By Chad Upham, Principal, Covive

On May 7-9, 2008, I had the privilege of attending the Amsterdam Conference on Sustainability and Transparency produced by the Global Reporting initiative. The majority of conference sessions were set in a debate format, with panels representing diverse interests, cultures, and sectors.

The following nine observations are a synthesis of ideas stated repeatedly by speakers and panelists over the course of the three-day conference.

1. Sustainability reporting is only worthwhile when it is an outgrowth of core business strategy that aligns with principles of sustainable development.
2. A sustainability programme and non-financial reporting must be driven by CEO, board, and executive management.
3. Materiality, stakeholder inclusiveness, and balanced reporting are critical to establish credibility.
4. In order to be useful to journalists and analysts, reports must be produced on an ongoing basis with consistency (of framework / format), comparability (of historical data), and objectivity (of disclosures).
5. Refrain from diluted corporate speak. Readers will believe you, and in turn give you their trust and confidence when you boldly confront your challenges and failings. “Dare to be juicy.”
6. You will never please everyone. Actively solicit and respond to positive and negative feedback to inform future action - and future reporting.
7. Regulated, mandatory reporting, while far off in the United States, is occurring by some governments, and may serve to level the playing field by establishing a common framework by which all companies disclose performance and by which they may be audited / held accountable.
8. Sustainability issues are relevant to investment decisions as the impacts of social and environmental conditions increase.
9. Climate change remains an imminent catastrophe that threatens the extinction of humans and the ecosystems / species we rely on. Business, government and civil society worldwide MUST ACT NOW to drastically cut carbon emissions through energy efficiency and alternative renewable energy sources. Where business will not / cannot change itself voluntarily, government and civil society MUST STEP UP to put pressure on business. That is their duty.

Mishal Husain and Nik Gowing of the BBC each moderated two 90 minute sessions, one representing the interests of civil society and labor unions, one representing the interests of financial markets, and one representing business management and corporate governenace. The final, dynamic session will be broadcast on the BBC on May 17 and 18 as part of a special series: The BBC World Debate - How accountable is business?

Host: Nik Gowing
Michael Rake, Chairman of BT (British Telephone)
Gerd Leipold, Executive Director of Greenpeace International
Maud Olofsson, Deputy Prime Minister of Sweden
Bruno Prior, Summerleaze Ltd.
Alex Sink, Chief Financial Officer, Florida
Alessandro Carlucci, CEO Natura, Brazil

You may refer to the following website for broadcast times.
http://www.bbcworld.com/

Mishal Husain, Anchor of BBC World, moderates panel on Civil Society and Sustainability Reporting.

Nik Gowing, BBC World News Presenter, moderates a dynamic panel conversation on sustainability reporting and business accountability for BBC series "The World Debate" to air May 17 and 18, 2008.

See the winners of the GRI 2008 Readers' Choice Awards. 

adidas-group:
Giving 110% our efforts to be a responsible business in 2007
Published March 5, 2008
Download the Report (3MB PDF)

To stay on top of trends in CSR reporting, Covive reviews nearly every CSR report published by companies around the world. Covive Principal Chad Upham took note of his personal reaction to the recently published adidas-group 2007 corporate responsibility report, going beyond initial impressions, to discover a refreshing, strategic reporting approach focused on topics of the day most relevant to the global sportswear and sports equipment manufacturer.

My first reaction to the report was that the majority of content is comprised of irrelevant statistics not related to the CSR work of the Social and Environmental Affairs (SEA) team at adidas. I began making a list of statistics in the print report in two columns, one for quantitative figures directly related to adidas, and another for general "state of the world" data. I found the tally to be quite imbalanced for a report supposedly documenting a company's own efforts, not simply a documentation of global problems. As a Global Reporting Initiative (GRI) Organizational Stakeholder and savvy CSR report reader, the complete lack of reference to the GRI guidelines structure, left me feeling that the report was prepared in a free-for-all style trying to look like a sustainability report, but really just avoiding real performance data by masking it in statistics.

I did not stop with the print report, however, as the frequency of links to the corporate sustainability website lured me to explore further. On the website, I discovered a very thorough record of policies, program descriptions, documentation, and performance data. The organization of this content with supplemental downloads demonstrates a highly operationalized, evolving sustainability program.

Upon downloading the 2005 Connected by Football social and environmental report, following a more conventional CSR format, I began to understand the departure in editorial style in the latest publication. I have said myself in summarizing reporting trends that 3rd and 4th year reporters, having established a reporting process, are focusing on issues of the day in their print report. Clearly China and India, both as manufacturing centers, and as emerging markets are topics of the day for adidas, especially with the Olympics this year. The publication also presents a case for sustainability in a way that educates new readers who may not be aware of global sustainability issues, making the publication a primer, more appropriate for distribution to wide audiences, perhaps available in stores, shipped with purchases, or paired with a financial annual report.

Overall, the report presents an interesting case for the departure from technical reporting guidelines such as GRI, though trends towards comparability and reliability through third-party assurance are made more difficult by such a maverick approach. For the die-hard CSR audience, a web-based GRI index with links to online report content would satisfy a basic minimum requirement with little additional effort.

