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A useful glossary of terms used in the field of corporate sustainability and corporate social responsibility (CSR). The Institute of Social and Ethical AccountAbility’s AA1000 Assurance Standard is a process standard providing guidance and best practice for stakeholder engagement and organisational reporting, including ways in which to assess the completeness, materiality and responsiveness of an organisation's systems and processes. To find out more, read our AA1000 briefing paper. The ability (of an organisation, project or institution) to provide an account of its activities both as an explicit record of them, and as an acceptance of responsibility for them. Our company name was taken from the 13th Article of the Convention on Biological Diversity, Rio Earth Summit (1992). Article 13 of the convention was concerned with education and awareness of biodiversity issues. Assurance, sometimes referred to as verification or auditing, is an evaluation of the quality of a sustainability report or processes, including the underlying systems that produce the information in the report, in relation to a standard or suitable set of criteria (e.g. AA1000 for stakeholder engagement). The assurance provider’s role is not to judge the organization’s performance, but simply to ensure that the report provides a fair and reliable basis for readers to make up their own minds. Independent assurance can add credibility to a sustainability report. Enables organisations to clarify vision and strategy, to translate this into action and to provide feedback around internal business processes and external outcomes, in order to continuously improve strategic performance and results. Focuses on four perspectives: The Learning and Growth Perspective; The Business Process Perspective; The Customer Perspective; The Financial Perspective. Developed in such areas as Total Quality Management (TQM), benchmarking involves the comparison, ranking or rating of different business processes, units or companies against standards. The aim: to identify ways of improving the performance of operations, systems, processes. The word - a contraction of 'biological diversity' - is sometimes used as a synonym for 'Life on Earth'. But its specific meanings, referring to the number, variety and variability of living organisms, will be central to 21st century values, thinking and action. The search in the biosphere, the collection of all living things, for new materials that have commercial value. Bioprospectors have been likened to the Indiana Joneses of the 21st century.To find out more, read our bioprospecting briefing paper. The practice of offering something (usually money) in order to gain an illicit advantage. A radical change in the definition and nature of the business, as if starting from scratch, in response to the external environment. Carbon dioxide (CO2) is the most abundant greenhouse gas and the term carbon emissions is used to refer to the largely anthropogenic (man made) production of this gas, created through the burning of fossil fuels, and from both small and large scale energy-consuming activities. Carbon trading has become the central pillar of international agreements aimed at slowing climate change. If a company wants to emit more than its carbon allowance, it must buy credits from others who are cleaning up. If it emits less, it has allowances in hand that it can sell to those doing less well - thus creating a market in carbon. Proponents of this market-based approach argue that carbon trading allows reduction of greenhouse gas emissions in the most economical manner. See also, emissions trading. Shorthand for a wide range of support, techniques and initiatives which aim at building the capacity of individuals or organisations within communities to engage with action plans and issues concerning their own future. Climate change implies changes in the occurrence or intensity of extreme weather events, or an accelerated uni-directional change in climate. It is manifested by a rise in global temperatures of around 0.6°C. Critics argue that the Earth's climate undergoes cycles of ice ages and warm periods, and therefore the climatic change we are witnessing is a natural phenomenon. However, a growing body of scientific evidence, and political consensus, suggests climatatic change represents a potentially catastrophic threat to humanity. To find out more, visit our Climate Change Resource Centre. A formal statement of the values and business practices of a company and sometimes its suppliers. A code is a statement of minimum standards together with a pledge by the company to observe them and to require its contractors, subcontractors, suppliers and licensees to observe them. Combined Code of Corporate Governance Published by the Financial Reporting Council, the Combined Code synthesises previous reviews of the role and effectiveness of non-executive directors by Derek Higgs (the Higgs report) and a review of audit committees by a group led by Sir Robert Smith (the Smith Report). It replaces the Hampel Committee Combined Code published in 1998. Community participation is the process of involving community members in decision-making about their issues that affect them, including service planning, policy