From: Issue 39
The quality of information in sustainability reports is rising, but it may be time to set basic standards for all
A growing number of Canadian corporations are publicly reporting on the economic, environmental and social impacts of their activities. This information is usually released in stand-alone reports with names like “sustainability” or “responsibility” in the title. But serious questions remain about the structure and content of such reports. Many corporations continue to struggle with the fundamental question: What information, precisely, should be shared?
Corporations have employed a variety of strategies to address this question, including reviewing published sustainability reporting guidelines, employing external consultants and consulting with their stakeholders. For example, the not-for-profit Global Reporting Initiative (GRI) offers guidance on setting reporting boundaries, organizing the document and selecting performance indicators, among other issues. Sustainability reporting awards, such as those run by the Canadian Institute of Chartered Accountants, offer further insights on expectations for reporting. Several major accounting firms, including Deloitte, PricewaterhouseCoopers and KPMG, now offer sustainability consulting services. A number of corporations have made sincere efforts to understand their stakeholders through public consultation, establishing advisory councils and other mechanisms.
Despite these efforts, there is an incredible range in the quantity and quality of information being shared. As one illustration of this, I recently co-authored a study that analyzed the indicators disclosed in 94 Canadian reports. The results, published in the Journal of Cleaner Production, showed that a total of 585 different indicators were reported. Of these indicators, only three – “funding, donations, sponsorship and community investments,” “greenhouse-gas emissions” and “total employees” – were reported by more than 40 corporations. Over 70 per cent of the indicators were used by only one or two companies. Even the indicators suggested by the GRI were not consistently used. A separate search of the reports for indicators that were explicitly identified as GRI indicators found only 19 of the 79 recommended indicators were reported by more than 20 companies. It also showed major differences in reporting between and within industry sectors.
There are a number of possible reasons for the variability of information in corporate sustainability reports. As a term, “sustainability” is an ambiguous word that is subject to many interpretations. This is reflected in the range of titles used for reports, and continuing debate on which issues fall under the umbrella of sustainability. Further complicating matters is the belief that sustainability is highly contextual and that different approaches are needed in different industries, markets and regions. Data availability is another challenge. Significantly, reporting on sustainability performance is also largely a voluntary exercise in Canada. Corporations have considerable discretion in terms of choosing what information to share.
The reason is there are few mandatory sustainability-reporting requirements in Canada. Canadian financial institutions, including banks, insurance companies, trust and loan companies, are required to annually publish a “public accountability statement” containing information on community development goals, activities, philanthropic actions and a limited number of indicators. Under the Canadian Environmental Protection Act, companies may be required to report on pollutants they have released to the air, water and land. They may also be required to report on materials they have disposed of or recycled. The results are publicly available through the National Pollutant Release Inventory database, but there is no requirement to publish this data in a stand-alone corporate sustainability report. Given the uncertainty on what corporations should be reporting, these limited requirements raise questions on whether corporations should be obliged to report on other sustainability issues.