Who reads sustainability reports?

For the second time since 2008 the Global Reporting Initiative launched the GRI Readers’ Choice Awards, giving readers a platform and a voice what they value most in sustainability reports and which reports they liked (and disliked) most. Are these reports addressing the material issues in a convincing way; is there a visible connection between the interaction with all groups of stakeholders (beginning with the question who those are) and the aspects the company chose to deepen in the report; is there a healthy balance between actual achievements and delays, does the organization say something about the dilemmas, threshold and obstacles they deal with; is there a clear link to the business strategy; in short: is the report a fair and balanced review of the past and a realistic outlook towards the future?

The GRI Readers’ Choice Award – in the end – tries to also deal with another fair question: “Who is reading all these reports and is it really worth the effort?” This is for many sceptics the most exciting question at all, but interestingly also still a big unknown in many organizations that publish sustainability reports; they simply don’t know! It’s one of the killer questions coming from those responsible for communication budgets and one that puts the staff responsible for sustainability often in a weak negotiation position . It is amazing that so little research has been done in the hundreds and thousands of stakeholder engagement processes running every year and that this question is also hardly addressed in the reports itself. Hopefully, the outcomes of the GRI Readers’ Choice Award 2010 can shed some more light and inspire reporting organizations to also do their bit of the research. There is so much possible nowadays with social media and interactive designs; the time of the questionnaire inlay in the printed sustainability report sent out to a thousand or a bite more multipliers by mail is long gone. Wikis, social media interest groups, even Twitter and Facebook could be used.

In that regard two other  things make me really wonder as well:

Firstly, I am always amazed how much capacity and money is available in nearly all companies that I have seen for their normal annual reporting process and print design, while sustainability reports still have to be produced with budgets that are “too much to die, but not enough to live”. Of course, there are difficult and overwhelming legal requirements to fulfil when pulling together annual reports. And yes, strict assurance practices are necessary as well; all that has to be well prepared and does cost money. However, in essence, this reporting is still mainly a look into the rear mirror, addressed to one stakeholder group only and not really covering the long-term future (in that sense: sustainability) of the company. One could argue that all these efforts are necessary for the professional readers of annual reports because that’s what they expect, that’s the way it has always be done, and that the next annual report needs to be better than any other annual report before. Well, let’s be honest – how many readers do annual reports really have apart from maybe 200 industry sector specialists, asset managers and other potential investors, ranking institutions, and probably some competitors and employees? How many printed (short) versions of annual reports that you hold shares in have you personally thrown away into the waste bin without having taken one single look at them? And how about XBRL? Isn’t that taking over much of the needed information transaction in the future? Maybe it’s time for a recalibration of the budgeting balance between annual reports and sustainability reports?

In contrast to this I have met so many companies where employees have learnt so much about their company (especially when they were large and/or multinationals) and have used sustainability reports as a reference document when visiting customers, shared them with friends and still have them at home, keeping every single version. I have seen students reading reports when figuring out which company could be a good employer, MBA students studying sustainability reports in their MBA courses and discuss the question what a specific company should be responsible for and how they would react in case of a certain dilemma, digging deep into the problems and build understanding of the rationale behind a specific decision that had to be made. And, don’t we also see more and more of the usual suspects for annual reports consumption reading sustainability reports because they want to learn how to invest more sustainable and long-term, making investment decision with a real sense – while still making money. Don’t we see more and more suppliers reading sustainability reports because they expect to be asked next about their specific responsibility in the supply chain by their customers? And don’t we see more and more communities and ministries really thinking about making sustainability information a requirement for their own procurement activities or making this sort of reporting mandatory simply because it makes sense to know more about an organization’s picture of the world and to assess if they are more part of the problem than the solution? So, is there anybody out there who likes to follow my bet that already today more people really read sustainability reports than annual reports?

Clearly, I am not arguing that less money should be spent on annual reports if it’s absolutely necessary. But it’s definitely time to make sure that sustainability reporting processes get the budgets they deserve! If the budget for the preparation of a good sustainability reports remains low over time, a clear story is told: it is not the lack of money, but the wrong prioritization of sustainability as a really important issue. I recommend stakeholders to ask in the next round of stakeholder dialog to get a ratio of money spent for the annual report versus the sustainability report. My guess is that a normal ratio is between 20:1 and 50:1. In my view its time for a recalculation exercise, also taking into a account the whole communication process linked to the publication of both reports, integrated reporting and the new design formats that allow a way more seamless communication of the organization’s results.

Secondly, isn’t the basic question about who is reading sustainability reports not also a worrying warning signal that stakeholder engagement, its process and the value connected to it, still not fully understood? While it is pretty clear that during the development of the sustainability report stakeholders need to be involved to define material issues, the question how to continue to involve stakeholders after the publication of the report also seems to remain a weak spot. Or has the communication strategy suddenly ended with the launch of the report (maybe still with an A5 card in the back as feedback form?) instead of making the launch of the report the starting point for even more stakeholder engagement (=input for the next report)? In summary the fact that we still ask ourselves the basic question about the readers of sustainability reports makes it a clear indication that some inefficiency in the overall reporting and feedback process still exists. Answers are welcome, let’s hope that many join the GRI Readers’ Choice Awards 2010 and help to decrease this inefficiency, so go to www.globalreporting.org and click further to the GRI Readers’ Choice Award. The GRI conference, to be held in Amsterdam on May 26-28 will surely be an exciting event to ‘ rethink, rebuild, and report’ – as the main theme for the conference is already proposing.