Target targets for 2019

Sustainability reporting used to be about activities and actions whereas today it is more about impacts and intentions. Substantiated intentions, that is, by which I mean T-A-R-G-E-T-S. Yes, that awful, threatening, potentially blood-pressure-raising concept of actually making a public commitment to making a difference. One of the things I find most frustrating about many sustainability reports is the extreme lengths companies go to in order to describe their mission, vision, what's important to them, what's important to stakeholders, what's important to the world and why it's ALL so important ("Sustainability is in our DNA" and "The world is about to end") .... but when it comes to saying what they plan to do about it: radio silence. Vague intentions, aspirations, declaratory blurb - it's all very nice but, well, no teeth. 

Andrew Wilson, expert advisor on sustainability, author of Green to Gold and The Big Pivot, has done leading-edge work in this area. He's even quite positive in his views of how targets have progressed and become embedded in the way most large companies report on sustainability. You can gain some comfort from his article from December 2017 here. He concludes that 94% of the largest 200 companies in the world include targets in their Sustainability Reports. 

You can check out Andrew's Pivot Goals database, containing 3,923 goals that have been publicly disclosed by (large) companies in their sustainability communications over the past few years (the database contains some duplication with both original goals and those that have been superseded or replaced). While this is apparent progress, it's by no means close to critical mass for all the thousands of companies that report on sustainability. Also, as you might expect, the distribution of targets is uneven - in the Pivot Goal database, for example, in the pharma sector, I counted 13 companies with targets, ranging from one company that has 62 targets and one that discloses just one target. 

Other aspects of target setting are coverage and quality. Coverage is the extent to which a company discloses targets for all material sustainability aspects versus targets that are limited to one area, say, environmental impacts which is the most popular. Quality is the extent to which targets are SMART. You know what SMART means. SMART is not: "Continue to improve our environmental impacts". Just sayin.  

Many of the reports I view and review are GRI-based and claim to be in accordance with GRI Standards at core or comprehensive level. Now, GRI has made reporting of goals and targets mandatory in the Management Approach Disclosures. Disclosure 103-2 requires (the organization SHALL report) disclosure of goals and targets. Well, sort of. The mandatory part is diluted by the addition of some small print: if the management approach includes that component.  

Additional guidance suggests including context, time-frame, reference to legislation if relevant and more. 

So, according to GRI, for GRI compliance, reporting of targets is mandatory if you have them. If you don't, no problem. Well, no problem is exactly how most reporters approach the Approach. It's so easy to say "we are committed to", "we place great importance upon", "we are passionate about" and all those other gloriously positive affirmations, but when it comes to the crunch, it's apparently more convenient to ignore the bits that bolt those commitments down in the organization and give stakeholders something to believe in. I believe disclosing targets should be a mandatory element of material topic reporting. Every single GRI Topic-specific Standard should include a requirement to disclose SMART targets - not IF they exist, but BECAUSE they should exist. And if they do not exist, conformance to GRI Standards should not either.

Some (random) examples of how companies commit in sustainability reports:

Arguably the best-of-the-best expression of public commitments and consistent reporting of progress is Marks and Spencer, whose Plan A, when it was created in 2007, immediately set M&S apart from the crowd with a bag of 100 commitments representing the most far-reaching and comprehensive set of targets by any company at that time (as far as I know).  Although Plan A's tagline was "Because there is no Plan B", Plan A has continued to reinvent itself and currently goes under the name of Plan A 2025. Behind the scenes of Plan A is a strong commitment to sustainable business, and business that positively impacts people and planet, and the pace has been maintained even at times when the company's financial results have been a bit wobbly. Marks  and Spencer's 2018 Plan A Report includes a detailed account of progress against all targets across the four Plan A pillars in a way reflects the M&S brand: quality, detail and tailored to meet a range of needs. 

Walmart's 2018 Sustainability Report includes a range of specific commitments at the start of its 230-page report. The targets are SMART enough and cover all areas of sustainability priorities - a comprehensive approach.