development, setting priorities and addressing quality issues in the delivery of services. There is a range of ways to involve the community and gain community input and feedback, such as: developing formal partnerships, inviting public comment through public meetings, forums and documents for consultation; conducting focus groups, surveys, interviews and workshops; forming community councils, advisory and consultative committees; developing networks of consumers, carers and community representatives; and appointing representatives to health committees. Porter (1985) proposes that competitive advantage "grows out of the value a firm is able to create for its buyers that exceeds the firm's cost of creating it". To find out more, read our CSR expert view on competitive advantage. The agreement of behaviour with a prescribed code generally used in connection with legislation. In general terms, consultation can be used to describe many forms of public or stakeholder involvement. The process should be a continuous exchange of views and information and if utilised effectively can help to ensure that stakeholders’ needs and views are central to any decisions that are made. Consultation provides an extremely important means of engaging people in both public and private sector activities, and in the shaping of services and policy development. Corporate Citizenship / Corporate Social Responsibility An approach by which a company:
This approach is derived from principles of sustainable development. To find out more, order our publication on Corporate Social Responsibility Corporate governance relates to the internal means by which corporations are operated and controlled. While governments play a central role in shaping the legal, institutional and regulatory climate within which individual corporate governance systems are developed, the main responsibility lies with the private sector. (“OECD Principles of Corporate Governance”, 1999). To find out more, read our CSR expert view on Corporate Governance. The capability of an organisation to continue its activities indefinitely, having taken account of their impact on financial, social and environmental capitals. Organisations integrate economic, environmental and social criteria into strategy and management. They pursue opportunities and manage risks that accompany sustainability trends. They create long-term shareholder value by leading their industry with a strong commitment and superior performance in all these dimensions. Lack of integrity or honesty, often associated with bribery, through the use of a position of trust for dishonest gain.
A range of visible and non-visible differences that exist between people. Managing diversity harnesses these differences and can create a productive environment in which everybody feels valued, where talents are fully utilised and in which organisational goals are met (www.britishcouncil.org). To find out more, read our CSR expert view on diversity. Dow Jones Sustainability Index Index of the top 10% of the leading sustainability companies in each of DJSGI industry groups. Companies are ranked according to their management of sustainability opportunities and risks to provide information for investors. Involves the delivery of competitively-priced goods and services that satisfy human needs and bring quality of life, while progressively reducing ecological impacts and resource intensity throughout the life cycle, to a level at least in line with the Earth's estimated carrying capacity. The "ecological footprint" is an aggregate measure of human impact which measures the amount of nature we use. It shows how much productive land and water an individual, a business, a city, or a country occupies to produce all the resources it consumes and to take in all the waste it makes. This area can then be compared to the existing space on the planet that is biologically productive. The incorporation of accounting, accountability and responsibility processes, consultation and audit findings with the strategic managerial practice and policy and operational levels of the organisation. Substances discharged into the air (as by a smokestack or an automobile gasoline engine). Approach which asserts that "long-termism and regard for other stakeholders can be achieved within current principles by ensuring that directors pursue shareholders' interests in an enlightened and inclusive way". (source: UKSIF Briefing: Modern Company Law for a Competitive Economy). Environmental Impact Assessment The EIA procedure ensures that environmental consequences of projects are identified and assessed before authorisation is given. The public can give its opinion and all results are taken into account in the authorisation procedure of the project. The public is informed of the decision afterwards. In the same way that certain social groups or communities may be economically disadvantaged, so they may suffer disproportionate health, safety or environmental problems. Linked issues can surface around various types of industrial facility, from oil fields and chemical production complexes to major airports. Environmental management system (EMS) standards The main international EMS standard is ISO 14001. There are other emerging regional EMS systems, notably the European