Thursday, September 22, 2011

Transparency is the key to Sustainability

You can't underrate transparency. It is the catalyst for driving sustainability performance. This is why sustainability reporting is so critical. Once a company makes a commitment to transparency, the rest must follow. The commitment to publish carbon emissions, employee turnover, community impacts and more leads a company to ask itself searching questions about its performance. This is why I have made made it my mission to drive awareness of the importance of corporate transparency and spend most of my time involved in activities which are connected with advancing transparency in one way or another. One of these activities is our investment in the development and publication of the Transparency Index which is now becoming a truly global comparative ranking.

We developed the Transparency Index methodology three years ago as a way of assessing the sustainability transparency level of publicly traded corporations via their corporate websites. We tested the methodology for three years in my home-base market, Israel, and have now broadened our scope to include additional countries.

The Transparency Index follows a rigorous methodology which, once determined, leaves almost no scope for judgment - the methodology defines what should sustainability information should be present on a corporation's website, following, broadly, the Global Reporting Initiative reporting framework. This includes information relating to all the sustainability dimensions that would normally be included in sustainability performance reporting. If the information or website feature is present, the company gains points. If it is not, it doesn't. That means that we can be sure of delivering a neutral, unbiased view of corporate transparency as we perform our analyses.  

Transparency Index Scoring Table

Our analysis covers four dimensions: Reporting, Content, Navigation and Accessibility. The Reporting dimension provides half the total points available. An Application Level A report, for example, earns 100 out of a total 200 points. The web-site analysis can then deliver up to an additional 100 points. The final score is an overall transparency percentage. Clearly, we make no judgment about the quality of an organization's sustainability performance - we focus on the quality of its transparency. This is because we believe that transparency is the key to improving sustainability performance. Oops, did I say that already?

Of course, you may take issue with the methodology and believe that points should be allocated with different weightings. You may even believe that the reporting element is overstated. If a company has all of  its sustainability performance on its website, why should it only get half the points? Well, we believe that the process and discipline of working towards a Sustainability Report way outweighs the publication of performance data on a website. A Sustainability Report (of good quality) ensures a comprehensive view of the entire sustainability impacts of a company, reported for one period, in one place, in a structured way. A company which produces a sustainability report and ensures that all sustainability information is easily accessible and navigable on the corporate website (without having to download the sustainability report) achieves optimum transparency in our view. As it stands, I believe The Transparency Index is the only ranking of corporate sustainability-performance website transparency in the world which is completely applicable across sectors, industries and geographies, enabling a true comparison of corporate commitment to transparency.

After having published the Transparency Index for three consecutive years in Israel (2009-2011), covering the top 100 publicly traded companies on the Tel Aviv Stock exchange, we have become expert in analyzing corporate websites and have amassed quite some data about transparency performance. In Israel, leading companies now approach us for details of our analysis of their websites and ask for advice on where to focus in order to improve transparency,  as well as publishing their transparency ranking in their own Sustainability Reports.

You can  download all the three year Israel reports from our website here.

South Africa sets a benchmark

This month we published the Transparency Index of the largest publicly traded companies in South Africa. See the full report here and the Press Release here. 

These large South African companies set a new benchmark in transparency, achieving an average of 78% (versus an average of 48% for the top 25 companies in Israel). The highest ranking was AngloGold Ashanti Ltd with 95% (though the highest ranking in Israel was Bank Hapoalim with 99%).

Ukraine joins the Transparency Index

We have been delighted to welcome the initiative of the dynamic Center for CSR Development in Ukraine to apply the Transparency Index methodology and measure the transparency level of the largest companies in Ukraine.  See the Press Release here. (a full report will follow).

The average level of transparency of the top 106 companies in Ukraine was 21% (35% for the top 100 in Israel), demonstrating that there is much work to do in both countries. DTEK, a large Ukraine energy company, achieved the highest ranking in Ukraine at 80% sustainability transparency.

Transparency Index Global Comparison

In addition to our work in Israel and South Africa, our friends in Ukraine performed a comparative analysis of thirty additional companies - ten from Russia and twenty leading global corporations.

Using the Ukraine analysis and our own analyses, we can come up with a semi-global league table which presents the top 20 companies out of the 260 + company sites analyzed:

In this top 20 so far, we have 9 South African companies, 5 global companies, 4 from Israel and one from Russia and one from Ukraine. The overall average of these leading companies for Sustainability Transparency is 88%, a very respectable benchmark for other companies to aspire to.

In the coming months, we will be adding UK, USA, Canada, India and other countries. As we grow our global transparency database, we will perform industry and sector analyses, as well as analyses relating to the sustainability content which is most widely published on websites and that which is not. At present, this information is only provided in country level reports.

Transparency is key to sustainability. Watch as the Transparency Index grows in scope and use it to influence companies toward greater transparency.

elaine cohen, CSR consultant, Sustainability Reporter, HR Professional, Ice Cream Addict. Author of CSR for HR: A necessary partnership for advancing responsible business practices Contact me via  on Twitter or via my business website  (BeyondBusiness, an inspired CSR consulting and Sustainability Reporting firm)

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