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Should sustainability reports be merged into annual reports?

by Davin Wilfrid

April 19, 2010

by Davin Wilfrid, Managing Editor, ERP Expert

Harvard Business Review has an excellent post by Robert G. Eccles on the increasing importance of sustainability reporting. Eccles doesn't like that many companies mail sustainability reports separately from annual reports, because it seems to send a mixed signal about the seriousness of the company's commitment to sustainability.

Instead, he argues for combining annual reports with sustainability reports:

So how can shareholders and other stakeholders know if a company's commitment to a sustainable society is contributing to a sustainable strategy that will create value for shareholders over the long term? The answer lies in combining the annual and CSR/sustainability reports into something I call "One Report," which provides the essential information on a company's financial, environmental, social, and governance performance and shows the relationships between them. This kind of Integrated reporting also involves leveraging the Internet to provide more detailed in formation to all a company's stakeholders while also providing them with the opportunity to engage in a virtual dialogue on these matters.

SAP itself has been way out in front on this one -- the company's chief sustainability officer, Peter Graf, has said SAP includes sustainability updates in each quarter's earnings call. Eccles points out that other companies, such as United Technologies, BASF, and Phillips, are doing similar things.

The bottom line is that sustainability is increasingly viewed as a core component of long-term financial growth. As more and more companies move in this direction, they will need to proactively adjust their back-end technologies and business processes.

The Annual Report as Sustainability's Secret Weapon [HBR]

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