At the end of the report, Walmart discloses how it is doing against these commitments:

While it's possible to correlate progress reported to the commitments made upfront, it takes a little detective work to sort it all out as the language used is different in both cases. However, Walmart's (mostly) specific time-bound targets and progress statements are enough to quench my thirst for target-juice in this report. 

CVS Health also does a great job in its 2017 Corporate Social Responsibility Report with multi-year targets and reporting of progress in the reporting year. Across four pages, CVS demonstrates a mature view of its role in society with targets that reflect its impacts on society (help create a tobacco-free generation by acting to reduce youth smoking) as well as targeting improvements it its own operations. The targets are also in line with the material impacts CVS Health defines in its report. 

A super presentation of targets is from Sinyi Realty Group, one of Taiwan's leading real estate agencies in its 2017 Corporate Sustainability Report. For key strategic areas, the company sets long-range goals, medium term targets to 2025 and short-term targets for the coming year. Sinyi transparently reflects performance against the short-term targets set in the reporting year. No room for misinterpretation or detective work required here: it all hangs together very credibly.

Google's 2018 Environment Report includes a set of targets and progress made against these. It's a clear enough presentation and scoreboard markers give you a quick overview of progress. However, while this is totally fantastic, the targets are a mixed bag, for example, two of the targets are: set targets and others are either not time-bound or relevant for the single reported year - which in sustainability terms is no time at all. All targets relate to the direct environmental impacts of Google's own operations, for example, achieving zero net operational carbon emissions, which Google has impressively done for at least the past five years.

Of course, I couldn't write a post about targets without looking at Target Corporation. I mean, if your name is Target, you have to have targets, right? Well, Target doesn't disappoint, though, oddly enough, Target's targets are called goals 😂😂😂 But, whatever they are called, they are extensive and are presented across 7 pages in Target's 2018 Corporate Responsibility Report, followed by a couple of pages of upcoming goals (or targets) in areas not measured to date or not the subject of goals so far.  

There is no doubt in my mind that the inclusion of public commitments is both a way to reinforce trust with stakeholders and a tool to catalyze performance improvements. Several leading companies are doing this really well, and I tend to agree with the analysis above that more are doing so these days than in the past. However, the leading companies across the world represent only a small fraction of the entire population of reporting companies, and many (I might even say, most) of them do not even hint at targets or commitments.

So, let's be clear: If you want stakeholders to believe you are serious about sustainability, or whatever you call it in your organization, make SMART public commitments in key areas of impact and report your progress against these year on year. 

Of course, a great addition to any Sustainability Report would be the inclusion of a target to provide a lifetime supply of free ice cream to anyone who blogs about your targets on the CSR Reporting Blog. 

Happy Holiday Season and Happy 2019 to all CSR Reporting Blog readers!

Interesting times for Sustainability Reporting

The next few years are looking interesting, we might even say exciting, on the sustainability reporting front. Two significant step-changes in reporting that we know we can expect are (1) the GRI G4 guidelines and (2) the Integrated Reporting framework. Last week, I attended the GRI webinar for Organizational Stakeholders where Nelmara Arbex, the Deputy Chief Executive of the GRI, took us through the paces on the way GRI is approaching both of these major developments.

The G4 - next generation of GRI guidelines

G4 is the new improved ! GRI framework which is scheduled for launch by 2013 for use in reporting probably during 2015. The process of developing the G4 will be the GRI's familiar multi-stakeholder process whereby broad consultation over a prolonged period will lead to the development of a final G4 draft by the end of 2012. G4 has ambitious objectives, designed to meet several needs as GRI expects to ramp up the number of companies reporting over the next few years. Whilst reporting has made massive headway, particularly amongst the larger public companies, the fact remains that upwards of 80,000 public companies have not chosen to disclose sustainability information. 

