Increasing organisational transparency through social auditing

16 March 1998

Social auditing is a powerful tool for organisational social accountability. But what do the results look like in practice? The pioneering social reports of Ben and Jerry's (B&J), the Body Shop International (BSI) and the New Economics Foundation (NEF) show how social auditing can provide stakeholders with a more balanced record of organisations' ethical performance.

The structure of the reports can vary. For each category, B&J comments on Intentions, Scope, Key Audit Findings, and Management Comments and Commitments. NEF, on the other hand, report Aims, Audit Process, Response Findings, and NEF Response and Next Steps. The categories of reporting also vary, but Customers, Franchisees, Staff, Suppliers, Environment, and Charities rank among the most commonly measured areas. Examples of these follow.

Customers:

• B&J had 12,397 logged customer contacts in 1995, of which 23% were positive comments, 14% were negative, and 60% were both positive and negative. The combined percentage of negative and mixed comments was 74%, compared to 69% in 1994. The one industry benchmark we were able to identify cited an average complaint rate of 42% of contacts.

Franchisees:

• Progress has been made towards improving consultative processes between franchisees and BSI with five individuals having been elected to represent international franchisees on a Franchisee Advisory Board.
• 60% agreed that franchisee contracts with B&J are financially and legally fair. 25% disagreed that contracts are financially fair and seven percent disagreed that contracts are legally fair.

Staff:

• In 1995, the effective ratio between the highest and lowest salaries was 14.5:1. Including stock options, based on B&J stock price at the end of 1995, the ratio was 18:1.
• BSI explored ways of formalising a process of employee representation and consultation, involving consultative councils covering some 900 employees and an advocacy process to be launched this year which will allow staff to seek support in grievance and disciplinary situations.

Suppliers:

• Three quarters of suppliers agreed or strongly agreed that NEF behaved ethically towards them. However, with regard to NEF's further aim to develop a supplier base sharing core values, over 90% had no opinion. Only half said they had an environmental policy.
• A self-funding Better Business Forum has been launched for suppliers to BSI, aiming to benefit members' businesses by improving their performance on environmental, social and animal protection issues, through working together and sharing best practices and ideas.

Environment:

• NEF was responsible for emissions of 14.6 tonnes of CO2 as a result of energy use.
• B&J increased the amount of dairy waste diverted from municipal treatment. This is an effort to turn a waste product into a valuable by-product by composting it or using it as animal feed.

Charities:

• B&J allocations to philanthropy in 1995 totalled $768,008, or 7.5% of pre-tax earnings. The average in the food and tobacco industry, as reported by the Conference Board, was 1.1% in 1994, the latest year available for comparison.

Aren't these the kind of indicators South Africa needs for tracking its social transformation?