The Sustainability Buzz

Combating Sustainababble and Making Reporting Relevant

Stack of Sustainability ReportsThese days it seems like there’s constantly a new flavor of the month in the sustainable lexicon.  Weren’t we just talking about transparency?  Then along came materiality, and now it’s all about resilience.  Even the term “sustainability” can seem a little hollow these days, taking on just about whatever meaning the person uttering it wants it to mean.

So what gives?  Am I supposed to be focusing on what’s material to my organization or on making it more resilient?  Am I supposed to be striving towards greater transparency in my reporting?  And is anyone reading those reports anyway?

There’s good reason to believe the answer to that last question is ‘no.’  A recent report from strategic thinktank and consultancy SustainAbility indicates that sustainability reporting has stalled when it comes to driving impact.  This isn’t surprising, given that in this era of Big Data, many organizations are swimming in numbers but doing little to make sense of them for themselves or their stakeholders.  As Kevin Wilhelm, CEO of Sustainability Business Consulting told The Guardian, “People write these giant reports, plagued by special language and catch-all-categories, and don’t think about the audience.”  In short, too much mathiness combined with sustainababble turns people off.

But that doesn’t mean companies should stop reporting.  And it doesn’t mean we should stop talking about things like transparency, materiality and resilience.  What it does mean is that we need to find a way to put those ideas into practice and then translate that practice into better business performance.

So how do companies start putting these ideas into practice, and how do they produce more relevant, readable reports?

It’s important to remember that just because you can measure something, it doesn’t mean you should.  The CEO at a large mechanical components manufacturer, lamenting that perhaps they measure more than they should, once joked to us, “We love measuring things so much that we even measure what we’re measuring.”

This is when it becomes important to prioritize the data you’re collecting, both to save time and to keep your reporting relevant.  Enter materiality, which we’ve talked about before in the Buzz.  It helps companies identify the issues that are most relevant and important to the business’s continued success and its stakeholders, and it allows them to focus on only gathering the information they need to address those issues.  But identifying those issues can be hard, as the main reporting organizations—GRI, IIRC and SASB—offer different guidance on materiality.  Which framework do you choose?

Until these three frameworks converge on a single definition of sustainability, which they most likely will at some point, it’s up to the individual company to align its reporting to a framework that most closely reflects its business management practices.  For example, if your management team already focuses on how material issues affect company value over time and how those issues are viewed by investors, the IIRC’s integrated reporting framework is probably the best fit.  However, if your management is already basing decisions off of the SEC’s definitely of materiality, the SASB framework is probably going to work better.

By distinguishing signal from noise and focusing on the things that really matter to the organization, management has a much better shot at making decisions that improve the company’s value.  They are no longer presenting data simply because they can (and feel like they have to in order to have green cred).  Instead, they can analyze only the relevant data to facilitate better decision-making and produce better reports that are relevant to stakeholders.  This is where the rubber meets the road, and ideas are put into practice.

So don’t give up on things like transparency, materiality and resilience just yet.  As reporting frameworks continue to mature, they’re likely to converge on a single standard that will be more robust, more relevant and more likely to drive true integration of sustainability into everyday business practice.  And we can’t wait for that day when the new sustainababble is “post-sustainable.”

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