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February 23, 2005

Web Design, Lobbying Disclosure Fuel Co-Operative Bank Win of UK Sustainability Reporting Awards
    by William Baue

The award judges distinguished between sustainability and corporate social responsibility reporting, noting that many reports identifying themselves as the former (which are more rigorous) were actually the latter.

SocialFunds.com -- Today at the British Library in London, the Association of Chartered Certified Accountants (ACCA) announced the winners of the UK Sustainability Reporting Awards in 2004. Co-operative Financial Services (ticker: CPBB_p.L--commonly known as Co-operative Bank) won the best sustainability report as well as sharing commendation for best electronic reporting with BT Group (BT.L). FRC Group was honored for the best social report, with Traidcraft named runner-up, and Thames Water (TW.L) received a commendation for its environmental report. Commendations went to mm02 (OOM.L) for innovative reporting and to Anglo American (AAL.L) for articulating the challenge of sustainable development for their business.

ACCA, an international professional accountancy organization with over 340,000 members in 160 countries, launched the European Environmental Reporting Awards in 1996. In 2002 the awards were expanded to cover sustainability reporting, which encompasses both environmental and social reporting, and the next year awards were granted nationally throughout Europe. ACCA, which does not present awards on the more mature format of traditional financial reporting, is now involved in 26 sustainability reporting awards schemes around the world.

The panel of judges assessed more than 80 submitted reports on three main criteria: completeness (40 percent), credibility (35 percent), and communication (25 percent). The judges short-listed eight submissions each in the sustainability and social report categories, but only two environmental reports. The dearth of qualifying environmental reports is only partly explained by the trend of replacing environmental reports with more comprehensive sustainability reports.

"The judges have perceived a decline in the quality of environmental reporting over the past few years: only two of the 23 environmental reports submitted in 2004 made it onto the short list," states the judges' report. "[S]ustainability and social reports seem to be leading the way, and the judges, overall, found them to be more impressive."

Perhaps the most interesting judgment of the panel was its opinion on whether the concepts of corporate social responsibility (CSR) and sustainability are synonymous, distinct, or complementary.

"One interpretation of the differences between sustainability and CSR is that an organization may be operating in compliance with legal environmental standards and regulations and may be reducing its environmental burden year-on-year, while still creating a resource, pollution, and waste impact which is beyond the carrying capacity of the receiving eco-system," state the judges. "This situation may be perceived to be in accordance with CSR principles but not in accordance with sustainable development principles."

According to this definition, the judges considered the majority of self-described sustainability reports to be CSR reports in fact.

Report credibility stands to improve significantly by enhancing the effectiveness of assurance statements, for example by disclosing the independence of the assuror and addressing the previous year's recommendations, listing changes made in response to past assurance statements.

Many of the award judges' past recommendations for better sustainability reporting still apply, such as disclosing public policy positions (as Co-operative did) and assessing the materiality of sustainability issues (mmO2 used a five-part materiality test from AccountAbility).

The reports were evaluated with particular attention paid to stakeholder engagement, this year's theme for the awards, yielding mixed results. For example, almost two-thirds (65 percent) of the reports explicitly identified their stakeholders. Of these, however, only a little more than a quarter (27 percent) differentiated between key and wider stakeholders, and only seven percent indicated the process of identification. Similarly, more than three-quarters (76 percent) of the reports encouraged stakeholder feedback, but less than a quarter (23 percent, or 15 reports) explained how the feedback would be used.

Also today, award sponsor CorporateRegister.com, an online resource that posts more than 9,000 environmental, social, and sustainability reports dating back to 1990, published the sustainability reporting status of the FTSE 100 companies.

"Of these top 100 companies, 82 publish stand-alone non-financial reports, 16 publish information on their corporate responsibility issues in a different form, and only two companies publish no such information at all," said Paul Scott, director of Next Step Consulting, which established CorporateRegister.com in 1998.

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