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Closing the CR leadership gap

Paul Hohnen, a long-time contributor to Ethical Corporation has provided (with Eva Riera) some excellent analysis of how reporting frameworks and tools are beyond used by the leading companies.

His research shows that:

– The Global Reporting Initiative (GRI) has become the default standard for sustainability reporting. Launched in 2002, the GRI is referenced by 95% of the DJSI Super Sector Leaders, 78% of the FTSE4Good Global 100, and 70% of the Global 100 Most Sustainable Corporations.

– The AccountAbility 1000AS standard, another multi-stakeholder developed tool, stands out as the assurance standard of choice. It is used by 26% of the Global 100 Most Sustainable Corporations and also 26% of the DJSI Super Sector Leaders.

– Officially developed frameworks are referenced less frequently than GRI, but achieve nonetheless a creditable level of usage. (Global Compact, OECD Guidelines, ILO, CDP)

That’s the good news. On the other hand, he points out that:

– Most leading companies fail to provide any detail or concrete evidence as to HOW they have used sustainability frameworks to embed CR into operations

– Companies are clearly having a hard time actually doing what they say they will do. Firms with a high carbon footprint, such as oil companies and airlines, might improve energy efficiency but overall emissions appear to be rising.

– If one widens the pool of candidates (the Global Compact claims over 6000 business participants and GRI just under 1900 reporters in 2010), the conclusion one cannot avoid is that the vast majority of the world’s companies appear either not to be using any of the recognised corporate responsibility frameworks, or doing so and not talking about it.

This last point is the key one for me.

We can, and should point out that leading firms such as those mentioned in the indexes and lists above (flawed though they may be) are not being transparent enough about integration measurement, progress and successes/failures, but at least most of them grasp the importance of sustainability.

The bigger worry, as I have mentioned before on this blog, is the gap that’s opening up between the leaders and the rest. There’s 500-1000 companies taking the agenda seriously. That’s nowhere near enough.

This is a helpful state of affairs for the leaders in a tactical way, in that they get credit for being better than the others, and increasingly so.

But strategically, if recalcitrant companies lobby against helpful incentives or benefit from the uneven playing field, that’s a major disadvantage to companies who are further down the road.

Governments don’t appear to understand this. The rise tide must lift most boats, and regulation, enforcement and fines will pick up the rest. If that doesn’t happen, aggressive lobbying by powerful minority forces will slow down progress and create disadvantage.

Clearly mandatory carbon reporting is coming. That’s a given.

Mandatory sustainability reporting is a trickier beast to argue for. But after ten years of arguing against that, governments have let us down on sustainability to the point where I am wondering if it’s the only lighter-touch regulatory approach that might encourage the laggards to raise their game.

It’s a tough argument to make: Compliance never breeds innovation. But if a decade of exhortation fails, where do we go next?

I argued in our policy recommendations to David Cameron three years ago that there are structured ways to exhort, encourage and cajole companies to improve their thinking on corporate responsibility. Now, some of what we suggested is being put, patchily, into action by the UK Government.

(Here’s a 3 minute audio clip of my colleague Peter Davis, talking about it)

I was never whole-heartedly convinced we had come up with enough solutions in our final report to the Conservatives that could deliver change.

I think it’s high time we re-opened the debate on what Governments can do beyond regulation (and using it), to encourage business outside the leadership groups to get up to speed.

Clearly it’s needed, as Paul and Eva’s analysis shows us above.

I suggested recently on the blog that there are a couple of other options too:

1) CEOs need to join forces and put more pressure on Governments. We need more public statements and even yes, campaigns by industry and business groups to push Governments onto more of a front foot on sustainability incentives and policy.

2) NGOs and campaigners need to turn their attention also to emerging market firms that are becoming increasingly global. No business is immune from bad publicity. I’m not suggesting Greenpeace stops pressuring Nestle, but I am saying WWF and others should focus just as much on newer global firms than on corporate donors or existing relationships. A whole new round of pressure is needed on emerging market companies, if nothing else to help them see the opportunities ahead in sustainable business.

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