Measuring  Quality  of  Corporate  Sustainability  Reporting:  A  Case  Study  of  the  Automotive  Industry    

 

Lisa Cioffi 7/29/2014

Summer I 2014    

   

 

Abstract:

In today’s growing international business environment, many external pressures drive

businesses to focus not only on their financial reporting, but also on other non-financial factors

that affect their business, including climate change, scarce resources, population growth, global

warming, and economic development. Throughout the US and the entire global marketplace,

companies spend much of their time and money tending to issues of corporate social

responsibility (CSR) by executing sustainability actions and reporting those results to the

businesses investors. Sustainability requires a business to focus on its interactions with the

environment and society overall so it can enhance the company’s allocation of resources while

also creating long-term worth for the business. Sustainability reports are composed by companies

and can be issued by itself, with the company’s annual reports, or even as a portion on the

company Web site. As business sustainability reporting becomes more common in the global

marketplace, it is necessary to understand how to analyze these reports accurately to make

comparisons between businesses in the same industries, and to make improvements for future

years.

Introduction

Throughout the past decade, the disclosure of non-financial information has become

prevalent across many corporations, nonprofits, and governments, however measuring the extent

to which an organization is being sustainable can be challenging. Sustainability reporting goes

beyond the traditional measures of an organization’s profits, shareholder value, and return on

investment, and includes the disclosure of the social and environmental factors as well.

Organizations have begun to acknowledge the importance of creating a balance between

 

financial, social, and environmental responsibilities, otherwise known as the “triple bottom line.”

Businesses want to understand and react to social and environmental influences, impact

government regulations, as well as control risk, and provide new goods and services while

maintaining external relationships in order to build confidence and integrity. As pressure from

investors and customers increase, businesses are becoming highly encouraged to address and

report sustainability issues and risks. The number of companies that voluntarily disclose their

sustainability goals and issues continues to rise in number worldwide; therefore there is a growth

in laws and regulations that specifically mandate this type of disclosure. This paper will focus on

the evolution of sustainability reporting globally and the development and use of sustainability

reports. It will also include a case study analyzing and comparing the sustainability reports

between two well-known Japanese automotive corporations; Toyota Motor Corporation and

Honda Motor Company.

Background

Impact of Corporate Sustainability

The global sustainability agenda, as defined in the PWC Sustainability Agenda, begins

with making a commitment to incorporating social, environmental, economic and ethical factors

into a company’s strategic decision-making. Further, sustainability agenda evaluates how these

influences affect the business and its stakeholders, and what risks and opportunities these

influences show. Lastly, the sustainability agenda requests businesses to accept measures to

alleviate risks and take advantage of opportunities. In order for businesses to meet the

sustainable development requirements, these businesses have a substantial role in motivating and

capitalizing in innovation. These businesses then have to report to the decision-makers of the

 

company regarding influence these nonfinancial activities influence the global sustainable

agenda. The global sustainability agenda intends to eliminate poverty, decrease discrimination,

have wide-ranging growth, and more sustainable production and consumption as the battling of

climate change endures and other environmental limitations. In order to change the way in which

societies manage their social and environmental matters depends on the information that they are

provided to help guide them to help with achieving the goals of the global sustainability agenda,

which is why corporations should be there to help guide them. Corporate sustainability reporting

is relevant to the global sustainability agenda as it is a key determinant to sustainable

development and there are guidelines that can be followed if a company so wishes to called the

Global Sustainability Reporting Guidelines, created by the Global Reporting Initiative.

The Global Reporting Initiative (GRI)

The Global Reporting Initiative (GRI) is an independent, global nonprofit organization

launched in 1997 that promotes corporate sustainability activities and reporting. Its mission is to

make sustainability reporting standard practice by providing guidance and support to

organizations. The GRI provides sustainability reporting guidelines, and has published several

updated versions of these guidelines as sustainability reporting continues to grow; they are now

up to their fourth published version (G4). The GRI’s guidelines are the most widely used for

sustainability reporting around the world. There are many US organizations that produce

sustainability reports based on the GRI’s guidelines, and efforts have been underway for raising

the number of US companies that report on sustainability and for improving the quality of the

reports these companies provide. The top accounting firms, Deloitte, Ernst & Young, KPMG,

and PwC supports the efforts and guidelines of sustainability reporting provided by the GRI. The

