The conversation around sustainability and CSR reporting has evolved. At the 2014 Ceres conference the dialogue was more nuanced and less definitional than at the 2012 conference. With a clear goal of integrating sustainability into the capital markets, companies and investors are weighing future possibilities, risks and rewards. There is momentum with more companies reporting each year, but there is still a long way to go with only 49% of the 613 largest companies publishing a sustainability report. Some key themes emerged:
Standards standards everywhere
There is confusion around the competing and complementary standards/frameworks, all of which are voluntary in the US. GRI is still the leading standard for sustainability reporting, but a very high bar for many. Only 32% of the largest 613 US companies used the GRI in 2012 (source). The SASB (Sustainability Accounting Standards Board) has a different approach and is welcomed as a more “minimal’ approach. With the recent announcement that Michael Bloomberg and Mary Shapiro are joining the board, their profile is growing. And, of course, the IIRC (International Integrated Reporting Committee) has standards all its own. Again, all standards and frameworks are voluntary, so no approach is wrong.
Walk before you run
The process of creating a report brings issues to the C-suite’s attention, reveals opportunities to discuss impacts and focus areas, and shines a light on issues that may have been hidden risks. Committing to a report will, in itself, move your company forward.
At first, it can be helpful to provide more context and narrative information, so readers can understand how it all fits together operationally. This isn’t fluff, but a way to bring company strategies to life. As more data is available reporting can be more robust over time. One likely approach is “evolving” reporting — an initial report done to a company’s own definition and standards, perhaps initially to SASB and then to GRI standards. The highest plane is integrated reporting — something akin to the IIRC’s standards — although this evolution is not a straight line by any means. In our work for clients we have seen a first step in combined reporting, where companies publish information together without being strategically integrated. From all corners we hear integrated reporting is the gold standard, where performance is performance — without the shading of financial versus non-financial.
Materiality vs. Transparency
Define what is material to your business, and who it matters to. Audiences for these reports are broad, and each has different priorities. What framework to use, if any, is up to individual companies. The real question is one of relevance. What matters to your company, customers, employees and partners will not be the same across businesses or sectors. And there is an inherent tension between a multi-stakeholder framework like the GRI and a more financially focused standard, where SASB is likely heading. Although Curtis Ravenel from Bloomberg summed it up well, saying “there will never be a time when you have to disclose less.” So with multiple definitions of materiality, and a clamor for increased transparency, companies opt for as much disclosure as they can make work.
The big take-away
It isn’t too late, or too early, to start your journey and create a meaningful report:
- Engage a specialist to help determine what’s material, or conduct the conversations internally. Assess what data is available.
- Find the case studies and narrative content to add context and enhance metrics, even if only a few metrics are available.
- Communicate your impacts, issues and opportunities in a report. And, use the report as an engagement tool with investors, employees, regulators, communities and all stakeholders.
Ideas On Purpose is ready to get to work, let us know how we can help.