Sustainability Reporting ‘Leads to Higher Cash Flows’

Source: Environmental Leader.com

More than half of companies say sustainability reporting leads to higher cash flows and helps improve firm reputation, according to a report from the Boston College Center for Corporate Citizenship and Ernst & Young.

Though issuing a sustainability report in accordance with the Global Reporting Initiative (GRI) Framework or another standard requires a lot of work, Value of Sustainability Reporting finds strong evidence that transparency gives companies a number of financial and social advantages that make it more than worth its costs.

Firms have a variety of motivations that change based on company size, industry and ultimate goals of the sustainability report, the report says. However, the top four motivations for reporting for all companies in the survey sample are:

  1. Transparency
  2. Competitive advantage
  3. Risk management
  4. Stakeholder pressure

The GRI currently provides the global standard for comparability, according to the Boston College/Ernst & Young. The study found that more than two-thirds of survey respondents say their organization employs the GRI or a GRI-referenced framework in the preparation of their sustainability report.

Additionally, with analysts, investors and other stakeholders paying attention to sustainability reporting, many companies are increasingly assuring their sustainability reports. Among those report-issuing companies in the survey, 35 percent have some level of assurance conducted on their sustainability reports. Of those reporting assurance, 55 percent have their full reports assured and 45 percent have some indicators assured.

Survey respondents disclosed three primary challenges to sustainability reporting and the assurance process:

  1. Availability of data
  2. Accuracy or completeness of data
  3. Internal buy-in

Additionally, for large enterprises, sustainability may not be an entirely internal activity, the report says. Some organizations need to work with subsidiaries and suppliers, some of whom either may not be large enough to support robust reporting or may not yet have adopted the practice of sustainability reporting.

Another study released this week found global consumers have clear and specific expectations for the role companies should play in addressing social and environmental issues with 93 percent wanting to see more of the products and services they use support corporate social responsibility efforts.

Companies that disregard these demands from consumers risk more than just their reputations. Nine in 10 consumers say they would boycott if they learned of irresponsible behavior, according to the 2013 Cone Communications/Eco Global CSR Study.

GRI released the latest version of its sustainability reporting guidelines, G4, on Wednesday.