 

goal of the sustainability guidelines is to report the economic, social, and environmental

performance of firms at the same level and with the same rigor as firms do with their financial

reporting. The national government and stock exchanges have aided with this growth the past

decade by promoting sustainability reporting. In the year 2000, only 44 firms followed the

Global Reporting Initiative’s guidelines for reporting sustainability, but by 2010 that number

grew to 1,973 firms. Each year, there is an increase in the number of firms adopting the GRI’s

guidelines for reporting their sustainability information. From 2006 through 2011, acceptance of

these guidelines increased from 22 to 58 percent.

Companies Currently Producing Sustainability Reports

There are several thousand companies who now generate corporate sustainability reports,

and the number continues to grow year by year. However, even though the number continues to

increase, the number of companies who do produce corporate sustainability reports only

constitutes a small portion of global business. KPMG has reported that out of the 250 biggest

global corporations in 34 countries, approximately 95% of report their sustainability performance

currently, as compared to 2008, where only 83% did, and 64% in 2005. According to a 2011

KPMG Corporate Responsibility Reporting survey, approximately 5,800 corporate sustainability

reports which were published in that year were available in online databases, and has grown

year-by-year between 17-20% in the years 2007 through 2011. The number of reports increases

continually throughout the years, but it is still only a small portion of global business.

Hypothesis:

Since there is no specific requirement in which corporations must report on sustainability

topics, it is probable to conclude that although both Toyota and Honda are corporations a part of

 

the automotive industry, their reasoning for reporting sustainability efforts and goals differ, as

well as the format in which they choose to report this information.

Methodology:

This research methodology includes gathering relevant data from specified documents

and compiling information from databases in order to analyze the data in order to heighten the

understanding of corporate sustainability reporting. The goal through this research would be to

answer some important questions, including: 1) What does corporate social responsibility mean

to companies within the automotive industry? 2) How do these automotive companies consider

corporate sustainability reporting beneficial for the corporation’s future? 3) How do the

sustainability reports from automotive corporations vary in their structure? 4) What guidelines do

these automotive corporations follow in order to distinguish themselves among each other?

To answer these questions, I have complied general information of the subject matter in

focus, corporate sustainability reporting, to frame the analysis of the actual sustainability reports

among two large automotive corporations, Honda and Toyota. The paper is of a qualitative

nature, where it will give general input on main topics and goals for corporate sustainability

reporting, and then will follow with Honda and Toyota’s participation and efforts towards

reporting on their sustainability goals. There is slight analysis of the specific percentage

improvements or failures of both these corporations; this is solely a report on the extent to which

Honda and Ford disclose their corporate sustainability reports.

Results:

What is corporate sustainability reporting?

Corporate sustainability reporting is used to provide relevant information to aid with

understanding a company’s future economic worth and influence towards creating and

 

preserving a sustainable global economy through considering the company’s economic, social,

and environmental impacts. However, although we know what it is used for, there is no

universally agreed upon definition since it is still an emerging discipline. The G4 GRI

Sustainability Reporting Guidelines defines corporate sustainability reporting as “a process that

assists companies in setting goals, measuring performance and managing change towards a

sustainable global economy – one that combines long-term profitability with social responsibility

and environmental care. Sustainability reporting – mainly through but not limited to a sustainable

report, is the key platform for communicating the company’s economic, environmental, social

and governance performance, reflecting positive and negative impacts.”

They also give sustainability reporting another definition as “a firm-issued general

purpose, non-financial report that provides information to investors, stakeholders, and the

general public about the firm’s practices involving environmental, social, and governance issues

either as a stand-alone report or as part of an integrated report.”

Another perspective of the definition of corporate sustainability reporting is given by the

GoF47 charter. The understand sustainability reporting as “the disclosure of information

concerning the significant economic, social, environmental and governance impacts and

performance of a company. Sustainability reporting is a key way to assume corporate

responsibility and to demonstrate a company’s long-term economic value. We understand

corporate responsibility as the responsibility of a company for the impacts of its activities on

society and the environment, exercised through transparent and ethical behavior that contributes

to sustainable development, including the health and welfare of society.”

