|
July 02, 2004
A Brief History of Sustainability Reporting
by William Baue
Part one of this two-part article outlines the history of sustainability reporting up to the
present; part two projects trends in sustainability reporting into the future.
SocialFunds.com --
Corporate reports covering non-financial information--variously called sustainability, triple
bottom line (TBL), corporate social responsibility (CSR), and environmental, health, and safety
(EHS) reports--are relatively young compared to financial reports. However, non-financial
reporting is growing in significance as corporations and their shareowners and stakeholders
recognize that non-financial issues impact financial performance. Tracing the history of
non-financial reporting helps project the trajectory of where this kind of reporting is heading,
which part
two of this two-part article will cover.
 "There have been sporadic initiatives [in
the past] to produce non-financial corporate reports, such as the social reports produced in
Germany during the 1970s," said Paul Scott, director of Next Step Consulting, a UK-based consultancy focusing on
corporate policy, strategy, and communications. Next Step manages CorporateRegister.com, a free online directory of
corporate non-financial reports. "The current reporting movement emerged from reporting in the US
during the late 1980s, in response to the increasing volume of emissions data put into the public
domain by the US 1987 SARA [Superfund Amendments and Reauthorization Act] Title III
legislation--the 'right to know' legislation which established the Toxic Releases Inventory."
Also in 1987, the
Brundtland Commission, appointed by the United Nations to study the connection between development
and the environment, coined the term "sustainable development," meaning that present resource use
must ensure future resource availability. Over the next several years, this concept created a
ripple effect in non-financial reporting, spurring a transition from narrowly-focused reports to
ones that integrated diverse sustainability issues.
"During the early 1990s the concept of
sustainable development gained common currency, especially following the 1992 'Earth Summit' in Rio
de Janeiro," Mr. Scott told SocialFunds.com. "The existing environment and EHS reports began to
include wider issues, such as community, and gradually 'sustainability reports' began to appear."
The shift continued through the "Rio + 10" Summit on Sustainable Development in
Johannesburg, South Africa in 2002. According to CorporateRegister.com statistics, the percentage
of reports exclusively focusing on the environment fell from 63 percent of non-financial reports in
2000 to 42 percent in
2002, while sustainability reports rose from 5 to 15 percent over the same period.
Sustainability is increasingly becoming the umbrella term under which all non-financial reports
fall. Last week, AccountAbility, a
UK-based institute promoting accountability for sustainable development, and CSRNetwork, a UK-based CSR consultancy, released a study
lumping social, citizenship, and EHS reports under the sustainability rubric. The Accountability
Rating, which rates sustainability reports from the Fortune Global 100 (or G-100, the
world's 100 companies with the highest gross revenues), finds significant growth in
sustainability reporting. Almost three-quarters (72 percent) of G-100 companies issued
sustainability reports by 2004, whereas less than half (48 percent) had done so by 2003.
"This is remarkable if you consider that many of the Global 100 are Japanese trading companies
and financial-sector firms, who do not tend to report," said Riva Krut, vice president of Cameron-Cole, an environmental management
services (EMS) consultancy. In 1997, Dr. Krut developed the survey on which the Accountability
Rating was directly based, the annual Benchmark Survey of Global Environmental/Social/Sustainable
Development Reporting, which CSRNetwork took over from Cameron Cole in 2001.
"The
escalation trend is most conspicuous in the USA, where the percentage of US reporters in the G-100
rose from 18 percent to a remarkable 49 percent in one year," Dr. Krut told SocialFunds.com.
Also conspicuous was the dearth of US companies in the top sustainability report ratings:
Hewlett-Packard (ticker: HPQ) was the sole US-based company
in the top ten, which included BP (BP), Shell (RD), Toyota (TM) and Unilever (UN), among others.
To gauge the overall status of sustainability reporting, the survey graded reports on a
100 percent scale in six areas: stakeholder engagement, strategy, governance, performance
management, public disclosure, and assurance.
The findings reveal that stakeholder
engagement is widespread, with 72 percent of companies earning some score in this arena in 2004 as
compared to only 31 percent of companies addressing stakeholder engagement the year before.
However, stakeholder engagement is relatively weak, according to the survey.
"Only two
companies scored 50 percent or above, and only 10 out of 100 companies both identified their
stakeholders and described processes in place for engaging with them," said Katy Anderson,
principal consultant with CSRNetwork.
Assurance had the lowest overall score of the six
areas, averaging four percent. Only 15 companies provided external auditing or verification of
their reports. Interestingly, seven of these companies placed in the top 10 overall ratings.
Part two of this two-part
article extrapolates the present state of sustainability into future trends.
©
SRI World Group, Inc. All Rights Reserved.
Top
|
