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How to Read A Sustainability Report: A Guide For Skeptics

It’s Sustainability Report season again. Companies around the world are sending out notices of their web-posted reports, highlighting their achievements with colorful charts, graphs and photos.

These reports represent the best and worst of the sustainability movement. At their worst, reports are shallow marketing pieces that breathlessly brag about one-off programs designed to be proof points for corporate responsibility. At their best, sustainability reports provide a transparent, quantified, balanced view of the company’s impact and ambitions.

To know the difference, readers need to be aware of what makes a credible Sustainability Report. Here’s my check list. The report…

Is balanced in content. The report will present the company’s performance as an employer, as a corporate citizen, as an environmental steward and as a business.

Is data-rich.  The numbers need to be specifically defined in terms of scope (all business units, all geographies?) the methodology used to calculate the numbers, and the importance and impact of that data within the context of the business. Numeric goals and key performance indicators in particular need to be specific and thoroughly explained. Yes, dear readers, that means reading footnotes.

Presents both good and bad.  To be credible, companies should present positive and negative developments. Missed goals, accidents, reputational gaffes and misguided strategies should be included. Nobody assumes that a report is a tell-all but at least some of the content needs to be retrospective and self-critical.

Follows international reporting standards.  The Global Reporting Initiative and Green House Gas Protocols are just two of the widely-accepted standards that now exist for sustainability reporting. Failure to follow these guidelines erodes the credibility of a report and indicates a lack of understanding about today’s market expectations. The standards also remove any ambiguity about what topics and issues should be included in reports. Are they cumbersome and technical? Yes. Are they essential? Yes, if a company is committed to being a sustainability leader.

Is audited, reviewed or “assured” by a third party. Best-in-class reports earn credentials by utilizing a major accounting firmto review their data and claims. This helps to squelch any criticismfromoutsiders about whether the company is “spinning the numbers” or “green-washing.” It also is an indication that the company is invested in providing trustworthy information that is more valuable for its stakeholders.

Looks ahead as well as backwards.  Annual reports shouldn’t be focused only on a single 12-month period. Companies claiming sustainability commitments should be citing longer-range goals and multi-year progress from previous years.

Connects sustainability with its business model. Sustainability is about how a company manages its resources – human, financial and in the marketplace. Ultimately, a sustainability report can be a persuasive and strategic tool to present the business case about a company’s value. Well-written sustainability reports give readers insights into how well a company is managed today and what its vision is for the future.  

So when your email box fills up with sustainability report notices this season, use this checklist to bring out your inner skeptic.

I also encourage you to use the same checklist for UPS’s Sustainability Report, which will be posted at sustainability.ups.com later this month.

How do you judge the credibility of a sustainability report?

Category: Sustainability
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    Comments [4]

  1. Thank you! Blog was very interesting and true. Users are
    still too optimistic to sustainability reports, but companies
    too marketing-oriented. Such comments help to both of
    them become more realistic.

  2. Very helpful points, Lynnette – for any company in any
    industry. It’s about reminding yourself to be a critical
    thinker and see the company you represent the way
    consumers are going to be looking at it. Are the
    data-rich resources like CSRHub.com of use to companies
    like UPS re: benchmarking/comparisons in the race to the
    top (of Mt. Sustainability.. as per Ray Anderson…) ?

  3. In summary, I would say it is all about TRANSPARENCY. A
    sustainability report should reflect that in terms of its
    environmental, social and most importantly economical
    issues – part of which I have noted in the course of
    digesting several sustainability report: most sustainability
    reports avoid the subject of tax payment. All in all, this is
    rather an insightful article. Well done Lynnette.

  4. Third party assurance is very important in
    avoiding “greenwashing” and producing credible and
    transparent CSR reporting. According to LBG Canada, a
    group of companies achieving the highest standard of
    community investment, including a third party assurance
    statement from credible auditors like PWC is becoming
    an increasing trend among the group. According to the
    2011 Annual Benchmarking Report, 39% of companies
    are including a statement in their 2011 CSR reports, up
    from 18% in 2009.

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