Edited by Sabri Boubaker, Douglas Cumming and Duc K. Nguyen
Chapter 5: How useful are CSR reports for investors? The problems of comparing environmental and social disclosures
This chapter explores the usefulness of corporate sustainability reporting practices and standards for investment decision-making. Two key issues are considered – aggregation and comparability – in the context of four important sustainability issues – energy, water, human rights and corporate political donations. For each issue, current reporting practices and standards are problematic: for carbon, the existence of a global carbon ‘budget’ needs to be taken into account for meaningful firm-level reporting; for water, the localized impact of water withdrawals and discharges means that disaggregated and catchment-specific water information is required; for human rights, the very nature of what should be reported is unresolved, with current recommendations focusing on processes as opposed to outcomes; and for political donations, disaggregated and contextual information required to ascertain the likely impact (and hence appropriateness) of a given donation. Collectively, this analysis shows that mandatory reporting of current corporate social responsibility (CSR) standards will not meet investor needs. We therefore, call for far more contextual and comparable CSR information to be required by the next iteration of CSR reporting standards such as the GRI.
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