This is the first of a series of observations I’ve shared with companies after analyzing their Corporate Social Responsibility (CSR) reports. Though not new, the number of companies committing to publicly report their goals and progress of socially responsible projects is on the rise. Several companies last year, including the Kellogg Company and Bacardi Limited, offered contact information to provide feedback to their CSR reports. The request for feedback is one way to walk the walk of CSR; by welcoming responses from stakeholders, these companies are embracing the spirit of CSR and improving annually based on real suggestions by those that matter most to their business. In my review of several CSR reports, a few areas jumped out as common opportunities for improvement.
This first post is centered on two main tenets:
- Integrated Reporting: Connecting Business Strategy & Corporate Social Responsibility Reporting
- Sustainable Agriculture
Many current CSR reports provide very thorough evidence of the work going in to corporate responsibility and sustainability. However, I feel reports could be even stronger if they took an approach towards reporting that better highlights the efforts to align business metrics and executive incentives with corporate responsibility and sustainability. Although there are often statements in CSR reports that provide splashes of isolated efforts in that direction, they don’t provide a holistic and coordinated effort toward integrated reporting. Consumers and stakeholders in general find CSR reports more effective when each section of the report is tied back to the identified business goals. Corporate responsibility and sustainability are increasingly being integrated into the bottom line; instead of operating as separate components of business strategy, they are a fundamental block of achieving long term business success.
There are opportunities to pair some quantitative figures with relative financial information. Here are a few examples:
- How do compliance fees compare to the investment in the research and marketing to properly comply?
- What are the quantitative differences in sales of products with various health labels, and is there motivation to invest more in those products?
Major companies like Mars, Bacardi Limited, and Campbell’s are using their CSR reports to tout their efforts to connect with their suppliers on sustainable agricultural practices. I commend the efforts to use data collection and analysis to communicate and spread best practices on sustainable agriculture through the industry. Investing in agriculture analysis will prove beneficial in connecting with the entire value chain and putting hard data behind product claims and marketing. There is potential to build upon this work by adopting a solution that embraces grower relationship management with integrated tracking of supplier contracts. Cloud solutions, like FoodLogiQ’s GRM, have proven to be easy to use for growers, at a lower cost. They also enable integration with core ERP systems, connecting sustainability metrics and agricultural operations from vendors and growers to the consumer-facing business. This “final mile” of supply chain integration to the growers can yield substantial supply chain benefits as well as improve yield per acre while minimizing agricultural inputs for the growers.
Questions to consider:
- What are your efforts beyond the government’s one-up one-back supply chain traceability requirements?
- Do you have any initiatives in place that allow you to integrate your agricultural operations to your main business by providing total grower relationship management?
- Do you capture and electronically store full sustainability data of all growers of your agricultural raw materials? This includes energy, chemical usage, and water usage, as manufacturers have significant influence on this tremendous environmental challenge.
- Have you considered partnering with global non-profit organizations such as CARE for critical agricultural ingredients to improve impoverished subsistence farming in poor countries while ensuring a cost-effective and reliable source of supply?
My next post will center on benchmarking, making note of year over year progress, and transparency, and engaging stakeholders At Clarkston, we focus on partnering with businesses in the consumer products industry to realize their competitive advantages and create value. Amongst other key areas, we support the efforts of CPG companies in their measurement and transparent reporting of corporate responsibility initiatives. Clarkston recognizes and admires the efforts of companies to proactively address corporate responsibility across all meanings of the words.
Read the next blog in this series: A Review of Today’s Corporate Social Reporting: Benchmarks and Stakeholder Engagement.