Soul Economy

Following on from our earlier post about the Benefits of Sustainability Reporting, Ulrike Schuermann from Momentum International Partnerships outlines the key issues surrounding sustainability reporting for Soul Economy. It would be great to hear your thoughts, ideas and experiences.

One, if not THE key issue is how we can achieve a balance between appropriate regulation and voluntary reporting so the government can fulfil its role in enforcing a level playing field. This could be achieved by introducing incentives such as relieving reporting companies from obligations to report separately to individual government departments, however, is not being dealt with here in depth.

At this moment, only very few countries request publicly listed companies to issue sustainability reports by law, one of these countries is France. Australia has conducted a parliamentary inquiry into this issues which resulted in a series of recommendations including that sustainability reporting should remain voluntary in Australia.

We therefore are faced with a proliferation and fragmentation of national level guidelines, which poses particular problems for multi-national companies in collecting consistent data. Adopting a publicly recognised, global set of performance indicators, and, despite its critics, it seems very much like the Global Reporting Initiative is emerging as the dominant global reference framework, is therefore highly desirable and can only be achieved through international cooperation and collective action.

Another issue is the need for independent verification and assurance of reports to provide comfort to stakeholders, management and the board in mitigating the risks posed by sustainability issues. Only a fraction of reports are independently assured, however, just like reporting itself, the trend is positive and gives rise to optimism.

Lastly, I would like to stress the need for business to identify material issues and link financial with non-financial aspects of corporate reporting which is an area most reporters are still grappling with. Those of us who actually read sustainability reports have been entertained with feel good stories and anecdotes about good corporate citizenship, with some enlightened exceptions.

Sustainability reporting is only one small part of the sustainability agenda be it an important one and certainly not a goal in itself. The purpose of sustainability reporting is to summarise and report issues that matter. This is a very quick moving field with evolving best practice and I would like to leave you with a few questions:

• Is the stand alone sustainability reporting sustainable or will the annual report and sustainability report merge into one meaningful document giving us a complete picture of a business performance in social, environmental, economic and governance terms?
• Are current business models equipped to deal with the new requirements?
• What is the risk to business of the impact of climate change and other material issues?

My next article on sustainability reporting will deal with the available standards, codes and guidelines including the Global reporting initiative and review a few sustainability reports.

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