Why errors in CSR reports are a problem for accountants

By Sandra Rapacioli

Last week telecommunications Giant Orange admitted to errors in its CSR report. Their 2012 CSR report claimed a 36% water reduction, when in fact total water consumption increased by nearly 8%.

But Orange is not alone.  Researchers from Leeds University in the UK and Euromed Management School in France, analysed 4,000 CSR reports, rankings and surveys, published by companies worldwide over the past 10 years and “found unsubstantiated claims, gaps in data and inaccurate figures.”

Whilst this certainly makes a case for auditing CSR information in external reports, I believe that data assurance should start much earlier on in the process – at the point of data collection and when the data is used by the organisation to inform decisions.

How can you make effective decisions when the data on which you’re basing those decisions is not accurate? The answer is, you can’t. This is why it’s so critical for finance professionals to bring the rigour and discipline used in financial accounting to the collection, analysis and reporting of sustainability data.

And that’s not the only value that accountants can...and should...add.

Management accountants must also work closely with sustainability professionals to understand what information needs to be collected in the first place and how it will be used in decisions. What non-financial issues are relevant to the organisation’s ability to create and sustain value – what’s most likely to impact on the bottom line? What data does the organisation need to collect? What are the right metrics?

They are also well placed to incorporate meaningful sustainability metrics into business planning processes and systems, and can help link sustainability to business performance. 

So by the time an organisation reports externally (and bearing in mind that an external report should be the top slice of management information that is used in board discussions), the data should have been through great scrutiny, making the margin for error tiny, and preparers should know the numbers inside out.

Therefore when I see big errors in external reports it does make me wonder to what extent that information is used by management to inform business decisions. And if it’s not used, and is not a regulatory requirement, then should it be reported on at all?