glossary
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ACCOUNTABILITY
With reference to corporate reporting, accountability can be seen as the duty and responsibility to explain and justify, to those entitled to know, what is being done to meet commitments to stakeholders both on the economic and profitability level (e.g. in relation to existing or potential investors) and from other points of view.
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ACCOUNTABILITY AA1000
AccountAbility 1000 is a standard developed by the ISEA (Institute of Social and Ethical Accountability) with the central aim of supplying quality to the ethical-social, environmental and sustainability accounting, auditing and reporting process.
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CAUSE RELATED MARKETING (CRM)
Cause Related Marketing is a business partnership between a for profit company and a non-profit organisation which brings transparent benefits, shared equally between the parties: for the former, increased sales and differentiated brand positioning; for the latter, extra funds and greater visibility for the cause.
Compared to event sponsorship, often limited to a one-off grant, Cause Related Marketing involves closer participation and a continuous dialogue. It provides valuable support to a socially useful cause while simultaneously pursuing the company's marketing objectives: the product becomes the means of transmitting the social message, and the economic contribution is wholly or partially proportional to the sales achieved.
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CODE OF CONDUCT
The Code of Conduct is the firm's "Constitutional Charter", a charter of moral rights and obligations which defines the moral and social responsibility of every participant in the business organisation. It is an effective means for companies to prevent irresponsible or illicit behaviour by people operating in their name and on their behalf, because it provides a clear, explicit statement of the moral and social responsibilities of its managers, executives, employees, and often also suppliers, in relation to the different groups of stakeholders. The Code of Conduct has become an instrument which assures fair, effective management of transactions and interpersonal relations and supports the company's reputation, in order to create trust in external relations.
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CORPORATE CITIZENSHIP
The concept of corporate citizenship finds various forms of expression, including partnerships and investments in the community, the involvement of personnel in the community, projects to aid marginalised groups and Corporate and Community Foundations.
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CORPORATE GOVERNANCE
Within a company, corporate governance deals with the social aspects related to its ownership structure, the makeup and mode of operation of the Board of Directors, and the relationships between the owners, the Board and the management structure. The topics dealt with relate to the composition of the governing bodies, the criteria for selecting Board members, the role of the non-executive directors, transparency concerning the operation of the governing bodies, the protection of minority shareholders, internal auditing systems and public take-over bids. There is a particular focus on the problems of family business, which often need to involve professional management, prepare the succession and expand their company capital - in other words, bring new blood into the governing bodies - to fuel their growth.
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CORPORATE SOCIAL RESPONSIBILITY
The "Green Paper" Promoting a European framework for Corporate Social Responsibility, published by the European Commission on 18 July 2001, defines Corporate Social Responsibility as "companies' integration of social and environmental concerns in their business operations and in their interactions with their stakeholders on a voluntary basis".
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DOW JONES SUSTAINABILITY GROUP INDEX
The Dow Jones Sustainability Group Index has been created within the general index of the New York Stock Exchange in order to provide a general, flexible scientific index with the aim of monitoring the performance of investments and funds oriented towards sustainable companies, and to provide an independent, objective yardstick for those wishing to invest in sustainable companies. The DJSGI satisfies these needs and demands by combining the experience and know-how of Dow Jones & Company with the specific advice of the SAM Sustainability Group, which specialises in sustainable investments.
The Dow Jones Sustainability Group Index derives from and is integrated in the Wall Street general index and uses the same method of calculation. It analyses 200 companies representing 73 industrial groups in 33 countries and has one general index, three zone indices (North America, Europe and Asia) and one for each US state.
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ENVIRONMENTAL IMPACT
"Impact" is a technical term (derived from the Latin "impingere": push against) which can be defined as "the encounter of a moving body with a surface". By extension, "impact" also means "collision" and one example of this definition is its use in "environmental impact", or "the action of a physical cause on the natural environment". The expression is therefore absolutely neutral, although the term "impact" brings with it slightly negative connotations.
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ENVIRONMENTAL IMPACT ASSESSMENT (E.I.A.)
Environmental Impact Assessment (E.I.A.) is the preliminary assessment of the potential effects of public works on their surrounding natural environment and whether these effects are reversible or irreversible. The relevant regulations also require the collection of the comments of all the community affected and thus (in theory) "people's" real participation in the final decisions.
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ENVIRONMENTAL REPORT
The Environmental Report is a disclosure document describing the main relations between the company and the environment, published voluntarily with the aim of directly communicating with the stakeholders concerned. It is a method for monitoring the firm's environmental performance and providing its stakeholders with the relative information, as well as a management tool which may help to improve its performance not only in environmental but also in economic terms. Unlike the Social Report, the Environmental Report refers to a specific part of the company's activities, analysing it with specific parameters and following guidelines laid down by various international organisations.
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ETHICAL INVESTMENT
Ethical investment (as it is known in Great Britain) or socially responsible investment (to use the term current in the United States) means the selection and management of investments (shares, bonds and loans) on the basis of ethical and social criteria.
