Do you gain trust by being transparent? Or do you become more transparent when people trust you?
These are some questions I’m left with after getting a bit more perspective on corporate social responsibility (CSR) reporting in Japan today. According to a 2011 survey of KPMG, 99% of Japanese companies publish a CSR report. An impressively high number, especially when you realize that there is no government regulation telling them to do so.
On corporate reporting
And, not only do many companies report – these reports are also easily accessible. No less than three (competing) Japanese websites focus on sharing CSR reports online and offer related services, such as extended search options, a report cover design award and seminars on this topic. But most of all: they offer exposure of these reports.
Today, I spoke to the people behind one of these websites, CSR Japan, about their work and about the characteristics of CSR reporting in Japan. I initially contacted this organisation as I assumed it would be the CSR association in Japan, much like MVO Nederland is in the Netherlands. The information on their website quickly showed their focus on collecting CSR reports (the website currently contains almost 500 reports of over 200 companies) and making these accessible.
I haven’t seen anything similar in the Netherlands, and I love how you can really search the relevant themes you want to know about – and it will give you the individual pages from the various reports. Imagine how much easier that makes it if you want to compare what various companies write about supply chain management, to give just one example. And on the plus side for companies who have their report listed here, they can get an overview of what pages have been viewed how often, and there’s a weekly ranking of the most searched for topics. This week, the top 5 consists of: company mission, work-life balance, investor relations, biodiversity and ‘relation with society and the environment’.
And as mentioned, CSR Japan is just one of three:
– Eco Hotline has the largest collection with reports from more than 500 companies
– CSR Toshokan has published reports from 400 companies
Each comes with their own additional services, of which Eco Hotline’s Report Cover Design Award is one example. [I will update this post when I have an answer to the question where this difference in quantity comes from. My guess is companies pay for the advantage of being listed, but I need to check]
Reasons for being transparent
So, why are these companies happily writing these reports, while in Europe there is a debate going on that making reporting mandatory will lead to higher costs for business? Why are Japanese companies doing this voluntarily?
CSR Japan explains this through the fact that there have been some major environmental disasters in Japan in the past (of which a well known example is Minamata). This has increased awareness from the public and from companies that it is important to be transparent about their business activities and their (environmental) impact.
Because indeed, the reports of Japanese companies seem to focus more (in comparison to for example European reports) on environmental than on social aspects of CSR. This also came back in other talks I have had today. The explanation for this may be sought in the fact that Japan has developed their own guidelines for reporting, but these focus solely on environmental issues: Environmental Reporting Guidelines by the Ministry of Environment. Luckily the other topics are partly covered by reporting through a combination of these guidelines, GRI and ISO26000.
So, it appears that Japanese companies are mostly transparent about their activities – which is of course very good. We then spoke about who reads the reports and whether or not this makes companies vulnerable. In Europe and the US, NGO’s sometimes maintain a type of watchdog function to make sure that companies are behaving correctly – hence the vulnerability by reporting what you do, or do not do. Interestingly, Japanese NGO’s do not seem to have this function at all – and in fact are usually very trusting of Japanese companies. There are hardly examples of big campaigns being set up when something has gone wrong, because it turns out that much more than in many other countries the population of Japan overwhelmingly trusts its corporations. And doesn’t particularly think of the NGO-sector of being trusted to do the right thing.
This interesting bit of information comes from the Edelman Trust Barometer, which I heard about in a later meeting, and which surveys the level of trust annually across around 20 countries worldwide in the government, the media, business and ngo’s. This is quite a different view towards corporations than for instance in the Netherlands, where it sometimes feels that NGO’s have no trust at all in companies (and where in fact some NGO’s and politicians are calling for more regulation and monitoring on CSR topics to ensure that companies will not do anything wrong through their business activities).
I also feel that this situation changes the dynamic of CSR in Japan, compared to Europe. It may be too early to draw that conclusion, after only a few discussions. Of course you would hope that the watchful eye of NGO’s and consumers is not the sole reason for companies to behave responsibly. However, knowing that you are being held accountable for your actions – or maybe rather, knowing that no one is really watching what you are doing – must make for different choices in putting together and implementing a company’s CSR policy.
Which brings me back to the question: does transparency beget trust, or is it the other way around?