This is the first of a 5 part series on state of sustainability in the corporate world today....
Is sustainability reporting the ultimate greenwash?
If 95% of "green" product claims in the US are false, what about "green" company claims?
These claims are put forth in CSR/Sustainability reports. If the claims these companies make for products are basically all bs, than what about the claims they make about themselves, are they credible?
Wait a minute you say, there are safeguards: standards, assurance, NGO watchdogs...surely people don't just make stuff up and get away with it? The challenge is not what is said, it is what is left unsaid.
Though some reports are known for their honestly, such as BASF a couple years ago, that highlighted worker fatalities, most reports glaze over ugly bottom side of their business model or their strategy.
Part of it is the inherent tension between short term profitability and sustainability. Sustainability is a long term play, being a good corporate citizen builds goodwill, brand loyalty. Short term profits yield bigger bonuses and higher salaries to management.
Standards such as GRI provide only a clue as to the breadth of a report, not the depth. Also, if the GRI rating happens to be verified, it lacks the rigor of a financial audit. It is like the difference criminal burden of proof - beyond a reasonable doubt, and civil -a preponderance of evidence. 3rd parties assure that there is not reason to believe it is untrue, not that it is true. And besides, even in the case of financial audits, there is a lack of true policing. Enron, Bear Stearns both came up roses before their collapse, but that is a discussion for part 2 - Integrated reporting...does it really matter?
Reporting Standards are flat, uniform, real issues are thorny. Every company has theirs, but do they talk about them or do they obfuscate? From my observation, there is a simple rule, if an issue is a big one and there is lots of negative press, they will take it head on. if it is big, but not as negatively treated, the more opaque the treatment and the greater the emphasis on other things.
I will take a major beverage company with a gorgeous sustainability report as an example. The whole theme now is around positive living. A lot of good stuff about water conservation (water use a big issue in the past for them), energy saving/climate change, but not too much on the elephant in the room - "diabetes". In fact, it speaks to "beverage benefits" and even quotes the American Diabetes Association (the only mention of diabetes in the report) but only in terms of an artificial sweetener.
So what's the big deal? Well, a few facts may help - 8.3% of the US has diabetes with 79million considered "pre-diabetes". 11% of population under 20 is diagnosed with diabetes. Worldwide the numbers grow even more staggering.
A 2006 peer reviewed study showed that women drinking 1 or 2 soft drinks a day( less than the average consumption) doubled their risk of diabetes. Furthermore, there was a "remarkable difference" in results from industry-funded and non-industry-funded studies on soft drink consumption and health outcomes, with the industry-funded studies much more likely to find the results favorable to industry, according to one of the leading experts at Yale University.
Industry favorable studies are just half of a two -pronged approach of denial and change the subject.
So what do we change it too? Sustainability!
Created by the well intentioned do-gooders based on science and compassion to help save civilization, sustainability/CSR organizations are now being becoming something quite different. Perhaps that maybe why the some companies in recent days make their CMO their new CSO. So in come the glizty websites and detailed disclosures, meeting the standards to get the good grades, but not addressing the thorniest issues.
In the end though, can we blame a company for protecting shareholder value when that is in fact their duty?
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