Sustainability Reporting – Updates from the CSR Summit 2012
The concept of a triple bottom line is becoming increasingly concretized with accounting firms providing services such as risk-based human rights audits (by MAZARS Indonesia), consultancies specialising in producing sustainability reports, and a plethora of offerings for sustainability reporting software (KPMG has recently released a review of sustainability reporting systems).
This relatively nascent industry has developed around the rapid growth in business demand for sustainability reporting. Since the first separate environmental reports produced in 1989, sustainability reporting has grown rapidly. Global Reporting Initiative-standard (GRI) sustainability reports have seen a 4384% increase globally within a decade from 2000 to 2010 (reported by Ioannou and Serafeim in their paper, The Consequences of Mandatory Corporate Sustainability Reporting).
At the recent International Singapore Compact CSR Summit 2012, speakers discussed bolder forms of reporting, such as Puma’s Environmental Profit and Loss account (EP&L) which converts environmental impacts into numerical economic terms. Since first releasing the groundbreaking report in 2011, the company has followed up with a product-specific report this year.
While numbers are important, the impact of the Puma report lies in the sincerity and firm position demonstrated. Sustainability reporting is evolving beyond quantitative reports on energy consumption and efficiency, experts and companies alike at the CSR Summit presented on the ‘aspirational’ trend of CSR and the need to have a strong and fundamental position on sustainability to maintain relevance.
While national stock exchange guidelines which recommend sustainability reporting contribute to this development, much of this may be attributed to a mix of business competition and business leadership.
At the summit, Professor Mahdev Mohan from the Singapore Management University shared that SGX’s sustainability reporting guidelines, released in June 2011, still lack compulsion and is practicably voluntary in Singapore. Looking beyond for more progressive standards, he suggested the Johannesburg stock exchange and Malaysia stock exchange.
Last November, four months after the release of the SGX reporting guidelines, Singapore Compact reported that 14% of mainboard-listed companies produced sustainability reports. It would certainly be interesting to note the change, in quantitative and qualitative levels, almost one year later.
According to Professor Jeremy Moon, Director at the International Centre for Corporate Social Responsibility at the Nottingham University Business School, reporting creates a company mindset, subtly encourages more thinking about environmental and social costs, as well as makes more information available at hand.
In a study on sustainability reporting based on 58 countries, researchers found that with mandatory reporting: “sustainable development and employee training become a higher priority for companies, and [the] corporate governance improves”.
This article is contributed by Yong Rui Yan.