Union's Eco-Management and Audit Scheme (EMAS). Ethical or socially responsible investment are terms to describe any area of the financial sector where the principles of the investor influence which organisation or venture they choose to place their money with, or how the investor uses their power as a shareholder. (source: www.eiris.com). Fully commercial trade undertaken on terms which include compliance with non exclusively financial or technical specifications e.g. labour standards, buyer behaviour etc. The science of morals in human conduct; moral philosophy; moral principles; rules of conduct. European Emissions Trading Scheme Emissions trading is emerging as a key instrument in the drive to reduce greenhouse gas emissions. The rationale behind emission trading is to ensure that the emission reductions take place where the cost of the reduction is lowest thus lowering the overall costs of combating climate change. The EU ETS is one of the policies being introduced across Europe to tackle emissions of carbon dioxide and other greenhouse gases and combat the serious threat of climate change. The scheme commenced on 1 January 2005. The first phase runs from 2005-2007 and the second phase will run from 2008-2012 to coincide with the first Kyoto Commitment Period. Further 5-year periods are expected subsequently. The scheme will work on a "Cap and Trade" basis. EU Member State governments are required to set an emission cap for all installations covered by the scheme. Each installation will then be allocated allowances for the particular commitment period in question. Trade undertaken between small, community-based Southern producers and buyers on terms superior to the open market for producers. Aims to provide reasonable assurance that the financial statements audited by external auditors give a true and fair view, and that they have been prepared in accordance with the relevant accounting and other requirements. Series of benchmark and tradable indices facilitating investment in companies with good records of Corporate Social Responsibility. Assesses businesses on three areas: working towards environmental sustainability, developing positive relationships with stakeholders and upholding and supporting universal human rights. Although this is an area in need of much further work, the Holy Grail is to develop accounting methods which account for all the key costs of a project or activity, not just the financial costs. A branch of modern technology. Range of techniques used by scientists in an attempt to control or modify genes, or transfer them between two unrelated species. Global Reporting Initiative (GRI) The GRI is a multi-stakeholder process and independent institution whose mission is "to develop and disseminate globally applicable Sustainable Reporting Guidelines". These guidelines are for voluntary use by organisations for reporting on the economic, environmental and social dimensions of their activities, products and services. Read our briefing paper, available on this website, to find out more about GRI3. The Higgs' report on corporate governance was recently released in the UK. It will feed into a new Combined Code of Practice for British companies, and will have far-reaching consequences for corporate UK, especially in the area of non-executive directors. To find out more, read our briefing paper on codes and reports on corporate governance. A civilised society recognises the right of every individual to liberty, freedom of association and personal safety. These form the basis of a code of human rights found at the core of national and international law across the globe. To find out more, read our CSR expert view on IT and CSR.
According to a report by the DTI and the CBI, innovation can be described as “a culture, embraced at all levels, where creativity, the new idea or concept anywhere within the organisation, is brought to successful exploitation by the process of innovation” (DTI/CBI, 1996). To find out more, read our CSR expert view on innovation. Internal auditing is an independent, objective assurance and consulting activity designed to add value and improve an organisation's operations. It helps an organisation accomplish its objectives by bringing a systematic, disciplined approach to evaluate and improve the effectiveness of risk management, control and governance processes. (Institute of Internal Audit). Outlined in the Turnbull report, internal control has as its aim the management of risks that are significant to the fulfilment of its objectives, with a view to safeguarding the organisation's assets and ensure that the organisation is effectively fulfilling its objectives (Institue of Internal Audit). The Kingsmill Report followed a comprehensive review which consulted the top management of 100 of the UK’s leading private and public sector organisations. The Report contained a summary of the factors behind the UK gender pay gap, an extensive discussion about the ways in which employers are managing their human capital and statements of evidence from 50 of the companies, trade unions, voluntary organisations and public sector bodies who were consulted during the review. Its recommendations centred around increased information on human capital management, improved reporting, commissioned