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Sustainability Reporting: What’s Next?

By Melissa J. Anderson

Last week, the Women’s Network for a Sustainable Future organized an event around new trends in sustainability reporting. With shareholders, regulating agencies, and the public increasingly interested in results, the quality of metrics around corporate sustainability has improved dramatically, as has awareness of the importance of benchmarking and reporting progress.

Ann Goodman, Executive Director of WNSF said, “Everyone from the SEC down and up is clamoring for disclosure.”

Moderated by Helle Jorgensen, US Sustainability Advisory Leader and member of the Global Sustainability Leadership Council, PwC, the panel included Margaret Lindeman, Sustainability Strategist, Lockheed Martin, Erica Matthews, Manager, Public Policy and Sustainability, Pepsico, and Mike Wallace, Director of Sustainability Reporting Framework, Global Reporting Initiative (GRI).

Corporate sustainability metrics matter to investors, consumers, and employees – and improving metrics around sustainability reporting will be critical to corporate success in the future.

Reporting for Investors

And as noted by the panel, investors on Wall Street are also growing ever more interested in seeing numbers around sustainability and corporate social responsibility. Even today’s Bloomberg terminals include self-reported, non-mandatory disclosure data on these topics.

Wallace underscored the importance of sustainability reporting when he recalled how one of his first meetings after getting off the plane from Copenhagen was with SEC Chief Mary Shapiro. “For many years, investors had been writing letters on disclosures for non-financial metrics,” he said. Investors are changing the way companies pay attention to and report on sustainability and social issues.

But, he said, the US has a long way to go compared to the rest of the world. While only about 12% of companies in the GRI database are based in the US, that percentage is growing, he said. Last month, the organization launched its “Focal Point USA” initiative at the New York Stock Exchange. Wallace said the symbolism wasn’t accidental.

“It just serves to show that the financial industry is recognizing the importance of non-financial performance metrics,” he said.

Ambitious Goals and Measuring Tradeoffs

Pepsico is taking a holistic approach to corporate social responsibility, said Matthews, echoing the company’s “Performance with Purpose” mantra. The company has set very ambitious goals for the next ten years, she said.

Originally Matthews balked at how big they were, but she thought, “If we are going to put these commitments out there, we must be sure we can meet them.” But that was actually not the case. They are indeed “stretch goals,” she said. She explained that goals aren’t goals at all if you’re sure you can meet them – you have to be ambitious.

Pepsico’s CSR reporting goals are focused around local and regional reporting (for example with water usage), social reporting (for example around human rights and grievance mechanisms), and measuring tradeoffs between health, nutrition, agriculture, and the environment. Without the use of metrics, she said, the company wouldn’t be as effective at understanding the tradeoffs behind each initiative or new product.

Moving from a Customer Demand to Point of Pride

Lockheed Martin, reminded Lindeman, is the US Government’s largest contractor. And sustainability just wasn’t on the table until the US started requiring reporting of sustainability metrics by its suppliers. Said Lindeman, “Originally there was a lot of push back by employees – that the customer wasn’t asking for us to do this, that the cost was higher. But now President Obama has signed Executive Order 13594, which covers sustainability requirements for government agencies.”

After the company’s largest client demanded further accountability, Lockheed Martin began to find other reasons to embrace sustainability, she said.

The connection between sustainability and profit helped employees and stakeholders see that sustainability is also about efficiency and tax incentives.

Now Lockheed Martin is ranked well when it comes to corporate sustainability. “It’s become a point of pride,” she said. “We’re seeing more headway within the organization… and we’re able to convince our internal stakeholders why it’s important.”

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