Thursday 27th October 2016                 Change text size:

Poor fact checking in corporate social responsibility exposed

Poor fact checking in corporate social responsibility exposed

Although corporate responsibility reporting may be at its highest ever, research from the University of Leeds shows that these reports may be routinely wrong. Charlotte Reid has more.

UK companies who are making bold claims about their environmental achievements are using incorrect data, according to a study from researchers from the University of Leeds and Euromed Management School.

Their research is casting doubt on corporate social responsibility reports released by companies that look at the whole performance of a business, including their environmental and ethical acts, as well as their finances.

The researchers analysed more than 4,000 corporate social responsibility reports published by companies over the past 10 years. Their results found that the company reports included unsubstantiated claims, inaccurate figures and gaps in data.

A lecturer in Corporate Social Responsibility at the University of Leeds, Dr Ralf Barkemeyer, said, “Some examples show that the quality of environmental data in sustainability reports remains appalling at times, even today.

“In financial reporting, leaving out an undisclosed part of the company in calculation of profits would be a scandal. In sustainability reporting it is common practice.”

Their research found out, amongst other details, that Eon and Volkswagen found a way of making a power plant disappear as well as its annual 2.5 million tonnes of carbon dioxide emissions. Whereas Italian energy company ENEL claimed in its 2009 report that its carbon emissions amounted to 122, 089 million tonnes. That is the equivalent of four times the emissions of Earth.

This comes after a KPMG report which revealed that corporate responsibility reporting is at an all-time high, with 100% of the UK’s top 100 companies now taking part.

Vincent Neate, leader of the KPMG’s UK climate change and sustainability practice, said it was “heartening that without exception, the UK’s largest companies are monitoring and reporting” on the corporate behaviour. However, the report did note that improvements still need to be made as there is no reporting standard for regulating global sustainability.

Dr Barkemeyer said the KPMG report was only part of the picture as “very few criteria applied in CSR [corporate social responsibility] ratings relate to the actual impact of corporate activity on the environment and society”.

Dr Barkemeyer concluded by saying that these examples show that stakeholders are either not using data published in corporate reports or not spotting the flaws in some information at all. Or “even worse, they might even ignore data altogether when they assess a company’s sustainability performance“.

If you want to invest in a company that takes its corporate responsibility seriously then talk to your financial adviser if you have one or complete our form and we’ll connect you with a specialist ethical adviser.

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