April 24, 2015
I hate sustainability reporting. It is so draining to spend six months of the year buried in the process, only to have very few people take the time to read the finished report.
I love sustainability reporting. If it weren’t for reporting, we’d have no way of knowing how much progress companies are making on sustainability issues and what they are learning along the way.
I hold both these views at the same time, and I think most sustainability practitioners at companies do, too.
These committed individuals lead the charge inside companies to create a more just and sustainable world. These tired souls feel depleted by the sheer weight of reporting expectations.
This is why, when sustainability practitioners at companies express opinions about how sustainability reporting can be improved, I listen intently. Strip out the debate about GRI, IIRC, and SASB, and some very intriguing paradoxes remain.
Reports need to be shorter, and reports need to be longer. Very few people are going to read a 120-page report from cover to cover in one sitting. At the same time, add up the information needed for specialist areas—such as privacy, greenhouse gas emissions, or supply-chain labor compliance—and it comes to much more than 120 pages.
I think we should move toward a reporting triangle: at the top, a succinct strategy and performance narrative accompanied by key performance indicators; at the bottom, the in-depth coverage required by experts. Vodafone’s reporting is an excellent example of this approach.
Sustainability experts are needed to write sustainability reports but shouldn’t be on the sustainability team. It is striking that investor-relations teams are responsible for financial reports and communications with investors—but are not responsible for company strategy. By the same token, it makes sense to me that sustainability reports should not be written by those responsible for sustainability strategy.
I’ve been increasingly struck by the number of practitioners expressing grave concern that responsibility for sustainability reporting is undermining their core purpose of being change agents for sustainability. While undoubtedly related, performance and accountability are getting muddled.
The guidelines are too long, but the guidelines aren’t long enough. It’s no secret that the volume of guidelines on what and how to report are a source of great frustration and often result in missing the big picture for all the detail. Yet some of the best reporting today benefits from extensive reporting guidance, such as the Greenhouse Gas Protocol or EEO-1 on diversity in the United States.
Perhaps we need to deliberately move toward a model where overall reporting guidance is significantly simplified but protocols for individual issues are developed to improve comparability. It is very interesting to note that internet and telecommunications companies’ significant progress on reporting around law-enforcement relationships came from sustained focus on a single material issue.
Companies can be entrepreneurial, and they can apply reporting standards. The process of reporting can be an exercise in geeking out over reporting standards—knowing the difference between EN3 and EN4 or understanding which aspects are required to reach “in accordance—core”. This is important, and I’ve yet to meet a practitioner who disagrees with the premise that sustainability reporting should be as robust and comparable as financial reporting.
However, the sustainability reporting profession remains very young in comparison with the financial reporting profession. I sense a yearning to return to the entrepreneurial spirit that characterized sustainability reporting in the late 1990s and early 2000s. The future of sustainability reporting is there to be shaped, and the companies “holding the pen” still have the power to lead by example.
I’ve been delighted and frustrated in equal measure by developments in sustainability reporting over the past 20 years. I’ve also been inspired by the deep commitment of its practitioners. If we can stay focused on the original purpose of reporting—using the power of transparency to energize improved performance, and informing decision-making based on comparable information—then the future is bright. But if we suffocate ourselves with complexity without reference to that original purpose, then I fear the volume of wasted effort.
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