The debate about whether companies should be obliged, by law, to participate in CSR activities has been going on for years and looks set to continue for some time yet.

The UK Companies Act (2006) took a step in the right direction through its compromise between the Yes/No extremes of this argument. In essence, it is not mandatory to participate in these activities, but all companies listed on the Stock Exchange are obliged to publish Key Performance Indicators (KPIs) to measure their impact on and involvement in “environmental matters, employees and social issues”.

The next round of debate will undoubtedly move onto what these KPIs should be. At present there is a situation where companies can choose their own measure making it impossible to compare one company with another easily or fairly. Some form of mandation seem likely.

However there is another way. Rather than mandating specific KPIs, those which can be used should be categorised and ranked in order of perceived importance. So, as a very basic example, you have environment and social categories and performance against an emissions cutting indicator is ranked more highly than performance against a carbon-sink creation indicator.

Then you create a green certification scheme for a company’s supply chain. What this scheme does is measure/aggregate the KPIs for a company’s supply chain and give it a familiar A-E ranking, much as is currently required for electrical items and offices.

At a single blow you’ve just created two things: a framework for comparing different KPIs which is flexible enough to accommodate new ones and changing priorities and a system for monitoring and encouraging companies’ sustainability through the their business activities.

Of course, the next debate is whether the scheme should be mandatory or not. Maybe or maybe not, but self-certification available for companies not listed in the stock exchange looks an interesting proposition. A discussion for another time.

Site Tags: sustainable, supply chain

This entry was posted on Wednesday, April 9th, 2008 at 9:20 am and is filed under Sustainability, Environment, Regulation. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.