Now that Rio+20 is well underway … history, almost …. and after the failure of Sustainability Reporting to be presented as a clear, firm, unequivocal commitment for mandatory Report or Explain approach by all governments in the draft declaration, making the starting point for high-level negotiation rather wishy-washy, despite a few Stock Exchanges beefing up their demands via the Sustainable Stock Exchange Initiative , a Forbes article by CERES number one, Mindy Lubber, which refers to a Tipping Point for Sustainability Disclosure in Rio, GRI Chief, Ernst Ligteringen, who proclaims that Sustainability Reporting will be “everywhere” within five years”, and an announcement that the UK government will support mandatory carbon reporting , first reported, as far as I can tell, in Jo Confino’s Rio+20 Earth Summit Diaries (the absolute best coverage anywhere on what went on at Rio), it seems fitting to write my very long overdue post about the Smarter Sustainability Reporting Conference which I chaired in London way back on March 15th.
In my opening remarks, I made reference to many interesting developments in reporting at this time.
- The move to “Shared Value” as a new reporting buzzword
- The localization and segmentation of Sustainability Reporting
- The increasing regulation around sustainability disclosure in different countries and in different ways
- The increasing place of sector reports about whole industries, and reports about major events and conferences
- The development of old and new frameworks that guide report content such as the forthcoming GRI G4 guidelines and the increasing uptake of ISO26000 as a report structure
- The uptake, or otherwise, of report assurance
- The expansion of software applications to assist in collating report information
- The explosion of “Life on the Internet” of Sustainability Reporting and of course
- The movement towards Integrated Reporting.
I asked the question: What is SMARTER Sustainability Reporting? I speculated that SMARTER reporting might just be about generating trust, a commodity which appears to be lacking in business these days.
Sabine Mosner, Deputy Director, Green Economy & Resource Efficiency,Defra (the Department for Environment, Food and Rural Affairs) gave the opening keynote about the role of sustainability reporting in building a green economy.
“You all know that Sustainability Reporting is good for business otherwise you wouldn’t be here”
“We are all looking for sustainable economic growth. Good sustainability reporting by business keeps us on that track.”
Next up was Andrew Raingold, Executive Director, Aldersgate Group, an alliance of leaders from business, politics and society that drives action for a sustainable economy.
“Reporting is traditionally a geeky subject”.
Andrew talked about the state of play of reporting and made a pitch towards mandatory reporting, which he calls a “litmus test” for much wider issues.
“The voluntary approach has run its course”.
Andrew said that everybody “gets’ carbon reporting – the public want it, politicians understand the need for it, business welcomes guidance on carbon reporting – so why are we waiting, he asked? Great question, no good answer.
Lois Guthrie,Technical Director, International Integrated Reporting Council (IIRC) then gave an overview of what’s happening in the world of Integrated Reporting.
“Reports are too long, too backward looking, too complex, to general purpose”
“We are mis-measuring our lives”.
Lois made the point loud and clear that reporting has to change – it needs to be more about a process of integrated thinking, taking into account all kinds of capitals. She made it clear that Integrated Reporting is different from Sustainability Reporting - contrary, I think to popular opinion, which sees Integrated Reports as being a move to eliminate standalone Sustainability Reports.
“Integrated reporting is not Sustainability Reporting – it should not duplicate or supersede Sustainability Reporting”
Pankaj Bhatia, Director, GHG Protocol, World Resources Institute then explained the process of developing the SCOPE 3 Emissions Standard which is a tool to improve risk mitigation and regulatory awareness. Scope 3 is often the largest source of emissions in any supply or value chain, and they often vary by sector. See this chart from Pankaj’s presentation which shows that Scope 1 and 2 emissions are just a small percentage of total and different sectors have vastly different Scope 3 opportunities.
“Scope 3 emissions are a treasure map of opportunities across the value chain”.
Kraft Foods, for example, found that 90% of their total emissions were in Scope 3. By helping cocoa farmers in Ghana increase crop yields and minimize use of carbon-intensive fertilizer, they can make a massive difference. Pankaj also offered some great advice for insomniacs.
“If you have trouble falling asleep, read the Scope 3 Standard before you go to bed”.
Ernst Ligteringen, Chief Executive Officer, Global Reporting Initiativethen talked about GRI developments, and said they were in the process of cooking up G4 (the first exposure draft of which will be published tomorrow, 21st June) but they don’t yet know what the look, taste and feel of it will be. G4 is an ambitious attempt to create a fabric of what exists – capturing the collective knowledge and experience – and should not compete but connect.
“GRI is a connecting framework”
“We are nearing a tipping point”.
“The future is not a printed report – in the future, you will have a range of information from printed, to digital, to XBRL.”
“There is still far too much greenwash, too many collections of nice stories, too little of commitments to the future”.
“Materiality cannot be determined only in the eyes of the reporting company”.
Ernst also talked about the technical quality of reporting and that it needs to be “assurable”. Oy, don’t get me started on assurance.
