The conferences[i] I attended in Berlin this week identified some issues to be overcome, some questions to address and a few innovative solutions.
Reporting was not the main focus of the Humboldt Uni conference (which attracted a large proportion of people working in practice), but the link between CSR, sustainability and corporate reporting, until recently pursued as separate academic fields by management and accounting academics[ii], was strongly made. I chaired a panel of experts[iii] who provided important insights.
Challenges to overcome
Two challenges particularly emphasised in the sessions I attended at the Reporting 3.0 conference were:
- Sustainability reports are not about sustainability – they don’t say enough about the sustainability context (Bill Baue, Co-Founder of the Sustainability Context Group).
- Changing attitudes about what growth is and having growth, as traditionally conceived, being the goal for large companies (Geoff Kendall, 3D Investment Foundation). Growth in economic welfare and natural resources is desirable and that production and consumption could grow to service this, but we must find ways of doing this without increasing use of natural resources.
Questions to address
The Reporting 3.0 conference raised a number of questions about the future of reporting and in particular the role of sustainability reporting – its impact on the world, the company and other stakeholders. These were articulated by Beat Grüninger, founding partner of BSD Consulting, with input from stakeholders in Brazil as follows:
Impacting the world
- How to reconcile growth of consumption of the growing middle class with sustainable use of resources?
- How to get sustainability commitment of the government and alignment with public policies?
Impacting the company
- How to integrate materiality into strategy and management?
- Are discourse and practice aligned?
- How to improve comparability between companies and incentivise a positive competition?
Impacting the stakeholders
- Does engagement in reporting create real benefits or changes for the involved stakeholders?
Speakers at Humboldt University (and I gather speakers in other streams in Reporting 3.0) in addition raised questions about comparability[iv] and different approaches to materiality in reporting frameworks.
Innovations in reporting discussed were:
Pants to Poverty’s 3D approach to calculating social, environmental and financial profit.
BASF’s approach to materiality and interactive materiality matrix.
Key take-aways – How reporting can facilitate corporate innovation towards sustainability more broadly
The key messages from both events that I latched onto were that reporting processes and approaches have a significant impact on behaviour and we need reporting approaches which will facilitate:
- the achievement of the Sustainable Development Goals;
- changing attitudes about what growth is and having growth, as traditionally conceived, being the goal for large companies;
- identifying the value created by social and environmental resources and initiatives;
- decoupling growth from increased use of natural resources;
- focussing on the sustainability context;
- using scientific measures to inform non financial KPIs and targets.
The following elements of reporting were identified as helping to deliver change:
- Supply chain reporting
- Product reporting
- Setting targets and reporting against them
- Materiality determination.
The events highlighted that we are short of answers and we need to move beyond describing problems and hearing about single examples of corporate innovation to articulating what is needed for transformative change.
In a related development, the International Integrated Reporting Council issued a press release yesterday in advance of annual meetings of the World Bank Group and International Monetary Fund emphasising the role of integrated reporting in the public sector which significantly lags the private sector in sustainability performance management[v]
Mark Carney, Governor of the Bank of England said, “Integrated Reporting can bring additional information, in particular about the longer-term costs of climate change, to feed into markets and inform decision-making and policy-formulation by institutions. If achieved, it will lead to better-informed and more sustainable long-term investment, for the benefit of society.”
Betrand Badré World Bank Group Chief Financial Officer said, “Public sector entities are one of the largest, if not the largest, reporting entities in the world, so the transparency of their financial information is of importance to us all. Integrated Reporting would enable governments and their stakeholders to gain a better understanding of resources available and help them to manage these more effectively.”
[i] The aims of the Reporting 3.0 conference organised by BSD Consulting and the 6th International conference on corporate social responsibility and sustainability organised by Humboldt Universität zu Berlin here.
[ii] see Gray, Adams and Owen 2014 Accountability, Social Responsibility and Sustainability: Accounting for Society and the Environment for a discussion of the connections between these two fields.
[iii] Robert Eccles, Professor at Harvard and Member of the International Integrated Reporting Council; Elaine Cohen, author and consultant; Sonia Favaretto, MD, BM&FBOVESPA S.A.; Thorsten Pinkepank, Director Corporate Sustainability Relations, BASF; Daniel Schmid, Chief Sustainability Officer, SAP SE; Birgit Spießhofer, Lawyer, Dentons & Chair of the CSR Committee of the Council of Bars and Law Societies of Europe (CCBE)
[v] See Adams CA, Muir S and Hoque Z (2014) Measurement of sustainability performance in the public sector, Sustainability Accounting, Management and Policy Journal 5(1): 46-67. Y