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ZOEKEN
How to make sustainability reports more exiting?
By now most companies that publish sustainability reports are preparing for next year’s round.
I would advise not to have more of the same, no incremental changes but some real improvements. Five suggestions, (a bit long for a blog, but well intended):
1) From aiming at all stakeholders, to targeting a key audience
Most sustainability reports seem to be aimed at “all stakeholders”. Consequently they cover broad topics, but lack focus and depth. Reports have turned into “qualifiers”(we need to have one), instead of “differentiators”. The good intentions of the company (trying to service an ill-defined audience) result in a situation where nobody is truly satisfied. Isn’t the relevance of financial reports based on the fact that they have a specific audience, with clear needs and demands? I believe companies should better prioritise their stakeholders and target the most relevant. The contents of the report will be very different if one addresses for example the employees, or the shareholders. Clients have different needs than society at large. Companies should discover which stakeholder-group is most relevant. Last sustainability report of AkzoNobel was targeted at investors. This does not mean that the report isn’t useful for other stakeholders, but the company messages have a single (instead of a fuzzy multiple) perspective.
2) From elaborating on everything to covering material aspects
Based on the key audience, the company should identify the material aspects of its business. What sustainability drivers are truly relevant for creating value (both monetary and societal value)? How can we best explain and underpin our impact for our key audience?
Currently lots of reports seem to be built on information that is easily available instead of the indicators that really matter. Is water use of a financial institution really important (or is it just easy to get the numbers?). If it is not relevant, why include it? Companies say a lot about sickness rates, but little about the more important productivity rates and the underlying programs to optimise those. By focusing on material aspects reports will become thinner and easier to read. And although this may dissatisfy some audiences, it will make your key audience happier.
3) From generic promises to specific measuring of impacts;
Maybe it is because of a lack of an identified key audience and a lack of focus on material aspects, that only few reports really give a measurable reflection of the sustainability impact of the company? Even less companies succeed in giving year-on-year information, since key performance indicators seem to be changing all the time.
Most reports are long on (non-?)information, but short on hard numbers, data and targets. This is an implicit proof that the underlying sustainability management systems of the company are poorly developed. It is an indication that line management doesn’t have a real “data-cockpit” that is being used for day-to-day operations. In other words: sustainability is not core of the matter, but an add-on. Companies should present sustainability goals in the same way as Warren Buffet presents Berkshire Hathaway’s annual business objectives: “Here’s what we are going to do, here’s how we’ll measure it and here is how you can evaluate our performance this time next year.”
This is a tremendous effort for the sustainability performance of many companies. But critical for improving their sustainability credibility.
4) From reporting as a “must” to reporting as an “opportunity”
Only few outsiders understand the complexity of sustainability reporting and the staying power that is needed to prepare a sustainability report. However, the internal struggle that is needed to make the report, often results hard times for the project team. The process seems to be “a must”. The need to produce the report by a certain date is infecting the mood and the report is a product on its own: fifty-some pages between two covers. Hardly any of their colleagues seem to understand the relevance of a sustainability report and are not so committed to generate valuable inputs.
However, the reporting process should be entirely different. It is a great way to involve inside stakeholders and outside stakeholders in the process of continuous improvement of the sustainability performance. Insiders and outsiders could be invited to discuss the material aspects of the company. Where do you believe the company can make a difference? What do you expect the company to report on? What do you consider to be our biggest dilemma’s and how do you think we should deal with them and report about them? Reporting would become much more a continuous process. The reporting process should become the catalyst for taking sustainability to a next level within the company.
It could even be considered to extent the involvement of the outside stakeholders to the verification process of the report. Intense dialogue on dilemmas and inputs, may decrease the need to invite an accountant for the verification process. Often accountants have trouble explaining the cost-benefit ratio of their involvement. Their statement is “the most expensive page” in every sustainability report, and is only being used as a stamp of approval. But I can imagine that a statement by a stakeholder group, as part of a continuous dialogue with the company, has more added value for the company itself. It would be the ultimate way of presenting the reporting process as an opportunity instead of a must.
5) From cosmetic top managers support to CEO ownership
These proposed changes seem very obvious on the one hand, but are rather fundamental on the other. Will outside audiences appreciate the increased focus on material aspects (less subjects), the prioritization of stakeholders (key audience, instead of “everybody”) as a positive direction? Or would they expect that the company is backing out of sustainability and trying to move away from some of the dilemmas? I believe the most effective way of underpinning the sincerity and sensibility of the company’s plans would be the active involvement of top managers in the process. To date I believe that the involvement of top managers in the sustainability reporting process is limited. They have delegated the reporting process to a team, which has to deliver some output (“must”). Top managers hardly see the benefit of a sustainability report.
The reporting team should propose the previous mentioned changes in a project plan and explain how this would increase the added value and relevance of the report. Top management should then be ready to “sell” this new sustainability report actively in a dialogue with key stakeholders.
