In This Chapter
Sustainability has certainly become a buzzword within the going green movement, but in its short life span within environmental language it has become watered down and misused. Often sustainability—which is representative of environmental, social, and financial bottom lines—only touches on its first pillar of environmental initiatives. For example, a consulting organization that states, “... we provide sustainability services, through calculating and substantially reducing the GHG (greenhouse gas) emissions of your business ...” is seeing only a part of the puzzle. An environmental assessment or carbon footprint can definitely have a place in a sustainability program but does not encompass the full realm of a credible program or report. Before we can define a sustainability report, we need to have a solid understanding of sustainability to avoid this common pitfall of partial reporting.
Sustainability has many definitions. The concept formally originated during the Brundtland Commission in 1987, when they defined sustainable development as follows: “Sustainable development is development that meets the needs of the present without compromising the ability of future generations to meet their own needs.”
In basic terms, we should live our lives and do business in a way that meets our needs and enables success but doesn’t inhibit the ability of people in the future to do the same. It is a simple yet humanistic concept.
In the business community, sustainability is referred to as the “triple bottom line” or the “integrated bottom line” and can be accompanied by the motto “People, Planet, and Profit” (see Chapter 1). These phrases refer to a business focus on three things: the environment, social well being, and the financial bottom line. Most consultants or professionals in the sustainability industry use these definitions only as starting points. You might consider how these definitions work and don’t work for you and then come up with your own definition of sustainability, keeping in mind the underlying principles.
The following table shows a sustainability report that outlines areas of sustainability.
Note
A sustainability report is a company-specific document which can follow various protocols—i.e., Global Reporting Initiative (GRI), measuring an organization’s performance through key performance indicators (KPI) in the focus areas of financial, environmental, and social. The collected data is tied in to anecdotes, stories, and quantitative representations which relate to the organizational goals and values.
Environmental (Impacts on living and nonliving natural systems) | Social (Impacts on the social systems in which an organization operates) | Economic (Impacts on the economic interests of stakeholders) |
|---|---|---|
Air quality | Labor practices | Sales, ROI, and profits |
Water quality (and usage) | Human rights | Employee wages |
Workplace diversity | Jobs created | |
Waste produced | Community impacts | Community development |
Greenhouse emissions gas | Product responsibility | Customer collaborations |
Land use | Operating ethics | Customer satisfaction |
Sustainability reporting helps companies communicate their sustainability vision and values and demonstrate what they have committed to and what actions they are taking to achieve this vision.
Survey after survey reinforces the fact that sustainability reporting has significant benefits. We’ve summarized some of our favorites and what we believe are the most meaningful to a wide range of organizations so you can choose the best approach for your business.
The initial sustainability reporting initiatives have roots in history earlier than you might think. The first sustainability reporting was done when pioneering corporations attempted to go beyond financial reporting more than 35 years ago in Germany.
Here in North America, we have been a little slower to respond to the sustainability reporting movement. The initial reports started showing up after the 1987 Brundt-land Commission, when sustainable development was defined.
In the 1990s, sustainability reporting closer to its current format began when several companies launched the practice of disclosing their environmental performance. Their reasons were partly self-serving and partly good business practice. High-profile global firms such as BP, Shell, Toyota, Hewlett-Packard, and General Motors responded to investors’ questions around the financial performance, record on human rights, labor practices, and resource conservation (or lack of) by sustainability reporting. As more companies realized they could not build trust or model transparency with their stakeholders after a huge public relations crisis, such as a catastrophic oil spill in an environmentally sensitive marine area, the sustainability report was a proactive solution.
When we look at a sustainability report, we are looking at the value of disclosing the information to external stakeholders. A sustainability report is a valuable tool to understand, measure, and analyze a company’s performance from the inside.
In the past, many organizations decided to create a sustainability report in response to a crisis. You may be aware of the stories of sweatshop exposés in the mid-1990s. In 1996, an article in Life magazine titled “Six Cents an Hour” featured the Nike organization. In this article was a picture of a 12-year-old boy named Tariq surrounded by the pieces of a Nike soccer ball which he would spend most of a day stitching together. His pay for the work was about 60 cents. At the same time, Nike was paying millions in endorsements to sports celebrities. The public responded relentlessly. Within weeks, activists all across North America, armed with pictures of Tariq, were protesting Nike stores, urging customers to not purchase Nike products.
Since this public relations nightmare, Nike has become a leader in the sustainability movement but continues to be suspect in the minds of the general public.