Corporate sustainability reporting is sometimes referred to as corporate social responsibly

reporting, even though the two reports do not exactly have the same definition. Corporate social

 

responsibility reports include all of the same objectives as a sustainability report, but it also

includes and highlights the company’s relations with local, human, and natural communities and

its functioning methods, buyer concerns and public participation. You may sometimes also hear

of companies referring to their sustainability reports as Citizenship Reports. Non-financial

reporting is also used as a term to describe both corporate governance and sustainability

reporting, to differentiate that it is a counterpart to but also separation from financial reporting.

Financial performance of a company can affect the sustainability decisions; therefore you may

see financial information included in the sustainability report.

Corporate sustainability reporting communicates a company’s sustainability information

in numerous ways. Companies can report how they handle and influence social, economic,

human, and natural resources. They will also report about information by the stakeholders’

request, so that the investors can evaluate the long-term viability of the company. Corporations

also report information that helps them to assess their long-term viability by analyzing their own

operating models and activities. Companies will also disclose their positive and negative impacts

on the economy, environment, and society as a whole, and even communicate the company’s

sustainability strategies and progress that is made towards achieving goals. Corporations would

also consider disclosing their own contributions to sustainable development. A corporation can

choose the extent to which they report on sustainability, and can include, but are not limited to

the factors listed above. Corporate sustainability reporting continues to evolve over time,

especially currently with the widened use of the internet, making it easier and more convenient to

report the information to those who are interested.

Honda Motor Company refers to their corporate sustainability report as its Corporate

Social Responsibility. Honda’s CSR initiatives are based on the company’s philosophy. Their

 

philosophy is founded on three joys which are creating, selling, and buying being that the

products should be a joy to engineer, market, and purchase (Honda CSR 2013, pg. 5) The Honda

engineers experience the joy of creating recognized products that improve the quality of life and

society. As manufacturers, the Honda products are distributed to consumers through dealerships,

and those individuals who sell these vehicles should experience the joy of selling after when they

feel the pride and joy of generating income for their dealership on a product that sells well. The

final joy is those of the customers, which Honda considers the most important of all. They are

the ones who can value the product more than the manufacturers and engineers through their

daily use and devotedness to the product. Based on the Honda philosophy, the company has

hopes of sharing joy with the people of the world, and in order to pursue that goal, Honda intends

to help bring about a sustainable society through fulfilling social responsibilities, communicating

effectively with stakeholders, which includes, investors, customers, dealers, suppliers, associates,

shareholders, and communities.

Toyota Motor Corporation refers to their published work as the Sustainability Report, and

it presents its main objective as conveying Toyota’s efforts to “realize harmony with people,

societies, and the global environment, as well as a sustainable society through manufacturing.”

(Toyota Sustainability Report, 2013) Toyota’s global vision is to be rewarded with a smile

through exceeding customer expectations. They hope to give people safe and responsible means

of mobility for consumers, by focusing on quality, constant innovation, and respect for the

planet.

Reasons for Producing Corporate Sustainability Reports

 

There is not one particular reason for a company to report on sustainability, and reasons

vary throughout diverse industries, mainly because each company has set forth different goals to

achieve. A brief explanation for why companies product sustainability reports includes

communicating their sustainability procedures, abiding by obligatory reporting conditions,

answering to stakeholder requests, increasing clarity and tracking growth against obligations to

sustainability.

A more specific reason for companies to produce sustainability reports is to provide a

response for the increasing demand for the companies to manage a large array of resources aside

from their financial capital and the involvement in productivity of the company, but to also

answer to compliance obligations. Sustainability reporting can be of major benefit to some

companies being that they could save on costs, simplify their access to the company’s wealth,

and recognize improvements of company performance in financial markets which leads to more

stability for the company. There are certain forces that could drive the production of corporate

sustainability reporting including obligatory stock exchange listing conditions and the voluntary

stock exchange parameters, request from stakeholders, and accessibility and prevalent use of

voluntary procedures and outlines.

Benefits of Corporate Sustainability Reporting

Not only does corporate sustainability reporting provide benefits to the reporting

organization, but also to others who show concern over corporate social responsibility issues.

