BUSINESS SUSTAINABILITY REPORTING

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CSR is also associated with the concept of sustainable business development, which is the view that businesses should seek to develop in a way that can be sustained into the future, without depleting the earth’s natural resources or causing irrecoverable environmental damage.

Sustainability reporting is an organisation’s practice of reporting publicly on its economic, environmental, and social impacts. Companies that are seen to cause damage to the environment may suffer from a loss of reputation among customers, suppliers and government.

This can have implications for fines and other penalties, civil legal action, lost contracts, clean up costs and possibly falling sales.

The impact on oil group BP of the explosion at a drilling rig in the Gulf of Mexico in 2010, and the subsequent environmental damage it caused, is a clear example of the potential risks and the need for companies to consider social and environmental issues, particularly in industries such as oil extraction, mining and energy production. Interest in sustainable development has come from several sources:

 governments, concerned about the implications for society of environmental damage and loss of natural resources;

 investors, many of whom now consider the ethical, social and environmental implications of the investments they make (‘socially responsible investment’ or SRI); and

 companies themselves, who may identify business opportunities – developing new products or reducing costs – in environmentally-friendly initiatives

 

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For example, in 2009, Mars announced a strategy for producing its entire cocoa supply in a sustainable manner by 2010. Pharmaceuticals group GlaxoSmithKline announced targets to cut waste in medicine production at its factories by two-thirds by 2015.

Sustainability The concept of sustainability is that organisations and individuals should meet their own needs today without compromising the needs of future generations.

It requires organisations and individuals to preserve the environment and better serve society at large. More and more companies have are recognizing the need to make their operations more sustainable.

Over the past twenty years or so the number of organisations that have made sustainability a key strategic focus has increased significantly. This increase is due to a number of factors, including:

 a broader understanding and acceptance of the links between economic activity and global sustainability issues;

 a recognition of the risk-management and economic benefits that organisations can gain from integrating sustainability into their strategies;

 

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 a growing demand from stakeholders, including investors, customers, employees and NGOs, for organisations to manage their operations in a more sustainable manner.

Also some governments and regulators have required companies to report on their environmental and social impacts.

Companies can enhance their value by developing an understanding about the connections between sustainability and business and communicating this to their stakeholders.

This also allows companies to drive improvement and innovation. 2.3 Sustainability reporting Organisations tend to communicate their sustainability activities through sustainability reports. Many companies worldwide (over 3,000) issue annual reports on sustainability and corporate responsibility.


These companies represent all sectors and industries across the globe. Sustainability reporting is largely voluntary although a few governments have

 

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 French law requires the annual reports of companies to include information on their environmental and social performance.

 All state-owned companies in Sweden must present a sustainability report using Global Reporting Initiative (GRI) guidelines on a ‘comply or explain’ basis. Furthermore some stock exchanges have sustainability reporting as a listing requirement. One such stock exchange is the Johannesburg Stock Exchange in South Africa, which has been a leading light in this area.

Greater transparency on sustainability and the consequent attention to sustainability issues is of benefit to both companies and their stakeholders. Experience has shown that the process of sustainability reporting can add value in a number of ways, including:

 increased efficiency;  higher levels of employee retention; and  lower cost of capital.

 

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A number of organisations have produced codes of practice and guidelines for companies to follow, but to date these are non-mandatory.

This can lead to problems in comparability of the content of these reports, although having the information in the annual report is better than not disclosing at all. Two such organisations are The Global Reporting Initiative and The Sustainability Accounting Standards Board

The Global Reporting Initiative (GRI) is an international not-for-profit organisation whose mission is to make sustainability reporting standard practice. GRI promotes the use of sustainability reporting as a way for companies and organisations to become more sustainable and contribute to a sustainable global economy