This example shows that it’s always better to be proactive rather than reactive. For small- to medium-size enterprises, the trend in sustainability reporting has been a proactive approach out of a desire to be more transparent with stakeholders. We can see examples of this with Seventh Generation, Ben and Jerry’s, Green Mountain Roasters, and Guayaki Sustainable Rainforest Products. It’s important to understand how we operate, interact with, and impact the markets we work with. A sustainability report helps map out that story and enables you to measure and manage the process. We’ll show you how to create such a report for your business.
As we enter into a more interconnected age of social networks and a huge variety of media sources, increasing pressure is placed on companies large and small to operate in a more accountable and transparent manner. This pressure comes from a variety of stakeholders, including customers, communities, employees, shareholders, and regulators. Credible reporting on all aspects of a company’s performance—economic, environmental, and social—is a way to enhance corporate accountability and transparency.
Sustainability reporting opens up many doors for an organization. The public opinion of your company changes, and you are seen as a leader in your industry, which will satisfy investor trends in the desire to invest in progressive companies. It also showcases your initiatives industry wide and has the potential to open up new markets. Again, more and more individuals are aligning their values to the money they spend. Nearly $1 out of every $10 under professional management in the United States today—9.4 percent of the $24.4 trillion in total assets under management tracked in Nelson Information’s Directory of Investment Managers—is involved in socially responsible investing.
Sustainability reporting is like taking inventory of your whole organization. We might compare it to a home renovation; you look at the vision of what your dream house would be and you build it. The areas of the home that weren’t functioning 100 percent are now new and improved. It tends to highlight inefficiencies in areas such as resource consumption and waste generation. Wearing your new sustainability vision and goals on your coat sleeves shows your commitment and excites and empowers your staff. It also sends a message to stakeholders and individuals looking at your organization that you put your words into action. This will help attract and retain high-quality employees, people who want to associate themselves with such leading organizations.
Cost savings are ultimately a part of any sustainability program, and these savings typically are seen through supply-chain innovations. In leading supply-chain initiatives and collaborations, you’ll strengthen relationships with key stakeholders. Being proactive is always better than reactive, and all this work will improve the management of sustainable development issues.
A sustainability report isn’t only for external use but can also be beneficial internally for measuring and managing specific areas of organizational development and growth. It has value in determining key criteria for green and ethical supply chain purchasing, outlining areas of inefficiency and waste, and empowering staff toward creative solutions.
The following chart outlines some of the areas and stakeholder groups who will use the report and how it applies to them.
Stakeholder Group | Areas of Interest |
|---|---|
Communities | Health and safety Economic opportunities Environmental concerns |
Customers | Product safety Customer satisfaction Ethical performance |
Investors | Risk and opportunity factors Major capital inputs as a factor of production Ethical performance |
NGOs | Environmental performance Ethical performance What you don’t report |
Employees | Health and safety Employee compensation Workforce demographics |
Regulators | Ethical performance Environmental performance Environmental compliance |
This is a question most small and medium enterprises (SME) face. Do we need a sustainability report?
You’ll need to consider several factors when making your decision, but more often than not, the ultimate determining question will be the bottom line: do you expect sustainability reporting will benefit your company?
We’ve already covered the extensive benefits companies have realized through sustainability reporting. However, the two most important questions tend to focus on time and cost. Does your organization have the time required and the budget available?
This list of initial considerations will help outline the resources and time required to produce a thorough sustainability report:
What is the scope of the report? Are you covering all of the company’s operations? One office or all offices? One division or all divisions?
Do you have current systems to help measure the required information, or do you need to develop these systems?
Do you have useable information available?
What is the degree of stakeholder consultation?
Do you have the internal capacity to develop the report, or do you have to use external parties?
What level of verification and assurance will you use?
What is the medium of the report (for instance, print-based versus web-based)?
If you are unsure of your capacity to report on or assess any of these areas, you might think about consulting a third party to help assess your needs. Look to your local chamber of commerce or industries association to see if there is an organization performing sustainability consulting. You can also check to see if there is a Business Alliance for Local Living Economies (BALLE) in your area. See Appendix B for contact information.
This standard 10-step approach to a sustainability report is a great starting place for all SME beginning the path to a more sustainable organization. Large organizations typically use the GRI, which isn’t practical for smaller businesses. There is a GRI program called “High-5” designed for SME, but before you purchase that, go through the following list. It’s great for organizations wanting to move forward through in-house initiatives. You can transfer your work here over to the GRI if needed.
