Experts Weigh in on Future of Accountability

30 Sep 2010 – Jeff Erikson

Yesterday SustainAbility and GlobeScan released the results of our most recent survey of sustainability experts. This is a survey of about 1200-1500 sustainability experts and practitioners across 80+ countries that we conduct three times per year through our Sustainability Survey Research Program. The theme of this most recent survey was accountability, and we addressed (a) sustainability reporting and transparency, (b) ratings and rankings schemes, (c) the implications of BP’s Deepwater Horizon accident, and (d) the Millennium Development Goals.

The results this time around, as usual, were a combination of the surprising and the expected. Key findings included:

• Sustainability reporting continues to add value, but significant shifts in how companies report are anticipated.
• Despite the plethora of ratings and rankings schemes, few have achieved a high degree of awareness or trust.
• The BP Deepwater Horizon incident is expected to accelerate regulatory and voluntary improvements, but leave the oil industry intact.

Further highlights from the four broad categories of the survey were as follows…

Reporting and Engagement

• Experts gave high rankings to the value of sustainability reporting to improve a company’s reputation, drive performance and raise the internal profile of sustainability. While not a particularly compelling finding, this may provide encouragement to those reporters who struggle with persistently high levels of effort needed to produce reports read by persistently small audiences.
• Anticipated trends in reporting include increases in the use of social media, investor interest and integrated (sustainability and financial) reporting. We expect a surge of experimentation in these areas in the next couple of years as companies try to capture the opportunities while adjusting to new technologies and increasing interest and scrutiny.
• We asked experts what are the most effective ways for companies to improve their sustainability reporting. There were plenty of ways cited, but the number one recommendation was for companies to be more transparent about shortcomings and challenges. Think about that. Ahead of improving company websites, providing more information on forward targets, or developing a separate summary report, the best way for companies to improve comes at no additional cost or effort (other than convincing your execs of the value). Just be honest about what you are not doing well enough. Our advice? Just do it.

Ratings and Rankings Schemes

• We asked experts how much trust they have in various types of organizations to accurately judge a company’s sustainability performance. We expected them to tell us they trusted those organizations who are in the business of rating company performance. Surprise – they placed third, well behind NGOs and companies’ own employees. Hint to you corporate types: NGOs continue to place high on the trust factor among sustainability experts – partner with them.
• For specific ratings schemes, there is good news and bad news. Dow Jones Sustainability Index, Carbon Disclosure Project and FTSE4Good received the highest credibility ratings. But none of the sixteen ratings schemes that we asked for opinions on received even a 50% positive credibility score. While “not credible” responses were low, many respondents were “not familiar enough to judge” credibility. It seems that the ratings organizations have some work to do in helping folks understand their approach.
• Objectivity and credibility of data sources are the most important factors in determining rating schemes credibility, followed closely by disclosure of rating methodology.

(For more on the current state of the ratings universe, see phase one of SustainAbility’s Rate the Raters research, and stay tuned for the release of phase two.)

Deepwater Horizon

• Not surprisingly, most of respondents (82%) expect increasing environmental and safety regulations, especially in the US, as a result of the BP accident.
• A strong majority of experts also expect an increase in voluntary environmental/safety investments by the oil industry in the US and globally.
• However, few experts (30%) expect that the accident will drive a shift away from fossil fuels, nor will it significantly increase demand for electric vehicles.
• So companies in all sectors can expect increasing regulations, but perhaps the end of oil is not yet upon us – at least not because of Deepwater Horizon.

Millennium Development Goals

• Stakeholders are looking not only to governments of both developed and developing countries, but to global companies as well, to help achieve the MDGs.
• Lack of commitment and political will are seen as the greatest barriers to achieving the MDGs.
• Businesses can most effectively contribute to achieving the MDGs by integrating long-term development strategies into their core business.
• This sets the table for partnerships among governments, business and NGOs to tackle the great challenges facing society.

As always, we are grateful to the many sustainability experts and practitioners who give of their time and provide their opinions and insights. Complete results of the survey are available to program members. If you’d like information about joining the research program, please contact Jeff Erikson of SustainAbility or Chris Coulter of GlobeScan.