The G4 identifies two broad goals: improve the G3, and prepare for scale-up. This is how Nelmara Arbex presented the objectives:

Improving G3: 

• Provide better guidance on how to report on governance issues
• More robust definitions to better support assurance processes
• Updated sustainability scope
• Guidance related to current stages of normative frameworks such as UNGC and OECD reporting guidelines
• Revision of the current Application level definitions

Prepare for scale up:

• Offer a variety of flexible reporting elements for use by reporters dealing with different requests
• Develop a user friendly format
• Link to the International Integrated Reporting Committee framework
• Link to broader ESG reporting requests and ESG information users 

Much of this might look like sudoku to you at this point, so let me try to fill in a few blanks from my own perspective.

G4 is the right direction

I will start by saying that I agree the G4 is the right way to go, and that there are many ways the current framework can be upgraded and modernized. As the GRI gains ground and becomes the de facto single reporting standard in the world, the name of the game will be not only to report on sustainability but also to do so in line with the GRI framework. As reporting "scales up" to achieve the aspirational mainstream, it makes absolute sense to reposition the common denominator and provide a platform which enables what we all want - a fair and balanced reflection of a company's sustainability performance and material impacts on all stakeholders in a way which is auditable, comparable and aligned with the business results. Additionally, disclosures should be accessible and presented in a way which makes it easier for stakeholders to use the data in a range of decision making tools.

Updated sustainability scope

The G3 is long and detailed but not long and detailed enough. The GRI's aspiration to "modernize" the G3 by including new sustainability issues which have emerged more visibly during the last five years since the G3 was developed in 2006 is absolutely relevant. Some issues have become more important such as the entire approach to water management whilst some represent new territory for the GRI such as the question of internet privacy and online exposure and intervention of corporations on social media, as well as a company's approach to managing employee presence on the world wide web. Other issues are not specifically covered in G3,  and I believe should be considered, such as the issue of road safety and how companies manage employees who spend a lot of time on the road for work purposes, a significant source of fatalities and other accidents which endanger not only employees but the general public. Many Sector Supplements  have been developed during the past 5 years and it may be that some indicators which have been identified via a single sector should be mainstreamed into the overall framework. My recent editorial for CSRwire.com refers to the mushrooming of sustainability fragments - specific industry associations that address single aspects of sustainability common to industry groupings - and it may be that these are also throwing up issues that G4 should address as basic opportunities for a common approach to disclosure. Updating the sustainability scope, providing the broadest possible scope for companies to report against the indicators which are material to them, is therefore a challenging but worthy objective for G4.

Improve the robustness of the GRI framework application

It is painfully obvious that many Sustainability Reports that have not applied the framework  lack rigor and balance. Regrettably, this can also be said of many who do use the framework, given a widespread lack of attention to detail when reporting on specific indicators. Far too often we find a GRI index at the back of a report which is neatly ticked off as fully disclosed only to find that, after detailed scrutiny, there is some fuzzy blurb which does not meet the requirements of the indicator. This is not helped by the hands-off approach by the GRI. The GRI Application Level Check, whilst very useful in providing an element of rigor in how the framework has been applied, only covers a small portion of the disclosures in any report and entirely skips over the quality of the assurance process.  Given that the GRI framework is not positioned as a "standard"  in the same way as ISO standards, for example, but as a helpful  tool for organizations, the GRI has distanced itself from any kind of "policing" or auditing of the use of the GRI framework, leaving the door wide open for all of the 1,500 users of the framework to "self-declare" pretty much anything they like. Sustainability is about impacts (outcomes) and not only inputs (actions), and as the GRI framework is the gold standard of how to report on sustainability (outcomes), I believe there has to be a greater connection between what companies are saying they are reporting and what we can actually find in the report. Therefore the GRI ambition with G4 to improve the framework to enable more rigorous assurance is a good objective of the G4 process.   

Provide a solution for harmonizing of reporting

As attention to sustainability has grown, so has the number of users of sustainability data, ranging from investor-targeted analysis and players in the financial markets, but also large companies who have understood that the sustainability of their business is linked to the sustainability of their broader supply chains. Companies such as Walmart and many others require sustainability data from their suppliers. Focused initiatives such as the Carbon Disclosure Project require data in a specific form. Local regulators are now requiring companies to include sustainability data in annual reporting. The UNGC and the OECD with whom the GRI has formed alliances, have their own reporting requirements as well. The plethora of requests to disclose that any company has to deal with is now becoming overly burdensome. The G4 aspiration is that reporters will be able to kill 43 birds with one stone and  cover off all bases with one set of guidelines. Harmonization should utopically make it possible to ensure all the data anyone might need is contained in one report. This is massively challenging but if achievable, is well worth the effort.

