Manufacturing Sustainability: Green Manufacturing News


Growing Interest in Sustainability Reports Driving Need for Investment-Grade Data

posted by Wendy Stott
Published: February 11, 2011

The quality of sustainability and corporate responsibility data that companies disclose will need to improve to keep pace with stakeholder expectations, according to a PwC US report released today, Creating Value from Corporate Responsibility.

The report goes on to note that half of the CEOs PwC recently surveyed plan to change their business strategies in the next three years because they expect their stakeholders to factor environmental and corporate responsibility into purchasing decisions. Yet, today's corporate responsibility reports often don't have in place the rigorous processes that are ubiquitous in other areas of the business, according to PwC.

"Investors, regulators and NGOs are holding businesses to higher standards, and company reputations and valuations are hinging on their ability to report on their efforts in a quantitative way," said Kathy Nieland, PwC's US Sustainable Business Solutions leader.

According to the report, some of the benefits of improved sustainability reporting include:

  • Better assessment of risks and opportunities at all levels of the business

  • Ability to allocate resources and set appropriate performance goals

  • Confidence that baseline measurements are accurate

  • Ability to enhance trust and promote value with key stakeholders

  • Improvements in delivering information in a timely and consistent way

  • Fewer errors and restatements

  • Less opportunity for manipulation

PwC's report notes that in the past year, activist shareholders targeted more than 80 US companies in various industries with resolutions for better disclosure on how they are managing potential business impacts related to sustainability challenges and opportunities. Despite these higher expectations, a quarter of the companies that report to the Carbon Disclosure Project either do not disclose any information about how they evaluate uncertainty ranges of reported data or do not evaluate uncertainty at all.

"Companies are increasingly expected to provide investment-grade sustainability data, and basic e-mail, spreadsheet, or other do-it-yourself reporting processes won't provide the necessary discipline," said Doug Kangos, partner, PwC US Sustainable Business Solutions. "Companies have a significant opportunity to improve their sustainability reporting, and investors are increasingly expecting the precision and the context that they've come to expect with financial reporting."

The PwC report was issued as the Global Reporting Initiative (GRI), the most widely used framework for producing sustainability reports, recently launched its new Focal Point USA. The newest Focal Point is an effort to increase the number of US companies reporting on sustainability in a consistent manner, improve the quality of those reports, and increase US organizations' input into developing new guidelines for sustainability reporting.

The effort, supported by each of the Big Four global professional services organizations, marks the fifth such Focal Point globally, joining Australia, Brazil, China, and India.

For the full PwC report, Creating Value from Corporate Responsibility, please visit: http://www.pwc.com/us/en/corporate-sustainability-climate-change/publications/creating-value-from-corporate-responsibility.jhtml.

For more information on PwC's Sustainable Business Solutions practice, please visit http://www.pwc.com/us/en/corporate-sustainability-climate-change.