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ETHICAL INVESTMENT PRODUCTS
Ethical products as such : offer the investor the guarantee that his money will be used in a morally correct way.
Targeted products: use the capital raised to support specific socially useful activities;
Humanitarian products: aim to increase the resources allocated to international solidarity. The investment is in non-profit companies founded on principles of mutuality, democratic self-government and transparency in the use of resources.
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ETHICAL INVESTOR
An ethical investor is not solely interested in the performance of his shares but also wishes to know the underlying reasons for this profitability, the characteristics of the goods produced and the firm's location, and to check how its business is conducted.
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FAIR TRADE
Fair Trade is defined as an alternative approach to conventional trade. It promotes social and economic justice, sustainable development and respect for people and the environment through trade, education and political action. Its aim is to correct the imbalance in relations with less economically developed countries and improve the market access and standards of living of disadvantaged producers, through a fairer distribution of profits. Fair trade is an equal relationship amongst all those involved in the marketing chain: producers, workers, fair trade outlets, importers and consumers.
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FUND RAISING
The term Fund Raising describes the sourcing and collection of funds to finance activities to guarantee the sustainability of Foundations, Associations and Charities which operate on a non-profit basis, by means of private and corporate donations. Currently, a large number of Foundations, Associations, Social Co-operatives and Charities are starting to view fund raising as a good financing opportunity for the development of social activities and charitable initiatives.
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GBS
The GBS standard, drawn up by the Italian Social Reporting Research Centre, defines a set of principles which must be complied with when preparing and drafting the Social Report. Under the GBS standard, the Social Report must describe the company's identity, the production and distribution of added value, and the results achieved in relation to the objectives set and the various stakeholders. The standard also envisages additional parts concerning the stakeholders' opinion of the document and their comments and suggestions for improvements.
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GLOBAL COMPACT
Global Compact ("GC") is the name which the UN, and its Secretary General Kofi Annan in particular, have given to a planning document by means of which they wish to get companies all over the world involved in topics of social and environmental responsibility. It was announced by the Secretary General himself at the World Economic Forum in Davos in 1999, and its operational launch took place in July 2000. At present about 500 companies from 30 of the world's countries have joined the GC and the forecasts and hopes are that one thousand will join by the end of this year, including at least 100 of the most important multinationals. Its spirit can be summarised by Kofi Annan's famous statement that: " not what is good for the company is good for society, but what is good for society is good for the company": it is a reversal of the picture, in which the company acknowledges its social role and puts itself at the service of the community, while continuing to seek economic returns to guarantee its survival over time. Specifically, it is a statement of principles with which business activity must comply in order to qualify as responsible and thus contribute, not only to increasing society's wealth, but also to its growth in terms of the enjoyment of rights, freedom, quality of life and improvement of health and hygiene conditions on the planet.
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GRI - GLOBAL REPORTING INITIATIVE (GRI)
The GRI - Global Reporting Initiative is a reporting standard promoted in 1997 by the CERES (Coalition for Environmentally Responsible Economies) of Boston in partnership with the UNEP (United Nation Environment Programme). The GRI aims to encourage the drafting of sustainability reports providing integrated coverage of the economic, social and environmental dimensions of the company's business.
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LOCAL AGENDA 21
Local Agenda 21 is an action plan for global sustainable development intended to develop integrated strategies to overturn the negative impact of human activities on the natural environment and promote economic development that is also ecologically sustainable. The Local Agenda 21 Programme, approved in Rio de Janeiro in 1992 and signed by more than 170 countries, is a catalogue of policies and actions aimed at achieving Sustainable Development. It represents the process of partnership through which local authorities work in collaboration with all sectors of the local community to draw up action plans for the pursuance of sustainability. In view of each city's unique features, local authorities all over the world were urged to set their own Agendas. In Italy, the Ministry of the Environment supports the Local Agenda 21 process by co-financing a large number of projects.
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MICROCREDIT
Microcredit programmes provide small loans to very poor people for income-generating self-employment projects, enabling them to support themselves. It is a form of financing available to those who would otherwise be completely excluded from the traditional credit system.
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MICROFINANCE
Microfinance is intended for those who are economically active even though they are below or close to the poverty line (estimated at about 400 million people world-wide): small craftsmen, farmers, small businessmen or aspiring entrepreneurs. If aided by means of finance (through conventional and other programmes) these people might achieve economic security.
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MISSION REPORT
The Mission Report is a social disclosure model specially conceived for non-profit organisations, enabling them not only to respond to a demand for social reporting but also to prove their social legitimacy, i.e. their acquisition of their right to claim to interpret unexpressed or unsatisfied social needs.
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NON-PROFIT
Profit is a Latin word, the contracted form of the third person singular (indicative mode, present tense) of the verb "proficere" which means to receive advantage. The word became current in English in the Sixteenth and Seventeenth Centuries. Non-profit is a term of American origin which stands for Non Profit Organisations, those which operate without having the generation of profit as their primary aim (the scientific term is actually Not for Profit).
