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As the concern for our environment grows, so too does the need for environmentally responsible business practices. Today, the majority of large Canadian businesses are choosing to report on their sustainability efforts and practices, despite the fact that there is no mandatory reporting system in place. A study from Ryerson University analyzing voluntary corporate reports on sustainability efforts makes it clear that while such reporting is a step forward; there is a wide variance not only in what is reported but in how each company defines their benchmarks.

Professor Cory Searcy, of Ryerson’s Department of Mechanical and Industrial Engineering, is the lead author of a recent study that analyzes the indicators disclosed in corporate sustainability reports. As no protocol for sustainability reporting currently exists in Canada, Searcy was interested in identifying what companies chose to report in sustainability reports as well as the differences between individual companies, and the differences within and between industry sectors.

“There are few standards for sustainability reporting, companies design indicators that suit their own needs,” said Searcy. “We have not gotten to the stage similar to financial reporting, where you know what is going to be in a sustainability report. They are still relatively new and they continue to evolve.”

Searcy and a former master's student analyzed the sustainability indicators published in annual reports from 94 for-profit Canadian companies in 10 different industry sectors. While the reports varied in title, from corporate social responsibility reports to sustainable development reports, all reports contained information on how the company managed to improve its economic, environmental and social effectiveness and efficiency.  Indicators were defined as benchmarks by which a company measured their success in a particular area.

What the pair found was a wide variance not only in what was reported but in how each company defined similar or identical categories. A total of 585 indicators were reported in the 94 reports, with an average of 19.5 indicators defined in each report.  Of those, 324 indicators were used only once in the entire sample. Forty-five of the 94 companies analyzed reported using the Global Reporting Initiative’s G3 reporting guidelines, a comprehensive sustainability reporting framework that is widely used around the world.  However, employing the GRI framework is not currently mandatory which means that many companies include and define indicators as they see fit.  With such variance between companies, particularly those in the same sector, it begs the question – would making such reporting mandatory further legitimize the process?

“Mandatory reporting would be useful in that it would standardize expectations as to what needs to go into a report. Readers of the report would have a reasonable idea of what to expect,” said Searcy.   “It may raise the credibility of the reports – presuming that the same levels of verification were applied to the indicators in each report. Moving to mandatory elements would help clarify what is supposed to be in a report. Many companies are stilling struggling with these reports, for example what should be in it and how it should be structured.”

While Searcy does see the value in standardizing such reporting, he is cognizant that this is a process that will take some time. Sustainability reporting has grown in popularity only in the last 20 years – a move to standardize it now may be hasty.

“I would caution against premature standardization. Mandatory or prescriptive elements will have to be fairly limited as there is such a wide range of information that could be reported under the category of sustainability. Sustainability is broad, ambiguous; there are so many different definitions. It’s not so easy to design a set of prescriptive guidelines for sustainability reporting.”

In the meantime, Searcy hopes this study will provide a benchmark for companies seeking to implement or improve their sustainability reporting. He views the research as providing a baseline on what companies are doing now, and what particular sustainability issues or concerns companies within the same sector are reporting on.  

An analysis of indicators disclosed in corporate sustainability reports was published in the January 2012 issue of the Journal of Cleaner Production, and was funded by the Natural Sciences and Engineering Research Council of Canada.

Ryerson University is Canada's leader in innovative, career-oriented education and a university clearly on the move. With a mission to serve societal need, and a long-standing commitment to engaging its community, Ryerson offers more than 100 undergraduate and graduate programs. Distinctly urban, culturally diverse and inclusive, the university is home to more than 30,000 students, including 2,300 master's and PhD students, nearly 2,700 faculty and staff, and more than 140,000 alumni worldwide. Research at Ryerson is on a trajectory of success and growth: externally funded research has doubled in the past four years. The G. Raymond Chang School of Continuing Education is Canada's leading provider of university-based adult education. For more information, visit www.ryerson.ca

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