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

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