Trust Us the Global Reporters 2002 Survey of Corporate Sustainability Reporting 02 Trust Us Executive Summary
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SustainAbility Trust Us The Global Reporters 2002 Survey of Corporate Sustainability Reporting 02 Trust Us Executive Summary Corporate accountability gained new The Carpet Bombing Syndrome Executive urgency in 2002. Following scandals in the The average page-length of printed reports United States, Europe and Asia, companies has soared 45% in just two years – with no Summary increasingly have felt demand from associated increase in overall report quality. stakeholders to account more fully for their Some reporters seem to be bombarding actions – through, among other things, report users with facts, with little or no increased transparency and reporting. thought for significance and materiality. Trust Us, which summarizes the findings GRI Guidelines Raise the Bar of the 2002 Global Reporters survey, aims The Global Reporting Initiative (GRI) to identify and classify best practice in sustainability reporting guidelines have corporate accountability across the triple allowed first-time reporters to enter at a bottom line (TBL) of sustainable much more sophisticated level of reporting development. The spotlight is on 100 than previously possible. A key question: sustainability and corporate social how does this quality of disclosure relate responsibility (CSR) reports from around to quality of performance? the world, with the Top 50 subjected to an in-depth benchmarking. In addition, The Magnificent Seven we analyze current reporting across Seven companies scored over 50% in the industry clusters and in terms of 2002 survey: The Co-operative Bank, Novo emerging ‘hot topics’. Nordisk, BAA, BT, Rio Tinto, Royal Dutch / Shell Group and BP. The newcomer to the As trust in capitalism and in companies highest-scoring bracket since the 2000 has hit new lows, CSR and sustainability survey is Rio Tinto. Interestingly, there are reporting potentially offers real no non-European companies among the opportunities for companies to rebuild that Magnificent Seven, although Bristol-Myers trust. Key to this, however, will be three Squibb from the USA, South African necessary conditions for rebuilding trust: Breweries from South Africa and WMC from Australia are in hot pursuit. Materiality Intelligent identification of the issues North America Leads – Just that matter most for measurement, Overall, average scores across the regions management and reporting remain relatively static, although in 2002 the North American reports (45%) overtook Governance the Europeans (43%). Non-OECD reporters New frameworks for corporate decision- (41%) and Other OECD reporters (40%) making, including improved board follow very close behind. recruitment, structures and processes GRI Signatories Excel Brands There is a substantial difference between Closer links between key areas of reports based on the GRI guidelines and corporate accountability and company others. On average, GRI reports scored 8% and product identity and communication. higher than their non-GRI counterparts, with the most significant difference in scores at the bottom end of the Top 50 — Key Conclusions a 17% difference between the lowest scoring GRI report and the lowest scoring Transparency’s Glass Ceiling non-GRI report. Best practice in corporate sustainability reporting appears to be hitting a plateau, All in the Mix with scores virtually unchanged since 2000. The scoring profile across the major areas of 01 A term used by SustainAbility Faculty our assessment methodology has remained member Jed Emerson to describe value Social and Economic Issues on the Rise largely the same since the 2000 survey, with added across several dimensions of the Social issues, and to a lesser extent wider strong performance from all the Top 50 triple bottom line. economic issues, are making a noticeably reports in the Context and Commitments stronger showing in the latest company (48%), and Management Quality (42%). reporting — alongside a corresponding The Royal Dutch / Shell Group report tops (and potentially worrying) drop in emphasis the league in Context and Commitments on environmental dimensions. with 80%, while BT leads on Management Quality (69%). Trust Us 03 Executive Summary The area of greatest change is in the Economic Bottom Line The Top 50 Companies balance of reporting. The early emphasis Beyond financial accounting, what on environmental performance has shifted economic information do we want? Rank Company Score % towards greater reporting on social and ethical material, at the expense of the Brand & Reputation 1 The Co-operative Bank 120 61 environmental dimension. While How does — and how should — reporting 2 Novo Nordisk 118 60 environmental reporting has gone down link to corporate and brand reputation 9%, reporting on social performance has and value? 3 BAA 116 59 increased by a dramatic 24%. BT leads 4 BT Group 114 58 with 67%, followed closely by newcomer Governance 5 Rio Tinto 107 55 Chiquita and veteran reporter Royal Dutch What are the appropriate roles for boards 6 Royal Dutch / Shell Group 104 53 / Shell Group (58% respectively). and top executives? 7 BP 103 53 Economic reporting remains the weakest 8 Bristol-Myers Squibb 96 49 aspect of performance reporting, although Breaking Transparency’s Glass Ceiling 9 ITT Flygt 95 48 bright spots of best practice are emerging. South African Breweries 95 48 BAA (71%) and South African Breweries The final section of the report focuses on BASF 95 48 (63%) lead the pack in this area. two significant new priorities: materiality 12 Volkswagen Group 94 48 and integration. WMC 94 48 14 CIS Co-operative 91 46 Clusters of Risk and Opportunity Materiality Insurance The soaring size of corporate reports — 15 Baxter International 89 45 In the 2002 survey, we examined results a trend also now found in mainstream 16 Cable & Wireless 88 45 in detail from eight clusters of companies financial reporting — underscores the need 17 Ricoh Japan 87 44 spanning a range of impacts and issues: for a new push in relation to the closely 18 Kirin Brewery 86 44 linked areas of issue identification and Chiquita Brands 85 43 Consumer Products materiality. The plateau in scores can only International Energy be overcome if companies provide better 20 United Utilities 83 42 Finance & Insurance evidence of how sustainability issues, 21 Suncor Energy 82 42 Food & Beverages management programs, and performance 22 BC Hydro 81 41 Heavy Industry trends are significant. But in the process, Eskom 81 41 IT & Telecommunications current definitions of materiality will need Matsushita Electric Group 81 41 Life Sciences to expand. Manaaki Whenua 81 41 Transport 26 British Airways 80 41 Integration SAS Group 80 41 Common issues cross-cut all eight clusters, That said, the most important challenges to 28 Alcan 79 40 including: climate change, business models, come will have less to do with questions of 29 General Motors 78 40 and governance how we report better, or govern companies better, and more to do with how reporting 30 Henkel 77 39 can help us use (and, where necessary, Kesko 77 39 Hot Topics change) market mechanisms to define, 31 Novartis International 76 39 develop and deliver sustainable business 32 Unilever 75 38 Section X examines and evaluates seven solutions. This will require a greater focus 34 RWE 73 37 current issues highlighted during the on four key areas of integration: Balance 35 Bayer 72 37 benchmarking process: Sheets, with a new focus on ‘blended 35 Deutsche Telekom 72 37 value’; 01 Boards, as they wrestle with the Procter & Gamble 72 37 Financial Markets new governance agendas; Brands, with Swiss Re 72 37 How are corporate reporters seeking to companies building new conversations with 39 Toyota Motor Corporation 71 36 engage the financial world? customers and consumers; and, as the need 40 BMW Group 70 36 for more radical solutions is increasingly 41 Tesco 69 35 Verification and Assurance recognized, Business Models. 42 AWG 68 35 The GRI will drive market demand, but Danone Group 68 35 how can real value be added? 44 Siemens 67 34 45 Aracruz Celulose 66 34 Supply Chains Sony Corporation 66 34 As value webs globalize, how can they be 47 TEPCO 64 33 made more transparent and accountable? 48 Suez 62 32 49 Credit Suisse Group 61 31 Emerging and Transition Economies Who is reporting on — and in — less 50 adidas-Salomon 57 29 developed regions? Figure 01.