Every box of Timberland shoes has a label that resembles the “Nutrition Facts” label found on food and beverage products. Called “Our Footprint,” this label gives consumers detailed information on the environmental and community impact of the product. Items such as manufacturing factory locations, climate impact, chemical uses and resource consumption are all tracked, calculated and provided to help consumers make informed decisions with greater product transparency.
Patagonia also strives to provide consumers with information transparency. The company’s interactive reporting website, called the Footprint Chronicles, gives detailed reports on the environmental impact of the processes used to manufacture its products including energy consumption, CO2 emissions, waste generation and water use. Both of these companies provide remarkable examples of how providing transparency into environmental practices can positively influence consumer and investor behavior.
What is Sustainability Reporting?
While definitions vary, the process of connecting and communicating both corporate financial performance and corporate environmental, social and governance (ESG) behavior is generally known as “sustainability reporting.” Sustainability reporting uses concrete data to promote the value and benefits of green initiatives and influence consumer behavior. However, the majority of companies lack the technology or knowledge needed to access sustainable information. In fact, according to an international survey by Corporate Responsibility Magazine, nearly 70% of companies surveyed admitted they couldn’t measure the impact of their "green" initiatives.
Although sustainability reports provide invaluable company metrics, producing them can take an extreme amount of effort. Data from across multiple supply chains, and often from multiple countries, must continually be gathered, monitored and analyzed. Ideally, the information should also be cross-referenced and compared against data of other companies.
Is it Worth the Effort?
A business’ environmental footprint is more relevant today than ever before. As the Gulf of Mexico deals with the ongoing impact of a major oil leak and the burgeoning effects of global warming are almost universally acknowledged, pressure to “do the right thing” is prompting businesses of all sizes to reduce and measure their environmental impacts. According to data published by CorporateRegister.com, an estimated 4,000 Corporate Responsibility (CR) reports will be published in 2010, with 20% coming from first-time CR reporters. Fortunately, technology advancements are making it is easier to assemble the financial and non-financial data necessary to create these types of reports. So, is it worth the effort it takes to report on environment initiatives? The answer is definitely yes – and it’s getting easier to accomplish.
New Reporting Standards
One such CR advancement is the global effort to create sustainability report standards based on eXtensible Business Reporting Language (XBRL). XBRL allows users to tag individual units of data so they can easily read by automated computer systems. When companies follow agreed upon guidelines or standards to tag their data, any interested party can easily share, analyze and use the information for making decisions. Currently, the most widely used taxonomy framework for sustainability reporting has been developed by the Global Reporting Initiative (GRI). The GRI is committed to continuous improvement and global adoption of sustainability reporting at a country-level and at the United Nations.
Many people believe the world is at a critical crossroad. Should companies continue to conduct business as usual with little thought to the environment, the effects will be catastrophic. Yet, there is an opportunity to forge a new path. For those who desire change, the technology and processes are in place to make a difference. While sustainability reporting is not yet a U.S. legal mandate, thousands of businesses have shown it’s possible to combine environmental responsibility with successful business practices. With effective use of existing and emerging technology, companies of all sizes can offer stakeholders transparency into their daily environmental initiatives, proving the integrity and success of the organization on all levels – not just financial.
About the author
Patrick Quinlan is chief executive officer for Rivet Software, the pioneer in standards-based business reporting and analytics, serving more Fortune 500 companies than any other XBRL technology company and helping transform business communications worldwide. For more information on Rivet, please visit www.rivetsoftware.com