Susanne Stormer, Vice President, Corporate Sustainability, Novo Nordisk, hailed in 2012 as the most sustainable company on Earth, said“The awards is not why we do it”. Novos’ aspiration is to set a standard for what corporate reporting looks like in the new economy. Susanne made reference to the fact that there is still no accepted standard for integrated reporting and that Novo Nordisk is doing what they think is the best way to inform and engage stakeholders, while using the reporting process as a decision making tool in their business.
“Our reporting gives a 360 degree perspective of our business – including the financials.”
Susanne also made a revealing confession:
“I am a reporting nerd.”
Guess that makes two of us.
It’s a good thing that Faith Taylor, Senior Vice President Sustainability and Innovation, Wyndham Worldwide Wyndham Green Program, wasn’t unemployed in 2002.
“My job did not exist ten years ago.”
The drive for sustainability in the hospitality industry is significant, and new travelers are a big part of that. “Over one million travelers come to us today from BRIC markets”. Not only this, but travelers are becoming more eco-conscious. “50 percent of travelers would pay more to stay in a green hotel” (based on a survey by Tripadvisor). But more than just a communication to external stakeholders, the first report by Wyndham served to create a shared approach and a common language within the organization, though not without its challenges.
“Last year, our first sustainability report was eye-opening – it was a new concept for the financial team. They looked at me as though I were crazy.”
But there were some good outcomes:
“Sustainability is a huge recruitment and retention tool”.
Frank Curtiss, Member, International Integrated Reporting Council and Head of Corporate Governance, RPMI Railpen Investments, described corporate reporting as a boilerplate. What’s that?
“Some or all of the following:
- A Victorian robot
- Copy made with the intention of making other copies from it
- Syndicated or ready-to-print copy, often used by weekly newspapers
- Trite, hackneyed writing
- The detailed standard wording of a contract or warranty
- Not original
- And often unhelpful – even harmful”
Not surprisingly, then, he concluded:
“Regulator and investors are not overly impressed with the current state of reporting”
Duncan Young, Head of Reporting & Engagement, Group Sustainability, Royal Bank of Scotland opened up by admitting that “RBS is not the first name that springs to mind when we talk about sustainability”. Nothing like a bit of realism from conference speakers. He described RBS as “one of the most reputationally challenged companies in the UK over the past few years”. However, he went on to describe the steps that RBS was taking to address these reputational challenges, including some new ways of Sustainability Rporting, especially after Climate Camp 2010 brought home the importance of engaging with stakeholders.
“More is not More.”
This is the advice from Meera Pau Mehta, Corporate Responsibility, ArcelorMittal, who says you can’t put everything in one report.ArcelorMittal has one of the most impressive suites of global and local reports, and issued 11 local reports in 2010.
“There is a lot of hunger for creating local reports and lack of capacity and resource.”
The global HQ provides a guidance manual, templates, training, and an optional structure for a 20 page report. Some local subsidiaries use the template, some do their own thing. All, however, produce good quality local reports.
Rowland Hill, Sustainability Manager, Marks and Spencer described the M&S reporting journey and shared learnings. One of these was that ”no matter how good a generic list of material issues is, it won’t be fit for purpose. Expectations and material are specific to sectors.”
Yogesh Chauhan, Chief Advisor Corporate Responsibility, BBC startedoff with some numbers:
- 4 ………….months to produce a report
- 64 ………..average pages in a report
- 000′s …….the cost of producing a report (GPD tens of 000′s)
- 23 ………..percent of people who opened the report email announcement.
Very enlightening. I think the point was that it’s a lot of work for little tangible return. Perhaps this was what prompted the BBC to experiment with a segmented approach to reporting – annual reporting on performance, mid term supplement on a focus issues and monthly newsletters. And by way of warning, Yogesh advised:
“We are notoriously bad at setting targets – we are creatively driven”.
Robert Clarke, Chief Executive Officer, ecodesk gave us a live demo of the capabilities of ecodesk, which bills itself as “the world’s largest user-managed digital platform for carbon, energy, waste and water data (and a lot more besides)”, and talked of the challenges of gathering sustainability data in a coherent way.
“When you ask suppliers to complete a questionnaire with an excel spreadsheet, most organizations do not respond.”
In the closing panel, which included John Elkington, Co-Founder and Executive Chairman, Volans, who is changing the language of sustainability once again with his new book, Zeronauts, Paul Scott, Managing Director, CorporateRegister.com , Yogesh Chauhan andmyself, I was too busy being on the panel to make notes, so no quotes!
All in all, this was one of the best conferences on Sustainability Reporting that I have attended. But, the answer to the question: What is SMARTERSustainability Reporting? remains elusive. Ultimately, in my view, a smart report serves to build or rebuild trust, but the recipe for that is still not open knowledge. Go where the stakeholders are, engage them and target your messages appropriately are themes which gained some support, while material focus, appropriate context and forward looking, rather than historical anecdotes, seems to be the way to go.
And the final quote, from me:
“So where did you hide all the ice cream ?”