At this time of a year there are always a lot of Annual reports issued, Financial reports and Sustainability reports. Having studied some recent sustainability reports makes me wonder – What´s the point?
The only purpose seems to be to show some Policy statements, some “base facts” and to position yourself in relation to others. This might be the main purpose of an annual financial report, but it doesn’t make much sense for a Sustainability report – the Planet doesn’t care if a Corporation is “less bad” than others, it needs Corporations to be “Good”.
To put it in another way – If an Annual financial report show “Red”, very negative numbers, the reaction would be very strong from shareholders, the market and the board – but if the Sustainability report shows 350,000 tons of CO2-emissions…
Is the reaction the same?
“Being Sustainable is almost a digital thing – either you are or Not!”
Establishing the Sustainable Bottom Line.
Currently we are exploiting many of the resources of our Planet beyond the safe boundaries. We have a very unequal Society and a wealth-distribution that is extremely uneven. At that point, to compare who is over-exploiting the least or being the least unequal seems like a non-productive effort.
Reporting and measuring must have the point where corporations need to be, when being sustainable, as the minimum level – not where they are today.
To set this “Sustainable Bottom Line” needs a total scrutiny of what a business is all about. Asking all the difficult questions, finding the best available ansvers, benchmarking with other companies, science etc.
“The best measureable value a negative thing can have is zero – Positive things, on the other hand, can be as high as the sky”
The Imbalance prevail
Annual financial reporting is the result of a year of thorough accounting, budgeting, prognoses and quarterly- and monthly reports often undertaken by a considerable workforce supported by a computer based business system. Almost everybody in an organisation is somehow involved in the process.
Furthermore there are very strict “quite general” laws and regulations on how to do the work and what you are allowed to do or not. There are also a number of key-figures, indicators and “rules-of-thumb” to analyse the performance.
“If your corporation is in some way underperforming financially it hurts mainly your corporation and its shareholders economy – very few people die from poor accounting.”
Sustainability reporting is, in best case, performed by some few dedicated people. Very few corporations have developed “sustainability accounting systems”, there is a lack of measuring of sustainability factors and routines for budgeting, prognoses etc. are often not in place. Most laws in this area are typically national and only regulating “minimum standards” with little or no concern of Sustainability. The variety of environmental impacts from different businesses is not comparable and are therefore very hard to benchmark. There are also many different practices on how to evaluate impact of various effects. The number of parameters to monitor is large and of a very varying type, from CO2-emissions to people’s well-being and bio-diversity. Key-figures and indicators are scarce.
“If your corporation is in some way underperforming in Sustainability, it might result in child labour, poisoning, deforestation, poor air-quality, increasing green-house effects etc. – all of them dangerous and possibly life-threatening and in large scale devastating to our Planet”.
If we are serious about Sustainability, we need to set the prerequisites right – People, Planet and Profits have to be in balance – also from an “accounting” perspective…!
A Sustainability dilemma
Is it OK as a Sustainable Corporation to do “Unsustainable work” initiated and owned by others?
A “hypothetical” example:
Your corporation has a Sustainable operation, is certified according to ISO 9000, ISO14000, has signed the UN Global Compact and is doing sustainability reporting according to GRI.
There is a tender out for the building of a pipeline; let´s say for the purpose to ship “Tar-sands bitumen” across the US. It involves a considerable amount of money and a great chance for good profits – Can your corporation submit an offer to build it?
If your answer is “Yes” – what is then the difference between this and transporting drugs, laundering drug-money or transporting guns to a cruel regime?