During the summer season you may find yourself reflecting on the participation of the benchmarking and reporting activities that you’ve been engaged in, as did Harvard professor Robert Eccles in a blog post, mentioning the “burden of immaterial sustainability reporting”.
The main purpose of participating in rankings such as the DJSI is to compare your sustainability performance with peers in terms of sizeable listed companies within ánd outside your own industry. The upside of a strong performance is that your sustainability leadership will be demonstrated by a trustworthy third party and therefore acknowledged by a growing group of investors that are looking for high performing companies with a solid sustainability profile. Since investors are on the outlook for value creation, the majority of rankings lead to better informed investment decisions, as it enables investors to identify attractive investment opportunities that generate long-term value.
By trying to focus too much on standardised materialities which is advocated from an accountancy point of view, and centre the company’s sustainability approach around those (mostly risk mitigating) issues, the opportunities to create competitive advantage as the vital purpose of a winning sustainability approach will seized to be captured. And as a consequence you will be caught in the Reporting Trap.
Since the list of rating and ranking questionnaires that land on your desk is growing, you might be tempted to look through the accountants’ lens as well. It’s worth noting that rankings are still voluntary – there’s no legal requirement to participate to any of them. But how to determine which are the most relevant rankings in order to make an informed decision about allocating resources and making an effort to participate? The next four items may help you to choose your battles wisely:
While some rankings were designed to name and shame frontrunners and laggards in a top 100-list, others sometimes are not as visible – whether or not because of poor communication skills, or whether the business model relies on the results to be sold. Publications such as the RobecoSAM Sustainability Yearbook, which include full listings of leading companies and follow-ups for 59 industries, are particularly useful to demonstrate your company’s performance from an independent expert objective.
Are you looking for support on how to best rationalize your sustainability ranking and rating efforts? Please contact Josée van der Hoek, Founding Partner, for help or a second opinion, at +31 6 28 02 18 80 or josee@finchandbeak.com.
Image source: ECCC, Flickr
Experienced strategic issues management specialist with expertise in strategy development, ESG benchmarking, ESG Equity Stories and food. josee@finchandbeak.com
Finch & Beak
hello@finchandbeak.com
+31 6 28 02 18 80