Cherry-pick­ing on sus­tain­abil­ity re­port­ing

NZ Business - - INBOX - M

C om­pa­nies may be cherry-pick­ing sus­tain­abil­ity mea­sures that make them look good, while huge vari­a­tions in what’s re­ported makes mean­ing­ful com­par­isons across firms im­pos­si­ble, an in­ter­na­tional study shows.

Re­searchers say their find­ings re­in­force the call for min­i­mum re­quire­ments for sus­tain­abil­ity re­port­ing, like those used in fi­nan­cial re­port­ing.

“Com­pa­nies are un­der in­creas­ing pres­sure from the pub­lic and share­hold­ers to ac­count for their en­vi­ron­men­tal and so­cial per­for­mance, as well as their fi­nan­cial per­for­mance,” says lead re­searcher Dr Ra­mona Zharf­peykan, a lec­turer in the Univer­sity of Auck­land Busi­ness School’s Grad­u­ate School of Man­age­ment.

“A 2017 KMPG sur­vey showed 93 per­cent of the world’s 250 largest cor­po­ra­tions now re­port on their sus­tain­abil­ity per­for­mance, and 69 per­cent of New Zealand’s top 100 com­pa­nies. Yet there is still no sin­gle global stan­dard and re­port­ing is vol­un­tary in most coun­tries. So, we were in­ter­ested in how com­pa­nies ap­proach sus­tain­abil­ity re­port­ing,” she says in a state­ment.

The re­searchers an­a­lysed re­port­ing by 797 com­pa­nies around the world from 2010 to 2014. All com­pa­nies fol­lowed a set of stan­dards cre­ated by the Global Re­port­ing Ini­tia­tive (GRI).

They found that none used all 91 GRI in­di­ca­tors, with the re­gional av­er­age for re­ported in­di­ca­tors vary­ing from 1 to 40. Ocea­nia – which in­cludes New Zealand – and Africa had the low­est av­er­age num­ber of re­ported in­di­ca­tors over the five-year pe­riod (20 in 2014).

Ocea­nia com­pa­nies were more likely to re­port on en­vi­ron­men­tal in­di­ca­tors, while African and Eu­ro­pean com­pa­nies showed greater fo­cus on so­cial in­di­ca­tors.

“Com­pa­nies seemed to cherry-pick in­di­ca­tors that were ei­ther easy to col­lect, or easy to im­ply pos­i­tive or neu­tral mes­sages, while some of the most sen­si­tive in­di­ca­tors have barely been cov­ered. It is not clear whether firms re­port merely to stay le­git­i­mate and gain their stake­hold­ers’ ap­proval, or re­port hon­estly and ef­fec­tively...”

The num­ber of hires, staff turnover, and ben­e­fits pro­vided to full-time staff were ex­am­ples of the fre­quently re­ported in­di­ca­tors. Shunned in­di­ca­tors in­clude re­duc­tion of green­house gas emis­sions, vol­ume of spills, and wa­ter sources af­fected by wa­ter use.

“On one level, this makes sense: why would you re­port on some­thing you were do­ing poorly when your com­peti­tors are only re­port­ing things that make them look good? But it un­der­mines the whole point, which is to pro­vide an ac­cu­rate, com­pa­ra­ble pic­ture of how com­pa­nies are do­ing across the sus­tain­abil­ity spec­trum. We will prob­a­bly only get this when min­i­mum re­port­ing stan­dards are im­posed.”

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