CSR Management Needs Drive Application Evolution

By Chris McClean

Companies that take corporate social responsibility (CSR) seriously—and their numbers are increasing—have to find ways to map large amounts of disparate data to large numbers of disparate stakeholders. As companies struggle to answer to these stakeholders, difficulties arise in collecting, processing, and publishing the desired information. Professionals who have dealt with substantial compliance or risk management initiatives understand the difficulties of trying to coordinate programs historically handled on a massive number of spreadsheets.

As with areas of corporate compliance and risk management, technology can play a critical role in making sense of CSR data.

Market Gravitates to Set of Core Requirements

Whether they are tasked with collecting vast environmental data or broader elements related to social and corporate governance, professionals in charge of CSR reporting are looking for tools to bear much of the burden.

Key capabilities that CSR professionals should look for from software include:

• Automated and manual input
• Data normalization and aggregation
• Performance management
• Flexible reporting
• Alerting and notifications
• Auditable record-keeping

The growing market has vendors coming in to help solve the problem from several angles.

Niche CSR Reporting Vendors

Seeing the growing demand for CSR tools and a lack of large vendors in the space, a number of niche software providers are looking to grab early market share with focused solutions. Applications in this category aim to pull in CSR and sustainability data from across the organization and repackage it to meet various reporting requirements. As these systems advance, customers will seek additional capabilities, such as workflow and process management, as well as better integration with existing systems.

Environmental Management Systems

Supporting large implementations for heavy-duty monitoring and management of air, water, waste, chemicals and other environmental factors, many vendors in this category have also built reporting capabilities mapping to environmental responsibility standards. Some have begun to incorporate social and governance performance indicators for a more complete CSR package, although they generally focus more on building additional capabilities related specifically to environmental management.

Governance, Risk and Compliance Platforms  

Vendors in this space help customers meet a very wide range of governance, risk management, and compliance requirements, such as corporate reporting, project risk management, financial controls and code of conduct policies. CSR and sustainability are very new on the radar screen of these companies, even though many of the risk and compliance issues they address are key elements of social responsibility.

Large Business Application Vendors  

Several large software vendors have been watching developments in the CSR reporting arena to determine whether and when entry into the market would make sense for them. Those with the most to offer potential buyers include vendors with core strengths in performance management and business intelligence.

CSR Seeping Further Into Business Practices

Attention to CSR continues to grow, and this growth is one of the biggest trends affecting corporate governance, risk, and compliance professionals.  Internally, the increasing complexity of business continues to drive greater demand for automating CSR reporting processes. Demand is also being driven externally by pressures raising expectations of responsible behavior.

As companies respond to mounting pressures, the trend will be to embed the concepts of CSR and sustainability into daily operations and decisions. This means that ultimately, these efforts are more likely to be managed side by side within more traditional business systems, such as human capital management, enterprise resource management, and financial reporting applications.

While CSR and sustainability programs are still often led by public relations and marketing professionals, the strength of these programs is severely limited without the policies, controls, metrics and assurance necessary to maintain appropriate behavior across the organization.  And for this to happen, professionals responsible for governance, risk management, and compliance will have to play a significant role.                

Chris McClean is a Forrester Research Analyst covering corporate governance risk management and compliance with a focus on CSR and environmental health and safety.