Common Roadblocks to Sustainability Reporting

By Pamela Babcock Jul 19, 2013

A majority of organizations (69 percent) that report on sustainability performance use a popular and standardized reporting framework, the Global Reporting Initiative (GRI). But those same organizations face roadblocks to pulling the numbers together—namely, the availability, accuracy or completeness of data and getting buy-in from organization leaders to disclose, according to a recent survey.

Those were a couple of the findings in value of Sustainability Reporting, a May 2013 report from Ernst & Young and the Boston College Center for Corporate Citizenship.

“Though issuing a sustainability report in accordance with the GRI Framework or another standard requires a lot of work, there is strong evidence that transparency offers a number of financial and social advantages that make it more than worth its costs,” the study said.

The survey, conducted via e-mail from Feb. 26 to March 8, 2013, provides insight into the benefits of reporting and addresses the upside of assuring elements of sustainability reports. The 571 respondents included members of the Boston College Center for Corporate Citizenship and corporate professionals who are on a Survey Sampling International panel.

Communicating value of Sustainability

Sharlyn Lauby, SPHR, president of ITM Group Inc., a Fort Lauderdale, Fla.-based HR training consulting firm and a member of SHRM’s Ethics and Corporate Social Responsibility expertise panel, said in an e-mail to SHRM Online that she didn’t find any surprises in the report.

“I thought the report did a good job of sharing the benefits and challenges with reporting sustainability results,” wrote Lauby, author of the HR Bartender blog.

The study said one reason companies don’t report is lack of buy-in. Lauby said HR can play an important role in addressing that problem because its practitioners are traditionally involved in developing, maintaining and shaping corporate culture.

“Sustainability is most effective when it’s part of an organization’s culture,” Lauby wrote. “Communicating the value of sustainability is critical to both internal and external buy-in.” HR’s role in helping shape sustainability programs and reporting results is critical to recruitment, engagement and retention, she added.

“Employees want to align themselves with businesses where they can understand and support the organization’s purpose.”

Why Report on Sustainability?

Companies report on sustainability for several reasons, based on size, industry and ultimate report goals, the study revealed. The top four motivators for all companies, both public and private, were:

  • *Transparency (71 percent)
  • *To gain a competitive advantage (53 percent)
  • *Risk management (41 percent)
  • *Stakeholder pressure (32 percent)

Among the benefits of reporting, some studies have shown, is that more transparent organizations tend to have higher cash flows. Respondents agreed, with more than half saying they realized business value from reporting.

“We were excited to see the high number of survey participants—50 percent—that indicated sustainability reporting gave them a competitive advantage,” Brendan LeBlanc, executive director of Ernst&Young’s climate change and sustainability services, said in a media statement.

How Companies Report and Assure Reports

Companies report on performance in various ways. The most popular and widely recognized is the GRI, which was developed by a nonprofit in Amsterdam. In the survey, more than two-thirds said they use the GRI or a “GRI-referenced framework.”

“It’s clear that GRI currently provides the global standard for comparability,” the study authors wrote.

Because analysts, investors and other stakeholders are increasingly focused on sustainability, a growing number of companies are also assuring reports to check the integrity and usefulness of information.

Assurance isn’t mandatory but “an important risk management exercise,” as, eventually, there’s likely to be increased demand for comparability and alignment across reports, the study said.

Of companies that issue reports, 35 percent have “some level” of assurance done on them: 55 percent have entire reports assured, while 45 percent have some indicators assured.

Roadblocks to Reporting on Sustainability

What trips people up when reporting and assuring reports? Respondents reported three key challenges:

  • Availability of data (61 percent)
  • Accuracy or completeness of data (60 percent)
  • Internal buy-in (47 percent)

The study noted that getting external buy-in is also one challenge for large organizations because they often work with smaller subsidiaries and suppliers that may not support “robust” reporting or may not have adopted sustainability reporting.

Reporting Reduces Inaccurate Information

Chris Hagler, leader of Ernst&Young’s Southeast climate-change and sustainability-services practice in Atlanta, pointed out one of the biggest selling points for sustainability reporting —namely, that 32 percent of respondents said reporting provides major value by reducing inaccurate information about their organization’s corporate social responsibility efforts.

Hagler agreed that’s a critical reason to report, particularly since, from a risk management perspective, “it would be frustrating if somebody else was talking about my (company’s sustainability record).”

Putting out accurate statistics lessens the chance that someone else—perhaps a frustrated third party like a nongovernmental organization or a disgruntled employee using social media—may criticize an organization’s record.

“The more accurate you are, and the more information you share, the less it leaves for somebody else to report on,” Hagler observed.

Links to Employee Loyalty and Engagement

HR should play a key role in sustainability programs, Hagler stressed. Consider that while 54 percent of respondents said issuing reports helps improve their firm’s reputation, 36 percent said doing so increases employee loyalty.

Meanwhile, Hagler listed several other ways respondents said reporting provides value, including “helped the organization refine its corporate vision or strategy” (31 percent), increased consumer loyalty (30 percent), monitoring long-term risks and improving long-term risk management (25 percent), and helping the organization increase long-term profitability (24 percent).

“Those are all things that also improve employee loyalty,” Hagler said. “Don’t you want to work for a company that has a great corporate reputation?”

While sustainability performance indicators often address energy use and waste diverted from landfills, a large number of them are people-focused and concern issues like diversity, the number of women on the board, equal pay and training hours offered to employees.

Hagler noted that too often HR professionals merely report numbers when asked, but they should be partners in the entire program, from helping form strategy to serving on sustainability committees.

“Some of these things are pretty much owned in the HR function,” Hagler said. “I see the opportunity for HR to embrace those things as part of the overall corporate social responsibility program and to work to improve the reporting around it and to participate in how that story is told in the corporate social responsibility report.”

Engaging Employees in Sustainability

Phyllis G. Hartman, SPHR, founder and president of PGHR Consulting Inc. in Pittsburgh and a member of SHRM’s Ethics and Corporate Social Responsibility expertise panel, agrees. Hartman has worked with Sustainable Pittsburgh, a nonprofit that recently started a program to help local organizations become certified sustainable businesses.

Criteria for the certification include diversity and inclusion and workforce development. Hartman has also worked with other organizations to make sure programs address HR aspects of sustainability.

“HR does have a critical responsibility for making sure that sustainability issues actually occur” and needs to be a partner in the development of practices and policies, particularly since sustainability becomes a performance issue, Hartman said.

The co-author of Never Get Lost Again: Navigating Your HR Career (SHRM 2009) said she sees HR’s role in sustainability as only expanding.

“This isn’t just about being a tree-hugger,” Hartman said. “It’s education. It’s getting people involved and then doing the follow-up and including this in everyone’s job description and performance review.”

Pamela Babcock is a freelance writer based in the New York City area.

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