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Sustainability Reporting Pain – and Gain!

I think it is safe to say that sustainability reporting has become mainstream — at least among our largest companies. The number of S&P 500 companies that reported on sustainability rose from just 19% in 2011 to 73% in 2013.

In fact, sustainability reporting has become so big that some companies, such as Campbell Soup, have created new positions just to manage the workload associated with reporting!  A primary driver for the increase in reporting is exponential growth in the number of requests for information being sent to companies by their institutional investors and customers.  Niki King of Campbell’s reports receiving more than thirty survey requests per year!  And, that number does not include RFPs, ratings and rankings assessments, or requests related to sustainability awards.

Medium and smaller companies are starting to feel the pain, too.  Larger enterprises are increasingly drilling down into their supply chain, seeking to understand how their suppliers are managing social and environmental risks and opportunities.  As a result, more and more companies of different sizes and a growing number of industries are receiving requests for sustainability information. There is no question that compiling these reports takes a tremendous amount time.  Planning, prioritization, and strategy is essential if you wish to avoid becoming completely overwhelmed, even if your just trying to respond to a few big surveys a year.

But, is there a silver lining in all of this work?  Is it adding any value?  Based on our experience, there are clear and demonstrated benefits to reviewing and strategically responding to reporting requests.

1.     Benchmarking your performance:  In the case of questionnaires, where your score is made available to you, as is the case of CDP’s supply chain questionnaire, EcoVadis’s platform, and AT&T’s supplier sustainability survey, responding can provide you with useful information about how you are doing on issues your stakeholders care about.  If used strategically, this information can be helpful in guiding your sustainability efforts toward those areas that may have the greatest impact, at least from a reputational or competitiveness perspective.  In some cases, such as CDP, you may actually be able to see the performance your peers and competitors.  This information is extremely useful in a number of ways, not the least of which is providing you with ideas about what areas others in your industry are focused on.

2.     Revealing opportunities:  Requests for sustainability information definitely run the gamut in terms of what they ask for.  Typically they are formulated based on the issue areas that the requestor is most concerned with (carbon, energy, waste, or human rights, for example).  Going through the questionnaires and carefully considering what is being asked can bring to light opportunities (and risks) that you had not previously considered.  Looking at all the areas that are being asked about across multiple questionnaires can provide added insight into areas that might be more urgent and significant for you to address.

3.     Motivation for upping your game:  Sustainability information requests, especially when received from a strategically important customer or investor, can be quite a motivator.  If you are having a hard time getting people to pay attention to sustainability, promoting the increase in the number of requests (a great thing to track and chart over time) can help you raise awareness for the program overall.  Little tidbits such as whether or not a requesting entity has a reputation of “upping their game” by demanding improvements to scores and how public the information will be can be useful attention grabbers.

4.     Continual improvement:  It is part of the intent behind most information requests.  Whether they state it or not, those who are requesting information know the more you start reporting, the more pressure you will feel to improve your efforts.  In our competitive society, most people have a hard time with saying the same thing or getting the same score every year, especially if it is a poor score.  Reporting often becomes a key driver for continuing to evolve and grow a sustainability program over time.  And, evidence shows that there is a correlation between reporting to more outlets and higher sustainability performance over time.

Source: CSR Hub

5. Protecting market share and improving reputation: Voluntarily posting information about sustainability on your website can have multiple benefits. It can drive internal motivation, especially if you are publicly stating goals. More importantly perhaps, it can help you protect market share and improve your reputation among stakeholders. More and more customers are factoring in sustainability with respect to decisions on what and from whom to purchase. You may not realize it, but they are looking on your website for evidence of your efforts. In some cases, such as the process for inclusion in the FTSE4Good index, assessment for inclusion will ONLY consider information that is publicly available on a company’s website. Other questionnaire areas will offer extra points for publicly stated goals and sustainability reports. As a result, having authentic and strategically aligned information on your sustainability efforts in the public domain will help you respond more effectively to stakeholder requests and can help enhance your reputation overall.