Noted from Jacson, et al., (2011) survey report United Kingdom been one of the countries promoting TBL reporting among businesses guided by Companies Act (2006) that oblige companies to provide a Business Review on non -financial reporting. Thus majority of FTSE100 companies (all of which have significant stakeholder impacts) are required to publish CRS reports (Henriques, 2010). Furthermore, Henrique’s analysis of FTSE100 compliance with non-financial reporting of Companies Act (2006) found out that 31% do not produced CRS report and there are widespread of variability in the nature and quality of reporting with a low overall level of reporting of non-financial data that might be relevant to stakeholders, other than on economic matters.
Apart from “do noting responsibly and report noting responsible” 31% companies that don’t publish CRS reports, one might inferred reasons for non -compliance from discussion for finding below:
“Less than a third of companies described the process of preparing the report. On a more technical front, even where quantitative information was reported, there was rarely any description or detailed specification of the indicators used, such as that the Greenhouse Gas Protocol was used for measuring greenhouse gases. It might also have been expected that the specific mention in the Act of KPIs (Key Performance Indicators) would have led to a more systematic disclosure of impacts and one which would allow the comparison companies on their impacts’’ (Henriques, 2010).
Based on the above finding, it was recommended that the effectiveness of section 417 of the Companies Act (2006) requirement for companies’ annual report Business Review to cover performance relating to broad environmental matters; company employees; supplier relationships and social and community matters should be conducted urgently with respect to the below key area of interest to this paper among other recommendations:
• Specification of KPIs which may be used for reporting non-financial information, developed through a multistakeholder process facilitated by the government,
• Provision of official guidance on reporting non-financial information (Henriques, 2010).
Therefore, it became clear that for a CRS reporting system to deliver the required non- financial performances information as obliged by Companies Act (2006) and demanded by stakeholders, its component must contain detailed specific and fully described KPI’s guided by official provisions. As such a review of scholastic effort to operationalise TBL in the form of CRS performance reporting system with reference to KPI’s components was carried out.
Corporate Responsibility and Sustainability Performance Reporting System
CRS reporting does not exist isolation as it stem out of the need for business to engage with stakeholders in a transparent manner. For a company to be seen as transparent and reputable there is need to provide CRS performance information that is clear and useful to stakeholders. Again, the establishment of insight into varied stakeholders ethical and legal requirements that opportunities and threats can be properly access ; conflict interest can be indentify and right decision on course of action to monitor business operational impact can be taken.
Overlooking certain stakeholders expectations often means missed opportunities for building reputation or entering new markets and can set up problems for the company in terms of lost contracts, employee’s unrest and even litigation. As era of “trust me” culture and “show me” culture has now passed with the world moving towards an “involve me” culture which calls for stakeholders working in partnership with organisations as part of CRS performance solution. These cultural changes required transparency-enabling infrastructure and efficient communication to bridge the gap between stakeholder’s expectations and company responses.
Then stakeholder oriented performance management process reproduced in figure 1 below showing the importance of measuring both stakeholder’s contribution and satisfaction inclusive of feedback streams associated with strategies, capabilities, implementation and contracts appear to meet system design requirement for CRS performance reporting (Katsoulakos and Katsoulacos, 2006b).
But stakeholder oriented performance management process in figure 1 above , though systemic and logical in terms of potential for disclosure of operational impacts, CRS programme or policies intervention key performance indicators was omitted in the framework (Katsoulakos and Katsoulacos, 2006b; Henriques, 2010). Nevertheless, Katsoulakos and Katsoulacos (2006b) did raise the importance of internal or external benchmarks provision for judging how well a company is doing and how its performance is changing over time. Further , they remarked that in many cases absolute scores or measures may need ‘normalising’ or standardising to allow valid comparisons to be made over time or between different locations. A suggestion that was in line with Henriques (2010) recommendations on KPI’s earlier noted in this paper.
Other limitation of stakeholder oriented performance management process in figure 1 above is that there are not defined methodology for quality of information assurance when compared to rigor of audit processes that financial data are subjected (Katsoulakos and Katsoulacos, 2006b; Jacson, et al., 2011). So, non-financial performances information reports publish through this process is face with problems of verification and lacking in global stakeholders acceptability. However, it was noted that over the past few years several verification approaches have been suggested but cost remains the key issue. Nonetheless, the widely use of ‘Stakeholder Panel’ has been one way of giving stakeholder representatives the opportunity to comment on CRS reports contents and veracity (Katsoulakos and Katsoulacos, 2006b). But when stakeholders are not involved in design of CRS reporting system, there are no KPI’s specifics, stakeholders are not fully involved in the data gathering processes and companies won’t even describe the process of preparing the publish CRS report. Then one might begin to wonder what sort of commentaries can non- participant stakeholders provide in terms of CRS reports contents and performance validity? This provides a justification for data gathering methodology that can drive CRS performance reporting system. To bridge CRS performance data gathering and reporting methodology gap, Egbeleke (2004) suggested integrated impact assessment (IIA) methodology with its capability at aiding sustainable strategic learning (Mayoux, 2002). Then what is Integrated Impact Assessment methodology?
Figure 1: Stakeholder Oriented Performance Management Process