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With the annual CSR reporting season nearly upon us, now is an appropriate time to ask where social and sustainability reporting is heading.
The World Bank’s first sustainability review, reported on page one, shows that this is no longer a niche activity. A new report from the Danish life sciences company Novo Nordisk, published last month, provides a glimpse into the future of a rapidly, if unevenly maturing, field. Novo’s contribution, which takes the form of a triple bottom line Annual Report, is likely to make the field still more uneven, for it further widens the gap between the serious reporters and the less committed. Last year, the company won the Association of Chartered Certified Accountants’ European Sustainability Reporting Awards, and this year’s report marks a further advance.
Novo’s latest effort neatly illustrates the paradox which lies at the heart of non-financial reporting. Reports need to be frank and honest: but no board in its right mind will sign off a document which does not present the company in anything but the best possible light. This explains, of course, why so many non-financial reports are full of puff. Novo, however, has something to say, and has had plenty of time to work out how to say it, having first become sensitized to reputational risk in the 1970s, when its sales in the US took a hammering following allegations (later successfully challenged) that enzymes in detergents cause allergies. The US is now the company’s single most important growth market.
To avoid puff, Novo has subjected the contents of its report to a materiality test, devised not by itself but by an independent third party, the UK-based assurance body Accountability. This has helped it decide what, and what not, to include, concentrating the minds of the report writers. As a further guard against information of doubtful import, the company has used external assurers (in this case PricewaterhouseCoopers) to check that the non-financial matters included are indeed material. In other words, outsiders have carried out not just a factual check, but a reality check too.
Novo is not perfect. There could have been more on the company’s lobbying, and its efforts to bring its health products and services to poor communities, although addressed, could perhaps have been covered more fully. But the way its Annual Report lays bare the interactions between corporate financial and non-financial performance in itself helps to demonstrate the business case. In a field where cynicism is so often the order of the day, that alone is no mean achievement. And at the very least, it helps to give a face to an otherwise fairly faceless pharmaceuticals company.
The World Bank’s first sustainability review, reported on page one, shows that this is no longer a niche activity. A new report from the Danish life sciences company Novo Nordisk, published last month, provides a glimpse into the future of a rapidly, if unevenly maturing, field. Novo’s contribution, which takes the form of a triple bottom line Annual Report, is likely to make the field still more uneven, for it further widens the gap between the serious reporters and the less committed. Last year, the company won the Association of Chartered Certified Accountants’ European Sustainability Reporting Awards, and this year’s report marks a further advance.
Novo’s latest effort neatly illustrates the paradox which lies at the heart of non-financial reporting. Reports need to be frank and honest: but no board in its right mind will sign off a document which does not present the company in anything but the best possible light. This explains, of course, why so many non-financial reports are full of puff. Novo, however, has something to say, and has had plenty of time to work out how to say it, having first become sensitized to reputational risk in the 1970s, when its sales in the US took a hammering following allegations (later successfully challenged) that enzymes in detergents cause allergies. The US is now the company’s single most important growth market.
To avoid puff, Novo has subjected the contents of its report to a materiality test, devised not by itself but by an independent third party, the UK-based assurance body Accountability. This has helped it decide what, and what not, to include, concentrating the minds of the report writers. As a further guard against information of doubtful import, the company has used external assurers (in this case PricewaterhouseCoopers) to check that the non-financial matters included are indeed material. In other words, outsiders have carried out not just a factual check, but a reality check too.
Novo is not perfect. There could have been more on the company’s lobbying, and its efforts to bring its health products and services to poor communities, although addressed, could perhaps have been covered more fully. But the way its Annual Report lays bare the interactions between corporate financial and non-financial performance in itself helps to demonstrate the business case. In a field where cynicism is so often the order of the day, that alone is no mean achievement. And at the very least, it helps to give a face to an otherwise fairly faceless pharmaceuticals company.
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