research on human capital issues, tax credits and disclosure of remuneration. Knowledge is a fluid mix of contextual information, values, experiences and r. For an organisation this resides within employees (human capital) and represents a source of creativity, innovation and adaptability to change. Knowledge management is an explicit system to use this capital. It is a pact agreed by governments at a 1997 U.N. conference in Kyoto, Japan, to reduce the amount of greenhouse gases emitted by developed countries by 5.2 percent of 1990 levels during the five-year period 2008-2012. Coming into force on 16th February 2005, a total of 141 countries have ratified the pact. The Kyoto protocol is the follow-up to the U.N. Framework Convention on Climate Change (UNFCCC), which set a non-binding goal of stabilising emissions at 1990 levels by 2000, and is the first legally binding global agreement to cut greenhouse gases. An ability to create a strong sense of direction for the organization and the people in it and the vision to create the values that need to go alongside this direction. Leapfrogging describes the idea that developing economies could find new paths to higher standards of living, bypassing the intermediate steps that have shaped the developed world. Technology and innovation are the cornerstones of leapfrogging. To find out more, read our CSR expert view on leapfrogging. Licence to Grow / Licence to Operate "It is the community, often with the active encouragement of advocacy groups, which has emerged as the force that grants a company's license to operate." (Edward Burke at The Boston College Center for Corporate Community Relations). The overall process of assessing the life-cycle impacts associated with a system, function, product or service. Sometimes considered to include four stages: Initiation, Inventory, Impact Analysis and Improvement. The mass balance concept is based on the fundamental physical principle that matter can neither be created nor destroyed. The mass of inputs to a process, industry or region balances the mass of outputs as products, emissions and wastes, plus any change in stocks. When applied in a systematic manner this simple concept of balancing resource use with outputs can provide a robust methodology for analysing resource flows. The mass balance methodology also allows the development of "what if" scenarios where the impact of changes on resource flow can be measured. For example, what would be the impact on resource use if recycling levels in households in South East England increased to 50%? For more info... Measurement is the "process of quantifying past action. A performance measurement system enables informed decisions to be made and actions to be taken because it quantifies the efficiency and effectiveness of past actions." (Source: Andy Neely, Measuring Business Performance, 1998). An organisations mission statement flows directly from the vision statement. It is the implementation of the vision and it outlines what must happen to realize the vision. It’s a “how-we-will-get-there” guide that contains action words and adjectives that modify them. A good mission statement: will do/contain/is the following: - Elicits an emotional, motivational response For more info... In simple terms, it means building things with extraordinary precision. It is technology development at the atomic, molecular, or macromolecular range of approximately 1-100 nanometres (1 billionth of a metre) to create and use structures, devices, and systems that have novel properties. To find out more, read our nanotechnology briefing paper. A method used to identify business critical intangibles and non financial issues, by building an evidence base to manage uncertainty and identify key issues before they become business critical risks. Operating and Financial Review (OFR) Changes to company law in the UK will require publicly listed companies and the largest limited companies to provide analysis of the main trends and factors underlying the results and their current financial position, and those that are likely to affect performance in the future, including social and environmental reporting factors. To find out more, read our briefing paper. Society has moved from what has been described as a “trust me” to a “show me” culture (Elkington, 1999) to what we have called an “involve me” culture. Arnstein’s ladder, put together by Shelley Arnstein in the 1960s, describes the ways in which we can think about the different levels of participation in a society or organisation. She calls these different levels: Manipulation and Therapy, Informing, Consultation, Placation, Partnership, Delegated power, Citizen control. Organisational leadership based on the principles and implementation of a participative approach, indicating two-way communication flows, and an element of sharing of responsibility and a multi-way decision-making power and the building of appropriate partnerships and networks. The Phillis Review, published in January 2004, tackles the three-way breakdown in trust between government and politicians, the media and the general public. This breakdown, the review argues, has led to increasing disillusionment amongst parts of society, particularly the ethnic groups and young people. The Review suggests that there has been a corresponding disengagement and withdrawal from the political and democratic processes, evidenced by declining participation in local and general elections. The Review advocates a sustained commitment to a long-term programme of radical change in the conduct, process and style of government communications, underpinned by the following principles: There is no generally agreed definition of poverty, mainly because the definition of poverty is a moral question - it refers to hardship which is unacceptable. 