2006 saw three initiatives being launched which will potentially have a significant influence on external corporate communications in the UK and beyond: the UN Principles for Responsible Investment, the third edition of the Sustainability Reporting Guidelines produced by the Global Reporting Initiative, and the UK 2006 Companies Act. Each of these has had an influence on corporate behaviour – through legislation and guidelines – yet have we felt the full impact of these initiatives?
Last year I went to two conferences that reflected some of the progress that has been made since these initiatives were launched. Both were revealing in their own particular way. At the GRI “Global Conference on Sustainability and Transparency” in Amsterdam in May 2008 over 1,000 companies, NGOs and consultants highlighted to me the industry which now exists to satisfy the need for companies to publish sustainability reports. Some of these reports are incorporated into the annual report, some are separate reports, and now with Web 2.0 we see an increasing use of online communication methods.
Along with 130 corporate reporters, I attended the Ethical Corporation’s “Corporate Responsibility Reporting and Communications Summit” in November 2008. We heard about new ways of reporting that took advantage of technical developments in communication, including social networking sites such as Facebook. Coca-Cola in the US, Cadbury’s in the UK, and Sasol in South Africa provided case studies on emerging trends in this area. Corporateregister.com currently holds 19,597 corporate responsibility reports in its database which have been published by 5,015 companies.
But what difference have sustainability reports made to the world?
Sustainability reporting by global companies is being increasingly influenced by stakeholder requirements i.e. demands of consumers, customers, NGOs, and the media. Yet it is not clear how much consideration is given to which are the most important stakeholders and what are the key issues which will determine future business performance.
During the GRI conference, KPMG / Sustainability Limited published their 2008 Readers’ Choice Survey of 2,279 readers of corporate responsibility reports worldwide. 60% of these readers were from business who wanted to see a greater link made between sustainability and business strategy as well as evidence of the impact that the company has had on society. 50% thought that increased stakeholder engagement should be a priority. Is it possible for sustainability reports to meet the needs of such diverse audiences as shareholders and stakeholders?
The Triple Bottom Line framework suggests a balanced approach of social and environmental as well as economic indicators. Until recently I would have said that most investors and board directors would not agree with such a suggestion; they would be more likely to say that the focus should be on purely financial measures of business performance. Yet I think a subtle change is taking place – many business leaders are now showing a greater understanding that non-financial metrics will provide an indication of future economic results.
Yet to what extent are sustainability reports used as an internal communications tool for staff to understand the company strategy as well as providing a foundation for meaningful dialogue around the boardroom table to inform more balanced decision-making processes.
We see an even bigger industry being created around climate change and the greening of business with vast arrays of new products and services on offer. This recession is predicted to be a lengthy one as boards develop survival strategies, but it is different to the last one. We now live in a different world: more people consider their personal carbon footprint and vote with the wallet against clothing retailers who don’t manage their supply chains well enough to eliminate child labour. We are seeing a more ‘human’ approach in the way businesses are being run.
If sustainability reports are to make a difference to the world, they need to help change behaviours within the boardroom. If they continue to be separate reports and not part of the annual report and accounts, the issues they deal with will remain on the sidelines of business decision-making. The ‘Beyond Accounting’ project will be looking at the various reporting frameworks that are used around the world to communicate a company’s sustainability policies, practices and performance and what impact they have had on the business strategy formulation and decision-making. It will be good to get to the substance behind the glossy cover.