Are sustainability reports honest and useful?

It is that time of the year again when a large number of companies will be publishing, or have recently published their annual reports. Some of them, hopefully most, will also be issuing reports that will talk about the company’s environmental and social performance, in other words, their CSR or sustainability reports. I look forward to seeing how businesses have evolved in communicating their sustainability performance to stakeholders in 2018.

Over the years, a growing number of organisations in the Arab region have been trying to catch up with global industry leaders and, through their sustainability reports, making efforts to be more transparent about how their HR policies and practices, their environmental impact, their community initiatives, their governance systems and more. But is transparency really the motive here, or is it just a glossy report that meets the company’s requirements rather than that of their stakeholders?

Critics of sustainability reporting claim that when companies publish their social and environmental impact, the results are either useless or misleading. There have been cases where companies have been found to publish data that is sometimes inaccurate, or communicated in way that seems to hide real issues and impacts.

So what is the value of sustainability reporting? And are they truly honest and useful for their stakeholders?

There is an inherent power in being transparent. Even if few companies misuse useful reporting frameworks to hide their negative impact and amplify their performance, the overall impact is that of improvement. The improvement of which will be in measurement, in benchmarking, in good behaviour and in performance.

Today, a number of stock exchanges in the developed world have made it mandatory for publicly listed companies to report their social and environmental impact. A number of investors and businesses also similarly mandate their clients and vendors to submit sustainability reports as part of their assessment. Moreover, almost all of the 250 largest companies in the world publish reports that talk about their social and environmental performance. It may very well be the case that many of these reports may not be 100 per cent accurate, or may not depict 100 per cent of the company’s issues. Nonetheless, the movement to be sustainable and transparent is here, and is gaining positive momentum.

The trend for sustainability reporting may be negatively affected by companies that abuse the system to publish greenwash and unreliable reports, but we are also seeing a constant improvement in reporting frameworks which will help improve the system of corporate integrity and accountability over time. This shows that while reporting may not be a perfect tool, it is important to address the sustainability challenge. The most commonly used reporting framework or standard does not simply focus on indicators, it also places emphasis on the process of talking to your stakeholders, understanding the most important and material issues, and assuring the data you have measured and reported.

The way I look at it, all companies should see how sustainability reporting can enhance their operations, their reputation and overall sustainability, and adopt some form of measurement and reporting — may it be integrated or standalone reporting — with the aim to be contextually relevant, responsible, transparent, innovative and engaging. In the complex world we live in, I believe this will be one of the most important ways to use the power of business to help achieve the Sustainable Development Goals by 2030.

Companies should see how sustainability reporting can enhance their operations and reputation