Use headings in the following list to help map out the sustainability reporting process and start putting a timeframe and team members around the activities associated with these tasks.
Building the business case is a way for you to share your ideas, and some high-level details, to help engage buy-in for your sustainability reporting project. In building the business case, you’re going to need all your cheerleading skills to rally your troops. First, look for buy-in by identifying and obtaining a commitment from a senior management sponsor who will champion the sustainability reporting process. If this is you, you are halfway there!
The next step takes a little more time, but is well worth the effort. Here are some suggestions on what to tie into your business case for sustainability reporting:
Look for links to the strategic direction and priorities that the company’s board and senior management have laid out—can other current projects dovetail sustainability? Is it consistent with the company’s culture—for instance, values stated and lived by management and employees (charity work, happy workforce)? Does it reflect what drives the corporate performance—for instance, maintaining or enhancing reputation, attracting and retaining talented employees, increasing short-term shareholder value, competitive position?
You get the picture: always look at the vision and goals and keep working it back. To make it easier, you may want to break it out into two parts: internal and external value for the company.
Now let’s look at conceptualizing what the report will look like and scope out the following. Remember nothing here is written in stone; you just want to get an idea of the key considerations you’ll need for your report.
Deciding what kind of report works best for your company will depend on how senior management wishes to position your company’s commitment to sustainability. Remember how in the previous step you linked to your company’s strategic direction? Now use that information you already have available. Many companies begin by reporting on one focus area, such as environment, and then expanding coverage and level of integration in subsequent reports.
Will you aim to achieve economic, environmental, and/or social factors? This is pretty straightforward; just know who you are writing your report for—keep the audience at the forefront in making these decisions (look at your stakeholder list).
What facilities, organizations, and time period are you using? Think big, but start small! Decisions on boundaries are important because they will affect the content, cost, and reception of your report. You will want to be sure all members of the reporting team are collecting data and information for the same part of the company and over the same period.
Some companies start with a hybrid approach to reporting because they need to share with multiple communities and stakeholders. Some companies use this approach to reduce costs and to keep their reports to a manageable size. A hybrid report involves printing a paper report as well as using the company website to supplement it.
Communication is important, so speak to your audience. Avoid jargon or overly technical explanations; save that for the website as a page for those who are interested. The widest range of audience members need to understand the report, so make it easy to read. If you are not a graphic designer, this is not a good place to practice. Bring someone in who can get the message across with an effective and attractive layout, using photographs or illustrations that will enhance the overall presentation of the information in the report. This applies to both the printed version as well as the web version.
Going Green
Publishing your first sustainability report online will allow you to not only be more environmentally responsible, but will also enable you to make changes to content and add information as it becomes available.
As Paul Scott, director of Next Step Consulting, points out, “The graphic clichés—smiling kids in baseball caps, happy chairmen planting trees, cupped hands cradling the globe—will be seen for the unnecessary padding they are.” Look for images that are real and relevant, that speak to the tone and culture of your organization—images that invoke the senses of your readers that show the words of the report in action. For example, tell about staff that helped out at a volunteer day event.
Verification and other forms of assurance can lend credibility to a corporate sustainability report. Verification is not a stamp of approval on good sustainability performance, but a tool to enhance the credibility of your performance reporting. So even in the preplanning step, decide to include verification and assurance within your reporting process. The AA1000 created by AccountAbility is one of the most accepted assurance standards; building your report based on this methodology will pave the way for a smooth third-party verification of your data in the future.
Stakeholders can also play an important role in the assurance process. Involving stakeholder review in the reporting process, for example, can be an effective means of verifying report quality and ensuring credibility. Stakeholders are more likely to question whether a company is reporting on all the relevant issues to its operations and doing so in a balanced way.
Now it’s time to start some discussions, take some surveys, or organize focus groups to determine your needs and develop your goals for sustainability.
Organize a working group that includes representatives from a variety of different business units. Discuss sustainability and what it means to your company so the working group understands; have them explain it back to you as well—there is a lot of info here, and everyone needs to be on the same page.
Develop a process for managing sustainability reporting (for instance, some companies establish internal reporting procedures). Google docs is a great tool if your company doesn’t have a shared point server.
Set responsibilities and reasonable timelines. Share workload and responsibility. Incorporate collaboration by ensuring that all working group members learn, share, and grow through the process. This is what sustainability is all about.
Assign appropriate employee hours resources (external assistance may be required in some areas), and let people do what they do best.
The person responsible for identifying key issues needs to ...
Identify the key issues the report will address.