'Poverty' may refer to: - material conditions - needing goods and services, multiple deprivation, or a low standard of living; Absolute poverty is based on subsistence, a minimum standard needed to live. The Copenhagen Declaration defines absolute poverty as "a condition characterised by severe deprivation of basic human needs, including food, safe drinking water, sanitation facilities, health, shelter, education and information. It depends not only on income but also on access to social services. Relative poverty is based on a comparison of poor people with others in society. To find out more, read our CSR expert view on poverty. Private Finance Initiatives (PFIs) PFIs, developed initially by the British Government, are a method of providing financial support for Public-Private Partnerships (see definition below). PFI projects aim to deliver all kinds of services for the public sector with the private sector receiving payment above that which the public sector would have received, linked to pre-agreed performance standards. Product Development Partnerships (PDPs) PDPs are usually public-private partnerships with product development as their core objective. They generally incorporate a combination of stakeholder interests, private profit and public health, which provides the relative tension and new cross-connections and insights to drive innovation. Examples include DNDi (Drugs for Neglected Diseases initiative) and the TB Alliance (Global Alliance for TB Drug Development). Public-Private Partnerships (PPPs) A PPP is a system in which a government service or private venture is funded and operated through a partnership of government and one or more private sector companies. Examples of PPPs include WHO collaborations with NGOs and the pharmaceutical industry, as well as with foundations such as the Bill and Melinda Gates Foundation and the Rockefeller Foundation. The term PPP also refers to activities like the transfer of council homes to housing associations using private loans.
R-Z In some areas, problems of economic, social and environmental dereliction combine to lock local communities into a vicious cycle of exclusion. Area based regeneration initiatives encourage a range of partners to work together, targeting their resources to improve the quality of life in these areas. To find out more, read our CSR expert view on regeneration. The process or the production and dissemination of the records or accounts of an organisation. To learn more about innovation in CSR reporting, view our archived expert view. Any event or actions that may adversely affect an organisation to achieve its objectives and execute its strategies (Insitute of Internal Audit). Significant risks are those related to market, credit, liquidity, technological, legal, health, safety, environmental, reputation, and business probity issues. Outrage: Perceived risk is usually a complex, volatile mix of hazard and outrage. Experts argue that companies minimize the risk of outrage when they engage stakeholders in the development and operation of major projects. Ability to pick up and amplify 'weak signals' in a business environment that depends on internal controls, composition of the board and the role of non-executive directors. Focus on economic value added (tool of choice of converting normal employees into value change agents resulting in a dynamic behaviour change that makes all constituents participants in shareholder value creation), and environmental/social value added/destroyed. An outline or model of an expected or supposed sequence of events, used for future proofing, risk management and strategy / policy planning. The DTI Foresight programme and Defra’s Horizon Scanning programme are examples of scenarios. Social and Ethical Accounting Auditing and Reporting SEAAR involves accounting for, reporting on, and auditing an organisation’s policies, procedures and impacts with respect to employees, communities (local and global), suppliers, customers and the environment (Accountancy Ireland, December 2000). A measure of the ability of people to work together for common purposes in groups and organizations. A key element of social capital is the sense of trust. Social capital also describes the pattern and intensity of networks among people and the shared values which arise from those networks. While definitions of social capital vary, the main aspects are citizenship, neighbourliness, trust and shared values, community involvement, volunteering, social networks and civic participation. (Office of National Statistics) The capacity to live together in harmony with a sense of mutual commitment among citizens of different social or economic circumstances. Social entrepreneurs play the role of change agents in the social sector, by:
