[I]nstead of signing off on sustainability reports, board of directors should sign on and be proactive when it comes to the process. This is especially important at a time when more corporate governance experts are calling for improved communication between investors, the C-suite and boards.“The board needs an understanding of the goals of sustainability reporting,” said [Helle Bank] Jorgensen [CEO of B. Accountability and President of the Global Compact Network Canada]. “There are a lot of board of directors that only get the sustainability report to review and sign off on it. Meanwhile, they are responsible for the financials–but why not the sustainability report?”What any board needs to understand, according to Jorgensen, is the reason why the so-called non-financials are important. Board members unfamiliar with the factors driving sustainability reporting may at first be averse to disclosing information about sensitive topics such as human rights or employee retention.But boards need to understand that there are more customers insisting that if they can’t trust where a company stands on issues such as human rights or the environment, they will shop elsewhere. And at a time when supply chain is on everyone’s mind, it is also important to remind boards that if it is not clear where a company procures its parts or raw materials, those same customers move on to another competitor.
At a time when more brands are taking stands and companies are stepping out of their comfort zone to not just take on environmental and social responsibility, but also volatile political issues, it may just be time to give another look at the annual corporate responsibility report, with the emphasis on the “annual.” And the fact that so much of this data is difficult to obtain should send a message to companies that the mad rush to push out that annual report means less time spent on doing good – instead the emphasis is reporting the “good.”“[Sustainability report] should not be a yearly project–it’s a process,” said Jorgensen as we wrapped up our talk.