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OSCAR DI BILANCIO
The "Oscar di Bilancio" is the award that attracts the participation of thousands of Italy's most competitive large and small organisations and helps to plot the story of the evolution of corporate disclosure in Italy during the last fifty years. In 2003, in line with the Oscar's aim of promoting and shaping the trends based on society's, and above all the financial community's expectations, the organisers launched their Oscar Bilancio di Sostenibilità (Sustainability Report Award). The award is intended for the organisations which use "triple bottom line" reporting to provide a clear, transparent picture of the interdependency of the economic, social and environmental policies they implement, and the management of their systems of relations with their stakeholders.
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Q-RES
Q-RES is a standard published by the Castellana University CELE Centre for Ethics, Law & Economics in collaboration with companies, associations, consulting companies and non-profit organisations. Q-RES identifies guidelines defining the whole body of tools for management of corporate ethical and social responsibility (ethical vision / code of conduct / ethical training / implementation and control / ethical-social reporting / external audits).
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SA8000 ACCOUNTABILITY CERTIFICATION
SA8000 accountability certification is a certification standard which companies can freely choose to adopt in order to guarantee that their products have been produced without damage to workers' rights, in line with criteria relating to the non-use of child labour or forced labour, the maintenance of conditions of health and safety at work, freedom of association, the absence of discrimination or coercion, and the setting of fair working hours and remuneration.
In its current version, the SA8000 standard can be applied in both developing and industrialised countries, by small or large companies, and by private and public sector organisations. Any organisation wishing to obtain certification must also guarantee that its chain of suppliers/subcontractors complies with these social requirements. The SA8000 standard, based on the ILO (International Labour Organisation) conventions, was drawn up by SAI Social Accountability International, a USA-based non-profit organisation founded in 1997 to analyse and develop a social responsibility standard.
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SOCIAL REPORT
The Social Report is a tool which highlights the social impact a company has on its host community and the social groups which interact with it. It is a document to be published alongside existing forms of disclosure, capable of providing the various stakeholders (human resources, customers and suppliers, shareholders, institutions, banks, communities, etc.) with information about the social effects of corporate policies. It also offers management the data needed to evaluate and oversee the results produced and decide the strategies to be implemented in the social field.
The Social Report reflects the company's ethical profile, which legitimises its role not only in structural but above all in moral terms, in the eyes of its host community. It is also an opportunity for emphasising the company's links to its geographical base and reinforcing the image of a corporation as an economic player which (by pursuing its own prevalent interest) helps to improve the quality of life of the members of the society within which it operates.
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STAKEHOLDER
Stakeholders are those who have an interest in the company's activity, including interests of a non-economic nature. Stakeholders are therefore all the people with whom an organisation interacts during its activities: shareholders, employees, customers, the community, state authorities, local government, suppliers, competitors, stock markets, banks, investors, etc.
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SUPPORT SALARY PROGRAMME
In the Support Salary Programme the company becomes a means of promoting a good cause amongst its employees, who are asked to contribute by donating a small part of their salaries to the financing of the project proposed. The company supports the initiative through an initial grant or by topping up the funds raised by its employees.
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SUSTAINABLE DEVELOPMENT
"Development which satisfies the needs of the present without jeopardising future generations' needs of satisfying their needs" (Bruntland Report - WCED, 1987).
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SUSTAINABILITY REPORT
Unlike the Social Report, the Sustainability Report places full emphasis on the environmental dimension, pays attention to the prosperity of future generations, combines the global and local dimensions of development, interacts with development providers and is the outcome of a complex interaction of social and environmental parameters within the company.
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THIRD SECTOR
This category includes all the organisations, generally voluntary organisations, social co-operatives, social promotion organisations and "pro-social" foundations, which work on a non-profit basis and use approaches different from those of public institutions and companies as such to carry out activities of various kinds (in the fields of education, health, social services, environmental protection, etc.) through forms of "social participation".
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TRIPLE BOTTOM LINE
The concept of the "triple-bottom-line" refers to a system for measuring and recording corporate performance from the economic, social and environmental points of view. Now common parlance amongst professionals, the "triple-bottom-line" approach means that companies should develop sustainable investments and corporate decisions starting from the bottom and simultaneously pursuing three aims (triple-line): social equity / environmental quality / economic prosperity.
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WELFARE MINISTRY CSR-SC PROJECT
To confirm his Ministry's commitment to promoting the adoption of the CSR culture, Italy's Welfare Minister Mr Maroni included this topic amongst the priorities for Italy's six-month Presidency of the European Union. The Ministry of Labour and Social Policies intends to make a major contribution to the European debate and has a concrete proposal to be made in Venice on 14 November during the Third European Conference on Corporate Social Responsibility. The Project, better known as the CSR-SC Project, comprises the development of generally accepted guidelines and criteria for the evaluation, reporting and verification of CSR practices.
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