Community Concern On Over-Positive Sustainability Reports

Investors, employees and community organisations are concerned by over-positive sustainability reports from Australian companies, according to new research presented at the Australian GRI Conference on Sustainability and Integrated Reporting in Melbourne.

The authors of the report, from the Australian Centre for Corporate Social Responsibility (ACCSR), say Australian companies should present more honestly their negative impacts on the economy, environment and society, as well as the positive ones.

Today’s new report analyses data collected from 16 research projects conducted by ACCSR between 2006 and 2011, relating to the way stakeholders perceive sustainability reports.

In total the researchers analysed the responses of 490 stakeholders. The researchers looked at differences in responses according to five distinct stakeholder groups, considering whether the report was the organisation’s first report or they were an experienced reporter, and by year, where sufficient data was available.

Results suggest that a quarter of stakeholders felt ‘anger, anxiety or concern’ when reading a sustainability report, rising to 32 percent of stakeholders when talking about experienced reporters. Most of the reasons given relate to lack of transparency and balance, the lack of targets, and the lack of focus on material issues of the organisation.

Stakeholders provided descriptions such as ‘adventurous statements’ and ‘half-truths’ when talking about the lack of balance in reports.

“A lack of trust in the content is hindering stakeholders from using sustainability reports to understand sustainability performance,” explained Dr Leeora Black, Managing Director of the Australian Centre for Corporate Social Responsibility and one of the authors of the report.

“Readers want balance and transparency, as well as accuracy and relevance, because it builds their trust in the report – and in the organisation. One of the aims of this research is to help sustainability reporters understand better what causes their stakeholders concern, ultimately helping them improve the effectiveness of their reports.”

The new research report, The state of CSR in Australia: Stakeholders as readers of sustainability reports, also reveals that companies experience the biggest boost in reputation following their first sustainability report, but the added reputation benefit fades over time.

The authors say this could be due to an increase in reader awareness and expectation of a company following initial performance disclosure.

“It is vital that Australian companies engage their stakeholders in the reporting process, and provide them with a balanced and honest view of the company’s performance,” added Dr Black. “We hope the results of this research will help sustainability reporters to produce the most well targeted, engaging and material reports possible.”

The research is being presented at the Australian GRI Conference on Sustainability and Integrated Reporting in Melbourne. The Conference, organised by the Global Reporting Initiative with support from the Australian government, aims to bridge the divide between organisations in Australia and the Asia Pacific region, and international developments in integrated reporting.

Lena Geraghty, Network Manager at GRI’s Focal Point Australia, said: “Today’s report reveals what stakeholders think about the way Australian companies disclose their sustainability performance, and provides some great evidence that companies should take on board. It is very important that reports reflect the negative and positive aspects of a company’s performance; GRI’s guidance can help make a balanced, representative and relevant report.

Alex Malley, CEO, CPA Australia concludes: “Business leaders that don’t encourage reporting on sustainability performance in an honest and transparent manner are doing themselves and the community a major disservice.

The new report is available to download free at www.accsr.com.au