Manual approaches to data-gathering exhaust resources and lead to lost business opportunities

By Holly Roland

Companies around the world are adopting sustainable business practices focused on improving global economic, social and environmental conditions, and they look to corporate sustainability reports—or corporate responsibility reports—to promote their positive brand with internal and external stakeholders.

A recent UC Berkeley Center for Responsible Business study cited three factors as significantly impacting consumer acceptance of sustainability initiatives. These are: the sustainability initiative’s fit, meaning similarities between corporate mission and social initiative; timing, whether proactive or reactive; and motivation, relating to whether the company wants to take a “purely social” position or a mixture of profit and social considerations.

Low-fit initiatives negatively impact customer beliefs, attitudes and intentions regardless of the firm’s motivation. But surprisingly, high-fit initiatives that are perceived as purely profit-motivated have the same impact. Consumers pay particular attention to the timing of proactive social initiatives. And, when the alignment of fit, timing and motivation is skewed, sustainability reporting can become a liability and diminish positive brand profiles.

Although the growing number of companies reporting attests to the benefits that can be derived from publishing sustainability performance information, forward-thinking executives are starting to use these reports as a tool to drive internal business value and business transformation. This is often part of their efforts to strategically optimize triple bottom-line (financial, social and environmental) performance.
Sustainability reports aggregate key financial, social and environmental indicators from across the company, and provide management with new information that was previously impossible to obtain since it was fragmented and difficult to consolidate and evaluate.

In addition to external reporting, the data now support sustainability management and business transformation. Those plants with the best performance on emissions and employee safety can serve as models for the rest of the organization, a source for internal best practices that can be replicated across all facilities. These new insights, combined with external benchmarking, can drive investment decisions and business transformation initiatives. Also, delivering on your sustainability strategy and specific sustainability targets is much easier once management has a reliable record of performance data to review.

Sustainability initiatives and positioning also set high expectations with the public. Companies that issue public information can come under attack from activists, especially if the reported information is subject to questioning. To minimize exposure, the data collection and aggregation must be well-managed and auditable.

However, many companies today are taking a manual, reactive approach to creating sustainability reports. This results in ad hoc reports that cannot be repeated, contain errors and are expensive to audit. The risky and costly nature of these manual sustainability processes means that some companies don’t take the opportunity to proactively communicate their sustainability activities, missing out on value-driving opportunities to improve their business.

AMR Research analyst Nigel Montgomery says: “The financial results a company delivers in today’s economy are no longer the only defining measure of its strength. Many companies are beginning to recognize that sustainability can translate into business opportunity or, just as importantly, protect the company against prejudicial selection. A recent AMR survey shows that 82 percent of companies will select suppliers according to their environmental stance within the next two years while 41 percent already do.”

Today, long-term success is no longer based solely on tangible financial results, but increasingly on such factors as competent management of your corporate financial, social and environmental responsibility. With increased visibility into high-quality sustainability performance indicators, along with flexible analysis and reporting options, companies can speed achievement of corporate responsibility goals, making a difference while saving resources and driving business value.

Those companies that have a sustainability management system can leverage sustainability as a competitive advantage.

Holly Roland is SAP’s Vice President of GRC Marketing and Product Definition.