Australian corporate social responsibility reports are little better than window dressing

Despite increasing visibility of corporate social responsibility (CSR) initiatives over the last decade, real change in corporate behaviour has tended to be modest.

This is clear from the sections in financial reports from Australian companies listed on the stock exchange that cover social and environmental initiatives. For example, only a fraction of Australian firms report transparently, using suggested guidelines when publishing annual reports. Instead, there are carefully tailored public relations documents, fancy media campaigns, and glossy reports that showcase the firm’s social good deeds. This weighting of image over substance, and spin over objectivity, leaves us questioning whether social initiatives today are simply window dressing.

According to the longest running study of CSR by the Australian Centre for Corporate Social Responsibility, Australians believe that progress in CSR has remained slow and insufficient over the last decade. The same study reports that compared to ten years ago, today there is at least an awareness of CSR.

It seems the majority of Australian businesses are just aware rather than truly integrating CSR into what they do. For example, although Qantas focuses increasingly on addressing its approach to and role in global sustainability, the balance of its latest annual reporting on sustainability in 2016 seems predominantly about the emerging possibilities for Qantas, rather than reducing damage to the environment caused by the company’s CO2 emissions.

Similarly, BHP states in its latest annual report that:

“Sustainability is core to our business strategy and integrated into our decision-making. It helps us live our charter values of putting health and safety first, being environmentally responsible and supporting our host communities”.

However, the same report also informs about five fatalities and two significant community incidents in 2015 alone, as well as the disastrous Samarco tailings dam collapse in Brazil. It seems that the company is all talk and no strategic action.

Another example is ANZ bank, which sets its yearly and half-yearly sustainability targets in a separate sustainability report. But, while the bank’s 2016 report shows that the organisation wants to improve its sustainability deeds, targets like “improving customer satisfaction ranking” are what the organisation should be striving for anyway in order to achieve its yearly profit.

In getting companies to do better, there are various motivations. This could come from increasing regulations, class action lawsuits, and social movements holding firms accountable not just for their misdeeds, but their very existence. An example of such jurisdictions is South Australia’s “Punters Tax” where 15% of South Australians’ losses will be payable in tax by online betting agencies, in part to assist with gambling addiction. We expect other jurisdictions to follow with similar taxes.

However good initiatives should also be encouraged and promoted. Working with communities to proactively mitigate the potentially damaging consequences of business activities can create significant long-term benefits for generations to come. For example, Fortescue Metal’s commitment to training and employing indigenous workers could change the lives of thousands of young people in the Pilbara.

Judging from the CSR reports of Australian companies above, businesses here seem to have at least understood in the last decade that the social and natural environments within which they reside are intertwined with their own existence. But, as there is no national standard on exactly how deep CSR must be entrenched in Australian companies’ strategies, the approach by even the largest firms towards CSR remains operational at best.

If firms truly want to incorporate CSR into their long-term strategy, then this is where CSR needs to sit right in the heart of the firm. Every action that follows, every move the firm does will then simply be a way of communicating this central cause.