Corporate reporting on sustainable development: music to the ears

The crux of sustainable development reporting (SDR) is for companies to demonstrate and communicate the link between sustainability and good longterm financial performance. The WBCSD's project on SDR is therefore geared toward making a compelling business case for this type of reporting.

Strong involvement from the financial community is clearly vital here and so the WBCSD went to London and New York to gauge the expectations of the respective financial communities. Key outputs from these discussions are recorded in a summary report by the SDR working group.

In parallel, the WBCSD suggests in a position paper now under review by members that the Global Reporting Initiative, as a multi-stakeholder institution, should serve as a focal point for the development of common reporting practices.

In a third initiative, the WBCSD has recently devised a framework that is designed to help companies prepare their sustainable development reports.

After one year of work, rounded off by discussions with financial players, the WBCSD has three key outputs in the pipeline: a summary report, a position on the Global Reporting Initiative, and a methodology for identifying good reporting practices.

The importance of speaking up

"The importance of business reporting on sustainable development can be better understood if you think of an opera," says SDR program manager Tauni Sanchez. "Reporting on sustainable development is becoming to business what music is to opera: indispensable."

"Now imagine that you are not just a spectator, but actually taking part in the opera," Sanchez says. "Not only do you hear the music, you get to sing the words!"

Taking that example to the streets of Seattle, Melbourne, Prague and Genoa, where opera became protest, it's clear that people are not only watching business but also wanting their voice to be heard from centre stage." In other words, companies no longer count on respectful silence as they sing their arias; they are being forced to invite the audience up onto the stage to join the chorus.

These audience voices are compelling companies to report with increasing transparency, so opening the door to clearer and more detailed communication with internal and external stakeholders. Sustainability reporting has evolved from the urgent need for companies to satisfy these external pressures.

It was the mounting pressure for greater business disclosure that motivated the WBCSD to launch the SDR project. It got off the ground with a scoping paper in the spring of 2000 and later evolved into roundtable discussions with members of the financial community in London and New York last June.

Communicating with the financial markets

Since the correlation between profits and social, environmental and economic values has become such a hot topic, it is vital to respond to it with well-planned sustainability reporting. Such a system ensures effective management of these areas while protecting the financial bottom line.

There are sound business reasons for communicating the competitive advantages and values of a company to a wider audience: a better understanding of the company's corporate culture, improved profits and stakeholder relationships, and the enhancement of reputation and risk-management benefits.

With this effort, the WBCSD wishes to give practical guidance that will help its members report according to their needs and in ways which attract a positive response from external stakeholders. More than this, the project is seen as a good tool for business involvement in next year's World Summit on Sustainable Development in Johannesburg.

"Sustainability reporting can help create long-term profits and help reduce costs by focusing the corporation on tangible areas for improvement," explains Sanchez.

Same tune, differing voices

The summary report follows the completion of two roundtable discussions on the SDR and sustainability ratings hosted by the WBCSD in New York and London in June.

These brought together representatives of the worlds of finance and industry in discussions that will be crucial in furthering the development and direction of the project in the run-up to the World Summit.

"A core objective of the project is to make the business case for companies to report on their sustainable development performance by means of a dialogue with their constituents," says Sanchez. "And the WBCSD will aim to make a compelling case for all to participate and generate ideas and options to streamline information."

The New York and London meetings were held in order to research and assess the positions of the North American and European markets on sustainable development. Interestingly, says Sanchez, significant differences emerged between the two meetings in terms of what the participants understood, needed, wanted or were willing to do.

The consensus in London was that sustainability is already firmly on the corporate agenda, so the emphasis was essentially on how to make it more standardized and effective.

By contrast, there was a great debate among the North American market representatives about what sustainability really means and how to raise its profile.

While the North American group was skeptical about whether sustainable development could actually maintain and eventually boost profits, its European counterpart focused on how to engage in dialogue with the more enlightened few and then later to address a wider audience.

"Globalization has brought about an international movement toward sustainable development issues, and an increase in awareness in North America," states the WBCSD's interim report. "The challenge for many is to convert movement and awareness into actions."

Integrating sustainable development issues into the overall culture of the organization is the way forward, the report concludes.

The Global Reporting Initiative

Like any form of music, operas need to be well orchestrated. The same is true for sustainable development reporting, says Sanchez.

So, as a conductor of SDR, the WBCSD supports the formation of a multistakeholder institution that will work to develop agreed practices. It suggests the Global Reporting Initiative (GRI) can usefully fulfill this function.

In a position paper currently under review by its members, the WBCSD explains that GRI could provide standardization in acknowledging balance, practicability, transparency and flexibility in sustainability reporting practices. As it becomes a multistakeholder institution, the WBCSD should remain very much involved.

"We support the GRI because it represents an opportunity to create standardized indicators for business and offers companies a template for reporting," Sanchez says. "We encourage our members to become involved in the GRI."

Identifying good reporting practices

One important component of the WBCSD's work on SDR is the development of a tool to identify good reporting practices. Entitled Sustainable development reporting portal, this tool is a collection of good practices in the area of SDR. It aims to support and guide corporations as they develop sustainable development reports in line with their specific needs and the demands of stakeholder groups.

The methodology also provides a detailed checklist of what a report should contain. The checklist takes into account recommendations from recognized initiatives and documents relating to reporting practices and reported subjects.

The WBCSD's Marco Bedoya, who developed the methodology, says that the procedure remains a little subjective because it is almost impossible for different people to have the same reading on how an issue has been reported.

"Nevertheless, after having gone through a quality assurance process performed by members of the SDR working group, the degree of disagreement between different readers remains quite acceptable," he says.

More research and test-drives will be carried out in the next few months, says Sanchez, and a final SDR project report ( 2.2 MB), complete with the self-assessment tool, will be released in time for the Johannesburg World Summit.

Author WBCSD Publication Date 31 Oct 2001 Document Type WBCSD news Issue/Topic Business Role/CSR Region (Global) Source WBCSD		2.2 MB Click here to order