I am making an attempt here to apply my culinary arts analogy to the #Sustainability Reporting (SR) practices followed by corporates. Earlier, I used this analogy for manipulated corporate valuations by companies for raising capital.
Out of all the SR frameworks around, the best SR recipe is defined by the United Nations Global Compact (UNGC- Chef Gordon Ramsey) in the form of ten principles and seventeen SDGs for everyone to follow for making a Sustainable Impact. UNGC also recognises LEAD companies (MASTERCHEFS) annually for engaging with them at higher levels and positioning them to provide inspiration to the other businesses around the world.
The criteria for choosing LEAD companies includes demonstrated leadership in one or more SDG issues and excellence in communication practices. Although it is assumed that the communications from these corporates is reliable and trustworthy but researchers haven’t been able to completely verify this assumption.
In fact, to be qualified as a LEAD company provides a great opportunity for companies to build public relations and to gain confidence of stakeholders which can lead to more business and profits. Businesses use sustainability communication tactics to improve their reputation and validate their practices which are actually far from their real commitment to sustainability.
In Gordon Ramsey’s Show, when the dish is prepared Gordon goes to each individual participant and checks the appearance and the taste to verify whether it meets the standards of his well-defined recipe. However, in case of UNGC although they do verify the external appearance in terms of GRI (Global Reporting Initiative Report) but unfortunately, participating companies do not have to go through the “taste examination” and provide proof that their SR recipe actually tastes well. Meaning, whether they are actually tackling environmental and social issues. Under various SR frameworks there is lack of mechanisms to verify the truthfulness, reliability, fairness and transparency of the information reported.
Like Greenwashing- where every investment is garnished with the word Green, a new term for “paying lip service to the UNGC reporting initiative” is called Blue-Washing. Blue Washing can be interpreted as “Cheating” in the sense that LEAD corporates use their membership, association and collaboration with UNGC which has a BLUE flag, to tell the consumers how sustainable they are. Adopting the principles and SDGs requires substantive changes to the environment and social issues practices within an organisation which the businesses are unfortunately lacking considerably.
A recently published study in early 2021 conducted by Macellari et al performed counter -accounting analysis of LEAD companies ( such as Acciona, Bayer, Nestle, Daimler etc.) and showed that these companies did not report their negative events. They found that more than 80% of identified events were not reported or were underreported. Those negative events were related to pollution, emissions, human rights, forced labour, discrimination, corruption etc. Paradoxically, companies that claim for high safety standards maximum environmental friendliness are the ones not reporting these negative issues.
Many such researchers confirm that SRs published by the corporates are biased and not validated. Businesses lack accountability for the data presented. There is a clear need to improve the quality and transparency of reports. Various initiatives have been taken around the world in this regard. Different frameworks are geared towards this but unless businesses take serious steps to improve their sustainable practices, report their factual information and show their accountability towards their reporting all the efforts will go in vain.
For taking serious sustainable steps every business will have to identify their “ HEROES” who will undertake heroic activities of true and tangible sustainable practices.
Here comes another analogy– “ Hero” – song lyrics.
There’s a hero ( Value Creation, sustainable practice )
If you look inside your heart ( Business Practices)
You don’t have to be afraid ( Businesses can create value)
Of what you are
There’s an answer
If you reach into your soul ( strong systems- monitoring and control)
And the sorrow that you know
Will melt away ( no need to hide negative news, just keep on improving)
And then a hero comes along ( strength – value creation, ethical practices)
With the strength to carry on
And you cast your fears aside
And you know you can survive ( sustainable – profitable, relevant)