I was preparing my review (coming soon!) for CSRwire and my CSR-Books blog of the recently published book, Accounting for Sustainability, in which there is a case study of BT and its approach to sustainability strategy and reporting. In the meantime, as I went to check out the BT 2010 sustainability report, I thought I would highlight what does appear to be their good practice in the analysis and quantification of sustainability intiatives.
The report covers materiality, the result of a considered process of analysing and prioritizing business and stakeholder-raised issue, and a range of other sections relating to social and environmental impacts. At the heart of the report is a KPI table, included as a separate PDF download here. There are 12 core non-financial indicators, with performance shown for the last three fiscal years, and a set of corresponding financial indicators, showing what financial impact is delivered by the performance against each of these non-financial indicators. The financial measure of the non-financial indicator "Improving Customer Service", for example, is total revenues and average revenues per UK household. An increase in the BT employee engagment score delivers a financial impact on employee costs. The lost time injury rate target has a financial impact on the cost ot the business resulting from injuries arising at work. The implementation of BT's Human Rights Standard in supplier procurement has an impact on the value of human-rights-approved procurement as a percentage of total supplier spend. Investment in society delivers an impact on the financial bottom line in terms of the overall spend in cash, time and equipment donated. Reducing carbon emission intensity delivers a financial effect on overall energy costs. An ethical performance measure delivers an interesting financial impact which counts revenue support - the number of customer bids which require a sustainability component. Interestingly, BT have a diversity target to maintian a top ten placement in four of five diversity benchmarks, but note that they have been unable to develop an appropriate financial measure for this non-financial target.
I believe this is good practice and clearly influenced by the "Connected Reporting Framework" proposed by the book I have just read. However, it's just a start. The value of assigning a financial result to a non-financial target can only be meaningful if you show the investment in performance development alongside the overall result. Average revenues per household may have increased, but what cash investment in customer service programs were necessary to deliver this improvement? What incremental safety programs, and at what cost, delivered the reduced cost of injuries to the business. What investment in carbon emission intensity reduction was needed to recude energy costs? There is not always a clear linear relationship between all these numbers. This demonstrates the rigour of thinking necessary to put all these sustainability initiatives into nicely separate "financialized" compartments. I think BT are doing well to make a first stab at this, and I would be really interested to see them take this thinking further.
Oh and as for diversity .. no financial measure ? What about the cost of additional efforts to recruit and retain a more diverse workforce against the benefit of low non-diverse turnover ? What about the financial contribution of women / minorities / disabled etc as a percentage of revenue generation? What about the cost of competing in all these external rankings against the value benefit of reputation enhancement ? Haha. That one was tongue in cheek.
Anyway, if all this is a little too intense for you to handle, BT also provide a little light relief from the metrics with some interactive sustainability games, which is why writing this blop took about 13 hours. (I am much better at metrics!)
elaine cohen, CSR consultant, Sustainabilty Reporter, HR Professional, Ice Cream Addict, author of CSR for HR: A necessary partnership for advancing responsible business practices. Contact me via www.twitter.com/elainecohen on Twitter or via my business website www.b-yond.biz/en (Beyond Business, CSR consulting and Sustainability Reporting firm)