Ernst & Young figures that something like two-thirds of major global enterprise businesses (the so-called Fortune 500) are now publishing a corporate sustainability or corporate responsibility report of some type. But what information should be included or excluded from these disclosures? How often should they published? Who should contribute information? Should financial analysts be explicitly briefed, especially since more of them apparently include these considerations in company valuations?
Those are among the broader questions explored in an Ernst & Young report called "7 Questions CEOs and Boards Should Ask About 'Triple Bottom Line' Reporting."
The thing is, even though the Securities and Exchange Commissions is asking public companies to be more forthcoming about environmental-related risks and the Federal Trade Commission is cracking down on greenwashing, most of these reports are released voluntarily.
According to the report, here's the risk of keeping triple bottom line reporting -- information about a company's environmental and social activities impact the planet, people and profits -- to yourself:
"Companies that do not release sustainability information may appear less transparent than competitors that do, coming across as laggards even if they aren't. And those that report incompletely, or which insufficient rigor may find that if reporting becomes mandatory and standards are tightened, glaring discrepancies may appear between past reports and newer ones. All of these factors have created momentum in the direction of more openness and more reporting."
After reading the report and the questions it poses, I have these seven observations on best practices for crafting corporate sustainability or responsibility reports. I encourage you to download the entire Ernst & Young analysis, though, because it will really help your team start asking the right questions -- regardless of whether or not you are already disclosing this information.
- Study your industry sector to understand which of your competitors are doing this.
- Understand the viewpoint of your major shareholders or institutional investors. According to Ernst & Young, there are two big resources to consult: the United Nations Principles for Responsible Investment and the Principles for Responsible Investment.
- Format. Probably the most widely used framework for triple bottom line reporting today is the Global Reporting Initiative (GRI) Reporting Framework, which suggests information that should be included and how it should be presented. The GRI reporting framework is relatively mature: it currently is undergoing its third revision, and some of the latest updates are expected in early 2011.
- Make the collection of information you need for corporate sustainability reporting a part of core processes -- and job mandates. Otherwise the data could be cumbersome to gather or it simply will not be a priority for your executive team.
- Consider getting a third party to verify the information you are reporting. Even though this isn't necessarily required today, it will demonstrate a higher level of transparency plus you may get some valuable feedback on things your company can do better.
- Be careful about how you disclose data from division to division or business unit to business unit. The people reading this report will naturally be inclined to make comparisons and if the information is reported differently, your message could appear disjointed. This also harkens back to the first point on this list: You need to understand how your competitors are talking about similar information -- otherwise the wrong conclusions could be drawn.
- Don't forget to use the information you gather for this reporting exercise as real key performance indicators that can help your company become more efficient overall. Period.
Finally, here are four reports that Ernst & Young suggests consulting for great ideas in corporate sustainability reporting:
This post was originally published on Smartplanet.com