Sustainability Disclosures – Where do we go from here?
Updated: Jan 2, 2019
On September 15, 2015 an extensive report titled “The Future of Sustainability Reporting” was released by Verdantix, a research and consulting firm covering the sustainability space. The firm summarized its findings by stating that “...today, sustainability is 95% a communications issue and 5% a compliance issue.” Just three days later, Volkswagen, the auto industry leader on the Dow Jones Sustainability Index, demonstrated just how literal Verdantix' observation could be, admitting to a decade of cheating on emissions tests while pushing “clean diesel” as their marketing strategy.
Many have already expressed their outrage, and investigations are underway on both sides of the ocean with at least 25 class action lawsuits already filed. In the green business community, many have been lamenting the damage to this nascent movement and its just and timely cause.
But as green business professionals, we need to reflect upon our own community's role in this episode. How could VW executives ignore sustainability's fundamentals so blatantly? The answer unfortunately is: sustainability simply isn't a priority, beyond some declarative posters hanging on the wall. Actual performance, even if it's being measured, is not integrated with other business metrics that serve their day-to-day decisions. Sustainability has been reduced to the act of reporting, both for voluntary and regulatory purposes. It's yet another set of paperwork that needs to be processed and filed. As long as the green business community is content with reporting schemes, and standards that measure the declarative posters on the wall instead of actual performance – this is what we'll get, time and time again.
So how does sustainability become integrated into business? There are 3 critical elements:
Create metrics that matter: Sustainability exists in the physical world, so metrics are not beyond reach. By focusing on actual, quantifiable performance metrics – companies can’t skate by on promises.
Allow for scale: Embracing cloud-based systems, big data analytics, mobile interfaces and the internet of things is crucial for sustainability to be embedded in the enterprise. After all, natural and social resources are the last frontiers to be digitized in the corporation. Financial, intellectual, physical and human resources went through the process decades ago and are now core business components.
Provide business context: None of the above matters if we cannot create business value from our sustainability values. A metric is only valuable when it can be benchmarked against others, it allows a business to identify clear priorities that allow for actionable insights, and it enables setting informed, achievable goals. If metrics can do that, few executives will complain sustainability is still lacking a business case.
As green business professionals, we've been worried about sustainability being marginalized for quite some time. VW's blatant violation simply brought this issue into the limelight.
So, for the past few months, we've been harnessing “big data” analytics to create a new cloud-based service called ecoOS: the Operating System for Sustainability Intelligence. While still in beta testing with initial clients, this is a tool that will help sustainability turn a corner. We’re looking forward to this next stage as we shift our focus from reporting and honors lists, towards sustainability intelligence that integrates naturally with corporate decision making.