GRI Conference - 27 May - Kolk- Sustainability Reporting Panel
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Transcript of GRI Conference - 27 May - Kolk- Sustainability Reporting Panel
Sustainability reporting:Trends and trajectories
Prof.dr. Ans Kolk
16 June 2010 1
Sustainability reporting trends
� Development over time
� 1970s: social reporting
� 1980s: decline
� 1990s: environmental reporting
16 June 2010 Dit is de titel van deze presentatie · 2
� 1990s: environmental reporting
� 2000 onwards: broadening towards reporting on sustainability and corporate social responsibility/citizenship/sustainable development
� Formats have become more diverse (also in annual reports, web-based)
� Topics have evolved, e.g. increasing attention to corporate governance, climate change (also separate carbon disclosure)
� More standardisation though still variety
� Verification has taken off
What we know – and what not…
� We know things about trends, but usually based on lists of largest companies (nationally or globally) � composition changes over time, different sets
� We know things about drivers but based on cross-sectional research �no insight in dynamics (‘deterministic responses to pressures’)
16 June 2010 Dit is de titel van deze presentatie · 3
no insight in dynamics (‘deterministic responses to pressures’)
� Hence, no insight into
� patterns at the level of the firm, and its strategies over time
� How companies respond to others, for example those that are perceived to be leaders (‘simply imitating others’)
� Therefore, this research examined reporting by a panel of Global 250 firms (n=213), over a period of a decade � considered in their sector-specific settings to explore dynamics
Reasons for reporting
� Enhanced ability to track progress against specific targets
� Facilitates implementation of sustainability strategy
� Greater awareness of sustainability issues throughout the organization
� Better conveyance of corporate message internally and externally
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� Better conveyance of corporate message internally and externally
� Improved all-round credibility from great transparency
� Ability to communicate efforts and standards
� Licence to operate and campaign
� Reputational benefits, cost savings identification, increased efficiency, enhanced business opportunities & staff morale
Hence, consideration of stakeholder pressure (legitimacy/impression management), weighing costs and benefits, larger firms more likely to report, as do those from ‘sensitive’ sectors (pollution, peer pressure)
Reasons for not reporting
� Doubt about the advantages to the organisation
� Competitors are not publishing reports
� Customers (and public) not interested; will not increase sales
� Firm already has a good reputation on sustainability
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� Firm already has a good reputation on sustainability
� Many other ways of communicating about sustainability
� Too expensive
� Difficult to gather consistent data from all operations and select correct indicators
� Could damage reputation of the firm, have legal implications or wake up ‘sleeping dogs’
Recent study showed that ‘competition’ and ‘implementation’ scored highest (reputational aspects were considered least important)
Panel of 213 large firms: trends in a decade
� Significant increase in reporting: from 39% in 1999 to 69%
� Clear growth of verification: from 9% in 1999 to 38%
� No sustainability reports in 1999, mostly environmental (and health and safety), this has completely changed
� Most polluting traditionally most active; European and Japanese firms
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� Most polluting traditionally most active; European and Japanese firms report more than average, US and South Korean firms less
� Reporting trajectories at the firm-level:
� Consistent reporters (32%): leaders, early in having reports verified
� Late adopters (16%): Japanese firms overrepresented
� Laggards (19%): banks/insurance overrepresented, and French
� Consistent non-reporters (24%): hardly European firms, more US
� Inconsistent reporters (8%): never had reports verified, many US
Sector dynamics, considering firm patterns
� In global industries with relatively small number of large firms, competitors closely watch one another, and ‘follow the leader’
� Reporting common in automotive, but verification not until recently
� In oil & gas, reporting and verification is rather common; the latter
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� In oil & gas, reporting and verification is rather common; the latter particularly for European firms in the beginning
� Utilities are less internationalised, but reporting common by 2002, verification not (again except for Europan firms)
� Chemicals and pharmaceuticals very early, already before 1998; verification by European firms, not by US firms
� In electronics/computers, reporting is prevalent, late adopters from Asia
� In banking, reporting took off relatively late (large number of late adopters), some NL/UK banks adopted verification later than reporting
Some conclusions
� Different dynamics in the various sectors, in some reporting more or less established, incidentally before 1998, in other more emergent still
� Influence of country of origin:
� many sectors show one or more European frontrunners, particularly
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� many sectors show one or more European frontrunners, particularly when it comes to adopting verification at relatively early stage
� In some sectors US firms follow later, but almost never verify reports
� Noteworthy is that one quarter consistently did not report, so disadvantages even for those highly visible firms, with peers already being active in reporting
� Implementation and complexity may play a role
� Fear of litigation, competitive sensitivity
� ‘Cycle’ of rising expectations
Some recent publications
� Kolk, A. (2008). Sustainability, accountability and corporate governance: Exploring multinationals reporting practices. Business Strategy and the Environment, 17(1), 1-15.
� Kolk, A. (2010). Trajectories of sustainability reporting by MNCs. Journal of World Business, 45(4), forthcoming.
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Journal of World Business, 45(4), forthcoming.
� Kolk, A., Levy, D. & Pinkse, J. (2008). Corporate responses in an emerging climate regime: The institutionalization and commensuration of carbon disclosure. European Accounting Review, 17(4), 719-745.
� Kolk, A. & Perego, P. (2010). Determinants of the adoption of sustainability assurance statements: An international investigation. Business Strategy and the Environment, 19(3), 182-198.
� Kolk, A. & Pinkse, J. (2010). The integration of corporate governance in corporate social responsibility disclosures. Corporate Social Responsibility and Environmental Management, 17(1), 15-26.