CR challenges for 2011 and beyond?
Before considering how the year ahead might shape up, it is beneficial to consider events taking place in 2010. From a potentially long list, we identified those reasonably high profile events offering some insights and learning opportunities for the future.
• A new UK government and a new focus - taking an apolitical stance, it is clear the coalition government has a different approach to the previous administration and has clearly signalled the need for restraint in the public sector and for a devolvement of power away from the centre. The 'Big Society' concept, whilst currently perhaps ill-defined, seems to encourage the principal of more community responsibility. It will strengthen with the Localism Bill, whose aim is to shift power from central government back into the hands of individuals, communities and councils. The combination of these themes focus on people and organisations taking greater responsibility for local issues.
• BP Oil Disaster in the Gulf of Mexico - probably one of the most newsworthy events, and cited by everyone with an interest in challenging companies' behaviour. We know BP spends a lot of time and money on sustainability issues but despite this, the event has had an impact on their reputation and that of the oil exploration business. To their credit though, BP undertook the bill for recompense. Whilst the causes are attributed to several sources, clearly there was a breakdown in communication about the operating standards that BP expected.
• WikiLeaks - whatever views one may have on this organisation and the information it is releasing; there can be little argument that this is probably the biggest whistle blowing incident ever. It highlights the issue of whistleblowing and the wider area of security but in particular the demand for greater transparency.
• Carbon Reduction Commitment - there was a lot of discussion on this subject but in essence the status quo of the process remains; although the profit impact is larger. The government postponed the cash impact of the scheme for a year; but to the shock of many the scheme changed, from a redistribution of moneys collected, to a tax. Carbon management and energy efficiency are permanent themes that will not go away, even though the government promises some simplification in 2014.
• Bribery - the Bribery Act was due to come into force in April 2011. The big concern is the Act has far reaching powers but lacks clarity in defining a bribe or facilitation. A strong element of the Act is that any successful defence is likely to rely on being able to demonstrate that an organisation has taken reasonable steps to prevent bribery taking place. Currently the Government has said it will re-look at the guidance and give 3 months notice before implementation. The Obama administration is making soundings suggesting displeasure if this Act were not to be fully implemented
• Non financial reporting
- one of the more surprising announcements of 2010 was the commitment
in the new government's manifesto to reintroduce the Operating and Financial
Review. They promised a consultation, and the outcome is that proposals
on the corporate agenda are promised by Budget 2011. At the same time,
the EU issued a consultation
Whilst the events generally appear unrelated, they do provide some themes which should be considered for 2011.
Emerging trends for 2011 and beyond
Key phrases emerging from 2010 include:
• Big society/more
But what challenges may affect your organisation?
Big society/more community responsibility
Companies may decide to review reporting quality, especially
regarding transparency, referred to later. Equally they should review
UK community activities in the light of localism, especially if they wish
to be seen to be having a strong UK community presence. For some, these
changes could represent business opportunities
Companies should consider how they report in this area and look to expand on current content. Particularly they will need to focus on the non financial risk area, where many companies need to be more comprehensive.
In addition there is growing interest in water consumption. Water foot printing can be expected to have a higher profile during 2011, particularly in industries where usage is significant either for direct use or in the supply chain.
Clearly, whilst 2011 may face economic challenges, for those focusing on reputation and risk in the corporate responsibility world, it will require them to be very alert about CR developments where potential challenges may have significant impacts.
If you would like an objective and impartial view on the items discussed in this newsletter,