March 12, 2004
Corporate Responsibility Index Launched in Australia
by Graham Sinclair
A coalition of nonprofit, media, and accounting organizations recently introduced the first index
to measure corporate social responsibility in Australia.
In a venture reflecting the growing impact of corporate social responsibility (CSR) on business in
Australia, a nonprofit, an accounting firm, and two newspapers have cooperated to introduce a
corporate responsibility index. Last month the St. James Ethics Centre, Ernst & Young, The Sydney Morning Herald and The Age introduced the Corporate Responsibility Index
(CRI) to measure CSR performance.
The CRI was designed by Business in the Community
(BITC), a member-based organization
of 700 companies in Britain that focuses on improving the impact of business on society. More than
80 companies helped develop the index, and more than 122 organizations participated in its first
year in Britain in 2002.
It is not the first attempt to measure this illusive metric.
Dr. Simon Longstaff, Executive Director of St. James Ethics Centre, says the index is the next
stage in the evolution of measuring corporate social responsibility in Australia.
"Previous indexes have principally been in response to the interests and objectives of outside
stakeholders," said Dr. Longstaff.
The Good Reputation Index, for example, has been
criticized by businesses because of its non-voluntary nature. Launched by nongovernmental
organizations 2 years ago, it ranks all businesses, not just those that choose to be evaluated, and
awards a zero score to companies that do not provide data.
"Our experience shows that
companies themselves are best placed to judge how to deliver a more positive impact for society,
[so] we’ve worked closely with leading businesses to identify exactly what information is needed to
improve business practices," said Julia Cleverdon, CEO of BITC.
The CRI was designed by
BITC, a member-based organization of 700 companies in Britain that focuses on improving the impact
of business on society. More than 80 companies helped develop the index, and more than 122
organizations participated in its first year in Britain in 2002. BITC officially launched the CRI
in Sydney in late February.
The initial target group for the CRI is the top 150 Australian
companies in terms of capitalization. Confidential feedback will be provided individually to
participating companies and results will be published in The Sydney Morning Herald and
The Age in mid-2004.
The index has 111 in-depth questions that cover corporate
strategy, integration, management (comprising community, environment, marketplace and workplace)
and performance and impact.
Ernst & Young Environment &
Sustainability Services will examine all surveys submitted for completeness and consistency, as
well as meet with selected participants to check their understanding and interpretation of the
questions, seeking further substantiation when necessary. Results will be scored using an on-line
database and Ernst & Young will conduct tests to confirm the proper operation of the online system
in terms of generating results.
The St. James Ethics Centre has the role of 'trustee' for
the process in Australia to ensure there are no residual conflicts of interest by Australian
business and NGOs to undermine the integrity of the assessments.
Dr. Longstaff believes
that the market will continue to favor traditional means for evaluating company financial
performance and may therefore be attracted by a specialist index that looks exclusively at
environmental and social performance. He believes the index will be viewed as credible because
"the CRI is a reasonably demanding tool that goes well beyond being a 'box-ticking' exercise."