Stockholm (NordSIP) – For the fourth year in a row, on 18 August, Forever Sustainable, a combined consultancy, think-tank, and professional network, invited those interested in the current state of corporate sustainability reporting to discuss the results of their latest research on the topic and share observations and ideas for improvement. The event gathered an impressive number of sustainability professionals in Stockholm’s Norrsken House and even more online.
Investors love to complain about the poor quality of corporate sustainability reporting. Portfolio companies’ disclosures are often deemed incomplete, arbitrary, or impossible to compare to each other, as they follow a plethora of disparate standards and frameworks. Forever Sustainable has chosen to tackle the issue in a different and rather refreshing way. Their analysis focuses on identifying trends and best practices of sustainability reporting in Europe while tactfully pointing out areas for improvement in those (undisclosed) companies where they find typical misses or faults.
Framing the issues
To get to their conclusions, the authors, Stina Josefson and Sanna Nalin have spent the summer deep-diving into the reports of all 42 European companies included in the 2021 Corporate Knights Global 100 Index. As in previous years, they have organised the material dividing it into three categories, covering the structure, scope and engagement of the sustainability data provided in the reports. Looking into the specific components of the three categories, they then position each in a matrix describing how common it is for companies to report on an issue and how difficult it is to implement it.
Overall, the conclusions of the report are quite positive. The authors find evidence that corporates are advancing their disclosure relating to sustainability. “Many of the assessed companies cover most of the subcategories included in the report. The average company covered 12 of the 14 subcategories,” they write.
The topic of sustainability-related frameworks is trending, which was evident even in the discussion following the presentation of the report. Many companies choose to report according to several available options, such as TCFD, GRI, SBTi, the EU Taxonomy, UNGPs, etc., which can be rather overwhelming. “With so many different frameworks and standards, we need to be pragmatic,” remarked Anette Andersson, SEB, during the discussion. The EU’s upcoming mandatory reporting templates, although complicated and still a work in progress, seem to be a welcome development, judging by the participants’ comments.
The researchers note that more companies are now linking material topics, KPIs and SDGs to demonstrate how business practice contributes to a sustainable development at the society level. However, the link between the two is relatively weak, and the targets are low.
Encouragingly, the number of companies tracking their progress is increasing for the second year in a row. Yet it is still a critical area that needs to improve faster, as Liudas Grigaliunas, one of the architects behind the original research methodology, currently working for J&J, points out.
Finding your purpose
A bonus presentation at the seminar, delivered quite entertainingly by Martin Behm, a consultant at Make Thrive, focused on the dos and don’ts of another important and highly visible part of a company’s profile: defining and communicating the shared value, or purpose statement. “The corporate purpose goes beyond the company’s mission (what it does) and vision (what it wants to be),” states Behm. “It constitutes a profound expression of the reason for its existence and activities, including the expectations of the company, society, and its stakeholders. It, therefore, expresses the value that the company brings to society.”
Finetuning this strategic tool is not an easy exercise, as it turns out. Blunders, platitudes, and vague statements void of substance abide in this space. Behm could, however, show a few successful examples and, even more importantly, explain why it is imperative for a company to take this issue seriously.