Beyond Accounting Assessing The Impact of Sustainability Reporting on Tomorrow’s Business

Business has an extraordinary capacity to deliver
practical solutions. Tomorrow’s Global Company: Challenges and Choices argues that future commercial success must go hand in hand with tackling our shared challenges, such as environmental degradation, poverty and abuse of human rights.

Tony Manwaring
Chief Executive, Tomorrow’s Company

We manage what we measure (and report) – it’s a truism, but no less valid for that. We believe that the time is now right to ask whether we have been measuring the right things in the right way and
communicating them appropriately to the right people.

As we face profound challenges for people, profit and planet alike, our need for an effective and ‘fit for purpose’ compass to plot a sustainable and successful course for the future has never been more urgent or important.

By far the most currently developed approaches to reflecting the triple bottom line (economic, social, and environmental) are the many frameworks and guidelines that companies use to report on their sustainability activities. For example, the Global Reporting Initiative, the UN Global Compact, and AccountAbility. Such frameworks enable benchmarking and can build understanding. Often this process is initially undertaken internally and later applied to external reporting. However, it is intended to create a platform for dialogue with stakeholders, and then seeks to influence behaviours and decisions for mutual benefit.

The Institute of Chartered Accountants in England and Wales (ICAEW) and Tomorrow’s Company have launched a project on the review of
sustainability reporting frameworks and guidelines. These ‘frameworks’ provide what is currently the most developed approach for companies to reflect what are commonly described as the non-financial impacts of business. However, these impacts often have significant costs as well as benefits. Taking them into account in mainstream business and investment decision-making is, therefore, central to our shared interest in exploring how best to ‘redefine success’.

This review of sustainability reporting frameworks and guidance is set in the context of the major programme of collaboration that ICAEW and Tomorrow’s Company have jointly undertaken – working with many others, including Pavan Sukhdev and his colleagues from the Green Indian States Trust (GIST), TEEB (The Economics of Ecosystems and Biodiversity), and the UNEP Green Economy Initiative – to explore how businesses can most effectively measure and communicate their impact on society and the environment.

Society is increasingly demanding that businesses take account of their impacts but also recognises that they have a strong positive role to play as well. Business, society and the environment are inextricably linked and inter-dependent for their survival and must be held in balance.

Equally, as we see the first shoots of the new Green Economy bursting through – given renewed impetus by the election of a US President committed to the sustainability agenda – we see challenges as well as extraordinary opportunities opening up to create value through sustainability. Yet, at this time of financial instability it would be very disappointing to see companies draw back from confronting the challenges of sustainability and from what has already been achieved.

The combined pressures of recession and growing population means that businesses have not only to think of making their operations more efficient (that is, cost cutting and carrying out their core business more effectively) but also to consider what sustainability means for their business strategy.

In this regard, Graham Hubbard, Professor of Strategic Management, University of Adelaide, Australia has written a paper ‘Beyond Accounting – assessing the impact of sustainability reporting on tomorrow’s business’. While many frameworks have been developed for sustainability reporting, few have received much general traction. Limited light has actually been cast on organizational performance by sustainability reporting to date and so far it is unclear what impact it has actually had on organization strategies, practices and outcomes. Many questions exist. What should a ‘responsible’ organization be expected to do (and not do)? What is ‘sustainable’ organization practice? Which measures should organizations really be worried about? Is the GRI framework a desirable global standard? Which organizations are performing well in nonfinancial areas? Can we trust what organi-zations say about their performance?” states Graham in his paper.

Graham’s Paper provides a background to the current state of sustainability reporting. It briefly covers the development of sustainability reporting. It considers approaches to sustainability reporting and the models of reporting that have emerged.

Graham’s paper also considers general issues which arise from the measurement problems in the field. Finally, it proposes plans for research which is proposed to address these issues.

Note
This note has been tailored for tbl with permission from the authors Mr. Tony Manwaring, Chief Executive, Tomorrow’s Company and Mr. Richard Spencer, Manager Corporate Responsibility, ICAEW.

To read the complete paper by Mr. Graham Hubbard, visit:

For further information on this joint project, visit www.forceforgood.com and www.tomorrowscompany.com

Corporate social responsibility is not just about managing,
reducing and avoiding risk, it is about creating opportunities, generating improved performance, making money and
leaving the risks far behind.

Sunil Misser,
Head of Global Sustainability Practice,PwC

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