Transparency is way more than a buzzword - it is a vital part of every successful business. Primarily, transparency signifies honesty, responsibility and willingness to communicate. Quality of available information about a business and its activities affects its reputation and views of all its stakeholders. It is essential, that companies provide all relevant and up-to-date information relating to their performance, be it positive or negative.
WHY IT MATTERS?
Every company should be aware about the essence of transparency. Many organizations fear that greater transparency of their activities will translate into greater vulnerability. Others deal with lack of information and data on their social and environmental impact. Long-term efforts to provide comprehensive, comparable and complete data, however, ensure positive reactions from stakeholders, who, based on availability of quality and credible information, can also make better decisions. At the same time, it is more likely, they will stay loyal, even in case of temporary negative circumstances.
All developed trust can help to improve company strengths, its goods or services, and in turn also its corporate competitiveness. Transparent companies are able to gain more loyal customers and retain the existing ones, reduce staff fluctuation and increase the interest of investors. Like in our lives, we also expect honest and fair approach from the people important to us.
TRANSPARENCY AS A MEASURE OF QUALITY COMMUNICATION WITH STAKEHOLDERS
Recently, we published a blog post related to increasing investor interest in corporate sustainability. The availability of high-quality ESG (environmental, social and governance) data helps them to better control and manage their investments. It allows them to keep track, whether it affects the society or the environment in a positive or a negative way. CSR and sustainability strategies and goals should cover all risks posed to their business as well as any failure to reach established targets. If the sustainability management is being carried out properly, it can increase the value of investment and/or mitigate its risk.
Employees play a crucial role in the company and they deserve to be informed and involved in decision-making about the financial situation as well as social, environmental and economic policies within the organization. Transparency is like a glue which keeps society together, allowing employees to ask important questions and receive honest answers. It can prove helpful for employee decision-making, functions as a tool to eliminate disinformation and strengthens their trust, loyalty and morality.
Transparency is also essential among consumers. Customers want relevant, true and easy-to-understand information about company products and services. Better customer awareness leads to increasing sales and thus also increasing company profit. “Our food. Your questions.” a McDonald’s campaign in Canada, is an example of such approach in practice. With the help of specialized digital platform, customers can ask any question about the chain store activities and the organization has to provide clear answers.
METHODS OF TRANSPARENT COMMUNICATION
Online network is an effective way how to create a culture of transparency, increase employee loyalty and deepen relationships with customers.
- Blogs,
- social media,
- e-mail campaigns
- these are the mechanisms that enable to stay in immediate and constant contact with all customers and communities. An integral part of transparent communication is also represented by regular sustainability reports that summarize all relevant business information and data for a set period of time and provide a structured overview of its impact.
Non-financial information can be published in various forms. It can be composed in the form of sustainability reports based on international standards and frameworks such as Global Reporting Initiative (GRI) or Carbon Disclosure Project (CDP) or feature as a part of the standard financial and annual reports, where they are integrated and provide a complete overview of the financial situation as well as the non-financial indicators of the company. When it comes to non-financial indicators, Czech companies are so far one of the least transparent in the region and in the world. Starting this year, however, a signal of change has come into effect as certain large businesses are now obliged to increase its transparency related to their non-financial performance based on the new EU Directive on Non-financial Reporting.
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Are Investors Keen on CSR?: https://flagship.cz/en/blog/detail/are-investors-keen-on-csr_337
New EU Directive on Non-financial Reporting: https://flagship.cz/en/blog/detail/new-eu-directive-on-non-financial-reporting_289
Case Study on Non-financial Reporting: Sustainable Development Trends: https://flagship.cz/en/blog/detail/case-study-on-non-financial-reporting_320