Sustainably relevant

Adopting sustainable management practices and triple bottom line reporting standards are catching on, according to Waikato Management School Dean Professor Mike Pratt.
He told research seminar at the University of Waikato recently that in Sweden, Canada, the Netherlands and France sustainability disclosure is “already regulated to some extent” and the list of countries signing up to the approach is growing.
“Soon industry-specific sustainability reporting standards such as the Global Reporting Initiative [GRI] and the revised AccountAbility framework [AA1000S] may be the benchmark for business,” he said.
The New Zealand Institute of Chartered Accountants recently made tentative moves to widen reporting and auditing standards to encompass sustainability reporting. Pratt thinks some organisations will choose to go for one of the environmental ISO accreditations, while for most others triple bottom line reporting will serve as an appropriate process for assessing and improving sustainability.
It was common misconception that sustainability “is too vague concept to be measured in common task assessments”, said Pratt. “But many industries are now using practical tools along with their financial reporting to objectively gauge their sustainability performance.”
Companies like Shell New Zealand, Richmond, Fletcher Building, Sanford, DB Breweries and Transpower have all taken steps toward adopting sustainability reporting. The Ministry for the Environment said last year there were “about 40 to 50 organisations” already reporting or committed to reporting on triple bottom line basis over the next two years.
“Sustainability reporting also provides tool for maintaining accountability and transparency of company performance, and hence means of maintaining public legitimacy,” said Pratt.
He believes the greater acceptance of sustainable management policies will follow when directors and executives appreciate the importance of evidence from overseas, and now in New Zealand, that suggests great (shareholder) value can be derived from triple bottom line reporting.
“A recent study for Towers Perrin of 25 companies active in corporate engagement – that is excelling in relationships with investors, customers, employees, suppliers and communities – had outperformed the Standard & Poor’s 500 by more than double over the last 15 years,” he added.
“Other research has shown that visionary companies with goals which extend beyond maximising profit were more profitable than their peers. So called ‘Built to Last’ companies had 10 percent higher return on equity than others over 10-year period.”
Pratt offered three central conclusions from the evidence that now existed in research around sustainable business practices.
* Sustainability is about better quality of life for all – including generations to come;
* Sustainability is too important an issue to be swept aside or ignored. For early adopters, it is source of competitive advantage and enduring success in fast-changing world;
* Regardless of the (type of) business, sustainability is relevant to the enterprise or endeavour. Sustainability has emerged as the international benchmark for business citizenship.