Cathy Pharoah: Confusion over corporate reporting should be tackled by the government

We need the government to endorse corporate community investment as integral to corporate social responsibility, and to promote effective reporting of both, writes our columnist

Cathy Pharoah
Cathy Pharoah

As companies squabble over the rights and wrongs of observing the spirit or the letter of the law on tax, and then make voluntary tax offers, it seems that public expectations of corporate citizenship behaviour are unclear. The business minister, Jo Swinson, recently launched a consultation on promoting corporate responsibility but soon afterwards Viscount Younger of Leckie endorsed a measure in the House of Lords that will lead to a reduction in corporate reporting requirements on charitable giving. This illustrates the UK's ambiguous attitudes towards business today. Should we be expecting greater corporate responsibility - or less?

What's not to like about the reporting of corporate charitable giving or corporate community investment (CCI for short)? Using figures from the Directory of Social Change, I estimate that average corporate giving in the UK is worth about £157k. That can't be too costly for companies to report on. If the recent full-page advertisement from ScottishPower in The Guardian, featuring the £2m it has raised for Cancer Research UK, is anything to go by, it would appear that companies are keen to ensure consumers know about their CCI. Other awareness-raising examples include CCI staff participation in sector events, not to mention company information leaflets and websites.

All this must cost more than the few lines on CCI added to annual reports. For charities, data on corporate giving is useful, because it helps them target their fundraising. Government and the public derive benefit from CCI reporting through its contribution to higher standards of transparency about company activities, and about corporate governance. Finally, there is the 'nudge' effect toward more corporate giving, which the government believes will result from donors being able to benchmark their giving with peers through published data.

The only reason for not publishing the data is one that I, the DSC and others have flagged up - namely, its poor and often misleading quality. Good luck to Swinson in calling for a voluntary set of metrics for reporting of corporate social responsibility. To date it has proved impossible to get standardisation in CCI reporting, despite the efforts of the London Benchmarking Group. Reported spending often combines cash with the value of non-cash giving, and practice varies on what gets included.

A key issue highlighted by the current confusion over corporate reporting is that corporate social responsibility and CCI tend not to be seen by companies, governments or researchers as part of the same thing. The sector often refers to CCI as CSR, but in organisational, management and policy terms, they exist in different spaces.

CSR reporting is surrounded by a regulatory regime; CCI is not. We need government to endorse CCI as integral to CSR, and to promote effective reporting of both.

Cathy Pharoah, professor of charity funding at Cass Business School

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