Revision of the current Application Level definitions

Aah, application levels. This is an interesting and controversial debate. At present, the Application Levels tend to be seen as an indication of the quality of the report, though as we know, the C, B or coveted A represents the measure of transparency, rather than quality. Arguably a more transparent report is of higher quality, but transparency still does not address the quality of the information provided. The gap between the levels is problematic - where a C report requires 10 indicators, a B report requires 20 and an A report requires all 79 plus a published Sector Supplement if relevant. The random selection of indicators, including some which are fairly lightweight and non-material to a particular business, can mean that a C reporter can actually produce a sustainability report without disclosing hardly anything about their true sustainability impacts, and a B reporter may not be much better. 

In my view, the Application Levels are unnecessary. What should be required is a summary table of indicators, in addition to the GRI detailed index which shows what has been reported and where to find it, which presents a quick n' easy overview of how many and which indicators have been reported in full. Profile and Management Approach disclosures should be required for all reports (currently C reports do not require Management Approach disclosures) as should, I believe, a minimum number of core indicators against which all companies should report. In other words, G4 is an opportunity to raise the threshold for all reports. Additionally, reporters should make it easier for us to see what else they have included. In this way, we would have a 45 report, or a 79 report, or a 15 report, or a 23 report, where the number refers to the number of indicators reported in full, in addition to the "pass" level of minimum disclosure. Partial disclosures are a bonus but, in order to achieve harmonization and a realistic assessment of sustainability performance, we need to look at full disclosures against indicators and not only work-in-progress or wannabe disclosures.

Alignment with the IIRC framework

For the uninitiated, the IIRC is the International Integrated Reporting Committee, established in 2010 by the GRI and the Accounting for Sustainability movement to create a globally accepted framework for integrated reporting.   The objective is that G4 should help companies to prepare for managing an integrated process in their companies and produce an integrated report in line with whatever framework the IIRC comes up with. The governance of the IIRC is as shown in the chart below, presented by Nelmara Arbex:

The members of the IIRC working group are predominantly accountants and investment experts, which tends to predict the nature of the output as predominantly geared towards the interests of financial markets, which is a double-edged sword and needs to be managed carefully. One of the objectives is to understand the link between sustainability impacts and financial results, if you like, a kind of platform for the financial ROI of sustainability as it is applies in a given company. This may yield some interesting outputs, but the integrated reporting framework is still a moving goalpost, and the preparatory alignment of G4 with the IIRC expected directional outcome makes sense, provided G4 does not become a pawn in the scheme of increasing the financial wealth of the already wealthy at the expense of other stakeholders.

G4 Technology

Another aspiration expressed for G4 is the use of new technology to make sustainability disclosures more accessible and allow for deeper analysis of data. New tools, ranging from XBRL to online reporting to  iphone applications and direct realtime data feeds to a range of applications could take reporting to another level and give stronger presence to sustainability performance for stakeholders. The GRi has also begun licensing software applications for GRI reporting, and once can understand an interest in these being more widely used. How technology can be used effectively for improved content development, greater accessibility and transparency of non-financial disclosures, as well as providing support for public consultation, is a challenge. Part of this is how the GRI presents the new G4 framework and what technical tools, in addition to a set of indicators, the GRI will provide. Thinking will have to transcend the basic excel tables and PDF's but not force reporting down a mechanical join-the-dots approach, exemplified by the "Let's Report" C level template.

Continue the debate

What's clear, is that the debate will continue, and if you have got this far in this obscenely long post, you might be interested in hearing more of Nelmara Arbex and other throught leaders in this space at a conference in London on 25th March, hosted by Justmeans, called Redefining Value, which I will  also attend. I love a good debate!

