Sustainability reporting is a process of disclosing information material to an organisation’s major economic, environmental or social impacts, and that substantially influence’s stakeholder decisions (Geraghty 2010). A company that is sustainability-oriented is one that is fully aware of its responsibilities towards the different stakeholders and adopts methods and tools that allow it to improve its social and ecological performance (Perrini and Tencati 2006).
Sustainability reporting has been emerging globally over the last fifteen years (Hubbard 2009). In previous years, Organisations were required to disclose their financial performance exclusively (Economist Intelligence Unit 2010). In present times, increasing numbers of companies voluntarily disclose information about their social and environmental performance in sustainability reports (Perego 2009). Environmental performance is expected to cover key inputs and outputs resulting from operational activity.
These issues include energy and water use, green house gas emissions and other wastes. Social performance, on the other hand, is expected to cover employees, customers and suppliers, community and political relationships (Hubbard 2009). This paper argues that Australian organizations need to adopt sustainability reporting in the 21st century.
It points out the reasons for adopting sustainability reporting and how organizations approach its planning and implementation. It then describes two Australian organizations that have adopted sustainability reporting and discusses how they differ from each other in that regard.
Many organizations believe that sustainability reporting is an important tool in assessing performance. There are various reasons that have been given to explain companies’ desire to adopt sustainability reporting. They include market-based drivers, societal, political, regulatory and ethical drivers. Examples of market drivers are brand reputation. Organisations report to prevent negative perceptions of their brand (Geraghty 2010).
Societal drivers may include internal stakeholders such as shareholders, employees and trade unions and external stakeholders like customers, suppliers, competitors, government and non-government organizations (Vormedal and Ruud 2009).
Vormedal and Ruud also point out that emergence of standard setting institutions for corporate responsibility, sustainable reporting and environmental management systems have supported the growth of non fiscal disclosures and that adoption of reporting has also grown due to development in the field of ethics and corporate accountability (2009).
Ethical and accountability issues are especially important for industries that dump waste into the environment which is why the government has also been involved in protecting the environment.
According to the economic intelligence unit (EIU) governments have increased pressure on corporations to measure the effect of their operations on the environment (2010). Geraghty’s findings mirror those of EIU in that they show that the Australian government is encouraging responsible corporate practices by funding the St James Ethics Centre which houses the Global Reporting Initiatives (GRIs) offices (2010).
Organisations approach the planning and implementation of sustainability reporting in various ways. With sustainability reporting, there are no agreed reporting frameworks and there are no agreed measures for what is reported. Reporting varies from company to company because each industry faces different external issues which might be important for its operations (Hubbard 2009). In a study by Hubbard (2009), every company studied had a statement of its business strategy and sustainability strategies.
Findings in that study also showed that sustainability strategies were clearly stated by 90% of the companies. Planning and implementation of reporting requires a strategic framework. Holistic sustainability frameworks have been developed by investor-oriented analysts (Hubbard 2009). The first step in planning a report is deciding what information should be contained in the report. This is done by highlighting the organisation’s purpose, what it aims to achieve and the interests of its stakeholders.
In the planning process, stakeholders are interviewed and their input considered. Data is then collected following indicators that have been developed by the Global Research Initiative (GRI) (Geraghty 2010). Once this is accomplished, the organization finds out the best way to implement its findings. Implementation consists of preparation and writing of the report and decisions made highlighting the most appropriate means of relaying the information to stakeholders (Geraghty 2010).
There are several organizations that have adopted sustainability reporting in Australia. Among those are Ruah Community Services (RCS), a not-for-profit organisation and Transurban, a company that owns and runs toll roads. RCS produced its first report in early 2009. This report covered RCS’s activities in the year 2008 and in the latter part of 2007. With the report, RCS was aiming to fulfill its commitment to transparency.
It complied with the GRI and the United Nations Global Compact (UNGC) guidelines. They have given an organizational profile and governance, presented a plan for environmental and economic sustainability. They have listed their labour practices, human rights, societal issues, product responsibility and anti-corruption practices.
These are especially important in a company like RCS that depends on donations because the value of a company depends on the quality of its relationships with its stakeholders (KPMG International 2008). Transurban is geared towards financial gain and has adopted sustainability reporting in a bid to sustain growth.
Transurban believes that to maintain a thriving business, it has to have government and community support. This is why in 2009; it became a signatory in the United Nations Global Compact proving that it was determined to protect human rights, labour, environment and anti-corruption (Transurban 2010).
The two organisations, Ruah and Transurban, approach sustainability reporting in different ways. Ruah presents its findings by stating what it is doing currently, the limitations of its current system of operations and what it intends to do in the future to correct those limitations. Transurban, on the other hand, states the challenges it faces and calls on its stakeholders to assist in tackling those challenges.
In determining what issues to present, Transurban compared the contents of its sustainability report with the output from its material report. This materiality test covered financial performance, Transurbans’s ability to fulfill its policies and strategies, concerns presented by stakeholders and societal and best practice norms (Transurban 2010).
In the use of materiality as a determing factor, Transurban differed greatly from Ruah because Ruah, being a not-for-profit organisation, used values to determine its sustainability scope. Data was collected by Transurban based on the impact that its operations has on the environment which consisted of measuring gas emissions using the Green house Gas Protocol.
The second data collection method was measurement of safety for both workers and customers. Its approach to reporting was collaborative because its employees, subject experts and public affairs teams took part in collecting data (Transurban 2010). This was unlike Ruah which shows minimal staff involvement.
Despite their many differences, Transurban and Ruah show a similarity in their use of G3 guidelines and UNGC’s ten principles to make their report. Both are also determined to protect human rights, labour, environment and anti-corruption.
In conclusion, sustainability reporting is the process of disclosing all company information to the stakeholders. Unlike previous reporting, it includes environmental and social impacts that an organization has. It is a recent practice that has been adopted due to pressure from consumers, a desire by companies to show accountability for their actions and the government’s desire to strengthen corporate social responsibility.
This paper discusses two organizations, Ruah Community Services and Transurban which have adopted sustainability reporting (Ruah Community Services 2009). RCS has been motivated by a desire for transparency while Transurban is motivated by a desire to improve environmental safety by reducing gas emissions and keeping employees and workers safe. In collection and presentation of data, the two organisations follow the GRI guidelines and comply with UNGC.
They differ in their style of collecting data. While Transurban uses output reports to determine where its sustainability report should focus, Ruah uses values. Transurban’s collection of data is collaborative while that of Ruah doesn’t seem to be (Transurban 2010). Reporting style is also different in that Ruah lists its current position per sector and where it aims to go while Transurban lists all challenges and calls for stakeholder involvement in finding solutions.
In this writer’s opinion, sustainability reporting will play a big role in minimizing resource depletion in Australia. In a world where population is increasing so rapidly and with global warming, there is a need to conserve the environment and sustainability reports will push organisations to do so.
Although reports show that weaker governance regimes are more likely to adopt a sustainability reporting system (Kolk and Perego 2008), Australia is in a good position to improve its sustainability reporting. For Australia to compete in a global market in the 21st century, it will have to show its commitment to environmental conservation and societal needs using sustainability reports.
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