More frequent and intense natural disasters have probably facilitated greater responsiveness to effects of climate change, even as awareness of environment protection became a global issue back during the 1972 Stockholm conference. Sustainable development has since been part of the main agenda of all nations. It has moved from a concern purely of the environment to one that incorporates social injustice; thus, the emergence of theories on inclusive development.
As economic drivers in society, business organizations are called upon to support global initiatives for a desired future that respects the rights of the current and future generations. The United Nations Global Compact has encouraged its 8,000 corporate signatories to commit, assess, define, implement, measure and communicate sustainable development initiatives on a spiral progression. Communication is done through sustainability reporting.
In the early 1990s, the triple-bottom line framework was introduced as a way for businesses to report on their economic, environmental and social performance. This led to the practice of non-financial reporting, which refers to the voluntary internal and external disclosure of an organization’s performance with respect to environmental and social dimensions.
As more organizations voluntarily disclose non-financial information and subject themselves to reporting standards such as those crafted by the Global Reporting Initiative (GRI), International Organization of Standards, Dow Jones and the Social Accountability International, to name a few, the less is the need to regulate such organizations. One should caution, however, against superficial compliance that results in being given “grades” on the basis of quantity of indicators met rather than the quality of compliance. While this can be countered by undergoing third-party verification from those who clearly do not have conflicts of interest, there are those who suggest that government should take a more proactive role in requiring sustainability reporting. These reports, therefore, must be read by individuals, groups or institutions that can monitor improvements in organization performance.
Triple-bottom line reporting has been driven by regulatory compliance, competitive forces, reputation factors and stakeholders’ expectations of public disclosure, owing in part to greater consciousness for green products, services and processes. Moving through several phases, corporations can start out by taking a wait-and-see stance, eventually complying because of stakeholder pressures, slowly incorporating social issues into management decisions, building systems around stakeholder expectations and finally graduating into full integration. It is in the final stage where organizations transform into sustainable organizations.
As organizations move from one phase to another, they overcome difficulties in measuring the social dimension with respect to cost and impact. If an organization uses the same measures over the years, however, then it can gauge its level of performance. Clearly, such measures cannot be compared against those of other organizations that may have their own metrics.
Another concern is the tendency to report on three separate dimensions as against integrating the three. Indeed, this can be expected from organizations beginning the process of sustainability reporting. Arguably, as an organization transforms and imbibes sustainability principles in its decision-making, then the three dimensions become interrelated. Whether performance in all three dimensions should be expressed in monetary terms is another issue that would have to be resolved.
Evidently, the trend of sustainability reporting requires skills that universities had not prepared for. Sustainability offices are just beginning to emerge and thus the demand for more qualified staff is on the rise. The accounting profession is seen as one discipline that can contribute best to sustainability reporting because of its inherent understanding of costs. Additional skill is needed to measure impact, one that economists are trained to do. Consequently, a revised accounting curriculum is required. Beyond accountancy, surely a business curriculum that is strong on sustainability is timely.
Dr. Santiago is a Full Professor at the Management and Organization Department of De La Salle University. She teaches Corporate Social Responsiveness, Sustainable Organizations, Leadership in Organization, Family Business Management, Human Resource Management and Finance in Education. E-mail: email@example.com