10 developments impacting the CSR landscape
2017 has started! Time to look at the trends that will play a role in corporate social responsibility this year.
1. Sustainable Development Goals integration
In 2015 the United Nations introduced the UN sustainable development goals (SDGs) aimed at reaching a desired situation in 2030. As opposed to the Millennium Development Goals, the SDGs already got huge exposure in the media and amongst thought leaders. In 2016 we already saw the first companies experimenting with the goals’ implementation. In 2017 we expect more organizations to integrate the SDGs in their strategies, targets and action plans.
2. Adoption of Science based targets
In addition, the science-based targets (SBT) receive increasing attention and more and more companies are setting SBTs. It is the ideal way of setting targets related to the agreements made during COP21. If companies align their targets to the 2°C global warming limit they can assign resources more effectively, making sure that they do not lose focus. The Carbon Disclosure Project included a section related to science based targets and the option have your target verified in the climate change questionnaire for the first time last year.
3. New GRI Sustainability Reporting Standard
Quite quickly after the introduction of the GRI G4 guidelines, GRI recently introduced its Sustainability Reporting Standards (SRS). Companies that are, or aim to be, GRI compliant, need to transition to SRS this year as GRI requires 2017 reports to follow the SRS. For an overview of all the changes, please see our blog post.
4. Professionalization of materiality assessment
Many companies use a materiality assessment for identifying focus topics and thereby defining the content of the sustainability section in their annual report. The materiality assessment is not yet used for the complete integrated report or for driving the strategic agenda, most probably because the assessment process is not yet at the same level of professionalisation as, say, risk management.
We expect that many companies will redefine their materiality in 2017 and . This will definitely facilitate the strategic decision making process and will deliver more focused and material integrated reports.
5. Changing business models and new economies
In 2016 we experienced in conversations with our clients that almost 75% of our clients are uncertain of how their business model will look like 5 years from now. Developments like Blockchain, FinTech and the sharing economy force companies to overthink their business model. Moreover, millennials have very different requirements if it comes to their employer, the things they buy (or share) and their free time. In 2016 we have experienced how CSR could be an enabler or accelerator if it comes to adapting to these new situations. With social enterprises currently filling the void, we expect that in 2017 more large corporations will start moderating their business model while using CSR.
6. Monetization of impacts
Peter Bakker of the WBCSD has been saying so for many years, Monetization of impacts may very well be the pathway to a more sustainable society. In the early days we saw Puma experimenting with this. In 2016 companies such as Heijmans presented interesting cases. Most probably we will see new cases in 2017 and perhaps even an Environmental and Social Profit & Loss?
7. Targeted stakeholder communication
Stakeholder engagement remains high on corporate agendas. It is a key element for business to cope with constantly changing dynamic environments and conditions. An online report combined with suitable communication tools, such as feeds, online marketing, tailored websites, etc., will make sure that you interact with all stakeholders and that stakeholders will receive relevant information. We expect this trend to be reflected more and more in company reports and their communication.
8. ESG-criteria in investment decisions
Institutional investors increasingly integrate Environmental, Social and Governace (ESG) criteria in their investment decisions. Investor ratings such as the Dow Jones Sustainability Index (DJSI), Sustainalytics, Carbon Disclosure Project (CDP) reflect this and are gaining traction.
The trend shifts from exclusion, where critical industries such as weapon are excluded from investment portfolios, to inclusion, where companies are only considered an investment option if they fulfil certain criteria, such as having achieved a minimum score e.g. in the DJSI. The topic of stranded assets receives higher attention in the investor community. Certain industries that are expected to diminish in the future, like fossil fuels, will be less and less included in investment portfolios, reflecting the trend to focus on sustainable, long-term investment options.
9. Going beyond compliance
As organisations are aware of the importance of (fully) integrating sustainability and CSR their company structures and operations, they no longer try to just follow external pressures and ensure compliance with external requirements. In 2016 we’ve seen many cases where companies are requesting governments to take action on e.g. climate change. For example Shell, Van Oord and others requested and signed the Dutch climate agreement, ROCKWOOL and others ask the Dutch government to integrate social impact into their procurement decisions and the banking sector is trying to live up to their climate statement. For 2017 we expect more sectors to do same, for instance in defining a coordinating approach towards the SDGs.
10. Rising regulation and legislation on CSR
Finally, we have seen regulation coming and will expect that more legislation is coming or will become effective. One example is the EU directive on non-financial reporting that becomes effective this year and requires organizations with more than 500 employees to report on aspects like governance, environmental and social impacts. As a consequence we expect to see increased efforts on CSR reporting by those firms that did not yet report on non-financial results.
Putting all these 10 trends together they definitely implicate another step towards a sustainable development and reflect the importance for organizations to tackle CSR and sustainability, together.
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