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Are you Taking Business Risk by Keeping Quiet on Sustainability/CSR?

So How Does Sustainability/CSR Reporting Involve Risk?

It begins by aligning these issues with business strategy and determining the company’s risk appetite.  This is a critical skill for corporate boards that have oversight of risk management.

KPMG defines risk appetite as:

How much risk a board is willing to take in pursuit of its strategic objectives?

As Mike Wallace recently posted on Linked in: Business is seeing there is a growing demand for corporate disclosure on sustainability.

He states “The materiality of carbon is evident, especially in certain industries, and as we see more companies put this information in their financials it sets precedent and expectations.”

Are these issues reported in your 10K under risk factors?  If so, what information is being shared with your shareholders on your risk appetite for sustainability/CSR?  Are you making it a competitive advantage like GE and Walmart?  Or are you keeping it on the low down until you are mandated by regulatory requirements?

Shareholders and regulatory agencies are seeking greater transparency on these issues. Mike identifies broader sustainability issues (i.e., water, waste, energy, toxics, etc.) that are being increasingly disclosed by companies of all sizes. Here are some recent studies that he quotes:

- According to KPMG’s International Survey of Corporate Responsibility Reporting 2008 – 61% of the N100 (the 100 biggest companies in the USA) have a publicly available corporate responsibility strategy http://www.kpmg.com/SiteCollectionDocuments/International-corporate-responsibility-survey-2008_v2.pdf

Risk: If you are the 39% not reporting – have you considered how  your competition see reporting fitting into their business strategy – cost reductions from lower resource costs, attracting new socially conscious customers, etc. ?

According to GRI’s data, the United States accounts for 10% of all GRI reports published in 2008, which makes the USA the second largest reporting country behind Spain. For 2008, GRI registered 109 reports from the United States  http://www.globalreporting.org/GRIReports/GRIReportsList/

So if you choose not to report are you taking a risk that your strategy will be impacted by competitors that are re-branding themselves as good corporate citizens in your marketplace? Do keep an eye on your competitors – it will keep your business strategy relevant to these uncertain times.

I want to thank Mike Wallace for inspiring me to post this topic.  Mike is Director of Sustainability Reporting Framework at Global Reporting Initiative (GRI).

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