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Finding stories in corporate responsibility reports

February 13, 2018

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Corporate social responsibility reports show the efforts companies make to act as, or show themselves looking like, good citizens. (Photo via Pixabay user Foto-Rabe)

Things a little dull on your beat? Try looking through some corporate social responsibility reports.

Corporate social responsibility, or CSR, refers to the efforts companies make to act as, or show themselves looking like, good citizens. There can be a mix of reasons for the activities, including an intent to act in a responsible manner, need to comply with certain types of regulations, or a desire to burnish the company image for marketing purposes.

Many companies publish reports on various aspects of their CSR activities. The material can serve as doors into corporate operations, ways to compare competitors on measures beyond financial performance, employment diversity insights, ongoing responses to regulatory requirements, and more.

A trip to a company’s website is the best first stop to see what might be available. Here are some of the areas worth checking.

Conflict minerals

Many manufacturers use minerals — including gold, tantalum, tin, and tungsten — mined in areas with domestic or international conflicts. The problem is that frequently the sales of the materials go to support military activities and the mining is often done by people forced into labor. Part of the Dodd-Frank act requires publicly-held companies to disclose use of such materials if “necessary to the functionality or production of a product.” Companies are required to file with the SEC, using a Form SD, to declare whether the materials sources they use are “conflict free” or not.

Responsible sourcing

In addition to issues of conflict minerals are questions about outsourced manufacturing and the performance of contracted companies. Issues can include child labor, pay and treatment of workers, and environmental concerns. This area can be a particularly thorny one, especially if outsourcing facilities in turn contract to other companies. In addition, overseas audits may be stymied by foreign corporate managers that try to hide evidence of problems, so remaining skeptical is necessary.

Employment diversity

Some companies, including many in high tech, report on the diversity of their employees, usually by gender globally and race in the U.S. only (EU privacy regulations prohibit keeping the racial demographics). Unfortunately, few companies publicly share their data. For context, you can look at the diversity reports by industry that the Equal Employment Opportunity Commission produces. Also, see if there is a breakout by age, which might show potential warning signs of age discrimination or future staffing problems, like a high preponderance of older employees coming close to retirement age.

Environmental impact

Some companies, particularly high-profile ones, report on what they do to reduce their impact on the environment. Power sources and use of renewable energy are major concerns. Recycled materials are another aspect. One thing to look for, and to quiz companies on, is water use. Some manufacturing processes are water-intensive. A semiconductor factory can use as much water daily as a city of 40,000 to 50,000 people. Given the number of chips being embedded in many products, there is a good chance that companies have more of an impact on global water supplies than might seem obvious.

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