One of the main issues that came up at the Responsible Business Summit was sustainability reporting. Even with all the progress we have seen so far, reporting continues to be one of the most challenging issues for CSR executives. Still, just like CSR, reporting becomes more focused, strategic and smart, and there’s even a continuous search after its business value. The journey of sustainability reporting is still a long one, but listening to the CSR executives in the summit it became clear to me that companies now understand the significance of reporting more than ever and try to figure out how to utilize it in the best way possible. Still, sometimes it works, sometimes it doesn’t.
Here are five issues that dominated the conversation about reporting at the summit:
1. From one-time event to an ongoing communication
Not too long ago the main question about the report was how to make it more readable, and while this question is still on the table, there seems to be a shift to approach the report not as a one-time annual event, but as a foundation of an ongoing dialogue with stakeholders.
How do you do it? Suzanne Fallender, Director of CSR Strategy & Communications at Intel provided a great example. After Intel releases its report, employees who helped put it together write stories on the company’s blog with further details on specific issues like Intel’s green fleet strategy. Then these pieces are also promoted using social media. Picking and writing on one section of the report every week helps not just to make the report more ‘snackable,’ Fallender explained, but also keeps the conversation about it going.
2. No supplier left behind
Reporting becomes an effective tool for companies to ensure their suppliers meet a certain level of sustainability. A growing number of companies request now their suppliers to report in some detail on ESG issues. Mike Wallace, the Director of the Global Reporting Initiative’s (GRI) Focal Point USA gave the examples of Microsoft and Apple that request detailed information from their suppliers. In the case of Apple it’s interesting as the company itself doesn’t release a sustainability report.
These reporting requests can be a real headache especially for small and medium suppliers. Intel’s Fallender explained that Intel, which also requests its top suppliers to report, works with the EICC (Electronic Industry Citizenship Coalition) to develop accepted industry-based levels of transparency that will help to reduce the burden on suppliers. Wallace also presented the Puma model - training the suppliers in GRI reporting, explaining them which issues are material for the company and requesting them to prepare GRI report that will include these specific material issues.
3. Regulators are pushing for more disclosure
Although reporting is perceived as a voluntary space, regulators around the world start shifting it into a semi-regulated space de-facto. Bennett Freeman, Senior Vice President, Sustainability Research and Policy at Calvert Investments reminded that the SEC is about to require disclosure not just regarding conflict minerals, but also from oil, mining and gas companies regarding all payments to governments in each jurisdiction in which they operate. Both requirements are a result of the 2010 Dodd-Frank financial reform law.
In addition, GRI’s Wallace added examples outside the U.S., from the Johannesburg Stock Exchange’s requirement that listed companies produce an integrated report to Denmark’s requirement that its largest companies disclose their CSR performance in their annual reports. It looks like almost every company will soon find that it needs to comply with some sort of disclosure regulation. This can be a real game changer.
4. Bloomberg makes a difference
Probably unintentionally Bloomberg has become one of the important drivers of reporting. The fact that Bloomberg added ESG data to its terminals and made it available to over 350,000 customers makes a difference – suddenly this data becomes searchable and comparable and it’s easier for investors to see which companies are doing better and which are lagging behind.
Investors do pay attention to this data as a new Harvard research shows and the result, as a PwC report explains, is that “progressive companies are quietly differentiating themselves by upgrading their sustainability reporting processes and systems to provide high-quality, investment-grade information, which they know will be reported to investors and analysts via information providers.”
5. Check list effort or value creator?
While the number of companies reporting is increasing, many companies are still not sure how material the report itself is. John Buckley, Managing Director and Head of CSR at BNY Mellon said for example that he sees the GRI report as a box checking effort. It’s a valuable exercise, he said, but doesn’t necessarily relate to the core of the company’s efforts. Doing a great job on the GRI doesn’t necessarily make a company a great one, he added.
On the other hand, Wallace claimed that companies that look at GRI reports from a checklist perspective don’t do a very good or efficient job since the GRI report can deliver much more if you approach it differently. Companies that do apply a different approach find, he added, that the value comes out of the journey and from digging dipper than just going over it as a check list.
Raz Godelnik is the co-founder of Eco-Libris, a green company working to green up the book industry in the digital age. He is an adjunct faculty at the University of Delaware’s Business School, CUNY and the New School, teaching courses in green business and new product development.
Raz Godelnik is an Assistant Professor and the Co-Director of the MS in Strategic Design & Management program at Parsons School of Design in New York. Currently, his research projects focus on the impact of the sharing economy on traditional business, the sharing economy and cities’ resilience, the future of design thinking, and the integration of sustainability into Millennials’ lifestyles. Raz is the co-founder of two green startups – Hemper Jeans and Eco-Libris and holds an MBA from Tel Aviv University.