There should be a focus on enduring strategy, control and forecasting, improved threat and

opportunity consciousness and enhanced benchmarking and clarity. Sustainability reporting can

create internal and external benefits for the reporting company and others, some of which include

a better appreciation of the link between financial and non-financial information and their

 

performance, support for control and liability on sustainability goals, decreasing expenses and

improving efficiencies, reduction of risk related to environmental, social, and governance

failures, comparing internal performance amongst companies and sectors, changing undesirable

environmental, social, and governance influences, improving status and brand loyalty,

constructing affiliations with investors, and demonstrations of how the company is influenced

and can influence anticipations of sustainable development.

Information Included in Sustainability Reports

Sustainability reporting includes a large array of information regarding social,

environmental, economic, and governance affairs. When viewing sustainability reports

throughout time, they are used as a guide to putting the positive and negative aspects of the

company into context year after year. If a company sets forth providing sustainability reports

each year, it illustrates their continuing dedication to the issue of sustainability. There is no set

format or content for corporate sustainability reporting which allows a company to report

information that is relevant to them and to their stakeholders. Some of the subjects you may see

reported can include utilization of non-financial resources including energy, fossil fuels, water,

forestry crops, etc. It is also likely that a company will report about the production of waste and

pollutants which can be harmful to the environment, including sending waste off to landfills,

greenhouse gas emissions, and the discharge of waste water, etc. Climate change, shortage of

resources, new product demands, etc. are also subjects that companies could include in their

sustainability reports regarding the risks and opportunities associated with any. Companies also

can include information about times in which they have participated working with local

community groups in order to achieve beneficial outcomes in those societies. Any strategy or

attitude taken on matters concerning corporate sustainability is likely to appear in a corporate

 

sustainability report, and also the corporation’s innovative ideas to create goods and services to

uphold the sustainability agenda. Other subjects that could be included in sustainability reports

are those of corporate governance, human resources management, social issues, and anti-

corruption policies, etc.

Information Honda Includes in their CSR Report 2013

Honda includes in its CSR Report for 2013 their communication with society,

environmental initiatives, corporate governance, and shareholder and investor information.

Honda interacts with society through efforts to maximize customer satisfaction. They approach

dealers about creating and maintaining the trust of Honda customers through the quality of

service at purchase, to continuing quality after purchase. Honda’s Customer Service Operation is

designed to enhance worldwide customer satisfaction by offering friendly, timely, reliable,

affordable, and convenient service for their customers. Honda holds meetings and events

regularly in order to enhance the with each region while still keeping a strong focus on creating

and maintaining an environment where dealers can address customer satisfaction improvements

more effectively and efficiently. Honda mainly interacts with society through the input received

from dealers, who distribute customer satisfaction surveys to consumers. The other way in which

they communicate with society is with The Customer Relations Center which is made available

through dialing for consumers to inquire to the corporation, and it is where all of their

satisfaction surveys take place.

Honda is involved in several environmental initiatives throughout six-regions of the

globe with the goal of reducing their environmental footprint worldwide because they are aware

of their impact they could have on it. They have established CO2 emission reduction targets for

all production, and plan to provide by 2020, “good products to customers, with speed,

 

affordability, and low CO2 emissions.” They also make efforts worldwide to address

environmental issues of climate change, energy problems, etc. This is all of the information that

Honda discloses in their CSR Report in 2013, and although there are increasing pressures for

corporations for report their environmental impacts, Honda currently does not, but has plans to

disclose this information by region for future years.

Honda discloses their corporate governance information and considers it a key

managerial issue that requires focus on increasing shareholder, investor, customer, and general

public’s trust in order to be the company society expects it to be. This section is sorted into three

sub-topics of their approach to corporate governance, risk management, and compliance. Each of

these topics relates back to the goal of increasing trust while mapping out structures for how they

plan to manage and accomplish this goal.

Lastly, of the main issues usually presented in sustainability reports, Honda included

beneficial information for stakeholders and investors of their corporation in their CSR Report for

2013. This is probably the most widely looked at portion of this report since, stakeholders are

mainly the individuals reading these reports, and it is in their best interest to focus their attention

on this section so they can understand how they are benefiting or not from the economic

decisions of this company. In this section, Honda includes a brief history of Honda on stock

exchanges. It then moves on to inform shareholders of how Honda protects their rights by

providing forums for communication among individuals, as well as holding meetings, and

hosting seminars to promote close dialogue among stakeholders and the company. And the final

section refers to Honda’s communications with stakeholders, through hosting annual meetings

where the company discloses vital company information as clearly as possible presentation style.

