Hands up if you have ever read a quarterly sustainability report. Don’t be ashamed if you haven’t, you’re one of millions.
In my experience the only people likely to have read your company’s full sustainability report (past the executive summary that is) are its authors. Although CEOs usually have a good grasp of the substance of the reports, they rarely read them in full. Neither, in general, do employees, investors, CFOs and (especially) customers.
Don’t get me wrong, accurately measuring and reporting your social, environmental and economic impact is half the battle. But it’s the equivalent of identifying the best terrain and marshalling the infantry towards it.
The important bit is how you follow through. And yet, when it comes to sustainable performance management, in too many cases almost all the effort goes into the reporting. Worse still, all this effort isn’t for the benefit of a specially appointed team of professionals charged to ‘look under every stone’ to find value generating opportunities. Rather it is conducted solely to meet minimum regulatory requirements, i.e. it’s box ticking.
This is probably the worst of both worlds. A company that sees sustainable performance management as a chore to be weathered, rather than as an opportunity to realise value, is not likely to use the time it invests to its best advantage, or to see it as an investment at all. Let me be clear: it’s a myth that cost savings generated by more sustainable practices are slow to accrue and tiny when they do.
This is simply not our experience. In many cases, small improvements and efficiencies can deliver 10% gains in 6 months to a year, and that’s without the need for costly and disruptive overhauls. For sure, reporting has to be accurate - but this is a means to an End and not the End itself.
Many companies report their sustainability performance up to 20 times a year, often using different methodologies, ‘scopes’ and timescales. To report the correct data, potentially up to 1000 indicators and thousands of employees can be involved in collecting and analysing it.
Yet, despite this complexity, the processes and software haven’t caught up and, in many cases, the primary reporting tool is still a manually compiled Excel spreadsheet. In an age where specialist software and hardware can automatically track metrics and analyse data, this sort of behaviour is irrational. Imagine running the financial accounts on this basis.
The fact is that, for most companies, sustainability represents a multi-billion dollar source of value, whether this is through generating greater revenues, building brand reputation or reducing cost. Companies should always aim to put a dollar value on both: “the value at stake” as well as the value actually delivered by sustainability programmes. The real challenge is delivering the maximum from that value at stake.
Once you recognise this, you can set your reporting methodology accordingly and put the horse before the cart.
In the vast majority of cases this approach sees almost immediate business benefit. Recent research by Accenture and the Carbon Disclosure Project (CDP) revealed the stark difference between companies who report voluntarily and 2,300 other suppliers, the majority of which also have lower standards of reporting. 63 per cent of the former reported year-on-year emissions reductions while only 29 per cent of the others did. This has much more to do with mentality than method though. It’s in a willingness to see the opportunity and to seize it.
Of course, efficient reporting and good performance management go hand in hand but the majority of time must be invested in the latter.
This means that companies do need to invest in the processes and technologies to simplify and (ideally) automate data collection. However, coming to see good data collection as a means of maximising business performance will help executives realise that (as experience confirms) the costs pale into insignificance compared with the additional business value generated.
Paul Gurney is a Senior Manager at Accenture Sustainability Services