, including more than 90 percent of the 250 largest companies in the world, as demand for such disclosure grows, and despite the emergence of increasingly rigorous reporting standards.

“The release of the G4 standards from GRI continues to advance the rigor of the practice, moving from a framework to an assurable standard,” says Katherine V. Smith, executive director of the Corporate Citizenship Center at Boston College, referring to the work of the Global Reporting Initiative nonprofit in its pursuit of a sustainable global economy. “There is more competition now in reporting standards with the initiation of the International Integrated Reporting Council, the Sustainability Accounting Standards Board and others. Companies are taking the reporting practice more seriously and the data are being captured now on analyst platforms such as FactSet and Bloomberg terminals.”

To date, GRI standards are the most widely used for CSR reporting.

The ROI of CSR

Investing in CSR is more than a matter of simply doing good. Indeed, few arguments are more persuasive for green-lighting an investment than the promise of a hefty return on that investment. Researchers insist that corporate citizenship promises just such an ROI

(return on investment). By their accounts, CSR can positively impact several areas of business, including corporate image, brand reputation, stakeholder satisfaction, consumer loyalty, employee morale and engagement, recruitment and retention of top-tier employees, and financial performance.

A 2015 study conducted by IO Sustainability LLC and Babson College found that companies that fully dedicate to CSR in their long-term business strategy reap the most financial benefits. The study, titled “Project ROI: Defining the Competitive and Financial Advantages of Corporate Responsibility and Sustainability,” found that effective CSR can increase the market value of a company by 4 percent to 6 percent, and that over a 15-year period it can increase shareholder value by approximately $1.28 billion. Launched by the Campbell Soup Co. and Verizon to measure the benefits of environmental, social, and governance programs within businesses, the study also found that engaging in meaningful CSR could avoid revenue losses of up to 7 percent of a company’s market value and reduce employee flight by 50 percent.

Attracting investors is yet another return on a CSR business strategy. Craig Pearson, co-founder and CEO of Private Wealth Systems Inc., a North Carolina firm, says companies that take environmental, social and governance issues into consideration are a magnet for investment, especially among wealthy millennials. High-net-worth millennials, aware of the doing-well-by-doing-good dynamics, increasingly look at philanthropy and investment through a single lens, Pearson notes. “These investors see socially responsible investing (SRI) as a way they can use their wealth to make a positive and lasting impact on causes that are personal to them,” he adds.

In a November 2017 survey by Swell Investing, 54 percent of millennials not invested in socially responsible investing options at the time said they plan to in the future, compared with 48 percent of Gen Xers and 31 percent of baby boomers. In Morgan Stanley’s Institute for Sustainable Investing’s 2017 Sustainable Signals report, 86 percent of millennials said they are interested in SRI compared with 75 percent of the total population, and 90 percent said they want sustainable investing options as part of their 401(k) plans. Their interest in SRI is rooted both in a desire to improve the world for themselves and their descendants, and in the belief that responsible corporate behavior is good business and thus a good investment.

Behind the rise in reporting

A decade ago, sustainable business was considered niche, said Boston College’s Smith. “Today, sustainable business is table stakes. Investors, consumers and industrial customers are looking to companies to be responsible stewards of our finite natural resources and the increasingly fragile ecological systems that regulate our climate,” she said in an email exchange with The Network Journal. “Small and medium-size enterprises (SMEs) are developing CSR reports as well because they are in the supply chains of our larger companies who want to provide to their stakeholders  the traceability and accountability for the stewardship issues outlined above.”

SMEs accounted for 10 percent of the sustainability reports in GRI’s 2015 Sustainability Disclosure Database. “With SMEs serving as a key engine for job creation and economic growth, sustainability reporting is vital for both small and large organizations alike,” GRI stated.

According to the Governance & Accountability Institute, a sustainability consulting firm headquartered in New York City, sustainability reporting rose from just 20 percent of the companies in the S&P 500 index reporting in 2011 to 85 percent in 2017. “One of the most powerful driving forces behind the rise in reporting is an increasing demand from all categories of investors for material, relevant, comparable, accurate and actionable ESG disclosure from companies they invest in,” says Louis Coppola, the institute’s co-founder and executive vice president. “Mainstream investors constantly searching for larger returns have come to the conclusion that a company that considers their material environmental, social and governance [ESG] opportunities, and risks in their longterm strategies will outperform and outcompete those firms that do not. It’s just a matter now of following the money.”

What CSR reporting entails and how to do it right is the subject of one of many CSR  certificate courses that Boston College’s Center for Corporate Citizenship offers. “With investors’ interest in sustainable investing continuing to rise, it is important for companies to communicate their ESG stories to analysts and investors,” Hilary Irby, co-head of the Global Sustainable Finance group at Morgan Stanley, said when the firm’s Institute for Sustainable Investing last year released a report analyzing the communications disconnect between the environmental, social and governance (ESG) information investors seek and what companies provide.

“Euromoney” named Morgan Stanley North America’s Best Bank for CSR in 2017.

Reporting trends

Some of the world’s largest companies now align their corporate responsibility activity with the goals of the United Nations 2030 Agenda for Sustainable Development, a roadmap for creating an environmentally sound, socially fair and economically prosper prosperous world. At the heart of this agenda is the Sustainable Development Goals, or SDGs — 17 priority objectives comprising 169 specific targets to be reached by 2030. The Business &

Sustainable Development Commission, an international consortium of business, finance, civil society, labor and international organizations that was set up to make the business case for the SDGs, reported that reaching the SDGs would open up $12 trillion in market opportunities in just four economic systems: food and agriculture; cities; energy and materials; and health and well-being.

Alignment with the SDGs is one of four major trends within CSR reporting covered by  KPMG’s Survey of Corporate Responsibility Reporting 2017. The other three are reporting on climate-related financial risk; reporting on the U.N. Sustainable Development Goals; reporting on human rights; and reporting on targets to cut carbon emissions. At 31 percent, the largest U.S. companies trail their European and Japanese counterparts when it comes to aligning corporate responsibility activity to the U.N. goals, the survey shows. Among the world’s 250 largest companies, European companies (German, 83 percent of companies; French, 63 percent; and British, 60 percent) lead the way in making that link, followed by Japanese companies with 46 percent of their largest companies.

Growth in CSR


Citing its own research over the past seven years, the Governance and Accountability Institute says corporate reporting on sustainability — including  environmental, social and governance (ESG) performance and achievements — continues to be a consistent, reliable standard for the largest and most influential companies in the U.S. capital markets. Below are the results of the institute’s annual monitoring and analysis of sustainability reporting in the S&P 500 Index®.


2017               85

2016               82

2015               81

2014               65

2013               72

2012               53

2011              -20


(Source: Governance & Accountability Institute Inc.)