By: Michael Kraten, PhD, CPA
One of the primary presumptions of the sustainability reporting movement is that data transparency will empower consumer choice. In other words, if rival companies publish comparable and reliable data on their web sites, consumers will use that data to identify vendors that reflect their values.
That does not mean, of course, that consumers will always “buy first” from vendors that share their priorities. Buyers may decide that price, quality, convenience, and other factors should impact their purchase decisions. However, the sustainability reporting movement presumes that a significant amount of purchasing capital will flow to supportive companies. It also presumes that this capital flow will influence corporate behavior.
It does not take much time to download publicly available corporate sustainability reports and review such data. If you wish to do so, here are some suggestions to keep in mind.
Much sustainability information is published on beautifully formatted web pages. Feel free to review it, but companies usually publish the most credible data in static PDF documents with titles like Annual ESG Report, Business Sustainability Report, and Corporate Responsibility Report.
These PDF reports are similar in appearance to traditional annual financial reports, given that their metrics complement the data in financial reports. For that reason, sustainability reports are often posted in the Investor sections of the web sites of publicly traded companies.
Furthermore, when you open these PDF documents, look towards the final pages of the reports for data tables that are filled with sustainability metrics. Although you’re welcome to review the visually attractive text and charts on the earlier pages, please keep in mind that rows and columns of hard data are much harder to “greenwash” than picturesque words and images.
In addition, the data tables should contain information that has been prepared and reported in accordance with the selected terms and definitions of credible, reputable nonprofit standard setting organizations. Look for references to organizations like the Global Reporting Initiative (GRI), Sustainability Accounting Standards Board (SASB), United Nations Sustainable Development Goals (UN SDGs), Climate Disclosure Standards Board (CDSB) and Task Force for Climate-related Financial Disclosures (TCFD) as promulgators of such standards. Then review the specific measurements that have been chosen for publication and ask yourself: “Are these choices consistent with my own values? Would I have asked the organizations to select these measurements from the full array that are published by the GRI, SASB, etc.?”
Most of the time, when you decide where to spend your money, you choose between organizations that compete for your business. Even if the sustainability reports of those competitors are not directly comparable to each other, you should consider your own values and then compare the data in each report to what you would have preferred the organizations to measure. Often, when you take this approach, you will be pleasantly surprised at your own ability to identify the vendors that come closest to sharing your preferences.
That is why you should read corporate sustainability reports. Why not try it? When you purchase products and services, you may as well invest your capital in organizations that serve your priorities and produce the data reports that prove it.
An earlier version was published at michaelkraten.blogspot.com. All rights reserved by author.