 

This type of atmosphere also allows stakeholders to directly ask Honda’s financial

representatives questions and receive the highest level of a response.

Information in the 2013 Toyota Sustainability Report

As does Honda, Toyota Motor Corporation also includes in their 2013 Sustainability

Report topics on environmental initiatives both in cars and communities, creating the future

society, corporate governance, and financial information. Toyota’s environmental initiatives

must be of high significance to them since they have two sections pertaining to the subject,

giving a more specific focus on initiatives for their cars as well as for society overall. Toyota is

currently in pursuit of the ultimate Eco-car due to the limited amount of fossil fuels available for

use. They plan to create conventional and hybrid vehicles utilizing alternative fuel sources such

as gas fuel, electricity, and hydrogen, and they expect to see increases in the usage of these

vehicles based on customer needs and requirements. Then moving forward into the

environmental initiatives in communities, Toyota defines its Environmental Action Plan to

contribute to a low-carbon society through significantly reducing GHG emissions, contributing

to a recycling-based society by enhancing recycling of resources, and protect the environment

while contributing to a harmony with nature society. (Toyota Sustainability Report 2013, pg. 34)

This section then expands on each of Toyota’s plans of action, mainly through illustrations and

graphs with explanations.

The next main section of the sustainability report is engaging with society, and Toyota’s

current initiative is to create a better future for society. Toyota collaborates with local

communities, governments, corporations, and academic circles to help realize a sustainable

society where all individuals are happy. Building environmentally thoughtful communities so

 

people can connect more openly and building robots made to improve the quality of life, are

among some of the major innovations for creating a better future for society.

Corporate governance is the next major area Toyota reports on. This section has a large

portion of explanations on it rather than charts and images to help explain the goals. The reason

why is that Toyota has established a position where stable long-term growth is of one of their top

priority management issues, and this can be achieved through building positive relationships

with Toyota’s stakeholders. The company illustrates their system for ensuring appropriate

management, as well as their basic approach to internal controls. In order to grasp a tight hold on

risk, Toyota created a Risk Management Committee in 2010. Toyota shows how this committee

is organized and how it was implemented into their corporation, and even provides the actions

the team takes to combat risks. Toyota has enlisted its philosophy on compliance in its Guiding

Principles, and the sustainability report touches upon checking activities to enhance compliance,

education and training to ensure through compliance, corruption preventive measures, and their

compliance hotline.

The final focus of a sustainability report that Toyota discloses information is the financial

section where they give shareholders all of the relevant information they need in order to prompt

decision-making. Toyota provides these stakeholders with the company’s three key priorities of

their financial strategy along with explanations of each, which are growth, efficiency, and

stability. They also provide a summary of their business results for the year they are reporting in,

while providing graphs and charts of their performance data, including net income, vehicle

production, vehicle sales, net revenues, and capital expenditures.

Guiding Principles for Sustainability Reporting

 

There are principles set in place to help guide and influence the production of corporate

sustainability reports in order to encourage specific outcomes including clarity and liability,

stability and impartiality, consistency and comparability, accuracy and entirety, timeliness,

clarity and understandability, reliability, flexibility, building on existing reporting frameworks,

materiality, linking reporting and action, investor receptiveness, and most importantly making

reporting attainable and useful for any business.

For any report a company makes public, you want them to be clearly written and

understandable so that anyone can make use of the information without difficulties. The

information being reported should reflect both the positive and negative aspects of the

corporation’s performance and should be written in an honest manner where it is perceived either

favorably or unfavorably by the individual reading the report. Each time a report is created year

by year, the information should be provided in a consistent manner with the same policies and

procedures for an individual company or a group of entities. While providing consistent reports,

it facilitates comparability among these reports allowing users to identify similarities and

differences between the sets of information based on the quality of which it is presented.

