EU firms report ‘aspirations before performance’

Large companies are routinely guilty of publishing “irrelevant data, unsubstantiated claims, gaps in data and inaccurate figures”, according to a new analysis of fact-checking in CSR reports.

Leeds University has found that fewer than one in six European companies report greenhouse gases for all their operations, particularly failing to include subsidiaries or make it clear which of its activities are being reporting on.

Looking at more than 400 EU companies featuring in the FTSE All World Index between 2005 and 2009, the researchers found “every second company has major problems” in its emissions reporting.

UK telecoms firm BT was found to simply insert zeroes for areas it could not find data for, leaving doubtful figures such as that 99.8% of its waste is produced by a few office workers in Belgium; its Irish and Dutch employees did not travel at all during the entire year; and that its Asia Pacific operations did not consume any water.

BT has responded by saying that “international data collection is far more complex than it is in the UK and, in some countries, the data is just not available”, but that it would “look to update our CSR reporting in coming years”.

Other companies produced inconsistent and unstable figures, as in Ford’s reporting of more mineral waste generation in North America than worldwide, and even, in the case of Volkswagen, of “disappearing” entire power plants.

Not all the mistakes were intended to flatter, however: the Italian energy company Enel gave itself a carbon footprint four times that of the whole world, while technology multinational ABB overstated its emissions by a factor of 1,000 over several years.

Frank Figge, of the Euromed Management School, which co-authored the report, partly blamed the Global Reporting Initiative for the current situation. Though it has improved the comparability of reporting across companies, he said, it suffers from not being legally binding or properly implemented.

Leeds’s Ralf Barkemeyer said: “The quality of environmental data in sustainability reports remains appalling at times, even today. In financial reporting, to leave out an undisclosed part of the company in the calculation of profits would be a scandal. In sustainability reporting, it is common practice.”

Companies are being rewarded for mere aspirations, according to Barkemeyer. Counter to claims in a recent KPMG report (see p16), which found that, unlike US companies, European firms were broadly aligning their targets with their capabilities, he said: “Put provocatively, companies get points for knowing where they want to go. But nobody seems to check whether this is where they are heading. Aspiration replaces performance. We need to change the way in which we process quantitative corporate sustainability information — in essence, now that companies are starting to provide it, we need to actually start using it.”