Sustainability report gets public audit

Most of the FTSE-100 now publish annual sustainability reports. But those who don’t may find themselves obliged to in the near future. The question is, who reads them, and why?

A survey recently published by KPMG in association with environmental think-tank SustainAbility, which asked those who read sustainability reports from companies across the globe, found some interesting answers.

Almost 60% of readers came from the business sector, with the rest in consultancies, investment houses and government departments.

Publishing sustainability reports can help a company attract new business, or at least project a more favourable image for potential investors.

More than one-quarter of respondents reading the reports were prospective customers or suppliers, while 60% read them to help benchmark a business’ overall performance.

One criticism is that the reports need greater transparency. There is a fear that companies will not incorporate ‘bad news’ in their reports ­ but readers want to know both the good and the bad and say that, by being more open, companies demonstrate greater commitment and credibility.

Further improvements suggested by the survey include incorporating stake-holder feedback into strategy and targets, since including critical stakeholder views shows a more serious commitment to sustainability.

Additionally, reports could demonstrate how companies take account of risk management or research and development in their sustainability strategies.

According to the survey, readers expect and want to see:
• A link between sustainability strategy and overall business strategy;
• Clear evidence of a commitment to sustainability; and
• Measurement of the impact sustainability activity has on the organisation.

According to Bank of England Governor Mervyn King ­ who is chairman of the Global Reporting Initiative ­ companies are “becoming increasingly aware of the need to report on such issues in a consistent and transparent manner".

Useful links
For the full report, go to www.sustainability.com and search for ‘count me in’