A sustainability thought leader shared a cautionary tale with me recently. His former company had received a sustainability questionnaire from a non-governmental organization (NGO). The CEO told him not to respond. The firm’s responses wouldn’t be ideal, and they weren’t sure how much to disclose. When the report came out, the cost of that decision became clear: The company received an “F” ranking. When the survey arrived the following year, the CEO instructed him to respond with whatever information the company had. Anything would be better than their current grade!
Companies are being publicly rated on sustainability criteria – whether they know it or not and whether they participate in the process or not. The newly updated Ceres report on corporate sustainability progress among 600 top U.S. companies is just the latest publicized ratings example. No doubt the results caught at least a few businesses off guard.
The challenge for businesses is that these inquiries from industry watchdogs, NGOs or clients call for complicated responses and are probably not on your ideal timeline (of, say, “later, maybe never”). As my acquaintance’s experience illustrates, sharing your progress is better saying nothing, even if you don’t have all the answers. And just asking the questions will give you a sense of what some of your next moves should be.
Why are large companies falling short of Ceres’ expectations?
Ceres, a network of investors, companies and public interest groups, launched the Roadmap to Sustainability in 2010. It provides an even baseline of corporate sustainability over categories such as governance, disclosure, stakeholder engagement and performance. Ceres released a progress report in April that cited many interesting results but also major room for improvement.
“While there are encouraging pockets of sustainability leadership in the U.S. business community, far too many companies are only taking small, incremental steps,” said Mindy Lubber, Ceres president. “Sustainability has yet to gain traction at anywhere near the scale and speed required given the global threats we face.”
Why are so many companies failing to meet expectations? The answer lies, in part, in the decisions companies make to under-report their sustainability efforts.
In my experience, companies are typically engaged in many sustainability initiatives, but are hesitant to communicate any of this to the outside world. They’re concerned that communicating action on select initiatives – especially when they’re not part of a comprehensive vision or strategy – may be perceived as green washing. They may also fear opening the company to criticism in areas of the business that have not yet started sustainability programs.
While these fears seem logical, most will not come to pass. And valid or not, they may all look less worrisome than receiving an “F” or other bottom-tier rating after opting out of a survey completely.
It helps to evaluate each inquiry by making sure you understand the criteria used by the ranking/rating organization. Where and how do they get the information for the rankings and ratings? The usual methods are web-based research on what’s already publicly available, and survey questionnaires you are responsible for answering.
If your company chooses to ignore the survey questions, expect to receive the lowest rating or ranking. Even if you cannot answer every question or don’t know the answer, effort is rewarded. In most cases your company will receive a higher score for incomplete responses than for not responding at all.
What to disclose
How can companies communicate sustainability initiatives to their stakeholders without fear of negative criticism?
The first answer is: Be honest. Explain where you are focusing your efforts and why. A thoughtful approach is difficult to criticize. Describe your current state, current actions and desired end state. You don’t have to be 95 percent of the way to your goals to improve your score in rankings by Ceres or other organizations, or for your stakeholders to respect and appreciate the information.
Second, remember not all your goals need to be strictly numerical. Aspirational goals communicate intent, vision and company values, all of which signal something of value. As your company develops capacity and experience, you can begin to tie these aspirational goals to something measurable – such as a time frame and total amount (whether an decrease or increase).
Communication gaps point to next steps
Upon receiving a disappointing rank or rating, it’s common to feel your score doesn’t accurately reflect what your business is doing and to want to fix incorrect or missing information. Companies are competitive, and want to score well if they’re going to be scored at all.
At a former workplace, I watched one rating organization miss publicly available information about my company that we thought strengthened our ranking. The next year, I guided the rating organization to all the publically available information before their next round of ratings so our work would be accurately represented.
In the course of responding to these surveys, you will inevitably find gaps or inconsistencies in data requested by others. Companies often don’t have the ability to report sustainability metrics consistently. Sustainability data is not an output from most enterprise systems. Collecting data from accounts payable, vendors and other partners often requires manual effort and specific knowledge.
Finding gaps like these is an opportunity to highlight new data collection processes or whole new initiatives that your company might want to consider. If one rating agency is asking for that information, other agencies may soon follow. And their questions can sometimes signal movements of interest from important stakeholder groups.
The next time you’re faced with an inquiry about your company’s sustainability policies or performance, try filling it out completely or sharing more than you have in the past. If your responses are honest, thoughtful and point in the right direction, you are probably more insulated from criticism than you think. And when you’re challenged by some of the questions, don’t despair! Everyone else is, too.
The key is to remember these surveys and requirements aren’t going anywhere and will probably multiply. By simply noting what’s missing or inconsistent in your responses, you’ll feel more confident when the next set of questions comes your way.