Comparability aids in presentation assessment and benchmarking. Sustainability reporting should

be precise and comprehensive to the extent where it guarantees that the stated information is

adequately correct in order to allow accurate assessments of a company’s performance. Accurate

information is that of which procedures and constraints are utilized to decrease the threat of

misstated information. The information is comprehensive when adequate detail is delivered to

assist readers in grasping the environment and grade of oversights, approximations, postulations,

and reservations. Sustainability reports should be provided in a timely manner on a regular basis

 

in order to verify that the information is dispersed among individuals and decision-makers so

they have the capability to make decisions at appropriate times.

Sustainability reports should provide individuals with understandable, available, and

practical information. Understandable information uses well-defined terms, recognizable

language, and the essential quantity of detail, including usage of diagrams to assist in the

individuals’ comprehension. The sustainability reports should provide individuals with reliable

information that is supported by evidence and internal controls. The information on these reports

should be in sync with the monitored information and is subject to assurance of information

through assessments from external sources. Companies are allowed the flexibility to choose

policies to incorporate into the corporate sustainability reports that are best suited to their

financial environment. What is also flexible about sustainability reporting is how companies can

report based on several global reporting requirements. Companies are even allowed to begin

reporting on a more basic level, but as the time progresses, the quality of the reports should also

progress. Many companies already report using guidelines provided, and it is important to

recognize if the report being analyzed is following a particular guideline. Usually when

companies do this, it means that they have found the guideline that suits them the best.

Focus on the materiality of sustainability reports is useful to encourage an emphasis on

the topics that have a direct and indirect impact on a company’s ability to generate, maintain, or

destroy their own environmental, social, and economic value, as well as those of their investors

and general society. Stakeholder receptiveness is crucial to an organization because those

relations with and commitments to stakeholders can support the progress and assessment of

sustainability policy and classifying and handling threats. Also, the idea of making reporting

achievable and practical for all businesses is a goal, and each company should not think of

 

reporting their environmental, social, and economic information as a burden, but just as an added

advantage to benefit their company.

Toyota Motor Corporation’s CSR policy focuses on the contribution towards sustainable

development. Toyota aims to be “admired and trusted by society” (Toyota Sustainability Report,

2013, p 6) through making sure that all employees recognize and act upon the company’s CSR

Policy. They hope all business activity globally can contribute to balanced and prolonged

development of society and the environment, based on their Guiding Principles. Toyota complies

with local, national, and international rules and guidelines, and operates all business activities

with utmost honesty and reliability. Toyota’s focus for sustainable development is based on

mangers interactions with stakeholders with approachable and open-minded perspectives

allowing for the best communications between them.

Steps Involved in Corporate Sustainability Reporting

There are many processes that go into creating corporate sustainability reports. The first

of these steps would be to identify the appropriate obligations necessary for the particular

sustainability report. There are legislations that require certain content to be included in

sustainability reports, and it is the corporation’s responsibility to recognize, comprehend, and

conform to the relevant legislations that are in place. Another step for preparing sustainability

reports is the necessity to communicate with external stakeholders of the business. The

sustainability reports are written based on requests from these investors in order to give them a

better understanding of the company’s performance related to environmental, social, economic,

and government issues. Companies should establish relations with their stakeholders so they can

learn about the investor’s perspectives to ensure that the sustainability goals serve the investor

 

needs as well as the businesses objectives for reporting. Aside from engaging with the external

stakeholders, it is also important to get internal input from those involved with the corporations

operating functions. Sustainability reports usually cover a large range of information across

many subjects, therefore it is in a company’s best interest to allow internal personnel to work

together and communicate with one another on relevant sustainability issues within certain

departments, including risk departments, health and safety, finance, human resources, etc.

