The rise of investor interest in CR issues is part of a broader trend towards a recognition of the importance of non -financial metrics (including brand equity; intellectual property; customer satisfaction; employee morale; …).
The Big 4 accounting firms have stated that we do not yet have the tools to adequately communicate how companies manage non-financial risk and generate non-financial value. At the moment, CR Reports are about the best that we have.
There are two good reasons for this.
First, stakeholders of all stripes recognize that, in a free-market economy, CR can be nothing else than enlightened self-interest. Understanding how companies prioritize CR issues is a window into how enlightened companies are about their self-interest. No one wants to hear about altruism: it is a flash in the pan.
Second, companies are recognizing that it is a mistake to think about stakeholder expectations as “additional requirements”: knowing stakeholders’ expectations actually helps companies to understand how to create additional value – non-financial, intangible, soft and fluffy, sure; but value all the same.
As soon as the accountancy profession develops tools to help companies measure non-financial risk and value-creation, maybe we will not need CR Reports. Or, maybe CR Reports are that tool – and we just need to get better at using them.
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