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The Value of CSR Reporting in Developing Economies

An interesting question was posed recently by a member of a group I’m part of on LinkedIn (Global Reporting Initiative) that stated simply “Is GRI beneficial for a 3rd world enterprise?” It’s both a valid and interesting question for a variety of reasons. This gentleman’s concern was mainly over the cost and time that it might take to put together such a report.

The GRI framework is an attempt at standardizing the reporting of CSR initiatives. While the framework is generally utilized by larger corporations (many in developing countries/emerging markets), this man’s question seemed to address a key economic driver, small to medium enterprises (SMEs). Of course, as with any company besides Google that has limited resources, the knee-jerk reaction is to believe that the time and monetary cost make reporting prohibitive. However, there is more than meets the eye.

Many of the respondents pointed out the potential cost savings from assessing where improvements in social and environmental aspects could be made. One comment looked at reporting as a way to focus your company on cost-saving measures like recycling, water reuse and proper waste disposal. Uninitiated transparency may also improve access to financing as potential investors may see the advantages of a company that is willing to tackle and report on such measures.

However, there is an even bigger picture here. The advantage for SMEs incorporating CSR or more specifically GRI reporting into their routine gives them a chance to integrate these principles into their core business. Much has been discussed about the need to make CSR not just something you do because of external (or for that matter, internal) pressure, but because it makes good business sense and it supports the growth of your business. For these businesses in particular, this is a great opportunity.

One respondent took even a bigger picture approach. She stated that she thought reporting was particularly important in emerging markets because “it sets the tone for ‘the way of doing business’ and provides opportunities in the global supply chain, while elevating the status of products and services to the local market.” I think this is an important point. And in no way do I mean to belittle emerging economies (after all with proper management they’ll be pushing the US shortly), but it’s interesting to look at these economies as SMEs themselves, where they can really make CSR reporting part of the national business conscience. India is already trying to make this a reality.

The flexibility that is available when building something, whether it be a business or economic policy, could really be an advantage to these economies and allow these countries to get a few things right business-wise that the US is currently attempting to play catch-up on. I would love to hear further thoughts on this.

Image Credit by cajanavarra via Flickr under a CC license

Written by Jonathan Banco

Jonathan has worked in both journalism and various facets of small business development over the past eight years. Most recently, he graduated from the Monterey Institute of International Studies (graduate school of Middlebury College) in 2010 with an MBA and an MA in International Development Policy. His interests include SME development and its role in economic growth, particularly in Sub-Saharan Africa as well as how CSR/Sustainability measures impact both business operations and the communities in which businesses operate. While at MIIS he worked as a summer fellow involved in small business consulting in Accra, Ghana and was an active member of the MIIS Net Impact chapter. As a life long traveler, Jonathan has been fortunate to have lived in, worked in or visited over 20 countries on 5 continents and he truly hopes that he will be able to continue this trend.

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