Big firms putting green credentials before social issues

Large companies are better at thinking green than actually acting with a social conscience, Scottish researchers have claimed.

The plans outline how to improve the air quality in Scotland.

A three-year study led by Dr Kelly Kollman of the University of Glasgow and Professor Patrick Bernhagen, of the universities of Aberdeen and Stuttgart, found that big businesses in the UK, US and Germany have made far slower progress in reporting on issues such as lobbying policies, collective bargaining and living wage rates than on their environmental credentials.

With funding from the Economic & Social Research Council, Kollman and Bernhagen created a database of 2,000 companies split across the UK, US, Germany and the rest of the world. From these, they selected 150 companies and analysed their corporate social responsibility (CSR) and sustainability reports at three points in time – 1995-99, 2005-06 and 2013.

Kollman, senior lecturer at the University of Glasgow’s School of Social & Political Sciences, said: “CSR is difficult to define and politically contested in that stakeholders do not agree on what should be included or the extent to which corporate action should be voluntary or incorporated into legal mandates.”

She added: “Despite controversies, many stakeholder groups have settled on a core set of procedural best practices that can be applied across different issue areas. These are contained in many of the codes promoted by the UN and multi-stakeholder schemes, such as the UN Global Compact, the Global Reporting Initiative, the Carbon Disclosure Project and the Forest Stewardship Council.”

Globally-recognised best practices include measuring the company’s relevant social, economic and environmental impacts; setting improvement targets for identified issues; auditing progress towards improvement targets; and reporting and verifying data of comparable issues to increase transparency and stakeholder dialogue.

“By and large we find that the top-performing firms are implementing these best practices, but overall implementation is spotty and varies across countries, but also crucially across issue areas,” said Kollman.

The report found that companies applied these best practices to the environment area more consistently than in the social areas of labour and human rights, although it found that improvements were beginning to show.

“In the latest set of reports that we analysed, which is 2013, issues like living wage are beginning to show up, as are non-employee human rights and even long-standing issues such as collective bargaining are being reported on more broadly,” said Kollman.

“We attribute this to a number of factors, such as the publication of the UN guiding principles on business and human rights in 2011; and the fallout from the financial crisis and greater attention on inequality.”

Among the emerging trends are moves to introduce due diligence checks of supply chain, especially for companies’ human rights impacts; responsible lobbying, with the Scottish Parliament likely to adopt a lobby register before the 2016 election; and firms introducing the living wage.

Jane Wood, chief executive of Scottish Business in the Community, said: “There must be an increased understanding that how businesses integrate social and economic concerns into their operations through their customers, employees, suppliers and local communities is fundamental to Scotland’s sustainable social and economic growth.”