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How Green Is Your Company?
Powered by BI, enhanced sustainability reporting increases the impact of corporate social responsibility.
by Terri Rylander
In light of environmental, economic and political issues, corporations are at a crossroads. Many are taking a road that expands their focus beyond profitability to include their environmental and social impacts. This road is called corporate sustainability, and it’s one of the fastest growing strategic initiatives.
Also referred to as corporate social responsibility, it is defined as economic development that meets the needs of the present generation without compromising the ability of future generations to meet their needs, according to John Elkington, a pioneer in the sustainability movement. He coined the term “triple bottom line” to describe the three components of sustainability: environmental, financial and social.
Each area contains risks and opportunities that will drive either cost savings or revenue increases. Some examples include:
- Environmental. Reduced energy consumption and hazardous waste, recyclability and reuse, minimized packaging
- Financial. Reduced consumption of energy and resources, legal compliance, improved brand reputation, shareholder support
- Social. Fair trade, human rights, diversity, employee development, community involvement
The Voice of Sustainability
Engaging in sustainability programs provides substantial benefits, but they won’t be fully realized unless efforts are properly communicated. Companies can demonstrate the depth and breadth of their participation to their stakeholders—including employees, customers, investors, regulators and non-governmental organizations (NGOs)—through corporate sustainability reports. The value returned to the company is in continued stakeholder support, such as available capital from investors, employee and customer loyalty, improved collaboration with regulators, and better relations with NGOs and local communities.
Today, most large publicly traded companies have active sustainability programs and publish comprehensive reports. Most produce them annually, but some are now publishing them quarterly or offering access to updated metrics in the sustainability section of their websites. The latest trend is to integrate the annual financial and sustainability reports.
The overall number of reports produced has increased dramatically since the 1990s. (See figure.) European countries were the early adopters, and the UK still leads the US in number of reports produced.
Click to enlarge
Success is in the Details
Although most reports combine explanatory text and numeric data, the detailed facts and metrics prove the commitment to real progress and enhance corporate credibility. A thorough report can be a competitive differentiator over one that speaks to sustainability efforts without the data to back it up. Organizations that talk about sustainability but don’t communicate their efforts well or accurately may be accused of “greenwashing.”
To help drive report consistency and accuracy, the Global Resource Initiative (GRI) provides a framework that offers guidelines and principles. The GRI standards address the principles for defining report content and ensuring quality.
The guidelines suggest areas for measuring key performance indicators (KPIs). One such KPI focuses on a company’s “Total Weight of Waste by Type and Disposal Method.” For example, one global beverage company publishes metrics on both packaging materials avoided and packaging recovered, measured in metric tons.
Overcome Obstacles
Creating sustainability reports is no easy task. Often, the required data is in silos or unavailable. Metrics are required from across an organization and even externally, from suppliers and partners.
If pertinent data is in silos and visible only to a particular business unit, an initiative might have a positive impact at the departmental level but a negative one overall. So while a firm’s supply chain division might reduce its carbon footprint by creating new, recyclable packaging, it might require greater energy to produce that packaging than traditional alternatives, resulting in a negative net effect.
In addition, many companies do not have the necessary reporting infrastructure in place. Without a sound reporting system, it’s difficult and time-consuming to gather, cleanse, integrate and format the data. And, if users are expected to do so manually, data quality issues can result. This is where business intelligence (BI) can be a key driver for success.
Corporate BI teams—equipped with the right technology—are best poised to support the business in undertaking sustainability reporting. An enterprise data warehouse is critical in providing performance metrics that span operations, supply chain, logistics, products and services, and employees.
The BI team can ensure that quality data is available and accessible at the level needed to support comprehensive reporting. The team can be instrumental in integrating external data, and it can provide access through scorecards and dashboards to help the business track performance against its targets.
Stand Out
Historically, corporate success was measured solely on financial profitability. That is changing as customers, investors and regulators focus on an organization’s overall health—including its impact on society and the environment. And while sustainability initiatives can bring significant value in financial and non-financial terms, that value can’t be realized fully unless it is communicated accurately.
BI is imperative in implementing corporate sustainability. Both staff and technologies play an important role in making the necessary data available, helping the company deliver an accurate, consistent and comprehensive view of progress that meets stakeholder needs and sets the firm apart from its peers.
Terri Rylander is a freelance writer specializing in business intelligence (BI) and technology.