Note: I submitted a follow-up e-mail to the UK-based report consultant and writer, Adam Garfunkel, who pointed out that a GRI index was indeed included in a seperate online report, different from the corporate sustainability content. The new 2007 online report with GRI index can be found at: http://www.adidas-group.com/en/SER2007/ 

Learn more about the sustainability efforts of adidas-group on their corporate website at http://www.adidas-group.com/sustainability

By Chad Upham, Principal, Covive
January 8, 2008

Last year, we reviewed more than 100 sustainability reports by U.S. and international companies to identify best practices in reporting. How are reports organized to best present a wide range of topics? Which convey sincere commitment and measurable action? How might analysts distill and interpret reports to make industry comparisons? Here is a summary of our findings.

1) Topics respond to stakeholder feedback

The sustainability report is a conversation. Effective reports are part of a feedback loop that addresses the reasonable interests of stakeholders from employees to customers, suppliers, and investors. How do you document what these stakeholders are saying? How are those concerns translated into action? These critical elements differentiate the autocratic organization of the past from the evolving sustainable company of the 21st century.

2) Narrative themes reflect learning and progress

Third- and fourth-year reporters are beginning to focus on challenges of the day. Having established a reporting process and framework, they are able to use the annual sustainability report to reflect on current challenges and highlight incremental progress. Case studies and strategic management narratives should be realistic and balanced, stating plainly your decision-making rationale. Transparency in communication and qualified disclosure effectively mitigates accusations of “greenwashing” or inaction. If something is proprietary or premature, state it concisely, don’t exclude it.

3) Metrics are relevant, comparable, and accessible

Just as financial reports enable comparison over time and between companies, effective sustainability reports display information according to commonly accepted standards that encourage comparison. While these standards are still evolving, key social and environmental performance indicators should be called out clearly and presented in finite terms. Determine which indicators are most relevant in the sustainability context of your business, and present them consistently over time.

4) Indexed by key performance indicators

Carbon emissions, water resources, employee diversity: savvy readers want to go directly to the topics and indicators of greatest interest to them. Effective reports provide an at-a-glance index listing the degree of completeness and page/online reference of key performance indicators. This index should follow industry-standard reporting frameworks and/or the Global Reporting Initiative (GRI) G3 framework. Indicators not covered in the report should include a note for such omission.

5) Third-party assurance and recommendations

Independent assurance gained footing in 2007. Standards are surfacing that define requirements and protocols for assurance. Just as accounting firms certify the accuracy of financial reports, third-party sustainability consultants should provide a statement of the reliability of quantitative and qualitative content. Such statements include a description of the engagement and should list any recommendations or corrections that were not implemented in the final draft. Streamline your sustainability reporting process with systems for documenting and auditing performance indicator data.

6) Links to online updates, supplements and references

Annually produced print or PDF sustainability reports need not be crammed with every policy and spreadsheet. Readers should gain a broad perspective of the company’s achievements and progress without being overwhelmed by technical jargon and minutia. The corporate sustainability website can display updates; supplemental data broken down by region or product; calculations used to derive totals; and references to corporate policies, personnel, and detailed program descriptions. Take advantage of technology to tell your story without sacrificing the details that give it credibility.

Below are a few of the best examples of sustainability reports published in 2007. (Note: Covive did not participate in the production of these reports, and lists them for your reference only.)

Timberland
strong stakeholder dialogue and industry viewpoints; well-presented, relevant indicators and index; exceptional theme and design

GE
comprehensive presentation of stakeholder engagement programs, corporate policies, and new product development opportunities in global markets

Ford
topics prioritized by stakeholder interest and sustainability context; well-distilled highlights with links to additional content

Sun Microsystems
industry leadership in sustainable computing as demonstrated in a corporate philosophy of information sharing and collaboration

Mattel
transparent presentation of design and sourcing challenges and achievements

Unilever
practical assessment of industry specific impacts and responsibilities; specific examples as well as corporate-wide metrics; approachable, branded design

Volkswagen
a superb example of sustainability operationalized; a guiding corporate document that provides insight and long-term perspective; exquisite information design

Download this article in PDF format.

To see what other companies are doing, browse the CoviveConnect Links.

Last week, Wal-Mart issued its first Sustainability Progress Update, a comprehensive review of the company's sustainability initiatives and performance.

While the progress report does not directly reference the GRI guidelines, it clearly incorporates many of the standard disclosures, performance indicators, and management approach narratives outlined by the GRI framework. Lacking is a GRI Index that allows analysts and the industry to quickly find and cross reference performance data in key categories such as environment, product responsibilty, society, human rights, labor and economic indicators. Such an index might easily be incorporated on the corporate website.

The degree of thoroughness in reporting on metrics is characteristic of Wal-Mart's reputation for efficiency and measurement. Few reports, if any, have come close to the volume of quantitative statistics presented in this progress report.

You can download the Sustainability Progress Update in PDF format at:
http://walmartstores.com/GlobalWMStoresWeb/navigate.do?catg=772 

 

The Global Reporting Initiative has just launched its first Readers Choice Awards for Sustainability Reporting. This competition not only recognizes companies who have prepared reports, but also reflects what aspects of sustainability reporting are successfully meeting the needs of readers and how the framework can evolve to better inform stakeholders.

Participants who score two or more reports based on the GRI framework are entered to win one of eight trips to Amsterdam to help present the awards at the Amsterdam Global Conference on Sustainability and Transparency to be held May 7-9, 2008

http://awards.globalreporting.org/

If you want to participate by scoring reports, a great place to start is the Covive Connect Links page that gives you direct access to PDF downloads of American Fortune 500 sustainability reports.

Covive Connect / Links