I could continue ... and I probably will at some stage ... but in the meantime, is there anyone who doesn't agree that the next few years will be an interesting time for Sustainability Reporting ?

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  (BeyondBusiness, an inspired CSR consulting and Sustainability Reporting firm)

12 CSR Reporting Trends for 2011

I recently published an editorial on CSRwire.com called "Sustainability Reports: don't ask "if", ask "how". In a nutshell, using the PwC CSR Reporting Trends 2010 study published last month, and the Radley Yeldar "How Does It Stack Up" reviews of European and UK CSR Reports, and the Lundquist second "Global Leaders" report, which assesses online sustainability communications (and not just sustainability reports),  the inevitable concusion to be drawn was that sustainability reporting is now a minimum expectation of companies and the key to differentiation is the way a company reports, rather than, as was the case not so many years ago, whether the company reports. There are still thousands of companies who do not communicate on sustainability, but sooner or later, there will be no avoiding full accountability and transparency. The ones who do it well will gain a range of internal as well as external benefits. You can read my full editorial here.

Anyway, as it is now mid-November, thoughts are turning to the end-of-year lists (The Best of 2010... The Worst of 2010... The Trends.. The Rising Stars .... The Leaders and the Laggards ... etc) and all those kinds of articles which appear in December, and I have already been asked for my view of how CSR Reporting did in 2010 and what the trends I see for 2011, for an article to be published on this subject. My response ended up being blop material. So here it is. After I tidied it up a little!

CSR Reporting 2010 and 2011 trends

2010 has been a good year for reporting. It started well with news of a sharp increase in reports produced by the S&P 100 in 2009,  93 of the 100 now reporting and by mid October, the GRI was reporting a 60% increase in reporting in 2010 versus 2009. . The PwC trends summary for 2010 shows strong advancement of a reporting culture. The success of the GRI 2010 Conference in Amsterdam and the establishment of a new GRI foothold in the USA, the continued expansion of the Carbon Disclosure Project and their new Water Disclosure Report  as well as many other other frameworks  all point to increasing focus on business transparency and reporting.  Companies are becoming more creative with reporting techniques, and using the power of the internet to reach more readers. The strong push towards Integrated Reporting and the establishment of the Integrated Committee (IIRC)  has provoked new debate, activity and even listing requirements on some stock exchanges. The focus on reporting as a feed into investment analysis tools has heightened with Sustainable Indexes continuing to have an important role, including the publication of the Global 1000 Index by CRD analytics, which powers the NASDAQ Global Sustainability Top 50.

The debate on reporting moved in 2010 from whether to report to how to report – and this includes fundamental questions about presentation of CR reports (online or print/download) , separate versus integrated and frequency of update (annual or more frequently). Whilst the talk is towards integrated, companies are not moving wholeheartedly in this direction and much work still  needs to be done to define what integrated really means and how it can be applied in a way which is better than now. Perhaps many will wait to see what guidelines and frameworks will emerge to assist them in addressing the highly complex issues that true integrated reporting poses.

Trends to watch in 2011

Non-profit reporting : We are starting to see more scrutiny of large NGO's and the understanding that as large organizations, they should be committed to transparency in spite of, or perhaps because of, their inherent social or environmental nature. The release of the GRI NGO sector supplement will probably have an influence here.

Integrated reporting : It is likely that more companies will want to get ahead of the game on integrated reporting, and will start by joining a financial report and a sustainability report in one cover. Whilst this is not true integration, some companies will go this route for many reasons, if only to be counted as leading a new phase of sustainability reporting. What we might see, however, is a greater attempt by companies to quantify the financial impact of their non-financial performance in one way or another. This is long overdue and would be a welcome development in Sustainability Reporting , even if full integration is not yet a practical option for most.

Online engagement around reporting : The drive to use reporting as a platform for interaction will gain speed in 2011. Today, only a handful of reporters (Guardian, SAP, Timberland to name a few) have really designed their reporting efforts around a more holistic view of sustainability communications and are using their report as a catalyst to engage stakeholders. As time goes by, more companies will realize that this is not only far less risky than they think, but also an inevitable feature of being a sustainability leader.

