Drawing on the work of John Elkington, this article describes SustainAbility’s five stage process to corporate environmental reporting, draws a parallel with reporting of corporate citizenship and asks how far advanced is your company?
Companies have long had a legal duty to report their UK charitable donations. No such statutory requirement exists on environmental impact. Yet reporting on ‘green’ issues is now more advanced than on corporate citizenship. The methodology is similar and described below are the five stages identified in the evolution of reporting.
Of course many companies do report widely on their community involvement, usually through glossy brochures describing examples and setting out the policy focus; but few turn the policy into clear objectives, set performance targets and measure progress, still less verify those outcomes independently and then report externally.
Why report?
Does that matter? For many reasons, yes. Business is engaging with internal and external stakeholders without whose commitment long term performance is hindered. In this age of scepticism, doing the right thing is not enough; it must be seen to be done. That builds credibility and trust. Companies enjoy a large measure of operational freedom, and they need to report openly what they are doing if they wish to avoid mandatory reporting. In fact systematic monitoring and evaluation helps management and when reported externally allows benchmarking to identify areas for improvement.
The environmental consultancy, SustainAbility, has been working with companies to improve reporting. In 1994, it published Company Environmental Reporting which set out a five stage evolution in environmental and sustainable development reporting. Now in a major new study(1) with the United Nations Environment Programme, it has revised these stages. Although drafted for the environment, they apply well to corporate citizenship and community involvement.
Five stage process
Stage 1 consists of materials such as green glossies, with a short statement in the annual report.
Stage 2 has a one-off report, often linked to a formal policy statement.
Stage 3 is characterised by reporting that is annual and linked to an environmental management system, but remains largely descriptive. There is basic one-way communication with stakeholders, such as information packs, press releases and briefings.
Stage 4.1 is distinguished by a shift from largely descriptive disclosure to fully quantified reporting, with two-way but passive communication, such as feedback slips and market surveys.
Stage 4.2 is distinguished by the emphasis it places on the quality of information, emphasising clear reporting of significant effects and performance against targets, and third party verification. The company promotes multi-way active dialogue with key stakeholder groups, via roundtables and discussion panels.
Stage 4.3 involves greater comparability, with reporting against recognised standards, sectoral indicators, global operating standards and benchmarking. Here the company engages in advanced multi-way active dialogue with all stakeholders on a global scale, covering all countries and regions where the company operates.
Stage 5 is characterised by integrated environmental, social and financial accountability, with consistent, worldwide reporting of local and global impacts, progressive global operating standards and lobbying, and internal and external performance evaluation. There is fully institutionalised multi-way stakeholder engagement, in which the boundaries of reporting and rules of engagement are themselves the outcome of a process of active stakeholder engagement.
The companies which work with SustainAbility on the environment are moving up the scale, but if your company is only in the foothills on community involvement, don’t be discouraged. Only the Body Shop is knocking on the door of stage 5.
John Elkington is director of SustainAbility and a member of the Community Affairs Briefing Editorial Advisory Panel.
(1) Engaging Stakeholders 1: The Benchmark Survey and Engaging Stakeholders 2: The Case Studies (price ?50 each or ?80 combined) are available from SustainAbility on 0171 937 9996. Limited copies of Company Environmental Report (1991) are still available.
COMMENTS