Another step a corporation should take is to agree upon as to when each sustainability

report is prepared annually, as it may vary with when annual financial reports are prepared due to

availability of information required to prepare it. Thereafter, a corporation should make sure that

their sustainability decisions throughout the term correlated with the company’s vision, business

strategy, overall decision making processes, and risk evaluations. After deciding what

information the company wished to present in the corporate sustainability reports, it comes time

for the company to begin collecting their data to use. Companies should make sure that they have

the correct systems, processes, and tools available for them to receive their data accurately in

order to report correct information. Then, the companies should determine the extent to which

they choose to collect data on certain subject matters for their sustainability reports. It is then

time for companies to decide what information to report based on the reporting requirements,

engaging with stakeholders, strategizing, and collecting data. Normally the companies will use

the stakeholder’s requests as a vital guide to decide on which information to present on their

sustainability reports. Something else companies should consider to put onto their reports are

their sustainability goals. Not all companies will be able to achieve all of their sustainability

goals in the short-term, most goals take much time, and therefore it is recommended for

 

corporations to present progress information on their sustainability reports to give readers a

better look at the efforts made to achieve these goals along with target outcomes and dates.

Companies should also consider disclosing the foundation, rule, or practice used to

collect, measure, and analyze their data for disclosure in their sustainability reports in order to

amplify clarity of the reported information. The next step a company should take would be to

determine the best approach for communicating their sustainability information. They can do so

by publishing their sustainability reports on websites, in a physical printed format, or even

through social media, which is becoming a useful method for relaying business information. And

lastly, the corporations should encourage stakeholders to give their input and opinion based on

the current sustainability reports in order to assist with improvements for future years.

http://www.toyota-global.com/sustainability/csr_initiatives/csr_concepts/csr_activities.html

 

http://world.honda.com/CSR/concept/activities/

Conclusions:

Requirements for corporations to disclose corporate sustainability reports yearly

continually grows, however with no universal guide or set requirements, corporations are at the

leisure of disclosing whichever information they find most valuable to their own benefit. It

would be an accurate assumption that companies within the same industry and originating from

the same country would follow the same corporate sustainability reporting guidelines; however

that is not the case, as we have seen through analyzing the reports of Honda Motor Corporation

and Toyota Motor Company.

Sustainability reports should focus on four main aspects of a company, including the

social, environmental, economic, and governmental issues and advances. For the automotive

industry, environmental issues are a main concern currently, including what these companies are

doing to reduce CO2 emissions and dependence on fossil fuels, requiring less use of oil, etc.

 

While analyzing Honda’s CSR Report 2013, they currently do not disclose much information

about their current environmental impacts and efforts to improve on them; all that Honda reports

is the general focus for dealing with environmental issues, and plan to report this information

within the coming years. Although Honda does report on all four major topics to include in

sustainability reports, it puts most of its emphasis on their shareholder communications rather

than their environmental impacts.

Overall, Honda’s CSR Report for 2013 provides entirely too much general information,

and tends to repeat goals hardly without expanding on processes in the works to improve on its

corporate social responsibility throughout several sections, although it is a lengthy hundred plus

page report. I would not consider this as an interactive report, being that Honda hardly provided

graphs and procedures, making this report specified towards the stakeholders more so than to

customers, even though Honda strives to be a company society wants to exist. Therefore, I do not

think that Honda’s sustainability reporting efforts are relevant to their CSR philosophy, and I

certainly believe that efforts should be made to improve on this type of non-financial reporting

so that Honda can achieve their corporate social responsibility goals in the future, and make it a

more desirable company to the global society.

Toyota’s Sustainability Report is one that should be used as an example for all

corporations in my opinion. This company clearly defines their philosophy and their plans of

actions to achieve the goals they desire. This report is about fifty pages less lengthy than the

Honda CSR Report for 2013, and it has more appeal to it. There is not a massive amount of

words just written on the page, but there are images, graphs, charts, and statistics on the pages of

this report with simple and precise explanations relating back to the relevant topic for fulfilling

the company’s goals. Just by the appearance of the report, all of the efforts that Toyota put into

 

their sustainability reporting is extremely noticeable and lets the reader know that this

information is just as important as financial information is to the company.

It can be expected that one can expect to find similarities among corporations within the

same industry, for example Toyota Motor Corporation and Honda Motor Company. That did not

prove to be the case for these two companies however. Although the companies may report on

very similar subject matters, the content in these sustainability reports do not are not of the same

caliber between the two companies. Toyota distributes a better quality report with great detail

that continues to support the well thought out philosophy of the company, while Honda still

seems a bit confused on what exactly their CSR initiative philosophy is. Therefore Honda

created a poorer quality report vaguely giving much detail on programs and processes used to

achieve their CSR initiative goals.