2006 corporate responsibility index results

- Simon Longstaff

This article was first published in the Executive Summary for the 2006 Australian Corporate Responsibility Index, May 2006 Click here to learn more about the 2006 Index results.

Corporations only flourish in flourishing communities. Businesses no longer ask if they should be responsible; only about how best to be so. The Corporate Responsibility Index is not a tool of measurement for measurement’s sake. First and foremost, it is a management tool – a roadmap for building sustainable prosperity.

Dr Simon Longstaff, Executive Director, St James Ethics Centre

This report marks the completion of the fourth Corporate Responsibility Index (CR Index) in Australia and New Zealand, launched on 18 September 2006. In total thirty-four companies, including fourteen of the ASX 50, participated in the Index representing 1.25 million employees and total revenue of AU$520 billion.

Current Context

In 2006 the Parliamentary Joint Committee on Corporations and Financial Services (PJC) and the Corporations and Markets Advisory Committee (CAMAC) released reports following inquiries into corporate responsibility in Australia. Both reports shied away from recommending any changes to director’s duties or from introducing mandatory reporting – electing instead to encourage and support voluntary initiatives in corporate responsibility (CR).

These reports have coincided with the worst drought on record in Australia, the release of the Stern Report in the UK and Al Gore’s film An Inconvenient Truth, all of which have brought environmental and responsibility issues to centre stage. Companies are now expected to take into account a broad array of interests in service of the long-term interests of shareholders. The challenge for companies is how do they address these issues systematically. This is where the Corporate Responsibility Index ultimately assists - by providing a framework for implementation and a means to review management systems and processes thoroughly.

Top Line Results

Since the launch of the Index in Australia the sixteen companies who have participated continuously have demonstrated a year-on-year improvement trend demonstrating the usefulness of the Corporate Responsibility Index as a gap analysis tool to drive performance and assist in strategic integration of corporate responsibility across the business.

• This year five companies scored over 95% in the Index: Westpac, Toyota Australia, BHP Billiton and Rio Tinto (equal third) and ANZ.
• The greatest improvements in performance were achieved by: Minter Ellison, Suncorp Group and Insurance Australia Group.

Participation Overview

To date, forty-seven companies have used the Index as a benchmarking tool in Australia and New Zealand. Of these, sixteen companies have participated in all four iterations of the Index.

In 2006 ten new and one returning (Coles Group) companies participated in the Corporate Responsibility Index. Seven of these companies participated in the full Corporate Responsibility Index (four privately) and four participated in the new Index modules (two privately).

Key Developments

The Corporate Responsibility Index is subject to ongoing review to continually strengthen its methodology. The following developments are the result of recent reviews in Australia and the UK:

• 2006 focused on further development of the Community Section – this related in particular to measuring performance and impact in community investment and the development of a standalone Community Module.
• Flexible entry options were introduced allowing companies to complete modules or engage in private bench-marking as a first step to full participation over a one to two year period.
• A Leadership Network is being developed to continue to engage and challenge companies scoring greater than 95% in the Index. We will work with these companies to examine next steps in transitioning to truly sustainable practice.
• In 2007 a thorough review of the Marketplace section of the Index will be conducted by Business in the Community. British American Tobacco was asked to withhold its participation in the Australian Index in 2006 until this review is completed.

Thanks

With the conclusion of the fourth Corporate Responsibility Index in Australia and New Zealand we would like to acknowledge and thank those organisations that have supported and guided the project through these initial four years. Thanks to Business in the Community, the architect of the Index and its developments in the UK, who has donated the Index for use in Australia. A special note of thanks to our partners The Sydney Morning Herald and The Age for their integrity in reporting and commitment to encouraging responsible business through the media and to Ernst & Young for the professional expertise they have brought to the validation process on a pro bono basis. To EcoFutures and the National Business Leaders Forum on Sustainable Development who continue to champion the cause of sustainable business and raise the bar, and to our two advisory groups whose breadth of expertise is invaluable in the ongoing development of the Index. To the New Zealand Business Council for Sustainable Development for their assistance with our work in New Zealand. And finally, to all the companies who have submitted themselves to this rigorous, voluntary examination of their corporate responsibility practices thereby demonstrating that business can lead the way.

Dr Simon Longstaff is Executive Director of St James Ethics Centre.
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The Corporate Responsibility Index is funded by the Australian Federal Government. The Index, developed and maintained by Business in the Community in the UK, is a project of St James Ethics Centre supported by Ernst & Young. Our media partners are The Sydney Morning Herald and The Age. Project catalyst: Pilotlight Australia.