Trends in Sustainability Reporting: More Transparent and Transportable

By Keith Littlejohns & Tim Woodall
Strategists, Sustainability Communications

From now through fall, a flurry of sustainability reports will be hitting our inboxes, all taking different approaches to transparency and design. There are a number of trends we observed over the past year that will have implications for sustainability reporting in 2014, such as more detailed materiality analysis, deeper stakeholder engagement and a growing number of integrated reports.

We’re now tracking three of these emerging trends: increasing disclosure and metrics on supply chains, making online reports more tablet-friendly, and the strategic use of social media in content creation and promotion.

In 2013, tragedies such as the Rana Plaza apparel factory collapse in Bangladesh and scandals such as the horsemeat debacle in Europe led to an unprecedented consumer interest in companies’ supply chains. This was amplified by activist campaigns such as Greenpeace’s Detox campaign.

While increased disclosure may not prevent such supply chain disasters, companies that publicly audit and improve the practices of their suppliers can generate meaningful improvements. Although firms may not have control over entities that produce parts of their product lines, it may not matter in the court of public opinion; just ask Gap, Kmart or The Walt Disney Company who were blamed when things went wrong.

For companies looking to take a comprehensive approach to supply chain transparency, best practices include such disclosures as:

• Providing names and addresses of suppliers (Adidas)
• Requiring suppliers to abide by a code of conduct (Dell)
• Employing verifiable production systems to confirm the sustainability of its suppliers (McDonalds)
• Auditing results on a range of topics (Timberland)
• Partnering on joint collaboration projects (Unilever)
• Reporting Scope 3 greenhouse gas emissions other than business travel (Kraft Foods)
• Sharing anonymous supply chain scorecard data with suppliers (Target)

So why are companies disclosing more? Essentially, they are protecting their brands. Companies are encouraged to disclose greater details about their supply chain impacts in the new G4 guidelines. The level of disclosure will likely increase in the future, as companies begin to see sustainability in the supply chain as a tool they can use to increase reputational value and strengthen brand loyalty.

If companies are being transparent about the materials that go into their products, they also need to acknowledge the footprint of producing those inputs. In the Kraft example above, the company found that third party suppliers account for up to 90 percent of its GHG emissions. This is a critically important discovery, and highlights that as comprehensive as some reporters claim to be, nearly all sustainability reports are only just beginning to touch the edge of reporting boundaries we will be drawing 10-15 years from now.

It will pay dividends to get a head start.

To see all three trends, read the full article at: http://www.addison.com/blog/more-transparent-and-transportable/#sthash.TwdKLkp8.dpuf