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SMEs should not be forced to report on CSR – Chamber

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The Chamber of Commerce, Enterprise and Industry believes that non-financial report – reporting on corporate social responsibility – should be limited to large companies, stressing that most SMEs are already far more socially engaged than perceived.
Malta has to transpose Directive 2014/95/EU on disclosure of non-financial and diversity information by certain large companies and groups by December 6.
The government has not yet decided on the options left up to the member states: “Malta is in the process of transposing so the said Directive is still a work in progress. However, unlike the case of EC Regulations, that are directly applicable, the transposition of Directives allows a degree of flexibility to member states to adapt to national legislation,” a ministry spokesman said.
Directive 2014/95/EU entered into force on December 6, 2014. The disclosure requirement applies to large public-interest entities with more than 500 employees. This includes companies listed in EU markets, as well as some unlisted companies, such as credit institutions and insurance companies. It is estimated that approximately 6,000 companies are affected by the Directive.
Member states have the flexibility to adapt it to their respective national circumstances, within the limits of the Directive. For instance, they may allow information to be disclosed in a separate report, rather than in the management report. Member states may also require that the information be verified by independent assurance service providers.

The chamber has maintained over the past decade that corporate social responsibility (CSR) should remain voluntary and should not be made legally binding: “This allows them to retain flexibility to find the most efficient means of how to apply such measures within their operations. Experience has shown that if there are additional rules originating from legislation there will be an unnecessary cost and burden for enterprises,” it said.
The Commission has specifically targeted large, listed companies, public interest companies and credit institution such as banks. “Given these criteria, it is clear that the impact on Malta-based companies will be minimal seeing how some of them are already compliant of their own free will. The chamber believes that this is the right way to go about it and that the legislation should not be further extended at this stage to include smaller sized enterprises,” it added.
The chamber has carried out extensive research in the last four years on the subject of CSR and found that local SMEs are already managed in a responsible way, “many a times unknowingly, they are socially engaged and traditionally participate in the life of their local community”.
“The ethical values of the business owner often play a role in the responsible attitude of SMEs. Even more so, enterprises also commit themselves to respect the environment. In fact, many enterprises are taking actions in this regard. Although this should not be the prime motive behind taking such activities, one still has to take them into account,” it said.
The chamber’s reference to the fact that many large companies already report on CSR is borne out by both those which are local – like Bank of Valletta and Malta International Airport – and others like HSBC and Vodafone, whose foundations follow the international group’s approach.
A spokesman for HSBC Bank Malta said the listed company issues its annual report and accounts, in which it discloses information about its corporate sustainability programme and investment, in the community.
A Bank of Valletta spokesman explained that its decision to publish a report on CSR was quite revealing: “When we decided to commit ourselves to CSR principles, we realised that a lot of the requirements were already being done by the organisation, even if not formally. In this regard, CSR brought structure and uniformity to these initiatives.
“The debate as to whether or not sustainability reporting should be mandatory has been ongoing for a number of years, and there are still diverging views on this subject. From our experience, we tend to favour the view that this form of reporting should remain voluntary. Although one may argue that by enforcing reporting, companies will have to do it, there is the counter-argument that mandatory reporting will be compliance driven, with most organisations reporting the bare minimum, rather than making a genuine effort.
“It is important for any organisation to undertake CSR because it has an active role to play in the communities in which it operates. Reporting must remain a tool, with the main objective being instilling a caring culture within the organisation,” the spokesman said.
The airport is the latest local company to issue a comprehensive stand-alone report, the first since it voluntarily adopted the Global Reporting Initiatives standard – established by an international independent standards organisation. The MIA report, independently assessed by PwC, covers everything from human resources and recruitment, to financial and environmental sustainability.
“Since Malta International Airport is such a key player in the tourism industry, we chose to take a more strategically relevant approach to our corporate responsibility,” MIA CEO Alan Borg said.
“It is for this reason that we adopted internationally-respected GRI standards in our CR reporting and voluntarily opted to have our CR Report independently audited.
“In doing so, we are voluntarily and in a completely transparent manner reporting both our successes and shortcomings which will, over the medium term, help us remove, reduce or mitigate our negative impacts and improve or build on our positive ones,” he added.
“Naturally, there is always room for improvement and we are confident that we can draw on last year’s lessons to build on this positive momentum in our CR efforts. Publishing our sustainability report is the first step towards making our business more accountable to a stellar performance, across our economic, environmental and social impacts, for the benefit of the tourism industry and Malta as a whole.”

Source: http://www.timesofmalta.com/articles/view/20160728/business-news/smes-should-not-be-forced-to-report-on-csr-chamber.620257

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