A privilege rather than an obligation

Sustainability reporting has a future
PostedMay 11, 2016, in  Step 7: sustainable excellence
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Sustainability reporting is more than an obligation, it is actually a privilege. It is empowered by the EU and therefore applicable to all European companies with more than 500 employees. Up to now, implementation continues to lag (far) behind. Why? And what can we do about it?

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Source: Pixabay.com

Powerlessness

Change never happens by itself, certainly not if change is imposed from above. Although there is of course a growing number of companies that has intrinsically embraced sustainability reporting, that does not apply for the majority of European businesses. And that is more due to powerlessness than unwillingness: sustainability reporting is not easy and requires the necessary investment in knowledge, time and people. With financial reporting it is mainly a question of gathering the right information, then analyzing and presenting it. For non-financial reporting that is only part of the story: it is also about ‘soft’ indicators. For example, if you want to identify social activities, then you will need to examine not only what is actually delivered (quantitative) but also how it is perceived at grassroots level (qualitative). That requires a whole new way of thinking.  

Added value

Whoever wants to start sustainability reporting, needs to re-learn how to report.  Ask other questions, list other indicators, set other priorities. The essence lies in the motivation: is it seen as an ‘obligation’ or as an opportunity with added value? Sustainability reporting can only be successful if it is 100% supported by the company, if there is an intrinsic belief that the company will become stronger through sustainability reporting

There is more than the GDP

The New Economics Foundation (NEF), an independent British think tank, recently set a good example. In October 2015, the NEF published a list of five indicators that say much more about the status of the country than the out-dated Gross Domestic Product (GDP). According to the NEF, the GDP is mainly a speedometer: it shows whether you are going faster or slower, but says nothing about the direction. Prosperity is not the same as wellbeing. More economic growth will not automatically mean that people are healthier or happier. And in that latter lie the collective wish of the population and the task of politics. The NEF listed the following five indicators:

  1. Good jobs: it’s not just about job opportunities but also job security.
  2. Wellbeing: the GDP is supposed to say something about our quality of life. Why not investigate the ‘life satisfaction’ of citizens?
  3. Environment: the NEF wants a national standard for controlling CO2 emissions.
  4. Fairness: the disparity between rich and poor is increasing in the UK. That imbalance must be normalized for the good of all.
  5. Health: many deaths can be prevented by investing in more qualitative care.

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Source: New Economics Foundation

The NEF focuses on the UK as a whole, but essentially it also applies to companies: don’t just look at hard economic figures but also at the context. What do the numbers mean for the mission, vision and long term strategy of the company? How can the company create added value

Transparency Benchmark

On the other side of the Channel, in the Netherlands, we find an inspiring example in the Transparency Benchmark. This is an annual examination of the content and quality of social reporting done by Dutch businesses. The company with the best performance wins the prestigious Crystal Award (in 2015 Akzo Nobel). The Transparency Benchmark gives clear criteria and thus points the way. Transparency is – of course – key and that benefits the quality. Furthermore, the competitive element increases the urge of companies to perform well: they want to keep up with each other, prestige is at stake. That actually raises just one question: why is there no European Transparency Benchmark?

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PostedMay 11, 2016, in Step 7: sustainable excellence
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