The research

• Scope: A national survey of more than 10,000 leaders and employees of Australian businesses
• Aim: To identify the stimulus for and obstacles against businesses engaging in sustainability reporting

Sustainability reporting is poised to take off

The strongest message emerging from the study is the huge latent potential in sustainability reporting in Australia – the will is there, but a substantial proportion of organisations are yet to find the way.

Around a third (35%) of leaders responding to the survey say their organisation currently produces sustainability reports. Of those, over half (54%) have been producing reports for less than three years. But latent potential is acutely demonstrated by the findings that 20% of leaders whose organisation is not reporting on sustainability say it is only a matter of time before they start, and 73% of leaders say they would personally like to see their organisation making a commitment to sustainability reporting.

What it tells us is that the business community is at a stage where it needs a lot of support and encouragement. This goes for organisations that have recently commenced sustainability reporting as they navigate the difficult early years, through to those that have the desire to undertake reporting but, for whatever reason, have not yet taken the plunge. The resources are out there, but the process of determining best practice can be bewildering.

Supply chain and other business community pressures will make reporting relevant to all

Three-quarters of respondents (74%) say that a major benefit of committing formally to sustainability is ‘reputation management’ – to many this may evoke cynical attitudes of ‘greenwashing’, but what we believe it says is that in order to operate a business in the current climate, organisations need to tackle sustainability issues. It indicates that sustainability is a business imperative, and a range of further findings support this.

Firstly, almost half (44%) of respondents believe the benefits of sustainability reporting outweigh the costs, and a similar proportion (47%) believe that in five years’ time the majority of businesses will be producing sustainability reports.

Secondly, as more organisations commence sustainability reporting, a larger number of others will be affected. For example, we found that 57% of leaders from reporting organisations would give preference to suppliers who can demonstrate their commitment to sustainability, and no less than 80% of leaders in reporting organisations agree it is likely that their organisation will require suppliers to meet certain sustainability standards in the future.

So although 42% of leaders say they are not doing sustainability reporting because they don’t feel it is relevant to their organisation, these reputational and supply chain pressures will inevitably affect most organisations – to say you ‘are too small’, ‘have no significant environmental impact’ or ‘are a not-for-profit organisation’ is unlikely to cut it.

There is a strong message here for associations. While they typically have not been among the first to engage with sustainability reporting, respondents believe there is a significant role for them in showing leadership in sustainability – 68% of respondents say that professional associations and industry bodies need to actively encourage members to engage in sustainability reporting.

Sustainability reporting is good for employees

Many people unfamiliar with sustainability reporting are unaware that ‘labour standards’ can play a huge role in sustainability initiatives. Over half (53%) of employees in reporting organisations believe their workplace is healthier and more productive as a result, and the overwhelming majority (70%) of employees in non-reporting organisations say they would feel they were promoting a healthier and more productive workplace if their organisation made a commitment to sustainability.

And if external reputation management is important, we must not forget internal reputation management: 54% of employees say that as a result of their organisation tackling sustainability issues, they feel more proud of their organisation.

And these results have not yet been controlled for employees’ perceptions of their organisation’s success at embedding sustainability initiatives – the reported proportions could climb dramatically if we looked exclusively at those organisations that were successfully doing sustainability reporting. This is something that we will be looking at in further analysis of the data.

Sustainability is also likely to be a strong driver of staff attraction; 41% of employees in reporting organisations say that if they changed jobs they would not want to work somewhere that does not tackle sustainability issues.

What next?

Business leaders should be reassured that they don’t have to achieve everything in the first year of their reporting: best practice is first to understand your business’s impact on your environment, then to take small steps towards improvement.

For those thinking about taking the plunge, a useful resource is the Good Business Register. The website is managed by St James Ethics Centre, the hub for the GRI and United Nations Global Compact in Australia. Their resources are essential reading for anyone interested in best-practice sustainability reporting.

How can we keep this momentum going? And how can we all take the next step towards embedding sustainability reporting in our business community culture? How can we make measuring and monitoring sustainability initiatives cheaper and easier, to ease the burden on organisations?

Download the People.Productivity.Planet report here.

Dr Rebecca Sheils is Director of Research at Beaton. She has a strong interest in sustainability as a driver of long-term profitability and the necessity of measuring and managing sustainability initiatives to ensure business success.

If you were to position your organisation on a sliding scale of ‘acting with corporate responsibility’, where would it sit? It’s a question to which you might well respond: ‘How can you give scale to corporate responsibility?’

Which is precisely the issue. In the corporate world, anything that can’t be measured, quantified and ultimately linked back to a competitive advantage is ignored. Such is the cold, hard reality of free markets.

That being said, most organisations will strive to act responsibly. We all (presumably) have a personal moral code that is embodied in our work. But can acting responsibly with respect to the environment, the community or each other be linked back to how well an organisation fares in the market? Are there organisational benefits beyond the warm and fuzzy feeling associated with taking the moral high ground?

According to some recent evidence, yes there are. Researchers at Ipsos MORI make a business case for engaging in sustainable business practices – for the sake of one of an organisation’s most important stakeholder groups: its employees.

Their 2004 study explored the role corporate responsibility plays in employee engagement. It described employee engagement as being a composite of:

1. Employer advocacy – the degree to which an employee sings the praises of their organisation
2. Commitment – an employee’s intention to stay with the organisation in years to come; and
3. Motivation – how invested an employee is in the success of the organisation.

The study collated the responses of 2,518 working adults within the UK. The vast majority of respondents (86%) felt that it was important that their employer act responsibly with respect to society and the environment.

Of those who felt their employer was adequately addressing environmental and sustainability concerns, three quarters (75%) were advocates for their organisation, stating they would recommend their employer to a friend or family member. This compared to just under half (43%) of those respondents who thought their organisation was not paying enough attention to the environment.

When it came to commitment to staying with an organisation, similar numbers were seen. Again, three quarters (75%) of those who felt their employer was adequately addressing environmental concerns were highly committed to their present job. This compared to 49% of those who felt their organisation was not addressing these issues.

Employers’ actions with regard to the environment appeared to have an even greater effect on the motivation of employees. When asked whether their motivation was increasing, remaining stable or decreasing, 23% of individuals who felt their employer was environmentally savvy said their motivation was increasing. Of those in the opposing group, only 8% cited their level of motivation as increasing. Conversely, 42% of those who said their employer was environmentally inept stated their motivation was decreasing, compared with only 16% in the opposing group.

While this was only preliminary research, the IPSOS study shows that as environmental responsibility is added to our collective moral checklist, we begin to demand it in all aspects of our life. Since we spend an average 260 days a year at work, it only makes sense that general sentiment regarding environmental awareness spills over into the workplace.

We look forward to having similar – and even more broad-reaching – data in Australia in the coming months, with the publication of the joint Beaton, WellmarkPerspexa and Nossal Institute study on business sustainability. In the meantime, you may like to start asking your employees where they stand on your organisation’s CSR agenda.

Dr Rebecca Sheils is Director of Research at Beaton, a research and consulting firm that has worked with some of the world’s largest and most prestigious knowledge-intensive organisations.