How Green Is My Company?

"The quality of [sustainability] reporting varies widely from company to company," notes Savitz. "While there has been an uptick recently of companies allowing for independent assurance of their reports, it is nothing close to what is required for annual financial reporting." That's to be expected, says Massie. "GRI has gone from nowhere to being used by 500 companies in less than seven years," he points out. "If you look at the comparable development of GAAP or the way [the Financial Accounting Standards Board] creates standards, there is a much longer history at play. I view sustainability reporting as a curve that most companies are only beginning to ride."

Still, some consultants advise caution when assessing the accuracy of claims made by companies about their environmental or social records. "There are companies using [sustainability reporting] more for a PR exercise, and others that mean what they say," says Eric Israel, managing director in the Forensic Practice at KPMG LLP in New York. Even Massie acknowledges that the quality of reporting varies. "But over the last couple of years, we've really seen companies consistently upgrade the quality of their reports," he adds. "Meanwhile, discussions are developing to create some kind of auditing standard for sustainability reporting."

Savitz says that until such a standard is developed, investors and stakeholders must take a company's nonaudited pledge of what it is doing with a grain of salt. "I know of a company that gave a stellar, comprehensive analysis of its occupational health and safety performance, but it turned out that this company neglected to report a fatality."

Then there was the time he was reading "a really first-rate sustainability report with a lot of metrics and some verification." Two days later, recalls Savitz, he picked up his daily newspaper and read that the company was the subject of a $30 million environmental enforcement action. "I figured two pages of the report must've been stuck together, so I read the whole thing again," says Savitz. "There was not even an inkling about this particular environmental problem — absolutely no hint of it. Environmental fines don't appear in one day; they go back months, if not years. It leads you to ask what else this company isn't disclosing."

Russ Banham is a contributing editor of CFO.com.

---

Who Are the Stakeholders?

• Communities (locations, nature of interest)
• Customers (retail, wholesale, businesses, governments)
• Shareholders and providers of capital (stock-exchange listings)
• Suppliers (products/services provided, local/national/international operations)
• Trade unions (relation to workforce and reporting organization)
• Workforces, direct and indirect (size, diversity, relationship to the reporting organization)
• Other stakeholders (business partners, local authorities, NGOs)

Attributes shown in parentheses are examples.

Source: Global Reporting Initiative, 2002 Sustainability Reporting Guidelines

---

The Triple Bottom Line
How performance indicators measure organizational sustainability

1. Economic
Direct economic impacts (the GRI acknowledges indirect economic impacts, but it has not identified a generic set of performance indicators)

• Customers
• Suppliers
• Employees
• Providers of capital
• Public sector

2. Environmental

• Materials
• Energy
• Water
• Biodiversity
• Emissions, effluents, and waste
• Suppliers
• Products and services
• Compliance
• Transport
• Overall

3. Social
Labor Practices and Decent Work

• Employment
• Labor/management relations
• Health and safety
• Training and education
• Diversity and opportunity

Human Rights

• Strategy and management
• Nondiscrimination
• Freedom of association and collective bargaining
• Child labor
• Forced and compulsory labor
• Disciplinary practices
• Security practices
• Indigenous rights

Society

• Community
• Bribery and corruption
• Political contributions
• Competition and pricing

Product Responsibility

• Customer health and safety
• Products and services
• Advertising
• Respect for privacy

Source: Global Reporting Initiative, 2002 Sustainability Reporting Guidelines

• « previous
• 1
• 2
• 3