Perceptions about the role of the corporation in society are changing. With corporations being held increasingly accountable for their impact on the environment and the communities in which they operate, a blinkered approach to bottom-line business performance is no longer an option.

Among the many things highlighted by the global economic events of the past two years has been the inherent difficulty in capturing and measuring true business and organisational performance. The increased global interdependence and volatility witnessed in financial and economic markets have made it patently clear that risk and worth can no longer be captured and measured solely using financial reporting.

The wider adoption of sustainability reporting, in particular, is crucial to increasing transparency and improving market confidence, which is why CPA Australia strongly supports the research that has been undertaken for the People.Productivity.Planet. report.

As an organisation that emphasises the virtues and business benefits of non-financial reporting, it is incumbent on us to walk the talk. The production of our sustainability report is the most tangible example of how we are doing this. Last year we became the first accounting body to have a sustainability report independently assured and checked by the Global Reporting Initiative, and we are currently putting the finishing touches on our second sustainability report.

The sustainability report: the end that justifies the means

The process of developing these reports, and indeed the journey that enabled us to produce them, has emphasised just how crucial they are in delivering a clearer and more comprehensive picture of organisational performance. It involved a massive exercise in self-examination – not always a comfortable endeavour if you do it properly.

As an organisation, our path to producing comprehensive sustainability reports has involved going back to the basics and closely examining what CPA Australia does. It sounds simple, but in the hurly burly of a large corporate environment, such self-examination can easily be mistaken for self-indulgent navel gazing: something to be sacrificed for more pressing day-to-day business demands. However, if we were to be serious about developing a product that would stand up to the most stringent scrutiny, this was absolutely necessary.

What we saw first-hand through all of this is how the process of developing a comprehensive and rigorous sustainability report actually drove organisational performance. It stands to reason that greater rigour, transparency, and the inclusion and measure of a broader range of information will positively influence performance. The information provided by sustainability reports can help organisations make better and more informed decisions about how they operate, manage risks and identify opportunities for further improvement.

Overcoming the barriers to uptake of sustainability reporting

Broader uptake of sustainability reporting will require leadership. The People.Productivity.Planet report and CPA Australia’s own research show that there are a number of obstacles – real and perceived – that hamper the uptake of sustainability reporting.

We undertook research in September 2009 that investigated the use and awareness of sustainability reporting with senior executives based in Australia, New Zealand, Greater China, Singapore and Malaysia, complemented by a survey of members in those countries. The results showed, among other things, that sustainability reporting and knowledge varies greatly between employers, members and countries.

Foremost among the obstacles to uptake of sustainability reporting is that many fail to see the immediate link between reporting of sustainability performance and overall organisational performance. Worse, there remains the perception among some that a focus on sustainability issues could in fact detract from overall performance. The global economic upheaval of the past two years has led to a focus on more immediate measures aimed at bringing about stability. However, the recent economic upheaval should in no way deter governments, business, industry and the wider international community from improving sustainability practices and developing a capacity to disclose their sustainability performance.

Another impediment to the uptake of sustainability reporting is a perception that such reporting may be suspect in quality. This is why greater awareness and understanding of international non-financial reporting frameworks such as the Global Reporting Initiative must be a priority.

Leading from the front

Transparency, rigour, management of risk and good governance must be front and centre as political and business leaders chart a course beyond the global downturn. The recent economic events should serve as an adequate motivator for the consolidation of sustainability reporting as a key plank for capturing organisational performance.

It is encouraging to see that the federal government’s intergenerational report features a section on environmental sustainability. It is in this area that governments must show leadership by laying the groundwork that will encourage uptake of sustainability reporting. Critically, businesses need incentive rather than threat.

Nonetheless, business leaders must be proactive in advocating the benefits of sustainability reporting – for their own good, and the greater good.

Download the People.Productivity.Planet report here.

Alex Malley is chief executive officer of CPA Australia. He is passionate and influential on issues that matter globally to the accounting profession, business and the government sector.

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