Use of social media tools to engage stakeholders in the reporting process : As online engagement becomes more widespread, companies will have no choice but to explore the possibilities of Social Media and use tools that are available on the Internet. We will see a proliferation of corporate CSR blogs, more Facebook pages and more tweets from Company accounts. Some may even take the lead from the Guardian who used their blog platform to ask stakeholders what the Guardian should be reporting on . In this way, Companies will try to engage stakeholders in the content and development of the report, rather than just gaining their reactions.

Dominant online formats: More companies will develop their online architecture to include sustainability data and use the annual reporting cycle to create order, priorities and create a structured report which is printed only in a summary form. Websites will be the domininant information carriers.

Issue based reports: We have seen an increase in sustainability reports which  are region or issue based: L'Oreal issued a report on Diversity, SAB Miller issued a report on their economic impact in South Africa, Unilever has issued a series of reports on different aspects of their sustainability initiatives, Nestle has issued a report on water management, and another on Nutrition and Diet. More companies will be looking to differentiate themselves through focused and targeted reporting on their impacts in specific regions or on specific issues.

Materiality and Engagement: These two areas are those which most companies fail to report well, and yet are key to good sustainability communication. We have seen companies start to mature into reporting on these issues. I believe better reporting on materiality and stakeholder engagement will characterize 2011 reports.

Some trends I would like to see but I doubt will materialize in 2011:

Brand based reporting for consumers: I would like to see more companies influencing consumers with their sustainability reporting, via the brands that they distribute and the customers they serve.  I would like to see some Sustainability Reports for Brands rather than global reports which mean little to local consumers or customers. I would like to see consumers being engaged at the point of sale with sustainability information contained on product packaging so that they can make the right choices as they purchase.

Employee involvement: I would like to see evidence of greater employee engagement and involvement in the reporting process. Many companies do not report on the process of their report development or use the great insights of employees in the body of the report itself. I would like to see more evidence of a CSR enabled culture in the business and its evidence in the reporting process and the report.

Outcomes: The most important change I would like to see is the move from reporting on what has been done to what a difference has been made i.e. the move from inputs, decisions, plans and actions to a real assessment of what impacts the company is making as a result of all these inputs, decisions, plans and actions. Outcomes has to be the key focus for 2011. However, I suspect that so many companies will continue to take the easy route of just listing all the good things that they have been doing and not really bothering to put in the extra effort so that we can all know whether it was worth it. This would mean considering the indirect impacts as well as the direct impacts a company has.

Localized reporting: I would like to see more global companies producing local reports describing their local impacts. When a global business reports, it is at a high level and meaningless for local stakeholders. Intel, GE, Vodafone,  Telefonica, Motorola and others have developed a leading habit of parallel reporting at local level. I hope that more global companies will do the same in 2011.

SME reporting: There are some glimmers of hope in the SME community but by and large, reporting has not been assimilated in this sector. However, as SMEs drive economies, we cannot ignore their collective impact on our societies. My firm view is that SME reporting will be largely driven by MNE requirements for reporting in their supply chain, much like the excellent initiative of Puma in the context of a GRI project or the requirements of Walmart from its first tier suppliers. I would like to see more MNE's driving this and supporting their supply chains in becoming more transparent and more sustainable.

Finally, a word about context. There is a body of thought that says sustainability reporting should be contextual, i.e. impacts which are defined in terms of their contribution to overall global sustainability rather than individual unconnected impacts of a single company. See this interview with Mark McElroy of the Centre for Sustainable Innovation. I am going to remain quiet on this for the time being till I distill my thoughts more comprehensively, but suffice it to say that beyond the additional more general contextual information shared as background to material issues reported on, I don't see many companies going this route, whatever its merits or otherwise.

So there you have it. Be prepared for an onslaught of posts, opinions and predictions of reporting trends for 2011, many of which will differ and only some of which will prove to be relevant. See you in December 2011 to check out how everyone did.

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 Ltd, CSR consulting and Sustainability Reporting firm)