What can happen when individuals or areas suffer from a combination of linked problems such as unemployment, poor skills, low incomes, poor housing, high crime environments, bad health and family breakdown. It can also have a wider meaning which encompasses the exclusion of people from the normal exchanges, practices and rights of society. Socially responsible investment (SRI) An investment strategy that takes into account a company's ethical, social and environment performance as well as its financial performance. The broadest definition of ‘stakeholder’ brings in anyone who affects or is affected by a company’s operations. Stakeholders are also defined as those who can claim a legitimate interest in an organisation and its work, through an impact that they have on an organisation, or an impact the organisation has on them. They are the people who care about and who may wish to play a part in how an organisation progresses. Stakeholders include both people inside and outside the organisation. The key new perception is that companies need to expand the range of interests considered in any new development from customers, shareholders, management and employees to such people as suppliers, local communities and pressure groups. The process of seeking stakeholder views on their relationship with an organisation in a way that may realistically be expected to illicit them (Institute of Social and Ethical Accountability, 1999).To find out more, read our briefing paper on stakeholder engagement. The linked set of resources and processes that begins with the sourcing of raw material and extends through the delivery of end items to the final customer. It includes vendors, manufacturing facilities, logistics providers, internal distribution centres, distributors, wholesalers and all other entities that lead up to final customer acceptance.To find out more, read our briefing paper on SMEs and the supply chain. The term 'sustainable communities' can and does mean almost all that you would want from your home and workplace. The full definition runs to three pages in Annex A of Securing the Future, and unpacks the opening words of the definition on the Communities and Local Government website: "Sustainable communities are places where people want to live and work, now and in the future." It can be taken with the statement in Securing the Future that: "Sustainable communities embody the principles of sustainable development. They:
Sustainable Consumption and Production Continuous economic and social progress that respects the limits of the Earth’s ecosystems, and meets the needs and aspirations of everyone for a better quality of life, now and for future generations to come. To find out more, read our Sustainable Consumption and Production briefing paper. There are over 100 definitions of sustainability and sustainable development, but the best known is the World Commission on Environment and Development’s. This suggests that development is sustainable where it "meets the needs of the present without compromising the ability of future generations to meet their own needs." To find out more, read our CSR expert view on sustainable development in the South East of England. Sustainable development involves the simultaneous pursuit of economic prosperity, environmental quality and social equity. Companies aiming for sustainability need to perform not against a single, financial bottom line but against the triple bottom line. The Turnbull Report is the abbreviated name given to guidance provided by The Institute of Chartered Accountants in England and Wales to enable UK companies to implement the internal controls required by the Combined Code on Corporate Governance. The full title of the Turnbull Report is 'Internal Control: Guidance for Directors on the Combined Code.' The guidance is supported and endorsed by the London Stock Exchange.
Over time, human and social values change. Concepts that once seemed extraordinary (e.g. emancipating slaves, enfranchising women) are now taken for granted. New concepts (e.g. responsible consumerism, environmental justice, intra- and inter-generational equity) are now coming up the curve. Certification by an external auditor of the validity, meaningfulness and completeness of an organisation’s records, reports or statements. ‘The big picture’. The word vision means the conception of an image. In a vision statement you say where it is you want to go. The measurements of success are quantifiable, and the creator of the vision statement would be able to create a mental image of achieving the vision. For more info... Reduction, reuse, and recycling programs to deal with household, commercial and industrial waste. A key component of this is also encouraging manufacturers and consumers to buy products with recycled content (www.ukonline.gov.uk). Business impact in the workplace means recognising the business benefits and the wider social impact of good employment policies. This not only covers the traditional areas of recruitment, remuneration, and training, but also the growing concerns - and opportunities - of issues such as diversity and equal opportunities.(Source: Article 13 sources and World Business Council on Sustainable Development). © Article 13
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