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Unpredictability in Sustainability.

Sustainability Reporting is gaining wide spread popularity in the corporate world, but in spite of this, the unpredictability we are facing is far more unprecedented at present, at least for our generation. The collapse of so many companies during the recession and the fear of possible double dip or “W” effect still persisting around the corner, makes Sustainability Reporting a much sought out affair, both by the investors and the general pubic as well. But the anomaly is even the companies that published Sustainability Report regularly, at the highest rating (A/A+), faced/ faces serious problems in sustaining itself.


The best example now is British Petroleum (BP), but there are also others like, General Motors, Lehman Brothers etc.


BP is one of the organizations, which is aggressive in the Sustainability initiatives, BP Sustainability Report 2009. BP even encourages people to evaluate and lower their carbon footprint @ Carbon footprint calculator. But the oil spill in the Gulf of Mexico has brought it to the brink of bankruptcy. Though at first sight the Gulf of Mexico oil spill seems to be an accident, there are allegations that there is a breach of the Safety standards, which led to the accident. From my point of view, this is highly plausible because, due to meteoric fall of the crude oil prices from US $160 to $ 40, any oil company will try to cut short its operating cost as much as possible. When cost cutting is in full swing, one of the primary cost cutting areas is safety related expenses.


So I was pouring through the Sustainability Report of BP, looking for the safety related expenses year-on-year. Though there are best intentioned statements on the safety policy and some qualitative data on the safety measure, there is no Quantitative data on the Safety and safety related budget and actual expenses year-on-year.  I was perplexed as to why this disclosure was not mentioned and naturally I started looking if this KPI is mentioned in the GRI framework. Oops, this KPI is not present in GRI framework itself! As safety related expenditure is a missing KPI in GRI, it is missing in the Sustainability Report too.


While it will be a good initiative from the government side to make Sustainability Reporting mandatory, the answer to the question why some of the leaders in the Sustainability Reporting struggle or failed to sustain needs to be probed. The real challenge is to make the Sustainability Reporting relevant and meaningful, so that we do not have any unpleasant surprises. To achieve this we need to analyze the past failures, list out the new missing KPIs and make it mandatory to report on the relevant KPIs. This is particularly very important for highly hazardous Industries like Oil and Gas, Chemical, etc.


Just like we have a market regulator (SEBI in India) for financial market, we need to have a separate board/ statutory Authority to check the veracity of the Sustainability Report and impose fine, if any irregularity is found. Since the carbon credit accumulated by one organization can be sold to another organization, the presence of such statutory bodies will ensure proper compliance and ensure punitive action when appropriate. Unless and until there is least unpredictability in the Sustainability Report of an organization, the purpose of Sustainability Reporting is not served and to realize that such statutory bodies will be of great help.


Let me think and come up with some missing KPIs, which will make Sustainability Reporting more meaningful.


Interestingly, when I took a cursory look at the GRI website, I found that they too are coming up with updated KPIs and are open to Public Comments now. So post your opinions on missing KPIs, the addition of which will make sustainability reporting more meaningful @ GRI G3.1 Public Comment Periods


Disclaimer: The opinions expressed in this blog are purely my personal opinions and has no legal liability on my employer or affiliates or parent organization.

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