What does social performance data tell us? Apparently, not enough
Social performance is one of those terms that some people understand and feel comfortable with and others have never even heard of. There is not a clear definition of social performance, but it is generally used to refer to how an organization, usually a company, is engaging with, managing the impacts on, and sharing benefits with society.
Over the past decade, there has been a big push for companies to regularly share information about their social performance. And despite an enormous amount of information being collected and reported, stakeholders do not feel that that social performance disclosures are answering the right questions and adequately measuring social performance. This leaves users of social performance disclosures, including investors, civil society, and communities, to make decisions based on a subjective interpretation of the available information.
Members of the Devonshire Initiative recognized this issue and led a study to investigate from a multi-stakeholder perspective why current disclosures are not adequately providing insight on a company’s social performance, with a focus on community well-being and the quality of the relationships between company and communities. The study included a literature review and interviews with 15 individuals from different stakeholder groups.
The study highlighted a few general themes. First, we are collectively moving towards a world of open data and transparency that will require additional resources and systems change to be effective. Second, this is a quickly maturing field. There are several opportunities to improve efficiency and accessibility of social performance disclosures and contribute to better communication, accountability, and trust in the mining sector. And third, the ground swell of interest from the investor community in ESG data is still focused on environmental disclosures (particularly as it relates to climate change) and diversity and inclusion data, as opposed to social performance. In addition to these general themes, the study identified a few findings that fall into the following five categories:
> Purpose. There is widespread agreement that social performance disclosures are important because they provide evidence that a company is managing risks to the business (as opposed to risk to communities).
> Audience. Investors are currently the main audience for corporate level disclosures. They are important; however, there is a great opportunity to collaborate with local stakeholders, civil society organizations, and governments at the local and national level to repurpose current disclosures and define new ones.
> Content. There are no consistent or agreed upon metrics for social performance disclosure. As a result, we use a series of proxies that require context and expertise to understand. Disclosures often focus on positive evidence and stories, as well as emphasizing efforts (inputs and activities) rather than evidence of effectiveness. There is an opportunity to provide more information about impacts or outcomes, mine site level data and the quality of the relationship between companies and local stakeholders (e.g., trust).
> Timing and accessibility. The timing and location of social performance disclosures contribute to a sense of complexity and perception of bias. The timing of disclosures devalues the data and information because it is not current.
> Methodology. The process of designing, collecting, analyzing, and reporting on social performance sits within company control, which leads to a perception of bias amongst some stakeholders. There is an opportunity to use participatory or collaborative monitoring to increase trust and provide balanced information.
It can feel a bit overwhelming to see the amount of energy and effort that goes into disclosures and realize it does not have the desired impact. But we can look at these findings with optimism! The study shows that there is a solid foundation that we can build on to make sure disclosures answer the right questions, measure social performance effectively, and meet users changing needs and expectations. You can read more about the study and some ideas that respondents had for the future on our website at www.devonshireintiative.org. This report is public to encourage companies and users of social performance disclosures to use and reference the findings. Society’s interest in data and accountability will continue to grow and it is in our collective best interest to align on the purpose, content, timing, and accessibility and methodology of disclosures.
CAROLYN BURNS is executive director of the Devonshire Initiative. The Devonshire Initiative is a multi-stakeholder forum focused on improving development outcomes in the mining context.
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