Do you agree that the combined efforts would lead to a new generation of more exiting reports?
I would advise not to have more of the same, no incremental changes but some real improvements. Five suggestions, (a bit long for a blog, but well intended):
1) From aiming at all stakeholders, to targeting a key audience
Most sustainability reports seem to be aimed at “all stakeholders”. Consequently they cover broad topics, but lack focus and depth. Reports have turned into “qualifiers”(we need to have one), instead of “differentiators”. The good intentions of the company (trying to service an ill-defined audience) result in a situation where nobody is truly satisfied. Isn’t the relevance of financial reports based on the fact that they have a specific audience, with clear needs and demands? I believe companies should better prioritise their stakeholders and target the most relevant. The contents of the report will be very different if one addresses for example the employees, or the shareholders. Clients have different needs than society at large. Companies should discover which stakeholder-group is most relevant. Last sustainability report of AkzoNobel was targeted at investors. This does not mean that the report isn’t useful for other stakeholders, but the company messages have a single (instead of a fuzzy multiple) perspective.
2) From elaborating on everything to covering material aspects
Based on the key audience, the company should identify the material aspects of its business. What sustainability drivers are truly relevant for creating value (both monetary and societal value)? How can we best explain and underpin our impact for our key audience?
Currently lots of reports seem to be built on information that is easily available instead of the indicators that really matter. Is water use of a financial institution really important (or is it just easy to get the numbers?). If it is not relevant, why include it? Companies say a lot about sickness rates, but little about the more important productivity rates and the underlying programs to optimise those. By focusing on material aspects reports will become thinner and easier to read. And although this may dissatisfy some audiences, it will make your key audience happier.
3) From generic promises to specific measuring of impacts;
Maybe it is because of a lack of an identified key audience and a lack of focus on material aspects, that only few reports really give a measurable reflection of the sustainability impact of the company? Even less companies succeed in giving year-on-year information, since key performance indicators seem to be changing all the time.
Most reports are long on (non-?)information, but short on hard numbers, data and targets. This is an implicit proof that the underlying sustainability management systems of the company are poorly developed. It is an indication that line management doesn’t have a real “data-cockpit” that is being used for day-to-day operations. In other words: sustainability is not core of the matter, but an add-on. Companies should present sustainability goals in the same way as Warren Buffet presents Berkshire Hathaway’s annual business objectives: “Here’s what we are going to do, here’s how we’ll measure it and here is how you can evaluate our performance this time next year.”
This is a tremendous effort for the sustainability performance of many companies. But critical for improving their sustainability credibility.
4) From reporting as a “must” to reporting as an “opportunity”
Only few outsiders understand the complexity of sustainability reporting and the staying power that is needed to prepare a sustainability report. However, the internal struggle that is needed to make the report, often results hard times for the project team. The process seems to be “a must”. The need to produce the report by a certain date is infecting the mood and the report is a product on its own: fifty-some pages between two covers. Hardly any of their colleagues seem to understand the relevance of a sustainability report and are not so committed to generate valuable inputs.
However, the reporting process should be entirely different. It is a great way to involve inside stakeholders and outside stakeholders in the process of continuous improvement of the sustainability performance. Insiders and outsiders could be invited to discuss the material aspects of the company. Where do you believe the company can make a difference? What do you expect the company to report on? What do you consider to be our biggest dilemma’s and how do you think we should deal with them and report about them? Reporting would become much more a continuous process. The reporting process should become the catalyst for taking sustainability to a next level within the company.
It could even be considered to extent the involvement of the outside stakeholders to the verification process of the report. Intense dialogue on dilemmas and inputs, may decrease the need to invite an accountant for the verification process. Often accountants have trouble explaining the cost-benefit ratio of their involvement. Their statement is “the most expensive page” in every sustainability report, and is only being used as a stamp of approval. But I can imagine that a statement by a stakeholder group, as part of a continuous dialogue with the company, has more added value for the company itself. It would be the ultimate way of presenting the reporting process as an opportunity instead of a must.
5) From cosmetic top managers support to CEO ownership
These proposed changes seem very obvious on the one hand, but are rather fundamental on the other. Will outside audiences appreciate the increased focus on material aspects (less subjects), the prioritization of stakeholders (key audience, instead of “everybody”) as a positive direction? Or would they expect that the company is backing out of sustainability and trying to move away from some of the dilemmas? I believe the most effective way of underpinning the sincerity and sensibility of the company’s plans would be the active involvement of top managers in the process. To date I believe that the involvement of top managers in the sustainability reporting process is limited. They have delegated the reporting process to a team, which has to deliver some output (“must”). Top managers hardly see the benefit of a sustainability report.
The reporting team should propose the previous mentioned changes in a project plan and explain how this would increase the added value and relevance of the report. Top management should then be ready to “sell” this new sustainability report actively in a dialogue with key stakeholders.
Do you agree that the combined efforts would lead to a new generation of more exiting reports?
jun 30, 2008
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