2006 Winners of the Ceres-ACCA Reporting Awards

By Ken Stier

Canadian firms were once again disproportionately well-represented among the companies submitting reports for this year’s North American Sustainability Reporting awards competition organized by Ceres. The annual awards program, which recognizes exemplary sustainability reporting by corporations and organizations throughout the United States, Canada and Mexico had a record number of submissions this year—102, an increase of more than 15 percent from the year before.

Among those submissions, Canadian firms accounted for roughly 40 percent. This reflects both the natural resource-based composition of much of the Canadian economy and a broader acceptance of reporting due to having been earlier targeted by more stringent regulations than most other sectors, explains Brooke Barton, Manager of Corporate Account­ability Programs for Ceres.

But since the awards are based on evaluating disclosure—not sustainability performance itself—other sectors are showing signs of catching up. An increasingly wide range of sectors were represented in this year’s 19 short-listed reports, according to Rachel Jackson, Head of Social and Envir­onmental Issues at the Association of Chartered Certified Accountants (ACCA), Ceres’ partner in the competition. Headquartered in London, the ACCA is the world’s largest accountancy body, and has been involved in evaluating and awarding reports in more than 20 countries.

Reflecting the premium put on the Global Reporting Initiative (GRI) guidelines, the evolving international standard, all of the short-listed reports referenced the GRI. An increasing number of the short-listed reports (approximately one-third) were also externally verified.

Highlighting best practices, the judges of the awards (14 experts in the area of sustainability and reporting) noted several with each of this year’s winners. The Vancity Group, the winner for best sustainability report, provided an innovative and convenient “dashboard of performance metrics” in several key categories and contained interviews with managers responsible for specific sets of issues. Governance was viewed as “a holistic accountability framework incorporating social, environmental and financial concerns,” according to a summary of the judges’ assessments.

Similarly, Bristol-Myers Squibb—trying to rebound from a $2.5 billion inventory overloading scandal, which led to a 2005 deferred prosecution agreement with U.S. prosecutors—produced a report with several unusual features that may set new standards. It is one of the first U.S. reports to apply the new GRI guidelines, known as G3 (and using an external assurance provider, received a B+ application level). The report clearly identified key material sustainability issues with long-term goals and targets. Its benchmarking disclosure appeared designed to drive internal performance, and it also displayed unusual transparency, by citing instances where its performance was exceeded by competitors. There is also strong discussion of management governance issues and itemized disclosure of political contributions.

Two companies—Mountain Equipment Co-op and Green Mountain Coffee Roasters—were honored as joint winners for best first-time sustainability reports. Green Mountain’s report followed GRI guidelines, a significant accomplishment for a first-time reporter, and offered an exceptional level of transparency, including wages and cost of living for direct employees and farmers in its supply chain. Mountain Equipment Co-op also displayed remarkable transparency, fully disclosing non-compliance in its supply chain. The report also contained a strong discussion of fair compensation by comparing minimum wages with CEO pay.

While the quality of reporting continues to improve, the judges said they would like to see companies offer a fuller contextualization of the challenges they face—including resource constraints, globalization and evolving climate change regulations—and how these are incorporated into the companies’ long-term strategies. The judges were also looking for more in-depth explanations of exactly how companies determine their material sustainability issues, particularly in light of the G3. This helps elucidate—both for the company and stakeholders—how well companies understand their overall sustainability challenge and lays the groundwork for creating well-defined targets, which still too few companies are setting for themselves.

Companies are getting better at “telling their story,” the judges agreed, but felt these accounts were often a little too rosy. That is where stakeholder engagement can inject a critical outside view, balancing companies’ understandable pride with broader public expectations. The better reports included both stakeholder feedback and discussion of how this feedback was incorporated into reporting and company practices.

Benchmarking against own goals was another fairly common trait among the reports; however, measuring against industry peers was less so, especially when being bested by others. Inn­ovative communications was another criterion, with Timberland’s multiple-channel approach deemed particularly noteworthy.

Judges felt there is still plenty of room for improvement on a range of other issues. Weyerhaeuser and Baxter were cited as being among the better discussants of climate change implications, but more companies should consult the new standard offered in the Global Framework on Climate Risk Disclosure, the judges noted. Product sustainability impacts are still being short-shrifted; Citibank’s increasing vigilance with how its money is being spent is an example of how this can be done. Statistics on workforce diversity should also be more fully reported, the judges said. While minimum wages are discussed, there is still far less attention to the more sensitive issue of top management compensation. There is gradually more discussion about management systems and governance, including integrating sustainability issues into board-level decision-making, but there is still much less disclosure on the so-called “influence agenda,” including companies’ participation in industry associations and other lobbying activities.

“We can expect some push-back on this,” says Ceres’ Barton, acknowledging this as an example of the moving goal posts in an expanding sustainability agenda. Another relatively new element: the expectation that companies report how they are contributing to the Millennium Development Goals, that is, how they are helping to solve global problems.

Ceres-ACCA Award Winners

Best Sustainability Report: Vancity Group of Companies

Runner-Up for Best Sustainability Report: Bristol-Myers Squibb Co.

Best First-Time Sustainability Reports: Green Mountain Coffee Roasters Inc., Mountain Equipment Co-op