Identify company-specific key data points already available. For instance, does staff satisfaction survey data exist? Does your company already have stakeholder feedback on their website?
Look at reports from other companies around the world to generate ideas and collect examples. Have everyone on your team look at another company’s sustainability report and tell you what he likes and dislikes about it.
This is one place where you might hire external help for advice and direction. Have you ever heard the saying “you can’t see the forest for the trees”? You may be too involved in the details of a problem to look at the situation as a whole. Objectivity and another set of eyes will also lend credibility to your report.
Stakeholder engagement helps ensure that your sustainability report meets the needs of your key stakeholders. As Mieko Nishimizu of the World Bank said in a 2002 keynote address on the 50th Anniversary of Japan’s Bretton Woods Membership Symposium in Tokyo, “We are tied, indeed, in a single fabric of destiny on planet earth.”
Map out the stakeholder engagement process and include it in your report. Describe how your company has identified its key stakeholders, how it solicits their input, and how their input is considered in the company’s decision-making processes and in determining the content of the report.
Remember how we stressed clarity in preplanning and writing for your audience? If you are not clear on who your audience is, including their interest areas, you won’t have a clear report.
Going Green
Here are common stakeholder groups:
Communities
Consumers
Customers
Employees
Financial institutions
Government authorities
Nongovernmental organizations (NGOs)
Shareholders
Suppliers
Make sure you do the following:
Identify the key stakeholders the sustainability report will target
Determine the extent of stakeholder engagement in the reporting process and in what stages:
Identification of issues to be included in the report
Development of key indicators of performance
Perceptions of company performance
Formal verification of company performance
Undertake stakeholder engagement at the appropriate stages
A performance indicator is a point of data that enables you to monitor and measure an aspect of your business. It describes organizational performance in a clear, balanced, and unbiased way—one of the major challenges of effective sustainability reporting.
Things to remember:
Select appropriate and meaningful indicators. Are they manageable and modifiable?
Ensure that selected indicators make sense to your business and your stakeholders; always check in with your vision and the feedback from your stakeholders. Many companies ask stakeholders to review their indicators before using them internally. This is also a requirement under the AA1000 assurance framework.
Know where to store indicator data and how to collect it. If you have an indicator that requires five steps in the collection process, collect it regularly (and on time) and measure it accurately.
Understand what you are currently measuring and how it can dovetail into the sustainability indicators.
Creating indicators may seem like a daunting task and a fairly dull part of the whole sustainability program, but it is well worth the upfront investment for any successful organization.
The secret to this step is to ask for help. Most of the data you are looking for is stored somewhere in the organization. By engaging team members and colleagues, you will save valuable time and energy and get another pair of eyes on the information to reaffirm the meaningfulness of the indicators you developed. Follow these steps:
Collect, collate, and analyze relevant data and information. Put that Excel spreadsheet to work.
Assess the reliability of data.
Collect data regularly and systematically, and ensure that collection procedures guarantee data reliability. Document the data collection process so you can duplicate it in the future if the contact person shifts departments.
Don’t be overwhelmed to the point of inaction over these ideas. Collect what you can and report what is relevant. If you can’t find the data for an indicator you’ve developed, state that in your report. The whole idea behind the report is transparency and “warts and all” reporting. Stating that an indicator needs further development is nothing to hide; your stakeholders will respect you more for being upfront and open.
Remember the preplanning section of this chapter? Align your notes from there with the following steps:
Identify key messages
Formulate the text of the sustainability report
Determine the appropriate report design, layout, and use of graphics
Receive management sign-off prior to printing
Again, revisit the preplanning exercise and look at what you found on verification and how it aligns with your sustainability goals.
Check the quality of the information and data you have collected and are reporting. Many experts recommend having an external party do this, as it lends to the credibility of the report. However, if cost is a consideration, have a couple senior-level staff members look at the process and check the data.
Congratulations, you’ve done it! This is the last step in a very rewarding project. Now how are you going to share what you have found?
Here are a couple tips:
Publish the report either electronically or in printed format.
Determine the launching strategy, and share the report with key stakeholders.
Find out how you did through some form of feedback mechanism(s), such as online comments or surveys, and incorporate the feedback into future reporting processes and the ongoing management of sustainability issues.
You are now a sustainability reporting master!
A sustainability report is a roadmap which can be as detailed or simple as your want; use it to understand where you are and where you want to go.
Stakeholders are key to any reporting process; use them to help as much as you can.
Everyone needs to start somewhere; think big and start small. Brainstorm the highest goals you can achieve and then begin.