CONFESSIONS OF A SUSTAINABILITY REPORTING JUNKIE

For the past 20 years I have spent a great deal of time refining and reviewing countless sustainability reports from companies and organizations of all shapes and sizes in many different sectors. I made a good career out of helping companies produce reports to help tell their ESG story. I have supported companies with their reporting strategy, guided them on content and format, and have penned many reports. I’ve analyzed reports, prepared benchmarking matrices, and conducted research into the state of sustainability reporting in Canada, which was co-published in the academic journal Account Perspectives. By all accounts, I’ve probably read over 1000 sustainability reports in the past decade.

And now, after years of devoting myself to improving sustainability reporting practices, I have come to the stark and unsettling realization that most of my efforts have been in vain, that my work was based on assumptions that never came to fruition, and that it’s going to take a major mind-shift to wean the world from thinking that sustainability reporting is the answer to better sustainability performance. It’s time to quit the way we’ve been doing sustainability reporting and rewind the clock.

Sustainability reporting first came on the scene with the Values Report issued in 1995 by The Body Shop, arguably a company that was well ahead of its time in all matters ESG. This report set the stage for corporate accountability and transparency and defined the ambitions and expectations for all sustainability reporting. If companies told their ESG stories, supported by facts and figures, they would earn respect and loyalty from all their audiences.

Through the early 2000s, companies, particularly those in sectors vulnerable to scrutiny and criticism, began to produce tomes worthy of doorstop stature. Since then, we have seen a steady increase in the number of sustainability reports produced every year. By 2020, 80% of the world’s largest companies reported on their EG practices to some degree. (The Time Has Come: KPMG Survey of Sustainability Reporting: 2020)

But as these reports continued to be produced at great financial expense (and at the expense of many an employee’s sanity) and produced annually, the question has remained - who is actually reading these reports? Companies claim anecdotal evidence that the reports are read primarily by their employees and potential hires researching the company they hope to work for. Within the investment community, sustainability reports appear to be increasingly used to obtain insight into a company’s non-financial performance, and any potential risks a company faces. But very few companies are actually able to show the links between their ESG practices and financial performance, and according to KPMG (2020 Study), only 16% of the world’s largest companies do integrated reporting. If sustainability reporting was important to the credibility and investability of corporations, why are they not part of quarterly and annual reporting? More fundamentally, what impact are sustainability reports actually having?

The answer to these questions may lie in the troubling reality that most sustainability reports are largely produced absent of input by the very audiences whose respect and loyalty companies hope to garner. Companies continue to talk at, and report to their audiences. They are not having a conversation with them; nor are not co-building their reports with them.

There are missed benefits of co-building sustainability with your audiences. The first benefit is that you will learn what really matters to your audiences and be able to develop the content, and format, that will penetrate. The second is that your audiences will help co-build the criteria of assessment, and define the corporate standards to meet, and ambitions to strive for. Your audiences will let you know how you are doing as an environmental steward, social actor and corporate Citizen. They will let you know what you ought to be doing to earn their respect, investment, purchase and loyalty.

Co-building with your audiences will bring real human value and truth to how you define and measure success. For example, how do you capture the real value creation of ESG; how an you measure the value of a life saved by a company’s ESG commitment; how do you measure the value of human rights commitments? Providing insights and intelligence on human matters that are not easy to measure is where corporation will earn real respect. Reveal the real impact your ESG commitments and actions have not only on the environment, but on people. You can do this when you create reports with your audiences.

The only way to earn that respect is to stop sustainability reporting in its current form and to start anew with three guiding principles. first, create your reports, criteria of evaluation, measures and stories with your audiences. Respect their voices and their input. Because when you do, you have a much better chance of getting at the truths of how you are defining, and realizing, your ESG commitments. Which is the second principle: seek the truth, which really means seek the truths. And the third principle is don’t be afraid to tell the truth. You will earn deep and enduring respect from brave truth-telling.

Because after all, what is the point of sustainability reporting if it is not to reveal courageous ESG commitments and to tell the stories about often conflicting truths of what really matters to the people affected by the activities and actions of a company?

Because, unfortunately, actions do not speak for themselves.