Sunday 16 January 2011

Reporting and Promoting Sustainability

What gets measured gets done.

Measuring the sustainability performance of companies is important to making progress. The insight that management guru Peter Drucker published in the 1950s is still valid today.

Two useful frameworks are: the OECD’s Guidelines for Multinational Enterprises and the Sustainability Reporting Framework developed by the Global Reporting Initiative (GRI). It is to be welcomed that the OECD and GRI have announced a partnership to give guidance to companies worldwide on how to conduct their business responsibly and report on their sustainability performance.

The big idea is that transparency through reporting on environmental, social and governance (ESG) factors drives the sustainability of individual organizations and, ultimately, the global economy. GRI's key goal is to make sustainability reporting mainstream.

"By working with OECD, we can help responsible multinational enterprises lead the way to a sustainable future," said Mervyn King, Chairman of the Global Reporting Initiative's Board of Directors.

"This MoU not only attests to the excellent co-operation that already exists between the OECD and the GRI but also to a common determination to assist enterprises to become more responsible corporate citizens," concurred Richard Boucher, OECD Deputy-Secretary General.

It is good to see these initiatives come together to give global enterprise a framework to use. Whether it works will depend on two things. First, will corporations discuss sustainability as an item high on the agenda of board meetings? Second, will investors factor in sustainability into their decisions over where to invest and which shares to hold?

Measuring and reporting is effective if it is at the core of managing the enterprise. If the measures are reported in separate glossy publications that come out of corporate affairs, aimed at improving the corporate reputation, it is likely to be ‘greenwash’. The Annual Report signed by the chairman and CEO is more likely to be a true reflection on the company’s performance and aspirations for the future. This is where I will be looking.

Sources:
http://www.globalreporting.org/Home
http://www.oecd.org/dataoecd/58/12/41201742.pdf

2 comments:

  1. Thanks for this, Peter, an extremely useful link. On first inspection of the G3 Guidelines, I can't see where climate change impacts fit in - would be best if this were a separate section.

    Nevertheless, this is a powerful tool for systematic reporting and one that has the support of numerous transnational corporations such as BP, Coca-Cola and Dell. Hopefully this will lead to behaviour change by those TNCs rather than simply badging them as responsible global citizens.

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  2. Good point. I agree that this must lead to real change and not simply a badging exercise.
    Peter

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